Performance and ownership in the governance of urban water

This paper provides additional evidence about the possible relationship between performance and public or private governance of urban water utilities. Data envelopment analysis (DEA) techniques are used to compute technical efficiency scores for a sample of Spanish water utilities. The principal contribution of this research is adaptation of the DEA technique to programmatic efficiency estimation in order to analyse the link between ownership and efficiency. From a first specification of the model, which allows a conventional estimation of efficiency, additional estimations, taking quality and hydraulic yield into account, were made. The results show that private management is more efficient when the estimations are made using the original model and when quality is taken into account. However, there are no significant differences between private and public management when hydraulic yield is included. The results suggest that public managers are more sensitive to the sustainable management of water resources. They also suggest that local governments follow a strategy of privatising water services when they are in financial difficulty, with fewer resources for maintaining distribution networks. This is an aspect that needs further investigation.