Electoral opportunism and water pricing with incomplete transfer of control rights

One of the forms of intervention in public services that lie beyond market forces is price control. While such regulation is justified by the need to achieve social goals, empirical evidence has sh...

Does the crowd matter in refereeing decisions? Evidence from Spanish soccer

This paper analyses referee home bias with data from the First Division of the Spanish Football League between the 2002/03 and 2009/10 seasons. The aim is to assess the behaviour of the referee in relation to two decisions, namely free kicks awarded and players booked. The main contribution of this paper is the way in which it analyses referee bias; free kicks and bookings are not considered independent elements, instead it is presumed that the number of free kicks awarded has an impact on the cards shown. Regarding methodology, two random effects panel-data regression models are estimated. The results obtained do not confirm, at least in the period under analysis, that Spanish soccer refer…

Accounting for operating environments in measuring water utilities’ managerial efficiency

In this paper adjusted input-specific scores of technical efficiency are computed for a sample of Spanish water utilities. Performance is adjusted by netting out efficiency scores from the effect of operating environments and statistical noise. The results show that computation of adjusted efficiency scores at the input level manifestly improves the assessment of utilities’ performance in our sample of water utilities. In addition, several environmental variables capable of affecting input-specific technical management are discovered, ownership or demand seasonality among them. Finally, distributions of conventional and adjusted scores of technical performance are found to be statistically …

Does service quality matter in measuring the performance of water utilities?

Abstract Quality is a dimension of water services that has been repeatedly omitted in the study of performance of water utilities. In this paper, Data Envelopment Analysis techniques are used to compute both conventional quantity-based and quality-adjusted scores of technical efficiency for a sample of Spanish water utilities. The key assumptions are that a lack of quality (bad quality) can be regarded as a bad output and the existence of a trade-off between quantity and quality. Our main results indicate that quality matters in measuring technical efficiency, the difference between conventional and quality-adjusted evaluations representing the opportunity cost of maintaining quality. Avera…

Does market concentration affect prices in the urban water industry?

This paper analyzes the relationship between market concentration in the private segment of the water industry and water prices with a sample of municipalities located in the Southern Spanish region of Andalusia. In doing so, several Heckman sample selection models are estimated with the main finding being that market concentration increases the price of water for residential use charged by private companies. The main policy recommendation is that urban water service privatization must be accompanied by the appropriate regulatory and institutional frameworks to promote competition among businesses and monitor water pricing.

Valuing water supply infrastructure improvements using life satisfaction data as a complement to contingent valuation

An analysis of the price escalation of non-linear water tariffs for domestic uses in Spain

Abstract Efficient and sustainable water resource use and management is becoming increasingly important, especially in regions under water stress. The use of increasing block pricing involving an escalation or progressivity of unit prices in tariff systems is an economic instrument that contributes to achieving this objective. More progressive tariffs are expected to contribute to a better allocation of resources and avoid their wastage. This article analyses the determinants of the price escalation of water supply tariffs in Spain, a country subject to a high water stress throughout most of its territory. The main objective is to discern whether differences in the degree of progressivity i…

Can we be satisfied with our football team? Evidence from spanish professional football.

This article assesses the sporting performance of Spanish professional football teams at competition level, namely, League, King’s Cup, and European competitions (Champions League and Union of European Football Associations [UEFA] Cup). Then, the gap between the result obtained by a team at the end of a season and that expected according to its potential is used as a proxy of the degree of satisfaction that fans should feel: the narrower the gap the greater the level of satisfaction. Regarding methodology, Data Envelopment Analysis techniques and directional distance functions are used. Results reveal that most teams perform rather differently across competitions, the lower average performa…

Assessing performance in the management of the urban water cycle

This paper proposes the use of directional distance functions and Data Envelopment Analysis techniques to assess technical efficiency in the provision of the different stages of the urban water cycle in Andalusia, a Southern European region. Evaluating performance in the management of specific stages of the urban water cycle provides utility managers and regulating authorities with relevant information that may not be detected by more conventional approaches based on assessing performance at utility level. We find that Andalusian water and sewage utilities could achieve significant increases in the volume of water delivered without diminishing the output of their other services and using th…

Urban Water Pricing and Private Interests’ Lobbying in Small Rural Communities

This research received funding from the LIFE programme of the European Commision [project LIFE16 ENV/ES/000196], the Regional Government of Andalusia and the European Regional Development Fund (projects P18-RT-576 and B-SEJ-018-UGR18) and the University of Granada (Plan Propio. Unidad Cientifica de Excelencia: Desigualdad, Derechos Humanos y Sostenibilidad -DEHUSO-).

Legislative reforms and market dynamics in the provision of urban water service by private contract operators in Spain

Abstract This paper studies the dynamics of concentration in the Spanish market for the provision of urban water service by private contract operators in the 2000–2020 period. The market is highly concentrated. Concentration increased until 2007, at which point it started to decline when Law 30/2007 on Public Sector Contracts and Organic Law 8/2007 on Political Party Financing were passed; before rising again from 2016 onwards. This latter trend results from strategic behaviour by the two leading operators, acquiring smaller companies with a notable presence in some regional markets. Further legislative reforms aimed at safeguarding space for competition are thus proposed.

