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

Tiago B Cetrulo1, Diogo F C Ferreira2, Rui C Marques2

  • 1Department of Hydraulics and Sanitation, University of São Paulo, Brazil.

Journal of Environmental Management
|May 9, 2020
PubMed
Summary

Choosing the right variables and methods is crucial for accurately measuring water utility performance, especially in developing countries aiming for universal access. Traditional models may penalize utilities investing in universal access, misrepresenting their true efficiency.

Keywords:
BenchmarkingData envelopment analysisHuman right to waterInequality in water accessWater losses

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Area of Science:

  • Environmental Science
  • Public Policy
  • Economics

Background:

  • Water utility performance studies using Data Envelopment Analysis (DEA) are sensitive to methodological choices and variables.
  • Developing countries face unique challenges in achieving universal access to water services.
  • Existing DEA models may not adequately capture the complexities of service provision in developing contexts.

Purpose of the Study:

  • To investigate appropriate approaches and variables for assessing water utility performance in developing countries.
  • To identify a Data Envelopment Analysis (DEA) model suitable for achieving universal access to water.
  • To compare traditional DEA models with those incorporating service quality and the human right to water.

Main Methods:

  • Comparison of three Data Envelopment Analysis (DEA) models: traditional variables, service quality variables, and service quality plus human right to water.
  • Evaluation of two methodological approaches: variable returns to scale DEA and slack-based directional distance function.
  • Case study analysis of 77 Brazilian water utilities.

Main Results:

  • Incorporating universal access objectives significantly alters water utility efficiency scores.
  • Traditional DEA models may penalize utilities investing in universal access by focusing on expenses without capturing outcomes.
  • The choice of variables and methodological approach substantially impacts the interpretation of DEA results.

Conclusions:

  • The selection of variables and methodological approaches is critical for accurate water utility performance analysis.
  • Models for developing countries must account for universal access goals to avoid misrepresenting utility efficiency.
  • Accurate performance measurement is essential for effective policy and investment in water services.