In European countries, wastewater treatment service is often provided by utilities, which have to comply with environmental laws and, at the same time, should control costs in order to restrain tariff growth and earn profits. By applying a conditional order-m efficiency method, this study provides some insights to the operational variables affecting the efficiency of 137 plants owned by a water utility operating in Tuscany, Italy. These performance drivers are categorized as: 1) wastewater features, 2) plant technology, 3) other plant features, 4) output quality, and 5) sludge disposal method. Starting from some controversial results from prior literature, this paper provides some useful insights on the best policies that could be adopted by a utility to catch cost savings

In this study, 139 Tuscan Wastewater Treatment Plants (WWTPs) were analyzed with the aim of evaluating their efficiency and highlighting the main efficiency drivers, as well as distinguishing among wastewater features, WWTP technology, other features of WWTPs, output variables, and sludge disposal. From a methodological point of view, the proposed method includes an ordinary least squares analysis of total plant costs regressed on a set of 28\ud exogenous variables and a two-stage Data Envelopment Analysis model, where efficiency scores are obtained through weight restrictions. Moreover, the results of this study demonstrate that, with the exception of the Bother features of WWTPs^, all other clusters of variables exert a negative effect on cost savings; in other words, larger scale of operations and higher usage of the productive capacity (grouped as Bother features of WWTPs^) can improve cost efficiency

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