Is the price of water for residential use related to provider ownership? Empirical evidence from Spain

Abstract This paper assesses the relationship between provider ownership and the price of water for residential use set by 386 Southern Spanish municipalities. Our main contribution to the previous literature is that we go much further than merely distinguishing between private and public ownership. First, we find that prices are lower when the urban water service is directly provided by town councils. Second, when water services are contracted out to external companies, the prices set by public utilities are higher than the prices of private utilities due to larger fixed quotas. Finally, water prices are also higher when the provision of the service has been privatised to an institutionali…

WHY DO LOCAL GOVERNMENTS PRIVATIZE THE PROVISION OF WATER SERVICES? EMPIRICAL EVIDENCE FROM SPAIN

Why do some local governments privatize water services, while others opt for public management? Economic literature has been unable to demonstrate that private management is more efficient than public management, so there must be other reasons that lead governments to privatize the service. But what are they? This paper presents the results of a study that analyses the factors behind the privatization of water services with data from 741 municipalities located in the South of Spain over a period dating from 1985 to 2006. A discrete choice model analyses the influence of each factor on the likelihood of privatization. One of the novelties of this paper is that we take the value of the explan…

The ‘social choice’ of privatising urban water services: A case study of Madrid in Spain

Abstract In countries where privatisation is permitted by law, policymakers usually provide different reasons of general interest to allow private companies to manage water services. However, these decisions often provoke intense political debate and are at times opposed by citizens. We illustrate how the Analytic Hierarchy Process can be used to introduce a political analysis regarding the management of water services. We analyse the recent decision taken by the Regional Government of Madrid (Spain) to part-privatise the management of water services. Our main result suggests that policymakers should reconsider the importance of citizen participation in the management of water services.

Contract Renewal in Urban Water Services, Incumbent Advantage, and Market Concentration

Contract renewal with the incumbent is common practice in the contracting-out of public services. It could, however, affect competition by reinforcing trends towards market concentration. This article contributes empirical evidence on the determinants of the result of public tenders for the renewal of private provision of the urban water service. A dataset with information on 215 public tenders held in Spain between 2008 and 2019 is employed. The methodology is grounded in logistic regression techniques. The findings indicate that incumbents' size does not play a role in the proba-bility of alternating between service providers. Furthermore, competition−proxied by the number of bidders−and …

The dynamics of privatization and regulation of water services: a comparative study of two Spanish regions

As in other economic activities, privatization of water delivery has not resulted in the retreat of the public sector, but rather a change in the way in which the government intervenes in the water industry. This paper illustrates this situation by comparing urban water services in two Spanish regions, Andalusia and Catalonia. Water service delivery is structured very differently in these two regions with respect to private involvement, the degree of market concentration and, as a result, problems in competition. The characteristics of the two regions' respective regulatory agencies reflect the different paths taken to privatization: in Catalonia private firms have much more tradition and o…

Opportunity Costs of Ensuring Sustainability in Urban Water Services

This paper assesses technical performance in the water industry in the Southern European region of Andalusia, while accounting for sustainability in the management of water. This allows the opportunity cost of producing sustainability to be evaluated. Given the low cost of raw water in Spain in relation to the estimated opportunity cost of saving this natural resource, wasting water becomes a profitable strategy for utility managers from a private perspective. However, this managerial strategy has a huge social cost in an area of Europe where the sustainable management of water is a pressing need. The conclusion is that environmental policy aimed at discouraging this wasteful behaviour is u…

The role of environmental factors in water utilities' technical efficiency. Empirical evidence from Spanish companies.

This article computes input-specific scores of technical efficiency for a sample of water utilities located in the southern Spanish region of Andalusia. In addition, differences in efficiency between different operating environments are investigated. Concerning the debate about ownership and efficiency, we find that privately owned companies outperform public utilities in their management of labour. Furthermore, technical efficiency is found to be greater among firms located in highly populated areas and for utilities providing water services to tourist municipalities. Finally, no empirical evidence supporting the greater technical efficiency of consortia of water utilities, a managerial st…

Estimating willingness to pay for desalinated seawater: the case of Djerba Island, Tunisia

AbstractWater scarcity can be a growth-limiting factor. Non-conventional water resources, such as desalinated water, represent an alternative means of guaranteeing access to water while reducing water stress. In this study, a contingent valuation survey carried out in Djerba Island, Tunisia, allows the joint modelling of two decisions: societal support for the construction of a desalination plant and households’ willingness to pay for desalinated water. To the best of the authors’ knowledge, no study to date has addressed this relationship. We find that although a clear majority of households are in favour of using desalinated water, far fewer are willing to pay for it. The article conclude…

Willingness to pay to improve urban water supply: the case of Sucre, Bolivia

In this study the contingent valuation method is applied in order to estimate the willingness to pay (WTP) of the inhabitants of Sucre (Bolivia) for an improvement in the urban water supply system. The study finds that about 55 per cent of households would be willing to pay an increase in their water bill for an improvement in the service. In order to deal with the problem of protest responses and the possible presence of a sample selection bias, a Heckman two-step model was estimated. More specifically, the econometric analysis undertaken reveals that there is no evidence of sample selection bias and that WTP positively relates to the respondents' household income, their level of education…

Public choice of urban water service management: a multi-criteria approach

Local policy makers in developed countries have to make decisions in increasingly complex scenarios. Consequently, they should use all the tools available when deciding which management option is the most suitable for urban water service, given how important that service is and the variety of criteria involved in making such a decision. This article employs ‘analytic hierarchy process’ techniques to perform an ex post analysis of the decision to transfer the management of the urban water service in Granada (in southern Spain) to a public-private partnership. The main conclusion is that the decision was rational, in that it was the best possible alternative considering the hierarchy of prefe…

Does a red shirt improve sporting performance? Evidence from Spanish football

Recent research has linked red shirts to sporting success. In this article, we analyse the relationship between the colour red and sporting performance in the Spanish Professional Football League. Our foremost conclusion is that once the effect of the different endowments of resources and the ability of managers have been discounted, teams with red shirts do not show greater performance than teams wearing shirts of other colours.