Malaysian Water Utilities Performance Using Two-Stage DEA

Abstract

Most previous studies on the performance of water utility services have adopted the standard data envelopment analysis (DEA) with slight modification. However, there are some loopholes which they have neglected the internal structure of proper measures of the operating performance of water utilities. This study uses a two-stage DEA to measure the performance of water supply services in Malaysia. The first stage uses operating cost and other factors to sustain the water production in terms of length of pipes involved and the number of clients. While in the second stage, the water production will generate revenue due to water delivered or consumed by clients. The two stages are an integrated efficiency model where optimal performance can be measured for both stages at the same time. The model will forms efficiency breakdown for both individual stages and uniquely it provides informative comprehensions compared to the traditional DEA.