Addressing Sustainability in Benchmarking Framework for Indian Urban Water Utilities

Studies on benchmarking in water sector are very scarce particularly in the Asian region. None of the studies conducted so far have estimated and aggregated multidimensional performance of urban water utilities that incorporate important sustainability parameters. This paper attempts to fill this gap and evolve suitable sustainability based benchmarking framework to assess aggregate efficiency of 18 Indian urban water utilities using data envelopment analysis approach. The proposed benchmarking framework may be used by the state regulator/operator to rank the utilities, set targets for productivity improvements, and provide performance linked incentives in order to enable sustainable water supply services. The performance analysis of water utilities against the six identified sustainability parameters based on average technical efficiency scores suggests the need for greater attention toward service adequacy, service reliability, and business viability parameters. The analysis on aggregate technical efficiency (TE) and scale efficiency (SE) suggests significant scope for improvement in technology and operational scale and hence cost savings. The study also shows significant scope for reduction in unaccounted for water, i.e., water loss, staff size, and electricity expenditure. Efficiency analysis based on city sizes presents higher TE for medium-sized utilities and higher SE for small-sized utilities.