Non-Revenue Water as Undesirable Output and the Performance of Malaysian Water Utilities
In general, typical benchmarking measurement often focuses on water supplied that generates revenue whereas neglecting the Non-Revenue Water (NRW) which is co-produced in water distribution systems.However, performance benchmark measures should give credit to outstanding water utilities that have successfully managed in reducing their NRW level. Since the process in water system can be expressed in a two-stage network process, this study employs the Network Directional Distance Function (NDDF) as an instrument for evaluating water utilities’ performance with defining the presence of NRW as an undesirable output. The performance of Malaysian water utilities is measured for the year 2012 in comparison with the efficiency scores obtained by single-process Directional Distance Function (DDF) approach. This study aims to measure the overall efficacy of Malaysian water utilities and to seek for meaningful insight as compared to DDF approach. This benchmarking activity has indeed assists water utilities for a finer reduction of NRW level while aiming for improvement in service delivery. This study too provides better understanding of management efficiency in terms of producing additional valid outcomes that further contributes to much fairer performance evaluation.
Index Terms—Directional distance function (DDF), Data envelopment analysis (DEA), Network directional distance function (NDDF), Network data envelopment analysis (NDEA).