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waterfor people andthe environment

Water Resources Strategy forEngland and Wales

We are the Environment Agency. It’s our job to look after your environment and make it a better place – for you, and for future generations.

Your environment is the air you breathe, the water you drink and the ground you walk on. Working with business, Government and society as a whole, we are making your environment cleaner and healthier.

The Environment Agency. Out there, making your environment a better place.

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Environment Agency

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prior permission of the Environment Agency.

March 2009

Environment Agency Water for people and the environment 1

Water is something that most of us in England and Wales take for granted. In fact, it is a precious resource that faces increasingly severe demands and conflicting pressures. It is the responsibility of the Environment Agency to manage water resources and to plan for their future use.

This strategy sets out how we believe water resources should be managed throughout England and Wales to 2050 and beyond to ensure that there will be enough water for people and the environment.

The pressures on water resources and the water environment mean that careful planning is essential to ensure there is sufficient water for society and the economy, as well as the environment.

There are a number of areas where action is required, such as the need to allocate water resources more effectively in the future. This document identifies the actions we believe are necessary, and in particular those that are needed to deal with the serious challenges of growth and climate change.

There is no single, easy solution. We look forward to working with a wide range of organisations to secure water supplies and a better water environment for future generations.

Executive summary 2

Introduction 6

Our Vision 8

Current and future pressure on water 10

Adapting to and mitigating climate change 30

A better water environment 40

Sustainable planning and management of 48water resources

Water and the water environment are valued 68

Implementing the strategy 76

Appendix 1: Links with other strategies and plans 78

Appendix 2: Future scenarios 81

Appendix 3: Assumptions in per capita 84consumption modelling (Figure 4.1)

Endnotes and references 85

Contents

Rt Hon Lord Smith of FinsburyChairmanEnvironment Agency

2 Environment Agency Water for people and the environment

Introduction

Water is precious. It is society’s most basic need; it is essential for life.

It’s also vital to the economy. It is used to generate power, run industries, grow food - and is used in our homes.

But the future for water in England and Wales is uncertain. Increases in population and changes in lifestyle, together with climate change, mean that we need to plan for the next 40 years and beyond. If we don’t, our society faces the real possibility of not having enough water for people and the environment.

It is the Environment Agency’s responsibility to decide how much water is taken from the environment for human and business use, without compromising the environment. We deal with all aspects of water such as managing abstraction, flood risk and water quality, and are able to look at the water environment in its entirety. Working in this way allows us to address the needs of society, businesses and the environment.

Over recent years we have improved water quality in rivers throughout England and Wales, improved biodiversity and made considerable progress in reducing greenhouse gas emissions. We are working to restore sustainable levels of abstraction, and will continue to take action to reconcile the needs of society with those of the environment.

We need to plan for what we know the future will bring, but we also need to plan for what the future might bring. Without a strategic approach to managing water resources, there will be a significant impact on the economy and the environment.

The nature and scale of the problems will differ across England and Wales – and our approach to dealing with them will vary. We will need flexible and incremental solutions which will allow society to adapt as the future reveals itself.

Here, we set out the Environment Agency’s proposed approach - but we can’t do it alone. For example, we need to work with others in water companies, industry, agriculture and government, as well as individuals, to take action to achieve these aims.

Climate change

Climate change will affect the amount of rain that supports river flows and replenishes groundwater, and when it does so. It will also influence the demand for water and its quality, as well as the way land is used – all of which will put pressure on water resources.

As the climate warms, rainfall patterns will change. Summers are likely to get hotter and drier, significantly increasing demand for water, and winters warmer and wetter. More rainfall may come in big downpours. This could lead to droughts and floods, possibly at the same time.

Predictions are that the amount of water naturally finding its way to rivers will decline drastically, and vital groundwater supplies – which usually replenish in the early autumn – will be hit.

Treatment plants, pumping stations and sewers, designed to cope with the past and present climate, may no longer be adequate. The reliability of existing reservoirs, groundwater sources and river intakes will change. Some infrastructure, critical for providing water supplies, will be more vulnerable to flooding.

Actions to reduce demand generally use less energy than developing new resources. If society uses less water, then less is treated, delivered, collected, and treated again as waste. All of these processes use energy. Less water used means less energy used, and fewer greenhouse gases released. It is vital that the water industry and other abstractors take this into account and act to minimise their carbon footprint.

Where a shortfall in water supply is forecast, any proposed solutions must include an evaluation of their greenhouse gas emissions and their reliability must be tested against a variety of climate predictions. This will prevent the development of unnecessary resources that may not be needed in the future.

In the Environment Agency, we are working to understand the impact of climate change on biodiversity so that we understand when and where the impacts will occur.

Executive summary


The changing water environment will affect where plants and animals can survive and the quality of their habitats. Existing ecology needs to be allowed to adapt. Different species will do this in different ways but some will be unable to adapt quickly enough unaided.

Our strategy includes actions to reduce existing pressures and improve resilience to climate change.

We believe that the current approach to designating nature conservation sites may need to be reviewed so that it better reflects the habitats and species that will exist in future.

Our strategy sets out climate change actions that will:

• enable habitats and species to adapt better to climate change;

• allow the way we protect the water environment to adjust flexibly to a changing climate;

• reduce pressure on the environment caused by water taken for human use;

• encourage options resilient to climate change to be chosen in the face of uncertainty;

• better protect vital water supply infrastructure;

• reduce greenhouse gas emissions from people using water, considering the whole life-cycle of use;

• improve understanding of the risks and uncertainties of climate change.

A better water environment

The water environment is under pressure because of abstraction – that is, the water being taken from the environment for human and business use. Although abstraction licences issued today protect the environment and other users, in some cases, licences granted decades ago do not provide the level of environmental protection needed today.

The amount of water historically made available for abstraction in a river catchment may not be sustainable today. In many parts of England and Wales, there is no more water available to take without damaging

the environment. At the Environment Agency, we are working hard to reduce levels of abstraction so that the amount licensed does not exceed the amount of water that is reliably available, whilst leaving enough for the environment. We want the licensing system to be more flexible to better reflect the needs of a changing environment.

To manage water resources effectively, we need to consider river catchments in their entirety, including water quality and their ability to deal with discharges. Changes in land use and drainage can significantly alter the amount and quality of water that makes its way into the environment.

We need to make sure that all of these factors are taken into account in our approach to managing water resources.

The Water Framework Directive, which looks to 2027, will help us do this. However, the water environment will continue to change beyond this date, so we need to look further ahead and plan flexibly.

The future will be difficult and it will be expensive to tackle these challenges. In some cases, we will need to make hard choices between the needs of the environment and the needs of people.

Our strategy sets out actions that will:

• protect conservation sites that depend on water so they are sustainable in the long-term, taking account of climate change impacts;

• ensure that licensing issues are resolved;

• improve environmental resilience, where we are able to do so;

• safeguard water resources through effective catchment management, considering the interaction between quality and quantity;

• reduce treatment and energy costs for water users;

• improve understanding of how the water environment and ecology interact.

Current and future pressures on water resources


Managing water resources

We need to plan so that there are sustainable, reliable water supplies for people and businesses, whilst also protecting the environment. This will become increasingly important in the face of climate change, population growth and an uncertain future. With a potential 20 million extra people living and working in England and Wales by the 2050s, the additional demand they will impose on the water environment will need to be managed carefully.

We believe that a balance of managing demand and developing resources is both necessary and the most flexible approach to maintain future water supplies.

As pressure on water increases, we believe that a more strategic approach to planning for public water supplies is required. There is evidence that water resources are not being shared effectively, particularly in the South East of England. If there is no action, we will need to strengthen the way we use our powers so that water resources are shared more effectively. This will help to make better use of existing and planned resources to meet demand.

We believe that in the longer term, the structure of the public water supply industry will need to change. There is currently little incentive to ensure a sustainable water industry in the medium to long term. There is real potential for the water supply system to be more resilient to the pressures of climate change and growth. This can be done by planning and investing for security of supply and placing fewer demands on the environment by abstracting less water and using less energy.

We also believe that water companies, particularly those in water stressed areas, should be required to contribute to a water efficiency commitment, similar to energy efficiency, where companies fund efficiency measures for their customers and act in a service provider role.

We also need to improve the way that water resources are allocated. The current ‘first come first served’ approach to licensing abstraction may not be suitable beyond the short term. We need to look at different options for licensing and different methods of allocating water in the future. For example, we may need to prioritise different water needs.

On the demand management side, we believe that water metering and sliding scales of charges are important, particularly in water stressed areas, as they play a crucial role in increasing efficiency. With smart meter technology, and the right charges, there can be a real incentive to reduce demand, and opportunities to address affordability concerns.

We also want to make sure that water is used efficiently in existing buildings and in new developments. Tighter standards for water efficient fixtures, fittings and appliances will help this happen. Abstractors need to do more to reduce and control leakage. Water capture and recycling technologies, such as rainwater harvesting and effluent re-use, will have an increasingly important role to play in reducing the pressure on resources in some areas.


• support housing and associated development where the environment can cope with the additional demands placed on it;

• allow a targeted approach where stress on water resources is greatest;

• ensure water is used efficiently in homes and buildings, and by industry and agriculture;

• provide greater incentives for water companies and individuals to manage demand;

• share existing water resources more effectively;

• further reduce leakage;

• ensure that reliable options for resource development are considered;

• allocate water resources more effectively in the future.


Valuing water

Many people believe that there is more than enough water in England and Wales to meet society’s needs. Overall, this is true, but rain does not necessarily fall in the right place or at the right time to meet demand from people or to provide the right amount for the environment. Water is not always naturally available in the same places as those with the highest pressures from people and growth.

People and businesses need to value water and use it more efficiently, and have a greater understanding of how managing water resources effectively will benefit society and the economy. Pricing of water needs to better reflect its value. People also need to recognise how investment in technology (for example, in more efficient domestic appliances, irrigation equipment and industrial processes) will help this happen.

Water users and abstractors have choices to make about how they use water, and need to have clear information on the options available. It is important that people understand, through education and communication, that water is vital to the economy, society and wildlife so that they value it and the environment that it supports.


• promote incentives to reduce demand;

• allow water companies to address affordability issues with customers;

• allow people to use water more efficiently, and improve the efficiency of fixtures, fittings and appliances;

• provide better information on a product’s water efficiency;

• allow more effective communication so that people can make more informed choices;

• increase investment in technology for all types of use, including agriculture and industry.

Conclusion

With the prospect of hotter, drier summers, less water in rivers and underground storage and an increasing population, pressure on water is growing. There is no escaping that these changes will affect society, the economy and the environment.

Everyone who uses water needs to recognise and plan for a challenging future. This will require a more integrated and planned approach to water resources, which manages the risks and uncertainties ahead. Solutions and actions need to be flexible and incremental, but society may also need to make some bold changes.

It will not be easy, but the needs of future generations mean action must be taken now. By working together, our strategy aims to make sure that there is enough water for people and the environment whatever the future might have in store.


Water is precious. It is society’s most basic need; without it nothing can live. It is vital to the economy, vital for health and used to generate power, run industries and grow food. Access to clean, safe and secure water supplies is fundamental to society.

Government has given the Environment Agency the duty to conserve, manage and secure the proper use of water resources in England and Wales. We are the central body with responsibility for long-term water resources planning.

This water resources strategy sets out how we believe water resources should be managed within the frameworks set out by the Department for Environment, Food and Rural Affairs (Defra) in its water strategy for England ‘Future Water’, and in Wales, the Welsh Assembly Government’s ‘Environment Strategy for Wales’.

We have set out a separate strategy for Wales, which takes account of the differences in Wales and shows how the aims and objectives in this strategy complement the Welsh Assembly Government’s vision and outcomes.

Developing our strategy

We have consulted with a large number of organisations and individuals in developing this strategy, and have reviewed good practice in many developed countries, including the USA, Canada, Israel, Australia and South Africa. Our consultation document ‘Water for People and the Environment: Developing our Water Resources Strategy’1 set out the issues we face and asked some challenging questions on how we should address them.

This strategy builds on our previous document (‘Water Resources for the Future’) published in 2001. It provides the strategic direction for water resources management, based on best available scientific evidence. Although we believe that a balance of demand management and resource development measures will be required, this strategy is not a blueprint for any specific development.

Our strategy looks to 2050 and beyond, well past the 25-year horizon associated with water company resources management plans. We believe that this long timescale is necessary in order to consider the implications of climate change fully.

Introduction


In developing this strategy we have carried out a number of specific studies which have:

• reviewed the outputs from the first cycle of Catchment Abstraction Management Strategies (CAMS) which have, for the first time, provided a comprehensive baseline understanding of water availability across England and Wales;

• mapped the potential seasonal impact of climate change on river flows across England and Wales;

• assessed the potential impact of climate change and land use change on groundwater resources;

• forecast demand under a range of potential policies to allow us to take their impact into account when we make our decisions;

• identified the carbon and energy use in the water industry and looked at the emissions associated with different types of resource development and demand management options;

• considered a range of possible future scenarios, looking at how society may change by the 2050s and how demand for water could be affected;

• looked at water resources management policies and activities in other countries faced with similar pressures, and considered how they may apply in England and Wales;

• looked at different models for legislation and governance, different models for resource allocation, and good practice in integrated catchment management.

These studies have helped to provide the evidence base which underpins many of the actions within the strategy as well as our policies and position statements. The conclusions and recommendations from this work are embedded in this strategy. Each study has been published and is available on our website.

Strategy vision and aims

Our vision for the environment is:

“A better place for people and wildlife, for present and for future generations.”Within this, our vision for water resources is for there to be enough water for people and the environment, meeting legitimate needs. To support our vision, we have set out the aims and objectives identified on the following page. Our strategy is designed to achieve these aims.



Enough water for people and the environment

“Management and use of water that is environmentally, socially and economically sustainable, providing the right amount of water for people, agriculture, commerce and industry, and an improved water-related environment.”

The Environment Agency is able to manage water resources and protect the water environment in the face of climate change.

Species and habitats that depend on water are restored, protected, improved and valued.

> Ecology is more resilient to climate change because abstraction pressures have been reduced and a diverse network of habitats has been allowed to develop.

> The resilience of supplies and critical infrastructure is increased to reduce the impacts of climate change.

> Flexible and incremental solutions in water resources management allow adaptation to climate change as it happens.

> Everyone is able to make more informed decisions and choices about managing water resources, protecting the environment and choosing options to avoid security of supply problems.

> Greenhouse gas emissions from using water resources are minimised and properly considered in future decisions.

> Measures will be in place to make sure that water bodies achieve Water Framework Directive objectives.

> Abstraction is sustainable, the environment is protected and improved and supplies remain secure.

> Environmental problems caused by historic unsustainable abstractions are resolved.

> Catchment management is integrated so that impacts on water resources and the water environment are managed together.

Vision

Aim

Aim

Objectives

Objectives

Adapting to and mitigating climate change


Some of the objectives are cross cutting.


Good water management contributes to sustainable development by supporting people and the economy in an improved environment.

People value water and enjoy their water environment and understand how it contributes to their quality of life.

> The twin track approach of resource development with demand management is adopted in all sectors of water use.

> In England, the average amount of water used per person in the home is reduced to 130 litres each day by 2030.

> The Environment Agency targets and adapts its approach to reflect the location and timing of pressures on water resources.

> In England, water companies implement near-universal metering of households, starting in areas of serious water stress.

> Leakage from mains and supply pipes is reduced.

> New and existing homes and buildings are more water efficient.

> Water resources are allocated efficiently and are shared within regions where there are areas of surplus.

> Water pricing for the abstraction and use of water acts as an incentive for the sustainable use of water resources.

> Abstractors and users make informed choices to use water more efficiently.

> Innovative tariffs are adopted by water companies to maximise savings and minimise issues of affordability.

> The needs of wildlife, fisheries, navigation and recreation, as well as the environment and abstractors, are fully taken into account when allocating water resources.

> Innovative technology is developed to improve water efficiency by all water users.

Aim

Aim

Objectives

Objectives

Sustainable planning and management of water resources

Water and the water environment are valued



1.1 Rainfall and population

England and Wales are commonly perceived as wet, within the natural climate variability of floods and droughts. Although some parts of England and Wales have a relatively high rainfall, there is also a high density of population. This means that, for each person, there is relatively little water to be shared between people and the environment. Climate change, population increases and a growing demand for water will mean that, in the future, there will be even less per person.

When population pressures are considered in addition to the rainfall we normally receive, parts of England actually have less water per person than many hotter and drier countries (Figure 1.1).

This simple assessment provides an indication of the pressures on water resources. However, it does not take account of environmental requirements, storage of water, and where and when water is used and returned to the environment. Appendix 2 shows how the index may change for England and Wales by the 2050s.

1.2 Water resources availability

The primary mechanism for allocating water resources and protecting the environment is through the abstraction licensing system administered by the Environment Agency. In general terms, anyone wanting to abstract more than 20 cubic metres of water per day needs a licence from the Environment Agency.

When we deal with applications for abstraction licences, we must ensure that we fully take into account the needs of the environment and existing abstractors. We grant abstraction licences with appropriate conditions to make sure that there are no unacceptable effects on the environment or other legitimate users.

We assess the availability of water resources for licensing as part of a programme of Catchment Abstraction Management Strategies (CAMS). CAMS consider the rainfall reliably received, the water requirements of the environment and the amount of water licensed for abstraction. They show us where water is potentially available for abstraction. In 2008, we completed assessments for 119 CAMS, and for the first time, we

now have consistent information on potential resource availability on a catchment scale for all of England and Wales (Figures 1.2 and 1.3).

