Frontier distance function analysis for water supply systems

Abstract

Almost all water supply policy makers and managers in developing countries (and in some developed countries) are faced with enormous challenges of improving managerial efficiencies and productivity. Some managers have tended to judge improvements in water supply management based on partial performance indicators. The question is which of these partial indicators should be used to say, unequivocally, that the company is approaching best practice? In this study, an input stochastic frontier analysis distance function is utilised to compute an aggregate measure – technical efficiency (catch-up). Unbalanced panel data are used from 12–15 water utilities under the National Water and Sewerage Corporation of Uganda for the period 2000–2006. The study concludes that individual partial operating efficiency indicators may exhibit varied improvement and statistical consistency trends compared to performance-compatible technical efficiency trends for water infrastructure management.