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The regulation of water services shares many similarities with that of other utilities such as electricity or telecommunications. As a result, similar methods are often used by regulators to assess the efficiency of companies in those sectors. Data Envelopment Analysis (DEA) is one of those widely applied methods. This paper aims to determine the adequacy of DEA as a regulatory tool for urban water services, with a special focus on the quality of the available data. In order to obtain useful conclusions, two DEA simulations were performed with audited data from 194 water utilities, officially made available by the Portuguese water regulatory authority (ERSAR). Both simulations will demonstrate that the inherent inaccuracies found in some of the key data provided by water utilities represent a significant obstacle to obtain meaningful results with the DEA technique. This could represent a paradigm shift for some of the regulatory authorities currently using DEA or similar techniques, as the complexity of the method does not seem to be justified by a better analysis of the comparative performance of the different services. [ABSTRACT FROM AUTHOR]

The allocation of economic value to environmental goods is intended to internalize the socio-economic and environmental costs of policies implemented and thus recognizes the value of the ecosystem and the consequences of environmental damage. This entails identifying the costs and benefits of management measures for conservation and of degraded ecosystems. The difficulties of this task are: (i) they are goods that have no market and (ii) there is a need for economic funding for conservation purposes. Payment for Ecosystem Services (PES) seeks to internalize the environmental externalities of human actions, ascribing monetary value to Ecosystem Services (ES) and helping decision-makers to recognize the real value of the loss of ES. Sustainable management is secured within a model of integrated resource management (a combination of economic, social, environmental, political and cultural spheres). PES breaks with the classical view of environmental protection (based on direct regulation to prevent, correct and punish harmful behaviour). This review focuses on concrete aspects of the sustainable management of ES related to water, examining the possibility of implementing PES for water ES, using mainly the Pigouvian approach. It considers the importance of developing PES schemes at the hydric level in response to the need for management of resources, while ensuring the supply for current uses and demand while being attentive to social and environmental dimensions. [ABSTRACT FROM AUTHOR]