Measuring the efficiency of water utilities: a cross-national comparison between Portugal and Italy

All over the world, governments are compelling water utilities to improve their efficiency and productivity through reforms and tougher regulatory tools. Despite the different strategies and approaches, the goals remain the same: to make the whole sector more efficient, to curb the profits and ‘quiet life’ of water utilities and pass the productivity gains to customers through reduced prices or better environmental protection and quality of service. The water sectors in Portugal and Italy underwent deep reforms in the 1990s, in pursuit of higher levels of performance. Therefore, there is added interest in measuring the performance of water utilities in these two Mediterranean countries. We assess their performance using composite (global) indicators on a sample of 88 water utilities, for the year 2007. While we compare the performance of the two countries in this sector we also try to identify the impact of the ownership structure on efficiency. Finally, this paper discusses the benchmarking results of our research and draws some policy implications.