Water 2050:

A White Paper
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Executive Summary Executive Summary

Water is essential for life, nature, jobs, and development. But our management of it needs to change if we
1 Introduction
are to deliver more for the environment and meet the threat of climate change.

Our customers expect us to deliver more environmental impact and In response to this threat, we have developed this White Paper to
2 Challenges, opportunities be ready to deal with the consequences of climate change. As water set out our positive ambition for the future of the water sector in
and gaps between now companies, we have a clear purpose: to protect public health, improve England and outline urgent priority areas for change that we need
and 2050: our priorities the environment, unlock economic growth, and act as a responsible to work on in collaboration with others. If we fail to act now, current
for change leader at the heart of England’s regions, today and in the future. It is our and future generations are at risk of paying more than they need to for
responsibility to ensure that we can deliver our purpose both today and services that fail to match their expectations, and could be faced with
in the future. water acting as a constraint rather than an enabler of future growth and
3 Our Vision for 2050 productivity.
While the latest science1 indicates that climate change will lead to
increased frequency of droughts and other extreme weather events, To rise to the challenge, our Vision is that: By 2050, we will be globally
our customers will expect us to continue to improve our services. recognised as an environmental leader, stewarding the improvement
4 Why and what we need They also expect us to play our part in reducing carbon emissions, and of rivers and seas, acting on the climate emergency and protecting
to change: Delivering water quality impacts, and in reversing the decline in biodiversity that customers’ long-term interests. To achieve our Vision, we will need
more environmental is threatening the prosperity of current and future generations.2 These to get the fundamentals right while continuing to transform our role in
impact more efficiently challenges are amplified by the expected increase in the UK population society (see below). Achieving our sector Vision is also a vehicle for the
and an ageing asset base, designed primarily to fulfil our duties towards Government’s own ambitions in a number of areas including the target
public health rather than improving wider ecosystems. We are therefore for Net Zero carbon emissions, its 25 Year Environment Plan (25YEP) and
5 Why and what we need facing an unprecedented threat to our ability to deliver our purpose. it will support the need to ensure no communities are left behind.
to change: Protecting
1. IPCC, Climate Change 2021 – The Physical Science Basics
long-term customer 2. The Economics of Biodiversity: The Dasgupta Review Headline Messages, 2021
interests through the
right investments at
the right time
Looking forward

6 The way forward: • Asset owners and operators • Water and sewerage • Environmental • Leaders in managing the
working together to providers service providers local environment
• Cost efficiency focus
deliver change • Cost benefit and • Service improvement focus • Maximising long-term
• Customers as passive
compliance focus value to society
recipients • Customers as consumers
• Customers as bill payers • Accountable to customers
• Partnership and
and communities as
catchment approaches
citizens and partners
• Conveners of stakeholders
across water catchments

2 | Water 2050 — A White Paper Looking back

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

Water companies’ regional focus means that we are experts in our We therefore need to develop and agree clear long-term resilience
environment, well-connected with other local stakeholders and have standards, a common risk framework and forward-looking
3 Our Vision for 2050
a funding mechanism that can enable private investment to deliver the approaches to assessing investment needs that can ultimately lead
improvements required across those regions. To achieve our Vision to a single adaptive plan for each water company. This will ensure
however, and deliver our purpose now and in the future, we have that current and future generations of customers receive the service
4 Why and what we need identified two priority areas for urgent change: levels they expect with the least bill impact.
to change: Delivering
more environmental 1. Delivering more environmental impact more efficiently — we The changes proposed in this White Paper will allow investments to
impact more efficiently need to ensure that every £1 of investment delivers maximum achieve far more. The changes will therefore support the long-term
environmental impact. While the current approach to environmental affordability of water bills. Given the size of the future challenge, we also
regulation delivered significant benefits in the past, it is not fit for need to consider the way we charge for water services to ensure that
purpose for the future as it is fragmented, prescriptive, output- they are affordable and acceptable today and in the future. While our
5 Why and what we need
focused and not systems-based. It ultimately leads to inefficient focus is on the water sector in England, we expect the areas for change
to change: Protecting
investments with less benefit for nature. We urgently need to that we have identified to have some relevance for other jurisdictions as
long-term customer
implement Outcome-Based Environmental Regulation (OBER) as this we are facing common challenges.
interests through the
will unlock innovation, enabling us to deliver more environmental
right investments at This White Paper sets out our positive ambition for the future of the water
improvements for less bill impact.
the right time sector in England and outlines urgent priority areas for change. However
2. Protecting long-term customer interests through the right no individual organisation can achieve this alone and we will need to
investments at the right time — as asset lives in the water sector work collaboratively with many stakeholders, both within and beyond
6 The way forward: span multiple generations, we need to make decisions today — in the water sector, recognising our shared responsibility to achieve
working together to the context of much greater uncertainty – that affect generations the outcomes customers and wider society require today and in the
deliver change in the future. Our current ways of planning as a sector lack a future. To achieve these changes for the benefit of current and future
thorough, joint and consistent understanding of best value and risk. generations of customers we need to act now. Failing to act now risks
They are also prone to a focus on backward-looking assessments hitting tipping-points from which it will be much more costly for society
against a future that is different and uncertain and where society’s to return.
expectations are changing. This means that we cannot be confident
that the right investment decisions are being made at the right time.

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

1 Introduction
4 Why and what we need
to change: Delivering
more environmental
impact more efficiently

5 Why and what we need

to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

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Executive Summary Who we are and why we have Our Purpose

developed this White Paper

1 Introduction
Water UK has developed this White Paper on behalf of
Challenges: Opportunities:
16 water companies that operate in England.
2 Challenges, opportunities What are the key What are the key
and gaps between now challenges we need opportunities that
Collectively, we serve over 55 million people and over 2.5 million businesses in England, to address over could help us in
and 2050: our priorities supporting around 180,000 jobs across the whole supply chain, at a cost of around £1 per
for change the next 30 years? the next 30 years?
customer per day.

We have developed this White Paper because our customers and communities face enormous
3 Our Vision for 2050 challenges over the next 30 years, with the climate and biodiversity emergency the most profound.
It threatens every aspect of the water sector. Which challenges will have the
biggest impact on our ability to
deliver our purpose and outcomes?
4 Why and what we need
to change: Delivering
more environmental This White Paper describes:
impact more efficiently
• Future challenges, opportunities and gaps and the priority areas for change Priority areas for change
(Section 2)

5 Why and what we need • Our Vision for 2050 (Section 3)

to change: Protecting Our vision
long-term customer • Why and what we need to change: Delivering more environmental impact Why and how we need to
interests through the more efficiently (Section 4) change to achieve our Vision and
right investments at continue to deliver our purpose
• Why and what we need to change: Protecting long-term customer interests
the right time
through the right investments at the right time (Section 5)

• How we will make the change happen (Section 6)

6 The way forward:
working together to
deliver change
While this White Paper has been developed on behalf of water companies that operate in
England, we expect the areas for change that we have identified to have some relevance for
other jurisdictions as we are facing common challenges.

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Executive Summary Our White Paper is built on a clear purpose

We have a clear purpose that is grounded in continuous
1 Introduction community and stakeholder engagement.

We do more than provide high quality, affordable and efficient water and
2 Challenges, opportunities wastewater to customers:
and gaps between now
and 2050: our priorities Our purpose is to protect public health, improve the environment,
for change unlock environmental growth, and act as a responsible leader at the
heart of England’s regions, today and in the future.

3 Our Vision for 2050 Our purpose is underpinned

by the following outcomes

4 Why and what we need

Clean, reliable
to change: Delivering and resilient
more environmental drinking water
impact more efficiently

Excellent
Reliable customer
5 Why and what we need and resilient experience
to change: Protecting wastewater
long-term customer services
interests through the
right investments at
the right time Outcomes we deliver
for our customers
and communities
Affordable
services
6 The way forward:
Improving the accessible
working together to for all
environment
deliver change

Delivering
value for the
wider society
and economy

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

2 Challenges, opportunities and
4 Why and what we need
gaps between now and 2050:
to change: Delivering
more environmental
impact more efficiently
our priorities for change
5 Why and what we need
to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

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Executive Summary We face enormous challenges to Consumer, community,

and societal expectations

our purpose over the next 30 years are increasing…

1 Introduction
We have identified the 5 key challenges to our purpose
between now and 2050.
2 Challenges, opportunities …while we need …particularly on
and gaps between now This is a based on a wider range of inputs, including experts from every water company in to adapt to the water quality,
and 2050: our priorities England and responses from stakeholders to a discussion paper we issued in March 2021, which consequences of and the need
for change was a public consultation on building an ambitious, long-term Vision for the water sector in the climate change to address the
England.1 emergency… biodiversity crisis

3 Our Vision for 2050 …and deliver

net zero.

4 Why and what we need

to change: Delivering
more environmental
“
The most profound
and urgent risk facing
“
The biggest existential
threats ever to face
The challenge is amplified
impact more efficiently the water sector, and mankind: climate change, by population growth…
society at large, is the water as a scarce resource,
5 Why and what we need
climate emergency.” and biodiversity”
to change: Protecting …and an ageing legacy asset
long-term customer stock and skills base
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change
“
The public increasingly expects that environmental quality will
always be good enough to support the activities they want to
do such a river swimming, fishing, river walking, as well as to
support wildlife. If it isn’t, they expect something to be done”

8 | Water 2050 — A White Paper 1. Developing a 2050 Vision for the Water Sector, www.water.org.uk/2050-vision-for-the-water-sector/
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Executive Summary We need to meet increasing Wider societal trends point towards consumers that
are more aware, ethical and connected and less patient
consumer, community
Consumer expectations are rising and priorities are changing, driven by
and societal expectations
1 Introduction
advances in technology, standards and societal change:

2 Challenges, opportunities Water customers are expecting us to improve the

and gaps between now environment in various ways More aware and ethical
and 2050: our priorities
• Consumers are increasingly holding companies to account on their
for change
environmental performance, including their carbon footprint, use of
“While our current bill payers place the highest priority on electric vehicles, air travel, and single-use plastics.
drinking water quality and reliability, our future bill payers
place more importance on protecting the environment, meeting • Gen Z “want brands to be transparent, to know what is in their
3 Our Vision for 2050
future challenges such as climate change and supporting low food, what country their clothes were made in, how employees are
income customers.” treated, what company profits are being put towards”.
United Utilities, Customer Priorities Research, Nov 2021 • Linked to consumer expectations on transparency and ethical
4 Why and what we need
to change: Delivering standards, there is a general debate on private ownership of
more environmental Working with others to improve ecological quality has been essential services and, post-Grenfell, the efficacy and priorities of
impact more efficiently promoted by Anglian Water’s customers to become one of the independent regulation, that covers a range of sectors such as rail,
company’s four long-term priorities. post, water, public transport, prisons, etc..  
Anglian Water customer research, 2017

5 Why and what we need

to change: Protecting Research for Water Resources South East showed 85% of
long-term customer customers thought companies should go beyond minimum More connected and less patient
interests through the government regulations and protect more of the environment.
WRSE, 2020 • Consumers expect seamless processes and intuitive interactions
right investments at
and the rise in real time information means they are becoming less
the right time
willing to wait. Tablets, smart phones, social media and chatbots
Bristol Water’s Youth Board explained that the environmental have transformed how companies engage with customers.
and social credentials of companies were important to their
6 The way forward: generation and were a key differentiating factor between • Over the next 30 years, we will see more technological
working together to businesses. advancements including 5G (and beyond), the Internet of Things,
deliver change Bristol Water Youth Board, 2020 Virtual Reality, Augmented Reality, and 3D printers. All of these are
likely to increased convenience and ease.

