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Technical Efficiency of Water Boards in South Africa: A Costing and Pricing Benchmarking Exercise

Victor Ngobeni and Marthinus Breitenbach ()

MPRA Paper from University Library of Munich, Germany

Abstract: South Africa is a water-scarce country with deteriorating water resources quality, security, infrastructure investment and management. 89 per cent of households have access to water supply, but, only 64 per cent or 10.3 million households are estimated to have reliable water supply. The water sector in South Africa is cost-intensive with various monopolistic utilities. The sector is faced with weakening financial viability due to: inefficient operations coupled with inadequate investment, financing and under-pricing. As a result, cost recovery is not being achieved. In this paper, we use DEA to analyse the technical efficiency of the 9 water boards. We achieve this objective by using expenditure, water losses, sales volumes, and tariffs to model the industry’s efficiency frontiers. The study finds the mean technical efficiency scores of 73.2, 83.7, 85.8 and 92.3 per cent, in the four models respectively. The study also determined the average bulk water tariffs that should be charged in the sector, thereby establishing the basis for economic regulation.

Keywords: Water Boards; Data Envelopment Analysis; Technical Efficiency; Tariffs (search for similar items in EconPapers)
JEL-codes: C6 C65 D2 H3 (search for similar items in EconPapers)
Date: 2020-07-03
New Economics Papers: this item is included in nep-eff
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