The performance of water utilities in Jordan

Abstract

This paper aims to measure the relative performance of Jordan's water utilities for water sector (WS) and wastewater sector (WWS), and to investigate the major factors behind their inefficiencies. DEA (non-parametric method) and Tobit model (parametric method) were used at two stages. At the first stage DEA was used to evaluate the utilities' efficiency and to investigate the utilities' scale effect on efficiency. At the second stage Tobit model (regression) is applied to determine the impact of the non-controllable factors on utilities' inefficiencies where the efficiency score is the dependent variable in the regression. The results of DEA showed that there is a potential to reduce inputs level: water supply and operational expense (OPEX) for WS, and treated wastewater and OPEX for WWS, by around 15-20 and 23-27%, respectively. Aqaba and Jarash utilities are the most efficient utilities in the WS, while it is Amman utility in the WWS. The utility size has relatively moderate effect on the relative performance. It is concluded that the medium utility size for WS and large utility size for WWS is the most appropriate. Tobit model results indicate that commercialization activities have a clear positive impact on efficiency improvement for both sectors.