“People increasingly expect companies in all sectors to behave

ethically and consider their broader impacts”
Ofwat, PR24 and Beyond

9 | Water 2050 — A White Paper

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+4,000 M/l day
Executive Summary The climate emergency presents an extra needed
extreme challenge. We face increased Extra capacity of litres of water per
day needed in England from 2025 to

drought risk between now and 2050…

1 Introduction
2050 (NIC, 2018).

2 Challenges, opportunities The latest IPCC report estimates that temperatures are rising faster than
and gaps between now expected and that 1.5°C warming will be reached sooner than expected,
and 2050: our priorities by mid-2030s. With this comes:
for change 2 droughts
• Increased frequency, severity and duration of droughts due to the climate emergency and every 10 years
population growth – the IPCC estimates that extreme weather events between 5.6 times and 13.9
3 Our Vision for 2050 times more likely with 1.5°C warming Frequency of an intense agricultural
ecological drought event occurring
• Total water supply is forecast to decrease by 7% by 2045 as a result of the climate emergency and in 10 year period is 2 times with 1.5°C
limits to sustainable abstraction. warming, and to 2.4-4 times with
4 Why and what we need 2-4°C warming (IPCC, 2021).
• Between 2020-2050, we are twice as likely to have a year with water restrictions due to droughts
to change: Delivering
in England when compared to the 1997-2004 time period.
more environmental
impact more efficiently • The chance of a serious drought between now and 2050 that results in water deficits and requires
supply restrictions is between 1-in-7 and 1-in-4.
• Without action, the risk of not having enough water to satisfy our customers’ demand is very real.
5 Why and what we need -8% to -22%
to change: Protecting
Change in supply-demand balances
long-term customer in 2050 compared to 2015 in England.
interests through the This is based on medium to high
right investments at assumptions for climate change and
the right time population growth and assuming no
additional action is taken (CCC, 2015).

6 The way forward:

working together to

!
deliver change

Additional water capacity needed in

case of drought under population and
climate scenarios (NIC, 2018)

Without action customers and

communities will be faced with longer
and more frequent water restrictions.

National Audit Office, Water supply and demand management, 2020 Committee on Climate Change, CCRA2: Updated projections of water availability for the UK, 2015
10 | Water 2050 — A White Paper IPCC, Climate Change 2021 – The Physical Science Basics National Infrastructure Commission, Preparing for a drier future: England’s water infrastructure needs, 2018
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Executive Summary …we also face increased flood risk, £300m - £700m
pollution and extreme weather events p.a.
Increase in expected annual damages
1 Introduction
due to floods by 2050 (CCC,2020).
In England, water companies are just one of the authorities that have a Water companies are one of the
role to play in reducing flood risk, alongside the Environment Agency, authorities that have a role in reducing
2 Challenges, opportunities flood risk.
Internal Drainage Boards, and local authorities, so working in partnership
and gaps between now
and 2050: our priorities
will become even more important in the future when:
for change
• Flood risk is increasing due to more intense winter rainfall and summer storms.
• Urban areas will experience more flash flooding in the future.
3 Our Vision for 2050 • Expected annual damages due to floods are forecast to increase from £1.4bn in 2020 to
between £1.7bn - £2.1bn by 2050. On average, the more socially vulnerable are exposed to a Heavy rain 1.7x
greater flood risk.
4 Why and what we need • Increased flood risk will increase the risk of reduced service levels as it leads to: more likely and
to change: Delivering – Increased risk of sewer flooding more intense
more environmental – Risk of reduced raw water quality and increased complexity of treating drinking water With 2°C warming, heavy
impact more efficiently precipitation over land is 1.7 times
– Negative impacts on biodiversity such as increased soil loss and movement of invasive
non-native species as well as movement of chlorides from the coast into freshwaters more likely to occur and will be 14%
wetter, in comparison with pre-
5 Why and what we need Present day 2050 warming levels (1850-1900), and 2.7x
4°C and high population scenario more likely and 32% wetter with 4°C
to change: Protecting
warming. IPCC, 2021.
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to !
!
deliver change
Expected annual damages
from flooding, £m (CCC, 2020) Without action customers and
communities will be faced with
increased risk of sewer flooding
and biodiversity loss.

Committee on Climate Change, Third UK Climate Change Risk Assessment (CCRA3) Future flood risk, 2020
11 | Water 2050 — A White Paper Natural Environment Research Council, Water Climate Change Impacts Report Card, 2016
IPCC, Climate Change 2021 – The Physical Science Basics
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Executive Summary A New Operating Environment

Playing our part in meeting the UK’s emissions reductions targets under
1 Introduction
the UK’s legally binding Net Zero 2050 commitment is a key challenge.
The Government’s Net Zero strategy places the water sector in a new
2 Challenges, opportunities
operating environment where carbon impacts are a key factor that will
and gaps between now drive changes to the energy systems we rely on and the operational
and 2050: our priorities processes we operate. Emissions will become a increasingly important
for change consideration alongside other investment objectives.

To maintain high levels of performance during the transition to a low carbon economy companies
3 Our Vision for 2050 must be enabled to make the requisite investment decisions, drive emissions reductions, and play
their part in achieving the 6th Carbon Budget.

4 Why and what we need

to change: Delivering
more environmental
impact more efficiently Key challenges include:
• Wastewater treatment is essential to protecting the water quality of our rivers but it
is responsible for around two thirds of the water sector’s overall emissions. Reducing
5 Why and what we need emissions from treating wastewater (process emissions) will require changing
to change: Protecting technologies, updating assets, or capturing emissions at c 6,000 sites across the UK.
long-term customer Greater focus on investment in research and development would allow the sector to
interests through the identify the most economically advantageous ways of achieving these reductions.
right investments at
the right time • Scaling up from successful pilots in areas where solutions have been proven, such as
nature-based solutions.

• Maximising biogas production to ensure this sustainable resource is put to work in

6 The way forward: the energy grid, allowing others in the economy to move away from fossil fuels, and
working together to allowing water customers to benefit from energy exports that balance the rising costs
deliver change of fuels.

12 | Water 2050 — A White Paper

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Executive Summary Summary of climate emergency impacts

1 Introduction

Risks to resilience1 Currently By 2050

2 Challenges, opportunities
and gaps between now
and 2050: our priorities Annual mean
for change 8.8°C Up to 33% higher 9.1°C to 11.7°C
temperature

3 Our Vision for 2050

Probability of
10% to 25% Up to 5x as likely 50%
heatwaves
4 Why and what we need
to change: Delivering
more environmental People in
impact more efficiently significant flood 1.4m Up to 70% higher 2.1m to 2.8m
risk areas

5 Why and what we need

to change: Protecting
Supply / demand -1.1bn litres/day to
long-term customer +1.4bn litres/day Up to 4.4bn l/d lower
interests through the balance -3.0bn litres/day
right investments at
the right time
Agricultural land
classified as poor
6 The way forward:
quality 2% Up to 40%pts higher 25% to 43%
working together to
deliver change (drought impact)

Sources: The Sixth Carbon Budget, Climate Change Committee (2020)

13 | Water 2050 — A White Paper 1. Data for England only
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Executive Summary We need to deliver a step-change in

environmental improvement
1 Introduction
We need to deliver substantial improvements to our natural assets,
which will already be under significant pressures from the climate
2 Challenges, opportunities
emergency and population growth.
and gaps between now
and 2050: our priorities
for change • The government’s 25-year Environment Plan (25YEP) for England provides a clear direction of
travel for environmental improvements. Its ambition is to help achieve “the first generation to Understanding the
leave our environment in a better state than we found it” and to “help the natural world regain
and retain good health” (Defra, 2018). circular economy
3 Our Vision for 2050
• This includes: is key to improving
– moving from 15% to 75% of rivers close to their natural state
– restoring 75% of the UK’s one million hectares of terrestrial and freshwater protected sites to
the environment
4 Why and what we need
favourable condition securing their wildlife value for the long-term As a recycled resource, the water
to change: Delivering
sector’s contribution to the circular
more environmental – Increasing woodland in England in line with Defra’s aspiration of 12% cover by 2060. economy can be significant. Reduced
impact more efficiently • This means that investment in natural assets is just as important as investment in physical assets. leakage, increased reuse and lower
• Like reducing flood risk, we have a big role to play in helping to achieve these ambitions, but energy consumption can help close
the loop between catchments
we are only responsible for around one-third of water quality issues in rivers, which means
5 Why and what we need and customers.
other authorities and sectors also need to play their part.
to change: Protecting
• This challenge is made even harder due to the extra pressure on the environment brought
long-term customer
about by the climate emergency and population growth.
interests through the
right investments at
the right time
Government’s 25-year goal of clean and plentiful water (2020)

!
Improving at least three quarters of our
6 The way forward: waters to be close to their natural state by…
working together to
deliver change
Without action customers and
Minimising Reducing communities will be missing out on
leakage damaging abstraction
the benefits of having an improved
Reaching or exceeding Improving cleanliness of environment.
objectives for bodies of water Reducing demand waters / reducing pollution

International Water Association, Water Utility Pathways in a Circular Economy, 2016

14 | Water 2050 — A White Paper Defra , A Green Future: Our 25 Year Plan to Improve the Environment, 2018
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Executive Summary We are at a tipping point to address these challenges

Temperatures are rising faster than expected Temperatures are rising faster than expected
1 Introduction
Key messages from the latest Report from the Intergovernmental While climate tipping points are global in nature, biodiversity tipping points
Panel on Climate Change (2021): can be much more localised, permanently shifting local ecosystems into
2 Challenges, opportunities different states. Some biodiversity loss may be irreversible.
• Temperatures rising faster than expected, 1.5°C expected to be
and gaps between now
reached by mid-2030s, and 1.5°C 40% likely to be temporarily
and 2050: our priorities
reached in next 5 years. UK Biodiversity Indicator: Change in the relative abundance of UK priority
for change
• 1.5°C will go beyond many tipping points, including loss of Arctic sea species, 1970 to 2016
ice, die-offs of coral reefs and thawing of methane-rich sea ice.

