Efficiency, Conflicting Goals and Trade-Offs: A Nonparametric Analysis of the Water and Wastewater Service Industry in Italy

This paper presents a benchmarking study of the water and wastewater industry in Italy. A three-stage modeling approach was implemented to measure the efficiency of 53 utility operators. This approach is based on the implementation of network and conventional data envelopment analysis (DEA) to model the production process of the water service utility operators. In comparison to the conventional black-box or one-stage production model generally adopted in previous studies, the proposed approach provides information relative to the different efficiency components of the stages and blocks of the water service production process and its overall efficiency. Further, by shifting the efficiency analysis to a two-dimensional performance space, i.e., resource and market-efficiency, it offers a more comprehensive view of the water service industry and allows accounting for different business goals at the same time and for an investigation of industry trade-offs. Results show that the operators’ efficiencies in the Italian water service industry are generally variable and low. There are no water service utilities which are 100% efficient from the resource-efficiency perspective, and the maximum efficiency score is 0.545. Efficiency measurements suggest that there is a general orientation of the Italian water industry to not invest in upgrading and improving the infrastructure assets, and achieving an acceptable efficiency in the operations is critical to delivering water services to market in an efficient way. Only one utility operator is 100% efficient from the market-efficiency perspective. The low tariffs adopted by the water service operators do not allow the gaining of satisfactory service remuneration and the achievement of long-term business sustainability. The joint analysis of the resource and market efficiency scores indicates that there is a trade-off between the corresponding business goals

Performance Evaluation of Water Services in Italy: A Meta-Frontier Approach Accounting for Regional Heterogeneities

first_pagesettingsOrder Article Reprints Open AccessArticle Performance Evaluation of Water Services in Italy: A Meta-Frontier Approach Accounting for Regional Heterogeneities by Corrado lo StortoORCID Department of Industrial Engineering, University of Naples Federico II, 80125 Naples, Italy Water 2022, 14(18), 2882; https://doi.org/10.3390/w14182882 Received: 22 August 2022 / Revised: 11 September 2022 / Accepted: 13 September 2022 / Published: 15 September 2022 (This article belongs to the Section Water Resources Management, Policy and Governance) Download Browse Figures Versions Notes Abstract Data relative to the water services industry in Italy indicate that there is a serious infrastructure gap between the southern regions and isles and the rest of the country. In these geographical areas, water utilities are provided with substantial public grants from the central and local governments to support investments necessary to mitigate the infrastructure divide by increasing capacity and improve service quality. This paper implements a meta-frontier non-parametric approach based on a data envelopment analysis (DEA) to evaluate the efficiencies of 71 Italian water utilities, accounting for the differentiated contexts in which they operate. A short-term perspective was assumed to estimate efficiency, considering the production factors associated with the infrastructure assets as non-discretionary inputs in the specification of the meta-frontier model. The results showed that water utilities operating in the southern regions and isles suffer from an efficiency gap in comparison to those in the northern and central regions. The average efficiency gap was 9.7%, achieving 24.9% in the worst case. Moreover, a more in-depth analysis focusing on the water utilities in the southern regions and isles indicated that scale inefficiencies might be an important determinant of such an efficiency gap. Indeed, slightly more than 69% of the water utilities operated at increasing returns to scale. Evidence from this study raises concern about the appropriate structure of the Italian water service industry and, particularly, the optimal size of the utilities and the financial sustainability of water services in the southern regions and isles

Congestion effect on renewable energy production efficiency in Europe

In the last decade the renewable energy facilities have become very important for generating electricity in Europe. Estimating the production efficiency of renewable energy industry is thus a major concern of governments. This paper implements Data Envelopment Analysis (DEA) to measure efficiency in the generation of electricity from renewable sources during 2002-2011 in 31 European countries. As input congestion may introduce bias in the efficiency analysis, an improved DEA model is used to correct and avoid efficiency underestimation

A nonparametric economic analysis of the US natural gas transmission infrastructure: efficiency, trade-offs and emerging industry configurations

