Scale and scope economies and the efficient vertical and horizontal configuration of the water industry: A survey of the literature

This paper surveys the literature on scale and scope economies in the water and sewerage industry. The magnitude of scale and scope economies determines the cost efficient configuration of any industry. In the case of a regulated sector, reliable estimates of these economies are relevant to inform reform proposals that promote vertical (un)bundling and mergers. The empirical evidence allows some general conclusions. First, there is considerable evidence for the existence of vertical scope economies between upstream water production and distribution. Second, there is only mixed evidence on the existence of (dis)economies of scope between water and sewerage activities. Third, economies of scale exist up to certain output level, and diseconomies of scale arise if the company increases its size beyond this level. However, the optimal scale of utilities also appears to vary considerably between countries. Finally, we briefly consider the implications of our findings for water pricing and point to several directions for necessary future empirical research on the measurement of these economies, and explaining their cross country variation

Estimating economies of scale and scope with flexible technology

Economies of scope are typically modelled and estimated using a cost function that is common to all firms in an industry irrespective of their type, e.g. whether they specialize in a single output or produce multiple outputs. Instead, we estimate a flexible technology model that allows for type-specific technologies and show how it can be estimated using linear parametric forms including the translog. A common technology remains a special case of our model and is testable econometrically. Our sample, of publicly owned US electric utilities, does not support a common technology for integrated and specialized firms. Our empirical results therefore suggest that assuming a common technology might bias estimates of economies of scale and scope. Thus, how we model the production technology clearly influences the policy conclusions we draw from its characteristics

Supplementary information files for An iron ore-based catalyst for producing hydrogen and metallurgical carbon via catalytic methane pyrolysis for decarbonisation of the steel industry

Supplementary files for article An iron ore-based catalyst for producing hydrogen and metallurgical carbon via catalytic methane pyrolysis for decarbonisation of the steel industry Experiments to investigate the catalytic pyrolysis of methane using an iron ore-based catalyst were carried out to optimize catalytic activity and examine the purity of the carbon produced from the process for the first time. Ball milling of the iron ore at 300 rpm for varying times – from 30 to 330 minutes – was studied to determine the effect of milling time on methane conversion. Optimal milling for 270 minutes led to a five-fold increase in methane conversion from ca. 1% to 5%. Further grinding resulted in a decline of methane conversion to 4% shown by SEM to correspond to an increase in particle size caused by agglomeration. Data from Raman and Mössbauer spectroscopy and H2 temperature programmed reduction indicated a change in phase from magnetite to maghemite and hematite (at the particle surface) as the grinding time increased. Analysis of the carbon produced as a byproduct of the reaction indicated a highly pure material with the potential to be used as an additive for steel production. </p

Supplementary information files for "Optimising and evaluating centralised infrastructure transitions: A case study of wastewater treatment plants consolidations in the UK"

Supplementary files for article "Optimising and evaluating centralised infrastructure transitions: A case study of wastewater treatment plants consolidations in the UK"Rational planning is essential for infrastructure transitions in network industries due to the substantial investment costs involved. This study evaluates the economic feasibility of transitioning to a centralised wastewater treatment paradigm. We propose a hybrid Wastewater Infrastructure Transition Optimisation and Evaluation (WWITOE) framework that integrates mathematical optimisation and Cost-Benefit Analysis (CBA), explicitly accounting for geographic, topographic, and hydraulic cost uncertainties. The transition strategy explored involves cascading consolidations of WastewaterTreatment Plants (WWTPs), whereby small-scale facilities are closed, and their flows redirected to larger, centralisedhubs. While economies of scale at these hubs are expected to reduce treatment costs, the construction of extended collection networks may offset these savings—necessitating a balanced, cost-effective approach.We formulate the optimisation model as an Uncapacitated Transportation and Facility Location Problem (UNCAP-TFLP) using integer Linear Programming (LP), and solve it through a Nearest Neighbour Search Algorithm (NNS-A) supported by GIS tools to address spatial feasibility and routing.The WWITOE framework is applied to a real-world case study of 63 WWTPs operated by Anglian Water Services Ltd (AWS) in Lincolnshire, UK. Over a 25-year planning horizon, the Benefit-to-Cost Ratios (BCRs) from the CBA reveal that fully centralised consolidation does not deliver economic advantages in this flat, semi-rural region. The findings demonstrate that WWITOE provides a practical decision-support tool for evaluating wastewater infrastructure transitions, with scalability to other contexts. However, the results reinforce that optimal degrees of centralisation are highly context-dependent, warranting further research into hybrid and adaptive transition pathways.© The Author(s), CC BY 4.0</p

Optimising and evaluating centralised infrastructure transitions: a case study of wastewater treatment plants consolidations in the UK

