Water losses and hydrographical regions influence on the cost structure of the Portuguese water industry

• Type: Article in International Scientific Journal
• Date: 2012

Authors

Rita Martins (Author) Other; Fernando Coelho (Author) FEP; Adelino Fortunato (Author) Other

Journal

Title: Journal of Productivity Analysis

Vol. 38 No. 1

Pages: 81-94

ISSN: 0895-562X

Publisher: Springer Nature

Indexing

ISI Web of Science

Scientific classification

FOS: Social sciences > Economics and Business

Other information

Abstract (EN): Despite the growing research about water utilities, some questions still remain to be solved on the supply side, which are frequently absent from empirical studies based on the estimation of cost functions. This paper aims to fill to some extent this gap in the literature by focusing the consequences of water losses reduction and the management of water resources based on their availability at an integrated river basin level. Major findings derived from the estimation of a multiproduct cost function suggest advantages from reducing water losses, given that an adjusted measure of economies of scope, adapting the fact that water lost cannot be sold, reveals that there are small diseconomies of scope. In addition, generally the variables related to the hydrographical regions used have significant effects on water costs. Since the outcomes also reveal the existence of economies of scale, more concentration in the Portuguese water industry at the retail level would be beneficial.

Language: English

Type (Professor's evaluation): Scientific