Disentangling the cost efficiency of jointly provided water and wastewater services

Providing operators with objective incentives for cost efficiency and continuous improvement in the provision of public services are major concerns for regulators. Measuring efficiency empirically is complex and this complexity is accentuated when the same operator is responsible for delivering more than one service (e.g. in order to explore potential economies of scope). Based on a sample of operators that provide water and wastewater services, this paper uses a shared input data envelopment analysis model to measure separately the efficiency of each service. The results show that a single measure may not provide enough information for monitoring multi-utilities. Together with other indicators, the proposed model can assist decision-makers in prioritizing efforts to improve overall efficiency.