Economies of scale and scope in water supply

Kim, H. Youn; Clark, Robert M.

doi:10.1016/0166-0462(88)90022-1

Cited by 52 publications

(5 citation statements)

References 13 publications

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“…The anticipated result was that economies of scale at the treatment level (Molinos-Senante and Sala-Garrido, 2017) would mean the more water being treated at larger treatment works, the more efficient energy use would be. An explanation of this could be that any economies of scale that are experienced are offset by the increase in the distribution of water to centralised treatment plants as Kim and Clark (1988) found, along with the increased leakages that occur over larger pipe network (<0.001 p-value using Pearson's r for relationship between leakage rates and network length found). Furthermore, scale economies are seen to be lost in treatment plants once they attain a certain size (Hernández-Chover et al, 2018), therefore this would weaken any relationship in the data.…”

Section: Role Of Explanatory Factors On Energy Efficiencymentioning

confidence: 94%

Key performance indicators to explain energy & economic efficiency across water utilities, and identifying suitable proxies

Walker

Williams

Styles

2020

Journal of Environmental Management

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Water companies consume up to 8% of global energy demand, at billions of dollars' cost.Benchmarking of performance between utilities can facilitate improvements in efficiency; however, inconsistencies in benchmarking practices may obscure pathways to improvement.The aspiration was to conduct an unbiased efficiency comparison within a sample of 17 water only companies and water and sewerage companies in England and Wales, accounting for exogenous factors, whilst evaluating the accuracy of common proxies. Proxies were tested, and bias-corrected energy and economic efficiency scores with explanatory factors were analysed using a double-bootstrap data envelopment method. Bias correction altered the rankings of two companies for energy efficiency only. Results imply that on average, companies could reduce energy inputs by 91.7%, and economic inputs by 92.3%, which was symptomatic of the companies specialising in drinking water supply considerably outperforming combined water and sewerage companies. As exogenous influences were likely to be a factor in the disparity between the companies, five indicators were evaluated. The results varied but of note were average pumping head height, which displayed a significant negative effect for energy efficiency, and proportion of water passing through the largest four treatment works, that exhibited a significant negative effect on economic efficiency. Within proxy performance, population served for drinking water was an adequate replacement for volume of water produced, with results matching the core variable apart from two companies changing rank in the economic analysis. Conversely, length of water mains performed poorly when replacing capital expenditure, implying companies were on average 12.6% more efficient, resulting in ten companies changing their rank and causing explanatory variables to contradict direction of influence and significance. The findings contribute new insights for benchmarking, including how different types of water companies perform under biascorrecting methods, the degree to which factors affect efficiency and how appropriate some proxies are.

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Section: Role Of Explanatory Factors On Energy Efficiencymentioning

confidence: 94%

Key performance indicators to explain energy & economic efficiency across water utilities, and identifying suitable proxies

Walker

Williams

Styles

2020

Journal of Environmental Management

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“…While the number of connections is the standard measurement of utility size used by the EPA, research finds that economies of scale are nearly inexhaustible in the treatment of water (Youn Kim & Clark, 1988), meaning the volume of water produced is the driving factor, but not the number of customers that are served by the system. Depending on characteristics of the distribution network such as connection density (Shih et al, 2006; Youn Kim & Clark, 1988), additional service connections can achieve greater economies of scale, but only if the underlying relationships between volume of water provided, size of the distribution area, and density of service connections are not adversely changed (Torres & Morrison Paul, 2006). In general, research has shown that public service delivery in more densely populated urban areas is more cost‐effective compared to areas that are characterized by suburban sprawl (Goodman, 2019).…”

Section: Relevant Literaturementioning

confidence: 99%

“…Number of connections is the standard measurement of utility size used by EPA. However, additional connections do not necessarily yield economies of scale, but rather may be dependent on other characteristics of the distribution network such as connection density (Shih et al, 2006; Youn Kim & Clark, 1988). As such, we hypothesize that municipalities with greater numbers of service connections and connection densities will be associated with lower rates, as they benefit from economies of scale and lower risk of water loss compared to smaller and less densely connected networks.…”

Section: Data and Model Specificationmentioning

confidence: 99%

Fiscal institutions and racial equity: Determining the price of water

Albrecht,

Carroll,

Kass

et al. 2024

Public Budgeting & Finance

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Municipal water utilities across the United States establish their own rate structures to cover operations, maintenance, depreciation, and outstanding debt repayment. Yet, little is known about how rates are determined to ensure equity and/or affordability. To identify sources of variation in residential drinking water rates, we examine municipalities in northeastern Illinois, 2015–2019. Controlling for water utility characteristics, billing structures, financial management, service quality, and demographic/socioeconomic factors, we find no statistically significant correlations between water rates and median household income or race when nonrevenue water from leaking infrastructure is considered, revealing relative racial equity in water pricing within these communities. A larger water distribution network, more water included in the base charge, and a greater number of months in the billing cycle are all associated with lower rates. Purchasing water through an individual or cooperative agreement, a greater proportion of nonrevenue water from leaking infrastructure, a higher minimum monthly base charge, and more revenue debt outstanding (while controlling for nonrevenue water) are all associated with higher rates. We also find a positive correlation between municipal sewer rates and drinking water rates that supports findings from prior research. Overall, our research aids in the development of public policy that ensures all households have access to affordable and safe drinking water to promote water equity and public health.

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“…Otras variables que también pueden afectar los costos -conocidos en la literatura especializada como variables de control-son los kilómetros en red (Kim & Clark, 1988;Garcia et al, 2007), cantidad de clientes (De Witte & Dijkgraaf, 2010), densidad de clientes por kilómetros de la red (Bottasso & Conti, 2009), fuentes de aprovisionamiento (De Witte & Dijkgraaf, 2010), pérdidas (Garcia & Thomas, 2001) y tipos de clientes, esto es, industriales o residenciales (De Witte & Dijkgraaf, 2010).…”

Section: Teorías E Hipótesisunclassified

Agua en la Ciudad de México: deseconomías de escala y tecnologías intermedias

Fraga-Castillo

2021

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El objetivo de esta investigación es examinar teórica y empíricamente las deseconomías de escala y las tecnologías intermedias en el sector del agua en la Ciudad de México. La concentración demográfica de esta ciudad puede disminuir los costos promedio de bienes públicos, como el agua; sin embargo, hasta cierto nivel, ellos pueden crecer y llevar a deseconomías de escala. La producción y la distribución de agua generan en cada caso costos diferentes; los que se pretenden estudiar en esta investigación son los de producción. Este trabajo contribuye con la presentación de indicios teóricos y estadísticos de que la tendencia a las deseconomías de escala en la producción de agua en la Ciudad de México, observada desde los años setenta, continúa, y si esta puede atenuarse con tecnologías intermedias.

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Economies of scale and scope in water supply

Cited by 52 publications

References 13 publications

Key performance indicators to explain energy & economic efficiency across water utilities, and identifying suitable proxies

Key performance indicators to explain energy & economic efficiency across water utilities, and identifying suitable proxies

Fiscal institutions and racial equity: Determining the price of water

Agua en la Ciudad de México: deseconomías de escala y tecnologías intermedias

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