thinking perspective is needed here. That which we can foresee the need for, we should provide for, with the cost-benefit analysis factoring all benefits into account. A rethink is needed on the continued use of ‘dumb’ meters.
Reform is in the air..... The Coalition Government has committed to publishing a Natural Environment White Paper by early 2011, and a Water White Paper later in 2011. Ofwat is consulting on options for introducing competition into the water industry of England and Wales, and retail competition has been up and running for over two years in Scotland. An external review of Ofwat is also underway. CIWEM, Waterwise, The Blueprint for Water coalition and others have already published their views as to what needs to be done to create a future-proofed platform for the delivery of water, wastewater and environmental services.
and for once, the route to take seems to be broadly agreed .... For all, the value of water lies at the heart of the matter. For Ofwat, revealing the value of water will open the door to effective competition, (water and licence) trading and innovation and thence to more sustainable investment and business decisions. For CIWEM, whose Value of Water campaign trail-blazed the route some years ago, greater awareness of the value of water is critical to changing attitudes to demand management and water re-use. For WWF, whose ‘Rivers on the Edge’ and ‘Itchen Initiative’ projects seek to find practicable ways to end damaging over-abstraction, it is about finding smarter ways to deal with scarcity. For me, it’s about recognising that to value every litre of water we use, we need to face the all-in marginal cost of each litre we take. As long as we can turn on the tap and pay nothing more for what we take, we can’t hope to manage resource scarcity effectively, or resources efficiently.
And for those who may be prepared to pay rather than reduce demand under scarcity .... Making customers face the full marginal cost of water they take is a necessary but not a sufficient condition for achieving reductions in demand and thence in abstraction reduction and environmental improvement. Some water users may be prepared to pay the high price of high usage under a marginal pricing regime. That may hold true even if the unit price for very high usage is set above the all-in marginal cost of its supply. But if the marginal price for very high water consumption was set above the marginal cost of its delivery, especially when and where water is scarce, those who might insist on using water regardless would at least be subsidising those who use water more wisely and sparingly. The implementation of an ‘unsocial’ tariff for profligate use of water under scarcity would seem appropriate, in the circumstances.
References 1. Defra, Future Water, 2008, p36, p91. 2.
As inspection of the Level of Service for the use of
restrictions on supply in water companies’ recent Water Resources Management Plans (2010) will confirm.
3. Environment Agency, Natural England & WWF-UK, 2009, Joint submission on the environmental issues of unsustainable abstraction,
http://www.assets.wwf.org.uk
4. Defra, XXX 5. That is, the non-use value of water left in the environment
6. Fenn and Wilby, 2010, Discussion Paper Number 4 of the Itchen Initiative, WWF-UK, at
http://www.wwf-uk.org.uk
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