Water Resources Management

, Volume 27, Issue 9, pp 3409–3419 | Cite as

Ownership, Investment Policies and Funding Choices of Italian Water Utilities: An Empirical Analysis

Article

Abstract

Nowadays, the efficient management of water has become the focus of vast debate, both in the academic literature and in the practical and regulatory field. Due to the growing importance and scarcity of water resources, it has become crucial to better understand how to improve the organizational efficiency of water utilities. By adopting an accounting perspective and using statistical methods, this paper analyzes whether and to what extent investment and financial strategies differ among clusters of water utilities with different ownership structures. The paper focuses on the Italian water industry, a context considered particularly appropriate due to the coexistence of utilities with different ownership structures. The main results of the paper show that ownership affects the level of investment as well as the financial structure and costs of water utilities. The evidence provided by this study should encourage national governments and regulatory authorities to select water utilities with the greatest investment potential measured in terms of financial efficiency and effectiveness.

Keywords

Water management Ownership structure Financial efficiency Investment policies 

References

  1. Abbott M, Cohen B (2009) Productivity and efficiency in the water industry. Util Policy 17:233–244CrossRefGoogle Scholar
  2. Altman EI (1968) Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. J Finance 23(4):589–609CrossRefGoogle Scholar
  3. Bakker K (2003) From public to private to.. public? Re-regulating and mutualising private water supply in England and Wales. Geoforum 34(3):359–374CrossRefGoogle Scholar
  4. Bank of Italy (2011) Relazione annuale sul 2010 Rome. http://www.bancaditalia.it/pubblicazioni/relann/rel10 Accessed 12 August 2012
  5. Barret G, Wallace M (2011) An institutional economics perspective: the impact of water provider privatization on water conservation in England and Australia. Water Resour Manag 25:1325–1340CrossRefGoogle Scholar
  6. Berg SV, Marques RC (2011) Quantitative studies of water and sanitation utilities: a literature survey. Water Policy 13(5):591–606CrossRefGoogle Scholar
  7. Bitrán G, Valenzuela E (2003) Water services in Chile: comparing private and public performance. Public Policy Private Sec 255 March 2003. http://rru.worldbank.org/documents/publicpolicyjournal/255Bitra-031103.pdf Accessed 27 July 2012
  8. Brenneman A, Kerf M (2002) Infrastructure and poverty linkages: a literature review. The World Bank. http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_policy/---invest/documents/publication/wcms_asist_8281.pdf Accessed 9 September 2012
  9. Briceno-Garmendia C, Estache A, Shafik N (2004) Infrastructure services in developing countries: access, quality, costs, and policy reform. World Bank policy research working paper 3468. World Bank, WashingtonCrossRefGoogle Scholar
  10. Brockett PL, Golany B (1996) Using rank statistics for determining programmatic efficiency differences in data envelopment analysis. Manag Sci 42:466–472CrossRefGoogle Scholar
  11. Carrozza C (2011) Italian water services reform from 1994 to 2008: decisional rounds and local modes of governance. Water Policy 13(6):751–768CrossRefGoogle Scholar
  12. Co.n.vi.r.i. (2009) Rapporto sullo Stato dei Servizi Idrici. Comitato per la Vigilanza sull’Uso delle Risorse Idriche, RomaGoogle Scholar
  13. Co.n.vi.r.i. (2011) Rapporto sullo Stato dei Servizi Idrici. Comitato per la Vigilanza sull’Uso delle Risorse Idriche, RomaGoogle Scholar
  14. Cooper WW, Seiford LM, Tone K (2000) Data envelopment analysis: a comprehensive text with models. Applications, references and DEA-solver software. Kluwer Academic Publishers, BostonGoogle Scholar
  15. Cruz N, Marques R, Romano G, Guerrini A (2012) Measuring the efficiency of water utilities: a cross-national comparison between Portugal and Italy. Water Policy 14(5):841–853CrossRefGoogle Scholar
  16. Danesi L, Passarelli M, Peruzzi P (2007) Water services reform in Italy: its impacts on regulation, investment and affordability. Water Policy 9(1):33–54CrossRefGoogle Scholar
  17. Ermano P (2012) Gli investimenti nel servizio idrico in Italia: un’analisi storica, working paper DIES 3/20. http://www.dies.uniud.it/wpdies.html?download=147 Accessed 18 September 2012
  18. Fabbri P, Fraquelli G (2000) Costs and structure of technology in the Italian water industry. Empirica 27(1):65–82CrossRefGoogle Scholar
