Skip to main content

The Determinants of Water Utilities Performance

  • Chapter
  • First Online:
Water Management in Italy

Part of the book series: SpringerBriefs in Water Science and Technology ((BRIEFSWATER))

  • 511 Accesses

Abstract

Over the last 25 years, the governance of public services has undergone important reforms in many countries. During the 1990s, efforts to reform the corporate entities established to pursue public policy and commercial objectives wholly owned either by the state or local governments (state-owned enterprises, or SOEs) were aimed at promoting privatization even if, for both political and economic reasons, the state remained a major owner of productive assets in many economies (Menozzi et al. 2011).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Abbott M, Cohen B (2010) Industry Structure Issues in the Water and Wastewater sector in Australia. Econ Pap: J Appl Econ Policy 29(1):48–63

    Article  Google Scholar 

  • Abbott M, Cohen B (2009) Productivity and efficiency in the water industry. Utilities Policy 17:233–244

    Article  Google Scholar 

  • Adams RB, Hermailin BE, Weisbach MS (2010) The role of boards of directors in corporate governance: a conceptual framework and survey. J Econ Lit 48(1):58–107

    Article  Google Scholar 

  • Agrawal A, Knoeber CR (2001) Do some outside directors play a political role? J Law Econ 44(1):179–198

    Article  Google Scholar 

  • Aida K, Cooper WW, Pastor JT, Sueyoshi T (1998) Evaluating water supply services in Japan with RAM: a range-adjusted measure of inefficiency. OMEGA. Int J Manage Sci 26(2):207–232

    Google Scholar 

  • Alsharif K, Feroz EH, Klemer A, Raab R (2008) Governance of water supply systems in the Palestinian territories: a data envelopment analysis approach to the management of water resources. J Environ Manage 87:80–94

    Article  Google Scholar 

  • Aly HY, Grabowski R, Pasurka C, Rangan N (1990) Technical, scale and allocative efficiencies in US banking: an empirical investigation. Rev Econ Stat 72:211–218

    Article  Google Scholar 

  • Antonioli B, Filippini M (2001) The use of a variable cost function in the regulation of the Italian water industry. Utilities Policy 10:181–187

    Article  Google Scholar 

  • Anwandter L, Ozuna T (2002) Can public sector reforms improve the efficiency of public water utilities? Environ Dev Econ 7(4):687–700

    Article  Google Scholar 

  • Arocena P, Oliveros D (2012) The efficiency of state-owned and privatized firms: does ownership make a difference? Int J Prod Econ 140:457–465

    Article  Google Scholar 

  • Ashton JK (2000) Total factor productivity growth and technical change in the water and sewerage industry. Serv Ind J 20(4):121–130

    Article  Google Scholar 

  • Bakker K (2003) From public to private to…public? Re-regulating and mutualising private water supply in England and Wales. Geoforum 34(3):359–374

    Article  Google Scholar 

  • Banker R, Charnes A, Cooper W (1984) Some models for estimating technical and scale inefficiencies in data envelopment analysis. Manage Sci 30(9):1078–1092

    Article  Google Scholar 

  • Berg SV, Marques RC (2011) Quantitative studies of water and sanitation utilities: a literature survey. Water Policy 13(5):591–606

    Article  Google Scholar 

  • Bhattacharyya A, Harris T, Narayanan R, Raffiee K (1995) Specification and estimation of the effect of ownership on the economic efficiency of the water utilities. Reg Sci Urban Econ 25:759–784

    Article  Google Scholar 

  • Boardman A, Vining A (1989) Ownership and performance in competitive environments: a comparison of the performance of private, mixed and state-owned enterprises. J Law Econ 32(1):1–33

    Article  Google Scholar 

  • Boubakri N, Cosset J, Saffar W (2008) Political connections of newly privatized firms. J Corp Financ 14:654–673

    Article  Google Scholar 

  • Boycko M, Shleifer A, Vishny RW (1996) A theory of privatization. Econ J 106:309–319

    Article  Google Scholar 

  • Bozec R, Dia M (2007) Board structure and firm technical efficiency: evidence from Canadian State-Owned Entesrprises. Eur J Oper Res 177(3):1734–1750

