Incorporating nonrevenue water in the efficiency assessment of water supply utilities: A parametric enhanced hyperbolic distance function

This study assesses the technical efficiency of water utilities incorporating an undesirable output, nonrevenue water, and allowing a proportional input reduction. A parametric enhanced hyperbolic distance function was applied to Malaysia's 14 state water utilities from 2000 to 2017. Overall, Malaysia's water utilities can increase the water volume delivered while decreasing nonrevenue water and making further input reductions. Water utilities, on average, experienced higher technical efficiency after the regulatory reform. Network density and regulatory reform significantly influenced the technical inefficiency of water utilities in Malaysia.