  19. García-Sánchez IM (2006) Efficiency measurement in Spanish local government: the case of municipal water services. Rev Policy Res 23(2):355–371CrossRefGoogle Scholar
  20. González-Gómez F, García-Rubio MA (2008) Efficiency in the management of urban water services. What have we learned after four decades of research? Hacienda Pública Esp 185:39–67Google Scholar
  21. González-Gómez F, García‐Rubio MA, Alcalá-Olid F, Ortega-Díaz MI (2013) Outsourcing and efficiency in the management of rural water services. Water Resour Manag 27(3):731–747Google Scholar
  22. Guerrini A, Romano G (2012) The process of tariff setting in an unstable legal framework: an Italian case study. Util policy forthcoming, doi:10.1016/j.jup.2012.10.002
  23. Guerrini A, Romano G, Campedelli B (2011) Factors affecting the performance of water utility companies. Int J Public Sect Manag 24(6):543–566CrossRefGoogle Scholar
  24. Hall D (2001) Water privatisation and quality of service. Public Services International Research Unit. University of Greenwich, London. http://www.psiru.org Accessed 31 July 2012
  25. Hall D, Lobina E (2006) Pipe dreams. The failure of the private sector to invest in water services in developing countries. World development movement and public services international/public. Services International Research Unit, London http://www.psiru.org Accessed 31 July 2012
  26. Hall D, Lobina E (2012) Financing water and sanitation: public realities. Public Services International Research Unit. University of Greenwich, London http://www.psiru.org Accessed 31 July 2012
  27. Hassanein AAG, Khalifa RA (2007) Financial and operational performance indicators applied to public and private water and wastewater utilities. Eng Constr Archit Manag 14(5):479–492CrossRefGoogle Scholar
  28. Hill MD, Kelly GW, Highfield MJ (2010) Net operating working capital behavior: a first look. Financ Manag Summer 783–805Google Scholar
  29. Idelovitch E, Klas R (1997) Private sector participation in water supply and sanitation in Latin America. World Bank, WashingtonGoogle Scholar
  30. Lobina E, Hall D (2007) Experience with private sector participation in Grenoble, France, and lessons on strengthening public water operations. Util Policy 15:93–109CrossRefGoogle Scholar
  31. Massarutto A, Paccagnan V, Linares E (2008) Private management and public finance in the Italian water industry: a marriage of convenience? Water Resour Res. doi:10.1029/2007WR006443 Google Scholar
  32. Ménard C, Saussier S (2000) Contractual choice and performance. The case of water supply in France. Rev Econ Ind 92:385–404Google Scholar
  33. OECD (2010) Pricing water resources and water and sanitation services. OECD PublishingGoogle Scholar
  34. Pérard E (2009) Water supply: public or private? An approach based on cost of funds, transaction costs, efficiency and political costs. Policy Soc 27:193–219CrossRefGoogle Scholar
  35. Renzetti S, Dupont D (2003) Ownership and performance of water utilities. Greener Manag Int 42:9–19Google Scholar
  36. Romano G, Guerrini A (2011) Measuring and comparing the efficiency of water utility companies: a data envelopment analysis approach. Util Policy 19:202–209CrossRefGoogle Scholar
  37. Shaoul J (1997) A critical financial analysis of the performance of privatize industries: the case of the water industry in England and Wales. Crit Perspect Account 8:479–505CrossRefGoogle Scholar
  38. SMAT (2007) International statistics for water supply. SMAT, TurinGoogle Scholar
  39. UnionCamere (2011) Osservatorio sulle società di capitale 2006–2008, Roma. http://www.unioncamere.gov.it/P42A704C189S123/Osservatorio-sulle-societa-di-capitale-Dati-economico-finanziari-2006-2008.htm Accessed 12 September 2012.
  40. Vinnari EM, Hukka JJ (2007) Great expectations, tiny benefits e Decision-making in the privatization of Tallinn water. Util Policy 15:78–85CrossRefGoogle Scholar
  41. Walter M, Cullmann A, von Hirschhausen C, Wand R, Zschille M (2009) Quo vadis efficiency analysis of water distribution? A comparative literature review. Util Policy 17:225–232CrossRefGoogle Scholar
  42. Yamout G, Jamali D (2007) A critical assessment of a proposed public private partnership (PPP) for the management of water services in Lebanon. Water Resour Manag 21(3):6CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • Giulia Romano
    • 1
  • Andrea Guerrini
    • 2
  • Silvia Vernizzi
    • 2
  1. 1.Dipartimento di Economia e ManagementUniversità degli Studi di PisaPisaItaly
  2. 2.Dipartimento di Economia AziendaleUniversità degli Studi di VeronaVeronaItaly

Personalised recommendations