Rational planning is essential for infrastructure transitions in network industries due to the substantial investment costs involved. This study evaluates the economic feasibility of transitioning to a centralised wastewater treatment paradigm. We propose a hybrid Wastewater Infrastructure Transition Optimisation and Evaluation (WWITOE) framework that integrates mathematical optimisation and Cost-Benefit Analysis (CBA), explicitly accounting for geographic, topographic, and hydraulic cost uncertainties. The transition strategy explored involves cascading consolidations of Wastewater Treatment Plants (WWTPs), whereby small-scale facilities are closed, and their flows redirected to larger, centralised hubs. While economies of scale at these hubs are expected to reduce treatment costs, the construction of extended collection networks may offset these savings—necessitating a balanced, cost-effective approach.We formulate the optimisation model as an Uncapacitated Transportation and Facility Location Problem (UNCAP-TFLP) using integer Linear Programming (LP), and solve it through a Nearest Neighbour Search Algorithm (NNS-A) supported by GIS tools to address spatial feasibility and routing.The WWITOE framework is applied to a real-world case study of 63 WWTPs operated by Anglian Water Services Ltd (AWS) in Lincolnshire, UK. Over a 25-year planning horizon, the Benefit-to-Cost Ratios (BCRs) from the CBA reveal that fully centralised consolidation does not deliver economic advantages in this flat, semi-rural region. The findings demonstrate that WWITOE provides a practical decision-support tool for evaluating wastewater infrastructure transitions, with scalability to other contexts. However, the results reinforce that optimal degrees of centralisation are highly context-dependent, warranting further research into hybrid and adaptive transition pathways.</p

Industry fragmentation and wastewater efficiency: A case study of hyogo prefecture in Japan

The efficient operation of sewerage services is impacted by various factors such as geographical and topographical conditions, diversity of vertical and horizontal organizational structure, ownership types, and level of public–private partnership. The Ministry of Land, Infrastructure, Transport and Tourism, as the primary regulator of the sewerage industry in Japan, has conducted policy reforms to address issues facing the country in the 21st century: population decline, aging population, potentially high investment needs due to the aging facilities and frequent natural disasters, and fiscal pressures given the country’s high debt to gross domestic product ratio. The ministry has set out several policy directions, with the most important being wide-area consolidation (WAC). Given the fragmented nature of Japan's municipally controlled sewerage system with different entities serving different customer types, the optimal consolidation strategy might differ both within and between Japan’s 47 prefectures. We therefore conducted a case study of Hyogo Prefecture, which has identified several subprefecture regions within which to pursue WAC. Our aim was to gain a better understanding of how the complex characteristics and fragmentation impact not only current sewerage entity performance, but also the required approach to achieve the benefits from WAC. We argue that WAC policy objectives would be best achieved by establishing consolidated regional public sewer authorities, which should adopt one of the following consolidation strategies, depending on their own characteristics: consolidation to improve operational performance without physical integration; consolidation around a non-urban river basin system to improve treatment and collection efficiency; consolidation around a regional champion city to support small municipalities; consolidation around an urban river basin system of all operations and infrastructure; and urban consolidation of operations, collection, and treatment infrastructure

Regulatory incentives to water losses reduction: the case of England and Wales

In recent years, England and Wales have suffered droughts. This unusual situation defies the common belief that the British climate provides abundant water resources and has prompted the regulatory authorities to impose bans on superfluous uses of water. Furthermore, a large percentage of households in England consume unmetered water which is detrimental to water saving efforts. Given this context, we estimate the shadow price of water using a panel data from reports published by the Office of Water Services (Ofwat) for the period 1996 to 2010 (three regulatory periods). These shadow prices are derived from a parametric multi-output multi-input input distance function characterized by a translog technology. Following O'Donnell and Coelli (2005), we use a Bayesian econometric framework in order to impose regularity – monotonicity and curvature – conditions on a high-flexible technology. Consequently, our results can be interpreted at the firm level without requiring the need to base analysis on the averages. Our estimations offer guidance for regulation purposes and provide an assessment of how the water supply companies deal with water losses under each regulatory period. The relevance of the study is quite general as water scarcity is a problem that will become more important with population growth and the impact of climate change

Scale and scope economies and the efficient vertical and horizontal configuration of the water industry: A survey of the literature

This paper surveys the literature on scale and scope economies in the water and sewerage industry. The magnitude of scale and scope economies determines the cost efficient configuration of any industry. In the case of a regulated sector, reliable estimates of these economies are relevant to inform reform proposals that promote vertical (un)bundling and mergers. The empirical evidence allows some general conclusions. First, there is considerable evidence for the existence of vertical scope economies between upstream water production and distribution. Second, there is only mixed evidence on the existence of (dis)economies of scope between water and sewerage activities. Third, economies of scale exist up to certain output level, and diseconomies of scale arise if the company increases its size beyond this level. However, the optimal scale of utilities also appears to vary considerably between countries. Finally, we briefly consider the implications of our findings for water pricing and point to several directions for necessary future empirical research on the measurement of these economies, and explaining their cross country variation