Most of us probably only think about our water company when we pay the bill, when there’s a hosepipe ban or when we see news stories about how much water bosses are getting paid. Labour’s proposal to renationalise the water industry highlights some of these popular concerns. With all this noise it is easy to forget that the water industry is a hugely significant player in environmental protection. Whatever the future ownership of the water industry looks like, we urgently need to improve the state of our waterways, increasing resilience and restoring nature.
The news that this summer’s heatwave could cause water shortages next spring only goes to demonstrate how England’s waterways are under constant pressure. They are threatened by climate change, demographic changes and pollution, and their overall health is poor. But 2018-19 could be pivotal in kickstarting a new approach to the restoration of our water environment. Because, while water companies are outlining and agreeing their plans to meet their environmental objectives from 2020-2025, the government is also redesigning agriculture policy to focus on the delivery of environmental public goods. This moment, when public and private funding could align, should be seized to focus spending where it can achieve the most for the environment.
Traditional approaches won’t work in future
By 2020, water companies will have spent £28 billion since privatisation on protecting and restoring the environment. Most of this has been focused on wastewater treatment. In the first decade after privatisation in 1989, the water industry cut the number of beaches failing to meet water quality standards from around 25 per cent to five per cent. Since 2000, continued investment in end-of-pipe solutions lowered failures to below 0.5 per cent.
But there are still challenges. The condition of England’s surface and ground waters are generally poor and, in some cases, in decline. The government’s aim is for three quarters of water bodies to reach good or high status, but currently only 16 per cent are achieving this and there has been no overall improvement since 2009. The water industry is also dealing with plastics pollution, increasing uncertainty in the weather due to climate change and rising demand for its services.
We are reaching the limit of what can be achieved with end-of-pipe solutions. Agriculture is now the main culprit when it comes to poor water quality, and is responsible for nearly a third of failures of water bodies reaching good status. The traditional ways aren’t working any more. New approaches are needed.
‘Catchment management by default’
The good news is that things are changing. Companies are increasingly using ‘catchment management schemes’, working with other organisations to manage pressures on the water environment at source and enhance habitats, avoiding the need to build hard infrastructure and providing better value for money. These measures include natural infrastructure, like building woody debris dams and earth bunds, and changes to farming practices, such as planting cover crops to reduce pollution.
The period 2015-20 has seen £200 million allocated by water companies for catchment management schemes, compared to £60 million from 2010-2015 (although this is still only six per cent of their total spending on environmental protection). Moving more quickly in this direction would avoid significant costs: a large water company could spend £80 million over 25 years upgrading its nitrate treatment plants to meet existing legal targets. But if agricultural pollution was dealt with at source much of this cost could be deferred or avoided altogether.
One barrier to catchment management is that natural measures don’t always have the same certainty of outcome as the hard solutions. Regulators could allow more latitude to experiment with new ideas, even if they might sometimes fail. The environmental projects being proposed for the 2020-25 funding period will be a source of evidence for what works well and what doesn’t.
Aligning public and private funding
Lining up public and private spending around complementary priorities for water management can’t come soon enough. The payment system as it is does not make sense. In the 20 years between 1995 and 2015, the government spent £37 billion on direct payments to farmers, encouraging agriculture which has made water pollution worse. Over the same period, water companies spent £20 billion on environmental improvements, including cleaning up pollution.
The new Environmental Land Management system proposed by Defra is a unique opportunity to remove this conflict of incentives and ensure that money spent is directed one way, to improving the environment.
The ultimate prize is a water environment in the UK which provides clean and plentiful water, supports wildlife in healthy habitats, and protects communities from drought and flooding. Regardless of whether the water industry is public or private in future, the next year is a golden opportunity to bring about a positive change in how we manage water.