    Article  Google Scholar 

  • Brockett PL, Golany B (1996) Using rank statistics for determining programmatic efficiency differences in data envelopment analysis. Manage Sci 42:466–472

    Article  Google Scholar 

  • Byrnes P, Grosskopf S, Hayes K (1986) Efficiency and ownership: further evidence. Rev Econ Stat 668:337–341

    Article  Google Scholar 

  • Carrozza C (2011) Italian water services reform from 1994 to 2008: decisional rounds and local modes of governance. Water Policy 13(6):751–768

    Article  Google Scholar 

  • Carvalho P, Marques RC (2011) The influence of the operational environment on the efficiency of water utilities. J Environ Manage 92:2698–2707

    Article  Google Scholar 

  • Carvalho P, Marques RC (2014) Computing economies of vertical integration, economies of scope and economies of scale using partial frontier nonparametric methods. Eur J Oper Res 234(1):292–307

    Article  Google Scholar 

  • Caves WC, Christensen LR, Swanson JA (1981) Productivity growth, scale economies, and capacity utilization in U.S. railroads, 1955–74. Am Econ Rev 71:994–1002

    Google Scholar 

  • Charnes A, Cooper W, Rhodes E (1978) Measuring the efficiency of decision making units. Eur J Oper Res 2(6):429–444

    Article  Google Scholar 

  • Chirkos TN, Sears AM (1994) Technical efficiency and the competitive behaviour of hospitals. Socio Econ Plann Sci 28:219–227

    Article  Google Scholar 

  • Coelli T (1996) A guide to DEAP Version 2.1: a data envelopment analysis (computer) program. In: CEPA working paper 96/08. Departments of Econometrics, University of New England, Armidale, Australia

    Google Scholar 

  • Coelli T (1998) A multi-stage methodology for the solution of orientated DEA models. Oper Res Lett 23:143–149

    Article  Google Scholar 

  • Correia T, Marques R (2011) Performance of Portuguese water utilities: how do ownership, size, diversification and vertical integration relate to efficiency? Water Policy 13(3):343–361

    Article  Google Scholar 

  • Cruz N, Marques R (2012) Mixed companies and local governance: no man can serve two masters. Public Adm 90(3):737–758

    Article  Google Scholar 

  • Cruz N, Marques R, Romano G, Guerrini A (2012) Measuring the efficiency of water utilities: a cross-national comparison between Portugal and Italy. Water Policy 14(5):841–853

    Article  Google Scholar 

  • Cubbin J, Tzanidakis G (1998) Regression versus data envelopment analysis for efficiency measurement: an application to the England and Wales regulated water industry. Utilities Policy 7:75–85

    Article  Google Scholar 

  • De Witte K, Marques RC (2010) Designing performance incentives, an International benchmark study in the water sector. CEJOR 18:189–220

    Article  Google Scholar 

  • De Witte K, Marques RC (2011) Big and beautiful? On non-parametrically measuring scale economies in non-convex technologies. J Prod Anal 35:213–226

    Article  Google Scholar 

  • Dewenter KL, Malatesta PH (2001) State-owned and privately owned firms: an empirical analysis of profitability, leverage, and labor intensity. Am Econ Rev 91(1):320–334

    Article  Google Scholar 

  • Dietsch M, Weill L (1999) Les performances des banques de dépots francaises: une evaluation par la méthod DEA. In: Badillo PY, Paradi JC (eds) La Méthod DEA. Hermes Science Publications, Paris

    Google Scholar 

  • Dinc S, Gupta N (2011) The decision to privatize: finance and politics. J Financ LXVI(1):241–269

    Google Scholar 

  • Eckel C, Vining A (1985) Elements of a theory of mixed enterprise. Scott J Polit Econ 32(1):82–94

    Article  Google Scholar 

  • Estache A, Kouassi E (2002) Sector organization, governance and the inefficiency of African water utilities. In: Policy research working paper no. 2890. The World Bank, Washington, DC, USA

