Technical inefficiency effects in a stochastic production function for managerial incentives in public water utilities

2013 ◽  
Vol 14 (1) ◽  
pp. 61-72 ◽  
Author(s):  
Silver Mugisha
Keyword(s):  
Production Function ◽  
Financial Incentives ◽  
Stochastic Frontier ◽  
Managerial Incentives ◽  
Policy Implications ◽  
Water Utilities ◽  
Service Coverage ◽  
Non Revenue Water ◽  
Utility Managers ◽  
The Impact

Performance of state-owned water utilities in developing countries is often weak. This study estimates the impact of managerial incentives upon efficiency using a stochastic frontier production function with revenue water as the output. The empirical analysis utilises unbalanced panelled data consisting of revenue water, connections, operating expenditure, water delivered and staff, from Uganda's 19 National Water and Sewerage Corporation (NWSC) sub-utilities for a 9-year period, 2002–2010. The inefficiency effects are modelled as a function of utility-specific variables: service coverage, level of financial incentives, target difficulty, and year of observation. While financial incentives and increased service coverage improve efficiency, targets (such as the reduction of non-revenue water) that are perceived as excessive by employees may reduce it. The findings suggest some policy implications: utility managers in the public water sector need to incorporate monetary incentives and increase service coverage to reduce non-revenue water. However, targets need to be set with great care and with transparency.

The Covid-19 pandemic and technical efficiency of Russian firms: a stochastic frontier production function approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Parul Singh ◽  
Kashika Arora ◽  
Areej Aftab Siddiqui
Keyword(s):  
Technical Efficiency ◽  
Production Function ◽  
Market Competition ◽  
Stochastic Frontier ◽  
Innovation Activity ◽  
Peak Period ◽  
Role Of Government ◽  
Content Type ◽  
External Assistance ◽  
The Impact

Purpose This paper aims to undertake the efficiency analysis in the form of stochastic frontier to estimate a Cobb–Douglas production function by controlling for the heterogeneity across Russian firms by including firm size, ownership, age, innovation activity and market competition. Design/methodology/approach During the peak period of Covid-19, certain firms witnessed either a decrease or increase in sales. Using this segregation of firms from World Bank’s Covid-19 impact surveys follow-up to the Enterprise Survey for Russia, this study empirically investigates the determinants of technical efficiency of these firms focusing on the role of government assistance. Findings The findings suggest that by segregating firms in terms of sales, different internal factors can enable in steering through pandemic situation besides just depending on external assistance. Originality/value One of the few papers to analyse the impact of the pandemic on Russian firms by considering World Bank Covid Survey.

scholarly journals Technical efficiency analysis of Fiji's sugar industry: An application of the stochastic frontier production function approach

1999 ◽  
Vol 2 (1) ◽  
pp. 77-92 ◽  
Author(s):  
Mahendra Reddy ◽  
John F. Yanagida
Keyword(s):  
Production Function ◽  
Sugar Industry ◽  
Stochastic Frontier ◽  
Efficiency Analysis ◽  
Policy Implications ◽  
Function Approach ◽  
Stochastic Frontier Production Function ◽  
Production Function Approach ◽  
Preferential Trading Arrangements ◽  
Frontier Production Function

Small developing countries have for long acquired significant benefits through preferential trading arrangements. However, these benefits have led to a proliferation of inefficient industries in the recipient countries. With the recent changes in the GAIT, these inefficient industries may close and thus lead to major economic and social problems in the recipient countries. This paper utilizes the frontier production function approach to examine the efficiency status of Fiji's sugar industry. The analysis reveals that a significant level of inefficiency exists at the farm level of Fiji's sugar industry. Some of the factors that were found to effect the level of efficiency are farming status, land class and ethnicity. These factors are then used to derive policy implications.

Benchmarking the economic and environmental performance of water utilities: a comparison of frontier techniques

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria Molinos-Senante ◽  
Alexandros Maziotis ◽  
Ramon Sala-Garrido
Keyword(s):  
Stochastic Frontier Analysis ◽  
Methodological Approach ◽  
Stochastic Frontier ◽  
Assessment Method ◽  
Water Utilities ◽  
Content Type ◽  
Frontier Analysis ◽  
Efficiency Assessment ◽  
Lower Variability ◽  
The Impact

PurposeThe purpose of this paper is to estimate and compare the efficiency of several water utilities using three frontier techniques. Moreover, this study estimates the impact of several qualities of service variables on water utilities’ performance.Design/methodology/approachThe paper utilizes three frontier techniques such as data envelopment analysis (DEA), stochastic frontier analysis (SFA) and stochastic non-parametric envelopment of data (StoNED) to estimate efficiency scores.FindingsEfficiency scores for each methodological approach were different being on average, 0.745, 0.857 and 0.933 for SFA, DEA and StoNED methods, respectively. Moreover, it was evidenced that water leakage had a statistically significant impact on water utilities’ costs.Research limitations/implicationsThe choice of an adequate and robust method for benchmarking the efficiency of water utilities is very relevant for water regulators because it affects decision making process such as water tariffs and design incentives to improve the performance and quality of service of water utilities.Originality/valueThis paper evaluates and compares the performance of a sample of water utilities using three different frontier methods. It has been revealed that the choice of the efficiency assessment method matters. Unlike SFA and DEA, a lower variability was shown in the efficiency scores obtained from the StoNED method.