These maps show that there are already significant pressures on the water environment, and that these pressures are not just confined to the south east of England.

Although a system of licensing remains an essential tool now and for the future, in this strategy we consider how we may need to modify it to meet society’s needs over the coming decades.

1.3 Pressure from climate change

Climate change is recognised as one of the nation’s most pressing environmental challenges3. Both Defra’s ‘Future Water’ and the Welsh Assembly Government’s ‘Environment Strategy for Wales’ provide a strong impetus for actions to provide resilience and to help us adapt to the changing climate.

We know that climate change is likely to alter the environment in the future. It will affect the amount and distribution of rainfall, impacting on flows and water levels, and also the temperature of water. This will, in turn, affect where plants and animals can survive, the quality of their habitats and their abundance. The rate and scale of change will affect different species in different ways as they try and adapt to changing habitats. Some of the sites of nature conservation interest that are being protected today may be increasingly vulnerable to irreversible change of habitat and species.

1.3.1 The impact of climate change on river flows and groundwater

We have recently assessed how potential changes in rainfall could affect average river flows across England and Wales throughout the year by 2050 (Figure 1.4). The work shows that by 2050 river flows in winter may increase by 10 to 15 per cent. However, river flows in the late summer and early autumn could reduce by over 50 per cent, and as much as 80 per cent in some places. These patterns would result in a drop in total annual average river flow of up to 15 per cent.


This work clearly shows how rivers that rely less on groundwater storage are more vulnerable earlier in the summer to changing patterns of rainfall, and that the groundwater areas are just as vulnerable later in the year. It shows that the potential scale of impact is serious. While we believe that this is important evidence that helps us understand the potential scale of the future pressures, we recognise the uncertainty around these predictions and that we need to carry out further research to improve our understanding.

Other studies4 looking at the effects of climate change on river flows and groundwater in the 2020s also indicate small increases in winter flows in most catchments and a notable reduction in summer flows.

Figure 1.1: Water exploitation index2 (actual abstraction as a proportion of effective rainfall)

No data

0% to 5%

5% to 10%

10% to 20%

20% to 45%



Figure 1.2: Water available for abstraction (surface water combined with groundwater)

Resource availability status:

Water available

No water available

Over licensed

Over abstracted

Groundwater only/not assessed/no status available


Resource availability status Licence availability

Water available Water is likely to be available at all fl ows, including low fl ows. Restrictions may apply.

No water available No water is available for further licensing at low fl ows. Water may be available at higher fl ows with appropriate restrictions, or through licence trading.

Over licensed Current actual abstraction is such that no water is available at low fl ows. If existing licences were used to their full allocation they could cause unacceptable environmental damage at low fl ows. Water may be available at high fl ows, with appropriate restrictions, or through licence trading.

Over abstracted Existing abstraction is causing unacceptable damage to the environment at low fl ows. Water may still be available at high fl ows, with appropriate restrictions, or through licence trading.

Figure 1.3: Water available for abstraction (major groundwater units)

Resource availability status:

Water available

No water available

Over licensed

Over abstracted

Major aquifer not present


January

May

February

June

March

April


Figure 1.4: Percentage change in mean naturalised monthly fl ows by 20505

10 to 15 per cent increase 10 to 20 per cent decrease

5 to 10 per cent increase 20 to 30 per cent decrease

5 to 10 per cent decrease 50 to 80 per cent decrease

5 per cent increase to 5 per cent decrease 30 to 50 per cent decrease


September

October

July

November

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December



We have considered how climate change may affect groundwater. By 2025, it is likely that overall recharge to aquifers will decrease, river flows fed by groundwater will decrease and that there will be a general lowering of groundwater levels, with a more marked reduction further away from rivers (Table 1.1).

Sandstone6

9% reduction

2% reduction

12% reduction

13 to 21% reduction

10 to 25% reduction

Chalk7

3% reduction

2% increase

19% reduction

6% reduction

5 to 6% reduction

Long term average recharge

Long term average winter recharge

Long term average summer recharge

Middle range river flows (Q50) for rivers mainly fed by groundwater

Dry period river flows (Q95) for rivers mainly fed by groundwater

Table 1.1: Potential impact of climate change8 on groundwater by 2025

We have also done some initial work to consider the additional impact of changes in land use on water resources. We plan to carry out further research in this area to understand the likely effect better.

1.3.2 The impact of climate change on the demand for water

Patterns of demand for water are also likely to be affected as a result of climate change – some types of abstraction will need more water either due to increased output(for example, the expansion of the soft drinks industry)or increased water use (for example, increased irrigation, as there will be less rain).

The scale of change will vary in different in parts of England and Wales, and the timing of the changes will be important too. By the 2050s, there may be an increase of between two and four per cent in domestic demand from climate change alone.9

1.3.3 The impact of climate change on the environment

There is strong evidence that the existing environment will change, and as a result, England and Wales risk losing some important species and habitats.10, 11

With changes to the amount and distribution of rainfall and an increase in temperatures, it is inevitable that the water environment of the future will be different to the environment seen today.

This strategy considers the actions we believe are necessary to help habitats and species adapt to these pressures.

1.4 Pressure from development and growth

Water is vital to the economy, it is integral to industry, agriculture and commerce. It supports growth, maintains public health and sustains and improves society’s current way of life and standard of living.


Figure 1.5: Population density 2006 mid year estimates (Source: ONS)

Water resources in many parts of England and Wales are already under pressure, and now face the prospect of meeting the needs of an additional 10 million people by the 2030s and a further 10 million by 2050.

Figures 1.5 and 1.6 show the current population density in England and Wales and percentage increases in population to 2030.

Number of people per km2

0 – 175

176 – 500

501 – 1500

1501 – 10000



Figure 1.6: Projected population growth: 2006 to 2030 (Source: ONS)

Projected increase in population2006 - 2030

0 – 10%

11 – 20%

21 – 30%

31 – 40%

41 – 50%


The greatest demands for new housing occur in some of the same parts of the country where water use per person per day is at its highest.

In the decades beyond this one, many more people may need to be accommodated as climate change takes hold, and people across the world look for better places to live. In the long term, there is also the possibility of population movement within England and Wales.

It is essential that development to support the increased population reflects the sustainable development goals set out by Government.12

The Housing Green Paper,13 published in July 2007, set new long term housing targets for England – to provide two million homes by 2016 and three million homes by 2020. Projections for housing growth in Wales, published in 2006, forecast the numbers of homes in Wales to increase by 20 per cent to 1.48 million by 2026.14

Recent projections of housing growth15 are significantly higher than those contained in spatial plans in England (Appendix 1). These projections mean that the pressure from growth is likely to be greater than originally anticipated and the urgency of some of the strategy actions will be greater, particularly in areas where pressure on water resources is greatest.

1.5 Future demand for water

To develop a strategy for managing water resources we need to understand how the demand for water may change in the future. To help us do this we have looked at the demand for water in the 2020s, the 2030s and the 2050s. We have considered the demand from households, from industry and commerce, from agricultural spray irrigation and from water company leakage.

The future scenario work was carried out before the current economic downturn. Unless the downturn is very protracted, it should not alter overall trends and pressures to the 2030s and beyond. By looking at potential scenarios for the future, we have considered a range of possibilities around how society may value and use water differently to how it does today. Future scenarios allow us to consider how shifts in the economy, in behaviour and in politics may affect water resources in the future.

1.5.1 Developing demand forecasts

In order to develop demand forecasts for the 2020s, the 2030s and the 2050s, we tailored our approach to suit the challenges presented by each time-period but also the output we needed.

2020sFor the 2020s, we based our assumptions on information from the UK Government sponsored Market Transformation Project (MTP). The MTP collates information about the technology that is available and in development at the moment. Using this information allowed us to develop a ‘business as usual’ demand forecast for England and Wales, based on current water company policies. This kind of approach is appropriate for a short time-period where we can have reasonably high confidence in the factors that influence the demand for water.

2030s and 2050sWhen we looked to the 2030s and the 2050s we needed to take a different approach. We cannot be as certain about the individual factors that influence demand. But we also have to accept a higher degree of uncertainty about the structure of society and governance and how this will affect the demand for water.

To help us deal with this uncertainty, we have used future scenarios. Our scenarios were developed for the Environment Agency and Defra to explore the possible changes in the pressures on the UK environment between now and 2030.16 They are based on different types of society (conservationist through to consumerist) and different types of governance (growth-focused through to sustainability-focused).

These scenarios are represented schematically inFigure 1.7.

For the 2030s we used the original scenarios. We asked experts to provide information on how these might affect the key factors influencing water demand and produced our forecasts based on this information.



For the 2050s we first extended the scenarios and then used a group of internal and external experts to help us tailor them to water use. From this qualitative picture of water demand in the 2050s we then built up a quantified scenario demand for each of the main sectors (household, industry and commerce, agricultural spray irrigation and leakage).17

Appendix 2 explains the assumptions about governance and society which control the scenarios we used. It also contains a short narrative for each of the 2050s scenarios.

1.5.2 Water demand forecasts

Our forecasts show that total demand for water is likely to continue to rise steadily over the next 10 years. By 2020, demand could be around five per cent (800 million litres of water per day) more than it is today. Water consumption for irrigating crops, for industry and commerce and for household use could all increase. This growth is driven by an expanding population and associated increased demand for food, goods and services.

Figure 1.7: Future scenarios

Dematerialised consumption

‘Sustainable behaviour’

‘Local resilience’

‘Uncontrolleddemand’

‘Innovation’

Materialised consumption

Sustainability-led governance

Growth-led governance


Figure 1.8: Total water demand

As levels of water metering increase, average water use per person will reduce. This is because people who have a water meter generally use 10 to 15 per cent less water than those that do not. As more people pay for water according to the volume used, the average use per person will move towards a more conservative volume.

By 2050, total water demand across the four scenarios varies from 15 per cent less than today to 35 per cent more. The highest rise in demand is equivalent to thirteen times the amount of water provided by Kielder reservoir, or more than 30 times the water that can be taken from Rutland Water. Figure 1.8 clearly shows the range of demand.

Household water usePer capita consumption (pcc) is the amount of water used by each individual at home. On average in 2007/08,148 litres of water per person per day were used, but levels of pcc vary quite markedly and in relation to whether the supply is metered or not (Figure 1.9). In 2008, average consumption ranged from 107 litres per person per day to 176 litres per person per day. The water companies reporting the highest use per person are all in south east England.

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per

day

Uncontrolled demand

Local resilience

Innovation

Sustainable behaviour



Figure 1.9: Current per capita consumption (source: Ofwat June Return 2008)

Measured pccLitres per person per day

< 130

130 – 150

150 – 160

160 – 170

> 170

Unmeasured pccLitres per person per day

< 130

130 – 150

150 – 160

160 – 170

> 170


Figure 1.11: Forecast population

Figure 1.10: Forecast dry year per capita consumption

75

70

80

65

60

55

50

20082010

20122014

20162018

20202022

20242026

20282030

20322034

20362038

20402042

20442046

20482050

Mill

ion

peop

le

Uncontrolled demand

Local resilience

Innovation


160

150

170

140

130

120

100

20082010

20122014

20162018

20202022

20242026

20282030

20322034

20362038

20402042

20442046

20482050

Litr

es p

er p

erso

n pe

r day

Uncontrolled demand

Local resilience

Innovation

Sustainable behaviour110



Figure 1.12: Forecast household demand (pcc x population)

While there may not be dramatic changes to the amount of water individuals use by 2020 (Figure 1.10), the number of people using water in England and Wales will significantly increase (Figure 1.11). Population is forecast to grow by five million people in England and Wales by 2020. This could increase household demand by six per cent - over 500 million litres per day(Figure 1.12).

By the 2050s population change is likely to remain the most significant driver for change in household demand for water. Figure 1.10 shows that the individual use is likely to fall under three of the scenarios by the 2050s. However because of the population growth under these scenarios, the total household demand only falls under one.

Industry and commerceIndustrial and commercial organisations can get a water supply either by abstracting water direct from rivers or

groundwater, or from a water company. There are well over 4,000 abstraction licence holders who take water directly from the environment for industrial use.

By the 2030s, there could be significant growth in industrial and commercial economic output, with the biggest growth in the construction, manufacturing and chemical sectors. Demand for water from all sectors will depend in part on how efficient businesses are with water in the future. The food industry has committed to reduce water consumption by 20 per cent by 2020. We applaud this target, and look forward to it being achieved. If all sectors adopted this approach, demand would reduce by 2,000 million litres of water per day.

Growth in industrial and commercial demand for water by the 2050s is likely to be largely controlled by a combination of the economic climate and the pressure to implement water efficiency. For example, a sector may grow economically, but it may not use more water if water efficiency measures are implemented. Despite different

13,000

12,000

14,000

11,000

10,000

8,000

7,000

20082010

20122014

20162018

20202022

20242026

20282030

20322034

20362038

20402042

20442046

20482050

Mill

ions

of l

itres

per

day

Uncontrolled demand

Local resilience

Innovation


9,000


combinations of these factors, demand falls under all scenarios but one – Uncontrolled demand.

Uncontrolled demand is a scenario where there is little regard for the environment and a high demand for cheap products and services, so it presents a worst case scenario in terms of water demand. However, it is a useful reminder of the importance of a strong steer from Government and regulators on the need for water (and energy) efficient processes and technology.

AgricultureThe most significant use of water by the agricultural community is for irrigation. Demand for irrigation is concentrated mainly in East Anglia and parts of the Midlands. Despite only accounting for around one per cent of total abstraction, irrigation is concentrated into a few months when water resources are most scarce, and little of the water is returned to the environment. On a hot dry day in summer, there can be more water abstracted for irrigation in some catchments than for public water supply.

Demand for water for irrigation could increase in all areas over the next 10 years, and could be 25 per cent higher by 2020. The recent trend of increasing demand for potato irrigation is expected to continue over the next 10 years, although the rapid rise in demand is likely to start to slow down by 2020. Water for irrigating vegetables will become an increasingly important use of water in the next 10 years.

For agriculture, the potential impact of climate change on increased demand is expected to be high. Figure 1.13 shows that potential irrigation requirements could increase dramatically, and could move northwards and westwards in the UK as a result of climate change. By the 2020s, central England and eastern margins of Wales could experience conditions similar to those currently typical of the south and east of England.

By the 2050s we expect to see a substantial increase in the demand for agricultural irrigation under all of the scenarios we considered. Although the volume of water this translates to is small, as referred to above it could be substantial in some parts of England and Wales. The

growth will of course be seriously affected by an increased population demanding more food and by climate change controlling the available growing conditions.

By the 2050s eastern, southern and central England and eastern margins of Wales could have irrigation needs higher than those currently experienced anywhere in England, and similar to those seen in central and southern Europe.

LeakageLeakage from water company supplies is a demand for water. A certain amount of leakage is unavoidable and is allowed for in planning how much water is needed. This is substantial enough to have a noticeable effect on the total demand for water.

Following some likely reductions in the next few years, water companies are not planning any further significant reductions in leakage.

Leakage in the 2030s and 2050s will, as it is now, largely be a result of the strength and direction of regulation and the technology available to minimise leaks. Our scenarios vary considerably in these factors and so our leakage forecasts mirror this variation.

1.6 Our wider water footprint

We not only have to consider how existing demand in England and Wales may be affected by climate change, but also need to look much wider than this and consider the amount of water used to produce food and goods consumed – our water footprint – and how demand may be imported from (or exported to) other parts of the world. The UK is the sixth largest net importer of water in the world,21 and only 38 per cent of total water use comes from its rivers, lakes and groundwater reserves. The average Briton uses about 3,400 litres of water per person per day22 in food and drink consumed and in goods and services used. To produce just one cup of coffee takes almost as much water as the 148 litres each of us uses on average in a day.23


Agroclimatic zones

Incr

easi

ng re

quir

emen

t for

wat

er

Zone 1

Zone 2

Zone 3

Zone 4

Zone 5

Zone 6

Zone 7

Zone 8

Zone 9

Zone 10

Baseline 2020s

2050s


Figure 1.13: Potential changes in summer growing conditions:18 baseline19 to the 2020s and 2050s20


Major changes in the uptake, or development of technology (for example, greater adoption of alternative fuel sources) could radically alter this water footprint.24

World food output must rise to feed a growing, wealthier population. The World Bank estimates that cereal production needs to increase by 50 per cent and meat production by 80 per cent between 2000 and 2030 to meet demand. If climate change affects the viability of growing crops and manufacturing goods in other countries, some of that activity may move to England and Wales, and place a significant amount of additional pressure on water resources.

Some countries have recognised the concept of embedded water, and have adopted a policy to import a large proportion of their food, rather than growing it locally.25 This meant they conserved water resources, allowing them to be used on higher value goods. The link between food policy, food security and water resources, as well as the link between energy and water, is likely to strengthen in the context of climate change. We are working with Government and policy makers involved in these areas to better understand and manage the implications of these interactions.

1.7 Resolving historical problems

While the vast majority of abstraction licences include conditions which provide protection for the environment and other abstractors, there are some licences which were granted many decades ago that do not provide the level of protection that is needed today. We are resolving these ‘legacy issues’ as part of our work on restoring sustainable abstraction.

1.7.1 Habitats Directive

The European Habitats and Birds Directives provide a high level of protection to a network of the most precious nature conservation sites across Europe, conserving habitats and species across their range. The Directives are implemented in the UK through the ‘Habitats Regulations’.

