Environment, Food and Rural Affairs CommitteeWritten evidence submitted by Water-Value

1) Does that Water White Paper set out the right principles for customers and the water and sewage industry for taking forward reform of the market for water supply?

The principles set out on the Water White Paper, taken holistically, peruse the right course of action; they set a trajectory rather than “bold blueprint for action”. This trajectory must account for the water-energy-food-climate nexus and rising per capita consumption.1 Per capita each of take 4,645 litres per day2, or around 15 bath tubs from our water commons, if we don’t curtail our behaviour this will increase.3

Society remains unaware of this water stressed reality. It is therefore critical to incentivise conservation. This will be created by creating an adequate supply—demand relationship, which will re-base our water industry in the commercial sector where the competing water demands are reconciled against their importance to society.

Resource Economics demonstrate that when the price signals which reflect the scarcities of goods and services are distorted or absent, investment and resource allocation in the private sector becomes complex and lurid.4 This in turn complicates the public sector decision making related to the resource.4 Furthermore it may foster a culture of wasteful behaviour, including actions, such as, water resource exploitation and misuse (water inefficiency), dumping of pollutants and wastes into our water course (pollution sinks) and, inter alia, mean water as our most valuable resource is under appreciated (water asset or liability, externalities).

2) Are the proposals to protect and enhance water resources, for example on abstraction regime reform, likely to be fully effective?

We welcome steps by the Environment Agency to improve information disclosure on abstraction licenses, including their returns, which allows abstractor applicants (A) to approach potential abstractors with surplus entitlements (B). Marketization strategy must be carefully deployed if this information is intended to reach its widest audience. If the information were displayed on a “slippery map” interface, potential applicants would be able to find the most suitable abstractor to approach across based on GIS based spatial analysis. May we suggest that this is added to the what’s in your backyard? section of the Environment Agency website allowing for maximum exposure. Simultaneously the Agency or Secretary of State, the regulator or lead diplomat, respectively, must remain independent and autonomous in the event of any modification or revocation of a license, of which, the Agency are currently investigating “250 sites”.5

In context of this, both the legal framework and Agency regime need to be changed in order to pioneer the facilitation of effective license revocation or modification. To pave the way for the valuation of a specific water resources.5

In respect of the new water bill, due “in the coming months” clear guidance on how “water undertakers” and “brokers” needs to be set down allowing them to operate in effective negotiation pursuance and not infringe pertinent legislation.6,5

There are a plethora of caveats if these changes are note pursued. The salient concern of government may be that, without these supply and demand price signals, a net increase in water abstraction would be incurred. As too many applicants may obtain the licenses (A) to abstract the new volumes granted, by right, espoused from revocation of superfluous entitlements from the other license (B).

3) Do you support the White Paper’s proposals on affordability of water bills for householders?

Water is life, and therefore those who are disadvantaged will need a hand up in order to have access to this vital resource which sustains life. Overall these changes will need to ensure water is provided to those who need it most, including those in the present generations, and the future too.

Everyone has the right to water, holistic signalling of water resource scarcity needs to be communicated, in order to sustain that right going into the future. But also to protect the nation’s riparian flora and fauna, which are often treated as creatures less useful to human kind. Failure to protect these species will infringe the European Union Water Framework directives.

4) Does the White Paper omit any key issues where further policy action is required to ensure sustainable, reliable and cost-effective water supplies?

A draft national map on how water companies supply infrastructure would be connected would be beneficial for planners involved in strategic regional level planning.

There is not a clear approach for tackling the legacy of unsustainable abstraction; our understanding is that Ofwat have stalled on the Periodic Review Process whilst the Environment Agency is looking at damaging licenses. Over and above the best practice advice offered in the White Paper. What will be done in the short term to tackle damaging unsustainable abstractions by water companies?

Editors Notes

Water-Value is a part of the George F White Group and was established in 2010 to address the real issue of valuation of water resources. We are now market leaders in valuing water resources both as an asset and a liability for appraisal, strategic planning, compensation and valuation. More information at www.water-value.com.


1 World Economic Forum (2008) Water Security: The Water-Energy-Food-Climate Nexus

2 Chapagain, A, Orr, S, (2011) UK Water Footprint: the impact of the UK’s food and fibre consumption on global water resource, Volume 1 World Wildlife Foundation (http://www.wwf.se/source.php/1407043/wwf_uk_footprint[1].pdf)

3 Allan, T, (2011) Virtual Water: Tackling the Threat to Our Planet’s Most Precious Resource London: I.B. Tauris Ltd, pp4

4 Adaptation of Young, RA (2005:XII) Determining the Economic Value of Water: Concepts and Methods Washington, DC: Resources for the Future

5 Defra (2012) Water for Life Department for the Environment Food and Rural Affairs (http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper/) pp 40

6 Utility Week (2012) Cameron promises draft water bill Utility Week 18. 18 January 2012 (http://www.utilityweek.co.uk/news/news_story.asp?id=196407&title=Cameron+promises+draft+water+bill)

20 January 2012

Prepared 4th July 2012