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The Performance of German Water Utilities: A (Semi)-Parametric Analysis

36 Pages Posted: 22 Apr 2011  

Michael Zschille

German Institute for Economic Research (DIW Berlin)

Matthias Walter

University of Augsburg

Date Written: April 2011

Abstract

Germany's water supply industry is characterized by a multitude of utilities and widely diverging prices, possibly resulting from structural differences beyond the control of firms' management, but also from inefficiencies. In this article we use Data Envelopment Analysis and Stochastic Frontier Analysis to determine the utilities' technical efficiency scores based on cross-sectional data from 373 public and private water utilities in 2006. We find large differences in technical efficiency scores even after accounting for significant structural variables like network density, share of groundwater usage and water losses.

Keywords: Water supply, technical efficiency, data envelopment analysis, stochastic frontier analysis, structural variables, bootstrapped truncated regression

JEL Classification: L95, C14, Q25

Suggested Citation

Zschille, Michael and Walter, Matthias, The Performance of German Water Utilities: A (Semi)-Parametric Analysis (April 2011). DIW Berlin Discussion Paper No. 1118. Available at SSRN: https://ssrn.com/abstract=1815137 or http://dx.doi.org/10.2139/ssrn.1815137

Michael Zschille (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Matthias Walter

University of Augsburg ( email )

Universit├Ątsstr. 2
Augsburg, 86159
Germany

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