How "Natural" are Natural Monopolies in the Water Supply and Sewerage Sector? Case Studies from Developing and Transition Economies

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 dev...

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Bibliographic Details
Main Authors:	Nauges, Céline, van den Berg, Caroline
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO SAFE WATER ACCESS TO SAFE WATER SUPPLIES AGRICULTURE AVERAGE COSTS AVERAGE VARIABLE COSTS BARRIERS TO ENTRY BASE YEAR BENCHMARK BENCHMARKING CONSTANT RETURNS TO SCALE CONSUMER SOVEREIGNTY COST FUNCTIONS COST RECOVERY CUBIC METERS DELIVERY OF WATER DELIVERY OF WATER SUPPLY DELIVERY OF WATER SUPPLY SERVICES DISECONOMIES OF SCALE DRINKING WATER ECONOMETRIC ANALYSIS ECONOMIC EFFICIENCY ECONOMIES OF SCALE ECONOMIES OF SCOPE ELASTICITY ELASTICITY OF SUBSTITUTION EXCESS PROFITS FINANCIAL VIABILITY GDP GDP DEFLATOR GDP PER CAPITA GNP HOUSEHOLDS INCOME INCREASING RETURNS INCREASING RETURNS TO SCALE LARGE UTILITIES LIVING STANDARDS LOCAL COMMUNITIES MARGINAL COST MARGINAL COST PRICING MONOPOLY POWER MUNICIPAL WATER MUNICIPAL WATER SUPPLY NATIONAL INCOME NATURAL MONOPOLIES NATURAL MONOPOLY NUMBER OF CONNECTIONS NUMBER OF WATER NUMBER OF WATER CONNECTIONS OPERATIONAL EXPENSES PERFORMANCE DATA PIPE BREAKS PIPED WATER PRICE INCREASES PRODUCTION INCREASES PRODUCTIVITY GROWTH PROVIDING WATER SUPPLY PROVINCIAL WATER PROVINCIAL WATER UTILITIES QUALITY OF DRINKING WATER QUALITY OF WATER QUALITY WATER QUALITY WATER SUPPLY REGIONAL UTILITIES REGRESSION ANALYSIS REGULATORY REGIMES REGULATORY SYSTEMS RESIDENTIAL CONSUMERS RESIDENTIAL CUSTOMERS RESIDENTIAL POPULATION RESIDENTIAL USERS SANITATION SANITATION MARKET SANITATION SERVICES SERVICE DELIVERY SERVICE PROVISION SEWERAGE SEWERAGE COLLECTION SEWERAGE COMPANIES SEWERAGE INDUSTRY SEWERAGE NETWORK SEWERAGE SECTOR SEWERAGE SERVICES SEWERAGE SYSTEM TOTAL COSTS TOWNS TRANSITION ECONOMIES URBAN WATER URBAN WATER UTILITIES UTILITIES UTILITY MANAGER UTILITY SIZE VALUATION VALUE ADDED VARIABLE COSTS VARIABLE INPUTS VOLUME OF WATER WAGES WASTEWATER WASTEWATER COLLECTION WASTEWATER SECTOR WATER CONSUMPTION WATER DEPARTMENT WATER DISTRIBUTION WATER DISTRIBUTION NETWORK WATER INDUSTRY WATER QUALITY WATER SERVICE WATER SERVICES WATER SUPPLIES WATER SUPPLY WATER SUPPLY COMPANIES WATER USERS WATER UTILITIES WATER UTILITY
Online Access:	http://documents.worldbank.org/curated/en/2007/02/7383571/natural-natural-monopolies-water-supply-sewerage-sector-case-studies-developing-transition-economies http://hdl.handle.net/10986/7181

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Summary:	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 0 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.

How "Natural" are Natural Monopolies in the Water Supply and Sewerage Sector? Case Studies from Developing and Transition Economies

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