Operational Efficiency of Mexican Water Utilities: Results of a Double-Bootstrap Data Envelopment Analysis

Abstract

The objective of this paper is to estimate the operational efficiency of Mexican water utilities and identify the context variables that impact their efficiency. In particular, a bootstrap data envelopment analysis (DEA) and a bootstrap truncated regression analysis are combined in a two-stage research method. In the first stage, an input-oriented DEA model is used to determine bootstrap efficiency scores. Then, the corrected distribution function of the efficiency scores is used to estimate a truncated regression which is aimed to identify the significant influential context variables. Three categorical and two continuous context variables are considered in the analysis. Results show that only one context variable has a significant impact on the water utilities efficiency scores. Managerial recommendations are drawn from the analysis. It is suggested that water utilities continue or implement wastewater treatment, persist in decreasing and controlling leakage across the distribution network, and maximizing sewer coverage.