Public Enterprise, 2016, Issue 22., Vol.1, Article 2

Benchmarking the Efficiency of Public Water Companies in Peru:

A Conditional DEA Approach

Guillermo Diaz

CENTRUM Católica Graduate Business School

Pontificia Universidad Católica del Perú, Lima, Peru

Received August 2015; Revised January 2016; Accepted February 2016

DOI:10.21571/pehyj.2016.2201.02

Abstract

Benchmarking has been suggested as a useful regulatory tool for water companies in both developed and developing countries, specially due to the predominance of public firms in these sectors. However, in order to be effective, the comparisons should reflect differences in the firms’ performances, rather than capture differences in their operating contexts. In this paper I apply a conditional data envelopment analysis (DEA) benchmarking technique that specifically controls for this, i.e., the conditional DEA approach. As a result, I find that conditioning on the population density in each firm’s area of operation affects the estimated efficiencies in a significant way. The results are consistent with previous findings in other countries (which use different methodologies), and are new in the case of Peru.

Keywords: Public enterprise, water, efficiency, DEA

Reference to this paper should be made as follows: Diaz, G. (2016). Benchmarking the Efficiency of Public Water Companies in Peru: A Conditional DEA Approach. Public Enterprise, 22 (1), 18-34. DOI:10.21571/pehyj.2016.2201.02

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