The most efficient clusters of Brazilian water companies

Abstract

Usually water utilities provide their services under natural monopoly, with few incentives to become efficient, therefore affecting customers in the form of expensive tariffs. Hence, it is extremely important to find out the sources of inefficiency. The present study aims to identify the most efficient water utility groups in Brazil. For this purpose, a robust non-parametric method was applied. The results show that the utilities that provide both drinking water and wastewater services, the local utilities, and the utilities with private participation are more efficient. Furthermore, this study proved that the utilities were more efficient before the regulatory framework had been implemented.

Public versus private water delivery, remunicipalization and water tariffs

“…Indeed, the lack of superiority demonstrated by private management has been quite evident since the very first empirical studies analyzing the productivity of water by management type, as reported and discussed in Bel and Warner (2008) and statistically analyzed in Bel, Fageda and Warner (2010). Note, however, that the performance of public management in developing countries appears to be slightly worse than in developed countries, compared to private management (Carvalho, Pedro and Marques, 2015;Cetrulo, Marques and Malheiros, 2019).…”

Technical and Scale Efficiency of the Brazilian Municipalities’ Water and Sanitation Services: A Two-Stage Data Envelopment Analysis

“…Third, and finally, state/regional level entities provide WSSs to their respective state and are the main WSS providers in the country, providing 78% of water services and 55% of sanitation services [7], after their creation in the 1970s in search for economies of scale. Previous studies have already pointed towards the higher efficiency of local-level WSS entities [8,9,17,18], although Sabbioni [19] showed that state/regional-level WSS entities have a higher efficiency due to the presence of economies of scale.…”

“…In fact, in recent decades, benchmarking studies in WSSs have been a popular trend in the literature, with most of them using Data Envelopment Analysis (DEA) as an efficiency measurement tool [22]. Such works include, e.g., De Witte and Marques [22] in designing performance incentives in the drinking water sector internationally, Carvalho et al [18] in identifying the most efficient clusters of Brazilian water companies, Pinto et al [23] in assessing the influence of the operational environment on the performance of Portuguese water utilities, Molinos-Senante and Maziotis [24] in understanding the influence of exogenous and quality of service variables on the performance of water companies in England and Wales, Walker et al [25] in studying the economic and environmental efficiency of water companies in the United Kingdom and the Republic of Ireland, Cetrulo et al [26] in analysing the performance of Brazilian water utilities, Henriques et al [20] in benchmarking the quality of service of wastewater operators in Portugal, lo Storto [14] in measuring the efficiency of urban integrated water services in Italy, Maziotis et al [15] in understanding the impact of external costs of unplanned supply interruptions on the efficiency of Chilean water companies, Molinos-Senante et al [27] in evaluating trends in the performance of Chilean water companies, Mocholi-Arce et al [28] in assessing the performance of English and Welsh water companies, Sala-Garrido et al [29] in proposing a composite indicator to assess the quality of service of Chilean water companies, and Salazar-Adams [30] in estimating the efficiency of post-reform water utilities in Mexico. A useful bibliometric analysis on the last twenty years of water utility benchmarking can be found in the work of Goh and See [31].…”

“…Indeed, after the seminal work of Tupper and Resende [35] on the efficiency and regulatory issues in the Brazilian WSSs, several other publications gradually surfaced, namely, Seroa da Motta and Moreira [9], Ferro et al [17], Carvalho et al [18], Carvalho and Sampaio [8], Barbosa et al [11], Cavalcanti et al [36], Cetrulo et al [26], Ferreira et al [21], and Tourinho et al [16]. Nevertheless, to the best of the authors' knowledge, there are no studies in the literature that are focused on investigating the existence of (dis)economies of scale in the Brazilian WSSs.…”

Operating Cost Coverage vs. Water Utility Complaints

“…However, when utilities publicize their data in the form of annual reports or report to a central agency, cross-national comparisons are feasible [19]. One major factor for cross-national [19] and national comparisons is the ownership of the water utilities [20], with private or partially private water utilities showing higher profitability compared to those fully publicly owned [21,22]. The time span is normally within one or a few years due to data limitations [23].…”