Potential abstractors need to demonstrate to us that their operations will not damage these sites before we can grant an abstraction licence. We also have to identify where a site is at risk from existing authorised activities and take action to remove that risk. This involves carrying

out investigations to find the cause of the environmental problems, and the effectiveness of proposed solutions. We may then have to modify or revoke some abstraction licences where abstraction is damaging or could potentially damage the site.

1.7.2 Water Framework Directive

Under the European Water Framework Directive (WFD) member states must aim to achieve ‘good ecological status’ for surface water, and ‘good status’ for groundwater by 2015. The directive allows for time extensions to 2027, or less stringent objectives after taking into account the technical feasibility and whether solutions are ‘disproportionately costly’.

The WFD also requires that there is no deterioration that will result in a change to a lower status.

River Basin Management Plans will be produced for the whole of the United Kingdom, and will show how actions will be taken locally. Figure 1.14 shows a map of water bodies in England and Wales that are at risk from abstraction.

The WFD requires us to manage the impacts of abstraction pressures in a more integrated way along with other pressures on the water environment such as water quality or channel modifications.

The WFD strengthens our role in protecting the environment and preventing deterioration. It may lead towards changes in abstraction licences where abstraction is having an adverse effect.

1.8 Pressure from diffuse pollution

There is evidence that changing rainfall patterns are affecting the quality of surface waters. Extreme summer rainfall events, such as those experienced in parts of England and Wales in 2007 and 2008, can cause considerable amounts of dry, uncompacted soil and associated debris to be washed off hillsides into rivers, lakes and reservoirs. Water companies are having to invest in additional treatment at some of their surface water sources to safeguard the quality of drinking water supplies. This is a particular problem for upland reservoir sources.



Figure 1.14: Surface water bodies at risk from abstraction

·

River waterbody catchments

At risk

Probably at risk

Probably not at risk

Not at risk

Not assessed

Around 81 per cent of groundwater bodies in England and 35 per cent in Wales are also at risk of failing Water Framework Directive objectives because of diffuse pollution.

Almost half the groundwater used for public supply is now blended with water from other sources, has additional treatment or has been replaced with other sources. Since 1975, 146 groundwater sources used for public supply have been closed because of quality problems. At least 425,000 m3 of water per day in licensed output has been lost due to these closures.26, 27

1.9 Pressure from land use change

If land use changes significantly in some locations, our work has shown that it can change the amount of water that makes its way to the water environment.

Other research28 has shown that the greening of urban areas can result in increases in shade and atmospheric water content. In urban areas, this could limit predicted climate change temperature increases, but is another source of demand for water resources. On a larger scale, some forms of afforestation, or a change in land use to deep-rooted biomass crops could adversely affect water resources, or a move to crops with lower water intensive requirements could have a benefit.

Soil compaction is a significant and under-researched problem. Under intense rainfall, soil compaction can greatly reduce the infiltration of rainwater generating greatly increased rates of runoff. Draining moorland and wetlands, and converting permanent pasture to arable increases run-off and can add to water quality problems.

1.10 State of water resources: current and future pressures

The pressures outlined in this chapter show that our society faces some significant challenges now and in the future. We have published a report29 detailing the current and future pressures on water resources as part of the preparation for this strategy. We plan to review this report on a regular basis.



Climate change is one of the biggest challenges we face in managing water resources in the long term. It will affect the amount and distribution of rainfall, the demand for water and the use of land – all of which will contribute to additional pressures on water resources.

Average natural summer flows in rivers could drastically reduce by between 50 and 80 per cent. The period where our groundwater resources are replenished could be shorter and resources could become much more vulnerable. There may be greater variability and what is known as an extreme drought or flood today, may become more frequent in the future. This could also include more extreme, drier winters.

All of this means that the nature of the water environment will change. This will affect where plants and animals can survive and the quality of their habitats. Different species will be affected in different ways as they try to adapt to changing habitats. The rate and scale of change is likely to be so great that some will not be able to adapt quickly enough.

Water infrastructure, which was designed to cope with the past and present climate, may not be adequate for the future. The reliability of existing reservoirs, groundwater abstractions and river intakes will change. Some infrastructure, critical for providing water supplies, may be more vulnerable to flooding.

A co-ordinated and longer term approach to adapting to and mitigating climate change is needed to guarantee more reliable water supplies for all types of abstraction and to ensure that the water environment continues to be protected.


• allow habitats and species to adapt better to climate change;

• allow the way we protect the water environment to adjust to a changing climate;

• reduce pressure on the environment from abstraction;

• enable options resilient to climate change to be chosen in the face of uncertainty;

• better protect vital water supply infrastructure;

• reduce greenhouse gas emissions from abstractors and people using water, considering the whole-life cycle of use;

• improve understanding of the risks and uncertainties from climate change.


Overview


To limit the future extent of climate change and some of the implications for water resources, we need to address its man-made causes. Irrespective of how successful these efforts are, there will still be some degree of unavoidable climate change, to which our society will need to adapt. The Stern Review30 makes it clear that there will be costs associated with both these ways of dealing with climate

2.1 Our objectives

Mitigation

• Carbon and greenhouse gas emissions from using water resources are minimised and properly considered in future decisions.

Adaptation

• Ecology is more resilient to climate change: abstraction pressures have been reduced and a diverse network of habitants has been allowed to develop.

• The resilience of supplies and critical infrastructure is increased to reduce the impact of climate change.

• Flexible and incremental solutions in water resources management allow adaptation to climate change as it happens.

• Everyone is able to make more informed decisions and choices about managing water resources, protecting the environment and choosing options to avoid security of supply problems.

change. Firm and early action to reduce greenhouse gases, which would mean less need to adapt, is the best value option.

To contribute to climate change mitigation, and to help abstractors, species and habitats adapt to the effects of climate change, we believe that the following objectives must be met.



2.2 Reducing greenhouse gas emissions

From 2010, the UK Carbon Reduction Commitment (CRC), an emissions trading scheme for medium to large energy users, will be introduced. It applies to organisations in the private and public sectors not covered by Climate Change Agreements or the EU Emissions Trading Scheme. The CRC aims to reduce carbon dioxide emissions by four million tonnes per year by 2020, helping achieve reduction targets outlined in the Climate Change Act.

Water companies and other major abstractors covered by the CRC will have to buy allowances each year to cover emissions arising from their electricity use and other energy sources, for example diesel. However, transport emissions are not included in the CRC.

To reduce emissions, it is important to understand the carbon footprint of water use, not only by water companies directly, but also by those who use water.

We have carried out research31 looking at the current energy and carbon footprint of water in households(see Figure 2.1) and have compared demand management measures with resource development options in terms of carbon dioxide equivalent emissions (Table 2.1).

Figure 2.1: Carbon emissions associated with the water industry and household use in England and Wales.

The life-cycle impact of individual options is based on the estimated emissions associated with construction, manufacture, installation, maintenance and operation.

We will continue to support research in this area and will also consider the carbon footprint of effluent treatment options.

The key findings are that simple demand management measures, particularly those which reduce the amount of hot water used in the home, have huge potential not only to promote water and energy efficiency but also to reduce the carbon footprint of water supply, use and disposal.

Demand management measures will also lead to less wastewater, resulting in less energy being used on treatment to maintain the water quality in the receiving waters. If treatment works are already treating to Best Available Techniques (BAT), environmental quality can only be maintained, in the face of increasing wastewater flow, by treating to standards better than BAT. This is likely to be expensive and carbon intensive. Demand management may be part of a more attractive solution.

External to household – 11%

Wastewater treatment 7%

Water treatment 2%

Water distribution 1.6%

Source, abstraction and conveyance 0.4%

Water in the home – 89%

Total carbon emissions of 6.2 tonnes CO2e per MI waterfor water in the home. This equates to 2.2 kgCO2e daily per household.


Demand management option*

Metering and tariffs

Smart metering

Conventional metering

Efficient showers

Spray taps

Water audits

Efficient baths

Low flush toilets

Current water ‘supply-use-disposal’ carbon cost

Community rainwater harvesting (retrofit)

Individual household rainwater harvesting (retrofit)

Community greywater reuse (retrofit)

Individual household greywater reuse (retrofit)

New supply option*

Current water ‘supply-use-disposal’ carbon cost

Direct ground water abstraction

Aquifer storage and recharge

River intake

Indirect effluent reuse

Reservoir

Desalination (brackish water)

Desalination (saline water)

Emissions

kgCO2e/day/house

2.08

2.14

2.20

2.25

2.38

2.36

2.30

2.42

2.43

2.56

2.67

2.59

2.71

Emissions

kgCO2e/day/house

2.43

2.46

2.47

2.48

2.57

2.61

2.91

3.77

Carbon cost relative to baseline

pence/m3

-3

-3

-2

-2

-2

-1

0

0

baseline

+6

+10

+11

+16

Carbon cost relative to baseline

pence/m3

baseline

+1

+1

+2

+3

+3

+6

+16

Carbon cost

pence/m3

25

25

26

26

26

27

28

28

28

34

38

39

44

Carbon cost

pence/m3

28

29

29

30

31

31

34

44

Table 2.1: Comparison of the carbon life-cycle costs of supply and demand options.

*Figures are indicative for each option, and are not cumulative values.



As an example, near-universal metering of households in England and Wales could reduce greenhouse gas emissions equivalent to between 27 and 40 per cent of the total UK Carbon Reduction Commitment target.

We believe that the aim to minimise emissions of greenhouse gases is vitally important, but should not override the duty on companies to provide wholesome supplies. It is essential that greenhouse gas implications are part of the decision making process, but should not be the sole deciding factor. Some high-energy options may be appropriate if their use is limited to meet peak demands, or as contingency measures during drought.

We will work with Government to ensure that carbon plays the right role in water resources planning, preserving the appropriate balance between financial, environmental and local planning issues.

We will check that water companies have considered the impact of climate change on the supply-demand balance in their water resources management plans (see Appendix 1). We will examine companies’ estimates of their carbon footprint, and look at the way they have accounted for the cost of carbon when comparing options in their plans.

We believe that there is an opportunity for water companies to look at operational efficiency and more innovative ways of reducing carbon emissions further. This should include renewable energy generation by water companies, where possible, for both new and existing operations.

It is important to understand how greenhouse gas emissions are generated in other sectors of abstraction. We will target and support scientific research in this area, and will work with those sectors to help them improve understanding themselves.

2.2.1 Linking energy use and water use

There is increasing recognition of the link between energy and water use.

Our work on carbon and energy use in water resources shows that this link is huge. When household and water company emissions are considered together, we calculate that 89 per cent of emissions come from water in the home (Figure 2.1). This includes energy for heating water, but does not include energy for central heating.

We believe that the link between energy, water and wastewater should be looked at as a package, appropriately funded, and strengthened in all sectors of abstraction and use.

We welcome the expanded remit of the Energy Saving Trust to integrate water efficiency with the Trust’s existing activities.

2.2.2 Linking power generation and future water demand

It is not just greenhouse gas implications of water use that need to be recognised in this link. There is also a strong need to work with the power industry to take account of its future and potential water needs, and the impact of energy policy (for example, towards new nuclear or hydro-electric power), particularly in the context of climate change.

In the United States, the Government has produced an Energy-Water Roadmap32 looking at the development of water and energy policies together. In England and Wales, we would encourage policies to be developed that consider both water and energy as pressures on water resources grow.

We are reviewing how we consider abstraction licences for hydropower and heat pumps to make sure that we are supporting the use of this technology, and therefore helping the UK meet its green energy target of 15 per cent by 2020, whilst protecting the environment.

2.2.3 Reducing the Environment Agency’s carbon footprint

In Wales, the Welsh Assembly Government is aiming to reduce carbon equivalent emissions in Wales by three per cent per year by 2011 in areas where responsibility is devolved.33 It is also proposing to set an emission reduction target for the public sector.

The Government in England has set a target for its own departments to achieve a 30 per cent reduction in their carbon emissions by 2020. We have set ourselves a target to achieve this reduction by 2012.

The Environment Agency’s overall carbon footprint in 2006/07 was around 62,000 tonnes. Operational energy use, which mainly comes from using transfer schemes,


We will work to influence the adaptation actions of other sectors to take account of these points.

For example, through our flood risk management38 policies we will aim to improve freshwater ecology adaptation measures by increasing the area of functioning flood plains and wetlands, reducing habitat fragmentation and thereby enabling species to relocate to more favourable or broader habitat networks.

While there are many actions we can take to help habitats and species adapt to climate change, we believe that the future system of water resources management should protect the water environment against any unacceptable impact from abstraction over and above the impact from climate change. Additional actions should focus on measures to help species adapt to these impacts.

We believe that a range of measures will need to be implemented, rather than relying exclusively on managing abstractions, to address the wider and longer-term impacts of climate change on the environment.

Section 3.4 provides more detail on protection of the water environment in the face of climate change.

2.4 Increasing the resilience of supplies

2.4.1 Reducing pressure from abstraction

Demand management will reduce society’s reliance on water as a natural, but uncertain, resource and make it more resilient to changes.

We expect water companies to adopt a twin track approach39 to managing water supply and demand. They should look at the full range of options for reducing water demand. Only where these are insufficient or unjustified in terms of cost should companies also progress with the development of sustainable new supply side measures. To cope with climate change, managing demand is particularly important where there is acute pressure on water resources, such as the south and east of England, and where high levels of growth are planned. Demand management options generally have a lower carbon footprint, thus helping limit the extent of future climate change.

accounted for 22,000 tonnes. These schemes are used to redistribute and increase water resources during dry periods and times of drought, so their year-on-year use may vary tremendously.

We have assessed the efficiency of our pumping operations to improve them where possible.34 We will also review the efficiency of operating arrangements with major abstractors to ensure that they minimise emissions. As part of these reviews, we will make sure that we continue to fulfil our duties.

2.3 Reducing the vulnerability of ecosystems to climate change

An active approach35 to managing the natural environment will be crucial to addressing the impacts of climate change. It is essential that we act quickly, as species and habitats are already changing. For the water related environment, we need measures to do this now. These include:

• reducing existing pressures on habitats, for example by restoring and improving habitats where damage is caused by abstraction;

• making sure that development takes proper account of the potential impacts of abstraction and other pressures on habitats and species;

• reducing the uncertainty around the scale and nature of climate change and the impacts it will have on biodiversity;

• restoring and supporting water dependent habitats that are critical to the ability of species to adapt to climate change;

• taking an ecosystems approach36 to managing water resources on a catchment scale;

• developing coherent ecological networks that link large-scale functioning habitats and provide ‘stepping stones’ to help ecology adapt as the climate changes;

• developing adaptive management plans that are resilient and good value, taking into account the sensitivity of designated sites and ecology37 to climate change.



2.4.2 Careful choice of supply and demand options

A different approach is needed to making choices for meeting future needs. In the context of climate change, some options will be more reliable and less vulnerable than others. For example, effluent re-use and desalination will be much more reliable in the future than rainwater harvesting, direct river abstractions and reservoirs. On the other hand, when choosing options we must consider the costs, the carbon footprint of the option, the level of service required and the need to protect the environment.

The following options will all provide increased resilience to climate change in the context of a twin track approach:

• greater local and inter-basin connection between supply infrastructure;

• improved base flows in rivers through land management techniques;

• more re-use of highly treated effluent;

• using water storage;

• desalination;

• ‘conjunctive use’ of supplies from different sources;

• ‘conjunctive use’ of resources with demand management.

Effective measures are required to adapt to climate change and cope with the potential for greater variability and intensity of rainfall. Reliance on fewer, but more intense, rainfall events may mean that reservoirs are more vulnerable to drought in the future. We believe that it is essential that abstractors test the sensitivity of yield estimates for resource development options against different long-term climate change scenarios so that resources are not developed that subsequently become unreliable.

2.4.3 Large scale reservoirs

Reservoirs are one of a number of options for managing water resources, providing support for the environment through augmentation and maintaining supply. There are currently no plans for new reservoirs in Wales but some water companies in England are proposing new or enlarged reservoirs.

Reservoirs are a valuable resource. They can have ecological value themselves, and storing rainfall is an effective way of managing uncertainty. However, developing a new reservoir, or enlarging an existing one,is costly and usually controversial.

Reservoirs have a large environmental footprint. They often involve large quantities of water being pumped into them at times of high flow, and consequently have a high ongoing energy requirement and a high carbon impact. Many reservoirs do not allow for an incremental approach to water resources planning and need to be considered alongside other supply and demand management options.

Where reservoirs are promoted, we need to be fully satisfied that they are the most appropriate response to water resources pressures in the long term (in the context of a changing climate) and that effective water efficiency measures have been put in place first.

We cautiously welcome the proposal39 that, where there is a sound and persuasive case for major water infrastructure projects, a National Policy Statement for water supply and wastewater treatment infrastructure in England will speed up the process of planning permissions for reservoirs.

2.4.4 Small-scale reservoirs

Small-scale reservoirs are an important option for supporting abstraction for many uses, and particularly for agriculture and horticulture. They can also result in a net reduction of environmental impact where they replace unconstrained40 surface water abstractions, which take water directly from the environment.

As with all other types of abstraction, storage reservoirs for agriculture must be considered in the context of the twin track approach of resource development and demand management.

Where reservoirs are justified, we will encourage them to be sited and constructed in a way that would improve the environment. If the construction of the reservoir could have an adverse effect on the environment, appropriate mitigation measures will need to be taken.