    Google Scholar 

  • Fabbri P, Fraquelli G (2000) Costs and structure of technology in the Italian water industry. Empirica 27:65–82

    Article  Google Scholar 

  • Faccio M (2006) Politically connected firms. Am Econ Rev 96(1):369–386

    Article  Google Scholar 

  • Faccio M (2010) Differences between politically connected and non-connected firms: a cross country analysis. Financ Manage 39(3):905–927

    Article  Google Scholar 

  • Fan JPH, Wong TJ, Zhang T (2007) Politically-connected CEOs, corporate governance and post-IPO performance of China’s newly partially privatized firms. J Financ Econ 84:330–357

    Article  Google Scholar 

  • Filippini M, Hrovatin N, Zori J (2008) Cost efficiency of slovenian water distribution utilities: an application of stochastic Frontier methods. J Prod Anal 29(2):169–182

    Article  Google Scholar 

  • Ford J, Warford J (1969) Cost functions for the water industry. J Ind Econ 18(1):53–63

    Article  Google Scholar 

  • Fraquelli G, Giandrone R (2003) Reforming the wastewater treatment sector in Italy: implications of plant size, structure and scale economics. Water Resour Res 39(10):1293

    Google Scholar 

  • Fraquelli G, Piacenza M, Vannoni D (2004) Scope and scale economies in multi- utilities: evidence from gas, water and electricity combinations. Appl Econ 36(18):2045–2057

    Article  Google Scholar 

  • García S, Moreaux M, Reynaud A (2007) Measuring economies of vertical integration in network industries: an application to the water sector. Int J Ind Organ 25:791–820

    Article  Google Scholar 

  • García-Sánchez IM (2006) Efficiency measurement in Spanish local government: the case of municipal water services. Rev Policy Res 23(2):355–371

    Article  Google Scholar 

  • Goldman E, Rocholl J, So J (2009) Do politically connected boards affect firm value? Rev Financ Stud 22(6):2331–2360

    Article  Google Scholar 

  • González-Gómez F, García-Rubio MA (2008) Efficiency in the management of urban water services. What have we learned after four decades of research? Hacienda Pública Española 185(2):39–67

    Google Scholar 

  • Guerrini A, Romano G, Campedelli B (2011) Factors affecting the performance of water utility companies. Int J Public Sector Manag 24(6):543–566

    Article  Google Scholar 

  • Guerrini A, Romano G, Campedelli B (2013) Economies of scale, scope, and density in the Italian water sector: A two-stage data envelopment analysis approach. Water Resour Manage 27(13):4559–4578

    Google Scholar 

  • Guerrini A, Romano G, Martini M (2014) Determinants of efficiency in Danish wastewater utilities. In: Working paper accepted at ECOstp IWA conference, Verona

    Google Scholar 

  • Gupta N (2005) Partial privatisation and firm performance. J Financ 15:987–1015

    Google Scholar 

  • Hall D (2001) Water privatisation and quality of service. Public services international research usnit. University of Greenwich, London. Available from: http://www.psiru.org. Accessed 31 July 2012

  • Hall D, Lobina E (2012) Financing water and sanitation: public realities. Public services international research unit. University of Greenwich, London http://www.psiru.org. Accessed 31 July 2012

  • Hassanein AAG, Khalifa RA (2007) Financial and operational performance indicators applied to public and private water and wastewater utilities. Eng Constr Arch Manage 14(5):479–492

    Article  Google Scholar 

  • Hoff A (2007) Second stage DEA: comparison of approaches for modelling the DEA score. Eur J Oper Res 181:425–435

    Article  Google Scholar 

  • Hunt L, Lynk E (1995) Privatization and efficiency in the UK water industry: an empirical analysis. Oxf Rev Econ Stat 57(3):371–388

    Article  Google Scholar 

  • Idelovitch E, Klas R (1997) Private sector participation in water supply and sanitation in Latin America. World Bank, Washington

    Google Scholar 

  • Kim H, Clark R (1988) Economies of scale and scope in water supply. Reg Sci Urban Econ 27(2):163–183

