Utility governance, incentives, and performance: Evidence from India?s urban water sector

In developing countries, managing trade-offs between socioeconomic and environmental objectives in water utilities is challenging. The Indian water sector suffers from financial losses, lack of access, and poor service quality. We use a stochastic frontier analysis approach to study 304 urban water supply services during 2010-2015. We examine the role of socioeconomic and environmental aspects. Results indicate that water supply exhibits significant inefficiencies and, thus, scope for improvement. Measures to reduce non-revenue water, increase water quality, and improve cost recovery and bill collection, may help induce efficiency. Results also indicate that increasing water supply hours would improve service performance.