Analyzing Productivity Indices for Urban Water and Wastewater Companies

Major investments and high operational expenditure are the special characteristics of the water and wastewater industry in the context of organizational mission. Planning the production and improving the efficiency of production factors by quantitative models are among the conventional methods in the management of investments, costs and financial resources. This research aimed to identify the share and elasticity of the urban water production factors and partial and total productivity in the context of production planning. The data used are panel data according to size of production and production factors (labor, capital stock and energy). The data on 34 urban waters and wastewater companies in the period of 2006-2016 (374 samples) were used and the fixed effect econometric method was applied to estimate the Cobb – Douglas production function. The results indicated that in the water and wastewater industry the elasticity of the labor, the capital and the energy was 0.32, 0.42, and 0.21, respectively. The research findings showed that the productivity of capital and energy as well as the total factor productivity declined in the years 2015 and 2016 while the efficiency of labor remained constant. The findings can be used by the top management of the industry as a strong tool for strategic planning of production of a high level of reliability.