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The Performance of German Water Utilities: A (Semi)-Parametric Analysis

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  • Michael Zschille

    (Graduate Center of Economic and Social Research - German Institute for Economic Research Berlin)

  • Matthias Walter

    (Chair of Energy Economics and Public Sector Management - University of Technology Dresden)

Abstract

Germany's water supply industry is characterized by a multitude of utilities and widely diverging prices, possibly resulting from structural differences beyond the control of firms' management, but also from inefficiencies. In this article we use Data Envelopment Analysis and Stochastic Frontier Analysis to determine the utilities' technical efficiency scores based on cross-sectional data from 373 public and private water utilities in 2006. We find large differences in technical efficiency scores even after accounting for significant structural variables like network density, share of groundwater usage and water losses.

Suggested Citation

  • Michael Zschille & Matthias Walter, 2011. "The Performance of German Water Utilities: A (Semi)-Parametric Analysis," Post-Print hal-00712372, HAL.
    • Handle: RePEc:hal:journl:hal-00712372
    DOI: 10.1080/00036846.2011.581215
    Note: View the original document on HAL open archive server: https://hal.science/hal-00712372
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    3. Ngobeni, Victor & Breitenbach, Marthinus C, 2021. "Production and Scale Efficiency of South African Water Utilities: The Case of Water Boards," MPRA Paper 106242, University Library of Munich, Germany.
    4. Piercarlo Pietra, 2014. "Il modello di Data Envelopment Analysis per la stima dell?efficienza nel settore idrico e alcuni risultati empirici in tema di privatizzazione," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2014(3), pages 443-450.
    5. Marta Suárez-Varela & María los Ángeles García-Valiñas & Francisco González-Gómez & Andrés J Picazo-Tadeo, 2017. "Ownership and Performance in Water Services Revisited: Does Private Management Really Outperform Public?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2355-2373, June.
    6. Károly Kovács, 2019. "Water Utility Integration in Hungary: impacts and future expectations," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(4), pages 509-522, December.
    7. Ben Amor, Tawfik & Mellah, Thuraya, 2023. "Cost efficiency of Tunisian water utility districts: Does heterogeneity matter?," Utilities Policy, Elsevier, vol. 84(C).
    8. Andrea Guerrini & Giulia Romano & Bettina Campedelli, 2013. "Economies of Scale, Scope, and Density in the Italian Water Sector: A Two-Stage Data Envelopment Analysis Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(13), pages 4559-4578, October.
    9. Ngobeni, Victor & Breitenbach, Marthinus C, 2020. "Technical Efficiency of Water Boards in South Africa: A Costing and Pricing Benchmarking Exercise," MPRA Paper 101501, University Library of Munich, Germany.
    10. Zschille, Michael, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Fr," CEPR Discussion Papers 8737, C.E.P.R. Discussion Papers.
    11. Michael Zschille, 2014. "Nonparametric measures of returns to scale: an application to German water supply," Empirical Economics, Springer, vol. 47(3), pages 1029-1053, November.
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    13. Andrea Guerrini & Giulia Romano & Alessandro Indipendenza, 2017. "Energy Efficiency Drivers in Wastewater Treatment Plants: A Double Bootstrap DEA Analysis," Sustainability, MDPI, vol. 9(7), pages 1-13, June.
    14. Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2013. "Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil [Efficiency in water and sanitation providers and its links w," MPRA Paper 48247, University Library of Munich, Germany.
    15. Ke-Liang Wang & Jianguo Wang & Jianming Wang & Lili Ding & Mingsong Zhao & Qunwei Wang, 2020. "Investigating the spatiotemporal differences and influencing factors of green water use efficiency of Yangtze River Economic Belt in China," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-24, April.
    16. Michael Zschille, 2015. "Consolidating the water industry: an analysis of the potential gains from horizontal integration in a conditional efficiency framework," Journal of Productivity Analysis, Springer, vol. 44(1), pages 97-114, August.
    17. Anne-Kathrin Faust & Andrea Baranzini, 2014. "The economic performance of Swiss drinking water utilities," Journal of Productivity Analysis, Springer, vol. 41(3), pages 383-397, June.
    18. Michael Zschille, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," Discussion Papers of DIW Berlin 1187, DIW Berlin, German Institute for Economic Research.
    19. Alexandr Akimov & Paul Simshauser, 2018. "Performance measurement in Australian water utilities: Current state and future directions," Discussion Papers in Finance finance:201802, Griffith University, Department of Accounting, Finance and Economics.
    20. Fanny Cabrera Barbecho & Juan Pablo Sarmiento, 2023. "Exploring Technical Efficiency in Water Supply Evidence from Ecuador: Do Region Location and Management Type Matter?," Sustainability, MDPI, vol. 15(8), pages 1-22, April.
    21. Reza, Rajibur & Tularam, Gurudeo Anand & Li, Bin, 2021. "A review of global research on private investment in the water sector," Utilities Policy, Elsevier, vol. 72(C).
    22. Mellah, Thuraya & Ben Amor, Tawfik, 2016. "Performance of the Tunisian Water Utility: An input-distance function approach," Utilities Policy, Elsevier, vol. 38(C), pages 18-32.

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    More about this item

    Keywords

    Social Sciences & Humanities;

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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