The Influence of Environmental Variables on the Carbon Performance of Water Companies Across Time

ABSTRACT One of the main challenges that water companies face is to reduce carbon footprint in their transition to carbon neutrality. Past research assessing carbon performance of water companies has mostly ignored heterogeneity among the water companies evaluated. To overcome this limitation, this study employed a parametric metafrontier approach to assess and compare carbon performance of a sample of English and Welsh water companies, embracing water and sewerage companies (WaSCs) and water‐only companies (WoCs). This method allows for a comparison of the carbon performance of these two types of companies and analyses the impact of environmental variables on their performance. It was evidenced that water treatment complexity, main source of raw water, and population density significantly influence carbon performance of water companies. The average carbon efficiency for WaSCs was 0.816, indicating marginally superior performance compared to WoSCs, which had an average carbon efficiency of 0.803. Regarding carbon productivity between 2011 and 2020, WoSCs demonstrated an annual improvement in carbon performance of 2.9%, while WaSCs showed an annual decrease in carbon productivity of 4.2%. The insights gained from this study are highly significant for policymakers focused on transitioning the water industry toward net‐zero carbon emissions.