We have prepared guidance41 on developing small-scale storage reservoirs for agriculture and will work with:


a) Regional Development Agencies and the Welsh Assembly Government so that funding can be made available and targeted to areas where pressures on water resources are greatest;

b) planning authorities so that they are aware of the importance of storage reservoirs in the context of a twin track approach as an effective way of managing resources.

2.5 Protecting critical infrastructure

We need to help make sure that infrastructure critical to the supply of water can withstand the future climate extremes. We know that climate change is likely to increase the risks from extreme weather, droughts and flooding, and it is essential that public organisations and private companies act now to avoid major risks to society, industry and commerce in the future.

We believe that there needs to be significant investment in infrastructure that supports water resources. Asset replacement rates need to be high enough to reduce the risk of failure, and assets which are vital for the continued provision of supplies (critical infrastructure) need to be protected against, or made more resilient to, the uncertainties of climate change.

The serious flooding which occurred in the summer of 2007 affected critical infrastructure in Gloucestershire, when 140,000 homes lost their water supply for 17 days after the Mythe water treatment works flooded.42

It is crucial that with more extreme events forecast as a consequence of climate change, water companies and operators of other critical infrastructure plan properly and:

a) make sure that these vital assets are protected, after properly considering risk;

b) invest to improve connections with existing sources to reduce the total reliance on that infrastructure.

We support the proposal43 that the economic regulator should have a specific duty to build resilience into critical infrastructure.

2.6 Improving flexibility

To be able to respond flexibly to the uncertainty and pressures of climate change, we need to adopt an

incremental approach and adjust abstraction licences, where appropriate, in a consistent and efficient way.

Since 2001, we have had a policy to grant new abstraction licences with a time limit, with a presumption of renewal. Under the Water Act 2003 time limits are now a legal requirement. However, only 20 per cent of all abstraction licences in England and Wales currently have a time limit.

We believe that a mechanism should be put in place to help adapt to a changing climate, and to allow justifiable changes to licences to be made without triggering compensation claims which may not be affordable, and without overloading the appeals system.

We believe that existing permanent licences should be converted to time limited status and will work with Government to provide evidence to support this.

As an alternative to time limiting, we would support further investigation into turning abstraction licences into reviewable permits, which could allow licences to be modified regularly. For example, discharge consents are reviewable after four years and can be modified at any stage after that.

2.7 More informed decisions

We will continue to develop our science-based understanding of the characteristics of climate change and the way in which it could impact on surface water and groundwater (including the impacts from land use changes), demand, resource availability (including water quality) and water dependent wildlife.

We will use updated climate change scenarios produced by the UK Climate Impacts Programme, together with our own water resources and climate change science programmes, to understand these impacts better.

We are reviewing the information that we gather from our surface and groundwater monitoring network so that we can generate high-quality and long time-series records that allow us to observe the impact of climate change. It is essential for us to understand the impact of climate change better. This will help us and others to develop the evidence-based policies and contingency measures we will need to cope with an uncertain future.




A1 Compulsorily convert all permanent abstraction licences to time-limited status, to provide the flexibility to respond to climate change.

A2 Increase the connectivity of water supply infrastructure to improve resilience of existing resources and provide additional security from extreme events.

A3 Promote efficiency measures and small-scale storage reservoirs for agriculture in the context of the twin track approach.

A4 Further research into the vulnerability of ecosystems and water dependent habitats and species to climate change, and gradual modifi cation of the designations for water dependent nature conservation sites to refl ect changing environmental requirements.

A5 Support research to understand how carbon and other greenhouse gas emissions are generated in sectors of abstraction and use (other than public water supply).

Also research into the use of carbon and energy in water quality, and the potential benefits and savings of different management options.

A6 Strengthen the link between energy, waste and wastewater in all sectors of abstraction.

A7 Review the efficiency of operating agreements with major abstractors to ensure that they minimise emissions, whilst maintaining our duties.

A8 Become an exemplar for the way water resources schemes are operated and managed.

A9 Review our policies on heat pumps and hydropower to ensure that we are actively supporting Governments’ carbon reduction and energy production agendas, while maintaining environmental protection.

A10 All abstractors to consider accepting a reduction in the reliability of supply as an option for resolving future deficits.

For water companies, achieve an appropriate understanding of the balance between levels of service and non-essential use bans/drought orders.

A11 Work with Government to understand the implications of the UK food policy (e.g. water use, land use, carbon emissions and other relevant factors).

Ref Action


Defra, Welsh Assembly Government, Abstractors, Ofwat Short term (5 years) and Environment Agency medium term (5 to 25 years) Owners and operators of critical Ofwat, Environment Agency Medium term (5 to 25 years)infrastructure (all sectors of abstraction).

Environment Agency Welsh Assembly Government, local Medium term (5 to 25 years) authorities, farmers and growers, industry, National Farmers’ Union, National Farmers’ Union Cymru, Farmers’ Union of Wales

Environment Agency, Government, Academic institutions, Defra, Medium term (5 to 25 years) Natural England and the Countryside Welsh Assembly Government and long termCouncil for Wales

Environment Agency Energy Saving Trust Short term (5 years)

Government Energy Saving Trust Short term (5 years)

Environment Agency Major abstractors with operating Short term (5 years) agreements

Environment Agency Medium term (5 to 25 years)

Environment Agency Defra, Welsh Assembly Government Short term (5 years)

Abstractors, regulators Short term (5 years) and medium term (5 to 25 years)

Environment Agency Defra, Welsh Assembly Government Short term(5 year) and medium term (5 to 25 years)

Lead organisation Other organisations Timescale for action that need to be involved



We are faced with some real challenges when protecting and improving the water environment.

There are a number of legacy issues that need to be resolved where abstraction could have an adverse impact on the environment, and where abstraction in catchments is at a level where sustainability is in question. This will require significant effort and investment which could amount to billions of pounds.

In many parts of England and Wales, there is no further water available for abstraction. We will find it harder and harder to grant abstraction licences that provide the appropriate protection for the environment.

Added to this, climate change is likely to significantly alter the water environment. We need to identify what is the right level of security of supply and environmental protection for the future, given the changes to the climate.

Whilst coping with these pressures, we will also look for opportunities to improve the water environment, subject to water being available.

Managing water resources is not just about managing abstraction. Integrated catchment management will become more important as water quality, flood risk management and land management all have the potential to affect water resources.


• protect water-dependent nature conservation sites that are sustainable in the long term;

• deal with environmental issues from the past;

• enhance the water environment, where we are able to do so;

• safeguard water resources through effective catchment management;

• help us understand the water environment better.


Rivers, lakes and wetlands support a wide diversity of habitats and a vast range of species. A healthy water environment is essential to make sure that the diversity is protected, and where necessary, restored and improved.

3.1 Maintaining a healthy water environment

Overview

A healthy water environment means that:

• flows and a full range of water levels are sufficient for wildlife and wetlands;

• the quality of the water is good enough to sustain aquatic life;

• the morphology (or structure) of rivers and wetlands provides the right range of habitats for species to thrive.


3.2 Our objectives

• Measures will be in place to make sure that water bodies achieve Water Framework Directive objectives.

• Abstraction is sustainable, the environment is protected and improved, and supplies remain secure.

• Environmental problems caused by historic unsustainable abstractions are resolved.

• Catchment management is integrated so that impacts on water resources and the water environment are managed together.

3.3 Achieving sustainable catchments

We will work to achieve sustainable abstraction:

a) on a catchment scale through the implementation of the Water Framework Directive (WFD), and

b) to protect important water dependent sites of nature conservation, for example through the Habitats Directive.

3.3.1 Sustainable catchments

One of the principles of the WFD is to promote sustainable water use. The WFD may lead towards changes in abstraction licences where abstraction is having an adverse effect.

A deficiency in one or more of these areas can increase the stress on habitats and species and can cause environmental damage.

Protecting flows and levels will also provide opportunities for recreational activities, will support navigation and protect archaeological features.

With the significant and growing pressures from climate change, we face a real challenge to preserve our existing environment, let alone improve it. To do this, we believe that the following objectives must be met.

Where changes to abstraction levels are required, we will consider demand management measures before replacement resources as potential solutions. We will work with abstractors to make sure we choose the best solution. We are committed to making sure that both the environment and the supply of water to the public are not put at risk.

We have incorporated environmental flow requirements for the WFD into our assessments of water resources availability within Catchment Abstraction Management Strategies. This will ensure that WFD objectives are more integrated into our decision making in the future.

3.3.2 Restoring sustainable abstraction

The WFD and Habitats Directive investigations, and any subsequent changes to abstraction licences, are being carried out as part of our Restoring Sustainable Abstraction (RSA) work (Figure 3.1). Where we need to

Figure 3.1: Distribution of Restoring Sustainable Abstraction sites in Environment Agency Regions.



change abstraction licences, the licence holder may be eligible for compensation. Voluntary changes to water company licences that are needed to meet the requirements of the Habitats Directive can be funded through the 2009 water company price review process (administered through Ofwat). Compensation, where appropriate, for other abstraction licence changes will be funded through abstraction licence charges.

3.4 Protecting a water environment in a changing climate

Climate change will affect habitats and species (designated or otherwise). We need to recognise this and accept that it presents a challenge for the way in which we protect the environment in the future. Our goal is to allow the environment to adapt to climate change in as natural and sustainable a way as possible.

This means that we need to:

• Protect designated sites The Environment Agency has duties to protect and

improve designated sites. Existing designated sites provide essential protection for species and habitats as they adapt to climate change and this is likely to remain the case over the coming decades. Whilst the nature conservation objectives for these sites are subject to periodic reassessment to reflect new information or knowledge, they are generally based on the implicit assumption that they will not change in their nature. However, it is widely recognised that in a changing climate the objectives of these sites and the purpose of their designations may need to be reviewed.

If populations of species shift to adapt to climate change, it is possible that protected areas will offer protection for new features, for example, species which migrate into them from other sites. The present and projected value of protected sites needs to be understood – and viewed – in their whole European context to take account of any widespread shifts in population numbers or distribution ranges which may take place over the next 30-75 years.

It is not within our remit to make decisions about the objectives that designated sites are given. Our role is to advise the relevant authorities with that remit, and

to exercise our powers to help meet those objectives. We accept that decisions are likely to happen on a case by case basis but want to see an effective framework for change in place to allow this to happen.

We believe that the designation system should reflect the effects of climate change. Where justified, the system should allow protected status to shift to those species and habitats that exist in the new climate, without diminishing the level of protection offered to species or habitats still in the process of adapting to climate change. This approach is consistent with Defra’s guiding principles on the topic.44

• Ensure that there is no deterioration of sites Habitats and the species that exist within them will

alter as the climate changes. We need to make sure that policies contribute to their long term resilience to climate change so that abstraction (and other pressures) do not cause this change to happen more quickly than it otherwise would.

As water resources become more scarce in the future, environmental needs change and the demand for water grows, circumstances may arise where it becomes difficult for us to reconcile the needs of the environment and the public water supply. Should this arise we will explore options with Government and regulators to ensure that the needs of both the environment and people can continue to be met.

• Allow climate change adaptation through a ‘landscape-scale’ approach

A landscape-scale approach to managing habitats will facilitate the movement of species. Landscape scale management could include measures such as river corridor management. Measures such as these will help to support interlinked habitats and make sure that important refuge sites are not isolated. They will also help to ensure a greater likelihood of species survival. The WFD will support this approach.

• Monitor the impacts on the environment so that ‘decision’ points can be identified, and the effectiveness of actions can be assessed

Increasing understanding of the natural limits of habitats and species and monitoring ‘control’ sites is important. It will help to determine where habitats


3.6 Safeguarding water resources

We believe that it is essential that water management is more integrated in the future. With the prospect of hotter, drier summers and more intense rainfall events, it is important that we use every opportunity to reduce flood risk and make better use of water when it is available.

Catchment-based management of water resources provides significant opportunities to improve the availability, volume, reliability and quality of water resources.

3.6.1 Land drainage and ‘slow water’

Initiatives to slow water down and reduce the load on drainage systems can reduce flood risk, provide opportunities for water use other than for drinking and benefit water resources and the environment.

Restoring large areas of upland wetlands will help to slow run-off and protect peat, which is an important carbon store. Peat uplands store around three billion tonnes of carbon, equivalent to 20 years of UK carbon dioxide emissions.46

Sustainable drainage systems (SuDS) provide a flexible approach to drainage and can include ‘green’ roofs (with vegetation), rainwater harvesting, permeable pavements, natural watercourse corridors, wetlands, reedbeds and ponds. SuDS provide an opportunity to treat polluted run-off from both urban and rural diffuse sources before it enters watercourses. These corridors and wetlands can form an attractive and functional part of accessible urban green space.

Along with land management practices that help retain water in soil, many of these approaches will help to reduce the risk of flooding and can provide opportunities to improve recharge to groundwater.

New developments should use SuDS. We encourage planning authorities to use planning conditions and/or legal agreements to secure the implementation of SuDS, especially in areas where pressure on water resources is high.

We want SuDS to be used more widely to improve the quality and quantity of water and also provide amenity

are naturally responding to climate change and what that response is. We can then use this knowledge to inform new environmental baselines against which we make decisions. To do this, we will need to work with conservation agencies to understand how designated sites may change and how we assess the impact of our abstraction licences on these sites.

3.5 Improving the water environment

There are many national and local actions which aim to help and support work to protect and restore wetlands in England and Wales.

Restoring and creating wetlands may not necessarily involve using water (from the environment), but it will alter the way that water moves through or is retained in a catchment. When assessing schemes to create or restore wetlands, we will consider water availability and the wider benefits and impacts that they may bring.

Restoring and creating wetlands on a sufficiently large scale:

• will help to reduce flooding, and retain water in catchments;

• will help reduce diffuse pollution (for example, by removing sediments and nutrients);

• may improve aquifer recharge;

• will help protect and link sites.

We have had a major role in developing a 50 year Wetland Vision45 for England, in partnership with Natural England, English Heritage, the Royal Society for the Protection of Birds and the Wildlife Trusts. This work shows where, subject to water availability, wetlands should be restored to help rare and threatened habitats and species and to preserve wetland archaeology.

In Wales, we will work with the Countryside Council for Wales and the Welsh Assembly Government to help restore wetlands identified through the Rural Development Plan.

Together, this work will help species adapt to climate change and will therefore bring about a more secure future for wetlands in an increasingly uncertain climate.



value. In future, we want less connection of surface water with combined sewers. We see this happening by reviewing the automatic right to connect to sewers and using SuDS more widely.

We will continue to investigate where storm-water can be diverted to rivers so that rainfall can enter watercourses closer to where it fell, and the burden on treatment works can be reduced without increasing the risk of flooding.

3.6.2 Flood risk management

Our approach to flood risk management may provide opportunities to restore wetlands and improve the recharge of water to groundwater. While highly desirable, this may not be possible in many locations because the amount of land required may not be compatible with other land use pressures.

The rehabilitation of river morphology (restoration of meanders and connectivity to floodplain) and functioning floodplains can help to slow and store flood waters.

In some coastal locations where there is managed retreat, a conscious decision may have been taken to allow costly flood defences to be replaced or supported by natural processes which provide protection. In some cases, this may lead to an increase in saline intrusion, and a reduction in freshwater available for abstraction. When determining our approach to flood risk management in these areas, we will take account of the wider impacts from each of the options available.

3.6.3 Land use change

It is not only climate change that is likely to affect the resources that are available for abstraction and which support the environment. There are other pressures too.

Water resources management does not start at the point of abstraction. We need to take account of the amount that reliably falls as rainfall, the amount that evaporates and the amount that is used by soil and vegetation before it reaches rivers, aquifers and wetlands.

Part of this is considering how land is effectively managed, and using incentives such as agri-environment schemes

(section 3.6.4) as a way of influencing good practice.

In some parts of the world,47 water use licences are granted for those land use activities where there is a risk of adverse impact on stream-flow. Elsewhere, environmental controls are put in place through planning systems.

We believe that it is becoming increasingly necessary for us to consider how land use can impact water resources, and to plan accordingly.

3.6.4 Water quality

It is essential that water quality is improved (in the most cost-effective way) to deal with established risks and to protect people and the environment. Taking action to improve water quality and ecology also provides assurance of the overall quality of water resources and extra confidence that they can be relied on as a source of drinking water into the future. We believe that this benefit should be considered when actions to improve water ecology are assessed.

We support using ‘at source’ initiatives to protect water quality (such as the removal of phosphorus from domestic laundry cleaning products, and working with farmers to reduce nitrate and phosphorus losses from agriculture) as well the requirement for treatment at sewage works.

We believe that, in general, making additional flows available for dilution should not be used as a way of solving water quality problems. We have shown that this is inefficient when compared to other options.

We need to improve knowledge of the catchment-scale effects of land management change, and encourage a more integrated approach to reduce flood and pollution risks together. This will be critical to ensure effective delivery of the Water Framework Directive. Voluntary initiatives such as the England Catchment Sensitive Farming Delivery Initiative (ECSFDI), the Catchment Sensitive Farming initiative in Wales,48 are already key and will become increasingly important as pressures on water resources grow. Currently, in these schemes, financial incentives and advice are provided for land managers to adopt practices that will lead to environmental improvements including protected and improved water quality and resources.


We welcome the initial success of the ECSFDI, the extension of the initiative for a further period and the increase in the number of catchments which are part of the scheme. The initiative provides a framework for action that is currently supported by capital grants, advice and agri-environment schemes.

As these schemes evolve, we want to see a sustained national programme of incentives, advice and training for land managers in England and Wales.

