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Sustainable practices in upstream catchments
       - an economic regulator’s view

                9th May, 2012


                                Martin Furness, Ofwat
           Water today, water tomorrow
The subject matter

Why is it catching on?

The evidence and delivery gaps

Next Price review




    Water today, water tomorrow
AMP5 Schemes




Water today, water tomorrow
The sums

The National Audit Office - the cumulative cost of
water pollution to be between £700 million and
£1.3 billion a year in England and Wales

 Water UK - potential for £26 billion for priority
substances in the WFD

Ofwat supported £5.3 billion for wastewater and
environmental schemes in AMP5

£460 million to deal with diffuse pollution at
water treatment works in AMP 5

Ofwat supported £52 million for catchment
management capex ( just over half for moorland
restoration)


      Water today, water tomorrow
Why is it catching on?

Low cost sustainable solutions for water companies

Pollution controls at source

Polluter pays-Beneficiary pays-Provider gets

Climate change-water quality/quantity

WFD-no deterioration and DWPAs

Sustainable abstraction


Moorland erosion




       Water today, water tomorrow
The evidence and delivery gaps

                                                                         Prioritisation, co-ordination
                                                                                 and alignment


                  Pilot
              catchments
                      Pilot
                 catchments


                                        CFE                                                                   Uncertainty
Defra                                    CFE
          EA
                                                                                                               climate change

                   Water
                                                                                                                  timescales
                 companies
                      Water
                    companies


                                       Rivers
                                       Trusts
                                          Rivers
    NE                                    Trusts
         NE                                                                                 Emerging benefits ?

                              consultants
                                 consultants
        RSPB
          RSPB                                                                                           Unfairly applied
                                                                                                         and costly mitigation
                                         Pollutant pathways                                              measures ?
                                         Modelling
              Research                   Land practices
                                         Biodiversity




                                                              Water today, water tomorrow
The evidence and delivery gaps




                               Water management portal?


                                                                  scale up?
                            pollution sources and pathways
Research
Company initiatives         emerging benefits/local successes
Partnerships                good practice
International lessons




                                                     Customers?
                               stakeholders



                             Water today, water tomorrow
The evidence and delivery gaps




   baseline of good practice/stewardship

   key stakeholder priorities with timely deliveries

   widen partnership successes

   examples of sector accountability

   balance of regulation/voluntary/incentives




     Water today, water tomorrow
Moorland restoration




rate and impact of colour attenuation

reduced opex, deferred capex- quantify

projections-pessimistic?

reduced GHG emissions

long term voluntary agreements/ short term compensation

multi benefits and customer value




    Water today, water tomorrow
Next Price Review



             Ofwat is
             engaging and
             listening




  AMP 5 progress
  partnership funding
  economic justification (framework)
  customer support
  outcome, risk based thinking




Water today, water tomorrow
Quantifiable, sustainable, cost beneficial,
emerging benefits, reflective of a changing climate,
that are community owned




 Water today, water tomorrow

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Martin Furness

  • 1. Sustainable practices in upstream catchments - an economic regulator’s view 9th May, 2012 Martin Furness, Ofwat Water today, water tomorrow
  • 2. The subject matter Why is it catching on? The evidence and delivery gaps Next Price review Water today, water tomorrow
  • 3. AMP5 Schemes Water today, water tomorrow
  • 4. The sums The National Audit Office - the cumulative cost of water pollution to be between £700 million and £1.3 billion a year in England and Wales Water UK - potential for £26 billion for priority substances in the WFD Ofwat supported £5.3 billion for wastewater and environmental schemes in AMP5 £460 million to deal with diffuse pollution at water treatment works in AMP 5 Ofwat supported £52 million for catchment management capex ( just over half for moorland restoration) Water today, water tomorrow
  • 5. Why is it catching on? Low cost sustainable solutions for water companies Pollution controls at source Polluter pays-Beneficiary pays-Provider gets Climate change-water quality/quantity WFD-no deterioration and DWPAs Sustainable abstraction Moorland erosion Water today, water tomorrow
  • 6. The evidence and delivery gaps Prioritisation, co-ordination and alignment Pilot catchments Pilot catchments CFE Uncertainty Defra CFE EA climate change Water timescales companies Water companies Rivers Trusts Rivers NE Trusts NE Emerging benefits ? consultants consultants RSPB RSPB Unfairly applied and costly mitigation Pollutant pathways measures ? Modelling Research Land practices Biodiversity Water today, water tomorrow
  • 7. The evidence and delivery gaps Water management portal? scale up? pollution sources and pathways Research Company initiatives emerging benefits/local successes Partnerships good practice International lessons Customers? stakeholders Water today, water tomorrow
  • 8. The evidence and delivery gaps baseline of good practice/stewardship key stakeholder priorities with timely deliveries widen partnership successes examples of sector accountability balance of regulation/voluntary/incentives Water today, water tomorrow
  • 9. Moorland restoration rate and impact of colour attenuation reduced opex, deferred capex- quantify projections-pessimistic? reduced GHG emissions long term voluntary agreements/ short term compensation multi benefits and customer value Water today, water tomorrow
  • 10. Next Price Review Ofwat is engaging and listening AMP 5 progress partnership funding economic justification (framework) customer support outcome, risk based thinking Water today, water tomorrow
  • 11. Quantifiable, sustainable, cost beneficial, emerging benefits, reflective of a changing climate, that are community owned Water today, water tomorrow