The Economics of the Water Industry: Technology, Ownership and Efficiency

Amedeo Amato, Maurizio Conti

The Economics of the Water Industry: Technology, Ownership and Efficiency

Printed Edition


Pages: 176

ISBN: 9788846472342

Edition: 1a edizione 2005

Publisher code: 380.300

Availability: Discreta

In many European countries the water industry is currently undergoing significant changes that require them to address and respond to three strategically crucial issues: iownership structure, implementation of adequate incentive regulation and horizontal and vertical integration.
The water industry in Europe, with the exception of France and U.K., is largely in public ownership. This book reviews the international empirical evidence without finding support to the oft-claimed higher efficiency of private operators in the water industry. More importantly appears the introduction of adequate systems of incentive regulation.
The book examines many systems of incentive regulation focusing in particular on yardstick competition (y.c.). The best known examples of regulators adopting y.c. are Ofwat and, more recently, the Scottish Water Commissioner. There are also some elements of y.c. in the Italian "Metodo Normalizzato". The work critically analyses the econometric models and other mathematical approaches underpinning regulation and presents some suggestions for improvement.
Econometric analysis shows that the current average size of water firms in most European countries is suboptimal. Cost saving could therefore be achieved through prudent mergers. However, M&A activity beyond a certain size appears to generate marked increases in unit costs. The analysis carried out in the book addresses the question of optimal size in the water industry and the possibility of achieving economies of vertical integration and other scope economies.

Fondazione AMGA was established in 2003 to initiate, promote and further cultural and scientific initiatives in the water sector. Foundation activities include promotion and carrying out of research, training and dissemination projects, as well as support of activities undertaken by other entities for management and safeguard of water resources.

Executive summary
The economics of water services: an overview of the main issue
(Introduction; The Economic of the Water Industry; Ownership Relative Efficiency in the Water Industry; Regulation and Yardstick Competition in the Water Industry; References)
The economics of the water industry and the structure of the technology
(Introduction; Economics Characteristics of the Water Industry; Natural Monopoly and Competitive Structure of the Water Supply Industry; Conclusion; References)
Scale and scope economies in the water industry: a review of the international empirical evidence
(Introduction; The Cost Structure of Water Utilities: Technical Background; The Empirical Evidence; Conclusion; Appendix; References)
Ownership relative efficiency in the water industry: a survey of the international empirical evidence
(Introduction; Publics vs. Private Provision of Water Services: An Overview of the Theory; The Empirical Evidence; Conclusion; Appendix; References)
Cost efficiency in the water industry: a comparison of different approaches
(Introduction; Frontier Efficiency Estimation; Efficiency Measurement and Consistency Conditions for Regulatory Purposes; Data and Model Specification; Results; Conclusion; References).


Serie: Economia e politica industriale

Subjects: Sustainability & Green Design

Level: Scholarly Research

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