An Research On The Efficiency Of Chinese Urban Water Industry

Water shortages and pollution are restricting China’s economic activity and social life two problems. In recent years, the overall loss of urban water supply industry is becoming the new hot spot concern. China Urban Water Association survey released shows that in 2012, the survey of 644 enterprises in the water supply, there are 351 companies at a loss, the total loss reached 4.705 billion yuan, total remaining 293 corporate earnings, after-tax profit to 2.681 billion yuan. Urban water supply sector is related to national economic development an important pillar industry, both utilities and industrial characteristics of natural monopoly. Improve the efficiency of urban water supply industry, not only to improve people’s living standards and social stability, and more importantly, there is an important effect on the long-term viability of our national economy and stable development. With the rapid development of China’s urbanization, the domestic demand for urban water services is also growing, improve water efficiency, ensure water quality, water balance between the interests of businesses and consumers, it is particularly important.There is no doubt that the actual cost will depend on the efforts of the water supply enterprise business managers the true costs and to reduce costs made. Therefore, the company’s losses and its amount is also affected by whether or not the above two factors. Obviously, if the loss was mainly due to higher supply enterprises rather than the true cost of inefficient management, improve pricing and unreasonable. Given the high loss of water supply enterprises, to explore the causes of the loss it has become particularly important. The actual cost will depend on the efforts of enterprises and managers the opportunity cost of reducing the cost of doing so, through efficiency measure, explore the real reasons of the loss of water companies, of great practical significance.This paper selects 2002-2012 (except for 2005) between the decade of 22 provinces and 19 provincial capital city’s water industry panel data, select Cobb-Douglas function input-oriented form of distance on the efficiency of urban water supply industry, the empirical research.First, the stochastic frontier model (random effects model, BC-92 model, true random effects model and Kumbhakar model) through four forms, estimate the level of efficiency of urban water supply sector to avoid the various models due to different assumptions premise The deviations are given a relatively reasonable and accurate water efficiency interval range. The results show that the average efficiency of the water supply industry value between 0.45-0.89. Obviously, for our country’s urban water supply enterprise, its efficiency as well as much room for improvement; from the regulator’s perspective, a low level of efficiency means that the entire regulatory system, including the regulatory body, regulatory means and regulation the process, there is much room for improvement.Then, using the common frontier (Metafrontier) method to estimate the efficiency of comparable provinces real value to solve the regulatory policy of "benchmarking" selection problems for the establishment of a benchmark provinces, cities or companies to provide a reference. Conclusions show that China’s overall low efficiency of urban water supply, which,22 provinces relative to the average efficiency of the value of the common frontier, the estimated value of the Meta-LP and Meta-SMF model were 51% and 59%.19 capital cities with respect to the value of the average efficiency of the common frontier, the estimated value Meta-LP and Meta-SMF model were 62% and 53%. Overall, the average efficiency of the water supply enterprise value relative to the common frontier, the estimated value of the Meta-LP and Meta-SMF models are 56%.These results show that the main reason for the loss of water supply industry is the low efficiency of the water supply, it is timely to take appropriate measures for incentive regulation. From a policy and regulatory point of view, despite the inevitable efficiency estimation error in estimation, Chinese urban water supply industry, there are still technical efficiency is lower than 60%, indicating that the existing regulatory system in Chinese urban water supply industry imperfect. If we will combine inefficiency value into account, then the level of efficiency may become lower.In summary, this article from the perspective of both domestic and abroad, is widely used in recent years to use SFA method efficiency water industry research literature to do a detailed carding system, trying to find the efficiency of water industry status quo and trends, seeking influence water industry efficiency factor, dig water industry to improve efficiency. Meanwhile, the paper summarizes the recent years Metafrontier methods in other areas for future research directions efficient water industry in the future.