Water company productivity change: A disaggregated approach accounting for changes in inputs and outputs

Abstract

The assessment of the productivity change of water utilities provides essential information to sector managers and regulators. This study uses the Luenberger-Hicks-Moorsteen Productivity Indicator (LHMPI) to evaluate productivity change as it can be further decomposed into three components namely technical change (TC), technical efficiency change (TEC), and scale efficiency change (SEC). This study evaluates the productivity of several water companies in England and Wales from 2001 to 2018. We found that productivity declined 1.2% per year due to the use of inputs that increased by 1.4% per year relative to outputs that increased by 0.2% per year.