Advances in Benchmarking to Improve Water Utility Operations: A Review of Six IWA Books

Six recent publications by the International Water Association underscore the growing importance of quantitative studies of water utilities for identifying (1) performance patterns, (2) trends in key indicators, and (3) best practice. Since each author takes a different cut through the problem of performance measurement and incentives for improvement, the books provide different perspectives on the decision-relevance of empirical analysis and cases for managers and policy-makers. Key lessons from the volumes include the use of benchmarking as a tool for establishing better internal incentives, the importance of data collection and auditing, and the role of transparency in helping stakeholders become more informed about utility operations. Analysts need to help stakeholders understand sector complexities, where hydrology, topology, historical developments outside current management’s control, population income levels, and the amount of skilled labor differ widely across and even within nations. The six books taken together underscore the value of quantifying relative performance and improving our awareness of production processes and the institutional arrangements that support strong water sector performance. As has been noted before in the context of evaluating water utilities, if we have no data on performance trends, lack authoritative comparisons among current operations, and have no idea of best practice, decision-makers cannot design performance incentives or establish reasonable targets for key indicators. Stakeholders need to know about the past (where operators have been), the present (relative performance today), and best practice (so successful techniques can be emulated in the future). A recent survey on the quantitative studies underscored the dramatic growth of published research and the dispersion of publications across several fields of study (Berg and Marques, 2011). Six recent International Water Association books consolidate much of the previous research, illustrating ways quantitative studies can be useful to decision-makers. Since they each take a different cut through the problem of performance measurement and incentives for improvement, each provides a different perspective on the decision-relevance of empirical analysis and cases for managers and policy-makers. The six volumes are briefly summarized below: Institutional Governance and Regulation of Water Services: The Essential Elements (2007) by Michael Rouse identifies the types of institutional structures that are beginning to show success in developed and developing countries. He lays out the policy issues and establishes principles for promoting high performance – drawing from the experiences of both public and private operators. Rouse pulls together the main themes of his book using the case of England and Wales as evidence of how consolidation, corporatization, benchmarking (yardstick competition), and regulatory incentives for cost containment can yield benefits to consumers. His insights set the stage for a series of volumes that support the principles he emphasizes.