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Efficiency Assessment Of Bosnia-Herzegovina Water Companies

This paper is aimed at addressing the issue of municipal water companies in Bosnia-Herzegovina. It demonstrates that data envelopment analysis (DEA) could be a useful tool in assessing the relative efficiencies of water supply systems. The results obtained by applying DEA are additionally compared with the resultants achieved by employing corrected ordinary least squares (COLS). The principal aim of this paper is to show that is worth assessing the efficiency improvements that could result from the better use of all inputs. Despite the severe scarcity of data for the BiH water sector, collected data allowed us to develop a DEA model with a set of inputs (number of connections, number of workers, and other costs) and outputs (water billed) as required in the water sector empirical literature. As a first step in the efficiency analysis in BiH the research could serve as a benchmark against which future analysis of water utilities can be measured. Additionally, it could provide policy-makers with comparable quantitative evidence on the effectiveness of water utilities with the aim of focusing them in rebuilding the water sector infrastructure, beginning with the most inefficient municipalities to minimize huge water losses.

Water; Efficiency; Benchmarking; Bosnia-Herzegovina

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