Factors Associated to Performance in Mexican Water Utilities

The aim of this paper is, first, to investigate the factors associated to performance in Mexican water utilities by analyzing the correlation structure of the most important indicators of a sample of 106 water utilities. Second, to classify these utilities according to these factors to identify patterns of efficiency related to contextual variables, such as GDP per capita, precipitation and population. A classification using Principal Component Analysis (PCA) and Hierarchical Clustering Analysis (HCA) was carried out. The PCA was used to investigate the essential factors (components) that are inherent to the main performance indicators of utilities. The HCA was used to generate clusters of utilities based on the factor scores obtained through PCA. Utilities were clustered in five groups; afterwards, the groups were compared in terms of variables that were thought to affect their performance. Results indicate that non revenue water is higher in utilities with a high number of staff per thousand connections. Non revenue water is also correlated to low production costs (low opportunity cost of water) and high precipitation rates, used as a proxy for water availability. Water and sewerage coverage is positively correlated to GDP per capita and number of connections, which indicates that larger and more developed cities have better access to water; however, high population growth rates seem to be associated to lower coverage ratios. Collection ratio and average revenue per cubic meter are greater in localities with higher metering level and these utilities have also the larger operating cost coverage (revenue/cost ratio). Privately managed utilities have lower staff per connection and higher revenue/cost ratio. Utilities with the overall best performance are located in the north of Mexico, where water is scarce, while the worst performing utilities are usually located in the south of the country, where water is more abundant. In general, this study provides an understanding of the correlations of performance indicators, and the classification of utilities provides policy makers with an overview of the variety of water utility profiles in order to formulate policies that are consistent with the problems faced by each group. See above See above