The Global View

Despite successes, British water industry is ‘unsustainable’

Britain’s water industry has seen many improvements in the 20-plus years since it was privatised, but it’s now at a critical moment … because continuing with business as usual has become unsustainable.

While drinking water standards and services have improved, the industry’s debt has ballooned from £0 to £33 billion, which amounts to a burden of around £1,500 per customer. Just as worrisome is the sector’s carbon footprint: since privatisation, the water industry’s energy usage has more than doubled — rising by 113 per cent — as more energy-intensive treatment standards have been put in place.

In the face of continued increases in operating costs, as well as growing water stresses (including more flooding) driven by climate change, the sector isn’t likely to be able to keep going on its current path.

“It’s not clear that such a continued high level of investment is sustainable in terms of whether it can be financed, whether customers are willing to pay for it and the associated detrimental impact on carbon emissions,” concludes a new report from Severn Trent Water, part of the utility and environmental services company Severn Trent plc. “We are not talking about revolution, but if we are to deliver the best possible outcomes for our customers, the environment and investors in the future, the regulatory framework must evolve significantly and quickly.”

What that means, the report’s authors conclude, is that the government must change its regulations for the water industry to better account for impacts on customers’ bills and carbon emissions. Water companies also need to start taking a more innovative approach to the strategies and technologies they use, the report adds.

If such changes aren’t made soon, the water industry is on course to require another £27 billion in debt — a doubtful proposition, considering the current economic climate — by 2030. Business as usual would also likely mean a 27 per cent increase in customers’ water bills over the next 20 years, and a rise in annual carbon emissions from more than 4 million tonnes of carbon dioxide equivalent to well over 4.5 million tonnes.

“A limited window of opportunity to implement these changes exists now,” the report notes.