Exploring Technical Efficiency in Water Supply Evidence from Ecuador: Do Region Location and Management Type Matter?

Abstract

The efficiency that drinking water suppliers have, is widely analyzed in the literature due to the importance of its proper diagnosis in the regulation of the sector. These regulations seek, via the reduction of inefficiencies, to counteract water access crises. This research calculates the level of input-oriented technical efficiency of Ecuador’s potable water service providers in the period 2014–2017. It analyzes its determinants, focusing on the effect of the geographic region (Highlands, Coast, and Amazon), as well as the type of management, specifically municipal departments and autonomous public enterprises. For this purpose, the semi-parametric method of data envelopment analysis (DEA) with double bootstrap is used. The results suggest that drinking water suppliers could save the inputs used while maintaining their level of production. In addition, it was found that the level of technical efficiency differs by geographic region but not by the type of management used. The natural Highlands region is more efficient compared to the Coast and Amazon region, suggesting climatic and natural resource distribution heterogeneities that induce this difference. The result by type of management shows that the advantages indicated by some literature regarding the technical, financial, and administrative autonomy of public companies may not improve efficiency compared to municipal departments.