Productivity and efficiency in the water industry

Over the past twenty years there has been increasing interest in the productivity and efficiency of, and the optimal structures for, the water supply and wastewater industries. In part this interest has manifested itself in the increased use of numerous statistical techniques to determine the productivity and efficiency of the water sector in a variety of countries. The purpose of this paper is threefold. First it briefly reviews the various measures that have been used to gauge the levels of productivity and efficiency in the water sector, with particular reference to input and output data requirements of these measures. Second it summarises the key structural findings that have been determined from this research, particularly with respect to economies of scale and scope, public versus private ownership and the impact of regulation. Third, it considers potential areas for potential future research, such as the effect of environmental management activities (including water conservation) and regulation on productivity and efficiency, the role of wastewater as a potential source of potable or ‘fit-for-purpose’ water and the relationship between water supply and urban planning.