Abstract
Key performance indicators (KPI) are widely used tools to evaluate the economic (in)efficiency of services, including the ones devoted to urban solid waste management. Regulatory exercises are, then, mostly based on the outputs from KPIs, raising some questions about their validity. In theory, other more appropriate tools could be used to estimate those efficiency levels. This study evaluates the economic inefficiency level of urban solid waste management services in Portugal (2010–2017) through the adoption of partial frontier benchmarking models (order-m) coupled with weight restrictions. That way, the constructed model can evaluate the performance of those services under some regulatory and sustainability requirements. Then, estimated efficiency levels and some common KPIs are compared in order to understand if the latter are sufficient to explain the economic efficiency. The novelty of this research lies in two main aspects: (a) the utilization of a robust order-α model coupled with weight restrictions linked to regulatory and sustainability impositions to estimate efficiency, and (b) the comparison of economic efficiency and some commonly used KPIs, including waste fractions and recycling rate. Results point towards efficiency distributions that follow Weibull functions, with the average close to 50%; thus, nearly half of the resources have been well spent in municipal solid waste management services since 2010 onwards. Nonetheless, in an efficient system, that average would be close to 100%. Additionally, the considered management related KPIs do not exhibit any relationship with economic efficiency, which means that their interpretation and usefulness for regulatory issues are both limited and should be used carefully. In other words, those KPIs are not good performance drivers and carry no capacity to explain economic (in)efficiency in urban solid waste management services.
Highlights
To the extent that society consumes more and more material and requires more resources, it unequivocally generates more waste [1,2]
The Municipal Solid Waste (MSW) of different operators is approximately changeless; Performance regarding the MSW management is not likely to depend on time; Because of Result 2, no productivity gap is expected due to the considerable time lag; Because of Result 3, the samples associated with each year can be pooled together to construct a common frontier to estimate the economic efficiency—by enlarging the sample, we mitigated the dimensionality problems related to non-parametric benchmarking models
Measuring the economic efficiency of MSW services is paramount for sustainability issues
Summary
To the extent that society consumes more and more material and requires more resources, it unequivocally generates more waste [1,2]. Instead of imposing a functional form for the frontier, this study focuses on non-parametric models Both DEA and FDH estimate full frontiers, which envelop the entire sample and, because of that, are sensitive to outliers and extremes. It is often desirable to include restrictions in benchmarking models to impose regulatory and sustainability requirements, such as the reduction of MSW disposable in the landfill and simultaneous increase of recycling and valorization of waste. Between two MSW services collecting the Sustainability 2020, 12, 4170 same quantity of MSW and spending the exact same money for that, the one recycling and/or valorizing more waste compared to landfilled waste is more efficient The introduction of these regulatory and sustainability requirements can be made through weight restrictions in order-α, demanding for a complex mathematical model based on Monte-Carlo algorithms. It is expected that our results will help regulators and policy-makers to design better strategies and policies to enhance the waste sector and its sustainability
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