IDEAS home Printed from https://ideas.repec.org/a/kap/jproda/v51y2019i1d10.1007_s11123-019-00545-w.html
   My bibliography  Save this article

Benchmarking service quality in the urban water industry

Author

Listed:
  • Jayanath Ananda

    (CQ University)

  • Nicholas Pawsey

    (Charles Sturt University)

Abstract

Providing secure and affordable drinking water and sewerage services is the primary mandate of the urban water industry. Water businesses must balance their service obligations and the quality of service delivered in order to maximize customer value. Being a monopoly industry, the urban water sector’s service levels and associated prices are not driven by competitive market pressures but through the regulatory processes. However, improving service quality often comes at a cost and yardstick regulation requires the evaluation and benchmarking of service quality within an economic efficiency framework. This paper uses a bootstrap Data Envelopment Analysis model to evaluate the service quality performance of the Australian urban water sector from 2009–2010 to 2015–2016. Specifically, the paper models the lack of service quality as undesirable outputs of water production. It estimates the Malmquist-Luenberger productivity index and its efficiency change and technical change components for 50 integrated water and sewerage utilities in Australia. Findings indicate that, overall, the sector’s quality-adjusted productivity has improved after a marked decline in 2010/2011. A comparison of the service quality productivity results with the conventional productivity measure revealed that the conventional analysis tends to underestimate the productivity growth. The paper concludes that benchmarking service quality helps the urban water sector to move from compliance-based regulation to best-practice regulation.

