Estimating minimum feasible water leakage and its economic impact in the drinking water sector: a case study from Chile

Abstract

In response to escalating global water scarcity, reducing water losses in urban drinking water services has become crucial for enhancing eco-efficiency. This study introduces an innovative methodological approach to benchmark water leakage and its associated operational-cost adjustment in the water sector. The approach employs inverse Data Envelopment Analysis (DEA) through reverse optimization. A case study of Chile’s water industry—marked by prolonged drought but maintaining stable leakage rates—was conducted to demonstrate the methodology’s value. The findings show that 6 out of 27 assessed water companies cannot reduce water leakage without affecting their eco-efficiency. However, for the remaining 21 companies, an average potential leakage reduction of 20.51% is achievable, with reductions ranging from 8.76 to 81.55%. The economic impact of these reductions varies significantly, from US$0.27 to US$38.32 per cubic meter saved. These results highlight the economic complexity of reducing leakage, emphasizing the importance of balanced policies that address water affordability alongside eco-efficiency goals.