Effect of multi-regional waterworks on the operation efficiency of local waterworks

Abstract

There have been several studies for developing policies that can promote the efficiency of the underdeveloped local waterworks in Korea. The studies can be divided into two parts. First, there are some studies of economies of scale through the integration of waterworks by each municipality(Choi, 2005). The others are several studies that compared the improvement of operation management index when the operation management work of each municipal waterworks was entrusted to water specialist institution(Won, 2010). According to each study, it has been suggested that commissioning of waterworks management to specialized agencies is more effective in some indicators than direct management. The Korea Water Resources Corporation, a specialized water agency, has been operating 22 local governments since 2004. However, local consignment commissioning projects are limited by the local government's decision-making and cost burdens as a policy to improve the overall conditions of domestic waterworks. As it reflects this, the deployment of domestic local waterworks consignment projects has been stopped since 2013. Second, the integration plan of local waterworks confirms that economies of scale occur according to characteristics of network industry of local waterworks through various studies. However, according to the domestic laws, it is practically impossible for local governments to jointly operate and manage the local waterworks by integrating a part of the water supply facilities between the respective localities as management bodies. Therefore, it is not reasonable to establish a policy for improving the efficiency of domestic waterworks operation on the basis of it Therefore, this study was carried out to establish a feasible policy direction for improving the poor water supply in Korea. For this purpose, this study analyzed the effect of multi-regional waterworks on the operation efficiency of local waterworks in each municipality. The reason for the analysis based on the multi-regional waterworks is as follows. First, the multi-regional water means the water supply to more than two municipalities. Therefore, it is possible to indirectly analyze the influence of the integrated water supply assumed in the previous studies. Second, it is possible to establish a viable policy because the role of the regional waterworks is the largest in order to improve the operation efficiency of domestic local waterworks. In other words, if the municipality receiving the multi-regional water is more efficient than the municipality that does not receive it, then it indirectly proves the integrated effect of the waterworks. In addition, it is expected that the present domestic water system which is physically divided into multiregional waterworks by the goverment and the local waterworks that is operated and managed by the local government, is able to be evaluated efficiently and indirectly. The results of the regression analysis are as follows, First, the regression analysis between the ratio of the multi-regional waterworks and the operation costs per total water supply of the local governments showed that there was a negative relationship at the 95% statistical significance level. In other words, the higher the ratio of the multi-regional water supply, the lower the cost per total supply which is quantitatively that the expenditure per water supply will decrease by 72won /m3 as the ratio of multi-regional water increases by 10%. This is different from the common sense that each municipality purchasing a lot of the multi-regional water will cost more than other municipalities that do not. The reason that the municipalities that have their own water intake and purification facilities cost more than the municipalities that receive the multi-regional water are that the cost of their own water resource is low but the other expensive costs are incurred because of facility investments and maintenance costs for water treatments. Second, as a result of analysis of the regression between the supply of the multi-regional water and the rate of revenue water, it was found that the local governments with a high ratio of the multi-regional water efficiently manage the revenue water at the 95% statistical significance level. This is because the municipalities that receive the multi-regional waterworks can concentrate on the relatively easy water supply work without the water treatment and management work that requires expertise. Lastly, the result of analysis of the regression between the supply of wide area water supply and the municipal operating workforce showed that the operational workforce decreased as the multi-regional water was supplied due to the integration effect. Quantitatively, as the multi-regional water ratio increased by 10%, the number of operators decreased by one. Based on the results of this analysis, the following policy directions can be established. It is considered that it is not efficient in terms of workforce management to entrust all the water supply facilities and customer business of each local government collectively to a specialized agency like K-water. In other words, even though a specialized institution is entrusted with the management and administration of waterworks of various municipalities, it is difficult to expect economies of scale in terms of workforce management as the workforce is mainly determined according to the total water supply. Instead, it is considered more efficient to adjust the scope of responsibility for the multi-regional and local water supply, which is divided into geographical boundaries between local governments. In detail, there may be an integrated management plan by expanding the business scope to the water treatment business of the municipality by the multi-regional water service provider. In this case, each municipality can concentrate only on supplying the tap water to each customer, which will lead to efficient operation of the whole local waterworks.