Water utilities performance analysis in developing countries: On an adequate model for universal access

Economies of integration and sources of change in productivity in the Chilean water and sewerage industry: a translog cost function approach

This paper researches the existence of economies of scale and scope in the Chilean water and sewerage industry using a translog cost function approach over the period 2010-2017. It also provides estimates of productivity growth and its determinants, technical change and scale effect. The results suggest that on average, the water industry operates under increasing economies of scale, which implies that further increases in water companies' scale of operations may be cost beneficial. Economies of scope between water and sewerage services were found for the average company, which suggests that the joint provision of these services may lead to cost savings. An average annual productivity increase of 2.5% was reported with scale effect being the major driver. Full private companies performed better than concessionary and public water companies. The results of our study can be of greater interest to the policy-makers who want to make decisions on introducing policy reforms such as mergers, unbundling of the water and sewerage supply chain, or developing incentives to improve companies' productivity.

Sustainable water and sanitation for all: Are we there yet?

The lack of access to water and sanitation services (WSS) of a considerable share of the world population has been challenging the international community for decades. The proposal of the Millennium Development Goals and, later on, the Sustainable Development Goals (SDGs) by the United Nations (UN) intended to act as a blueprint to achieve a more equitable future for all and, in the case of WSS, "Ensure the availability and sustainable management of water and sanitation for all" (SDG 6). However, the current global pandemic further emphasised the importance of WSS, given the increasing asymmetries faced by billions worldwide, and the gaps between high-income and low- and middle-income nations. For this reason, understanding whether low- and middle-income countries have been approximating towards or deviating from the SDG 6 is crucial to derive and communicate key information for the sake of improved public governance and political decision-making. In this paper, we extend a state-of-the-art methodology based on data envelopment analysis for assessing the convergence of the low- and middle-income UN Member States regarding the SDG 6 between 2016 and 2017. We find that, on average, not only did the Member States converge by decreasing the performance spread and the gap between the best and worst practice frontiers, but also the Level of water stress: freshwater withdrawal as a proportion of available freshwater resources was the indicator in which the majority exhibited the worst performances. In the end, we derive possible policy implications, which, as our results show, are aligned with the recent UN reports on the subject.

Total factor productivity assessment of water and sanitation services: an empirical application including quality of service factors

Assessing the productivity change of water companies provides relevant information for both water regulators and companies' managers. Past research has illustrated that different indicators and indexes have been applied although not all of them are equally reliable. Thus, this study evaluates the total factor productivity (TFP) change and its drivers employing the Luenberger-Hicks-Moorsteen productivity indicator (LHMPI) including, for the first time, quality of service variables as undesirable outputs. Moreover, unlike the previous studies, LHMPI was decomposed into three drivers; namely technical change, technical efficiency change and scale efficiency change. Our empirical application conducted on a sample of Chilean water companies over 2007-2018 embracing full private water companies (FPWCs) and concessionary water companies (CWCs). Results evidenced that, on average, TFP increased at an annual rate of 2.2%, mainly due to outputs rise. The main driver of productivity growth was scale efficiency change suggesting that adjustments in the water companies' scale of operations could lead to lower operational costs. It was also evidenced that FPWCs performed better than CWCs over the period analyzed.