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Nontransferable Water Rights and Technical Inefficiency in the Japanese Water Supply Industry


  • Eiji Satoh


This study examines whether the Japanese scheme of nontransferable water rights results in technical inefficiency. Using data on 1,263 Japanese retail water suppliers for 2008, their technical efficiency is measured employing data envelopment analysis. Next, a bootstrapped truncated regression model is specified to examine the determinants of technical efficiency. The estimation results reveal that the nontransferability of water rights leads to technical inefficiency of retail water suppliers. Furthermore, the costs of this efficiency amount to about 462 billion yen. This result suggests the government should reallocate water rights flexibly in order to ensure efficiency.

Suggested Citation

  • Eiji Satoh, 2011. "Nontransferable Water Rights and Technical Inefficiency in the Japanese Water Supply Industry," Global COE Hi-Stat Discussion Paper Series gd11-211, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd11-211

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    References listed on IDEAS

    1. Leopold Simar & Paul Wilson, 2000. "A general methodology for bootstrapping in non-parametric frontier models," Journal of Applied Statistics, Taylor & Francis Journals, vol. 27(6), pages 779-802.
    2. R. Quentin Grafton & Gary D. Libecap & Eric C. Edwards & R. J. (Bob) O'Brien & Clay Landry, 2011. "A Comparative Assessment of Water Markets: Insights from the Murray-Darling Basin of Australia and the Western US," ICER Working Papers 08-2011, ICER - International Centre for Economic Research.
    3. Byrnes, Joel & Crase, Lin & Dollery, Brian & Villano, Renato, 2010. "The relative economic efficiency of urban water utilities in regional New South Wales and Victoria," Resource and Energy Economics, Elsevier, vol. 32(3), pages 439-455, August.
    4. Fumitoshi Mizutani & Takuya Urakami, 2001. "articles: Identifying network density and scale economies for Japanese water supply organizations," Papers in Regional Science, Springer;Regional Science Association International, vol. 80(2), pages 211-230.
    5. Deborah Peterson & Gavan Dwyer & David Appels & Jane Fry, 2005. "Water Trade in the Southern Murray-Darling Basin," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages 115-127, August.
    6. Cécile Aubert & Arnaud Reynaud, 2005. "The Impact of Regulation on Cost Efficiency: An Empirical Analysis of Wisconsin Water Utilities," Journal of Productivity Analysis, Springer, vol. 23(3), pages 383-409, July.
    7. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    8. Barros, Carlos Pestana & Peypoch, Nicolas, 2008. "Technical efficiency of thermoelectric power plants," Energy Economics, Elsevier, vol. 30(6), pages 3118-3127, November.
    9. Valentin Zelenyuk & Vitaliy Zheka, 2006. "Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine," Journal of Productivity Analysis, Springer, vol. 25(1), pages 143-157, April.
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    More about this item


    Bootstrapped Truncated Regression; Data Envelopment Analysis; Technical Efficiency; Water Rights;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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