Efficiency and Productivity of Water Utilities in Hyogo Prefecture

Abstract

This study measures the productivity of water utilities in Hyogo Prefecture during 1992 to 1998. At first, partial productivities are measured. The results show that labor productivity increases, while capital productivity decreases dramatically. The reason of decreasing of capital productivity is that capital grows up sharply, while output fluctuates. And other productivity decreases until 1994 and fluctuates after 1994.Next, total factor productivity is measured by the Malmquist productivity index. In order to consider technical efficiency change, this study adopts the index developed by Fare et al. They define the Malmquist productivity index as the geometric mean of the efficiency change and the technical change. The results show that technical efficiency decreases and technical change decreases, and TPF change decreases.Then the Malmquist productivity index is measured in the case that technical change does not decrease, because decreasing of technical change is inappropriate for the circumstances of water utilities. The results shows that TFP change decreases until 1994 and it fluctuates from 1994 to 1998 because of decreasing of technical efficiency and increasing of technical change.