Supplementary memorandum submitted by
Water UK
CLIMATE CHANGE, WATER SECURITY AND FLOODING
1. Thank you for asking us to provide you
with some further information for the Committee. You asked us
to come back on three specific points and for clarity I would
just like to refer to a couple of points in our original evidence
that perhaps we did not explain sufficiently well.
2. You will remember that the Committee
was concerned that the water industry might be looking to shed
its responsibilities in relation to the protection of species
and habitats. This was certainly not our intention when we suggested
that more work should be done on the de-designation of sites.
We just wanted to raise the issue of whether regulation itself
is currently sufficiently flexible to cope with changing circumstances.
3. There are species that are not good at
adapting to a changing climate and can survive in only a very
limited range of climatic conditions. Very small changes may have
a catastrophic effect on such species. There is therefore an issue
about identifying which sites are designated on the basis of the
presence of such species. We understand that English Nature is
currently working on de-designation processes and we look forward
to co-operating with them. Of course cost is an issue. It may
be possible to take remedial actions at certain sites, but if
this is an ongoing or increasing cost then questions will inevitable
be raised as to whether any landowner is in fact trying to preserve
something in aspic, which is no longer sustainable.
4. The Committee also asked about what companies
had already been doing on climate change. A huge amount of work
and investment has gone on improving security of supply since
the droughts of 1995 which many people will remember led to hosepipe
bans, standpipes and an unacceptably poor service to customers
in some parts of the country. This did not happen in summer 2003,
which was the driest for many decades, and this was thanks both
to this investment and improved water resource management. Planning
for successive drought years raises a different scale of investment,
which no doubt the Environment Agency will wish to discuss with
you.
COST OF
CLIMATE CHANGE
TO THE
INDUSTRY
5. It is difficult to establish accurate
costs of preparing for climate change to the water and wastewater
industry. This is because it is an implicit rather than an explicit
issue. It will add uncertainty to all aspects of operation and
act in parallel with other drivers such as socio-economic change,
legislation and land-use change. For example, climate change alone
may not result in the need for new reservoirs, but it may be a
major contributing factor that shifts the supply-demand balance
within a particular company's area.
6. However, clearly climate change will
impact on most areas of the business:
— increased demand (c 2% increase by
2020);
— increased/replacement supplies (new
reservoirs, accelerated resource development, demand management);
— effects on process treatment (STWs
and WTWs);
— increases in odour/septicity effects
on assets;
— increased storage (flooding);
— increased storage for CSOs;
— infiltration/exfiltration;
— increase in leakage/bursts because
of changing ground conditions;
— poorer water quality—deteriorating
groundwater/saline intrusion, less dilution of river water, eutrophication,
algal blooms in reservoirs; all leading to higher treatment standards
and hence investment at STWs and increased treatment costs at
WTW;
— increased fluvial flooding, sewer
flooding and coastal flooding; and
— agriculture—changing practices,
more irrigation.
7. Perhaps one way to look at the problem
is the total capital spend of the industry. In the final business
plans for PR04 this comes to £22 billion. Of this £10
billion is related to capital maintenance and infrastructure,
£4 billion to supply demand, and £7 billion to new environmental
standards.
8. The second assumption is that climate
change will add a premium to these drivers in the future; having
discussed this with a number of colleagues in the industry, a
premium of 5-10% sounds reasonable. This means that every five
years climate change could be responsible for extra investment
of the order of £1-2 billion. This does not include the costs
for fluvial and coastal flooding identified in the recent foresight
report.
9. The main cost drivers from climate change
will probably come from changes to the sewer system. However,
the amount of money that can be spent on this will depend on the
allocation of funding by Ofwat.
USE OF
TRADING PERMITS
AND LEVIES
ETC
10. Water UK has participated in the Government's
Sustainable Buildings Task Group which will report to Ministers
shortly. Part of the Group's remit is to look at promoting water
efficiency in buildings, it would be inappropriate for us to pre-empt
the findings of the report.
11. Water companies have a statutory duty
to promote water efficiency and all companies take measures to
encourage wise use by domestic and commercial customers. The use
of a levy on water use is not an issue on which Water UK has a
developed a view. However, if such a levy were proposed it should
first be trailed in a pilot area to test its impact on water use,
it should be totally hypothecated with monies used to promote
efficiency and it should be tailored so that vulnerable customers
are protected.
UKWIR STUDY
12. The Committee asked to receive further
information about the UKWIR project on climate change and the
hydraulic design of sewerage systems. I attach a draft summary
report for the Committee. Please note that this remains for the
moment a draft document; and cannot yet go into the public domain.
It should therefore be treated as confidential at present. We
will be happy to supply a final version when the work is completed
and published.
Water UK
May 2004
| 
