Estimating the Relative Efficiency of Brazilian Publicly and Privately Owned Water Utilities: A Stochastic Cost Frontier Approach

• Published in: Journal of the American Water Resources Association Vol. 43; no. 5; pp. 1237 - 1244
• Main Authors: Da Silva e Souza, Geraldo, De Faria, Ricardo Coelho, Moreira, Tito Belchior S.
• Format: Journal Article
• Language: English
• Published: Oxford, UK Blackwell Publishing Ltd 01.10.2007; American Water Resources Association
• Subjects: Brazil; cost efficiency; Earth sciences; Earth, ocean, space; Exact sciences and technology; Hydrology. Hydrogeology; privatization; R15; R38; stochastic frontier analysis; Water resources; water utilities; Brazil; South America; models; efficiency; cost; water utilities; water supply; water; stochastic frontier analysis; companies; stochastic models; privatization; maximum likelihood; water resource management; Brazil; cost efficiency
• ISSN: 1093-474X; 1752-1688
• DOI: 10.1111/j.1752-1688.2007.00106.x

This paper assesses cost efficiencies of Brazilian public and private companies of water supply. To measure the efficiency, we used a stochastic frontier model derived from the translog family - a specification similar to a Cobb-Douglas including a quadratic term in log output. The model parameters are estimated by maximum likelihood using Brazilian data for the year 2002. Statistical inference leads to the conclusion that there is no evidence that private firms and public firms are significantly different in terms of efficiency measurements.