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Hierarchical classification of water service operators in Romania: an integrated analysis of financial and technical indicators

Author

Listed:
  • Octavia MOISE

    (Romanian Academy,School of Advanced Studies of the Romanian Academy,Doctoral School of Economic Sciences,National Institute of Economic Research"Costin C. Kiri?escu",Institute of National Economy,Bucharest,Romania)

Abstract

Objective: The main objective of this study is to apply hierarchical classification techniques to systematically classify water service operators based on several performance indicators, thereby identifying distinct categories of operational performance, information that can be used for strategic planning and intervention in the supply system with water. Method: The methodological approach of this study involves a hierarchical clustering analysis, a technique that groups water service operators into clusters based on the similarities between several predefined indicators. The analysis was facilitated by the use of statistical software, which allowed a robust assessment of similarities and differences between operators. Results: The hierarchical clustering analysis revealed significant differences between water service operators in Romania, resulting in the identification of two main clusters that reflect distinct operational and financial particularities. Cluster 1 includes most operators, characterized by moderate efficiency in water resource management. Operators in this group show a relatively average Non-Revenue Water (NRW) rate, indicating significant but manageable water losses. Cluster 2 consists of a smaller number of operators, which are distinguished by lower operational performance. The NRW rate is significantly higher, indicating substantial water losses and major inefficiencies in the distribution system. By understanding the profile and needs of each cluster, decision-makers can allocate resources efficiently and implement solutions adapted to local realities, thus contributing to the long-term sustainability of water services. Originality: The original approach of this study is to use hierarchical classification to structure a complex set of data into a comprehensible and actionable form, thereby providing a new insight into the operational efficiency of water services. By identifying clear patterns of performance among water operators, the research contributes directly to the literature and supports the development of evidence-based public policy.

Suggested Citation

  • Octavia MOISE, 2024. "Hierarchical classification of water service operators in Romania: an integrated analysis of financial and technical indicators," Romanian Journal of Economics, Institute of National Economy, vol. 59(2(68)), pages 206-223, December.
    • Handle: RePEc:ine:journl:v:59:y:2024:i:68:p:206-223
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    References listed on IDEAS

    as
    1. Simona FRONE, 2008. "Factors And Challenges Of Regionalization In The Water And Wastewater Sector," Romanian Journal of Economics, Institute of National Economy, vol. 27(2(36)), pages 185-200, December.
    2. Stephen Johnson, 1967. "Hierarchical clustering schemes," Psychometrika, Springer;The Psychometric Society, vol. 32(3), pages 241-254, September.
    3. Madhu Sachidananda & D. Patrick Webb & Shahin Rahimifard, 2016. "A Concept of Water Usage Efficiency to Support Water Reduction in Manufacturing Industry," Sustainability, MDPI, vol. 8(12), pages 1-15, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    hierarchical classification; water service providers; non-revenue water (NRW);
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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