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The Financial Economics and Accounting research group of the University of Murcia (UMU) has published two articles in the international journals 'Cities' and 'Journal of Water Resources Planning and Management' where they warn about the inefficiency of the privatization of the supply service of drinking water at the municipal level.
"One of the conclusions of our research, which we consider very important, is that direct management is more efficient than indirect management, which is contrary to what the literature usually says about rendering public services cheaper when It outsources the management or, what is the same, it is done privately ", explains Bernardino Benito, professor and member of the research group of Financial Economics and Accounting of the UMU.
This result deserves to be highlighted if one takes into account that in most municipalities the potable water supply service is privatized, especially in those with the largest population.
The higher the population density, the more efficient
Another variable that has been significant in municipalities with more than 5000 inhabitants is the density of population per urbanized square kilometer.
The more density, the more efficient the service becomes.
"This fact leads us to think that what is now being done in many cities to build horizontally instead of vertically, that is, a large number of very dispersed urbanizations replacing the classic buildings, is less efficient from the point of view economic view in the case of the supply of drinking water, since that takes a plus of added cost, "reflects Benito.
Maintaining areas such as urbanizations increases the cost of this service, which may mean that the most densely populated urban areas are paying the excess water cost of the urbanizations.
From these data it is clear, according to the expert, that the more densely populated a municipality is, the more efficient it becomes, "perhaps it would be necessary to group the population, associate municipalities to achieve economies of scale, or pool certain services. make us rethink how we are organized administratively, and perhaps research works like the ones we carry out can help to make decisions in this regard. "
Tourism and wealth, variables involved in the water supply service
Another relevant issue is that the potable water supply service is more efficient in the most touristic municipalities and with a population greater than 5000 inhabitants.
For the professor, these municipalities may have a special interest in providing their services efficiently to continue promoting tourism, since it is probably their main source of income.
On the other hand, the higher the economic level of the inhabitants, and only in the case of municipalities with less than 5000 inhabitants, efficiency is reduced.
"This may be due to the fact that the comfortable economic situation of the inhabitants of small towns does not lead them to complain about the high cost they may be paying for the provision of the service, which translates into a lower efficiency of the service. , in the municipalities above 5000 inhabitants, the economic level is not decisive in the calculation of this efficiency, "says Benito.
On the other hand, the results of the investigation show that the political sign, this is the party to which the mayor belongs, and the political strength (if it is governed or not with an absolute majority) are not significant or relevant when deciding what Town hall is more or less efficient.
The road to administrative transparency
The economic crisis initiated in Spain in 2017 involved the introduction of certain laws with the aim of rationalizing public spending and ensuring the sustainability of public finances.
Among other measures, the need to calculate the cost of some municipal services was introduced, with the primitive objective of taking measures in those that were deficient.
This idea did not prosper, but since then municipalities have been obliged to provide information on the cost of some municipal services such as garbage, water supply, sports and cultural facilities or local police, among others.
These data are available on the website of the Ministry of Finance since 2014, the last year included in 2017. Before November 1 of each year, local entities will calculate the cost of services based on the data contained in the liquidation of the general budget and, where appropriate, of the approved annual accounts of the related or dependent entities, referring that calculation to the immediately preceding year.
The calculation of this cost is mandatory for all local entities regardless of their size.
Implications of the study
For this professor, the results are relevant not only for politicians, public managers and researchers, but also for citizens.
The latter, as contributors and beneficiaries of municipal services, demand information on how local governments manage the resources they receive and demand improvements in the efficiency of public services, says the researcher.
In addition, the methodology and results of this study will be of great interest to water regulators since "in the global context of water industry management, policy makers face the challenge of selecting the most appropriate and sustainable approach ", considers Benito.
Source: Universidad de Murcia
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