Ranking water utilities in a competitive scenario using two years of information and data envelopment analysis

ABSTRACT Urban water utilities (UWUs) efficiency assessment in a competitive scenario and sunshine regulation are considered the main drivers of competitive services improvement in the water industry. The conventional data envelopment analysis (DEA) assessment technique is weak in accounting for the nature and operation environment of the UWU. Despite numerous use cases, conventional DEA has not successfully benchmarked UWUs in a competitive scenario. Thus, to account for the nature of a UWU environment, regulators employ a performance indicator (PI, single gap) system and other empirical analyses to rank UWU performance. This study has developed a network form of the conventional DEA that employs two years of information to benchmark UWU efficiency in a competitive scenario and compare efficiency results with the PI system. The comparison of the computations was demonstrated to obtain tractable results. The assessment indicates that the proposed network DEA approach includes variables with zero values and places UWUs in a competitive scenario beyond the single gap system. In this way, the best, mediocre and worst performances are revealed, and inefficient UWUs can learn management practices from efficient UWUs and improve water service delivery.