Although water companies appear keen to utilise nature-based solutions over traditional grey infrastructure, the level of implementation to date has been lacklustre.
Nature-based solutions include catchment management, where water companies work with landowners and farmers to reduce the levels of agricultural chemicals and nutrient run-off from entering the water system, and treatment solutions, such as integrated constructed wetlands and reed beds. Such solutions are acknowledged to result in broader benefits than traditional grey infrastructure can provide.
Although catchment management is widely utilised and both government and Ofwat have been vocal in their support of nature-based solutions, treatment options particularly are not being implemented.
And although Ofwat has included specific allowances and rewards for nature-based solutions, as well as introducing a new biodiversity performance commitment to its framework for PR24, the rate of uptake is not expected to noticeably change over the AMP8 period.
One regulatory director indicated to Utility Week before the business plans were published that the anticipated uptake was unlikely to be above 5% in the upcoming price control period.
To help drive momentum United Utilities, in partnership with more than 20 other bodies, launched an innovation project worth £8.9 million in 2023 to identify the barriers to nature-based solutions. Unusually, Ofwat is directly involved in the project, signalling to the industry that it intends to ensure the industry transitions away from traditional grey infrastructure, and it has its eyes set on PR29. Amina Aboobakar, director of strategic development and stewardship at the Rivers Trust and United Utilities, says the regulator has brought forward the deadline for the project’s outcomes to 2026 to allow it to directly feed into the next price control framework.
Here Utility Week looks at the challenges that have been identified by the project and others in the industry.
Breaking down silos
Water companies will need to start integrating themselves into the water system within which they operate. Nature first strategy and implementation manager at Yorkshire Water, Sarah Mason, says water companies can’t keep operating separately and the lines between organisations need to become “blurred”, as this is where the real opportunities lie for utilising solutions that deliver more for customers.
One example of this is sustainable drainage being embedded into new cycle lanes in Greater Manchester as a result of United Utilities working with the combined authority and the Environment Agency to create an integrated water management plan.
United Utilities’ strategic catchment lead, Sarah Jenner, told the industry and regulators committee in July last year that such opportunities were “routinely missed”.
“If we leave nature-based solutions to be driven solely by water companies, we will miss a lot of opportunities. That integrational alignment is vital,” she said.
The upshot of this is that water companies will need to lose some control. “We’ve need to be working within the catchment, at systems level, and that’s going to get messy. There’s going to be lots of people and we are going to have to lose control a little bit – we won’t be able to control everything,” says Mason.
In particularly urban settings, Jenner believes that a body within a specific geography is needed to bring different parties together. The devolution deal for Greater Manchester, which sets out a role for the combined authority as a test bed for integrated water management planning, is acting as a pilot.
However, Ruth Barden, director of environmental solutions at Wessex Water, speaking to the same committee, said that the flexibility for water companies to work with other organisations to co-invest in projects is hampered by the need to comply with the price control and the Environment Agency’s environmental performance assessment.
Jenner said the ability to co-invest with other parties is often critical to making the business case for a project, such as natural flood risk management in the Wyre catchment in Lancashire. United Utilities has worked with organisations such as the Rivers Trust, Environment Agency and insurers like Flood Fe to make the business case stack up, with a community interest company set up to deliver the investment.
Jenner added that the risk of receiving financial penalties for not delivering projects on time also means the ambition around blue-green infrastructure is being impeded, because water companies have to lock in the design of any blue-green infrastructure early in order to design any grey infrastructure which might also be needed.
The Environment Agency and Ofwat have given water companies the opportunity to propose an advanced Water Industry National Environment Programme (WINEP) in which they will look to create more flexibility. “That is a real focus area. There are the beginnings of some interesting movements in that field, but it needs to be seen through in relation to creating that agility,” said Jenner.