Policy reforms and productivity change in the Dutch drinking water industry: A time series analysis 1980-2015

Jos L.T. Blank*, Bert Enserink, Alex A.S. van Heezik

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

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In the last four decades, the Dutch drinking water industry has undergone two major policy reforms, namely the consolidation of the industry by stimulating mergers and the introduction of yardstick competition by applying benchmarks. This paper addresses the question of whether these two instruments have improved productivity. Productivity changes are derived from an estimated cost function. The effects of average scale as well as the introduction of a form of yardstick competition on productivity are formally tested. Estimation is conducted on the basis of time series data in the period 1980-2015. Industry consolidation has taken place over a long period of time. Yardstick competition was introduced in 1997 on a voluntary basis. It shows that total factor productivity was rather stable in the period 1980-1998. Since 1998, annual productivity growth has been substantial (about 0.6% on average). There was an obvious break point in 1998, providing clear evidence that the introduction of the benchmark instrument has affected productivity change. Moreover, there are various indications that benchmarking has also contributed to improving quality and sustainability. We could not find any empirical evidence for the hypothesis that consolidation of the industry has improved productivity.

Original languageEnglish
Article number3463
Issue number12
Publication statusPublished - 2019


  • Benchmarking
  • Cost model
  • Drinking water
  • Policy reforms
  • Productivity change
  • Scale economies
  • Time series

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