# Economies of Scale and Efficiency in the Wastewater Treatment Sector: A Decision Tree Approach
###### Abstract
However, the influence of Directive 91/271/EEC and the environmental need to treat as much wastewater as possible has led to an increase in the number of treatment facilities and a reduction in their size [28; 29; 30]. It is therefore necessary to analyze this phenomenon in order to solve the dilemma of whether it is appropriate (economically and environmentally speaking) to centralize or decentralize urban wastewater treatment. In other words, we must consider whether it is better to build large WWTPs or to create a network of smaller WWTPs disaggregated by territory and adapted to the conditions of the territory and the pollutant loads they receive. The most widely recognized methodology for efficiency analysis is Data Envelopment Analysis (DEA) [31], which allows researchers to analyze the behavior of the units thanks to the construction of an efficient operating frontier. This frontier represents the optimum efficiency of the sample and is used to locate the units of the analysis with respect to it; the closer they are to the frontier, the more efficient they will be. Within DEA, a wide variety of models allow for the analysis of different aspects of the production processes. This study focuses on the efficiency analysis trees (EAT) model [32]. The EAT model focuses on efficiency analysis through combining machine learning and linear programming techniques to solve the problems derived from overfitting in the efficiency calculations and to help improve the robustness of the results obtained. This generates reliable efficiency values that facilitate a better comparative analysis of the selected units of analysis and provides guarantees when using these results in decision-making processes. The application of the EAT model is recent; it has been applied in the education sector with the aim of assessing efficiency in higher education institutions, as well as in industrial assembly processes [33,34]. In the water sector, it has only recently been adopted; studies have focused on the energy efficiency of WWTPs and the influence that greenhouse gas emissions have on treatment costs and their eco-efficiency [35]. In contrast, the novelty of this study lies in its application of the EAT model to a sample of WWTPs in order to determine the influence of economies of scale on the treatment efficiency of WWTPs. Based on the above assumptions, the aim of this study is to analyze the economies of scale in the wastewater treatment sector in the Valencian Community from economic and environmental points of view through the application of the EAT model. This analysis seeks to determine the behaviors of differently sized WWTPs with respect to the existing quality criteria and the possible implementation of reuse models in the territory. The novelty of this research is twofold. On one hand, it applies the EAT model to determine the effect of economies of scale on the treatment efficiency of WWTPs. On the other hand, it includes water quality criteria (i.e., lower quantities of nutrients such as nitrogen and phosphorus) as a starting point for the future implementation of reclaimed water in Valencia. This analysis highlights the potential for minimizing the economic cost of treatment; by extension, operators are encouraged to implement changes in the structuring of the WWTP network in order to take maximum advantage of the existence of economies of scale and the circular economy.