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State agencies can also encourage greater cooperation between utilities to encourage economies of scale — something that can benefit the highly fragmented water industry The magnitude of scale and scope economies determines the cost efficient configuration of any industry. Upgrading america’s water infrastructure and making it more resilient will not come cheap.
Economies of scale and the optimal size of the water industry have become relevant topics in many countries, because the water sector is highly fragmented, with a key role still being played by municipalities. This paper surveys the literature on scale and scope economies in the water and sewerage industry By surveying the empirical research from different parts of the world, we aim to shed some light on the topic of economies of scale, and to provide a synthesis of the literature
We also aim to determine whether there is a tradeoff between centralization and decentralization.
However, part of the scientific community defends centralized schemes due to economies of scale In this study we use datasets from the 1995 and 2000 community water supply surveys to examine the production costs of water supply systems We first estimate the economies of scale in water supply by estimating the total unit cost as well as individual component cost elasticities.
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