Network DEA models for assessing urban water utility efficiency

Abstract Urban water utilities (UWUs) operate in environments without competitors; regulators use targets to monitor UWU operations, with the expectation that the current year's performance should be equal to or better than the previous year's performance. This paper presents a performance analysis of UWUs using data envelopment analysis (DEA). Standard DEA for relative performance evaluation has shortcomings and does not allow for setting clear improvement guidelines. For this reason, network DEA models are proposed to overcome the problem. This novel benchmarking technique produces an efficiency value for a UWU in a competitive scenario with other UWUs. The technique allows decision-makers to sort out UWUs with the best and worst management environments and set clear performance improvement guidelines.

[1]  Robabeh Eslami,et al.  Managerial goals directed benchmarking for organised efficiency in data envelopment analysis , 2016, Int. J. Inf. Decis. Sci..

[2]  Chiang Kao,et al.  Efficiency measurement for parallel production systems , 2009, Eur. J. Oper. Res..

[3]  Chiang Kao,et al.  Multiplicative aggregation of division efficiencies in network data envelopment analysis , 2018, Eur. J. Oper. Res..

[4]  Emmanuel Thanassoulis,et al.  Measuring Efficiency Through Data Envelopment Analysis , 2018 .

[5]  Hau L. Lee,et al.  Socially and Environmentally Responsible Value Chain Innovations: New Operations Management Research Opportunities , 2017, Manag. Sci..

[6]  Kaoru Tone,et al.  Network DEA: A slacks-based measure approach , 2009, Eur. J. Oper. Res..

[7]  A. Charnes,et al.  Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis , 1984 .

[8]  Peter Bogetoft,et al.  DEA-based yardstick competition: The optimality of best practice regulation , 1997, Ann. Oper. Res..

[9]  Chiang Kao,et al.  Efficiency decomposition for general multi-stage systems in data envelopment analysis , 2014, Eur. J. Oper. Res..

[10]  Atul K. Mittal,et al.  Efficient water utilities: use of performance indicator system and data envelopment analysis , 2014 .

[11]  Pedro Simões,et al.  Raising the bar: The role of governance in performance assessments , 2017 .

[12]  Dennis Hilgers,et al.  Trajectories of efficiency measurement: A bibliometric analysis of DEA and SFA , 2015, Eur. J. Oper. Res..

[13]  Silver Mugisha.  Utility Benchmarking and Regulation in Developing Countries: Practical Application of Performance Monitoring and Incentives , 2011 .

[14]  Gary R. Reeves,et al.  A multiple criteria approach to data envelopment analysis , 1999, Eur. J. Oper. Res..

[15]  Sungjin Park,et al.  Does more competition result in better port performance? , 2018 .

[16]  Paul Ingram,et al.  The Transfer of Experience in Groups of Organizations: Implications for Performance and Competition , 2002, Manag. Sci..

[17]  Per J. Agrell,et al.  DEA and Dynamic Yardstick Competition in Scandinavian Electricity Distribution , 2005 .

[18]  Kaoru Tone,et al.  Slacks-Based Network DEA , 2014 .

[19]  Pedro Simões,et al.  Water services performance: do operational environment and quality factors count? , 2017 .

[20]  Abraham Charnes,et al.  Measuring the efficiency of decision making units , 1978 .

[21]  John S. Liu,et al.  A survey of DEA applications , 2013 .

[22]  Dag Morten Dalen,et al.  Yardstick Competition and Investment Incentives , 1998 .

[23]  Ali Emrouznejad,et al.  A survey and analysis of the first 40 years of scholarly literature in DEA: 1978–2016 , 2018 .

[24]  Casey Furlong,et al.  A categorisation system for Australia's Integrated Urban Water Management plans , 2017 .

[25]  Hirofumi Fukuyama,et al.  Variations effect of intermediate products on the second stage in two-stage processes , 2019 .

[26]  Ali Emrouznejad,et al.  DEA models for ratio data:convexity consideration , 2009 .

[27]  Rolf Färe,et al.  Network DEA II , 2014 .

[28]  Yongjun Li,et al.  DEA Models for Extended Two-Stage Network Structures , 2012 .

[29]  Andrew C. Worthington,et al.  A review of frontier approaches to efficiency and productivity measurement in urban water utilities , 2014 .

[30]  Warren Brettenny,et al.  Efficiency evaluation of urban and rural municipal water service authorities in South Africa: A data envelopment analysis approach , 2016 .

[31]  Rui Cunha Marques,et al.  A yardstick competition model for Portuguese water and sewerage services regulation , 2006 .

[32]  Alexandros Maziotis,et al.  Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach , 2017, Water Resources Management.

[33]  T.-S. Chang,et al.  Optimal system design series-network DEA models , 2011, J. Oper. Res. Soc..

[34]  Kuo-Tai Cheng,et al.  How transparency and accountability matter in regulating the Taiwan Water Supply Corporation , 2018, Utilities Policy.

[35]  Giulia Romano,et al.  Measuring and comparing the efficiency of water utility companies: A data envelopment analysis approach , 2011 .