Because water resources are shared and ownership rights are generally absent, transforming the water sector will require collaboration among five key players:
- Water utilities, with the help of information technology, will look beyond their traditional business, decoupling profits from sales volumes and selling their expertise in water management.
- Regulators will increasingly demand more monitoring and transparent reporting from all large consumers; use more regional planning of the water basins; and stimulate efficiency through enhanced consumer information, effective pricing and performance standards.
- Retailers and manufacturers, such as producers of consumer packaged goods, will play a pivotal role in encouraging water efficiency through supply chain management program, product selection and design choices. They can also empower and engage consumers.
- Consumers will have to change their behavior and reduce water consumption to a more sustainable level.
- Technology providers will in turn be the great enablers, delivering more efficient appliances and water technologies, and improve the management of all components of the water system.
Ripple effects of water efficiency
Water efficiency unleashes a series of positive indirect ripple effects on the lifecycle of water, on the power system and society at large. Because a significant amount of energy is used throughout the water lifecycle, using less water also reduces energy consumption. This, in turn, will lead to lower water use by the energy sector, continuing the beneficial feedback loop. The greatest ripple effects will be felt in the industrial and urban sectors because of the high energy intensity of their water use, while agriculture holds the greatest potential for water savings.
Opportunities in the three sectors - Urban, Industrial and agricultural
We looked at specific opportunities in the following three sectors:
The urban sector, which in this report covers services provided by water utilities to residential, commercial and public buildings, is responsible for 11% of total water withdrawals. Major water savings can be realized at no additional cost through changes in consumer behavior and by switching to more water efficient appliances.
Effective information and tariff structures such as rising block tariffs – which charge increasing unit rates for higher consumption – can encourage consumers to save water.
Water utilities around the world are confronted with ageing infrastructure, requiring massive capital expenditure, which can often be reduced through end-use efficiency and better visibility of water distribution networks.
Waste water will increasingly be exploited as a source of recycled materials, energy, nutrients, revenue and additional water supply. In Israel, about 75-80% of urban waste water is treated and re-used in the agricultural sector.
The industrial sector, typically a self-reliant water user, accounts for 19% of global water withdrawals. Access to sufficient water is essential for industrial growth, and the industry has an enormous opportunity to increase water efficiency throughout the value chain. At the same time, industries must assess the risks that water shocks pose to their operations as well as their supply chains. Water scarcity and regulations have raised the cost and energy intensity of water. Stakeholder reporting and identifying water risks to production systems require improved analytics.
Implementing off-the-shelf efficiency technologies can reduce large water inefficiencies. In the pulp and paper industry in India, such measures can cut water use by more than a quarter at no additional cost.
The agricultural sector, which accounts for 70% of global water withdrawal, will need to supply more than 9 billion people with food in 2050. Water efficiency represents a huge untapped opportunity:
- Saving 32% of agricultural water globally would be sufficient to cover the entire expected growth in water use by both the industrial and urban sectors through to 2030.
- With an efficiency rate of 80-93%, drip irrigation is one of the most cost-effective ways to conserve significant amounts of water. It also has hidden benefits, such as reducing the power needed for groundwater pumping, increasing yields and reducing water pollution.
Six ways to transform the water system
- Utilities will need to switch from their current business model, based on increasing sales volume, to a decoupled model, based on providing water services.
- Developing countries that “leapfrog” over inefficient water practices can make major cuts in both water and energy use, while still providing services to more people.
- Reducing sources of pollution, such as agricultural runoff, can significantly reduce the cost of water treatment borne by both utilities and society.
- Integrated management of water basins (sources) and water end-use can help ensure that water is used in the most economically efficient manner.
- It makes good business sense for both utilities and society to integrate the recycling of water, energy and materials into the water system.
- Information technologies create opportunities for smarter, innovative water management.
In this in-depth business analysis, we identify substantial opportunities to deliver “smarter water”: using less – often, much less – water, while maintaining the same or better service, and at the same time increasing long-term profitability for utilities and lowering costs for end-users. We focus on the central role of ICT in enabling a smarter water system.
Learn more about the five business case analyses showing pathways to lower water consumption that make business sense and benefits the society.
Read White Paper: Keeping the Basins Full: Smart Water for the 21st Century (PDF, 3.15 MB)