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Economies of Scale in Sewage Treatment Using a Translog Cost Function

박선영 1 Yoo, Seung-Hoon 2 Chongwon Kim 3

1고려대학교 경제연구소
2서울과학기술대학교
3국토연구원

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ABSTRACT

The Korean Government announced integration plans for sewerage operation in order to prevent the waste of management cost and excessive investment on sewage treatment equipments which is respectively executed by local governments. Currently, the cost-recovery rate of Korea’s sewer treatment is very low at 38.3%, with local governments managing their own sewer sector. Many of them suffer from financial deficit, which in turn fails to secure economy of scale. A case study of Busan, Ulsan, Gyoungsangnam-do, and Gyounsangbuk-do was performed to discover cost function of sewerage section from 1998 to 2009, employing translog cost function. Estimates suggest the existence of economies of scale. These findings said that moderate cost savings from prudent mergers could be expected. In addition, these results could be understood that integration and area-widening can improve efficiency of sewage treatment section.

Citation status

* References for papers published after 2022 are currently being built.