A composite indicator framework integrating regulator perspectives for assessing water service quality

This study presents an innovative approach to assessing service quality in the water supply and wastewater treatment sectors, using directional Benefit-of-the-Doubt (BoD) models tailored to regulator needs. Unlike previous research, this work integrates the regulator preferences throughout the entire evaluation process, from selecting key performance metrics to determining reference weights and validating results through sensitivity analyses. A new index for the Assessment of the Quality of Services (AQS) was constructed using a set of indicators chosen by the regulator, ensuring a direct alignment with regulatory priorities. Additionally, the study examines the relationship between service quality and cost efficiency, the latter computed using the Data Envelopment Analysis (DEA) methodology, to address the inherent tension in the water sector between these often conflicting goals. By providing a comprehensive comparison of wholesale utilities’ performance, the findings highlight that cost efficiency and service quality do not always align. This underscores the need for a balanced regulatory approach that fosters service quality improvements while maintaining cost control, promoting sustainable and effective management of the sector. • Regulator-driven BoD model aligns service quality with sector-specific priorities. • New AQS index reflects preferences of the water sector regulator. • Weight restrictions reflect preferences incorporated in performance assessment. • Service quality and cost efficiency assessed jointly using DEA and BoD techniques. • Study reveals trade-offs between quality and efficiency in wholesale utilities.