Dynamic goal programming synthetic indicator: an application for water companies sustainability assessment

ABSTRACT

This study proposes to evaluate the sustainability of water companies through time by using a new approach, one that involves a dynamic synthetic indicator derived from goal programming techniques. This dynamic indicator approach incorporates catch-up and innovation indices, which enables one to identify the main factors that drive changes in sustainability through time. We used a case study approach to clarify this dynamic approach by evaluating indicator values from a sample of 129 Portuguese water companies over the 2012 to 2015 time period. For most of the water companies we evaluated, sustainability values changed over time, which illustrates the importance of evaluating dynamic sustainability. For each examined water company, we quantified whether changes in sustainability were due to external and/or internal factors. The indicator approach we proposed should be useful for water regulators evaluating the effectiveness of policies aimed at improving a water company’s sustainability.

KEYWORDS:

• Dynamic sustainability
• water utilities
• composite indicator

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

Supplementary data can be accessed here.

Notes

1. Interested readers wishing to know more about performance indicators used by water companies can consult the studies by Alegre et al. (2006) and Nogueira Vilanova, Filho, and Perrella (2015).

2. If more than two years are analyzed, the decomposition of the dynamic sustainability indicator into the catch-up and innovation factors between the first and last year could be separated into those occurring between pairs of years. It provides more detailed information about the sustainability change across time, although it complicates the analysis.

3. Portuguese national regulatory authority: Entidade Reguladora dos Serviços de Águas e Resíduos (ERSAR): www.ersar.pt/en. Molinos-Senante et al. (2016) evaluated the sustainability of 154 water companies, but information was available only for 129 plants for the 2012–2015 period.

4. An alternative set of initial indicators can be considered depending on the objectives of each empirical application.

5. The alternative decomposition of the dynamic synthetic indicator shown in Section 2 (Equation (9)) provides similar results, which are shown in the supplemental material.

Additional information

Funding

The authors wish to acknowledge the financial assistance received from Conicyt through the programme Redes Internacionales (REDI170223); the Spanish Ministry of Education (ECO2016-76567-C4-4-R); the Junta de Andalucía (SEJ417); and the University of Málaga (PPIT.UMA.B1.2017/21).