Water losses: A productivity analysis of the water supply in Portugal

Environmental concerns have increasingly influenced production processes, particularly in recent years, as natural resources become progressively scarce. Among these, water remains the most critical resource, further exacerbated by climate change and its associated challenges, such as frequent droughts, especially in warm and mild-climate regions like Southern Europe. This study analyzes the performance of the Portuguese water supply sector, focusing on a sample of 116 water utilities between 2013 and 2021, representing diverse geographic and management structures. The production process is conceptualized as a non-linear joint-production process, incorporating water losses as an undesirable output within performance evaluations. By applying exponential Hicks-Moorsteen and Malmquist indices within a non-parametric Data Envelopment Analysis framework, this study provides an assessment of the efficiency and productivity trends in the sector. The findings offer insights into how Portuguese water utilities manage resources under environmental and infrastructural constraints, with a focus on reducing water losses and enhancing sustainable practices.