Measuring operational and quality-adjusted efficiency of Chilean water companies

Ramon Sala-Garrido,Alexandros Maziotis,Manuel Mocholí-Arce,Maria Molinos-Senante

doi:10.1038/s41545-021-00146-x

Ramon Sala-Garrido, Alexandros Maziotis + Show 2 more

Open Access

https://doi.org/10.1038/s41545-021-00146-x

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Abstract

The path to a sustainable management of the urban water cycle requires the assessment of both operational and quality-adjusted efficiency in a unified manner. This can be done by the use of non-radial Data Envelopment Analysis models. This study used Range Adjusted Measure models to evaluate the operational, quality-adjusted, and operational & quality-adjusted efficiency (O&QAE) scores of the Chilean water industry including water leakage and unplanned interruptions as undesirable outputs. It was found that on average water utilities presented large O&QAE scores over time. The mean O&QAE score was 0.964 which means that water utilities could further reduce costs and undesirable outputs by 3.6% on average, while trying to expand the scale of operation. This finding suggests that excellent quality-adjusted efficiency at an efficient expenditure could be feasible. It was also evidenced that customer density, mixed water resources, and ownership influenced the O&QAE of Chilean water companies.

Highlights

The path to a sustainable and efficient urban water cycle requires the water utilities to make efforts to reduce both production costs and undesirable outputs such as water leakage, carbon emissions, and unplanned water supply interruptions[1]
Previous studies[3,4,5] evidenced that from a customers and regulatory perspective is essential that water utilities improve the quality of service provided by reducing several undesirable outputs such as water leakage and unplanned water supply interruptions that are generated as part of the drinking water production process
The national water regulator established that 15% of water delivered is the maximum percentage of water leakage, average value for the Chilean water industry is around 30%31

Summary

Introduction

The path to a sustainable and efficient urban water cycle requires the water utilities to make efforts to reduce both production costs and undesirable outputs such as water leakage, carbon emissions, and unplanned water supply interruptions[1]. Previous studies[3,4,5] evidenced that from a customers and regulatory perspective is essential that water utilities improve the quality of service provided by reducing several undesirable outputs such as water leakage and unplanned water supply interruptions that are generated as part of the drinking water production process. Dealing with these undesirable products improves the performance of water companies by reducing operational costs and improving the quality of service to customers. The importance of integrated evaluation, operational and quality of service efficiency, in the water industry has received considerable interest among researchers and policy makers as it can lead to a sustainable management of water services[6,7]

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