Is DEA useful in the regulation of water utilities? A dynamic efficiency evaluation

Abstract

The discussion about public utilities efficiency and its management has become increasingly important in the last decades. We focus on the distribution of water, which is one of the most important natural resources (Marshall, 1879). This research shows the relationship between efficiency and institutional factors such as management system. For this purpose, we have data about some Spanish water utilities under different provision systems, during the 1985-2000 period. Using Data Envelopment Analysis (DEA), we estimate potential cost savings in this context. We will extend the results obtained by Thanassoulis (2000), in attempt to guide the regulation of this sector.