    Google Scholar 

  • Kirkpatrick C, Parker D, Zhang Y (2006) An empirical analysis of state and private-sector provision of water services in Africa. World Bank Econ Rev 20(1):143–163

    Article  Google Scholar 

  • Knapp M (1978) Economies of scale in sewerage purification and disposal. J Ind Econ 27(2):163–183

    Article  Google Scholar 

  • Li W, Xu LC (2004) The impact of privatisation and competition in the telecommunications sector around the world. J Law Econ 47:395–430

    Article  Google Scholar 

  • Lobina E, Hall D (2007) Experience with private sector participation in Grenoble, France, and lessons on strengthening public water operations. Utilities Policy 15:93–109

    Article  Google Scholar 

  • Lynk E (1993) Privatisation, joint production and the comparative efficiencies of private and public ownership: the UK water industry case. Fiscal Stud 14:98–116

    Article  Google Scholar 

  • Marques RC, De Witte K (2011) Is big better? On scale and scope economies in the Portuguese water sector. Econ Model 28(3):1009–1016

    Article  Google Scholar 

  • Martins R, Fortunato A, Coelho F (2006) Cost structure of the Portuguese water industry: a cubic cost function application. Universidade de Coimbra, GEMF

    Google Scholar 

  • Massarutto A, Paccagnan V, Linares E (2008) Private management and public finance in the Italian water industry: a marriage of convenience? Water Resour Res 44:1–17. doi:10.1029/2007WR006443

    Google Scholar 

  • Megginson, W.L., Nash, R.C., & Van Randenbourgh, M. (1994). The financial and operating performance of newly privatized firms: an international empirical analysis. J Financ. XLIX(2), 403-452

    Google Scholar 

  • Ménard C, Saussier S (2000) Contractual choice and performance. The case of water supply in France. Revue d’économie industrielle 92:385–404

    Article  Google Scholar 

  • Menozzi A, Gutiérrez Urtiaga M, Vannoni D (2011) Board composition, political connections, and performance in state-owned enterprises. Ind Corp Change 21(3):671–698

    Article  Google Scholar 

  • Mizutani F, Urakami T (2001) Identifying network density and scale economies for Japanese water supply organizations. Pap Reg Sci 80(2):211–230

    Article  Google Scholar 

  • Nauges C, Van den Berg C (2008) Economies of density, scale and scope in the water supply and sewerage sector: a study of four developing and transition economies. J Regul Econ 34(2):144–163

    Article  Google Scholar 

  • Niessen A, Ruenzi S (2010) Political connectedness and firm performance. Evidence from Germany. Ger Econ Rev 11(4):441–464

    Article  Google Scholar 

  • Peda P, Grossi G, Liik M (2013) Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities. J Manage Gov 17(2):237–259

    Article  Google Scholar 

  • Picazo-Tadeo AJ, Gonzàlez-Gòmez F, Sàez-Fernàndez FJ (2009a) Accounting for operating environments in measuring water utilities’ managerial efficiency. Serv Ind J 29:761–773

    Article  Google Scholar 

  • Picazo-Tadeo AJ, Sàez-Fernàndez FJ, Gonzàlez-Gòmez F (2009b) The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies. Appl Econ 41:615–628

    Article  Google Scholar 

  • Ray SC (1991) Resource-use efficiency in public schools: a study of Connecticut data. Manage Sci 37:1620–1628

    Article  Google Scholar 

  • Renzetti S, Dupont D (2009) Measuring the technical efficiency of municipal water suppliers: the role of environmental factors. Land Econ 85(4):627–636

    Google Scholar 

  • Romano G, Guerrini A (2011) Measuring and comparing the efficiency of water utility companies: a data envelopment analysis approach. Utilities Policy 19(3):202–209

    Article  Google Scholar 

  • Romano G, Guerrini A, Vernizzi S (2013) Ownership, investment policies and funding choices of Italian water utilities: an empirical analysis. Water Resour Manage 27(9):3409–3419

    Article  Google Scholar 

  • Rossi D, Young E, Epp D (1979) The cost impact of joint treatment of domestic and poultry processing wastewaters. Land Econ 55(4):444–459

