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Efficiency improvement is one of three patterns a public utility should follow in\udorder to get funds for investments realization. The other two are recourse to bank loans or to\udprivate equity and tariff increase. Efficiency can be improved, for example, by growth and\udvertical integration and may be conditioned by environmental variables, such as customer\udand output density. Prior studies into the effects of these variables on the efficiency of water\udutilities do not agree on certain points (e.g., scale and economies of scope) and rarely\udconsider others (e.g., density economies). This article aims to contribute to the literature by\udanalysing the efficiency of water utilities in Denmark, observing the effects of operational\udand environmental variables. The method is based on two-stage Data Envelopment Analysis\ud(DEA) applied to 101 water utilities. We found that the efficiency of the water sector was\udnot affected by the observed variables, whereas that of wastewater was improved by smaller\udfirm size, vertical integration strategy, and higher population density

The Effects of Operational and Environmental Variables on Efficiency of Danish Water and Wastewater Utilities