Using Principal Component Analysis to assess the performance of Romanian wastewater operators

George Banghiore
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George Banghiore: School of Advanced Studies of the Romanian Academy, Doctoral School of Economic Sciences,National Institute of Economic Research "Costin C. Kirițescu";Institute of National Economy,Bucharest,Romania

Romanian Journal of Economics, 2024, vol. 59, issue 2(68), 95-110

Abstract: Objective: In the current global context, characterized by increasing pressures on the environment and the need to optimize resources, the wastewater management sector in Romania faces numerous challenges. These challenges relate in particular to operational efficiency and compliance with environmental standards imposed at national and European level. The present study aims to explore the performance of wastewater operators in Romania, using Principal Component Analysis (PCA) to identify the main operational and financial variables that influence this performance. The main purpose of the research is to evaluate the way different variables contribute to the overall efficiency and the fulfillment of the environmental standards. Method: In order to carry out this study, it was decided to apply the Principal Components Analysis (PCA), a statistical method recognized for its effectiveness in simplifying complex data sets by reducing their dimensionality. For data analysis, the following variables were used: the number of inhabitants connected to sewage services, the volume of wastewater discharged into the outfall without treatment, the volume of wastewater entering the wastewater treatment plants, the total revenues from exploitation, in terms of concerns the wastewater activity, the total investments in the wastewater system and the degree of compliance with the quality of the treated wastewater. Results: The results of the analysis indicate a strong association between the infrastructure and financial capacity of operators and the efficiency of wastewater management. The first two principal components presented distinct dimensions of performance related to operational capacity and compliance with environmental regulations. Originality: The originality of the study consists in using principal component analysis to extract and interpret latent dimensions from a complex data set, providing clear insight into the determinants of performance in the wastewater treatment sector. This method allows efficient and focused analysis, helping to identify key points for strategic interventions and improvements.

Keywords: principal component analysis (PCA); wastewater management; performance of water operators; compliance with environmental requirements; wastewater infrastructure (search for similar items in EconPapers)
JEL-codes: C10 Q53 R10 (search for similar items in EconPapers)
Date: 2024
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