Sustainable Development and Efficiency Analysis of the Major Urban Water Utilities in Spain

Abstract

In Spain, the water supply service is a municipal responsibility and in general is a sector without competitors. For this reason, an efficiency analysis attains greater significance. This study uses Data Envelopment Analysis (DEA) to estimate the efficiency of different urban water utilities. An extensive data search, where several variables such as the capital expenditure, the cost of material, or the labor have been recorded, has allowed evaluating the relative efficiency of the most important Spanish water distribution networks in using their resources. Furthermore, their sustainable efficiency has also been evaluated by including a variable representing the percentage of water losses. Results reveal the weaknesses of inefficient utilities and help to detect potential aspects that these companies should improve. For instance, there is an evident incorrect management of the costs of material by many urban water utilities, which does not happen with the labor. Additionally, the most efficient water utilities regarding the sustainable efficiency help to discover target percentages of water losses for the inefficient ones.