I received a kind invitation to take part in today’s BBC Radio 4 You & Yours show on ‘Water for the Future – Why don’t we have enough water?’ The full programme page is here and there’s a link to the chapter that I feature in here.
Overall I thought it was a great show that covered a lot of material in an easy to follow way. Views from different water users were brought in, including households, farmers and the Environment Agency speaking on behalf of the environment and wildlife. A range of issues were tackled, such as meters, leakage, water pricing, water saving ideas like rainwater harvesting, and cross-border water trading.
For my part I talked a little about how water companies could be challenged to innovate more to bring leakage levels down to something more acceptable – and more in line with best practices seen around the world in places such as Singapore and Las Vegas. Sadly, I also made a little gaff by saying Ofwat should have a view on long-term water resource plans but happily Regina Finn, Ofwat’s chief executive, very quickly clarified this as primarily the EA’s territory then approved by the Defra Secretary of State (I guess I can chalk that error under pressure up to not being very used to being interviewed for radio!).
There were only two points raised during the programme I took issue with. First, there was a suggestion that households who use more water, say to water their gardens, should pay a higher price for this kind of discretionary water use above a certain volume. This is an increasing block tariff (IBT) structure. Looking at the material on this tariff from our University of Manchester Masters course leader, Prof. Dale Whittington, it’s not true that this is a clear-cut good suggestion. IBTs are in use around the world, of course. However there is little agreement on how big each of the blocks should be – for instance, my own household water use of around five cubic meters a month falls within the first ‘lifeline’ block of ‘essential’ consumption in practically every system I’ve seen. So I’d probably pay little or nothing for my water under such an arrangement, which is clearly not appropriate as I’m pretty sure not all of my water use is ‘vital to life’. IBTs can also cause regressive cross-subsidies, from poor to rich and not the other way around, unless one has a detailed and nuanced understanding of household water use conditions.
There is also the issue of how one determines – either universally or on a case-by-case basis – what is essential versus what is ‘discretionary’ water use. This is not a new topic for the UK of course. Back in a November 1998 DETR consultation response report on water charging there was talk of ’[c]harging by reference to the amount of water used, particularly where large amounts of water are used for discretionary purposes … (for example garden watering with sprinklers and filling swimming pools) … [to] provid[e] a means of matching supply and demand without increasing costs for all consumers‘. However the challenge was recognised as to how water companies could ‘identify sensitively those using water for discretionary purposes, without taking an approach which is unduly intrusive‘ (paragraphs 17 & 18).
At the WRc innovation day event I attended a few months back I heard there is now more understanding about household water uses, from water diary based research, from surveys, and from pilot tests of real-time, smart metering technology that can detect and identify the distinctive water use profile of specific devices, like washing machines, showers and so on. So perhaps there is now the technology to implement a two-block, essential/discretionary IBT in the UK. I’m not sure, but at any rate it would have to be cleverly tailored to specific household groups and would require a major culture change of approach in how water companies (and possibly regulators) interact with water customers, to build more trust, mutual understanding and flexibility into the current system.
The second point I took issue with was when a contributor to the programme dismissed ownership of the water companies as an important effect – and certainly as secondary to that fact that all the water companies are tightly regulated as to what they can and can’t do. He then explained that water company owners/investors expect safe, low returns from the water utilities. This of course means that ownership conditions are quite likely to affect our main bugbear here at Waterstink – i.e. the innovation intensity of water companies. If owners/investors expect a low-risk/low-return set-up, what signal does this send and how does this incentivise staff within water companies to innovate and come up with new solutions for the sector’s many challenges? Doesn’t it instead put pressure on water companies to just go with the usual, tried-and-tested, business-as-usual techniques and approaches?
Had I been able to make it into the studio for the programme, I would have tried to get those two points added to the overall discussion. Nevertheless though, as I say, it was a great programme and well worth a listen!
(Oh… and I almost forgot. There was also two interesting new reports mentioned by presenter, Winifred Robinson, during the show. The first was a State of the Nation: Water report released today by the Institution of Civil Engineers; the second was the newly updated water resources/drought prospects report from the EA.)
Duncan Thomas