3 Our Vision for 2050 • Extreme weather events between 5.6 times and 13.9 times more
likely with 1.5°C warming

4 Why and what we need

to change: Delivering The climate emergency and biodiversity are linked
more environmental
impact more efficiently

Biodiversity hotspots located around the world will each face

unique challenges in Climatic Impact Drivers (CID) changes.
5 Why and what we need Heat, drought and length of dry season, wildfire weather, sea
to change: Protecting surface temperature and deoxygenation are relevant drivers Source: UK State of Nature report, https://nbn.org.uk/wp-content/uploads/2019/09/State-of-Nature-2019-UK-full-report.pdf
long-term customer to terrestrial and freshwater ecosystems and have marked
interests through the increasing trends.
right investments at IPCC: Climate Change 2021: The Physical Science Basics
the right time
15 percent of UK species are threatened with extinction. Of
the G7 countries, the UK has the lowest level of biodiversity
remaining. At a minimum, the UK has failed to meet 14 of the
6 The way forward: Biodiversity acts to regulate the state of our planet, including the
19 Aichi biodiversity targets, the global nature goals the UK
working together to cycles of carbon, nitrogen, oxygen, carbon dioxide and water - if
committed to meet by 2020.
deliver change too much biodiversity is lost we risk triggering a tipping point in our
House of Commons Environmental Audit Committee. Biodiversity in
climate and seas. the UK: Bloom or bust? (2021)

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Executive Summary Population growth and demographic +13% to +18%

Increase in overall UK population
changes will amplify the impacts of the from 2020 to 2050 (CCC, 2020)

climate emergency
1 Introduction

2 Challenges, opportunities The UK population is forecast to grow from 67m in 2020 to 75m – 79m
and gaps between now
in 2050, further increasing pressure on the supply and demand balance
and 2050: our priorities
and our infrastructure:
for change
+19% to 25%
• Growth is forecast to be highest in the South East of England, with projected growth between Increase in South East population
3 Our Vision for 2050 19% - 25% by 2050 but the issues will affect all regions. There is also increased uncertainty from 2020 to 2050 (CCC, 2020)
around the distribution of population growth as a result of COVID-19.
• Average household size is also decreasing, resulting in many more connections to the network.
4 Why and what we need • The population is ageing as well: In 2018, 18% of residents were 65+ years old, but this share will
to change: Delivering rise to 24% by 2043.
more environmental
impact more efficiently This presents a number of challenges:
• The extra demand will place extra pressure on our water resources, asset health and the
environment which will already be under pressure from the climate emergency. For instance,
2.7
5 Why and what we need a larger population will result in an increase in the use of detergents which will result in higher Average household size in the UK
to change: Protecting levels of phosphorus entering rivers and lakes. by 2040, down from 2.85 today
long-term customer • Our relationships with customers will also need to adapt to cater for an ageing population.
interests through the
right investments at

“
the right time

6 The way forward:

working together to
deliver change
Three factors in particular are likely to increase water scarcity in the coming years: an
increase in population and the number of households, a reduction in available water
due to climate change, and regulatory restrictions on abstracting water from already
over-stretched sources.”
!
Without action customers and
EA — Water Ambition Evidence Synthesis — Towards a Sustainable Water Management System communities will be faced with
for England longer and more frequent water
restrictions, poorer network
performance and biodiversity loss

Committee on Climate Change, Updated projections of future water availability for the third UK Climate Change Risk Assessment 2020
16 | Water 2050 — A White Paper Office for National Statistics, National population projections, 2018
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Executive Summary The other challenges are amplified by the 25%

Increase in supply interruptions
need to future proof asset health & skills if asset replacement rates are
1 Introduction not increased.
(UKWIR, 2017)
Future-proofing our physical infrastructure

2 Challenges, opportunities • Our legacy assets are ageing and were designed primarily to meet the public health
challenges of previous generations, not the wider expectations and needs of current and future
and gaps between now
generations and a changing planet.
and 2050: our priorities
for change • The approach to asset replacement over the past 30 years does not meet the future
challenges, particularly in the context of:
– the need to deal with climate change now and for future generations
350,000km
3 Our Vision for 2050 – increased customer expectations of service and amenity levels
Km of water mains in the
– the need to improve the health of our local ecosystems
UK that will begin to fail
– changing water demand patterns more often.
4 Why and what we need (UKWIR, 2017)
Take our underground assets as an example:
to change: Delivering
more environmental • Many of our water mains and sewers were first built in the 19th century. Only 0.2% of sewers
impact more efficiently and 0.6% of water mains are replaced annually. At this rate, it would take 500 years to renew
our sewers, and 167 years to renew our water mains.1 Renewal rates will have to increase to
1.3% for mains and 1.2% for sewers for performance simply to stand still.1

5 Why and what we need • We have found innovative ways of achieving higher levels of performance from these assets,
to change: Protecting but this can only go so far. Ultimately we will need to increase our renewal rates as without this
by 2050 service will deteriorate significantly, including:
long-term customer
interests through the – the number of water main bursts will increase by 20% 625,000km
right investments at – the number of interruptions to water supplies will increase by 25% Km of sewers in the UK that
the right time – flooding and pollution from sewers will increase by 6%.1 will begin to fail more often.
On top of this, we need to consider how the performance of these networks need to change to (UKWIR, 2017)
meet increased expectations of our customers and society and the changing demands on them
6 The way forward: from climate change (e.g. the use of sewer overflows).
working together to
1. UKWIR, Long Term Investment in Infrastructure, 2017
deliver change

Future-proofing our 1 Our workforce is ageing — 2 We will need a different skill mix 3 We need our workforce to be
we need to continue to attract going forward to respond to more diverse and inclusive so
skills and talent
the best minds to the sector future challenges — for example, that it represents the population
We are faced with three and transfer our knowhow we need to bring in new skills that we serve.
challenges: and experience to the next that will become increasingly
generation. important in future such as
17 | Water 2050 — A White Paper machine learning and big data.
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Executive Summary Opportunities: Innovation will play a key role in helping

us meet these challenges
1 Introduction
We have the opportunity to transform Big data, AI, machine learning and digital twins
our ways of working:
2 Challenges, opportunities • We have vast amounts of data, covering everything from the real-
and gaps between now time condition of underground assets to customer sentiment on
• We have a long history of innovation, stretching back over 400
and 2050: our priorities social media posts.
years, from the world’s first city-level water transfer project in 1613 to
for change
the invention of the activated sludge process in 1914. • With advancements in big data, AI and machine learning, we will
• We are proud of our innovative history and will continue to be able to unlock valuable insights from this data to help optimise
innovate to deliver positive outcomes for our customers and the operations and investment, and manage risk. Imagine being able to
3 Our Vision for 2050 environment, as set out in our 2050 Water Innovation Strategy. predict the next mains burst
• The key to this will be to promote collaboration with others, both
within the water sector and beyond and to foster a culture where
4 Why and what we need innovation thrives. Given that the climate emergency is impacting on
to change: Delivering virtually every sector, collaboration with other sectors is especially
more environmental important. Using open data to improve services and
impact more efficiently
• There are many opportunities for us to grow: generate wider value Northumbrian Water
– Open data and using new technologies, approaches and ways
In 2019, the Cabinet Office announced that a National
of working
5 Why and what we need Underground Assets Register (NUAR) would be piloted in
– Improve sector-wide collaboration and co-ordination North East England and London with estimated benefits of
to change: Protecting
long-term customer – Work more closely with universities so that academic research £4bn a year. The NUAR was born at Northumbrian Water’s
interests through the can help us meet our challenges Innovation Festival in 2018 whose objective was to bring
right investments at – Increase the speed of innovation from ideation to together infrastructure providers and Ordinance Survey
the right time implementation to explore how asset data could be combined on a single
platform.
– Create a streamlined and effective point of access to water
sector innovation for external partners nationally and globally Northumbrian Water also opened up datasets associated
6 The way forward: – Develop regulatory frameworks to enable innovation with its sewage pumping stations (SPS). By collaborating with
working together to a diverse range of capabilities they were able to identify
– Create a culture where people are willing to take risks to
deliver change a pattern in pumping station flows that could act as a lead
innovate
indicator for potential future failures. Northumbrian Water
– Turn ideas into commercial products experienced a reduction in pollution originating from SPS’s of
– Learning from others within and outside the sector over 70%, and the open data initiative was identified as a key
contributor to this improvement.

18 | Water 2050 — A White Paper Water UK, UK 2050 Water Innovation Strategy, 2020
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Executive Summary Working together to meet What challenges will have the
biggest impact on our ability to

these challenges deliver our purpose and outcomes?

1 Introduction
Comparing the scale of each of the challenges, climate change
Priority areas for change
and the biodiversity crisis have the biggest impact on our ability
2 Challenges, opportunities
to deliver our purpose. This is because they are unprecedented in
and gaps between now
and 2050: our priorities
their scale and they threaten our ability to deliver reliable services.
for change
Delivering more Protecting long-
While we could simply look to increase investment in the environment and resilience, our priority
environmental term customer
is to find a way for the sector to deliver more environmental value and the right level of resilience
impact more interests through
3 Our Vision for 2050 in a way that minimises bill impacts.
efficiently the right
Our twin priorities are therefore focused on: investments at
the right time
• Delivering more environmental value more efficiently and
4 Why and what we need
• Protecting long-term customer interests through the right investments at the right time
to change: Delivering
more environmental Given the size of the future challenge, we also need to consider the way we charge for water
impact more efficiently

!
services to ensure that they are affordable and acceptable today and in the future.

5 Why and what we need Challenge Impact on ability

to change: Protecting to deliver purpose Without any changes in these areas,
long-term customer customers, communities and the
interests through the Customer expectations Medium economy will face significantly
right investments at higher risk of experiencing:
the right time Climate change mitigation and adaptation High
• Restrictions on water use
Biodiversity crisis High • More sewer flooding
6 The way forward: • Reduced water quality (e.g.
working together to Population growth Medium
boil water notices)
deliver change • Deteriorating ecological status
Future-proofing assets and skills Medium
of rivers and environment
• Biodiversity loss
• Supply interruptions

Or customers and communities

will be paying more to avoid
these consequences.
19 | Water 2050 — A White Paper
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Executive Summary Focusing our combined efforts on these

twin priorities will be essential for us to
deliver our purpose today and in the future
1 Introduction

2 Challenges, opportunities Our twin priorities for change reinforce each other — failures in service
and gaps between now will have a direct impact on the environment as well as on customers.
and 2050: our priorities
for change
Focusing on these priorities will also help:

• Safeguard the high quality of our potable water supplies, keeping them resilient to climate
3 Our Vision for 2050 impacts and supporting public health.
• Ensure that the sector meets these unprecedented challenges in the most efficient and
therefore most affordable way for our customers.
4 Why and what we need • Enable the sector to deliver wider value to society and the economy across all regions.
to change: Delivering • Enhance the engagement of water customers and communities with their local water
more environmental environment and their willingness to actively participate in the solutions to the challenges.
impact more efficiently

5 Why and what we need Our priorities

to change: Protecting for change...
long-term customer
interests through the
right investments at
the right time

Delivering more environmental Protecting long-term customer

6 The way forward: impact more efficiently interests through the right
working together to investments at the right time
deliver change

...affect all of
our outcomes

20 | Water 2050 — A White Paper

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

3 Our Vision for 2050
4 Why and what we need
to change: Delivering
more environmental
impact more efficiently

5 Why and what we need

to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

21 | Water 2050 — A White Paper

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Executive Summary Our Vision responds to these priorities

1 Introduction
OUR VISION
By 2050, we will be globally recognised as an environmental
2 Challenges, opportunities
and gaps between now leader, stewarding the improvement of rivers and seas,
and 2050: our priorities acting on the climate emergency and protecting customers’
for change long-term interests.

3 Our Vision for 2050

4 Why and what we need

to change: Delivering
more environmental
impact more efficiently
“It is incumbent on every part of the water industry to play its part to mitigate and
adapt to the impact of climate change on the environment and the sustainability
of the water supply”
2050 discussion document feedback

5 Why and what we need

to change: Protecting
Achieving our Vision will ensure we continue to deliver on our purpose in an affordable
long-term customer
way despite the challenging external environment. This will help protect our customers and
interests through the
communities from the consequences of the climate change emergency and the biodiversity crisis,
right investments at
whilst ensuring resilient and sustainable services, and lower bill impacts in the longer term.
the right time
Achieving our Vision can be a vehicle for the government’s ambitions in a number of areas and
protect the long-term interests of citizens and communities. This includes the target for Net Zero
6 The way forward: carbon emissions, the 25 Year Environment Plan (25YEP) and the need to ensure no communities are
working together to left behind (levelling-up).
deliver change
To overcome the challenges and achieve the Vision, water companies, the supply chain,
government, regulators, customers and communities need to come together to accelerate the rate
of positive change.

