Influence of regulation on the productivity of waste utilities. What can we learn with the Portuguese experience?

Abstract

This paper examines the merits and the perverse effects of quality of service regulation in the performance of urban waste services when implemented alone and compares the performance of different economic regulatory methods. By means of a productivity analysis, we investigate the influence of a five-year period of regulation on the performance of Portuguese urban waste utilities using an unbalanced panel data for the period 2001-2008. Different non-parametric methods were applied to estimate the productivity change, all leading to similar outcomes. We observed a tendency of productivity decline in the urban waste utilities and concluded that in spite of the unequivocal improvements in the quality of service induced by sunshine regulation, more should be done as far as economic regulation is concerned. We also found that the use of sunshine regulation together with low incentive economic regulatory methods is not positive, leading to overinvestment rather than to value for money.