Tuesday 16 August 2022

Would water trading between regions reduce future costs?

Water supplies are under pressure again due to the very dry weather. So here are some facts about water usage: how much we use at home compared to businesses and industry, how this is expected to change, and how the cost of trading water between regions compares with new supply.


Public water supply – 57% is for households

Using data from Discover Water, here are some statistics on the public water supply – i.e. drinking water supplied by water companies. 


Data mostly from Discover Water [1]. However they do not report directly on non-household supply so I have estimated this by subtracting leakage and household supply from the total. I calculated household use from the ONS population numbers and per capita consumption. 

Other water users are responsible for 70% of water use, or 7% depending on how you measure it

Some businesses take water directly from rivers and lakes or underground supplies – in particular power stations (except wind farms and solar farms) take water for cooling. Here is a chart from Discover Water showing that public water supply is only about 30% of water use.

Chart from Discover Water [1]

Contrast this with figures from the environment agency [2], implying that public water supply is about 93% of use.

 Every day:

    •  Water companies provide around 14,000 million litres of water for public water supply
    •  Other sectors, such as industry, power and farming use around 1,000 million litres of water – this varies across the seasons and regions

The 1,000 Ml/d figure excludes public water supply, hydropower and aquaculture. The abstraction volumes are adjusted for consumptiveness – this represents the proportion of water taken from the environment that is not put back close to where it is taken.

The difference is because when industry uses water it very often puts it back where it came from - albeit in the case of power stations a little warmer than it was because it has been used for cooling. (See also How much water to power stations use?

Households are responsible for around 25-30% of leakage

You may have noticed from the first chart that nationally 20% of water is lost to leaks. This is a lot, but fixing leaks is expensive and in the past water companies were required to minimise costs by balancing the cost of extra supply against the cost of fixing the leaks. This has now changed and they have stringent targets for reducing leakage – overall by 50% by 2050.

This is a challenge for the water companies, especially given that their leakage target includes leaks in our pipes, not just theirs. I do not have data for this nationally but using Cambridge Water statistics from 2016/2017 [3] 27% of leakage is in household pipes. Another 3% is from business customer pipes and 70% is the company’s own. Your water company is not responsible for fixing leaks on your property but they often will help with this.

Demand will increase by 24% by 2050 unless we take action to reduce water use

The Environment Agency report [2] predicts future needs if no action is taken to reduce consumption.

Currently water companies supply 14,000 Ml/d (million litres per day). The extra by 2050 would be another 3,400 – an increase of 24%. This comprises:

  • 1,150 Ml/d to increase our resilience to drought, for example by building more reservoirs and desalination plants.
  • 1,040 Ml/d for population increase
  • 720 Ml/d to fix current over-use that is damaging the environment in sensitive areas
  • 400 Ml/d to allow for climate change impacts on water availability.

Scenarios for reducing household consumption range from 12% to 24%

This table illustrates the scenarios under consideration for water saving. (Current household usage is about 145 litres/person/day.) 


High demandCentral demandLow demand
Per capita consumption litres/person/day127 (12% less)119 (18% less)110 (24% less)
Change in non-household consumption (overall)No changeNo change4% reduction
Leakage reduction30% less50% less50% less

If you are interested in what this target could mean for your household, try my water calculator

Having a water meter encourages us to use less water

Many of us have a water meter so we only pay for the water we use, rather than a fixed fee based on the value of our house. Metered customers use less than unmetered: 139 compared to 183 litres/person/day [1]. Paying for metered usage is a considerable incentive to avoid wasting water and ideally by 2050 all homes will use a meter. Switching is usually free and there are guarantees: at Cambridge Water you can switch back to fixed charge if you change your mind within two years.

Water from the tap is currently incredibly cheap

The typical annual bill is £419/year, about half is for supply and half for dealing with the sewage [1]. The cost of a litre of water is about 0.3p (including the sewerage).

Hosepipe bans save just 2%

Hosepipe bans have just been announced by a number of water companies, because of the current shortage of water. Hosepipes and sprinklers can use a lot of water, but if you are on a meter you are probably already careful with how you use them. Perhaps this is why the Environment Agency models hosepipe bans as only saving 2% of consumption. 

Trading water across the country could reduce additional costs by 9%

Water companies already trade water between each other to some extent and share resources such as major rivers. Each region now has a water planning body which is an alliance of water companies and stakeholders (here in the East of England it is Water Resources East). Also there is a national planning organisation called RAPID ‘Regulators’ Alliance for Progressing Infrastructure Development’ and they commissioned a study (from the University of Manchester) on potential benefits of more water trading across the country [4].

The findings are complicated. They produced a model of water supply in England and Wales and used it to cost many different water portfolios, involving varying combinations of supply options and trading options - it shows that more water trading would be helpful, possibly reducing additional costs by 9%. However, the cost of transporting water has been estimated largely based on the distance involved and the change in elevation between end points; detailed costings are not available at this stage so the results are only indicative for now. This chart shows the cheapest combinations for national water supply under the three water savings scenarios. Costs include both capital costs and operating costs, spread over the lifetime of the asset (80 years for transfer pipes).

Figure 3.5 from [4]: Cost efficient portfolios for the three National Framework scenarios investigated indicating the least-cost portfolio within the National Framework Central scenario. Resilience 1:500 means the risk that companies would have to resort to standpipes to handle drought would be 1 in 500 in any year. The sustainability reductions are measures to protect the environment as mentioned above. The curves show portfolios on the pareto boundary minimising both supply and transfer cost.

The total cost of each scenario is the sum of the transfer cost (transporting water) and the supply cost. For example, on the orange, (central scenario) lines, the least cost option indicated is £145m for transfers plus £218m for supply measures: total £363m. But any of the orange points between about £100m and £200m for transfers have very similar cost. This means that for quite a lot of potential schemes the cost of bulk transfers is the same as the cost of equivalent extra supply.

This chart from the same report shows the size and direction of transfers in the least cost portfolio. Most of the transfers are over quite short distances, and concentrated in the south and east where the supply-demand balance is already very tight.

 

Figure 3.6 from [4] showing bulk transfers and supply side measures in the least cost portfolio

 

Summary

Households are responsible for about half of all water use in the country, ignoring industrial uses where the water is returned to the environment close to where it was taken (such as power stations).

Our water use is already over-burdening the environment in some places. A growing population, plus climate change means we need more water supply capacity – such as new reservoirs and desalination plants. With no investment in efficiency we would need to increase water supply by 24% by 2050. However, water companies have targets to reduce leakage by 50% by 2050, and water users are also expected to reduce how much they use. Home water use per person needs to decrease between 12% and 24% by 2050.

Water trading between regions could help, possibly reducing overall additional costs by 9% (based on rough projected costings). However, in many cases the cost of water trading is similar to the cost of new supply options.

[1] Discover Water

[2] Meeting our future water needs: a national framework for water resources – accessible summary (www.gov.uk) March 2020

[3] WRMP 2019 Dry Year Annual Average (DYAA) tables. (Cambridge Water) 2018

[4] Slaughter, A., Harou, J.J., Tomlinson, J., Matrosov, E., Wilson, J., Dennis, J., Read, M., Dunford, T., Stokes, M., O. Walker, A. Widmaier, 2021, “A water supply-demand model for England and Wales”, RAPID commissioned report. 



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