Gaming in a benchmarking environment. A non-parametric analysis of benchmarking in the water sector

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Courtesy of IWA Publishing

This paper discusses the use of benchmarking in general and its application to the drinking water sector in particular. It systematizes the various classifications of performance measurement, discusses some of the pitfalls of benchmark studies and provides some examples of benchmarking in the water sector. After a presentation of the institutional framework of the water sector in the Belgian region of Flanders (without any benchmarking experience), Wallonia (recently started a public benchmark) and the Netherlands (introduced a public benchmark in 1997), we point to their different stages in the benchmarking cycle. As these three regions are comparable apart from their different implementation of benchmarking, a non-parametric estimation of the productivity gains over time (by a Malmquist index) could be insightful. The ‘carrot’ and the ‘stick’ of benchmarking seem to offer an effective incentive to trigger performance. In addition, the Malmquist decompositions provide some indication on the ‘gaming’ of the stakeholders by the water utilities.

Keywords: Benchmarking, Gaming, Malmquist decomposition, Regulation, Water sector

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