Decision makers must keep in mind that water services have an invaluable ‘price’ for the public budget and society’s welfare. However, due to the specific features of the service, water utilities are prone to inefficiency. Thus, performance evaluation becomes indispensable to face this constraint. Besides the application of the traditional technique of Data Envelopment Analysis to evaluate the performance of Portuguese water utilities, this study also implements the robust technique of order-m to assess the influence of operational environment on water utilities’ performance. In spite of several reforms, the Portuguese water sector still reveals significant levels of inefficiency, partially caused by an inappropriate operating scale. Concerning the operational environment, it was possible to observe a positive influence of private sector participation, economies of scope, and groundwater sources on efficiency. The influence of the ‘quality of service provided’ was also studied in this performance analysis.

Water tariffs are a powerful management tool. Indeed, they can be seen as a conceptually simple way to promote multiple, possibly conflicting, objectives. Those trade-offs cause discrepancies between stakeholders and may produce undesirable results. The residential urban domain is particularly sensible to those predicaments. To shed some light on the matter, this paper carries out a literature survey on empirical studies, with emphasis on different tariff structures. In total, 185 publications were identified concerning the importance of tariff structures in achieving specific local objectives, or perspectives, of those who demand and supply water. These studies examine, occasionally comparing: (1) the degree to which specific objectives are achieved; (2) how the desired outcomes of a particular structure depend on the customers' sensitivity when receiving a price signal; and (3) the drivers of the decision-makers in the tariff-setting process. A major result is the empirical evidence that the way prices are used matters almost as much as whether they are used or not.