Utility Governance, Incentives, and Performance: Evidence from India's Urban Water Sector

In developing countries, managing trade-offs between socioeconomic and environmental objectives in water utilities is challenging. The Indian water sector suffers from financial losses, lack of access, and poor service quality. We use a stochastic frontier analysis approach to study 304 urban water supply services during 2010–2015. We examine the role of socioeconomic and environmental aspects. Results indicate that water supply exhibits significant inefficiencies and, thus, scope for improvement. Measures to reduce non-revenue water, increase water quality, and improve cost recovery and bill collection, may help induce efficiency. Results also indicate that increasing water supply hours would improve service performance.