Benchmarking of North Indian urban water utilities

Abstract

PurposeThe purpose of this paper is to develop a suitable benchmarking framework that encompasses multiple criteria of sustainable water supply services for assessing the performance of select North Indian urban water utilities and also to arrive at potential for input reductions (or efficient input levels).Design/methodology/approachThe study considers 35 North Indian urban water utilities pertaining to two union territories (Chandigarh and Delhi) and three states (Haryana, Punjab and Uttar Pradesh) for sustainability‐based performance assessment using input‐oriented variable returns to scale data envelopment analysis (DEA) model. Important criteria considered for sustainable water supply services are service sufficiency, service reliability, resource conservation, staff rationalization, and business viability which in turn address the key sustainability dimensions (social, environmental and financial).FindingsThe approach when applied to a sample of 35 North Indian urban water utilities shows low‐performance levels for most of the utilities, with significant scope for reduction in operation and maintenance expenditure, staff size and water losses. State/UT‐wise analysis of sustainability‐based average efficiency presents the highest score for Chandigarh and the least score for Haryana, whereas the rest of the three states/UT score in between them.Research limitations/implicationsLimited data availability has constrained the incorporation of other sustainability criteria (such as services to the poor, tariff design, customer services, revenue functions, etc.) for efficiency analysis of urban water utilities. Also, estimation of efficiency scores does not encompass the effect of exogenous environmental factors which are beyond utilities' managerial control (such as topography, population density, water source, ownership status, etc.).Practical implicationsThis framework would be useful for the regulator or operator of the facility to rank the utilities and devise performance‐linked incentive mechanism or price cap regulation.Originality/valueThis paper is a significant departure from the other international benchmarking initiatives/studies as it develops a holistic framework for benchmarking in the water sector that encompasses multiple criteria of sustainable water supply services using DEA as a tool.