Along with Defra and Natural England, we will monitor the continued success of this integrated approach and will consider whether additional incentives, regulatory interventions (or tighter planning controls) over and above voluntary approaches will be needed in the future as pressures on water resources grow.

We will work closely with the Welsh Assembly Government and partner organisations in Wales to consider the further expansion of Catchment Sensitive Farming initiatives in Wales.

We need to assess the effectiveness of Water Protection Zones, (and how they can be used to help manage the way land is used), and identify whether the existing powers are sufficient for the future. We need to work with farmers and advisors to shape and target regulation, and we need farmers to be better informed of their regulatory responsibilities.

Improved nutrient planning, a requirement for wider buffer strips adjacent to rivers, bank-side and channel stability, improved storm-water management and sediment management could all help improve and protect water resources.

We believe that incentives and regulation should be used where the environment needs more than ‘good’ practice.

Land managers and abstractors need to identify the likely impacts of climate change on their business and take steps to adapt and mitigate. This includes more efficient use and storage of water in irrigated agriculture, reducing risks from drought, and ensuring soils are able to effectively absorb rainfall to reduce flood risk.

We will continue to look at examples of integrated catchment management practice elsewhere in the world and consider if these approaches could be used in England and Wales. For example, in Denmark,49 groundwater quality has been protected and improved in some areas by converting land used for intensive agricultural cultivation to woodland and grassland.

Evidence50 suggests that overall, some broadleaved woodland can substantially improve water quality and can reduce siltation, eutrophication, pesticides, acidification and dissolved organic carbon. While some woodland can provide water quality benefits, extensive tree cover can reduce recharge to groundwater. The benefits need to be considered against the impacts.51

We support the view that, where it is cost effective to do so, water companies should be funded to make payments to land managers to use land management practices that protect and improve water quality and water resources.

In the longer term, we may need to consider using abstraction licence charges to fund the costs of integrated catchment management where there is a benefit to water resources. For example, we could make payments to land managers to deliver land management practice to improve and protect water quality and water resources.

3.7 Improving our understanding of the water environment

We will continue to develop our science-based understanding of the relationship between water dependent species, flows, levels, morphology and water quality. We will work with others when doing this and will target our approach to those areas where the risks and uncertainty are greatest.



B1 Prioritise and target our approach to manage catchments that are ‘fully committed’.

B2 Require sustainable drainage schemes to be incorporated into new developments in England.

B3 Target the use of sustainable drainage schemes in new developments in Wales.

B4 Restore wetlands to help rare and threatened habitats and species and to preserve wetland archaeology, subject to water availability.

B5 Consider the further expansion of catchment sensitive farming initiatives to safeguard water resources.

B6 Develop our science-based understanding of the relationship between water dependent species, flows, levels, morphology and water quality, targeting those areas where the risks and uncertainty are greatest.

Ref Action


In addition to the numerous actions that we are already undertaking to protect the environment, we advocate the following actions:



Environment Agency Abstractors and other relevant Medium term (5 to 25 years) parties (land managers etc)

Local authorities, developers and Environment Agency Short term (5 years) and water companies medium term (5 to 25 years)

Local authorities, developers and Environment Agency Short term (5 years) andwater companies medium term (5 to 25 years)

Natural England, Countryside Council Environment Agency Short, medium and long termfor Wales, nature conservation bodies

Defra, Welsh Assembly Government Environment Agency, Short term (5 years) and National Farmers’ Union medium term (5 to 25 years)

Environment Agency Natural England Short, medium and long term




A growing population results in significant pressures. By the 2050s, a further 20 million people could be living and working in England and Wales. Beyond this, population movement caused by climate change could occur, both within England and Wales and from other countries. Additional water demands from the global movement of goods and services could add to these pressures.

We need to work to manage water resources carefully, to meet the needs of agriculture and industry, guarantee water supplies and protect the environment.


• support housing and associated development where it can be proved that the environment can cope with the additional demands placed on it;

• enable a targeted approach to be taken where pressure on water resources is greatest;

• encourage efficient use of water in homes and buildings;

• provide greater incentives for water companies and individuals to manage demand;

• allow existing water resources to be shared more effectively;

• further reduce leakage;

• ensure that reliable options for resource development are promoted;

• allow water resources to be allocated more effectively in the future.


Overview


4.1 Our objectives

The approach taken to managing water resources now will influence how well future pressures such as increased population and development growth can be addressed, and how the water environment can be supported and maintained in the face of climate change. We believe that the following objectives are necessary to ensure that policies support sustainable development, while accounting for differences in pressures on water resources across England and Wales.

• The twin track approach of demand management and resource development is adopted in all sectors of water use.

• In England, the average amount of water used per person is reduced to 130 litres each day by 2030.

• The Environment Agency targets and adapts its approach to reflect the location and timing of pressures on water resources.

• In England, water companies implement near-universal metering of households, starting in areas of serious water stress.

• New and existing homes and buildings are more water efficient.

• Leakage from mains and supply pipes is reduced.

• Water resources are allocated efficiently and are shared within regions where there are areas of surplus.

4.2 Applying the twin track approach

We believe that a balance of resource development and demand management is necessary to maintain supplies in the future, and to help improve resilience against climate change.

We advocate a balance between both developing new resources and implementing demand management measures.

The twin track approach is broadly supported by interested groups.52 The issue tends to be around what represents an appropriate balance and the process to define that balance.

Along with Defra and the Welsh Assembly Government, we believe that options that reduce demand rather than increase resources should be considered first, as they provide benefits for adapting to and limiting the extent of climate change and the principles of sustainable development.

4.2.1 Public water supply

Water companies are legally required to prepare water resources management plans which set out how they will provide secure water supplies over the next 25 years, while, at the same time, protecting the environment. Water companies follow guidance from the Environment Agency and Ofwat when preparing these plans, and submit them to Government. Our role is to advise Government whether these plans are adequate. When doing this, we will continue to take a critical look at how far water companies are applying the twin track approach in their plans.



4.2.2 Other types of abstraction

The twin track approach not only applies to public water supply, but also to other types of abstraction.We already include an assessment of the justification of need when we consider applications for abstraction licences. We are introducing a test for abstractors to demonstrate efficient use as part of the renewal process for time limited licences.

We may expect water efficiency audits to be carried out, so that abstractors can demonstrate that they:

• are able to measure and monitor their water use;

• have a clear responsibility for managing that water;

• are identifying where, when and how much water they need (particularly for irrigation);

• are using water efficiently.

The specific details of these requirements will vary for different cases. We will continue to support this approach by working with abstractors to identify good practice, develop guidance53 and share information.

4.3 Reducing the amount of water we use in our homes

We believe that there needs to be a determined effort to reduce the amount of water our society uses, from current levels of around 150 litres per person per day.

Defra has an aspiration for ‘per capita consumption’ (pcc) of water in England to be reduced to an average of 130 litres per person a day by 2030, and possibly 120 litres per person a day, depending on new technological developments and innovation.

We have modelled different levels of pcc. Our work considers which policies would be required to achieve them. The scenarios presented in Figure 4.1 show how pcc can be progressively reduced by policies such as tighter design standards for buildings, and different levels of metering.

From this work, we have reached a policy view about what could and should be done in the future. The approach is presented in this chapter.

The work concludes that Defra’s aspiration for 130 litres per person per day is realistic, particularly given that there are areas within water companies (including some in the south and east of England54) that already have averages at or below this level. We believe that the technology is readily available, but also that these aspirations may need tightening in the future as pressures increase.

It is clear from this work that changes in technology and behaviour both reduce demand, and that metering is a prerequisite for both – but the biggest impact is when they all happen together.

4.4 Household water metering

Households use about half of the total public water supply in England and Wales. Research shows that households that are charged by the volume of water they use (metered households) use, on average, 10-15 per cent less water55 than households whose water use is not metered. The savings could be increased further if water conservation tariffs were applied.

The UK is almost unique among developed countries56 in that most households are not metered. Average levels of household water metering for England and Wales in 2007/08 were 31 per cent, ranging from 10 per cent (Portsmouth Water) to 67 per cent (Tendring Hundred). This is growing at a rate of about two per cent per year. On current projections, the average will be 46 per cent in 2015 and 77 per cent in 2030.

The Welsh Assembly Government and Defra have commissioned an independent review of charging for water and sewerage services for households in England and Wales.57 Among other things, the review will consider the effectiveness and fairness of methods of charging and the role of metering. We welcome the opportunity to make the case for metering and will take the findings of that review into account when setting future policies for water resources management.

We will work with the Welsh Assembly Government, Defra, water companies, Ofwat and consumer groups, and believe that moving towards metering as the basis for charging is generally the right way forward for managing water resources in the long term.


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Figure 4.1: Forecasts of average year per capita consumption with different metering and water effi ciency policies (Assumptions shown in Appendix 3)



The Welsh Assembly Government recognises that metering, along with other measures, has a role to play in incentivising water efficiency. It remains concerned though about the potential impacts on vulnerable groups, and does not consider that metering, or encouraging the uptake of metering, is essential for managing water resources in Wales.

Our water resources strategy for Wales explains our proposals on metering in Wales in more detail.

4.4.1 Areas of serious water stress in England

Increased metering will be key to resolving water supply pressures, particularly in those areas that are, or may become, seriously water stressed, and innovative tariffs (social and variable) will be an effective way of tackling affordability issues.

The current piecemeal approach to metering is not as cost-effective as near-universal metering. Neither does it save as much water. Near-universal metering is a cost effective option (Table 4.1) and can also help to reduce leakage levels, particularly in supply pipes. It also allows consumers to understand the true value of water by seeing how their actions affect how much water they use and pay for.

Option Range of costs (pence per cubic metre)

Near-universal (90%) metering58 140-160

Groundwater development 100-500

Surface water development 100-500

New reservoir 300-1000

Desalination plant 400-800

Table 4.1: The cost of near-universal metering relative to other options

Reference for all options other than metering59

It is our view that:

• There needs to be a greater level of urgency. In relation to England, Defra recognises the need for compulsory water metering in areas where there is serious water stress, and advocates introducing it in these areas by 2030.60

We would like to see the majority of homes in seriously water stressed areas metered by 2015. But we recognise that because of the numbers of meters to be installed, some companies may not be able to achieve full metering until 2020.

• Using water more efficiently would help stretch current supplies further. This is particularly important in parts of the south and east of England, where high levels of growth in new housing and communities are planned.61

• Over time, metering should form the basis of charging for water. Most consumers agree62 that paying for what you use is fairer than an unmeasured system of water charging. Other utility services charge in this way. Water companies that are not pursuing compulsory metering should vigorously promote uptake of optional and change-of-occupancy metering.


• Smart meters can give consumers better information about the water they use and can encourage households to use water more efficiently.

We are assessing energy and water smart meter interoperability (the ability of different types of meters to use common data formats). This would potentially enable:

• efficiency in meter reading (single reads for multiple utilities);

• integrated or complementary future tariffs for energy and water (variable conservation tariffs);

• multi-utility information to be displayed in the home and on bills;

• future opportunities for retail competition.

Our work with the energy sector makes it clear that interoperability between energy and water smart meters is relatively simple to achieve technically, mainly requiring the definition of common data standards between manufacturers.

No current initiative exists to bring energy and water smart metering closer together. With the imminent roll out of new meters across both sectors, the opportunity for interoperability may be lost without an initiative to bring these together. We urge the water industry, the energy industry and meter manufacturers to work together on this important issue.

• Companies should introduce tariff structures that reduce demand while protecting vulnerable and low income customers. Everyone should be able to access sufficient water for their needs, regardless of their income. We recognise that we need stronger evidence about the effects of tariffs in the UK. Our ongoing work on metering aims to address this, and we will also continue to help water companies develop their own evidence.

• There must be appropriate provisions for vulnerable and low income customers made through the social system. It is essential that metering programmes include protection for vulnerable and low income groups. We encourage the Government to take the lead in addressing water affordability and continue to work with regulators and the industry to make

sure that vulnerable and low income customers don’t lose out as a result of metering.63 Tariffs can provide protection for these groups. We have commissioned a study to help us fully understand the impact that metering might have on low income and vulnerable groups.

• Clear and consistent information is vital. We encourage Defra to take the lead and work with others to tell the public about how and why we need to save water, and why metering rates need to increase.

We encourage the Consumer Council for Water and water companies to improve the information made available to householders about the benefits of metering and work with others to solve any issues about affordability that result from higher levels of metering.

Water companies, with the support of the Consumer Council for Water, should make sure that consumers understand how they use water and know how to save it. Companies should use the opportunity provided by metering to make their bills more informative. For example, in England, Folkestone and Dover Water has developed a bill that shows how water used compares with the neighbourhood average.

Introducing more metering will create greater scope for competition for water in households in the future. With more metering in more areas, this could encourage greater competition in retail sales of water, billing, data management and customer relationship management.

In 2008, the All Party Parliamentary Water Group64 highlighted the importance of near-universal metering, combined with social tariffs to support vulnerable customers and improve efficiency savings. It urged Government to take action on their introduction.

4.5 Ensuring all new homes and buildings are water efficient

It is critical that more water efficient designs are incorporated in new buildings (whether housing, farm buildings, factories or offices) as technology becomes more widely available and affordable.



4.5.1 Building regulations and development planning controls

In 2009, minimum water efficiency requirements fornew homes will be included in building regulations forthe first time.

Local planning authorities (through development planning controls65) can set standards of water efficiency even higher than the Building Regulations standards, particularly in seriously water stressed areas.

We believe that local authorities will have an increasingly significant role to play in progressing water efficiency where pressure on water resources is greatest. We will continue to play a part in developing Regional Spatial Strategies in England, and the Wales Spatial Plan and Local Development Plans in Wales to make sure that, in these areas, better building standards are required for new developments.

In the longer term, developers in areas where water resources are, or are forecast to become, under high levels of pressure could be required to achieve greater levels of water efficiency than is the norm. This could involve moving towards ‘water neutrality’ (see below).

The Code for Sustainable Homes, which has been adopted in England and in Wales, identifies the level of water efficiency of a building by considering the water efficiency of appliances, fixtures and fittings that have been designed into the building. All new homes in England are now given a mandatory rating against the Code for Sustainable Homes. Adopting higher levels of the code for social housing (Level 4/5) has also been proposed by the Welsh Assembly Government.

Where appropriate, for example, for the Eco-towns proposed in England,66 we support the adoption of higher levels of the Code for Sustainable Homes to minimise the impact on water resources.

The All Party Parliamentary Water Group proposes that ratings on a building’s water efficiency are also included in Home Information Packs so that this information is available for all homes, not just new ones.

For non-household buildings, developers should have to demonstrate how they have considered water efficiency and conservation in the design and maintenance of buildings.

We advocate a risk-based approach to setting water efficiency standards for non-households, focusing first on sectors using most water (for instance, a code for sustainable offices or schools).

We support a whole-building performance standard that can be developed for non-household buildings, both as a regulatory level and a voluntary code above that. This first step has been recognised in Wales with the proposed introduction of the Building Research Establishment Environment Assessment Method (BREEAM) ‘very good’ level for new non-household buildings in Wales.

4.5.2 Water fittings regulations

We believe that regular, ambitious reviews of the Water Fittings Regulations will be crucial as we face the growing pressure of development, and as technological advances take place.

The Water Supply (Water Fittings) Regulations 1999 cover the water used by individual fittings (such as toilets and taps) and apply in all buildings, not just households. We believe that as incentives and measures to improve the efficiency of water fittings drive technological improvements, regular reviews will become essential. Reviews are important to ensure that minimum standards are tightened, and a wider range of products is included.

4.5.3 Appropriate infrastructure is provided

The environment and infrastructure capacity for water supply, sewage disposal, flood risk management and surface water drainage should be assessed through water cycle studies. Developers proposing significant housing developments should carry out a water cycle study and produce and implement a water cycle strategy that among other things, provides a plan for water services infrastructure implementation.67 These studies should consider the potential impact of climate change68 and


should involve partnership between the local planning authority, the Environment Agency, the relevant water and sewerage companies, and other interested parties. We have produced guidance on their development.

We believe that, in the future, all planning applications for significant new housing developments should be accompanied by a water cycle strategy that provides a plan for the necessary improvements to water services infrastructure.

In future, as pressure on water resources increases, new non-household developments may need to include dual supply systems of potable supplies (for general use) and non-potable supplies (for process use).

4.6 Improving water efficiency in existing homes and buildings

As well as making new developments more water efficient, we need to make significant water savings in existing buildings. Despite high levels of development, two thirds of the dwellings that will be in use in the UK in 2050 already exist,69 so it is important to do more to make sure they use water efficiently.

For existing developments, extending metering and reducing leakage will help to improve water efficiency in homes and decrease the amount of water that is wasted.

We support measures to replace existing devices and appliances with more efficient ones, or, where practicable, altering existing devices to use less water. In areas where water resources are under pressure and where significant new development is planned, we advocate a move towards water neutrality,70 which means no overall increase in total water demand as a result of new development.

New buildings would need to be highly water efficient with their residual demand for water ‘off-set’ in the surrounding area through retrofitting, using variable tariffs and minimising water lost through leakage.

In England, the Government is making high water efficiency standards a requirement in proposed Eco-towns, and is interested in Eco-towns aspiring to achieve water neutrality for the community as a whole, especially where

the Eco-town is in an area where water resources are under pressure. The Eco-towns Planning Policy Statement sets out environmental standards that we would like to be applied not just to the Eco-towns but to all high performing exemplar developments.

Developers should work in partnership with water companies and others to explore the feasibility of achieving water neutrality when new housing developments are proposed, within the context of a water cycle strategy.

