Productivity growth and its drivers in the Chilean water and sewerage industry: a comparison of alternative benchmarking techniques

Several benchmarking techniques have been developed to assess and decompose the productivity growth of the industries. This paper reports the estimation of productivity change and its drivers for 23 water and sewerage companies in Chile during the period between 2007 and 2015, by applying the stochastic frontier approach (SFA) and data envelopment analysis (DEA) techniques. The study found that on average the productivity growth values estimated using the SFA approach were higher than those computed using DEA. Both methodological approaches evidenced that the main drivers contributing positively to productivity growth were the scale effect and technical change. However, under SFA, efficiency change contributed slightly positively to productivity change whereas under DEA, this driver contributed negatively. The differences in the productivity growth results between these benchmarking techniques suggest that policy-makers should not be indifferent to the selection of the most appropriate method for evaluating the productivity growth of water companies.