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Fragmentation, Scale, and Management: Determinants of Public Spending Efficiency in Colombia's Water and Sanitation Sector

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  • Pérez Urdiales, María
  • López-Luzuriaga, Andrea
  • Castillo, Adriana
  • Couto Ribeiro, Beatriz

Abstract

Achieving universal and equitable access to water and sanitation remains a critical challenge in Latin America and the Caribbean (LAC). This paper assesses the efficiency of public spending in providing water and sanitation services across Colombian municipalities. Efficiency levels are estimated using a stochastic frontier analysis that accounts for unobserved heterogeneity. The results show that the organizational and governance characteristics of service providers play a significant role in shaping spending efficiency. Municipalities with more service providers tend to be less efficient. In contrast, efficiency improves when providers operate across multiple jurisdictions. Additionally, municipalities where the head of the service provider is appointed--rather than elected--demonstrate greater efficiency. Overall, the findings indicate that public expenditures could be reduced by approximately 18\% without compromising service quality, highlighting the potential for substantial gains through improved provider organization and governance.

Suggested Citation

  • Pérez Urdiales, María & López-Luzuriaga, Andrea & Castillo, Adriana & Couto Ribeiro, Beatriz, 2025. "Fragmentation, Scale, and Management: Determinants of Public Spending Efficiency in Colombia's Water and Sanitation Sector," IDB Publications (Working Papers) 14276, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:14276
    DOI: http://dx.doi.org/10.18235/0013721
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    Keywords

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    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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