Home

>

Efficiency of South African water utilities: a double bootstrap DEA analysis

Although the efficiency of the water sector has been studied extensively utilising data envelopment analysis (DEA), the literature tends to use the conventional DEA model to compute efficiency scores. However, conventional DEA input/output data may contain random errors, which may result in distorted efficiency frontiers due to statistical noise. Bias-correcting double-bootstrap DEA came into being because of this shortcoming in the conventional DEA approach. This study joins a growing number of studies using bootstrapping DEA to correct efficiency scores. Most importantly, little is known about the comparative performance of conventional DEA versus bias-corrected DEA. A conventional model is deterministic in nature and yields biased efficiency scores. To determine the bias-corrected efficiency scores of rural and urban water utilities in South Africa, this study uses a robust, non-parametric DEA model to generate them. The truncated double-bootstrap regression results give insight into the drivers of efficiency. We found that there are significant differences between the rankings and efficiency scores generated by the conventional DEA model compared to the double-bootstrap DEA model, for both urban and rural samples. The regression model found location and the ratio of metered to unmetered connections to be significant determinants of efficiency for both urban and rural water utilities. Non-revenue water is a significant explanatory variable for urban utilities only. The number of consuming units mattered for the rural utilities only.

Working paper 794
1 September 2019
Related Journal

Applied Economics
28 November 2021
SHARE THIS Working Paper PUBLICATION:

Related South Africa’s Cities and Growth Spatial Challenges and Policy Interventions Content

Request for Proposals: The role of cities as drivers of growth and employment
Background Urbanization in South Africa is expected to reach 80% by...
Call for Work
South Africa’s future will be decided in our cities
Discussion Document 14 South Africa’s cities face multiple, overlap...
Dieter von Fintel, Justin Visagie, Ivan Turok, Takwanisa Machemedze, Claus Rabe, Sebastian Galiani, Edward Glaeser
Discussion Document
Monitoring South Africa’s metropolitan economies: A survey of the data landscape
Discussion Document 13 Disparities in data across different metropo...
Dieter von Fintel
Discussion Document
Cities, productivity and Jobs in SA: Problems and potential
Discussion Document 12 Cities contribute to national prosperity bec...
Ivan Turok, Justin Visagie
Discussion Document
Place-based economic policies: international lessons for South Africa
Discussion Document 11 Place-based policies are designed to support...
Harris Selod, Claus Rabe
Discussion Document
What luminosity data can and cannot reveal about South Africa’s urban economies
Discussion Document 10 As novel types of data are becoming availabl...
Takwanisa Machemedze
Discussion Document
Crime: A policy-oriented survey
Discussion Document 9 South Africa has a reputation for having high...
Sebastian Galiani
Discussion Document
Virtual CDE Workshop on SA Cities and Growth
Urban economics has provided powerful insights into how the charact...
Workshop