This paper presents a study aimed at measuring the efficiency of the transmission segment of the US natural gas industry from an economic perspective. The gas transmission infrastructure is modeled as an economic production function and a multi-stage modeling approach based on the implementation of Data Envelopment Analysis is employed to obtain an efficiency measure in a two-dimension performance space, i.e., cost and revenue-efficiency. This approach allows taking into account conflicting business goals. The study also performs cluster analysis to uncover homogeneous efficiency profiles relative to the gas transmission systems to explore determinants of efficiency rates, and trade-off situations. A sample containing 80 US gas transmission systems is used in the analysis. Results indicate that the transmission segment of the US gas industry has considerable inefficiencies, while average cost and revenue-efficiency scores are 0.324 and 0.301, and only three transmission systems achieve high scores on both efficiency dimensions. Cluster analysis identified seven configurations. In three of them there are no trade-off situations between cost and revenue efficiencies. However, only in one of them gas transmission systems have high efficiencies. The remaining four configurations exhibit trade-off situations having different intensity. Such trade-offs can be determined by the gas transmission infrastructure size

Knowledge Search Strategies in the Biotechnology Domain: A Patent Benchmarking Analysis

This paper offers a new interpretive perspective to investigate factors of researchers productivity, moving from a personal features/resource endowment view to a behavioral one centered on the knowledge search. Little work has indeed been carried out on the relationship between the research productivity and the scientist knowledge search behaviors. Three knowledge search dimensions are taken in account: search type, search focus and search dynamics. Using data relative to 873 biotechnology patents granted from 1960 to 2007 to 255 academic scholars that are affiliated to 36 Italian universities, this paper investigates if a particular knowledge search behavior is associated to greater patenting rates

Evaluating Technical Efficiency of Italian Major Municipalities: A Data Envelopment Analysis model

This paper presents findings of an exploratory study aimed at assessing expenditure efficiency of 103 Italian major municipalities. The study implements Data Envelopment Analysis to calculate an efficiency score and investigate economies of scale. Findings reveal that there exist scale inefficiencies in a number of municipalities that need an in depth investigatio

Ecological Efficiency Based Ranking of Cities: A Combined DEA Cross-Efficiency and Shannon's Entropy Method

In this paper, a method is proposed to calculate a comprehensive index that calculates the ecological efficiency of a city by combining together the measurements provided by some Data Envelopment Analysis (DEA) cross-efficiency models using the Shannon's entropy index. The DEA models include non-discretionary uncontrollable inputs, desirable and undesirable outputs. The method is implemented to compute the ecological efficiency of a sample of 116 Italian provincial capital cities in 2011 as a case study. Results emerging from the case study show that the proposed index has a good discrimination power and performs better than the ranking provided by the Sole24Ore, which is generally used in Italy to conduct benchmarking studies. While the sustainability index proposed by the Sole24Ore utilizes a set of subjective weights to aggregate individual indicators, the adoption of the DEA based method limits the subjectivity to the selection of the models. The ecological efficiency measurements generated by the implementation of the method for the Italian cities indicate that they perform very differently, and generally largest cities in terms of population size achieve a higher efficiency score

Eco-productivity analysis of the municipal solid waste service in the Apulia region from 2010 to 2017

This paper presents a dynamic efficiency study of the solid waste management in the municipalities of the Apulia region (Southern Italy). The study employs the non-parametric Global Malmquist Index to measure the change in productivity of the municipal solid waste service from 2010 to 2017. Three different DEA-based models are implemented to measure productivity. The first model computes the service productivity solely from the economic perspective, while the second and third models compute the service productivity from both the economic and environmental perspectives. Adopting two distinct perspectives provides a more comprehensive insight into the performance of the waste management service considering the productivity and the eco-productivity of service provision. The results from the productivity analysis show that, between 2010 and 2017, the municipal solid waste sector was still facing a transitional period characterized by low cost-efficiency and productivity growth measurements. Vice versa, the efficiency and productivity indicators improve when the analysis is performed accounting for the environmental impact. Indeed, both the eco-efficiency and eco-productivity measures increase from 2010 to 2017. Findings demonstrate the critical importance to include environmental indicators in the efficiency and productivity analysis