This paper employs data envelopment analysis (DEA) of US EPA Community Water System Survey data (EPA, 2002) to compare the relative efficiencies of facility ownership type and nature of water source for potable water utilities. Three ownership types (private for-profit, private not-for-profit, and public) and two types of supply sources (ground and surface water sources) are compared. Statistically significant results indicating the efficiency advantage of certain utility types depending on measurement variable selection were found, and clear trends towards certain utility types were identified, notwithstanding the variable selections used for measurement. The findings indicate that public utilities are most efficient overall, followed by private not-for-profit utilities, with private for profit utilities being least efficient. Except for a few cases of very large supply demands, utilities employing ground water sources were generally more efficient than those using surface water sources. A brief investigation into the marginal return on information obtained from using additional measurement variables to measure utility performance is also presented. It is demonstrated that additional ranking information can be obtained by using more discrete measurement variables, but that there are diminishing marginal returns. This efficiency evaluation of public water utilities should prove useful as a tool for guiding ownership policy and water source development.
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