How"natural"are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies

Celine Nauges and Caroline van den Berg

No 4137, Policy Research Working Paper Series from The World Bank

Abstract: Using data from the International Benchmarking NETwork database, the authors estimate measures of density and scale economies in the water industry in four countries (Brazil, Colombia, Moldova, and Vietnam) that differ substantially in economic development, piped water and sewerage coverage, and characteristics of the utilities operating in the different countries. They find evidence of economies of scale in Colombia, Moldova, and Vietnam, implying the existence of a natural monopoly. In Brazil the authors cannot reject the null hypothesis of constant returns to scale. They also find evidence of economies of customer density in Moldova and Vietnam. The results of this study show that the cost structure of the water and wastewater sector varies significantly between countries and within countries, and over time, which has implications for how to regulate the sector.

Keywords: Town Water Supply and Sanitation; Urban Water Supply and Sanitation; Economic Theory&Research; Water and Industry; Water Supply and Sanitation Governance and Institutions (search for similar items in EconPapers)
Date: 2007-02-01
New Economics Papers: this item is included in nep-com and nep-dev
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Citations: View citations in EconPapers (15)

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Working Paper: How "natural" are natural monopolies in the water supply and sewerage sector? Case studies from developing and transition economies (2007)
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