A Two-Phase Method to Assess the Sustainability of Water Companies

Abstract

Composite indicators are becoming more relevant for evaluating the performance of water companies from a holistic perspective. Some of them are related with economic aspects, and others focus on social and environmental features. Consequently, a multidimensional evaluation is necessary for handling the great amount of information provided by multiple single indicators of a different nature. This paper presents a two-phase approach to evaluate the sustainability of water companies. First, a partial composite indicator for each dimension (social, environmental, economic) is obtained using multi-criteria decision making (MCDM). Then, a global indicator is obtained, in terms of the values reached in the previous stage for every partial indicator, by means an optimization problem rooted in data envelopment analysis (DEA). Our proposal offers the possibility of analyzing the performance of each water company under each dimension that characterizes the concept of sustainability, as well as a joint assessment including all the dimensions, facilitating the decision-making process. We apply it to evaluate the sustainability of 163 Portuguese water companies. The results show the strengths and weaknesses of each unit and serve as a guideline to decision-makers on the aspects for improving the performance of water utilities.

A composite indicator for measuring the environmental performance of water, wastewater, and solid waste utilities

“…The minimum value of 0.5819 together with the first quartile of 0.6614 denotes the widespread presence of poorly performing operators, i.e., operators which are outperformed despite being evaluated in the most favorable way along different measures of environmental pressure. Previous literature had already detected the need for a performance enhancement of the Portuguese water and waste sectors (see among others Ferreira da Cruz et al, 2012;Marques et al, 2015;Molinos-Senante et al, 2016;Pérez et al, 2019). Our findings complemented this evidence by giving specific emphasis on the environmental sustainability issue and particularly from an environmental pressure perspective.…”

A composite indicator index as a proxy for measuring the quality of water supply as perceived by users for urban water services

“…Numerous methods can be used to create a CI, provided that the OECD standards (Joint Research Centre, 2008) are met. These methods include the analytic hierarchy process (Molinos-Senante et al, 2014;Sun et al, 2020), TOPSIS (Fu et al, 2020), multi-criteria analysis (El Gibari et al, 2018;Mao et al, 2019;Pérez et al, 2019;Cabello et al, 2020), and methods derived from any of these approaches, such as MRP-WSCI, which is based on multi-criteria analysis (Ruiz et al, 2020) and data envelopment analysis (DEA). More specifically, DEA has been used to create CIs for evaluation in different sectors: services in airports (Baltazar et al, 2014), suppliers' green performance (Dobos and Vörösmarty, 2014), tourism (Gómez-Vega and Picazo-Tadeo, 2019), and corporate social responsibility (Staessens et al, 2019;Aparicio et al, 2020).…”

“…In fact, in the literature, the DEA-MCDA model is a commonly used method that has been applied for a variety of purposes, such as to construct the Human Development Index (Hatefi and Torabi, 2010) and the Sustainable Energy Index (Hatefi and Torabi, 2010;Wang, 2015), to minimize total costs in assembly lines (Zahiri et al, 2016), to evaluate the efficiency of airports (Jardim et al, 2015), and to manage hazardous waste (Ali et al, 2015). In the water sector, the MCDA-DEA approach has been applied to evaluate the sustainability of water companies (Pérez et al, 2019). Finally, a notable study using MCDA and DEA together is the study by Reig (2015), who built a CI of quality of life to compare the quality of urban life in 43 cities belonging to the Metropolitan Area of Valencia (the same geographical area as in this study).…”

“…In the water sector, there are specific water CIs such as the Water Poverty Index (Sullivan, 2002;Sullivan et al, 2006), the Canadian Water Sustainability Index (Policy Research Initiative, 2007), the Watershed Sustainability Index (Chaves and Alipaz, 2007), and the West Java Water Sustainability Index (Juwana et al, 2010). There are also CIs that evaluate the performance of water companies under each dimension (social, environmental, and economic) of sustainability (Pérez et al, 2019). CIs have also been used to evaluate the sustainability of activities related to wastewater treatment (Molinos-Senante et al, 2014;Sabia et al, 2016;Sun et al, 2020).…”