Efficiency Evaluation of Water Sector in the Czech Republic: Two-Stage Network Dea

Abstract

The water and wastewater services, usually provided in a monopoly regime, do not offer the operators natural incentives toward efficiency and innovation. Therefore the main aim of the regulatory institutions is to stimulate a competitive environment. The contribution measures technical efficiency of 21 water and waste water companies in the Czech Repulic. For the period 2018–2020, the two-stage slacked-based model (SBM) by Kaoru Tone and Miki Tsutsui (2009) was applied. The results of this study are heterogeneous. Only one company out of 21 can be identified as an overall technically efficient unit during all three analyzed years. It is Vodohospodárská společnost Olomouc (VSO) followed by Pražské vodovody a kanalizace (PVK) that is very close to full technical efficiency. Our results therefore reveal a strong potential for the decrease of ineficiency of the water sector in the Czech Republic. Another important outcome is the fact that regulation of the water industry in the Czech Republic is highly fragmented.

Keywords

• performance measurement
• optimization
• regulation
• water industry
• data envelopment analysis
• network sbm
• covid-19