Regulatory incentives to water losses reduction: the case of England and Wales

Abstract

In recent years, England and Wales have suffered droughts. This unusual situation defies the common belief that the British climate provides abundant water resources and has prompted the regulatory authorities to impose bans on superfluous uses of water. Furthermore, a large percentage of households in England consume unmetered water which is detrimental to water saving efforts. Given this context, we estimate the shadow price of water using a panel data from reports published by the Office of Water Services (Ofwat) for the period 1996 to 2010 (three regulatory periods). These shadow prices are derived from a parametric multi-output multi-input input distance function characterized by a translog technology. Following O'Donnell and Coelli (2005), we use a Bayesian econometric framework in order to impose regularity -monotonicity and curvature -conditions on a high-flexible technology. Consequently, our results can be interpreted at the firm level without requiring the need to base analysis on the averages. Our estimations offer guidance for regulation purposes and provide an assessment of how the water supply companies deal with water losses under each regulatory period. The relevance of the study is quite general as water scarcity is a problem that will become more important with population growth and the impact of climate change. 2

Assesing the influence of environmental variables on the performance of water companies: An efficiency analysis tree approach

“…Hence, we included several operating characteristics that we were related to the quality of the network, source of raw water, and density of the areas served by water utilities. The percentage of water leakage was used to reflect the quality of network (Brea-Solis et al, 2017). The percentage of raw water collected from rivers and reservoirs was used to indicate the source of raw water.…”

Eco-Efficiency of the English and Welsh Water Companies: A Cross Performance Assessment

“…Three desirable outputs were selected for the purposes of our study. The first desirable output was the volume of water delivered measured in thousands of cubic meters per year [ 13 , 50 , 51 ]. The second desirable output was the number of water-connected properties measured in thousands per year [ 48 , 52 ].…”

“…These were selected to capture the different operating characteristics of the companies, such as topography, treatment complexity, and population density [ 4 ]. Thus, the percentages of water taken from boreholes and rivers, and average pumping head capture topography [ 49 , 50 , 59 , 60 ]. The more water is abstracted from rivers or boreholes, the higher the pumping (energy) requirements could be.…”

Comparing Operational, Environmental and Eco-Efficiency of Water Companies in England and Wales

“…We used the annual volume of drinking water delivered measured in megalitres [55][56][57][58]. The second desirable output was defined as the annual number of water connected properties measured in thousands [59,60]. The undesirable output was presented by the GHG emissions from the process of water services [4,10,[61][62][63][64].…”

“…Consequently, we selected the following variables which were based on topography, water treatment complexity and density [41,[66][67][68]. The variables used to capture topography included: (i) the water taken from boreholes measured in percentage [10,60,69]; (ii) the water taken from rivers measured in percentage [10,41,70], (iii) average pumping head as a proxy for the energy requirements to supply water to end-users [10,41,60]. We included two variables to capture treatment complexity: (iv) the water that gets advanced treatment measured in percentage (for more details please see [66][67][68]71] and (v) the number of treatment works required to treat water that comes from surface [41,71,72].…”