22 | Water 2050 — A White Paper

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Executive Summary To achieve our Vision, we will need to get the fundamentals right
while also continuing to transform our role in society
1 Introduction

The role of the water company has changed Our Vision and the changes we need to make are not dependent
on any specific industry structure. Changes to environmental
significantly over the past 30 years.
2 Challenges, opportunities regulation could encourage integration across different providers
and gaps between now of environmental services in the long-run but this would be a
and 2050: our priorities Customers used to be viewed as passive recipients of water and consequence not a pre-requisite. We are uniquely placed to play the
for change wastewater services, and companies used to focus narrowly on their role we set out in this White Paper because:
own assets.

Now, we are proud protectors of the environment, with a responsibility The water sector has a long-term role in society
3 Our Vision for 2050 much wider than our own assets. We collaborate with an increasing
number of partners, and customers and communities are active We are experts in our local environment
participants in the sector. We have improved faster in some areas than
4 Why and what we need others, but looking forward, in achieving our Vision, we will ensure that
in addition to getting the basics right, we are focused on maximising We are well-connected with stakeholders, other sectors and NGOs
to change: Delivering
more environmental long-term value for society across all parts of our business.
impact more efficiently We have a funding mechanism that can enable private investment to
deliver the improvements required across all regions - £160 billion
invested since the 1990s

5 Why and what we need

to change: Protecting
long-term customer
interests through the
right investments at Looking forward
the right time

• Asset owners and operators • Water and sewerage • Environmental • Leaders in managing the
6 The way forward: providers service providers local environment
• Cost efficiency focus
working together to • Cost benefit and • Service improvement focus • Maximising long-term
deliver change • Customers as passive
compliance focus value to society
recipients • Customers as consumers
• Customers as bill payers • Accountable to customers
• Partnership and
and communities as
catchment approaches
citizens and partners
• Conveners of stakeholders
across water catchments

23 | Water 2050 — A White Paper Looking back

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

4 Why and what we need
4 Why and what we need
to change: Delivering
to change: Delivering
more environmental
impact more efficiently
more environmental
5 Why and what we need
impact more efficiently
to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

24 | Water 2050 — A White Paper

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Executive Summary Stepping back: Protecting our natural environment requires

environmental regulation to address market failures
1 Introduction

In the current regulatory period

(2020-2025), water companies are Environmental regulation is an important tool for managing river
2 Challenges, opportunities catchments as they are subject to a number of market failures.
and gaps between now
spending £5bn on improvements
and 2050: our priorities to the environment via the WINEP1
for change that is focused on improving 1. Common Pool Resources UPSTREAM
catchments. It is very difficult to limit access to them; but their
supply is fixed, meaning they can be depleted
Farmers
3 Our Vision for 2050 A catchment is the geographical area of over time. This is why catchments are prone to Rail & road
land through which water from any form of market failure and why intervention is needed in Public
precipitation drains into a body of water – the first place. Different sectors use catchments Water companies
this can be a river or groundwater. Water in different ways and we need to take a holistic
4 Why and what we need is abstracted from catchments for various approach to environmental regulation.
to change: Delivering purposes including public water supply and Industry
more environmental industrial use and pollutants enter catchments as DOWNSTREAM
impact more efficiently a result of discharge (from sewerage companies
or industry) and as a result of run-off (e.g. from
farmland or roads). In addition, the public uses
5 Why and what we need rivers for a range of leisure activities such as 2. Feedback loops
to change: Protecting fishing, boating and swimming. These can be positive (virtuous cycles) or
Plants and
wildlife flourish
long-term customer negative (vicious cycles). A holistic approach
Input Nutrient load
Environmental regulation is critical to protect (e.g. decreases
interests through the can help accelerate the virtuous cycle and put reducing
our catchments, improve the environment, pollution)
right investments at the environment in a position where it can self-
and ultimately deliver better outcomes for
the right time recover. Plants absorb
consumers. Without government intervention nutrients
rivers would be over-abstracted and over-
polluted as the social cost of abstraction and
6 The way forward: pollution are not aligned with the private costs
working together to (which is a classic externality problem). 3. Tipping points
deliver change The environment can tolerate a degree of harm,
The additional issue with catchments is that but beyond a certain point it quickly deteriorates
there are many different environmental and it becomes significantly harder to restore. Stable point 1
Tropical forest
externalities that interact. This creates a level of Tipping point
complexity that needs careful policy design.

Stable point 2
Grassland

25 | Water 2050 — A White Paper 1. Water Industry National Environment Programme

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Executive Summary The current approach to environmental regulation is not fit for purpose
The current approach to environmental regulation delivered good value when there were “low hanging fruit”
1 Introduction
such as substantial reductions in point source pollution at low costs or reducing specific abstractions which
caused clear environmental harm. Today the approach is no longer fit for purpose because it is:
2 Challenges, opportunities
and gaps between now
Fragmented and sends different Prescriptive and output focused Not systems-based
and 2050: our priorities
signals to different sectors
for change

• Many sectors impact on the • The current WINEP is made up • This means that environmental
3 Our Vision for 2050 environment but are subject to very of more than 11,000 individual trade-offs are not transparent and
different types of regulation and output requirements for water not reflected appropriately
incentives. In water, we have the companies to deliver, and is set • Through the WINEP, water
WINEP that covers all environmental to cost £5 billion over the period companies have been required
4 Why and what we need improvements including stricter 2020-2025. Many of the outputs are to invest heavily in physical assets
to change: Delivering discharge consents and reducing demonstrably not optimal, and the to improve water quality, even
more environmental abstraction. There is no equivalent same outcome could be achieved when it is not efficient to do so,
impact more efficiently scheme in other sectors. While more efficiently. and perversely, many of these
there are new schemes aimed at • The WINEP also obliges the asset-based solutions are energy
biodiversity improvements such as water sector to carry out the intensive adding to their carbon
5 Why and what we need Environmental Land Management improvements itself even though footprint.
to change: Protecting (ELM) and Biodiversity Net Gain engagement with other sectors • The current approach runs the risk
long-term customer (BNG), they are only available to could achieve the same outcomes of creating additional negative
interests through the some sectors even though others at a lower cost and with greater externalities and misses the
right investments at can deliver the same outcomes. benefits. opportunity to create virtuous
the right time • This sends different signals about circles, e.g. as a result of nature-
the social costs and benefits of the based solutions.
environment to different sectors.
6 The way forward: This is not in line with the ‘polluter
working together to pays’ principle which is one of
deliver change the key principles set out in the
Environment Act.
• Each sector (and their end Government’s recent WINEP reform taskforce has been a useful step in the right direction
customers) should be paying for but has not gone far enough in moving away from prescriptive outputs, delivering in
the true social costs of the goods partnership or encouraging systems-based thinking. The consequences of the current
and services being produced. approach are that we do not deliver environmental improvements in a way that
maximises benefits and minimises costs to society.

26 | Water 2050 — A White Paper

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Executive Summary And financial incentives and culture & skills contribute
to a focus on traditional solutions
1 Introduction

The focus on traditional solutions is reinforced by:

2 Challenges, opportunities
and gaps between now
Financial incentives skewed towards traditional solutions Culture and skills across industry largely focused on
and 2050: our priorities
traditional solutions
for change

• The current approach to economic regulation means the • The culture and skills in the industry need to move away
cost of traditional capital-intensive solutions is recovered from focusing on traditional solutions towards finding new
3 Our Vision for 2050
with some certainty through the Regulated Capital and innovative ways that provide best value from a holistic
Value (RCV) over a period of time. In contrast, nature- systems-based point of view. This runs the risk of creating
based solutions will provide broader environmental a vicious circle that incentivises traditional thinking and
4 Why and what we need benefits require mainly opex, and their cash-flow profile therefore prevents the transition to a broader set of skills
to change: Delivering is therefore more even over the life of the solution. Cost and expertise.
more environmental recovery beyond the current regulatory period is less • Related to this is the need for the water sector to represent
impact more efficiently certain for companies as repeated costs such as opex are a wider set of perspectives in its workforce. Currently, the
benchmarked at each price control making these solutions water sector has a less diverse workforce when compared
less attractive in an internal cost benefit analysis. This to all other sectors, e.g. only 4% of the workforce identifies
5 Why and what we need potential issue has been acknowledged by Ofwat in its as BAME compared to 15% across all sectors and 20% of the
to change: Protecting PR24 and beyond document. workforce is female compared to 47% of all sectors. This
long-term customer • Innovative solutions have a different risk profile compared means that the workforce does not necessarily represent
interests through the to traditional solutions as we need to build up a track the different perspectives that we need to be outward-
right investments at record of experience. If the overall risk and reward focused and innovative.
the right time balance is based on traditional solutions, there is a case
for reviewing the balance to ensure it appropriately
incentivises innovative solutions.
6 The way forward:
working together to
deliver change

27 | Water 2050 — A White Paper

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Executive Summary Action on Net Zero brings significant

co-benefits that alleviate other challenges
1 Introduction
The changes needed to deliver net zero also support other priorities,
producing efficiencies and synergies that help the sector meet
2 Challenges, opportunities increasing expectations. For example:
and gaps between now
and 2050: our priorities
• Increasing operational resilience by deploying renewables — solar and wind generation,
for change
coupled with battery storage makes our sites more resilient when power grids fail, meaning
water customers remain in supply, and grid operators can focus their attention on other
priorities such as asset health. Deploying more of these systems would also protect customers
3 Our Vision for 2050 from energy price shocks, as more of the sector’s power would come from our own sources,
reducing the link with fossil fuel pricing.
• Reducing chemical dependency through new technologies — deploying alternate treatment
4 Why and what we need technologies would allow the sector to retire some of the high-carbon and chemical-
to change: Delivering dependent technologies used to treat water. This would help decouple the sector from
more environmental overseas supply chains which can be disrupted by fuel prices, political changes, and times of
impact more efficiently low global security.
• Harnessing nature for biodiversity — nature-based solutions such as peatland restoration
and wetlands, not only reduce our carbon footprint, they also provide vital habitats for nature,
5 Why and what we need alleviate the biodiversity crisis and provide opportunities for public recreation that enhance
to change: Protecting national wellbeing.
long-term customer
interests through the • Reducing demand — reducing demand, especially in times of drought, can avoid the need
right investments at to tanker water to support local networks, cutting vehicle emissions, and avoid the need to
the right time source water in already stressed areas.
• Utilising by-products — carbon reduction technologies, such as advanced anaerobic
digestion, already help turn wastes into products that support sustainable practices in other
6 The way forward: sectors, and widening this to other aspects of the industry can help the UK decarbonise, and
working together to generate revenues that offset the burden on customer bills.
deliver change

But we need regulation to recognise and incentivise these co-benefits sufficiently if we are to
realise their maximum potential.

