How does the operational environment affect utility performance? A parametric study on the waste sector

The urban waste treatment service has been a sensitive issue for the Portuguese governments in the past decades. Among other measures, the environmental and economical issues led to the creation of a sector-specific regulator for the waste sector. Considering this atypical circumstance in the worldwide context it is worth studying the external factors that may influence the waste utilities efficiency along with the regulation role. In this regard, we applied the parametric approach of the stochastic frontier analysis to evaluate the influence of the operational environment on the urban waste services performance. The sample included 32 utilities responsible for the waste treatment service in Portugal. The results showed a negative influence of factors, such as the existence of regulation, the distance to the waste treatment facilities and the provision of other services on utility performance. We also observed some benefits from privatisation and incineration, although these options have some particular features.