Suggested Citation

  • Jayanath Ananda & Nicholas Pawsey, 2019. "Benchmarking service quality in the urban water industry," Journal of Productivity Analysis, Springer, vol. 51(1), pages 55-72, February.
    • Handle: RePEc:kap:jproda:v:51:y:2019:i:1:d:10.1007_s11123-019-00545-w
    DOI: 10.1007/s11123-019-00545-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11123-019-00545-w
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11123-019-00545-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Calabrese, Armando, 2012. "Service productivity and service quality: A necessary trade-off?," International Journal of Production Economics, Elsevier, vol. 135(2), pages 800-812.
    2. Yoruk, BarIs K. & Zaim, Osman, 2005. "Productivity growth in OECD countries: A comparison with Malmquist indices," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 401-420, June.
    3. Kim Woodbury & Brian Dollery, 2004. "Efficiency Measurement in Australian Local Government: The Case of New South Wales Municipal Water Services," Review of Policy Research, Policy Studies Organization, vol. 21(5), pages 615-636, September.
    4. Pastor, Jesus T. & Lovell, C.A. Knox, 2005. "A global Malmquist productivity index," Economics Letters, Elsevier, vol. 88(2), pages 266-271, August.
    5. Dong-hyun Oh, 2010. "A global Malmquist-Luenberger productivity index," Journal of Productivity Analysis, Springer, vol. 34(3), pages 183-197, December.
    6. Cooper, Bethany & Crase, Lin & Pawsey, Nicholas, 2014. "Best practice pricing principles and the politics of water pricing," Agricultural Water Management, Elsevier, vol. 145(C), pages 92-97.
    7. Rolf Färe & Shawna Grosskopf & Carl A Pasurka, Jr., 2001. "Accounting for Air Pollution Emissions in Measures of State Manufacturing Productivity Growth," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 381-409, August.
    8. David Saal & David Parker & Tom Weyman-Jones, 2007. "Determining the contribution of technical change, efficiency change and scale change to productivity growth in the privatized English and Welsh water and sewerage industry: 1985–2000," Journal of Productivity Analysis, Springer, vol. 28(1), pages 127-139, October.
    9. Picazo-Tadeo, Andres J. & Saez-Fernandez, Francisco J. & Gonzalez-Gomez, Francisco, 2008. "Does service quality matter in measuring the performance of water utilities," Utilities Policy, Elsevier, vol. 16(1), pages 30-38, March.
    10. Abbott, Malcolm & Cohen, Bruce, 2009. "Productivity and efficiency in the water industry," Utilities Policy, Elsevier, vol. 17(3-4), pages 233-244, September.
    11. Chen Lin & Sanford Berg, 2008. "Incorporating Service Quality into Yardstick Regulation: An Application to the Peru Water Sector," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(1), pages 53-75, February.
    12. Simar, Leopold & Wilson, Paul W., 1999. "Estimating and bootstrapping Malmquist indices," European Journal of Operational Research, Elsevier, vol. 115(3), pages 459-471, June.
    13. Tupper, Henrique Cesar & Resende, Marcelo, 2004. "Efficiency and regulatory issues in the Brazilian water and sewage sector: an empirical study," Utilities Policy, Elsevier, vol. 12(1), pages 29-40, March.
    14. Catherine WADDAMS PRICE & Bitten BRIGHAM & Lin FITZGERALD, 2008. "Service Quality In Regulated Network Industries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 79(2), pages 197-225, June.
    15. Saal, David S & Parker, David, 2001. "Productivity and Price Performance in the Privatized Water and Sewerage Companies of England and Wales," Journal of Regulatory Economics, Springer, vol. 20(1), pages 61-90, July.
    16. Zhang, Chunhong & Liu, Haiying & Bressers, Hans Th.A. & Buchanan, Karen S., 2011. "Productivity growth and environmental regulations - accounting for undesirable outputs: Analysis of China's thirty provincial regions using the Malmquist–Luenberger index," Ecological Economics, Elsevier, vol. 70(12), pages 2369-2379.
    17. Rolf Färe & Shawna Grosskopf, 2003. "Nonparametric Productivity Analysis with Undesirable Outputs: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1070-1074.
    18. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    19. François Destandau & Serge Garcia, 2014. "Service quality, scale economies and ownership: an econometric analysis of water supply costs," Journal of Regulatory Economics, Springer, vol. 46(2), pages 152-182, October.
    20. Marques, Rui Cunha, 2006. "A yardstick competition model for Portuguese water and sewerage services regulation," Utilities Policy, Elsevier, vol. 14(3), pages 175-184, September.
    21. Byrnes, Joel, 2013. "A short institutional and regulatory history of the Australian urban water sector," Utilities Policy, Elsevier, vol. 24(C), pages 11-19.
    22. Lin, Chen, 2005. "Service quality and prospects for benchmarking: Evidence from the Peru water sector," Utilities Policy, Elsevier, vol. 13(3), pages 230-239, September.
    23. Byung M. Jeon & Robin C. Sickles, 2004. "The role of environmental factors in growth accounting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 567-591.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mocholi-Arce, Manuel & Sala-Garrido, Ramon & Molinos-Senante, Maria & Maziotis, Alexandros, 2021. "Performance assessment of water companies: A metafrontier approach accounting for quality of service and group heterogeneities," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
    2. Mocholi-Arce, Manuel & Sala-Garrido, Ramon & Molinos-Senante, Maria & Maziotis, Alexandros, 2022. "Performance assessment of the Chilean water sector: A network data envelopment analysis approach," Utilities Policy, Elsevier, vol. 75(C).
    3. Molinos-Senante, María & Delgado-Antequera, Laura & Gómez, Trinidad, 2022. "Measuring the quality of service of water companies: A two-stage goal programming synthetic index proposal," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    4. Agostino, M. & Nifo, A. & Ruberto, S. & Scalera, D. & Trivieri, F., 2022. "Productivity changes in the automotive industry of three European countries. An application of the Malmquist index decomposition analysis," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 216-226.
    5. Tourinho, Marco & Barbosa, Flávia & Santos, Paulo Rosa & Pinto, Francisco Taveira & Camanho, Ana S., 2023. "Productivity change in Brazilian water services: A benchmarking study of national and regional trends," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    6. Jean-Philippe Boussemart & Daouda Diakité & Raluca Parvulescu, 2023. "Performance of Water Utilities Evaluated from Different Stakeholders Perspectives: An Application to the Ivorian Sector," Journal of Productivity Analysis, Springer, vol. 60(1), pages 87-105, August.
