Nonparametric models of technical efficiency in urban water utilities
This chapter models the technical operating and capital efficiency of major Australian urban water utilities using data envelopment analysis. We specify different inputs and outputs for each measure of efficiency and make allowance for the inclusion of uncontrollable contextual inputs thought to impact upon the observed efficiency of utilities but largely outside their control. The results indicate that a relatively high level of relative operating and capital efficiency prevails across the sector. Measured efficiency is even higher after we allow for the scale of operations. However, a number of utilities exhibit inefficient behavior in operations and, to a lesser extent, in capital activities, and we are able to provide target inputs, outputs, and sets of best-practice peers that these utilities can focus on when seeking to improve their performance.
Economic and Financial Modelling of Markets, Institutions and Instruments
Environment and Resource Economics