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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 06 de 2008


Water Losses and Hydrographical Regions Influence on the Cost

Structure of the Portuguese Water Industry

(Publicado em Journal of Productivity Analysis 38(1): 81-94, 2012)

Rita Martins
Faculty of Economics, University of Coimbra

Fernando Coelho

Adelino Fortunato
Faculty of Economics and GEMF, University of Coimbra

There is a consensus that the emphasis on the management of water resources should be put on demand side policies. However, some questions remain to be solved on the supply side, which are frequently absent from empirical studies based on the estimation of cost functions. This paper aims to fill to some extent this gap in the literature by focusing the consequences of water losses reduction and the management of water resources based on their availability at an integrated river basin level.
Major findings indicate that it would be better in terms of costs to maintain some level of water losses than to repair the leaks and suggest advantages from more concentration in the Portuguese water industry. In addition, the costs do not seem to be systematically influenced by the hydrographical regions to which water utilities belong, what might be due to the absence of appropriate cost accounting methods.

JEL Classification: L11, L95, Q25.

water utilities; water losses; river basins; multi-product cost function.

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