4.7 Reduction of leakage from mains andsupply pipes

Companies have made excellent progress in reducing and controlling leakage over the last decade. However, forecast reductions in leakage are disappointing and we believe that more needs to be done.

Water companies predict that leakage will only reduce by two per cent between 2015 and 2035 (Figure 4.2).

We have modelled ‘best practice’ leakage to understand the influence of different policies and the potential scope of leakage reduction. The modelling assumes that all companies achieve the best standards in finding and repairing leaks, managing pressure and replacing mains. If current best technology was applied by all companies, leakage could be 30 per cent (1,000 million litres per day) lower by 2025 than it is now.

Leakage performance and targets are set in the context of the supply-demand balance, but there is a growing need to link water company maintenance programmes for mains and leakage targets.

We believe that, in the longer term, the economic level of leakage and the economics of balancing supply and demand need to be linked more clearly with water companies’ capital maintenance programmes.

We would like to see longer term modelling of capital and operation costs for managing the mains infrastructure in a sustainable way.

Most water companies report that they are operating at, or below, their ‘economic level of leakage’ (ELL).



We support Ofwat’s move to setting targets based on a ‘sustainable economic level of leakage’ (SELL), which requires water companies to take account of the social and environmental costs and benefits of leakage management.

We believe that companies should also take account of the importance of reducing leakage in improving customers’ willingness to reduce demand.

Improvements in technology and the increasing scarcity of cheaper options for balancing supply and demand should drive down the economic level of leakage in the long term.

We are working with Ofwat and other stakeholders on identifying alternatives to the current leakage targets which could represent real opportunities for the future. One option is a ‘frontier approach’ to leakage target setting which will allow leakage management efficiency to be compared between water companies. The most efficient companies would set the standard for others to work towards, which would increase efficiency and remove the most inefficient practices. Some preliminary work has been done on this71 and we intend to continue to examine this option more rigorously.

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Figure 4.2: Water company reported and forecast leakage


Figure 4.3: Supply pipe leakage in England and Wales, 2007-08.72

In England and Wales, leakage from customers’ pipes (supply pipe leakage) makes up a quarter of total leakage. Evidence shows that metering, especially where meters are installed externally, can significantly reduce supply pipe leakage (Figure 4.3).

In England and Wales, most companies’ policy is to install meters externally, where possible. We support this approach, as it will reduce supply pipe leakage.

We would like all water companies in England and Wales to fully integrate their metering and supply pipe leakage policies to make sure that both meter installation and operation, and leakage reduction, are carried out in the most effective way.

In the responses to our consultation on the strategy, we noted that there was a range of views on the potential for transferring the ownership of supply pipes from customers to water companies, as a way of reducing supply pipe

leakage. This is a complex area and we will look to support Government and the water industry in exploring this further.

4.8 Increasing rainwater harvesting and water recycling

Rainwater harvesting73 from buildings and other structures, grey-water recycling and other water recycling technologies are becoming increasingly popular for generating non-drinking water for domestic, agricultural, industrial and commercial use. These technologies offer an additional water supply, which is particularly attractive in managing resources in areas where water resources are under pressure. We welcome this increased interest in using these technologies where they are cost-effective, appropriate and used together with other demand management measures.

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Water recycling and reuse technologies are usually most cost-effective and sustainable when designed into new buildings and structures. As metering becomes more widespread and incentives to use water efficiently increase, these systems will become more cost-effective and could play an increasingly important part in managing water resources in the future.

We recognise that we need to work with others to fully understand the implications of water recycling and reuse on the energy and carbon agenda, and their reliability in a changing climate. We also need to understand more about how efficient and cost-effective this technology is as a demand management measure.We will be working with other interested groups to set up a research programme to do this.

4.9 Re-using effluent in the environment

A significant proportion of river water is already made up of treated effluent, particularly at times of low flow. In the lower reaches of the River Nene, during periods of low flows, around three quarters of the flow is made up of highly treated discharges from sewage treatment works. We continue to recognise treated effluent as an important, reliable and valuable resource, particularly in a changing climate.

We believe that, in areas where there are stresses on the water environment, and where there will be a clear benefit, there will be further opportunities to use treated effluent to sustain the water environment and to support downstream abstractions. The location of the point of discharge is key to the ability to re-use this resource, and opportunities are greatest where the effluent would otherwise be discharged to sea, especially in areas where other supply/demand options are limited.

But this is not a straightforward option. We recognise that protecting public health is paramount and we need to make sure that greenhouse gas emissions from engineering/pumping costs and treatment are considered when comparing options to do this.

Due to high greenhouse gas emissions, effluent reuse may be particularly suited to short-term peak loads as opposed to base line operation.

It is critical that the public accepts treated effluent as a way of sustaining the water environment and that dischargers play their part in protecting health and the environment. We need to increase public confidence by continuing to invest in science and research, looking at health aspects and communicating information more effectively.

4.10 Allocating water resources efficientlyand fairly

We expect greater sharing of water resources in places where water resources are under pressure. We want to encourage abstractors to share existing resources, and where new resources are developed, we will expect them to be shared better between different uses.

4.10.1 Public water supply

Where water resources are under pressure, water companies will need to consider a range of supply and demand management options to maintain secure water supplies. Developing more resources is a legitimate response, and greater investment in storage and/or more reliable supply options may be needed as part of a twin track approach with demand management.

We have shown74 that the south east of England is approaching crisis point. Planned levels of investment by water companies in water resources would result in over-capacity when the south east of England is considered as a whole.

In their 2004 plans, water companies in the south east of England were planning to develop approximately500 mega litres per day (Ml/d) over and above what was identified as being required by 2029/30. This is equal to a surplus investment cost of £1.4 billion and is enough water to supply 3.2 million people – that’s all the existing customers in South East Water, Portsmouth Water, Bournemouth & West Hants Water and Folkestone & Dover Water combined.


We already have powers that allow us to:

a) reallocate water between water companies in the interests of greater efficiency in the use of water resources;

b) promote bulk supplies between water companies;

c) require abstractors to enter into operating arrangements.

Companies with deficits are often located next to those with surpluses (Figure 4.4). This, plus our work on the south east of England, clearly shows that companies need to share resources more effectively.

Figure 4.4: Water company surpluses and defi cits – dry year supplies (From data reported to Ofwat, 2008)

Below target headroom

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Our policy to date has been to promote a voluntary approach and work with companies to encourage them to share resources where there is a need, only using these powers as a last resort. This approach is having limited success and unless water companies are able to share resources more effectively, we will need to use these powers.

We also have powers to secure the proper use of water resources. As pressures on water resources increase, we will need to take a more proactive role in planning water supplies across England and Wales in order to optimise resource use to meet demand.

4.10.2 Consideration of future water industry structures

Inefficient allocation, a lack of sharing between companies and poor integration of planning between companies, if left unchecked, will lead to redundant resource development. This will result in increases in customers’ bills and additional impacts on the environment, as well as poor alignment with climate change adaptation/mitigation and the principles of sustainable development.

The current structure of the water supply industry is one which is ‘vertically integrated’ with a single company being responsible for all aspects of public water supply delivery for a defined geographical area. Other utility sectors across England and Wales have been ‘unbundled’, separating out responsibilities broadly equivalent to:

• Supply: abstraction and treatment of bulk water.

• Distribution: distribution network operation, asset maintenance and water treatment.

• Retail: provision of customer services and retail sales to customers.

Ofwat has recently advocated an initial first step - accounting separation - which may lead to eventual unbundling of the public water supply industry across England and Wales.

Such a shift in the structure of the water supply industry could provide real advantages for a more resilient and sustainable management of our water resources in the future.

We would advocate that along with any unbundling of the industry, a degree of horizontal integration and merging between geographic neighbours, particularly in England, takes place to form water resource abstraction operations which are more aligned with the natural boundaries of water resources.

The merging of neighbouring operations, particularly in England, could provide real advantages for customers and the environment through more integrated planning and management of water resources, and enhanced resilience through the sharing of water resources and infrastructure across wider areas.

4.10.3 Agriculture

We support, and will continue to promote, setting up water abstractor groups75 for agriculture, and for other purposes. Water abstractor groups provide an excellent opportunity to share water resources.

For example, there is an abstractor group in Lincolnshire that is particularly effective in sharing resources. The group has a single abstraction licence for its members. Water is allocated and managed by collectively agreed arrangements, allowing existing resources to be used flexibly and making them go further.

We believe that there should be more of these groups in areas where water resources are, or will become, under pressure.

We will try to identify other opportunities to share water. For example, when resource developments for public water supply are proposed, they may also provide an opportunity to share resources with others.

4.10.4 The future allocation of water resources

When determining abstraction licences, we follow the ‘first come first served’ principle, allocating water by dealing with each application as it is received. This approach is stable and well understood, but it does not give incentives to innovate, be efficient, or invest and has no means of bringing unused licensed volumes back into the market.

In the short term, we may be able to make improvements to this system, and for example, are working with Ofwat


focusing more on using water efficiently. This could increase efficiency and significantly reduce supply and treatment costs for industry.

We are working with Defra, the Welsh Assembly Government and Ofwat to make sure that:

• long-term security of supplies is maintained and that droughts can be managed;

• the environment is not put at risk to promote competition;

• competition in public water supply does not compromise other valuable uses of water;

• we remove any barriers to licence trading within the water resources regulatory framework;

• we appropriately consider recommendations made in the Cave Review of competition and innovation.

4.12 Water service companies and regulatory incentives

The current model for the water industry across England and Wales, and the system of regulation within which it operates, has remained effectively unchanged since privatisation in 1989.

The one exception is D∑r Cymru Welsh Water, that has operated a not-for-profit model since 2000. The company outsources most of its day-to-day operations to specialist contract partners employed through a competitive procurement process. Any financial surpluses generated are invested back into the business to reduce financing costs. In recent years, the surpluses have also been used to fund an annual rebate or ‘dividend’ to customers’ water and sewerage bills.

In many respects, the model adopted in 1989 by the rest of the water industry has worked well with improved planning, stimulation of operational efficiency, enhancement of levels of service and facilitation of capital investment. The model has enabled benefits for water company customers in terms of security of supply, and has provided environmental improvements and economic and financial benefits.

to review how abstraction licence trading could be improved to encourage competition.

In the medium to long term, as pressures on water resources grow, we may need greater flexibility in the way water resources are allocated so that water can be more effectively accessed by those who have a legitimate need and the environment can remain protected. We have started to look at different options for doing this76.

We believe that a future system of allocation could be an evolution of the current system, that changes should be incremental and that they need to include:

• minimum flows for the environment;

• time limiting of all licences;

• new provisions to prioritise water use in severe drought;

• a greater role for trading;

• use of differential abstraction prices to create incentives for efficiency and allocation.

Other approaches that are worthy of further consideration are:

• collaborative planning partnerships building on River Basin Management Plans (RBMPs);

• auctioning of all existing licences or only new licences after minimum flows or quotas have been set aside for the environment;

• development of new supply infrastructure.

We will work with stakeholders to investigate and agree the extent of the changes needed and how best to implement them.

4.11 Competition

Competition offers the potential to use water more efficiently, and to improve the allocation of resources. New entrants, competing to provide water supplies for non-household use, may be more able to respond to clients’ needs, and may be able to offer improved services. One such service could be carrying out water audits,



Since privatisation, the aim has been to achieve progress through the provision of incentives for private investment and to stimulate efficiency through the principles of comparative competition. This period since privatisation has, however, been relatively stable in terms of external challenges.

The future, in the context of the timescales of this strategy, is uncertain for water companies. Climate change provides a fundamental threat to water resources. In addition, higher levels of population may mean tighter margins for supply security. The industry could have a far less stable operating environment with a higher degree of uncertainty and a greater potential for shocks. This changing environment will test inherent weaknesses within the current model as well as introducing new, as yet untested, pressures. We believe that the current regulatory model is not fit for purpose and must change given the future pressures. We believe that now is the time to consider alternatives.

• Water service companies We believe that future regulation of the water

industry must align with the changing outcomes which will be required in order to address the new and emerging pressures on water resources and the water environment. It is vitally important to ensure that financial barriers to adapt appropriately to future pressures are removed.

The primary incentive affecting the way the water industry operates is financial performance and the alignment of profit with strategic priorities. This has been recognised in other countries which have adapted regulatory regimes to align financial incentives with required outcomes. These approaches often include mechanisms to share savings with customers: the concept of water service companies.

The established water industry model has rewarded companies for selling as much product as possible to customers.77 This has become further enhanced with higher levels of metering. This is clearly at odds with both the principles of sustainable development and those of climate change adaptation/mitigation, as well as the twin track approach to planning.

A water service companies approach would put the provision of sustainable water services at the centre of the companies’ delivery and their reward structure. Experience exists across North America, mainly in the energy sector, which has developed a range of regulatory mechanisms and tools to both deal with the associated revenue loss, and a range of incentives for companies to deliver water conservation.

We have undertaken work to assess the transferability of this approach,78 and have concluded that opportunities do exist for future implementation of these approaches in the water sector for England and Wales.

Such a shift of regulatory approach not only requires a shift in thinking within water companies but is only likely to happen in response to proactive intervention by both Government and regulators through the setting of appropriate financial and regulatory incentives and standards.

We are pleased to see that Ofwat has introduced a ‘revenue correction mechanism’, which allows prices to be adjusted to account for over or under recovery of income. This will partially mitigate the incentive to sell more, not less. However, some incentive still remains and the future use of incentives is potentially an important opportunity for the future.

• Water efficiency targets Ofwat is introducing water efficiency targets for water

companies, where each company has an annual target to save one litre of water per billed property per day through approved water efficiency activity.

Water companies will be expected to continue to meet the costs of this activity without additional funding. The targets represent the minimum level of activity that companies should already be achieving through their duty to promote efficient use of water. If met, the proposed targets would achieve annual savings of around 23 Ml/d each year between 2010 and 2015.79


The England and Wales annual target of 23 Ml/d corresponds to the recent annual performance of a 20 Ml/d saving. The targets will in effect formalise the base level of water efficiency activity expected by companies, but will not encourage further activity in water efficiency for all companies.

• A Water Efficiency Commitment Other forms of incentives could also help to shift

the emphasis of approach. One important example would be a Water Efficiency Commitment, based on the successful Energy Efficiency Commitment80 where an element of the energy companies’ income is put towards a fund for the installation of efficient devices and energy saving technology.

We believe that companies, particularly those in water stressed areas, should be required to make a Water Efficiency Commitment, where they have mandatory water saving targets. This would require that they operate more as a service provider. Our recent work linking water efficiency with energy consumption in the home and the implied potential for household bill reductions demonstrates how such incentive mechanisms can be used to address sustainability and affordability issues together.

We will continue to work with Defra, the Welsh Assembly Government, Ofwat, water companies and other relevant parties to consider how to progress appropriate water efficiency options based on evidence.


C1 Increase levels of metering with suitable tariffs to improve water and economic efficiency whilst protecting vulnerable groups.

C2 Allow access to funding for local water efficiency and resource development initiatives for agriculture in areas where water resources are under pressure.

C3 In areas where water resources are under pressure, include measures that support water neutrality where new development is planned and require developers to produce water cycle studies where housing developments are proposed.

C4 Identify water efficiency standards for non-household buildings at a regulatory level and a voluntary code beyond that.

C5 Produce and deliver water reduction targets for different categories of use (for example, the food industry already has a target of a 20 per cent water demand reduction by 2020).

C6 Further leakage control based on alternative methods of setting targets that better reflect the costs to society and the environment .

C7 Explore the merits of a change of ownership of supply pipes so that water companies have accountability to achieve a reduction in supply pipe leakage.

C8 Take a more proactive role in planning across England and Wales in order to optimise resource use to meet demand.

Ref Action




Water companies Defra, Welsh Assembly Government, Short term (5 years) for areas of Environment Agency, Ofwat. water stress and medium term (5 to 25 years) for other areas

Development agencies, Short term (5 years) and Welsh Assembly Government medium term (5 to 25 years)

Local authorities Environment Agency, Short term (5 years) and and developers Water companies medium term (5 to 25 years)

Defra, Communities and Local Environment Agency, Medium term (5 to 25 years)Government (CLG), Welsh Advisory organisationsAssembly Government Industry Environment Agency, Medium term (5 to 25 years) Advisory organisations

Water companies Environment Agency, Ofwat Short term (5 years) and medium term (5 to 25 years)

Defra, Environment Agency, Ofwat, Short term (5 years) andWelsh Assembly Government Water Companies medium term (5 to 25 years)

Environment Agency Medium term (5 to 25 years)




C9 Use existing powers to identify opportunities for bulk supplies between companies, to identify where water resources need to be re-allocated between companies and where operating arrangements can be used.

C10 Encourage the establishment of water abstraction groups, particularly in agriculture.

C11 Work to remove barriers to licence trading within the water resources regulatory framework.

C12 Further investigate options for an alternative approach to how we allocate water resources within a catchment.

C13 Consider how different structural models for the water industry can reap benefits for the environment and customers.

C14 Complete a review of the way the water industry is funded – instead of water companies being rewarded for the amount of water they sell, introduce incentives for reducing the amount of water provided, and for improving the quality of services provided.

C15 Increase mandatory standards for fixtures, fittings and appliances to improve the water efficiency of homes and businesses.

C16 In areas where water resources are under pressure, adopt water efficiency standards in planning conditions that are tighter than the default standard identified in building regulations.

