Total factor productivity growth and technical change in the water and sewerage industry

The characteristics of total factor productivity growth and technical change in the water and sewerage industry of England and Wales are examined within this article. Total factor productivity growth, technical change and the components of technical change are quantified using a time trend model. A translog specification of productive technology is employed. Very low levels of technical change, the components of technical change and total factor productivity growth are observed over the sample period. Substantial economies of scale are recorded. Three major implications may be dawn from the study findings. Initially, the high levels of investment have yet to substantially influence the productive technology of the water and sewerage firms. Secondly, strong empirical evidence of the natural monopoly conditions in the water industry is provided. Finally, it may be stated that privatisation does not appear to have raised the level of technical change or productivity growth since 1989.