Identifying the performance drivers of wastewater treatment plants through conditional order-m efficiency analysis

In European countries, wastewater treatment service is often provided by utilities, which have to comply with environmental laws and, at the same time, should control costs in order to restrain tariff growth and earn profits. By applying a conditional order-m efficiency method, this study provides some insights to the operational variables affecting the efficiency of 137 plants owned by a water utility operating in Tuscany, Italy. These performance drivers are categorized as: 1) wastewater features, 2) plant technology, 3) other plant features, 4) output quality, and 5) sludge disposal method. Starting from some controversial results from prior literature, this paper provides some useful insights on the best policies that could be adopted by a utility to catch cost savings.