C17 Establish a Water Efficiency Commitment for water companies which includes mandatory water saving targets. Water companies to then implement these targets.

Ref Action


Environment Agency Water companies Medium term (5 to 25 years)

Environment Agency National Farmers’ Union, Farmers, Medium term (5 to 25 years) Other Abstractors, National Farmers’ Union Cymru, Farmers’ Union of Wales, UK Irrigation Association (UKIA).

Environment Agency Abstractors Medium term (5 to 25 years)

Environment Agency Abstractors Medium term (5 to 25 years)

Defra, Environment Agency, Medium term (5 to 25 years)Welsh Assembly Government Water Companies, Ofwat

Defra, Medium term (5 to 25 years)Welsh Assembly Government, Ofwat

Defra, Communities and Local Local authorities Short term (5 years) andGovernment (CLG), Welsh medium term 5 to 25 years)Assembly Government

Local authorities Environment Agency Short term (5 years) and medium term (5 to 25 years)

Defra, Short term (5 years) andWelsh Assembly Government, medium term (5 to 25 years)Ofwat, Water companies




Many people believe that we have more than enough water in England and Wales to meet everyone’s needs. Overall, this may be true, but rain does not necessarily fall in the same place or at the same time to meet demand.

Everyone needs to value water much more and use it more efficiently. This means recognising water as a valuable resource, and investing in technology and communications that will improve the way it is used and managed.

We need to work with others to make sure that people value water and the water environment. By using water efficiently, changing habits and providing more and better information, people can make more informed choices.

Our strategy will:

• provide abstractors and individuals with incentives to reduce demand;

• allow water companies to better address affordability issues with customers;

• encourage people to use water more efficiently;

• improve the efficiency of fixtures, fittings and appliances;

• provide better information on water efficient products;

• generate more effective communication so that people can make more informed choices;

• increase investment in technology for all sectors of abstraction and use.

Overview


5.1 Our objectives

To achieve our aim for water and the water environment to be valued, we believe that the following objectives must be met.

• Water pricing for the abstraction and use of water acts as an incentive for the sustainable use of water resources.

• Innovative tariffs are adopted by water companies to maximise savings and minimise issues of affordability.

• Abstractors and users make informed choices to use water more efficiently.

• Innovative technology is developed to improve water efficiency by all water users.

• The needs of wildlife, fisheries, navigation and recreation, as well as the environment and abstractors, are fully taken into account when allocating water resources.

5.2 Reforming abstraction licence charges

We recover around £130 million each year from abstraction licence charges. Legislation on the charges scheme means that we are not allowed to make a profit or a loss, and the amount we raise needs to cover the costs of managing water resources in England and Wales.

We have developed our charging scheme in recent years to take account of changes in legislation, and the need to recover charges to fund compensation for licences where changes are necessary to restore the environment.

We believe that further reforms to the way we charge for water could provide us with a more effective and flexible approach for securing water efficiency, particularly in areas where pressures on water resources are greatest. In implementing this strategy, we will consider how the charges scheme can provide greater incentives for managing water resources better and allocating resources more effectively.

In particular, we will consider:

a) the potential to charge by volume abstracted, rather than by licensed quantity.

b) the potential to modify the abstraction charging regime to allow cheaper abstraction during the summer months during periods of high flow (as the current charging scheme provides an incentive for winter abstraction). This will help promote small-scale storage reservoirs, where they can be justified in the context of the twin track approach.

As pressures on water resources grow, we believe that it may be necessary to extend the ability to impose restrictions on abstractors other than irrigators, along with associated charging agreements, which reflect increased vulnerability during droughts.



In the longer term, we may need to recover abstraction licence charges to cover the costs of integrated catchment management activities which improve and protect water quality and water resources.

5.3 Implementing innovative tariffs

We believe that using innovative tariffs will be a crucial way of changing the way that water is used and valued.

Innovative tariffs allow an amount of water to be used, sufficient for basic needs, at an affordable rate. Progressively higher charges apply as more water is used over this specified threshold, or during periods where stresses on supply are greatest (Figure 5.1). For example, rising block tariffs mean that everyone gets the basic water they need at a lower price but that those who choose to use more water must pay more. Summer block tariffs mean that if people choose not to increase water use significantly in the summer they can reduce their overall water bill.

Figure 5.1: Examples of tariffs

In our section on metering (see Section 4.4), we make a case for using innovative tariffs to provide a price signal and incentive to use water more efficiently, as well as a way of appropriately protecting vulnerable users.

Tariffs are not limited to metering, and the Welsh Assembly Government is working with Ofwat to explore the development of tariff options in Wales, with a focus on methods that do not rely on measurement of volume at present.

5.4 Informing choices

Metering and charging systems that provide incentives for using water more efficiently need to be supported by information, so that people using water can make more informed choices and react to different price signals, or simply value water more. This applies equally to domestic and non-domestic use.

There are websites81 where consumers can evaluate the water footprint of their shopping habits. This information is a good start, but it relies on people carrying out research before they go shopping. There is also little or no link to where goods are sold or produced.

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Existing information on water use and efficiency is fragmented, difficult to obtain and does not reach users effectively. However, where informed choices are made, there can be significant benefits for both the water environment and for water users.

5.4.1 Information on the water efficiency of products

We support labelling schemes that improve consumer choice by making information available on the water efficiency of a product when it is bought. This approach is advocated by the All Party Parliamentary Water Group82, and is consistent with the principles of the Welsh Assembly Government that support climate change mitigation through behavioural change.

The Bathroom Manufacturers’ Association has introduced a voluntary scheme for water efficient bathroom products.

Government departments are working with the European Commission and other EU member states on the follow-up to the Commission’s communication on water scarcity and droughts. The European Commission has published proposals as part of the Eco-Design Directive and the review of the EU energy label for dishwasher and washing machines.

We believe that, for a labelling scheme to be effective, it needs to be part of an integrated and long-term water efficiency strategy at the core of the governments’ sustainability agendas. It needs to be supported by incentives for water efficient products such as exemption from (or reduction in) VAT and subsidies or grants to encourage end-of-life replacement with best-in-class products. It also needs to make water efficiency a bigger factor in consumers’ choices. It needs to cover a wide variety of products so that consumers recognise it as a ‘one stop shop’.

We want to work with Government, the Bathroom Manufacturers’ Association and other bodies to further develop the water efficiency labelling scheme so that it would achieve this, and more.

International examples show that the most effective schemes are mandatory and part of an overall water efficiency strategy. The success of energy labelling shows the extent of market transformation (and consumer awareness) that could be achieved.

While an effective labelling scheme would inform consumer choices, there is a growing role for regulation to set minimum standards, help transform the market and contribute to achieving the UK’s CO

2 emission targets.

We believe that there should be further incentives, such as reducing or removing VAT on water efficient products to influence customer choice and to make water efficiency a bigger factor in their decisions.

As pressures on water resources grow, we believe that there should be:

• measures to require minimum standards for design and manufacture of these products;

• regular revision of water fitting regulations to take account of technological advances and a wider range of products;

• a greater degree of intervention to ensure that inefficient goods which fall below minimum standards are not imported and sold in the EU;

• incentives that make high-efficiency goods cheaper for customers (for example, a reduction in or a removal of VAT);

• an improved water efficiency labelling scheme;

• a co-ordinated communications campaign to ensure that water efficiency and water conservation messages are more effectively targeted.

5.4.2 Communication/behaviour change campaigns

The Environment Agency, Government, local authorities, schools, business, trade associations and water utilities all have a role to play in developing and communicating messages about water efficiency.



Water efficiency and water conservation may mean different things to different users. For agriculture and industry, water efficiency may mean getting the greatest value out of every drop. With more efficient scheduling of irrigation, ‘improving efficiency’ may mean that reduced use from more efficient methods of application is partially or fully offset by increased use due to improvements in identifying where and when water is required.

In this strategy, ‘water efficiency’ means that the right amount of water (reflecting needs and no more) is used in the right place and at the right time.

‘Water conservation’, on the other hand, means a concerted effort to reduce the amount of water used.

Work commissioned by the Consumer Council for Water suggests that water conservation programmes could be more effective if they focused on measures to move users from being ‘unable’ to ‘able’ to conserve water, and from being ‘unwilling’ to ‘willing’ to conserve water. We believe that the principles of this concept apply across all sectors, and that efforts should focus on:

a) making sure people use water more efficiently;

b) instilling a desire to change the way people think about and use water.

Work by the Water Saving Group in England looking at water conservation campaigns for water company customers suggests that there is a need for one organisation to co-ordinate messages to make sure there is a consistent and more effective approach. International examples show that those countries that have long-term strategies with integrated initiatives achieve the best results in changing attitudes and markets for water efficient products.

We believe that, in England and Wales, water conservation messages can be more fully integrated with messages to conserve energy and minimise waste.

The expanded remit of the Energy Saving Trust to cover energy and water will help provide consistent messages and should be much more effective in reaching consumers and changing behaviours.

5.5 Targeting science, research and innovation

It is vital that there is continued investment in new science-based research and innovation so that all those involved in the management of water resources can understand how the pressures on water resources may change in the future, and identify and develop effective evidence-based solutions and policies.

Research and development may relate to (but should not be limited to):

• developing new technologies for water use (for example more efficient domestic appliances, irrigation equipment and industrial processes);

• options around the uptake and use of technology (for example developing innovative tariffs and improved methods of leakage control);

• identifying and promoting best practice approaches adopted worldwide, and communicating and sharing this information;

• improved techniques and methods for assessing and managing water resources (for example understanding better the potential implications of climate change);

• understanding better how changes in society and catchments may affect how we manage water resources.

All of these will enable everyone to make more informed choices about how they use water, and identify which water resources management activities and solutions will be most appropriate for current and future needs.

5.5.1 Innovation in the water industry

The Sainsbury report83 on innovation looked at the impact of economic regulation on funding for utility research and development investment and recommended that:

“regulators should review their policies to ensure that the appropriate level of emphasis is given to innovation in their decision making in the price-regulated sectors, to protect the interests of both current and future consumers. We would like consideration to be given on how innovation could be incorporated into their duties.’’

The All Party Parliamentary Working Group also reported that the total research and development spending by combined water and sewerage companies in England and Wales in 2004-05 was £22 million, representing just0.3 per cent of company turnover. This is a reduction of60 per cent since 2000.

We believe that it is essential to significantly increase research and development investment in all sectors of abstraction and use, and to identify ways of increasing uptake of new technology. We urge Ofwat to allow the water industry to make higher levels of investment, so that it can respond more effectively to future pressures.

5.5.2 Our own research

During 2008/9 we have invested nearly £20 million in scientific research to ensure our policies are based on firm evidence. We will work with Government, the water industry and other water users to make sure that investments in water resources related initiatives are set at a high level and have the right priority and profile, given the increasing pressures we face.

5.6 Valuing the water environment

Water resources are critical in maintaining the physical environment that so many people enjoy. Water related recreation includes fishing, boating, canoeing, or simply walking and enjoying the water environment. These activities provide many health, social, environmental and economic benefits.

Recreation and leisure associated with our rivers, lakes and coasts bring huge economic and social benefits. These include the income generated from activities and the money saved by society as people become fitter and healthier, as well as the social benefits to communities.

With current levels of use, potential growth or predicted growth forecast for water related recreation,84 it is vital that it remains a strong factor in decisions around water resources allocation now and in the future.


D1 Introduce further incentives for the purchase and fi tting of water effi cient equipment and appliances.

D2 Significantly increase innovation within the water industry by 2015 and allow funding for the increased level of investment to meet the challenges of climate change.

D3 Implement variable tariffs to provide the incentive for demand management, whilst mitigating against affordability issues.

D4 Change the abstraction charges system to reflect the value of water, incentivise efficient use and allocation and allow us to manage water resources effectively in the face of future challenges .

D5 Broaden the expenditure base of abstraction licence income to take on additional responsibilities for upstream water resources management (recognising the interaction between water resources, land management and water quality).

D6 Improve, and widen the range of the water efficiency labelling system introduced by the Bathroom Manufacturers’ Association for appliances that use water.

Ref Action




Defra, Short term (5 years) andWelsh Assembly Government medium term (5 to 25 years)

Water industry, Ofwat Short term (5 years) and medium term (5 to 25 years)

Water companies, Ofwat, Defra Environment Agency, Short term (5 years) andWelsh Assembly Government Consumer Council for Water medium term (5 to 25 years)

Environment Agency Short term (5 years) and medium term (5 to 25 years)

Environment Agency, Medium term (5 to 25 years)Government

Government, manufacturers Industrial bodies Short term (5 years)retailers



Implementing the strategy

6.1 A targeted approach

This strategy provides a consistent framework for water resources management across England and Wales, while allowing a targeted geographical approach.

We recognise that more effort may be needed sooner in some locations and that economics will play a major role in determining appropriate solutions.

We also recognise that there will be different delivery mechanisms for the actions in the strategy in England and Wales. A separate water resources strategy for Wales has also been prepared in recognition of these differences.

We believe that the vast majority of the actions will be appropriate for areas where pressure on water resources is greatest such as the south east of England, and that areas in England and in Wales will have different pressures (for example spray irrigation concentration in our Anglian Region).

We will produce Regional Action Plans after the main strategy is published. These plans will show how the actions in the England and Wales strategy can meet local circumstances, and will allow different priorities to reflect local needs. For example, some actions may have different timescales. We will also prepare a more detailed Action Plan to accompany the Wales Strategy.

Many of the actions in Regional Action Plans will also reflect the local measures included in River Basin Management Plans and will need to be included in future water company water resources management plans.

We aim to produce Regional Action Plans, and the more detailed Wales Action Plan by Autumn 2009.

6.2 A better regulation approach

As the lead organisation responsible for water resources management in England and Wales, we are committed to adopting a ‘better regulation’ approach85 in the way that we work.

We will continue to follow a risk-based approach, so that we can focus our resources on those areas that will have the greatest potential impact or potential benefit.

Our risk-based approach is reducing the administrative burden on business, so that abstractors have an incentive to improve their environmental performance while remaining competitive.

6.3 The role of others

Many individuals and organisations are involved in, or have an interest in, water resources management(Figure 6.1). There is no single or simple solution to the pressures that we face, and it is essential that all organisations work together.

There is enough water for people and the environment, but it will take a lot of hard work to make sure that we use and manage this precious resource in a way that protects the environment for future generations and allows water to be used efficiently and enjoyed.


Natural England

Countryside Council for Wales

Wildlife trusts

Archaeological trusts

Hydropower

Public WaterSupply

Water companies

Waterwise

Consumer Council for Water

Water UK

Ofwat

Defra

Welsh Assembly Government

Drinking Water Inspectorate

Communities andLocal Government (CLG)

District & County Councils

Local Authorities

Development Agencies

Welsh Local GovernmentAssociation

Envirowise

Confederation of BritishIndustry (CBI)

Environment groups

National Farmers’ Union (NFU)

NFU Cymru

United Kingdon IrrigationAuthority (UKIA)

Farmers’ Union of Wales

Quarrying/aggregates

Industry

Friends of the Earth Cymru

British Waterways

Fishing/angling associations

Water-based recreationgoverning bodies

WWF

Power generation

Power stations

Environment

Recreation &navigation

Water ResourcesStrategy for England

and Wales

Majorabstractors

Industry &commerce

Regulation

Agriculture Planning &development

Figure 6.1: Organisations involved in water resources management (not exclusive)


Appendix 1: Links with other strategies and plans

Figure A1 shows how the Water Resources Strategy and other plans and strategies fit together to provide a co-ordinated approach to water resources management.

Government Strategies

Defra’s ‘Future Water’Welsh Assembly Government’s ‘Environment Strategy for Wales’

Environment Agency Water Resources Strategy

‘Strategy for England and Wales’‘Strategy for Wales’

Environmental Restoration

• Restoring Sustainable Abstraction

• Habitats Directive

Catchment Management

• Water Framework Directive

• River Basin Plans

Water Company Planning

• Periodic review

• Drought plans

• Water resources management plans

Water Resources Regulation

• Abstraction licensing

• Catchment Abstraction Management Strategies

The policy framework

Deliverymechanisms

Environment Agency Water Resources Strategy – Regional Action Plans

Figure A1: Water resources management – linkage between strategies and plans


Figure A2 shows how the respective strategies and plans fit together in terms of their timescales and geographical coverage.

Figure A2: Scale of plans and strategies

Tim

esca

le

Geographical scale

Water Resources StrategyRegional Action Plans

(2050)

Water company waterresources management plans

(2035) Defra’s FutureWater Strategy

(2030)

Welsh Assembly Government’s Environment Strategy for Wales

(2026)

Water company supplydemand balance

submissions to Ofwat

Water companydrought plans

WFD River BasinManagement Plans

Catchment abstractionmanagement strategies

Water ResourcesStrategy for Wales

(2050)

Water ResourcesStrategy for Englandand Wales (2050)


Government strategies

In 2006 the Welsh Assembly Government produced the ‘Environment Strategy for Wales’, and in 2008, Defra published ‘Future Water: The Government’s Water Strategy for England’. Together, these strategies set out the broad strategic direction and form the current policy framework for water management in England and Wales. This strategy sets out how water resources should be managed in the context of those frameworks, and provides the direction for local actions.

River Basin Management Plans

The Water Framework Directive has introduced the requirement to prepare River Basin Management Plans to show what actions are necessary to ensure that water bodies aim to achieve ‘good ecological status’ by 2015 and that there is ‘no deterioration’ after taking feasibility and affordability into account.

