Productivity, efficiency and technological progress in Australia's urban water utilities
Waterlines report No 62 - October 2011
This research project used National Performance Reports data over the past three years to measure and analyse efficiency, productivity and technological changes in the urban water supply industry.
The report argues that there is potential for efficiency measurement techniques to guide regulatory policy and industry practices. However, the research acknowledges difficulties with the modelling techniques, particularly in accounting for qualitative aspects of utilities' business environments, and the lack of granularity in the data.
With these limitations in mind, the report found that most productivity improvements have been due to efficiency gains rather than technological advances. It also found evidence of economies of scale at about 90,000 connected properties.
The report recommends greater differentiation of inputs and outputs to the sector, to better inform potential reforms. Individual utilities might want to pursue further analyses on their own to make improvements at their operating levels.
This report has been prepared for the National Water Commission by Andrew C Worthington, as part of the Commission's Fellowship program. The Fellowship Program was established to support implementation of the National Water Initiative by developing future leaders for Australia's water sector who can advance water-related knowledge and build industry capacity.
