Authors: Nava Haruvy; Sarit Shalhevet
Addresses: Netanya Academic College, University Rd. Netanya 42100, Israel ' SustainEcon Corp., LLC., 126 Thorndike St. Brookline, MA 02446, USA
Abstract: Over the past decade, water and wastewater utilities have been gradually replacing local municipalities in Israel as the providers of drinking water and wastewater treatment services. Most utilities serve one or two cities or several small municipalities, often operating at a low profit or even at a loss. This research examines the factors influencing the utilities' profitability, including the potential existence of economies of scale. The results show that for small utilities, an increase of 10,000 in population size is associated with an increase 0.5%-1% in gross margins, but this increase tapers off as the utilities grow larger. The profitability depends on many other factors, including the utility's age (experience) and physical location, as well as the municipality's structure and socio-economic rating; therefore, the optimal utility size varies greatly for each area.
Keywords: water utilities; population size; Israel; profitability; drinking water; wastewater treatment; urban water management; economies of scale; utility age; utility location; municipality structure; socio-economic rating.
International Journal of Global Environmental Issues, 2016 Vol.15 No.1/2, pp.121 - 135
Received: 30 Jul 2014
Accepted: 20 Oct 2014
Published online: 24 Jan 2016 *