The performance of the urban water and wastewater sectors in Australia

Substantial structural reform has occurred in the water and wastewater sectors of Australia's major urban centers over the past two decades. This reform has involved the corporatization of government assets and some vertical and horizontal separation. This paper analyses the performance of these sectors since the mid 1990s. In particular, it uses Malmquist Data Envelopment Analysis (DEA) to determine the different levels of productivity and efficiency improvement over this period. The results point to modest, but positive productivity gains in the larger urban centers, independent of industry structure. Further, it highlights the need to consider exogenous factors that can influence productivity outcomes in an industry generally associated with monopoly characteristics and dependent on water sources that are, to varying extents, unpredictable and uncontrollable.