Public Spending Efficiency: Evidence from Tuscan municipalities

The aim of this thesis is the study of public expenditure efficiency of Tuscan municipalities, with particular attention on the effect of the municipal size. The interest in this topic is undoubtedly linked to its highly topical feature: in a so difficult period of crisis, the national legislator has enacted laws on the public spending containment that has also modified the structure of local governments. As a consequence, the Tuscan regional legislator has enacted measures to increase efficiency and to reduce costs and these measures regard also the municipalities, in particular their size. In a context of increasingly limited resources, the study of efficiency in the public expenditure municipalities is worthy of investigation. In particular, in the scientific literature there is a more and more attention to this issue: even if there are different approaches to face this topic, the most common way to do an efficiency analysis is through the estimation of the Efficiency Frontier. In this field there are two alternative techniques: parametric and non-parametric techniques. In this thesis, DEA approach is used, since it’s suitable to an efficiency analysis of the public sector: in fact, DEA avoids assuming specific functional forms of the production frontier, gives intuitive ideas to correct the found inefficiencies and its results can be explained by econometric analysis (in particular, by Tobit regression). In addition, Tobit regression is used to explain municipal inefficiencies

Environmental sustainability and service quality beyond economic and financial indicators: A performance evaluation of Italian water utilities

As water utilities operate as natural monopolists and they provide essential services for human life, their activities are regulated by public authorities. The sustainable use of water resources and a specific attention on social needs should be essential goals for this kind of firms, so that the evaluation of their business should go beyond their profitability and their financial solvency. Keeping pace with the new Circular Economy paradigm and the evolution of the water regulatory framework, in this paper we suggest a global composite indicator apt to evaluate in a novel way the water utilities performance, encompassing financial and economic indexes together with environmental sustainability and service quality measures. To show its empirical implementation we evaluate the performance of Italian water utilities. The operating context is also under scrutiny focusing on specific water utility features such as size, geographical location, degree of diversification and ownership. In this light, operating in the Center and being large are considered favourable background conditions, while the South and the medium size display a significant unfavourable influence on the water utility performance. Multi-utilities are more advantaged with respect to the mono-utilities and no significant distinction can be made among the different ownership models. ispartof: Socio-Economic Planning Sciences status: Published onlin

Water pollution in wastewater treatment plants: An efficiency analysis with undesirable output

The environmental efficiency of 96 Tuscan (Italian) wastewater treatment plants (WWTPs) is investigated taking into account the quality of the outgoing water in terms of pollutant. In this regard, the presence of the residual nitrogen in the outgoing treated water is considered as undesirable output. The efficiency analysis is performed by applying a novel integrated Analytic Hierarchy Process/Non-radial Directional Distance Function (AHP/NDDF) approach, combining the benefits of the two techniques. Similarly to the standard NDDF approach, the suggested model allows to include simultaneously inputs, desirable and undesirable outputs and not to overestimate the efficiency scores. At the same time, the AHP inclusion gives the possibility to directly take into account the decision maker preferences in the weighting system and to encompass some existing directional distance function models as special cases.The obtained results are then used to identify the efficiency explanatory variables: among them, the facilities' capacity, the percentage of wastewater discharged by the industrial and agricultural activities and the level of compliance with the pollutant concentration threshold set by the legislator have a significant impact on the WWTP performance. The integrated performance assessment allows the water authorities to combine the WWTP efficiency together with the environmental sustainability issue and it has the potential for further promising environmental inspections

School Infrastructure Spending and Educational Outcomes in Northern Italy

We explore whether investment in public school infrastructure affects students' achievement. We use data on extra funding to public high schools after the 2012 Northern Italy earthquake and apply a quasi-experimental design and an instrumental variable strategy. We find that spending on school infrastructure increases standardized test scores in mathematics and Italian language, and the effect is stronger for lower-achieving students and in mathematics. These results provide evidence in favor of a positive impact of capital spending in improving the learning environment and performances of high school students

Global public spending efficiency in Tuscan municipalities

The paper presents a Data Envelopment Analysis aimed at studying the efficiency of Tuscan municipalities' public expenditure. Five strategic functions of Tuscan municipalities are first considered carrying out a non-aggregate analysis; then the overall expenditure composition of each municipality and the global spending efficiency are analysed by a proposed composite indicator. The main determinants affecting the municipalities' efficiency were further investigated. In particular, the obtained results may be consistently included in the long-standing debate on the municipal size, proving that the bigger the municipality, the greater its level of public expenditure efficiency