scholarly journals Impact of land fragmentation and soil fertility on Aus rice producers’ technical efficiency in Barisal district of Bangladesh

2016 ◽  
Vol 14 (1) ◽  
pp. 75-81
Author(s):  
AKM Abdullah Al Amin ◽  
M Saidur Rahman ◽  
MI Hossain
Keyword(s):  
Soil Fertility ◽  
Technical Efficiency ◽  
Positive Impact ◽  
Average Distance ◽  
Stochastic Frontier ◽  
Sampling Procedure ◽  
Policy Implications ◽  
Land Fragmentation ◽  
The Impact ◽  
Fertile Land

This article determines the impact of land fragmentation and soil fertility on Aus rice producers’ technical efficiency (TE) of Barisal district in Bangladesh. A total of 60 farm households from two villages were selected using stratified random sampling procedure. Detailed input and output data for the Aus were collected in May 2015. Cobb-Douglas stochastic frontier model was used to address this TE. Results indicate that the mean TE was 0.61. Among the four land fragmentation indicators two were found to be statistically significant with anticipated signs. The positive effect of the number of plots on TE implies that variation effect exceeded the management effect and the average distance from plots to homestead indicating loss of time and inconvenience in farming management as well as inefficiencies in input use. The study also used two indicators of soil fertility (i.e., share of highly fertile land and share of not highly fertile land). Between these share of highly fertile land had positive impact on TE in rice productivity. Therefore, the study includes policy implications addressing the structural causes of land fragmentation and developing effective strategies to promote soil conservation.J. Bangladesh Agril. Univ. 14(1): 75-81, June 2016

Quantifying the global non-revenue water problem

2018 ◽  
Vol 19 (3) ◽  
pp. 831-837 ◽  
Author(s):  
R. Liemberger ◽  
A. Wyatt
Keyword(s):  
Climate Change ◽  
World Bank ◽  
Water Utilities ◽  
Level Of Service ◽  
Water Problem ◽  
The World ◽  
Service Coverage ◽  
Non Revenue Water ◽  
Financial Concern ◽  
The Cost

Abstract This paper provides a long overdue update on the global non-revenue water (NRW) estimates, initially published in a World Bank publication more than 10 years ago. The authors use a similar approach based on latest data to estimate the volume of water lost by water utilities around the world. The conclusion of this study is that the 2006 estimates were extremely conservative and that realistic NRW estimates are significantly higher. The global volume of NRW has been estimated to be 346 million cubic metres per day or 126 billion cubic metres per year. Conservatively valued at only USD 0.31 per cubic metre, the cost/value of water lost amounts to USD 39 billion per year. Not only is this an enormous financial concern, but elevated NRW also detracts from water utilities, in a time of increasing scarcity and climate change, from reaching their goals of full service coverage, at a reliable level of service at an affordable price.

scholarly journals PENGARUH POLUTAN TAMBAK TERHADAP EFISIENSI TEKNIS PRODUKSI BANDENG DI KABUPATEN KARAWANG

2013 ◽  
Vol 1 (2) ◽  
pp. 107
Author(s):  
Lilis Imamah Ichdayati ◽  
Sri Hartoyo ◽  
Yusman Syaukat ◽  
Sri Utami Kuntjoro
Keyword(s):  
Technical Efficiency ◽  
Production Function ◽  
Stochastic Frontier ◽  
Policy Implications ◽  
Average Efficiency ◽  
Stochastic Frontier Production Function ◽  
Input Variables ◽  
Frontier Production Function ◽  
Nitrogen Pollutants ◽  
Efficiency Rate

<em>This study uses two models of stochastic frontier production function Cobb Douglas separate to estimate differences in environmental efficiency of conventional input variables and input variables detrimental. The results that farms with milkfish monoculture and polyculture cultivation pattern majority (approximately 82 percent) have reached a technically efficient, with an average efficiency rate of 0826.  Effect of pollutants on the efficiency of production of milkfish ponds visible from reduced levels of technical efficiency of the 0826 in model 1 becomes 0.633 in model 2 , so that the influence of pollutants by 0193. The decrease in efficiency is derived from the nitrogen pollutants are negative and significant. Policy implications necessary to supervise the use of the excessive feed and urea</em>.

scholarly journals Taking water efficiency to the next level: digital tools to reduce non-revenue water

2020 ◽  
Author(s):  
J. Cassidy ◽  
B. Barbosa ◽  
M. Damião ◽  
P. Ramalho ◽  
A. Ganhão ◽  
...  
Keyword(s):  
Real Time ◽  
Early Warning Systems ◽  
Water Utilities ◽  
Management Tool ◽  
Water Losses ◽  
Smart Water ◽  
Communication Capacity ◽  
Non Revenue Water ◽  
The Impact