    Article  Google Scholar 

  • Saal D, Parker D (2000) The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model. Manag Decis Econ 21(6):253–268

    Article  Google Scholar 

  • Saal D, Parker D, Weyman-Jones T (2007) Determining the contribution of technical efficiency and scale change to productivity growth in the privatized English and Welsh water and sewerage industry: 1985–2000. J Prod Anal 28:127–139

    Article  Google Scholar 

  • Saal D, Arocena P, Maziotis A, Triebs T (2013) Scale and scope economies and the efficient vertical and horizontal configuration of the water industry: a survey of the literature. Rev Netw Econ 12(1):93–129

    Article  Google Scholar 

  • Sauer J (2005) Economies of scale and firm size optimum in rural water supply. Water Resour Res 41:1–13

    Google Scholar 

  • Seroa da Motta R, Moreira A (2006) Efficiency and regulation in the sanitation sector in Brazil. Utilities Policy 14(3):185–195

    Article  Google Scholar 

  • Sexton TR, Sleeper S, Taggart RE Jr (1994) Improving pupil transportation in North Carolina. Interfaces 24:87–103

    Article  Google Scholar 

  • Shaoul J (1997) A critical financial analysis of the performance of privatize industries: the case of the water industry in England and Wales. Crit Perspect Account 8:479–505

    Article  Google Scholar 

  • Shih JS, Harrington W, Pizer WA, Gillingham K (2006) Economies of scale in community water systems. J Am Water Works Assoc 98(9):100–108

    Google Scholar 

  • Shleifer A, Vishny RW (1994) Politicians and Firms. Quart J Econ 109:995–1025

    Article  Google Scholar 

  • Shleifer A (1998) State versus private ownership. J Econ Perspect 12:133–150

    Article  Google Scholar 

  • Simar L, Wilson PW (2004) Performance of the bootstrap for DEA estimators and iterating the principle. In: Cooper WW, Seiford LM, Zhu J (eds) Handbook on data envelopment analysis. Kluwer Academic Publishers, Boston, pp 265–298 (Chapter 10)

    Google Scholar 

  • Simar L, Wilson PW (2007) Estimation and inference in two-sage semi-parametric models of production processes. J Econometrics 136:31–64

    Article  Google Scholar 

  • Sørensen RJ (2007) Does dispersed ownership impair efficiency? The case of refuse collection in Norway. Public Adm 85(4):1045–1058

    Article  Google Scholar 

  • Stanton KR (2002) Trends in relationship lending and factors affecting relationship lending efficiency. J Bank Financ 26:127–152

    Article  Google Scholar 

  • Stone, Webster Consultants for OFWAT (2004) Investigation into evidence for economies of scale in the water and sewerage industry in England and Wales. Final report

    Google Scholar 

  • Torres M, Morrison-Paul CJ (2006) Driving forces for consolidation or fragmentation of the US water utility industry: a cost function approach with endogenous output. J Urban Econ 59:104–120

    Article  Google Scholar 

  • Tupper H, Resende M (2004) Efficiency and regulatory issues in the Brazilian water and sewerage sector: an empirical study. Utilities Policy 12:29–40

    Article  Google Scholar 

  • Tynan N, Kingdom B (2005) Optimal size for utilities? Public policy for the private sector, World Bank Note 283

    Google Scholar 

  • Vinnari EM, Hukka JJ (2007) Great expectations, tiny benefits e Decision-making in the privatization of Tallinn water. Utilities Policy 15:78–85

    Article  Google Scholar 

  • Yamout G, Jamali D (2007) A critical assessment of a proposed public private partnership (PPP) for the management of water services in Lebanon. Water Resour Manage 21(3):6

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Andrea Guerrini .

Rights and permissions

Reprints and permissions

Copyright information

© 2014 The Author(s)

About this chapter

Cite this chapter

Guerrini, A., Romano, G. (2014). The Determinants of Water Utilities Performance. In: Water Management in Italy. SpringerBriefs in Water Science and Technology. Springer, Cham. https://doi.org/10.1007/978-3-319-07818-2_3

Download citation

Publish with us

Policies and ethics