28 | Water 2050 — A White Paper

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Executive Summary Case studies that illustrate the problem International precedent

and benefits from solving the problem An integrated network

1 Introduction approach to flooding resilience*
Case Study
2 Challenges, opportunities Wessex Water’s experience at Poole Harbour avoid carbon and chemical intensive solutions
and gaps between now Wessex Water was obliged to reduce nitrate that run counter to national net-zero ambitions Amsterdam
and 2050: our priorities pollution at Poole Harbour by investing in and deliver biodiversity gains. Early results
show that water quality has improved In response to several severe rainfall
for change a carbon-intensive treatment process, with
beyond expectation and that wildlife thrives events in the Netherlands, Waternet (the
an estimated cost of £31,000 per tonne of
in the newly created natural environment. water supplier for Amsterdam) established
nitrogen removed. However, Wessex has
Amsterdam Rainproof. The project
3 Our Vision for 2050 shown that it could achieve the same outcome Whilst Anglian was able to successfully deliver established a collaborative network of
by delivering a nature-based solution in this pilot, the transition to more widespread organisations and citizens who work
partnership with farmers, at a cost of £9,000 use of nature-based solutions faces several together to increase the city’s resilience to
per tonne of nitrogen removed – i.e. 71% barriers. Prescriptive regulatory requirements
4 Why and what we need extreme rainfall on a small and large scale.
cheaper and also with biodiversity benefits (in this instance to line treat the constructed
to change: Delivering instead of more carbon emissions. But despite
more environmental wetland) can increase both the carbon and The Amsterdam Rainproof project
this, Wessex was ultimately still obliged to financial cost of wetland schemes and risks
impact more efficiently promotes an outcome rather than outputs
invest in the costlier carbon-intensive solution. pushing water companies back towards based approach, identifying where
lower-value solutions. Moving to outcome improvements in other sectors could
Case Study based regulation would focus on the best achieve the same outcome at lower cost
5 Why and what we need way to deliver overall outcomes rather
Anglian Water: The opportunities and greater benefit to society. The project
to change: Protecting than specifying specific inputs, allowing
offered by nature-based solutions also promotes Amsterdam’s circular
long-term customer natural capital and carbon benefits to be
and barriers to their implementation economy goals, finding opportunities to
interests through the maximised at minimal environmental risk. reuse excess rainfall e.g. the Hemelswater:
right investments at Anglian Water worked with the EA and the
Outcome based regulation would facilitate Code Blond beer is brewed using
the right time Norfolk Rivers Trust to explore solutions that
more cross-sector collaboration and this rainwater from roofs of Amsterdam.
would maximise wider value whilst delivering
would also accelerate widespread use
a reduced level of ammonia and phosphorus
nature-based solutions e.g. the ability to To date over 50 physical rainproof
discharge from its water recycling centre at
6 The way forward: work in partnership with landowners and projects have been implemented.
Ingoldisthorpe. Rather than focusing only
working together to top up money farmers are already receiving
on traditional solutions such as membrane
deliver change to fund better land management. Finally,
bioreactors technology or pumping flows to
there is a challenge for water companies
neighbouring areas, which would have been *https://iwa-network.org/city/amsterdam/
themselves to ensure that their culture
more expensive, it invested in a nitrifying sand
and systems are set up to identify and
filter along with four new connected wetlands
enable new and partnership-style solutions
to further improve water quality and enhance
e.g. redesigning procurement systems to
the natural capital of the local environment.
contract with smaller, local level organisations
This innovative approach allowed Anglian to
rather than national engineering firms.
deliver against its water quality commitments,
29 | Water 2050 — A White Paper
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Executive Summary The case for change: the current approach to

environmental regulation of catchments is inefficient
1 Introduction

2 Challenges, opportunities
and gaps between now Each sector is faced with its
and 2050: our priorities own cost curve for improving
for change the environment. The current
approach to environmental
regulation is inefficient as it
does not incentivise all sectors
3 Our Vision for 2050
to implement the best value
solution first but instead leads
to an arbitrary mix of solutions.
4 Why and what we need
to change: Delivering The picture to the left illustrates
more environmental that the consequence for
impact more efficiently society is less environmental
improvement at higher costs.

This problem is exacerbated

5 Why and what we need when policies are only aimed
to change: Protecting at one environmental measure
long-term customer (e.g. phosphate). In this
interests through the case, the solution to reduce
right investments at phosphate may create other
the right time negative environmental
impacts that are not reflected.

We therefore need an
6 The way forward:
approach that is efficient from
working together to
a holistic point of view.
deliver change
Current approach Efficient approach

30 | Water 2050 — A White Paper

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Executive Summary We need to work together to implement

outcome-based environmental regulation
(OBER) and change our culture and skills
1 Introduction

2 Challenges, opportunities
and gaps between now
How do we deliver more environmental impact, with more benefit for
and 2050: our priorities nature from each pound of investment?
for change Ideally this would be
1. Implement outcome-based environmental regulation (OBER): underpinned by protection
in law such as a new single
• Long-term outcome targets linked to the 25YEP set for England as a whole covering all key “Rivers Act” (Action 2 in 21st
3 Our Vision for 2050
aspects of the environment – including carbon. This will ensure that the water sector targets Century Rivers Plan).
contribute directly to the 25YEP ideally as part of a National Plan for Rivers1 and other water
bodies (Action 1 in our 21st Century Rivers Plan1).
4 Why and what we need
• Targets and milestones apportioned to catchments, fundamentally reshaping the scope of the
to change: Delivering
WINEP. Water companies should receive their fair share of the targets without delay so we can
more environmental
start making our contribution to the 25YEP.
impact more efficiently This would be enabled with
• Companies allowed to meet targets by delivering outcomes in partnership with others, “Local Empowerment” (Action
including customers and communities and other sectors. This will ensure that the best 3 in 21st Century Rivers Plan).
value solutions are implemented and allow innovation to flourish. This is key for unlocking
5 Why and what we need efficiencies.
to change: Protecting
• Economic regulation provides appropriate risk and reward balance and level playing field
long-term customer
between traditional and natured-based solutions. This will ensure that there are no financial
interests through the
barriers to innovative solutions. This would support
right investments at
the right time • OBER monitoring framework supported by additional steps to provide open and live data accountability on the basis of a
(e.g. discharges). This is essential for trust and confidence in OBER and identify how OBER has data-driven approach (Action
facilitated innovation. 4 in 21st Century Rivers Plan
6 The way forward: 2. Change skills profile and culture so:
working together to
deliver change • Water companies, regulators, NGOs, etc. have world-class green skills to identify, develop, and
implement innovative solutions.
• Everyone is focused on outcomes, innovative approaches and partnerships.
• This will ensure that OBER delivers maximum benefits to customers and communities as we
have the right skill base and mindset to develop, trial and implement innovative solutions.

31 | Water 2050 — A White Paper 1. Water UK, 2021, 21st Century Rivers, 10 Actions for Change
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Executive Summary While it is difficult to estimate the costs and benefits of reform…
Approach 1: Bottom up estimate based on Wessex Water’s experience
1 Introduction
• Estimating the potential cost savings of outcome-based
environmental regulation is challenging, as it difficult to observe the
cost curves of other sectors to deliver environmental improvements. Net benefits
2 Challenges, opportunities
However, there are various case studies that highlight the
and gaps between now
inefficiency of the current approach to environmental regulation.
and 2050: our priorities
for change • Through the WINEP, Wessex was initially obliged to reduce
discharges at a small number of treatment works. However, it was
able to demonstrate that by reducing discharges by a smaller
amount at a greater number of sites, it could achieve the same
3 Our Vision for 2050 outcome but for £54 million less (c20% less), and with around £35
million of extra benefits (c10% more). The EA accepted this analysis
and allowed Wessex to deliver its alternative approach.
4 Why and what we need • To get an overall sense of the benefits, these figures can be scaled
to change: Delivering up to England as a whole. Wessex’s area of operation covers around
more environmental 8% of England. Scaling up these figures – which assumes that other
impact more efficiently companies would be able to achieve similar cost savings and
greater benefits through an improved approach to the WINEP – Prescriptive Outcome-based Outcome-based
approach approach but approach
would imply: still delivered delivered in
5 Why and what we need – a total cost saving for England of around £700 million for the by the water partnership
to change: Protecting period 2020-25, equal to around £6 per household per annum. company
long-term customer Assuming the same cost saving per annum, this equates to
interests through the cumulative cost savings of £2.7 billion out to 2050 in net present
right investments at value (NPV) terms. Catchment NPV of NPV of Net Benefit /
the right time – extra benefits of £1.7 billion in NPV terms out to 2050. costs £m benefits benefits cost ratio
£m £m
• However, it is worth noting that Wessex’s proposed approach still
involved Wessex carrying out the improvements itself. Further cost Dorset Stour 166 214 47 1.3
6 The way forward: savings and greater benefits could have been possible if it were able Parrett 102 141 39 1.4
working together to to deliver the improvements in partnership with others. Therefore,
deliver change the figures above really only capture the impact of partially moving Total 268 355 86 1.3
away from a prescriptive approach and not the full benefits of
outcome-based environmental regulation
Alternative ~ 214 ~ 390 176 1.8
• This estimate is clearly only based on extrapolation of one example approach —
and therefore the figures should not be viewed as a robust estimate indicative
of the overall benefit. Instead they provide an illustration of the
magnitude of potential benefits. Further work is needed to assess
the costs and benefits in detail.
32 | Water 2050 — A White Paper Wessex Water PR19 Business Plan: Appendix 5.1.F — Alternative approaches to delivery of the WINEP
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Executive Summary …the potential magnitude could amount to billions out to 2050
Approach 2: Top down analysis
1 Introduction
• According to Indepen, across all sectors in England, over £13 billion • Assuming the same cost saving per annum, this implies cumulative
is spent on improving catchments each year: savings of around £10 billion in NPV terms.
– Direct - Spending with a primary aim of protecting and improve • As this estimate is clearly based on a number of high level
2 Challenges, opportunities
England’s water and land environment. Indepen estimates assumptions, it should not be viewed as a robust estimate of the
and gaps between now
spending on this to be £7.7 billion per annum. overall benefits. Instead, it provides a high level indication of the
and 2050: our priorities
– Indirect – Spending in a catchment to manage water for the potential magnitude of the benefits. Further work is needed to
for change
benefit of society (for example, drainage, flood risk and water assess the costs and benefits in detail.
supply). Indepen estimates spending on this to be £5.7 billion per
annum.
3 Our Vision for 2050
• Given the inefficiencies of the current approach to environmental
regulation, it is not unreasonable to believe that with outcome- Academic literature on cost savings from
based environmental regulation, the 25YEP could be met for billions delivery through market-based approaches
4 Why and what we need of pounds less and with significantly greater environmental benefits
to change: Delivering than under the current approach.
more environmental Cost reduction Market Scheme
• First, not all of the £13 billion figure would be on incremental activity
impact more efficiently 15%–90% Sulphur dioxide allowance trading in the US
which could be suitable for delivery through partnerships. Part of
it would relate to operating and maintaining existing assets. For 40%–47% NOx trading in the US
instance, of the EA’s budget on flood risk management, around 65%
5 Why and what we need 43% South Coast Air Quality Management District
is spent on ‘capital’ which “is money that is spent on investment
to change: Protecting and things that will create growth in the future” which could be
long-term customer suitable for delivery through partnerships instead. Similarly, for water
interests through the companies, around 18% of expenditure is spent on ‘enhancement’
right investments at which includes spending on new assets some of which could
the right time alternatively be delivered through partnerships instead.
• Making a high-level assumption that 40% of this £13 billion
figure relates to incremental activity which could be delivered in
6 The way forward: partnership with others, and assuming a relatively conservative 10%
working together to cost saving on that amount, equates to potential cost savings of
deliver change £520 million per annum, or £22 per household in England each year.

