Abstract
An important part of the environmental degradation is caused by the discharge of untreated or mistreated wastewater. Since centralized treatment systems have proved to be inefficient, tackling the environmental issues requires a regional approach. Wastewater treatment plants (WWTPs) mitigate environmental impacts and contribute to financial savings of other firms. However, the literature evaluating WWTPs’ financial performance and economic sustainability does not abound. Thus, this paper analyses the economic sustainability of wastewater treatment companies in Portugal by NUTS II regions, in 2016-2019. Using firms’ financial reports from SABI, results show that, by and large, firms in the Centre region display higher financial performances when compared to other regions. These results can be used to investigate whether firms in the central region are implementing the best practices regarding management and technology. Results can also foster enhancements in the governance of regulated utilities.
Highlights
Wastewater treatment plants (WWTPs) perform the important task of mitigating environmental impacts caused by organizations and households at the end-of-pipe
The worst performances are shown in Azores in terms of financial situation (ROE= -56) of firms and Alentejo (ROA= -186) when evaluating the economic performance
Financial autonomy decreased from 57% to 52%, which means that nearly half (48%) of the firms' assets are financed by external funds
Summary
Wastewater treatment plants (WWTPs) perform the important task of mitigating environmental impacts caused by organizations and households at the end-of-pipe. The literature so far falls short on evaluating these companies own financial performance and economic sustainability. Evaluating the economic sustainability of any business is important because it affects firm survival in the market. The purpose of this paper is to analyse the economic sustainability of wastewater treatment companies in Portugal by NUTS II regions to assess the region with the best performance and provide regional policy implications. For this purpose, the SABI database provides financial reports for 55 firms, during 2016-2019.
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