Environmental sustainability and service quality beyond economic and financial indicators: A performance evaluation of Italian water utilities

As water utilities operate as natural monopolists and they provide essential services for human life, their activities are regulated by public authorities. The sustainable use of water resources and a specific attention on social needs should be essential goals for this kind of firms, so that the evaluation of their business should go beyond their profitability and their financial solvency. Keeping pace with the new Circular Economy paradigm and the evolution of the water regulatory framework, in this paper we suggest a global composite indicator apt to evaluate in a novel way the water utilities performance, encompassing financial and economic indexes together with environmental sustainability and service quality measures. To show its empirical implementation we evaluate the performance of Italian water utilities. The operating context is also under scrutiny focusing on specific water utility features such as size, geographical location, degree of diversification and ownership. In this light, operating in the Centre and being large are considered favourable background conditions, while the South and the medium size display a significant unfavourable influence on the water utility performance. Multi-utilities are more advantaged with respect to the mono-utilities and no significant distinction can be made among the different ownership models.