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Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach

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Abstract

The assessment of productivity change across companies and over time is of great importance for water utilities managers and regulators. In this paper, for the first time, we apply the Färe-Primont productivity index (FPI) to evaluate the productivity change for the 10 water and sewerage companies (WaSCs) and 12 water only companies (WoCs) in England and Wales during the years 2001–2008. The FPI is the only index that without price data allows making comparisons involving many firms and many periods. The results indicate that during the years 2001–2004 productivity improved which was mainly attributed to gains in efficiency whereas technical change remained constant, the exception being the year 2004. During the years 2005–2008 productivity showed a declining trend and any gains in efficiency were lost to the highly negative technical change on productivity growth. From a policy perspective, it has been illustrated the importance of using a reliable index to compute the productivity change of water companies when the performance of companies is used to set water tariffs. Finally, the decomposition of productivity change into several drivers allows water utilities and managers to identify the main factors on which they should act to improve productivity of the company.

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Notes

  1. Carvalho et al. (2012) and See (2015) conducted a literature review on water utility benchmarking studies.

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Authors and Affiliations

  1. Departamento de Ingeniería Hidráulica y Ambiental, Pontificia Universidad Católica de Chile, Av. Vicuña Mackenna, 4860, Santiago, Chile

    María Molinos-Senante

  2. Facultad de Arquitectura e Instituto de Estudios Urbanos, Pontificia Universidad Católica de Chile, El Comendador, 1916, Santiago, Chile

    María Molinos-Senante

  3. Centro de Desarrollo Urbano Sustentable CONICYT/FONDAP/15110020, Av. Vicuña Mackenna, 4860, Santiago, Chile

    María Molinos-Senante

  4. Foundazione Eni Enrico Mattei, Isola di San Giorgio Maggiore 8, Venice, Italy

    Alexandros Maziotis

  5. Department of Mathematics for Economics, University of Valencia, Avda. Tarongers S/N, Valencia, Spain

    Ramon Sala-Garrido

Authors
  1. María Molinos-Senante
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  2. Alexandros Maziotis
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  3. Ramon Sala-Garrido
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Corresponding author

Correspondence to María Molinos-Senante.

Ethics declarations

By submitting the manuscript to Water Resources Management, the authors understand that the material presented in this paper has not been published before nor has it been submitted for publication to another scientific journal or being considered for publication elsewhere. I attest that this work has been approved by all co-authors. This paper has no any conflict of interest. The research does not involve animals. The paper you reference in google scholar is different from this one since it is focused on Spanish ports while our paper focus on English and Welsh water companies. Actually, we cited in this manuscript the paper you refer in google scholar.

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Molinos-Senante, M., Maziotis, A. & Sala-Garrido, R. Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach. Water Resour Manage 31, 2389–2405 (2017). https://doi.org/10.1007/s11269-016-1346-2

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  • DOI: https://doi.org/10.1007/s11269-016-1346-2

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