The efficiency of public services in small municipalities: The case of drinking water supply

This paper uses DEA methodology to analyze the efficiency of the drinking water provision service in small municipalities. Once the efficiency indicators are obtained, these are related to a group of exogenous variables, so as to evaluate the determinants of efficiency. We use a sample of Spanish municipalities of under 5000 inhabitants in 2014, and the results show a negative and significant impact of population density and citizens' level of income on the drinking water supply efficiency. Moreover, the greater the political strength of the local government, the higher the level of efficiency in the provision of drinking water. The findings also show that there is greater efficiency when the provision of drinking water is managed directly by the local government. Finally, there is no significant impact of the touristic character of the municipality or of the government's political ideology on the efficiency of the drinking water supply.