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Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach

Author

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  • María Molinos-Senante

    (Pontificia Universidad Católica de Chile
    Pontificia Universidad Católica de Chile
    Centro de Desarrollo Urbano Sustentable CONICYT/FONDAP/15110020)

  • Alexandros Maziotis

    (Foundazione Eni Enrico Mattei)

  • Ramon Sala-Garrido

    (University of Valencia)

Abstract

The assessment of productivity change across companies and over time is of great importance for water utilities managers and regulators. In this paper, for the first time, we apply the Färe-Primont productivity index (FPI) to evaluate the productivity change for the 10 water and sewerage companies (WaSCs) and 12 water only companies (WoCs) in England and Wales during the years 2001–2008. The FPI is the only index that without price data allows making comparisons involving many firms and many periods. The results indicate that during the years 2001–2004 productivity improved which was mainly attributed to gains in efficiency whereas technical change remained constant, the exception being the year 2004. During the years 2005–2008 productivity showed a declining trend and any gains in efficiency were lost to the highly negative technical change on productivity growth. From a policy perspective, it has been illustrated the importance of using a reliable index to compute the productivity change of water companies when the performance of companies is used to set water tariffs. Finally, the decomposition of productivity change into several drivers allows water utilities and managers to identify the main factors on which they should act to improve productivity of the company.

Suggested Citation

  • María Molinos-Senante & Alexandros Maziotis & Ramon Sala-Garrido, 2017. "Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2389-2405, June.
    • Handle: RePEc:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1346-2
    DOI: 10.1007/s11269-016-1346-2
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    Cited by:

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    2. Min Li & Kaisheng Long, 2019. "Direct or Spillover Effect: The Impact of Pure Technical and Scale Efficiencies of Water Use on Water Scarcity in China," IJERPH, MDPI, vol. 16(18), pages 1-13, September.
    3. Viet Nguyen, Thanh & Simioni, Michel & Le Van, Dao, 2019. "Assessment of TFP change at provincial level in Vietnam: New evidence using Färe–Primont productivity index," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 329-345.
    4. Rongrong Xu & Yongxiang Wu & Ming Chen & Xuan Zhang & Wei Wu & Long Tan & Gaoxu Wang & Yi Xu & Bing Yan & Yuedong Xia, 2019. "Calculation of the contribution rate of China’s hydraulic science and technology based on a feedforward neural network," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-22, September.
    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. Amir Homayoun Sarfaraz & Amir Karbassi Yazdi & Thomas Hanne & Peter Fernandes Wanke & Raheleh Sadat Hosseini, 2023. "Assessing repair and maintenance efficiency for water suppliers: a novel hybrid USBM-FIS framework," Operations Management Research, Springer, vol. 16(3), pages 1321-1342, September.
    7. Walker, Nathan L. & Styles, David & Williams, A. Prysor, 2023. "Water sector resilience in the United Kingdom and Ireland: The COVID-19 challenge," Utilities Policy, Elsevier, vol. 82(C).
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    9. Molinos-Senante, María & Maziotis, Alexandros & Sala-Garrido, Ramón, 2020. "Changes in the total costs of the English and Welsh water and sewerage industry: The decomposed effect of price and quantity inputs on efficiency," Utilities Policy, Elsevier, vol. 66(C).

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