Abstract Efficiency optimization of urban water systems is a growing concern for water utilities worldwide. This case study aimed at evaluating the impact of using cloud-based tools on the reduction of both real (real-time network monitoring) and apparent water losses (integrated customer meters management) in two water utilities. The incorporation of smart water solutions with a methodology for the management and operation of the systems allowed to diagnose, prioritize areas and define actions to improve efficiency. Using a real-time monitoring tool allowed to categorize bursts and to evaluate their impact on water loss volumes and to identify operational inefficiencies regarding detection and repair times, particularly in small and medium bursts. Additionally, the implementation of an integrated customer meters management tool allowed for an optimized meter management reducing apparent losses by estimating metering errors more accurately, allowing the water utilities to replace meters based on specific lifespan. Digitalization, through the implementation of optimized algorithms and early warning systems, allowed the analysis of data in a methodical and prompt manner resulting in non-revenue water reduction up to 8% in 3 years while improving the digital organization of data and its quality (reliability and accuracy), interdepartmental organization and communication, capacity building and utilities’ image among stakeholders.

Foreign direct investment and innovation in Estonia

2013 ◽  
Vol 8 (2) ◽  
pp. 231-248 ◽  
Author(s):  
Jaan Masso ◽  
Tõnu Roolaht ◽  
Urmas Varblane
Keyword(s):  
Foreign Direct Investment ◽  
Production Function ◽  
Open Economy ◽  
Direct Investment ◽  
Small Open Economy ◽  
Policy Implications ◽  
Community Innovation Survey ◽  
Content Type ◽  
Innovation Output ◽  
The Impact

PurposeThe aim of this paper is to study the linkages between inward and outward foreign direct investment (FDI) and the innovation inputs and outputs of domestic and foreign owned companies in Estonia, a small economy in CEE.Design/methodology/approachThe econometric analysis of the data about the linkages between FDI and innovation is made using the model by Crépon et al., which allows estimation of the innovation expenditure equation, the knowledge production function (with various innovation output variables as dependent variables) and the productivity equation (production function), with all the equations including company and industry level FDI variables.FindingsThe results show that the higher innovation output of foreign owned companies vanishes after various company characteristics are controlled for, but there were significant differences in innovation inputs such as the higher use of knowledge sourcing and the lower importance of various impeding factors. Outward investment has a positive influence on innovativeness among both domestic and foreign owned companies.Practical implicationsThe managers can benefit from this study by tapping into a wider range of knowledge sources via diverse and active involvement in exporting and investing activities. Often they fail to realise that initiation of international activities can also serve as an important learning opportunity in becoming more innovative. The policy implications suggest that government policies as well as triple helix cooperation should be oriented not only towards attracting foreign interest, but also towards building opportunities for more extensive regional and international business networking by exporting and outward FDI.Originality/valueThe originality of the study lies in the usage of the data from a small open economy of Central and Eastern Europe. This region is a good candidate for studying the impacts of FDI; while CEE countries were closed to FDI before the onset of transition, since the beginning of transition they have witnessed massive FDI inflows. The present study seems to be one of the first ones to use three different waves of the Community Innovation Survey (CIS), specifically CIS3 covering 1998‐2000, CIS4 (2002‐2004) and CIS2006 (2004‐2006). Thereby the authors are able to study the impact of the changing economic environment on the link between FDI and innovativeness.

scholarly journals Competition and Profitability of Banks: Empirical evidence from the Middle East & North African (MENA) Countries

2020 ◽  
Vol 3 (2) ◽  
Author(s):  
Syed Moudud-Ul-Huq ◽  
Md. Abdul Halim ◽  
Tanmay Biswas
Keyword(s):  
Banking Sector ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Stochastic Frontier ◽  
Government Support ◽  
Policy Implications ◽  
Mena Countries ◽  
Banking Sector Development ◽  
Wide Range ◽  
The Impact

This paper uses generalized method of moments (GMM), Least Squares (LS) and Generalized Linear Model (GLM) to examine the impact of competition on profitability of banks and Stochastic Frontier approach (SFA) is used to estimate of cost efficiency. We have used an unbalanced panel dataset from a sample of emerging economic MENA countries over the period between 2011 and 2017. We find out that have a significant and negative impact of competition on profitability of banks. The empirical findings of this study suggest that MENA banks should more improve the process of managing and monitoring the loan segment business ; the result which reducing in the level of credit risk which leads to higher profitability  ii) MENA banks should shrink higher level of banking sector development. iii) MENA banks should make full conduct of available funds to engage in various natures of businesses; if there is an issue of insolvency, robust government support would give protection to MENA banks. Finally, it also provides some compulsory policy implications which will be very beneficial for a wide range of stakeholders.

Sign in / Sign up

Export Citation Format

Share Document