Int. J. Global Environmental Issues, Vol. 15, Nos. 1/2, 2016 121 Copyright © 2016 Inderscience Enterprises Ltd. Indicators of efficient urban water management Nava Haruvy* Netanya Academic College, University Rd. Netanya 42100, Israel Fax: 972-8-9365345 Email: navaharu@netvision.net.il *Corresponding author Sarit Shalhevet SustainEcon Corp., LLC., 126 Thorndike St. Brookline, MA 02446, USA Email: sarit.shalhevet@gmail.com Abstract: Over the past decade, water and wastewater utilities have been gradually replacing local municipalities in Israel as the providers of drinking water and wastewater treatment services. Most utilities serve one or two cities or several small municipalities, often operating at a low profit or even at a loss. This research examines the factors influencing the utilities’ profitability, including the potential existence of economies of scale. The results show that for small utilities, an increase of 10,000 in population size is associated with an increase 0.5%–1% in gross margins, but this increase tapers off as the utilities grow larger. The profitability depends on many other factors, including the utility’s age (experience) and physical location, as well as the municipality’s structure and socio-economic rating; therefore, the optimal utility size varies greatly for each area. Keywords: water utilities; size; Israel; profitability; wastewater; population. Reference to this paper should be made as follows: Haruvy, N. and Shalhevet, S. (2016) ‘Indicators of efficient urban water management’, Int. J. Global Environmental Issues, Vol. 15, Nos. 1/2, pp.121–135. Biographical notes: Nava Haruvy is a Full Professor of Economics in the Netanya Academic College in Israel. She received her PhD from the Hebrew University in Jerusalem. He has over 30 years of research experience on economics of the environment and natural resources, with a focus on water and wastewater economics. She has published over 40 papers in refereed journals, as well as many conference symposia proceedings and other papers. She has participated in international research projects on the evaluation of water technologies and water resource management, and for the past decade has been conducting research for the Israeli Water Authority on water management policy issues, especially regarding the management of water and sewerage utilities. Sarit Shalhevet is an economic and environmental consultant at SustainEcon Corp., located in Massachusetts, USA. She holds an MBA from Tel-Aviv University in Israel. She holds a Masters of Liberal Arts in Sustainability and Environmental Management from Harvard. Her research focus is on economic valuation and environmental life cycle impact assessment of agriculture and