The structure of municipal water supply costs: Application to a panel of French local communities

Citation
S. Garcia et A. Thomas, The structure of municipal water supply costs: Application to a panel of French local communities, J PROD ANAL, 16(1), 2001, pp. 5-29
Citations number
37
Language
INGLESE
art.tipo
Article
Categorie Soggetti
Economics
Journal title
JOURNAL OF PRODUCTIVITY ANALYSIS
ISSN journal
0895-562X → ACNP
Volume
16
Issue
1
Year of publication
2001
Pages
5 - 29
Database
ISI
SICI code
0895-562X(2001)16:1<5:TSOMWS>2.0.ZU;2-P
Abstract
Network losses and returns are important issues for water resource manageme nt, that are addressed in this paper by modeling the structure of productio n for municipal water utilities with two outputs: water sold to final custo mers and water network losses. We propose a measure of economies of scope t o assess the benefit associated with joint production of water for final cu stomers and water losses, and several measures of returns to evaluate poten tial gains in exploiting technological flexibility of water networks. We es timate the cost structure of water utilities using a GMM procedure with a T ranslog cost function and panel data. Estimation results reveal a positive degree of economies of scope, and short-run returns to production density a nd returns to customer density that are not significantly different from 1. Significant economies of scale indicate that local communities may benefit from merging into water districts.