I am happy to present fellow blogger and author, David Zetland, of the Aguanomics blog and The End of Abundance: economic solutions to water scarcity. This week David agreed to lend his expertise to the community on the topics of water pricing, reducing Non-Revenue Water (NRW) and incentives to induce change. I hope you enjoy, and please check out his blog for more great insights.
Here we go…
Around the world, urban water suppliers use similar technology: the pipes, pumps and valves that move water from central treatment plants to household taps. These pressurized systems are not that much different from the systems that Romans used to supply water to their fountains and baths, with one exception: the Romans left their water running all day and all night. Few of us leave our taps open these days, because water is increasingly scarce — and we don’t want to pay a huge bill for massive volumes of water flowing through our household meter.
But that doesn’t mean that taps aren’t open somewhere else in the system that serves our houses. Leaking pipes drain our water supplies all day and all night. They reduce the water we have for emergency situations, and they increase the bills for everyone who has to pay for water. Water prices are set to cover the total cost of treating and distributing water, even if half that water is lost to leaks.
The industry uses the term “non revenue water” (NRW) to refer to water that’s lost, stolen or not paid for. System losses are usually the largest component of NRW that ranges from 5 percent in a “tight” system to 60 percent or more in decaying systems with poor management of revenue and water flows.
Most water managers know their NRW statistics. Some of them act to reduce NRW — by plugging leaks, metering all users and collecting payment — because they want to run an efficient operation, but others don’t care: why work harder if they can just push more water through the system? That response is not very satisfactory to customers who have to bear an unfair share of the system costs; it’s even less popular to people who worry about the impact of greater water withdrawals from the environment.
Indifferent managers usually pay more attention to NRW when their supplies are limited or when water is expensive. Scarce supplies make it profitable to spend money plugging leaks, to avoid building a desalination plant, for example. Higher prices create three impacts. First, paying consumers use even less water, increasing the impact of NRW (30 units of NRW in total sales of 100 units gets more important if paying consumers lower their use from 70 to 50 units). Second, higher prices mean it’s worth spending more to reduce NRW. Third, higher prices mean paying customers put more pressure on managers to share system costs more widely.
There are many ways to reduce NRW. Some of them require better measurement tools; others require changes in operating techniques. It’s interesting that expensive water gives both consumers and managers the incentive to change their technologies and techniques, as each group seeks a way to reduce, respectively, the cost of their household water and system inefficiencies.
Bottom Line: The end of abundant water means that cannot just run the taps like Romans. We need to close the taps, plug the leaks and make sure that everyone pays for his water use.