✦ LIBER ✦

Efficiency and regulatory issues in the Brazilian water and sewage sector: an empirical study

✍ Scribed by Henrique Cesar Tupper; Marcelo Resende

Publisher: Elsevier Science
Year: 2004
Tongue: English
Weight: 197 KB
Volume: 12
Category: Article
ISSN: 0957-1787
DOI: 10.1016/j.jup.2003.11.001

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✦ Synopsis

The paper quantifies the relative efficiencies of state water and sewage companies in Brazil during the 1996-2000 period. Relative efficiency scores obtained by Data Envelopment Analysis-DEA indicate that sub-optimal performance is salient for some utilities. In order to control for regional heterogeneities, the complementary between DEA and econometric procedures is explored as one controls for network density and water loss factors. The procedure leads to distinct adjusted relative efficiency scores that are considered in the construction of a linear reimbursement rule that constitutes a yardstick mechanism. The comparison of actual costs and reimbursed values defined by the comparative efficiency analysis makes salient different patterns across the different utilities and the possibility of important cost savings. The feasibility of the actual implementation is, however, constrained by the current regulatory framework for the Brazilian water and sewage sector.

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