33 | Water 2050 — A White Paper

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Executive Summary Case Study Case Study

Yorkshire Water: Partnership working to deliver greater United Utilities: Enabling the best value schemes to proceed
flood resilience
1 Introduction United Utilities (UU) needs to meet a new phosphate permit at a rural
The Hull area is at particular risk from extreme flooding and is one of
water recycling centre and prevent storm spills from the site. In this
the most vulnerable areas to climate change. Traditional solutions to
particularly difficult location UU worked to understand how nature-based
expand the capacity of Hull’s sewer system would cost around £1.8bn for
2 Challenges, opportunities solutions could support the delivery of this while also benefitting other
consumers.
and gaps between now ecosystem services. Two non-traditional options were developed to treat
and 2050: our priorities Yorkshire Water worked with the EA and local government to explore storm spills rather than prevent them, a storm treatment reed bed and an
for change alternative holistic solutions that combine grey and natural flood Integrated Constructed Wetland (ICW).
management solutions (blue-green solutions). It identified four ‘hot spot’
The reed bed was the lowest cost option and also a relatively more
areas where blue-green interventions could deliver flood resilience at
proven approach. The benefits case however is significantly better
3 Our Vision for 2050 a lower cost to consumers, along with delivering co-benefits for the
for the ICW as it provides a more natural habitat which created better
environment via biodiversity improvements and an amenity value within
biodiversity as well as an amenity for local people to access. The location
the local economy.
of the site next to a public right of way opened up an opportunity to
4 Why and what we need maximise this value. The use of nature-based solutions therefore allowed
to change: Delivering Blue-Green solution cost (£m) Traditional solution cost (£m) a viable solution to be developed for this site at a significantly reduced
more environmental cost to the traditional solution although at greater cost than the reed bed.
50.5 72.1
impact more efficiently

By working together with local partners, Yorkshire Water was able to Solution Construction (£m) Natural capital value
develop a non-traditional solution that delivers against both the levelling- (£m)
5 Why and what we need
up and environmental agenda which would not be the case using a
to change: Protecting Traditional 1.000 -
traditional solution.
long-term customer Reed bed 0.255 +£0.163
interests through the Yorkshire Water faced a number of barriers to partnership driven
right investments at Constructed Wetland 0.340 +£1.800
solutions. Separation of flooding responsibilities across different bodies
the right time ignores the interdependent nature of flooding and obtaining regulatory
approval for holistic solutions is perceived to be difficult due to UU has decided to progress the ICW option, facilitated by a bespoke
uncertainty around the treatment of wider social benefits. incentive arrangement with the economic regulator to deliver natural
6 The way forward: capital value that offsets the additional costs and risk to UU associated
Removing regulatory and other barriers to partnership working will with the ICW approach.
working together to
reduce the risk that traditional siloed solutions remain the default
deliver change
option and can be expected to allow solutions that maximise public A move to outcome-based environmental regulation would systemise
value to be identified and pursued. a more holistic assessment of wider environmental benefits across
water company investment decisions so that these opportunities to
deliver wider value are identified and proceed as a matter of course.

34 | Water 2050 — A White Paper

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Executive Summary Case Study Case Study

South East Water: Taking a long-term view to environmental planning Anglian Water: Slug-it out campaign — Changing the culture and skills
base within water companies
1 Introduction South East Water recognised that making a lasting change to the
environment takes time, and that no one organisation can do it alone.
Anglian faced the challenge of metaldehyde, a soluble compound
It has therefore taken the bold step to develop its own 25 year plan
commonly used by farmers as a pesticide against slugs and snails.
for the environment, co-creating a long-term environmental strategy
2 Challenges, opportunities Rather than installing traditional treatment solutions to ensure water
to enhance environmental resilience in the short and long-term. It
and gaps between now quality, which would have cost the region £595m to build, with an
worked together with more than 200 customers, stakeholders and
and 2050: our priorities additional £17m annual operating cost, it piloted a programme to
employees to identify the greatest challenges and key strategic
for change work with 225 farmers to use alternative chemical slug controls at a
themes for the strategy. This included environmental NGOs, local
cost of £3.5m. The campaign has been highly successful, delivering a
and national government representatives, large land owners,
96% reduction in metaldehyde levels across the region and farmers
industrial water users, housing developers, highways authorities,
3 Our Vision for 2050 have proactively stopped using metaldehyde in other areas.
independent expert groups, and representatives for other water
users. Furthermore, the strategy explicitly recognises that we need A key factor to the success was that Anglian Water developed
to consider wider environmental impacts, taking a more holistic a team of skilled agricultural experts to engage with farmers,
4 Why and what we need view to ensure the best possible outcome for the environment. helping to broker relationships and ensure productive ongoing
to change: Delivering engagement. The success of this pilot shows how that if the
This plan will exceed the statutory obligations and planning cycles
more environmental industry is to grasp fully the opportunities of outcome-based
such as the WINEP, Water Resources Management Plan, and dry
impact more efficiently environmental regulation, companies will need to develop new
weather plan - showing an appetite for companies to work with
ways of working in partnership with others and acquire and develop
stakeholders to deliver more integrated long-term plans. These
new skills to identify the opportunities for different solutions.
would be facilitated by greater commonality in the existing planning
5 Why and what we need frameworks’ objectives and greater clarity and consistency on how
to change: Protecting to interpret and implement a best-value approach across them.
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

35 | Water 2050 — A White Paper

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Executive Summary Case Study Case Study

South West Water — Working with communities to identify and deliver Southern Water: Enhancing the natural environment to reduce
wider environmental benefits overflow spills — a win-win solution
1 Introduction
South West Water engaged with a community action group Southern Water is focusing on a addressing the challenge of storm
Water Watch to identify the multiple sources of bacterial pollution overflows in a number of catchments across its region, including
2 Challenges, opportunities impacting on the quality of the bathing water at Combe Martin the Sandown catchment on the Isle of Wight that has high amenity
and gaps between now beach, including dog faeces and farm run-off into the River Umber. and ecological value. By scrutinising the pathways and sources of
and 2050: our priorities rainwater and runoff to the sewerage system there it has identified
From this they identified that planting more native trees in the that approximately 80% of the additional hydraulic load that is causing
for change
catchment will help improve water quality in the River Umber and overflows to spill is coming from roofs and roads. Preliminary analysis
at Combe Martin beach by intercepting peak flows of rainfall in the shows that reducing a proportion not all of this runoff will significantly
valley and improving soil health. Approximately 4 hectares of trees reduce storm overflow spills. Most excitingly this reduction can be
3 Our Vision for 2050 and 130 metres of hedgerow at seven locations will be planted across achieved using upstream nature-based solutions that are low-carbon,
the catchment after local landowners volunteered to get involved. enhance biodiversity and add further amenity and ecological value to
These catchment actions complement South West Water’s ongoing the area. This is therefore a win-win in environmental terms and Southern
4 Why and what we need work to improve the wastewater drainage systems in the area and Water is currently establishing the partnership to drive this forward.
to change: Delivering will have additional positive impacts for biodiversity and carbon.
more environmental
Outcome-based environmental regulation will result in a step-change
impact more efficiently
in the scale and scope of these types of opportunities by providing
additional incentives for collaboration between communities,
landowners and water companies to look at environmental
5 Why and what we need improvements in a holistic way. It will encourage them to identify
to change: Protecting and then deliver innovative approaches that have greater long-
long-term customer term environmental benefit for every pound of investment.
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

36 | Water 2050 — A White Paper

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Executive Summary Looking back from 2050, what would we see?

1 Introduction
Without proposed changes With proposed changes

2 Challenges, opportunities
and gaps between now • Water companies deliver their share of 25 • Water companies catalyst for partnerships
and 2050: our priorities What will Year Environment Plan using mainly asset- that improve catchments in a holistic
for change we see? based, traditional solutions and innovative way – reflecting all
• Small proportion of innovative solutions environmental consequences
tested but not widely adopted • Broader use of innovative solutions that can
3 Our Vision for 2050 • Industry skills and culture focused on assets be spread to other sectors
• Skills and culture focused on delivering
environmental value in partnership
4 Why and what we need
to change: Delivering
more environmental
impact more efficiently

• Fewer catchments have achieved good • More catchments have achieved good
5 Why and what we need What are the ecological status and/or good ecological ecological status and/or good ecological
to change: Protecting status achieved with much higher bill impact status achieved with much lower bill impact
long-term customer
impacts on
customers, • Lower overall environmental improvements, • More environmental value delivered, e.g.
interests through the
e.g. fewer species saved from extinction. more rivers suitable for swimming
right investments at communities
The State of Nature report estimates 1,188 • Billion £s of efficiency gains achieved for
the right time and the species are at risk of extinction in the UK billpayers
economy? • Billion £s of inefficiency passed on to
billpayers
6 The way forward:
working together to
deliver change

37 | Water 2050 — A White Paper

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

5 Why and what we need
4 Why and what we need
to change: Protecting
to change: Delivering
more environmental
impact more efficiently
long-term customer
5 Why and what we need
interests through the right
to change: Protecting
long-term customer
interests through the
investments at the right time
right investments at
the right time

6 The way forward:

working together to
deliver change

38 | Water 2050 — A White Paper

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Executive Summary Stepping back: Making the right decisions for current
and future generations is a complex challenge
1 Introduction

Water company Implication Challenges and risks

2 Challenges, opportunities
characteristic
and gaps between now
and 2050: our priorities
for change
Long life assets This means that decisions • We don’t know the preferences of future generations
we make today affect and humans are biased towards today.
3 Our Vision for 2050 many generations in • Climate change in particular creates a lot of
the future. Optimal uncertainty around the future – we need to
decisions are important. make decisions today that have consequences
for a long time despite the uncertainty
4 Why and what we need
to change: Delivering
more environmental
impact more efficiently

When making • Some impacts are difficult to quantify or monetise.

Actions affect customers, decisions, we need
5 Why and what we need • Tipping points can make it challenging to assess
communities, economy to reflect the full
to change: Protecting the impacts of individual actions appropriately
and the environment range of impacts.
long-term customer (e.g. it is not clear which project is the marginal
This is now more action that prevents biodiversity collapse).
interests through the
important than ever.
right investments at • Regulators have different remits that do
the right time not always reflect full impacts.

