Water supply and sanitation in the United Kingdom

Source: Metropolitan Consulting Group: VEWA - Vergleich europaeischer Wasser- und Abwasserpreise, 2006, p. 7 of the executive summary [http://www.bgw.de/files/pdf/0.1_resource_2006_7_14.pdf]

Taking into account differences in subsidies and service quality, the cost of supplying water at an equalized service level would be 84 euros in Germany, 106 euro in both France and England/Wales, and 74 euro in Italy. Metropolitan Consulting Group: VEWA - Vergleich europaeischer Wasser- und Abwasserpreise, p. 7 of the executive summary [http://www.bgw.de/pdf/0.1_resource_2006_6_12_4.pdf] ] Concerning sanitation, unequalized tariffs are the highest in Germany at 111 euro per year, 93 euro in England and Wales, €90 in France and only €40 in Italy. Equalized costs net of subsidies are, however, highest in England and Wales with €138, followed by France (€122), Germany (119 euro) and Italy (85 euro).

Tariff review procedures Water and sanitation tariffs are regulated by OFWAT, which sets caps for tariff changes over five-year periods. In the 2000-2005 review period OFWAT mandated an average annual reduction of tariffs of 1.6%. However, in the 2006-2010 review period it has allowed an average annual increase of 4.2%. OFWAT Facts and Figures, 2007, [http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/water_regfacts_figs.pdf/$FILE/water_regfacts_figs.pdf] ]

Affordability As a proportion of income, in England and Wales the cost of water and sewerage together works out at less than 1.5% of weekly earnings. [ [http://www.water.org.uk/home/resources-and-links/waterfacts/waterprices#cost Water UK] ]

More details on tariffs in England and Wales are provided in OFWAT's annual reports on water and sewerage charges [ OFWAT Annual report on water and sewerage charges 2006 [http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/tariff_report06.pdf/$FILE/tariff_report06.pdf] ]

Investment and Financing

Average annual investments in water and sewerage in 2000-2005 were 3.3 billion Pound Sterling, according to OFWAT, OFWAT Facts and Figures 2007 [http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/water_regfacts_figs.pdf/$FILE/water_regfacts_figs.pdf] ] [ [http://www.water.org.uk/home/policy/positions/finance-and-investment/overview.pdf-31-aug-07.pdf Water UK:Water Industry Finance and Investment Overview 2007] ] which corresponds to 61 Pound Sterling per capita per year. According to the industry association Water UK, between 1980 and 2010 the water and wastewater industry in England and Wales will have invested over £88 billion. [http://www.water.org.uk/home/resources-and-links/waterfacts/waterindustry Water UK] ]

Investments are financed primarily through self-financing and borrowing in the capital market. In March 2006 overall borrowing stood at £23.5 billion for England and Wales. Net returns on this borrowing in 2006 were 6.6%.

Efficiency (Water losses)

Efficiency of service provision has many dimensions, of which only one (water losses) is treated here.

According to OFWAT leakage in England and Wales has declined significantly from 228 liters/property/day in 1994-95 to 149 l/p/d in 2005, enough to supply the needs of 10 million people. OFWAT Facts and Figures 2007 [http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/water_regfacts_figs.pdf/$FILE/water_regfacts_figs.pdf] ] According to the Environment Agency, many companies in the UK have reduced their water loss to the economic level of leakage. This is the level at which, in the long-term, the marginal cost of leakage control is equal to the marginal benefit of the water saved. The rate of reduction in leakage has slowed for many companies because the most obvious causes of leakage have been detected and addressed, leaving only less apparent leakage problems. [ Environment Agency [http://www.environment-agency.gov.uk/yourenv/432430/432434/432451/446237/?version=1&lang=_e] ] Models have been developed and fine-tuned to assess the economic level of leakage. A summary of the debate on these models can be found in a recent report by OFWAT. [ OFWAT, Security of supply, leakage and water efficiency, 2006, p. 40. [http://www.ofwat.gov.uk/aptrix/ofwat/publish.nsf/AttachmentsByTitle/leakage_05-06.pdf/$FILE/leakage_05-06.pdf] ]

According to a comparative study commissioned by the German water industry association BGW average water losses in the distribution network in England and Wales have been estimated at 19 percent. They are lower than in France (26 percent) or Italy (29 percent), but higher than in Germany, where they are apparently only 7 percent. Metropolitan Consulting Group: VEWA - Vergleich europaeischer Wasser- und Abwasserpreise, p. 4 of the executive summary [http://www.bgw.de/pdf/0.1_resource_2006_6_12_4.pdf] ] The study states that its methodology allows for an accurate comparison, including water used to flush pipes and for firefighting. This is consistent with the International Water Association's definition of non-revenue water, which includes authorized non-metered consumption such as for flushing and firefighting.

OFWAT does not use percentage figures when it assesses leakage levels. Also it assesses only leakage and not broader losses. It is thus difficult to compare figures from the comparative study cited above with OFWAT figures for England and Wales.

Metering

A particularity of water tariffs in the U.K. is the low share of metering. Most users are not billed on a volumetric basis and have no financial incentive for water conservation. Since the 1990s efforts have been made to increase the share of household metering, which reached 33% in 2008. [ [http://www.water.org.uk/home/resources-and-links/waterfacts/waterprices#cost Water UK] ] The Environment Agency would like to see 75% of households metered by 2025. Studies show that water meters lead to a 5-15% reduction in household water use. [ Environment Agency [http://www.environment-agency.gov.uk/subjects/waterres/286587/1466399/?lang=_e] ]

See also

*EU water policy
*Water framework directive

References

External links

* [http://www.water.org.uk/ Water UK]
* [http://www.ofwat.gov.uk/ OFWAT] , the economic regulator for the water and sewerage industry in England and Wales
* [http://www.environment-agency.gov.uk/subjects/waterquality/?lang=_e Environment Agency] 's water quality website
* [http://www.wagrico.org.uk/site/WAgriCo/content-folder/home/ Water Resources Management in Cooperation with Agriculture project]
* [http://www.scottishwater.co.uk/portal/page?_pageid=225,483511&_dad=portal&_schema=PORTAL Scottish Water]
* [http://www.watercommissioner.co.uk/ Water Industry Commission for Scotland]


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