Catchment Abstraction Management Strategies (CAMS)

CAMS provide an assessment of the water resources available in local catchments, and set out local water abstraction licensing practice. They are one of the building blocks for River Basin Management Plans.

Water company water resources management plans

These plans, prepared by water companies, show what companies propose to do to manage supply and demand for water over the next 25 years. They are prepared following guidance from the Environment Agency and Ofwat, are subject to consultation and then submitted to Government. We then provide advice on their adequacy.

Water company drought plans

These plans, prepared by water companies, show the actions that companies propose to take in order to manage water supply during drought periods. They are prepared following guidance from the Environment Agency, are subject to consultation then submitted to Government. We then provide advice on their adequacy.

Regional Spatial Strategies (RSS) and Wales Spatial Plan

In England, regional planning bodies are required to prepare Regional Spatial Strategies (RSSs). In Wales, the Welsh Assembly Government has prepared a Wales Spatial Plan.

RSSs and the Wales Spatial Plan go beyond traditional land-use planning by attempting to bring together and integrate policies for developing and using land. They provide a single regional strategy, co-ordinating jobs, economic growth, housing, planning and environmental objectives, and are set within the framework of Regional Economic Strategies (RESs). Many RSSs and RESs and the Wales Spatial Plan include policies on water efficiency and water resource sustainability, and include targets for per capita consumption (the amount of water each of us uses on average each day). For example, the Regional Economic Strategy for the South East of England has a target to ‘reduce per capita water consumption in the South East by 20 per cent from 169 litres a day in 2003-2004 to 135 litres a day by 2016’. A specific aim in the Wales Spatial Plan is “reducing the pressure on the availability of water supplies from local rivers by managing water consumption”.86

Water resources strategy – regional implementation

We will produce Regional Action Plans for the water resources strategy that will identify how the national actions and principles contained in this strategy translate into local activities, and how the actions will be carried out at a local level. They will supplement water resources actions contained in River Basin Management Plans.


Appendix 2: Future scenarios

Scenarios are a tool for thinking about different possible futures and can be used to inform policy making. Using scenarios to explore and rehearse uncertainties may highlight a number of issues or potential options which require further detailed investigation or analysis.

The scenarios outlined below are based on those developed for the Environment Agency and Defra to explore the possible changes in the pressures on the UK environment between now and 2030.87 They are centred around two axes of control. The first axis focuses on UK societal attitudes and behaviour around consumption, in particular of ‘material’ goods. At one extreme of the axis, consumption patterns are constrained. At the opposite extreme, individuals exist in an intensified ’desire economy’ in which there is greater consumption of goods and experiences.

The second axis refers to international governance systems. At one extreme, governance systems and decision making focus on longer term sustainability concerns, such as global warming and resource depletion. At the opposite end, governance is based on rules concerning competitiveness and open markets, for reasons of sustaining economic growth.


Those living in ‘sustainable behaviour’ have a strong sense of their role and responsibilities within the wider world, and recognise the need for action against climate change. Governments around the world have responded to these concerns, and over the past decades we have witnessed a virtuous circle of growing public awareness and policy developments. Sustainable behaviour in the home and business has consequently increased.

This focus on sustainability resulted in increased prices across the board, and reduced purchasing power. However levels of social cohesion are high, reinforced by local or regional delivery of a number of services and shared ownership schemes for now expensive goods (for example, cars). Moreover, local governance is increasingly important in this world. There has also been a shift towards public ownership of key utilities, and mutualisation is common in a number of industries, including water, energy supply and waste.

The greater focus on regional governance has resulted in variable levels of service quality. While some areas have prospered under engaged and enthusiastic representatives keen to meet the needs of their community, others have suffered from less effective leadership. With moving out of the area unaffordable for the majority, the idea of a ‘postcode lottery’ determining the quality of service provision is becoming a key concern.

Innovation

This scenario sees a highly technology driven and knowledge led UK. Consumers continue to consume in a relatively resource intensive manner. Environmental concerns are perceived to be the problem of manufacturers and service providers, who have responded by becoming increasingly resourceful at engineering new (and less carbon intensive) solutions to the problems of meeting consumption demands. Closed loop systems have become widespread in an attempt to ensure that nothing gets wasted. Supply side regulation has now become an accepted and integral part of the economy – and in the UK the influence of EU legislation is particularly strong.

This is a world in which there has been a wide range of scientific breakthroughs, including in nanotechnology, genetics, transport pharmaceuticals and health diagnostic technologies. However these are in the context of heavy government intervention around innovation patterns, ensuring that efficient resource use is prioritised by business. Huge numbers of people now work in regulation and compliance; a new army of what the public call ‘men in green coats’. However, the loss of jobs from manufacturing has caused societal inequality among the unskilled workforce.


Appendix 2: Future scenarios

Local resilience

In ‘Local resilience’, ‘Peak Oil’ turned out to happen much sooner than the consensus suggested, resulting in a series of economic shocks triggering recession and inflation. Protectionism followed, and the market model which dominated the global economy in the late 20th century was not designed for a world in which underlying resources – especially energy – were scarce.

One result was that governments spent less on infrastructure as social payments absorbed more of their shrinking revenues. Transport schemes were cut, telecoms infrastructure deteriorated, investment in sewage and water schemes was cancelled, and the electricity grid became less reliable. Systems which had been national have frequently been localised. As a result, ‘Local resilience’ (and technologies to facilitate this) have a high degree of importance. Moreover, the cost of resources means that people have adapted their houses to reduce energy consumption and water use. Food is more seasonal and more local and there is also more ‘urban agriculture’.

People have also become used to reusing goods. Online networks help people find things they need cheaply or second hand, and ‘de-cluttering’ is a widespread social phenomenon. GDP has declined in importance as a measure of social success, as other measures of social wellbeing and welfare have become more prominent. There is less concern for the environment, and some habitats have suffered. But ecosystem services have a far greater importance, and biodiversity has increased.

Uncontrolled demand

In this world, there is broad awareness of environmental issues – but for many consumers these issues are not heavily pressing. Economically, Britain is doing well by 2050, and an historic commitment to free trade and open markets has helped to keep overall GDP levels among the world’s highest.

However, there is also considerable inequality and polarisation in this world. The wealthiest 20 per cent of society enjoy a high standard of living – but increasingly cut themselves off from the rest of society. At the other end of the scale, there is also a growing underclass, which by 2050 represents around 20 per cent of the population, unable to sufficiently adapt to the changing demands of the globalised labour market. This significant minority includes the British-born poor, many climate change refugees and second generation immigrants. Meanwhile, the middle class has also found economic life increasingly challenging, experiencing stagnant wage growth and feeling economically and materially worse off than previous generations. The picture of national prosperity therefore masks significant disparities.

Service provision (including provision of water) in this world is dominated in many cases by private companies, leading to heavy disparities in the quality and reliability of provision, depending on income levels.

Water exploitation index for 2050

We have forecast how the water exploitation index shown in Figure 1.1 on page 11 could change by the 2050s under each of the future scenarios, allowing for the impact of climate change on resource availability and the future demands under each scenario. The output of this work is presented below, and clearly shows how in most areas, pressure on water resources is predicted to increase.


2.5%

10.4%

25.9%2.4%

9.7%

22.7%

3.3%

12.3%

26.5%3.6%

14.4%

35.9%


Local resilience

Innovation

Uncontrolled demand

0 – 5%

5 – 10%

10 – 20%

20% – 45%

Appendix 3: Assumptions in per capita consumption modelling (Figure 4.1, page 51)

1. Uses base year micro-components from draft water resources management plans. Forecast based on Market Transformation Programme reference scenario (current policy commitments).

2. Uses base year micro-components from draft water resources management plans. Forecast based on Market Transformation Programme policy scenario (ambitious but feasible policy measures to transform markets to more efficient devices).

3. Includes assumptions for efficient outdoor water use:

• lower volume of water used to wash cars (more buckets instead of hoses);

• lower volume of water used to water gardens (more use of rainwater butts and when a hose has to be used it has a trigger instead of leaving on a sprinkler);

• less use and volume of ‘other water using products’ such as paddling pools in response to water saving messages.

4. As reported in draft water resources management plans.

5. Assumes all other areas achieve metering rates as reported in draft water resources management plans.

6. Assumes all other areas achieve at least 80 per cent metering by 2030.


Endnotes and references

1. The consultation document and the summary of consultation responses can be found athttp://www.environment-agency.gov.uk/wrs

2. Based on European Environment Agency data, and our own data

3. European Environment Agency: http://www.eea.europa.eu/highlights/sustainable-water-management-better-information-for-better-choices

4. UK Water Industry Research Limited. Effect of climate change on river flows and groundwater recharge, a practical methodology

5. Using the medium-high UKCIP02 scenario

6. Permo-triassic sandstone. Analysis using the West Midlands Worfe groundwater model

7. Analysis using the Test-Itchen groundwater model

8. Medium-high emissions scenarios

9. Downing, T.E, Butterfield, R.E., Edmonds, B., Knox,J.W., Moss, S., Piper, B.S. and Weatherhead, E.K.(and the CCDeW project team) (2003). Climate Change and the Demand for Water, Research Report, Stockholm Environment Institute Oxford Office, Oxford

10. Berry, P.M., Jones, A.P., Nicholls, R.J. and Vos, C.C. (eds.) 2007. Assessment of the vulnerability of terrestrial and coastal habitats and species in Europe to climate change, Annex 2 of Planning for biodiversity in a changing climate – BRANCH project Final Report, Natural England, UK. http://www.branchproject.org/reports/Annex2_1.pdf

11. ‘MONARCH – Modelling Natural Resource Responses to Climate Change – a synthesis for biodiversity conservation’, Consortium of Organisations, published through UKCIP, 2007

12. http://www.sustainable-development.gov.uk/what/principles.htm

13. CLG (2007) Homes for the Future. More Affordable,More Sustainable

14. National Housing Strategy for Wales, 2006

15. ‘Meeting the Housing Requirements of an Aspiring and Growing Nation: Taking The Medium And Long-Term View.’ National Housing And Planning Advice Unit,June 2008

16. Environment Agency (2006) Environment Agency Scenarios 2030 – Science Summary SC050002. Environment Agency: Bristol

17. Demand for water in the 2050s, Environment Agency 2008

18. High emissions scenario

19. Long term average, 1961-90

20. Based on UKCIP02 data and produced by JW Knox andJA Rodriguez-Diaz (Cranfield University, 2007)

21. ‘UK Water Footprint’ – WWF, 2008

22. Hidden Waters, Waterwise

23. Chapagain and Hoekstra 2004; Williams, Ayres, and Heller 2002, referenced in Hidden Waters, Waterwise


24. ‘Water Intensity of Transportation’, King and Webber, 2008

25. ‘Governance and Legislation in Water Resources Management – International Comparisons’, Aquaterra for Environment Agency, 2008

26. ‘Implications of changing groundwater quality for Water Resources and the UK water industry Phase III: Financial and WR impact’ UKWIR report, 2004

27. ‘Underground and under threat’ Environment Agency, 2006

28. ‘Adaptation strategies for climate change in the urban environment’ Centre for Urban and Regional Ecology, University of Manchester, 2006

29. ‘Water Resources in England and Wales: Current State and Future Pressures’, Environment Agency, 2008

30. The Stern Review of the Economics of Climate Change

31. Greenhouse gas emissions of water supply and demand management options, Environment Agency Science Report SC070010/SR (2008)

32. http://www.nature.com/climate/2008/0804/full/climate.2008.22.html

33. ‘One Wales – A progressive agenda for the government of Wales’, 2007

34. ‘Resource Use in the Environment Agency – the energy efficiency of pumping stations and their associated infrastructure’ Environment Agency Science Report – SC070017, 2008

35. ‘Securing a healthy natural environment: an action plan for embedding and ecosystems approach’ Defra, 2008

36. Securing a healthy natural environment: An action plan for embedding an ecosystems approach.http://www.defra.gov.uk/wildlife-countryside/natres/eco-actionp.htm

37. ‘Preparing for the Impacts of Climate Change on Freshwater Ecosystems (PRINCE)’, Environment Agency Science Report, May 2007

38. Making space for water, Defra http://www.defra.gov.uk/environ/fcd/policy/strategy.htm

39. ‘Future Water’ Defra, 2008

40. An ‘unconstrained’ abstraction is where there are no abstraction licence conditions that require abstraction to cease (or reduce) when flows or levels are low. Some of the early licences granted in the 1960s reflecting previous rights fall into this category

41. ‘Thinking about an irrigation reservoir: A guide to planning, constructing and commissioning a water storage reservoir’, Environment Agency and Cranfield University, 2008

42. ‘2007 Summer Floods, Gloucester’s vital service under threat’ Environment Agencyhttp://www.environment-agency.gov.uk/commondata/acrobat/infrastructurestudy_1917458.pdf

43. ‘Learning lessons from the 2007 floods’, Sir Michael Pitt, 2008

44. ‘Conserving biodiversity in a changing climate: guidance on building capacity to adapt’, Defra, Natural England, Countryside Council for Wales et al. 2007

45. http://www.wetlandvision.org.uk/

46. Nature’s Capital; Investing in the Nation’s Natural Assets, National Trust, 2008

47. South Africa National Water Act 1998.http://www.dwaf.gov.za/Projects/WARMS/

48. http://new.wales.gov.uk/topics/environmentcountryside/consmanagement/csfarming/?lang=en



49. City of Aalborg

50. ‘Woodland actions for biodiversity and their role in water management’ Woodland Trust, 2008

51. ‘Study of the potential impacts on water resources of proposed afforestation’. Calder et al, 2002 for Defra

52. ‘Water for People and the Environment: Summary of consultation responses’, Environment Agency,January 2008

53. ‘Waterwise on the Farm’ LEAF, Environment Agency,NFU and Defra.http://www.environment-agency.gov.uk/subjects/waterres/286587/286911/?version=1&lang=_e

54. Based on water company data contained in draft water company water resources management plans, 2008

55. Critical review of relevant research concerning the effects of charging and collection methods on water demand, different customer groups and debt. UKWIR report05/CU/02/1

56. Organisation for Economic Co-operation and Development (OECD)

57. The Walker Review

58. The costs & benefits of moving to full water metering. Science Report – SC070016/SR1 (WP2). Environment. Agency 2008. http://publications.environment-agency.gov.uk/pdf/SCHO0508BOBN-e-e.pdf

59. Average incremental social costs other options are taken from Water efficiency in the South East of England: retrofitting existing homes. Environment Agency report, 2007

60. ‘Future Water’, Defra, 2008

61. Compulsory metering combined with retrofitting water efficiency can offset half of the demand expected from planned development in the South East of England. ‘Water efficiency in the South East – retrofitting existing housing’, 2007 Environment Agency

62. Deliberative research into consumer views on fair charging for the Consumer Council for Water,Corr Wilbourn R&D, 2007

63. An OECD study found that water charging in England has a greater impact on the poor as a proportion of their income than in any other country examined except Mexico (Improving Water Management: Recent OECD Experience, OECD, 2003)

64. ‘The Future of the UK Water Sector’, All Party Parliamentary Water Group, 2008

65. Planning Policy Statement on Climate Change –a supplement to PPS 1

66. ‘Sustainable Water Management: Eco-towns Water Cycle Worksheet Advice to Promoters and Planners’, TCPA, Communities and Local Government, Environment Agency, March 2008

67. ‘Sustainable water management: eco-towns water cycle worksheet’, Environment Agency, Communities and Local Government, Town and Country Planning Association, 2008

68. ‘Hidden Infrastructure – the pressures on environmental infrastructure’, Environment Agency, 2007

69. http://www.sd-commission.org.uk/publications/downloads/Sustainable%20Buildings%20R3.pdf

70. Water neutrality is where there is no additional water requirement following new development. ‘Towards Water Neutrality in the Thames Gateway: Summary Report’. Science report: SC060100/SR3. Environment Agency, CLG and Defra, 2007

71. ‘Leakage target setting – a frontier approach’ WRc for the Environment Agency and Ofwat, 2008

72. Ofwat: security of supply 2007/8

73. http://www.environment-agency.gov.uk/subjects/waterres/287169/286587/511050/



74. “Water for the Future: Managing water resources in the South East of England – A discussion document”, Environment Agency, 2007

75. “Working together to protect water rights”. Cranfield University, EEDA, UKIA, NFU and the Environment Agency

76. “Alternative ways to allocate water”, Environment Agency, 2008

77. Ofwat’s revenue corrected price cap approach for PR09 will partly remove the short term disincentive for demand management but the incentive to sell more, not less, is still explicit within the reward mechanism of the current regulatory model

78. “Promoting demand management within the UK water sector”, London Economics International report for the Environment Agency, 2008

79. Ofwat. (2008). Future water efficiency targets:A consultation

80. Now the Carbon Emissions Reduction Target (CERT)

81. www.waterfootprint.org

82. “The Future of the UK Water Sector”, All Party Parliamentary Water Group, 2008

83. UK Innovation – The Race to the Top, October 2007

84. “Strategic Plan for Water-related Sport and Recreation in Wales.” University of Brighton for Welsh Assembly Government et.al., 2008

85. “Hampton Review, Reducing administrative burdens: effective inspection and enforcement”, Report to HM Treasury, 2005

86. http://new.wales.gov.uk/dpsp/40382121/wsp2008update/wsp2008updatee.pdf?lang=en

87. Environment Agency (2006) Environment Agency Scenarios 2030 – Science Summary SC050002. Environment Agency: Bristol

GEHO0309BPKX-E-P

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