    7. Jayanath Ananda & Nicholas Pawsey & Tahmid Nayeem, 2022. "Customer‐centric regulation: The case of Victorian urban water sector," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 536-556, April.
    8. Zhu, Bei & Zhong, Ruohan & Wei, Chu, 2024. "Measuring digital government service performance: Evidence from China," China Economic Review, Elsevier, vol. 83(C).
    9. Goh, Kim Huat & See, Kok Fong, 2021. "Measuring the productivity growth of Malaysia's water sector: Implications for regulatory reform," Utilities Policy, Elsevier, vol. 71(C).
    10. Mocholi-Arce, Manuel & Sala-Garrido, Ramon & Molinos-Senante, Maria & Maziotis, Alexandros, 2021. "Water company productivity change: A disaggregated approach accounting for changes in inputs and outputs," Utilities Policy, Elsevier, vol. 70(C).
    11. D’Inverno, Giovanna & Carosi, Laura & Romano, Giulia, 2021. "Environmental sustainability and service quality beyond economic and financial indicators: A performance evaluation of Italian water utilities," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    12. Chuku Chuku & Victor Ajayi, 2024. "Growing green: enablers and barriers for Africa," Journal of Productivity Analysis, Springer, vol. 61(3), pages 195-214, June.
    13. Maziotis, Alexandros & Molinos-Senante, Maria, 2022. "The impact of model specification and environmental variables on measuring the overall technical efficiency of water and sewerage services: Evidence from Chile," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 191-198.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ananda, Jayanath & Hampf, Benjamin, 2015. "Measuring environmentally sensitive productivity growth: An application to the urban water sector," Ecological Economics, Elsevier, vol. 116(C), pages 211-219.
    2. See, Kok Fong & Ma, Zhanxin, 2018. "Does non-revenue water affect Malaysia's water services industry productivity?," Utilities Policy, Elsevier, vol. 54(C), pages 125-131.
    3. Romano, Giulia & Molinos-Senante, María & Guerrini, Andrea, 2017. "Water utility efficiency assessment in Italy by accounting for service quality: An empirical investigation," Utilities Policy, Elsevier, vol. 45(C), pages 97-108.
    4. Mande Buafua, Patrick, 2015. "Efficiency of urban water supply in Sub-Saharan Africa: Do organization and regulation matter?," Utilities Policy, Elsevier, vol. 37(C), pages 13-22.
    5. Jian Chang & Wanhua Li & Yaodong Zhou & Peng Zhang & Hengxin Zhang, 2022. "Impact of Public Service Quality on the Efficiency of the Water Industry: Evidence from 147 Cities in China," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    6. Mocholi-Arce, Manuel & Sala-Garrido, Ramon & Molinos-Senante, Maria & Maziotis, Alexandros, 2021. "Performance assessment of water companies: A metafrontier approach accounting for quality of service and group heterogeneities," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
    7. Lena, Daniela & Pasurka, Carl A. & Cucculelli, Marco, 2022. "Environmental regulation and green productivity growth: Evidence from Italian manufacturing industries," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    8. Deshan Li & Rongwei Wu, 2018. "A Dynamic Analysis of Green Productivity Growth for Cities in Xinjiang," Sustainability, MDPI, vol. 10(2), pages 1-13, February.
    9. Emrouznejad, Ali & Yang, Guo-liang, 2016. "CO2 emissions reduction of Chinese light manufacturing industries: A novel RAM-based global Malmquist–Luenberger productivity index," Energy Policy, Elsevier, vol. 96(C), pages 397-410.
    10. Barbosa, Alexandro & Lima, Severino Cesário de & Brusca, Isabel, 2016. "Governance and efficiency in the Brazilian water utilities: A dynamic analysis in the process of universal access," Utilities Policy, Elsevier, vol. 43(PA), pages 82-96.
    11. Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2013. "Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil [Efficiency in water and sanitation providers and its links w," MPRA Paper 48247, University Library of Munich, Germany.
    12. Walter, Matthias & Cullmann, Astrid & von Hirschhausen, Christian & Wand, Robert & Zschille, Michael, 2009. "Quo vadis efficiency analysis of water distribution? A comparative literature review," Utilities Policy, Elsevier, vol. 17(3-4), pages 225-232, September.
    13. Picazo-Tadeo, Andrés J. & Sáez-Fernández, Francisco J. & González-Gómez, Francisco, 2008. "Assesing Performance in the Management of the Urban Water Cycle," Efficiency Series Papers 2008/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    14. Liu, Junqing & Fukushige, Mototsugu, 2020. "Efficiency and pricing of water supply and sewerage services in Japan," Utilities Policy, Elsevier, vol. 62(C).
    15. Du, Juan & Chen, Yao & Huang, Ying, 2018. "A Modified Malmquist-Luenberger Productivity Index: Assessing Environmental Productivity Performance in China," European Journal of Operational Research, Elsevier, vol. 269(1), pages 171-187.
    16. Alexandr Akimov & Paul Simshauser, 2018. "Performance measurement in Australian water utilities: Current state and future directions," Discussion Papers in Finance finance:201802, Griffith University, Department of Accounting, Finance and Economics.
    17. Picazo-Tadeo, Andres J. & Saez-Fernandez, Francisco J. & Gonzalez-Gomez, Francisco, 2008. "Does service quality matter in measuring the performance of water utilities," Utilities Policy, Elsevier, vol. 16(1), pages 30-38, March.
    18. Ke Wang & Yujiao Xian & Yi-Ming Wei & Zhimin Huang, 2016. "Sources of carbon productivity change: A decomposition and disaggregation analysis based on global Luenberger productivity indicator and endogenous directional distance function," CEEP-BIT Working Papers 91, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    19. Chuku Chuku & Victor Ajayi, 2024. "Growing green: enablers and barriers for Africa," Journal of Productivity Analysis, Springer, vol. 61(3), pages 195-214, June.
    20. Mellah, Thuraya & Ben Amor, Tawfik, 2016. "Performance of the Tunisian Water Utility: An input-distance function approach," Utilities Policy, Elsevier, vol. 38(C), pages 18-32.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:51:y:2019:i:1:d:10.1007_s11123-019-00545-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.