Measuring Efficiency in Local Government: An Analysis of New South Wales Municipalities’ Domestic Waste Management Function

Abstract

Data envelopment analysis (DEA) is used to measure the technical and scale efficiency of the domestic waste management function in 103 New South Wales’ local governments. After allowance is made for nondiscretionary environmental factors which may affect the provision of these local public services, such as congestion and the inability to operate machinery in densely-populated urban areas, comparison of efficiency across geographic/demographic criteria is made. The results suggests that, on average, waste management inputs could be reduced to just over 65 percent of the current level based upon observable best-practice whilst productivity losses due to scale effects account for slightly over 15 percent of total inputs. The results also indicate that inefficiency in urban developed councils is largely the result of congestion and other collection difficulties encountered in densely-populated areas, whilst inefficiency in regional and rural councils stems from an inability to attain an optimal scale of operations.