Environment, Food and Rural Affairs CommitteeWritten evidence submitted by Lord Krebs, Chair, Adaptation Sub-Committee (ASC), Committee on Climate Change

The second report of the Adaptation Sub-Committee (ASC) assessed the preparedness of the water resources sector for current and future climate.1 Climate change is an important factor in planning for future water resources in the UK. Water companies estimate that there could be a gap between supply and demand during severe droughts in about 45% of resource zones by 2035 without remedial action. Climate change is a contributing factor in at least 80% of areas projected to have a potential shortfall by 2035. The UK’s first climate change risk assessment will provide further evidence on the possible effects of climate change on the availability of water for use by households, industry, agriculture and the environment.

The Water White Paper goes some way towards enabling the water resources sector to respond to the challenges of climate change with two key reforms:

Abstraction licensing. The ASC found that the current regime for abstraction licensing is a barrier to adaptation because: (i) it does not adequately reflect the environmental costs of abstraction, and (ii) there is insufficient flexibility within the system to respond to changes in water availability.

   The commitment in the White Paper to reform of the abstraction regime should address these issues over the long term. It is less clear how the Government plans to tackle the legacy of unsustainable abstractions for public water supply.

Long-term investment planning. The ASC found that water companies now routinely factor climate change into their 25-year business plans. However, it is difficult for the regulators to assess robustly whether greater levels of investment can be justified to prepare for climate change uncertainty, based on the information that water companies provide. Some work that we undertook with Thames Water identified that accounting for climate change uncertainty could actually increase the business case for some so-called “low regrets” measures, such as leakage reduction and targeted metering.

   The White Paper may help to tackle this issue to some degree by confirming that the Government’s forthcoming guidance to Ofwat will point to the latest research on how to account for climate change in planning for water resources over timescales beyond the current 25-year planning period.

However, on reducing demand for water, my Committee is concerned that the approach outlined in the White Paper will not deliver sufficient change to prepare adequately for a changing climate. Reducing water demand is a priority for adaptation because it provides benefits regardless of the extent of future climate change, including lower costs to customers and reduced pressure on freshwater ecosystems. The ASC found that in the South East water use could be reduced from an average of 160 litres per person per day to 115 litres per person per day by upgrading household fittings over their natural replacement cycle.

The White Paper sets out the Government’s aspiration for improving water efficiency. Where water companies are in a water stressed area, or where they have demand that is above the national average, the Government expects water companies to produce a plan that will deliver overall demand reductions in the first five years. It is unclear whether this will lead to any significant long-term change from the previous Government’s aspiration of reducing average water demand to 130 litres per person per day by 2030.

Finally, there is the difficult question of water metering. The White Paper rules out universal metering for the time being, as the benefits vary from region to region. In the view of my Committee, consumers will not make sufficient effort to reduce water use unless there is a clear price signal. The ASC’s economic analysis for the South East found that, if a household is metered, the financial savings through lower water bills outweigh any additional costs associated with fitting water efficient measures.

I hope the analysis that the ASC has undertaken is useful for your current inquiry on the Water White Paper. I would be happy to discuss these issues further with your Select Committee if that would be helpful.

January 2012

1 Further details on this evidence (including all reference sources) can be found in Chapter 4 of the second progress report of the Adaptation Sub-Committee: Adapting to climate change in the UK: measuring progress (July 2011) http://www.theccc.org.uk/reports/adaptation/2nd-progress-report-2011

Prepared 4th July 2012