Sub-national service provision and public spending analysis

Local and regional governments represent the nearest form of government to the people and their fundamental role in addressing citizens’ needs is acknowledged worldwide. In line with the subsidiarity principle, the responsibility of the public good and service delivery is primarily upon the territorial administrations closer to the citizens, with the main advantage of offering more suitable and better tailored solutions at local level. In a context of scarce resources and tight budget constraints exacerbated by the ongoing economic crisis, the achievement of these goals is limited and needs to be pursued in an efficient and effective way. Accordingly, the development of tools to evaluate the performance of local and regional government is required, as well as measures to monitor the progress of the task achievement and instruments to support over time the decisional process, in the interest of all the involved shareholders, specially policy makers and citizens, international and civil society organizations. This dissertation contributes to the knowledge on basic service delivery and public expenditure analysis at sub-national level. Particularly, it deals with the provision of both general and specific services, namely the education and water sector ones. From a methodological point of view, innovative methods are proposed to evaluate the service supply and public spending in terms of efficiency and effectiveness. To show the potentiality of the suggested tools, empirical applications are proposed covering two EU countries, Belgium and Italy, which are interesting study cases for their common and peculiar features and provide complementary insights. In Chapter 2, we propose the innovative use of a composite indicator to measure the multidimensional aspects of the local public provision, encompassing several commonly acknowledged municipal tasks, and to investigate the relationship with the local government size, as the decentralization of public activities to the municipalities calls for a more enhanced service provision analysis at the local level. We suggest a robust conditional version of a directional distance Benefitof- the-Doubt approach with weight restrictions based on the municipal expenditure composition. Specifically, we deal with the presence of undesirable municipal service indicators and with the heterogeneity among the municipalities in their political preferences, priority public activities and operating environment characteristics. To illustrate the applicability of the suggested method, we show the construction of the municipal service provision composite indicator for 307 Flemish municipalities over the year 2006-2011. As a focus on a particular service, in Chapter 3 the environmental efficiency of 96 Tuscan (Italian) wastewater treatment plants (WWTPs) is investigated taking into account the quality of the outgoing water in terms of pollutant. In this regard, the presence of the residual nitrogen in the outgoing treated water is considered as undesirable output. The efficiency analysis is performed by applying a novel integrated AHP/non-radial directional distance function approach. The obtained results are then used to identify the efficiency explanatory variables: among them, the facilities’ capacity, the percentage of wastewater discharged by the industrial and agricultural activities and the level of compliance with the pollutant concentration threshold set by the legislator have a significant impact on the WWTP performance. In Chapter 4, a Data Envelopment Analysis model is used to study the efficiency of Tuscan municipalities’ public expenditure. Five strategic functions of Tuscan municipalities are first considered carrying out a non-aggregate analysis; then the overall expenditure composition of each municipality and the global spending efficiency are analysed by a proposed composite indicator. The main determinants affecting the municipalities’ efficiency are further investigated. In particular, the obtained results may be consistently included in the long-standing debate on the municipal size, proving that the bigger the municipality, the greater its level of public expenditure efficiency. In Chapter 5, we explore whether investment in public school infrastructure affects students’ achievement. We use data on extra funding to public high schools after the 2012 Northern Italy earthquake and apply a quasi-experimental design and an instrumental variable strategy. We find that spending on school infrastructure increases standardized test scores in mathematics and Italian language, and the effect is stronger for lower-achieving students and in mathematics. These results provide evidence in favour of a positive impact of capital spending in improving the learning environment and performances of high school students

Data Envelopment Analysis: A Review and Synthesis

This chapter introduces the main concepts and models underlying the evaluation of efficiency using the Data Envelopment Analysis (DEA) technique. It starts with a historical overview of the origin of DEA models, including a brief description of the theory underlying the representation of the technology of production and the efficient frontier in DEA. The main models for evaluating efficiency are reviewed before discussing recent developments in the DEA literature. The chapter also includes a discussion of well-established and emerging areas of analysis. Successful applications of DEA, both for the support of organisations’ management and the design of public policies, are examined. In the end, some considerations regarding the role of efficiency assessment techniques in modern societies and opportunities for future developments are presented

Service Level Provision in Municipalities: A Flexible Directional Distance Composite Indicator

With increasing decentralization of public activities to the municipalities, it has become imperative to deploy an enhanced service provision analysis at the local level. This paper suggests the innovative use of a composite indicator to measure the multidimensional aspects of the local public provision comprising of several commonly administered municipal tasks. We propose a robust conditional version of a directional distance composite indicator with weight restrictions based on the municipal expenditure composition. Specifically, we deal with the presence of “undesirable” municipal service indicators and with the heterogeneity among the municipalities in their political preferences, priority public activities and operating environment characteristics. To illustrate the applicability of the suggested method, we show the construction of the municipal service provision composite indicator for 307 Flemish municipalities over the year 2006–2011.status: publishe

Service level provision in municipalities: a flexible directional distance composite indicator

With increasing decentralization of public activities to the municipalities, it has become imperative to deploy an enhanced service provision analysis at the local level. This paper suggests the innovative use of a composite indicator to measure the multidimensional aspects of the local public provision comprising of several commonly administered municipal tasks. We propose a robust conditional version of a directional distance composite indicator with weight restrictions based on the municipal expenditure composition. Specifically, we deal with the presence of “undesirable” municipal service indicators and with the heterogeneity among the municipalities in their political preferences, priority public activities and operating environment characteristics. To illustrate the applicability of the suggested method, we show the construction of the municipal service provision composite indicator for 307 Flemish municipalities over the year 2006–2011.status: publishe

Environmental sustainability and service quality beyond economic and financial indicators: A performance evaluation of Italian water utilities

As water utilities operate as natural monopolists and they provide essential services for human life, their activities are regulated by public authorities. The sustainable use of water resources and a specific attention on social needs should be essential goals for this kind of firms, so that the evaluation of their business should go beyond their profitability and their financial solvency. Keeping pace with the new Circular Economy paradigm and the evolution of the water regulatory framework, in this paper we suggest a global composite indicator apt to evaluate in a novel way the water utilities performance, encompassing financial and economic indexes together with environmental sustainability and service quality measures. To show its empirical implementation we evaluate the performance of Italian water utilities. The operating context is also under scrutiny focusing on specific water utility features such as size, geographical location, degree of diversification and ownership. In this light, operating in the Center and being large are considered favourable background conditions, while the South and the medium size display a significant unfavourable influence on the water utility performance. Multi-utilities are more advantaged with respect to the mono-utilities and no significant distinction can be made among the different ownership models.status: Published onlin