Water efficiency projects
3. Promoting the efficient use of water by consumers
can help water companies maintain a safe margin between the demand
for water and the amount they can supply. It can also keep water
companies' costs down, for example by removing or delaying the
need to develop a new source of water such as a reservoir.[3]
This in turn helps to keep consumers' water bills down.
4. To be effective, Ofwat needs information on the
water saved by water efficiency schemes and their effect on consumers.
In 2002 the Committee recommended that Ofwat should identify which
water efficiency measures are most effective in helping consumers
waste less water and share this information with water companies.[4]
5. A wide range of water efficiency programmes can
help consumers to use less water. These include toilet cistern
devices that reduce the amount of water used when the toilet is
flushed, rainwater collection devices, and systems that re-use
bath water for flushing the toilet.[5]
Consumer education
and publicity are also important elements of a water efficiency
programme.
6. Work has been done internationally on the effectiveness
of water efficiency measures, most notably in Australia. For example,
Sydney Water provides grants to consumers who take effective measures
to save water. To date over 300,000 households have taken part
in this programme, saving, on average, 20,900 litres of water
per household per year.[6]
There is however no direct comparison of these figures to England
and Wales as little evidence has been gathered on water savings
in the UK.
7. Ofwat has only recently started to take some steps
to address the Committee's 2002 recommendation. In 2006 it established
a good practice register of water efficiency initiatives and it
is working with water companies to ensure that the information
collected is available for the next periodic price review. Ofwat
is also co-funding and participating in research projects to determine
the cost effectiveness of demand management schemes.[7]
8. Five years after the Committee's recommendations
on water efficiency, however, Ofwat still does not have enough
robust evidence on which water efficiency projects are the most
effective.[8] Furthermore,
a majority of water companies believe that Ofwat has not been
very effective in encouraging them to promote water efficiency;
several of them find Ofwat's approach to allowing extra funding
for water efficiency projects confusing.[9]
Consumer response to water efficiency
9. During the drought in 2006, both consumers and
water companies responded to non-financial incentives to save
water. Consumer demand in the Thames region was 8% less than the
norm for the summer. Anglian Water and Southern Water made efforts
to repair all visible leaks to demonstrate that they took water
efficiency issues seriously.[10]
But other companies did not do so.
10. Recent research by the Consumer Council for Water
shows that consumers will save water in a drought, especially
if they believe that their own water company is also doing all
it can to reduce wastage.[11]
Water companies therefore play an important role in giving a lead
and setting an example to consumers.[12]
Ofwat does not, however, require the companies to alter their
operating practices during a drought.
Impact of metering on water efficiency
11. Consumers who do not have a meter pay a fixed
sum regardless of how much water they use. There is therefore
no financial incentive for them to use less water.[13]
By contrast, metered consumers do have a financial incentive to
reduce consumption (Figure 1). Research by UK Water Industry
Research (UKWIR) shows that metering can reduce household consumption
by between 9% and 21%.[14]
12. A water company increases its revenue for every
unit of water used by a metered consumer. The incentive for a
company therefore is to encourage metered consumers to use more
rather than less water.[15]
There is no evidence that water companies are doing this, but
as metering becomes more widespread, the economic incentives on
companies to do so will increase.[16]
A revenue cap, as opposed to the current system of a price cap,
would limit the amount of total revenue that a water company can
earn and therefore reduce the incentive to promote water use.
Ofwat has begun to investigate using a revenue cap to complement
the current price cap regime.[17]
Figure 1:
Economic incentives on the consumer and company
