Tariffs and efficient performance by water suppliers: an empirical approach

Abstract

Water leaks are an environmental and sustainable issue as well as an economic issue. The objective of this paper is to analyse the efficiency of a sample of Spanish urban water systems by considering water leaks in a network as undesirable outputs. Data envelopment analysis (DEA), an analytical benchmarking methodology, is used to calculate technical and economic efficiency. We also discuss the possible relationship between efficiency and tariffs charged to users. Results show that the possibilities for reducing water leaks in networks are high, thus demonstrating that there is room for savings from an economic and environmental point of view. The assessment of efficiency performance could usefully assist local authorities and water suppliers in the task of optimising urban water management.

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