6 The way forward:

working together to
deliver change

39 | Water 2050 — A White Paper

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Executive Summary The current approach to making investment decisions

is not fit for purpose
1 Introduction
The current approach to making investment decisions is appropriate when the sector is in a “steady state”.
However, in the context of the climate and biodiversity emergency, the approach is no longer fit for
2 Challenges, opportunities purpose because it is:
and gaps between now
and 2050: our priorities
for change Not based on a thorough joint Based on backwards looking Lacks an integrated approach
understanding of uncertainty around assessments
climate change, technological change,
and preferences of future generations
3 Our Vision for 2050

• The current approach is largely • The assessment of costs is • The current approach reflects
based on individual decisions by largely based on historical costs multiple planning guidelines for
4 Why and what we need different parts of the business that
different regulators and companies – this is appropriate in a “steady
to change: Delivering can have different objectives. This
on how much risk we are prepared state” but not fit for purpose
more environmental can create inefficient planning
to take without an overall when faced with an inflection
impact more efficiently processes.
framework. This means we cannot point in the external environment
be confident that our planning and as a result of climate change and • Most of the planning guidance now
investment decision processes the ambitions of the 25YEP. reflects “best value” approaches
5 Why and what we need always lead to decisions that are but there is a lack of clarity on
• Backward-looking assessments
to change: Protecting aligned with current and future how to interpret and implement
also runs the risk of favouring
long-term customer customers’ preferences. this approach. Most decisions
tried and tested solutions over
interests through the are based on a mix of customer
• We do not have the right innovative solutions.
right investments at valuations and wider societal values
conversations about risk. Long-
the right time without any clear consideration of
term planning for the water
sector is an exercise in managing future generations’ preferences or
uncertainty and currently capturing the risk of tipping points.
6 The way forward: planning and decision making We currently do not have a holistic
working together to processes are not based on a assessment of all of the impacts for
deliver change thorough joint understanding each potential scheme.
of uncertainty around climate
change, technological change, and
preferences of future generations.

As a result, we cannot be confident that the current approach will enable us to make the right decisions for
40 | Water 2050 — A White Paper current and future generations.
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Executive Summary Ensuring no regrets investment

for 2050 and beyond
1 Introduction
Making the right decisions

2 Challenges, opportunities
The UK Net Zero Strategy provides a high-level approach to meeting the Net Zero 2050 target, but
and gaps between now
it is currently absent the detail needed for all stakeholders to plan their own pathways. Clarity and
and 2050: our priorities
confidence in the strategic direction are essential for sound sector-level planning and to finding the
for change
most advantageous approach for society as a whole. Defra’s role in supporting the water sector
to meet the Government’s Net Zero target is an important catalyst for future collaboration and
coordination on more detailed policy objectives.
3 Our Vision for 2050
Our Net Zero 2030 Routemap identified the importance of PR24 for enabling the sector’s transition
to net zero. Process emissions in particular is an area where significant emissions reductions have
been identified by Government, and significant research and innovation will be needed.
4 Why and what we need
to change: Delivering The water sector is also pivotal in the net zero ambitions of other sectors. Recognition and analysis
more environmental of the interdependencies by regulators would allow sectors to progress faster, and ensure
impact more efficiently investments do not conflict or supersede those in elsewhere in the system.

5 Why and what we need

to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

41 | Water 2050 — A White Paper

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Executive Summary The current approach to planning and making investment

decisions is not fit for purpose
1 Introduction
Not selecting the level of risk that reflects Not selecting projects on the basis of
preferences of current and future generations best overall value
2 Challenges, opportunities
and gaps between now The climate emergency is changing the likelihood of extreme events When faced with the decision of whether to propose or allow a project
and 2050: our priorities and service interruptions such as drought or extreme rainfall. Without to go ahead, a holistic cost benefit analysis can inform which projects
for change action, customers and society would experience lower service levels. are optimal from a societal point of view. The problem is that is not
As a result, resilience has been one of the major investment themes. straightforward to assess and include all relevant impacts. The table
However, we currently do not have a systematic approach to analysing below provides an illustrative example of two options that could address
3 Our Vision for 2050 and deciding on the level of risk current and future generations want to the same problem. When reflecting customer preferences today, option
take. The current approach is often ad hoc, e.g. risk is considered when 2 is optimal as it has a higher benefit cost ratio. But if environmental
looking at individual investment options. This risks leading to decisions impacts are included, both options are equally worthwhile. If we include
that are not optimal so we either take too much or too little risk and do consideration of tipping points, option 1 becomes more cost-beneficial
4 Why and what we need
not invest at the right time. than option 2. The problem with the current approach is that we do not
to change: Delivering always have a comprehensive analysis of the impacts and we then do
more environmental In addition, when relying on historical data for assessing the costs of not always make consistent and coherent decisions on the basis of the
impact more efficiently addressing future challenges, there is a risk of not allowing the right level impacts. The risk is that we select options or projects that are not optimal
of investment at the right time to deliver the society’s risk preferences – this means ultimately society will pay more for less improvement.
over the long-run.
5 Why and what we need
to change: Protecting
long-term customer Option 1 Option 2
interests through the How much risk do BCR1 (Customer preferences today) 1.2 2.2
right investments at current and future
Number generations want BCR (with environmental impact) 1.5 1.5
the right time
of sewer to take?
flooding BCR (with environmental tipping point) 2 1
incidents
1. Benefit / cost ratio
6 The way forward:
working together to
deliver change

Probability

42 | Water 2050 — A White Paper

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Executive Summary Case Study Case Study International precedent

Thames Water: How fixed regulatory South East Water: PROWATER Identifying Cloudburst: Delivering societal value
timescales can hinder the adoption of tipping points in the local environment alongside flooding resilience*
1 Introduction solutions which deliver wider benefits
South East Water is taking part in the European
Thames Water has identified that it might have PROWATER project which aims to facilitate Copenhagen
been possible to develop a more integrated greater use of ecosystem-based adaptation
2 Challenges, opportunities approach to the water quality and flooding solutions (EbA) to build resilience against Copenhagen is experiencing more frequent
and gaps between now major rainfall events and rising levels of
issues associated with the Roundmoor Ditch, climate change. Not only are nature-based
and 2050: our priorities damage due to climate change. To address
a chalk stream in its region that is strongly solutions less carbon and chemical intensive this challenge, it carried out a reassessment
for change influenced by a discharge from Slough Water than traditional solutions, they also deliver of the overall economics of flood resilience
Recycling Centre. environmental benefits via soil protection mitigations, choosing between traditional
and biodiversity. These solutions also provide sewer solutions and a combined blue/
The regulatory timescale associated with the green solution. The combined solution
3 Our Vision for 2050 climate change resilience, allowing us to
requirements to upgrade Slough WRC meant consists of a network of parks that act as
understand how specific habitats can capture reservoirs when required, connected by
that a potential alternative solution which
more rain and transfer it to groundwater, streets that channel water to the harbour.
maximises the environmental and community
improving effective rainfall while protecting the
4 Why and what we need benefits could not be fully pursued, as the To decide between these options, the city
quality of raw water. carried out a socio-economic assessment
to change: Delivering complex issues associated with a more
which recognised the additional benefits of
more environmental integrated approach could not be resolved However, the current regulatory system
a combined solution which included urban
impact more efficiently in sufficient time for the company to avoid is not considered to facilitate cross-sector space improvements, new job creation, and
financial penalties for non delivery of the collaborative nature-based solutions, and the the value of piloting a proof of concept that
scheme. key objective of the PROWATER project is to could be applied in other cities, all while
develop a long-term incentive scheme and preparing the city for a 100-year rainfall event.
5 Why and what we need
Thames currently therefore expects to need common toolbox for assessment of co-benefits The city ultimately went with the blue/
to change: Protecting
to pursue an option which is likely to be more for EbA solutions. green solution, with the mayor for
long-term customer technology and the environment stating
costly and increase the carbon footprint
interests through the To illustrate this point, the project has that “we could build more sewers, but that
of the site. It will only partially address the
right investments at developed a geographic information tool to would be expensive and Copenhageners
operational and community issues associated would get little benefit out of it. Instead we
the right time identify key areas where a change land use
with the Roundmoor Ditch and fails to make opted for a green and blue solution”.**
use of the potential opportunity afforded by change could act as a tipping point for the
this upgrade to restore local watercourses and local environment, deteriorating soil health,
6 The way forward: deliver local environmental improvement. water quality and quantity, and biodiversity
DKK billions Traditional Combined
working together to loss. However, even once these high risk sewer solution
deliver change areas are identified, water companies do not solution
have the powers to ensure land is managed
Net benefit -4 5
in a way to deliver natural solutions, requiring
multi-sector collaboration to effect change.  
Environmental regulation around land-use
though is fragmented across segments and * https://climate-adapt.eea.europa.eu/metadata/
publications/economics-of-cloudburst-and-stormwater-
often input or output focused, making it difficult management-in-copenhagen/11258638
for multiple stakeholders to work together to ** https://www.politico.eu/article/copenhagen-
take corrective action. warming-climate-flooding/
43 | Water 2050 — A White Paper
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Executive Summary We need to work together to change

our approach to investment planning
and decision making
1 Introduction

2 Challenges, opportunities How do we protect long-term customer interests through the

and gaps between now right investments at the right time?
and 2050: our priorities
for change 1. Resilience standards and a common risk framework:

• Defined and agreed clear long-term resilience of service standards alongside a common
understanding of risk and who is best placed to bear that risk
3 Our Vision for 2050
• A sector-wide view of operational resilience that can identify and take steps to mitigate
systemic vulnerabilities to low probability, high impact events – for instance, the sudden
inability of the UK to source a critical chemical.
4 Why and what we need
• All sector planning decision frameworks to be focused on best value, allowing the most
to change: Delivering
beneficial, innovative improvements to be taken forward where they have wider benefits to
more environmental
society
impact more efficiently
2. Forward-looking approach to investment decisions:

5 Why and what we need • Investment decisions and cost assessment should always be made and funded based on
forward-looking approaches to assessing costs, value and risk of existing and new assets
to change: Protecting
long-term customer • Short-term company targets transformed into milestones consistent with a best value approach
interests through the towards achieving long-term standards, enabling innovative solutions that may require longer-
right investments at term horizons.
the right time
3. A single joined-up long-term adaptive plan

• Integration of multiple existing plans into a single, joined-up, long-term adaptive plan for each
6 The way forward: company (including the WINEP, WRMP, DWMP, RBMP) and closer collaboration with other
working together to sectors
deliver change • This plan will form the basis of 5-year revenue allowances and service milestones, framed
within 25-year and 50-year horizons
• This would enable a better decision making on affordability in the context of the long-term

44 | Water 2050 — A White Paper

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Executive Summary Case studies that illustrate the benefits of the proposed changes
Top down analysis Case study management of major rivers, including
1 Introduction upgraded coastal defences, barriers and
The National Infrastructure Commission’s Anglian Water: Future Fens – Taking an barrages will protect growth areas and enable
(NIC) recent study of England’s future water integrated and holistic approach to key local infrastructure projects, while new
needs points towards the need for increased long-term planning open water channels will enable growth in
2 Challenges, opportunities
investment in resilience to protect customers The Fens is the most exposed area of the UK biodiversity, tourism and navigation. New
and gaps between now
from drought risk.1 Based on the highest risk to climate change. This low-lying region is multi-sector reservoirs (including a 60 billion
and 2050: our priorities
scenario – high population growth and high on the frontline of rising sea levels and at the litre capacity resource) will provide additional
for change
climate impacts – the costs of maintaining foot of major river catchments. Traditional water supply resilience for water companies,
the current level of resilience in response to a solutions to the Fens’ challenges would farmers and the food industry, and improve
drought emergency could reach c£40 billion see reservoirs, transport links, biodiversity the water environment. This programme
3 Our Vision for 2050 by 2050, while proactively investing in long- enables the Fens to take control of its own
restoration and flood prevention considered in
term resilience may only cost c£21 billion. silos, an expensive approach delivering limited destiny; adapting and becoming climate
benefits. By contrast, Future Fens: Integrated resilient. It has the potential to unlock wider
On flood resilience, the Third UK Climate
4 Why and what we need Adaption (FF: IA) is multi-agency collaboration benefits for the region and for the country
Change Risk Assessment discusses flood risk
to change: Delivering led by Anglian Water, Water Resources East such as: more productive agriculture, long-
in terms of expected annual damages to
more environmental and the Environment Agency in partnership term food security, increased biodiversity,
residential and non-residential properties, in
impact more efficiently with Royal Haskoning DHV, the Dutch Delta climate resilient infrastructure, a supply of
addition to indirect damages. Under current
Commission, local MPs and authorities and sustainable housing, thriving places and
levels of adaptation and planning, expected
many regional partners to bring together many renewed local pride. It will bring tangible
damages from flooding could rise to c£2
different sectors, organisations and people social benefits to an area where social mobility
5 Why and what we need billion annually by 2050, an increase of 60%
into one integrated, holistic approach to help has been limited (with youth unemployment
to change: Protecting relative to current levels under the high risk
solve the problems we all face together. a particular challenge), and where livelihoods
long-term customer scenario of a 4°C rise in global temperatures
are at further risk from climate change. It also
interests through the and high population growth. The new water management approach provides an opportunity to build on inclusion
right investments at
created by this partnership will be one solution and diversity work led by Anglian Water and
the right time Over the course to 2050, the studies above
addressing many of the environmental, others in the region.
indicate that more joined-up, long-term and
economic and social challenges faced by
adaptive planning may help save up to £35
the Fens. By integrating all elements of water
billion, or £80 per household per annum2 in
6 The way forward: usage, we can ensure the most effective
relation to adverse resilience outcomes around
working together to storage and use of water resources, building
droughts and flooding.
deliver change resilience into the long-term. Flood risk

system boundary within which water Upgraded flood risk

strategy will be aligned with land use management strategy
management (i.e. NFRM & ELMS), wider
floodrisk management goals and other

