Chief executive of the National Infrastructure Commission James Heath has warned of a brewing water infrastructure crisis.
Heath has warned that not properly balancing investment needs for water and wastewater infrastructure with the rising pressures on household finances could create an infrastructure crisis.
The chief executive highlighted the need for investment levels to be around two to three times greater at the next asset management period than the current one. However at a time when pubic trust in the sector is low and 1.5 million households are already in water poverty, increasing water bills could prove difficult.
Heath warned that as bills necessarily rise, shareholder returns should be limited “to reflect the true level of risk” of investing in the sector.
He praised Ofwat’s push for companies to link dividends with environmental performance but stressed the need to get the balance right between affordability and investment. “If we get this wrong, the cost of living crisis may become an infrastructure crisis in water,” Heath warned.
He summarised the most pressing issues for the sector as “too much, too little, and too dirty water” that each require complex, inter-linked solutions that themselves need investment.
“Short-term solutions and tinkering at the edges won’t solve the fundamental challenges facing the sector,” Heath said and stressed the need for new approaches. “The water sector will need to do different things, not just do the same things a bit better or a bit cheaper.”
The NIC has called for increased uses of nature-based solutions and blue-green infrastructure to remedy environmental issues without causing unintended consequences elsewhere in the networks.
“It would surely be a missed opportunity if we were to tackle discharges from storm overflows by just pouring more concrete underground and investing in end-of-pipe solutions rather than deciding to treat rainwater differently,” Heath said.
Heath said draft Drainage and wastewater management plans (DWMPs) published last year were not the “pivot to a widespread use of catchment and nature based solutions”, which had been hoped for, nor are they properly integrated with local authority planning to manage surface water.
Directing investment to long-term pipelines of work will be essential, Heath said, to build the supply chains and skills capacity that are needed. Novel approaches may also take longer to implement than grey solutions, such as plans by Thames Water to spongify London to reduce surface water flooding.
Considering resource deficits, Heath said the current system of treating and pumping drinking standard water instead of harvesting rainwater or reuse systems was “an extravagant way to treat a finite natural resource”.
He encouraged a pricing strategy that more closely reflects consumption and places greater efficiency requirements on buildings and appliances.
“We have made some progress with metering, there have been steps forward in other areas, but we’re not going far enough, fast enough to reduce demand.”
As well as metering, Heath urged the wider spread adoption of smart devices for monitoring supply and wastewater networks.
He added: “Why are smart solutions not more widely deployed across the sector? Is it culture, leadership and skills that are getting in the way? Is there a problem with incentives and regulation? We need to identify and remove the barriers.”