New open water transfers Upgraded coastal defences

New reservoirs

New reservoir intake

Boston to Peterborough
wetland corridor

45 | Water 2050 — A White Paper 1. National Infrastructure Commission, Preparing for a Drier Future, 2018
2. Committee on Climate Change, Third UK Climate Change Risk Assessment (CCRA3) Future flood risk, 2020
 Back Next

Executive Summary Looking back from 2050, what would we see?

1 Introduction
Without proposed changes With proposed changes

2 Challenges, opportunities
and gaps between now • Individual assessments of risk that are not • Water companies have facilitated
and 2050: our priorities What will aligned collaborative, holistic discussion and decision
for change we see? • Lack of transparent environmental trade- on risk and investment that is adapted over
offs to inform resilience investment time and allows for longer term innovative
decisions solutions
3 Our Vision for 2050 • Backward looking assessment leads to sub- • Our common understanding of risk is reflected
optimal level of investment in single joined-up plans that align decisions
across different regulators and areas

4 Why and what we need

to change: Delivering
more environmental
impact more efficiently

• Too little or too much resilience with higher • Level of resilience reflects society’s long-
5 Why and what we need What are the bill impact term preferences
to change: Protecting
long-term customer
impacts on • Less environmental value • More environmental value

interests through the customers, • Missed opportunities to mitigate risks for • Opportunities to mitigate risks for future
right investments at communities future generations generations realised
the right time and the
economy?

6 The way forward:

working together to
deliver change

46 | Water 2050 — A White Paper

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change

3 Our Vision for 2050

6 The way forward:
4 Why and what we need
working together
to change: Delivering
more environmental
impact more efficiently
to deliver change
5 Why and what we need
to change: Protecting
long-term customer
interests through the
right investments at
the right time

6 The way forward:

working together to
deliver change

47 | Water 2050 — A White Paper

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Executive Summary Summary of our proposals for change

To overcome the challenges and to achieve our Vision, water companies, the supply chain, government,
1 Introduction
regulators, customers and communities must all come together to accelerate the rate of positive change.

2 Challenges, opportunities Delivering more environmental value, more efficiently Protecting long-term customer interests through the right
and gaps between now investments at the right time
and 2050: our priorities
for change 1. Outcome-based environmental regulation OBER: 1. Resilience standards and a common risk framework:
• Long-term outcome targets linked to the 25YEP set for England as • All sector planning decision frameworks to be focused on best
a whole covering all key aspects of the environment – including value, allowing the most beneficial improvements to be taken
3 Our Vision for 2050 carbon. This will ensure that the water sector targets contribute forward where they have wider benefits to society.
directly to the 25YEP ideally as part of a National Plan for Rivers1 and
other water bodies. Ideally this would be underpinned by protection • A sector-wide view of operational resilience that can identify and
in law such as a new, single “Rivers Act”.1 take steps to mitigate systemic vulnerabilities to low probability, high
4 Why and what we need impact events – for instance, the sudden inability of the UK to source
• Targets and milestones apportioned to catchments, fundamentally
to change: Delivering reshaping the scope of the WINEP. Water companies should receive a critical chemical.
more environmental their fair share of the targets without delay so we can start making • Defined and agreed clear long-term service resilience standards
impact more efficiently our contribution to the 25YEP. alongside a common understanding of risk
• Companies allowed to meet targets by delivering outcomes in 2. Forward-looking approach to investment decisions:
partnership with others, including customers and communities and
• Investment decisions should always be made and funded based on
5 Why and what we need other sectors (consistent with local empowerment.1 This will ensure
forward-looking approaches to assessing costs, value and risk rather
to change: Protecting that the best value solutions are implemented and allow innovation
to flourish. This is key for unlocking efficiencies. than focusing on historical data.
long-term customer
• Economic regulation provides appropriate risk and reward balance • Short-term company targets need to be transformed into milestones
interests through the
and a level playing field between traditional and NBS. This will consistent with a best value approach towards achieving long-term
right investments at
ensure that there are no financial barriers to innovative solutions. standards, enabling innovative solutions that may require longer-
the right time
• OBER monitoring framework supported by new measures that term horizons.
provide open and live data (e.g. discharges). This is essential for 3. A single joined-up long-term adaptive plan
trust and confidence in OBER and identify how OBER has facilitated
• Integration of multiple existing plans into a single, joined-up, long-
6 The way forward: innovation.
term adaptive plan for each company (including the WINEP, WRMP,
working together to 2. Change skills profile and culture so: DWMP, RBMP) and closer collaboration with other sectors. This
deliver change
• Water companies, regulators, NGOs, etc. have world-class green plan will form the basis of 5-year revenue allowances and service
skills to identify, develop, and implement innovative solutions milestones, framed within 25-year and 50-year horizons.
• Everyone is focused on outcomes, innovative approaches and
partnerships
• This will ensure that OBER delivers maximum benefits to customers
and communities as we have the right skill base and mindset to
develop, trial and implement innovative solutions.

48 | Water 2050 — A White Paper 1. See Water UK, 2021, 21st Century Rivers, 10 Actions for Change
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Executive Summary Industry case study:

21st Century Rivers – Promoting Collaboration
and Reform to Prioritise Healthy Rivers
1 Introduction

2 Challenges, opportunities Water UK’s recent document 21st Century Rivers asks everyone — from regulation (OBER) will enable water companies up to innovate and invest
and gaps between now river users and customer groups, to environmental NGOs, to work with in the outcomes that really matter for the environment. This is likely to
and 2050: our priorities the water companies on a new collaborative approach that responds be achieved by working with others who impact on the health of the
for change to the challenges of climate change, increased customer expectation river and will also identify opportunities to improve other environmental
and the realisation that substantial investments driven by environmental outcomes such as biodiversity and avoid negative externalities such as
regulation are not producing the outcomes that society expects. additional carbon emissions. This will enable companies to deliver the
3 Our Vision for 2050 most environmental value at the least cost.
With other industries shown by the EA to be responsible for three-
quarters of the reasons for harm in rivers and the use of storm overflows This White Paper calls for changes that would lead water companies to
responsible for just 4%, a National Plan for Rivers will help prioritise produce a single and integrated long-term plan, grounded in local needs
4 Why and what we need investment across sectors and identify the policy changes required. and a common understanding of risk. These plans will place the future
to change: Delivering health of our rivers alongside other key priorities such as achieving net
more environmental The 21st Century Rivers ‘Ten actions for change’ therefore provide an zero and the need to secure the resilience of our water and wastewater
impact more efficiently example of the collaborative, cross-sector approach that is needed services to customers in the face of climate change and its impact on
to rise to the challenges of the future. One of the key actions is for a our ageing asset base. A National Plan for Rivers will both inform and be
National Plan for Rivers to be developed and governed by a National Plan informed by companies’ own integrated long-term plans. The outcome
Steering Group. The 21st Century Rivers Actions are aligned with the key will be a transparent set of expectations for improvements to the river
5 Why and what we need changes articulated in this White Paper with the aim of “delivering more that will enable us to invest in the right things at the right time.
to change: Protecting environmental value more efficiently”. Outcome-based environmental
long-term customer
interests through the
right investments at
the right time

The 21st Century Rivers Actions are aligned

6 The way forward: with the key changes articulated in this
working together to
White Paper with the aim of “delivering
deliver change
more environmental value more efficiently”.

49 | Water 2050 — A White Paper

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Executive Summary

1 Introduction

2 Challenges, opportunities
and gaps between now
and 2050: our priorities
for change
Together we need to build a shared endeavour to rise to the
challenges of the future
3 Our Vision for 2050
On behalf of the water companies in England, Water We need to work together to implement the changes
UK will bring together a wider range of stakeholders that will enable us to deliver our Vision.
4 Why and what we need to drive collaborative change.
to change: Delivering We understand that short-term priorities often take precedent but the
more environmental challenges are so great that we cannot afford delay.
impact more efficiently
We therefore commit to driving these changes forward by:

Water Supply • Establishing a White Paper Steering Group to facilitate ongoing

5 Why and what we need companies chain strategic dialogue with all stakeholders on how much progress we
to change: Protecting have made against the priority areas for change discussed in this
long-term customer White Paper;
interests through the • Together with our stakeholders we will integrate, accelerate and
right investments at boost existing work programmes to deliver the changes we need;
the right time and
Regulators NGOs • When faced with short-term challenges or regulatory cycles we will
ensure that we do not lose sight of the priority changes.
6 The way forward:
working together to
deliver change
Customers & Government
communities

50 | Water 2050 — A White Paper

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Executive Summary We need to change now to meet society’s future

needs in the face of a changing planet
1 Introduction

2 Challenges, opportunities
and gaps between now We need to implement changes now… … so we can deliver our Vision:
and 2050: our priorities
• Agree key changes that are needed By 2050, we will be globally recognised as an environmental leader,
for change
• Implement “low hanging fruit” stewarding the improvement of rivers and seas, acting on the climate
emergency and protecting customers’ long-term interests.
• Implement changes in all areas
3 Our Vision for 2050

4 Why and what we need

to change: Delivering
more environmental
impact more efficiently

2020s 2030s 2040s 2050

5 Why and what we need
to change: Protecting How the planet 1.5C temporary 1.5C permanent Approaching 2.0C Approaching /
long-term customer will change: temperature increase temperature increase Exceeding 2.0C
interests through the
right investments at Government Increased productivity, growth and wellbeing A better Net Zero achieved
the right time policy goals: across all regions environment for
future generations
achieved (25 YEP
6 The way forward: end point)
working together to
deliver change

… and continue to deliver our purpose:

protect public health, improve the environment, unlock environmental growth, and act
as a responsible leader at the heart of England’s regions, today and in the future.

51 | Water 2050 — A White Paper

© Water UK 2022 | water.org.uk