water can the triple bottom line deliver greater value to water utilities? by steve kenway, pat...

waterutilitymanagementI N T E R N A T I O N A L

JUNE 2009VOLUME 4 � ISSUE 2

ANALYSIS4 World Bank report advises on

reform processesBy Lis Stedman

5 World Bank project aims to improveEgypt’s sanitationBy Lis Stedman

FEATURES7 BUSINESS PLANNING

Toolkit aid for town watersupply provisionBy Simon Gordon-Walker

10 DEMAND MANAGEMENTWater demand management foran urban area: the case study ofDwarka, a sub-city of DelhiBy Rabidyuti Biswas, Deepak Khareand Ramasurbramaniam Shankar

18 PRICINGTariffs and pricing policies: anopportunity to network with Far Eastwater professionalsBy Renato Parena

20 PRICINGStructuring tariffs: getting the mostfrom water ratesBy Lis Stedman

21 PERFORMANCETriple Bottom Line reportingand management for improvingutility performanceBy Steve Kenway, Carol Howe,Shiroma Maheepala, Tony Kellyand Cheryl Davis

23 PERFORMANCEHow can the Triple Bottom Linedeliver greater value to waterutilities?By Steve Kenway, Pat McCaffertyand Francis Pamminger

Six associations representing the US water andwastewater sector, in collaboration with the

US EPA (Environmental Protection Agency), havereleased a document titled ‘Effective water andwastewater utility management case studies’, acompanion to last year’s ‘Effective utility manage-ment: a primer for water and wastewater utilities’.

This companion piece provides concreteexamples and ‘how to’ assistance for utilitymanagers through profiles of four utilities thatsuccessfully applied the primer concepts andtools to progress effective management practicesand achieve long-term sustainability.

The Effective Utility Management (EUM)collaborating associations – the American PublicWorks Association (APWA), American WaterWorks Association (AWWA), Association ofMetropolitan Water Agencies (AMWA), National

Association of Clean Water Agencies (NACWA),National Association of Water Companies(NAWC), the Water Environment Federation(WEF), and EPA – have been working togetherover the past two years to promote effective utilitymanagement across the water sector, based on aseries of ten attributes of effectively managedutilities and five keys to management successidentified originally in a report released by thegroup in May 2007.

The new case study document illustrateshow four utilities used the attributes and keys,along with example measures and a self-assessment tool found in the primer, toimprove management operations, bring acrisp and cost effective focus to theirinitiatives, and supplement both theirinternal and external communications. �

US collaboration releases utilitymanagement case study document

The World Bank has issued a new report on theguiding principles for successful reform of

urban water supply and sanitation sectors, whichaims to provide practical guidance to its ownteams advising on the implementation anddesign of urban water supply and sanitationsector reforms.

The report’s three main chapters discuss howto measure the performance of an urban waterand sanitation service, explain apparentperformance gaps (if these exist) and how todesign and implement reforms so that they

increase access to infrastructure, improveoperational efficiency and increase the reliability,sustainability and affordability of the service.

The report is based on a number of pieces ofanalytical research either already published bythe Bank or due for publication on a range oftopics such as governance, service efficiencyand public-private partnerships.

It also provides a range of case studies toillustrate the various reform topics that it covers,either of successes or of the consequences offailure to reform (see Analysis page 4). �

World Bank provides guidanceon successful water andsanitation reform

The Asian Development Bank (ADB) and theIslamic Development Bank (IDB) have agreed

to set up Asia’s first major multi-country Islamicinfrastructure fund.

The Islamic Infrastructure Fund, which has atarget of $500 million, will make Shari’ah-compliant equity investments in the 12 countriesthat are borrowing members of both develop-ment banks, currently Afghanistan, Azerbaijan,Bangladesh, Indonesia, Kazakhstan, KyrgyzRepublic, Malaysia, Maldives, Pakistan,Tajikistan, Turkmenistan, and Uzbekistan.Most of Asia is in urgent need of additionalspending on infrastructure, the ADB says,but infrastructure in the target countries is

frequently worse than the Asian average.Robert van Zwieten, director of ADB’s Capital

Markets and Financial Sectors division, said: ‘InIndonesia, only 39% of urban dwellers haveaccess to piped water, only 9.5% of roads inAfghanistan are paved and only 42% ofBangladesh’s population has access toelectricity. Without added investment tochange that, economic growth and povertyreduction will be held back.’

The investment is the ADB’s first Sharia’ah-compliant fund. Such instruments are structuredto comply with Islamic law, which barsinvestment in interest-bearing securities orin forbidden activities such as gambling. �

Banks set up multi-country Islamicinfrastructure fund

2 • WATER UTILITY MANAGEMENT INTERNATIONAL • JUNE 2009

EDITORIAL

Editor / Associate PublisherKeith Hayward ([email protected])

Publishing AssistantCatherine Fitzpatrick

Water Utility Management Internationalfocuses on the interests of utilityexecutives, policy makers and advisorsaround the world engaged with the keymanagement issues faced by water andwastewater utilities. As well as seniorutility managers, the publication willbe of interest to regulators, consultants,contractors, academics, and financial,technical and legal professionals.

Utility reform and achieving efficiencyare central themes of the publication,encompassing topics such as benchmark-ing, investment planning, consolidation,public / private sector roles, leadership, IT,and human resources. Other regularthemes include financing, regulation,charging policies, procurement, corporategovernance and customer issues.

Editorial Advisory Panel

Dr Richard Franceys, Centre for WaterScience, Cranfield University, UKDr Bernhard Hoersgen, Executive BoardMember, Gelsenwasser AG, GermanyDr David Johnstone, Oxford Centre forWater Research, University of Oxford, UKProf Hamanth Kasan, General Manager -Scientific Services, Rand Water, SouthAfricaMr Khoo Teng Chye, Chief Executive, PUB,SingaporeMr Alejo Molinari, Quality of ServicesManager, ETOSS / ERAS, ArgentinaDr Renato Parena, Chief Financial Officer,Societa Metropolitana Acque Torino SpA,ItalyMr Eric Rothstein, Principal, GalardiRothstein Group, USAMs Meike Van Ginneken, Senior Water andSanitation Specialist, World Bank, USA

For more information, visit:www.iwaponline.com/wumi/default.htm

PUBLISHING

PublisherMichael Dunn

Water Utility Management Internationalis published four times a year (March,June, September, December) by IWAPublishing. Statements made do notrepresent the views of the InternationalWater Association or its Governing Board.

IWA PublishingAlliance House,12, Caxton Street,London SW1H 0QS, UKTel: +44 (0)20 7654 5500Fax: +44 (0)20 7654 5555Email: [email protected]: www.iwapublishing.com

SUBSCRIPTIONS

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2009 price (4 issues):£187/ €282 / $373(IWA members: £164 / €246 / $328)

ContactPortland Customer ServicesCommerce Way, ColchesterCO2 8HP, UKFax: +44 (0)1206 799331Email: [email protected]

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Design & printLayout: IPL Print & Design LtdOriginal design: John BerbutoPrinted by Hobbs the Printers, UK

ISSN (print) 1747-7751ISSN (online) 1747-776X© IWA Publishing 2009

waterutilitymanagementI N T E R N A T I O N A L

NEWS

Business

SOUTH AFRICA: Johannesburg Water announces majorinfrastructure spendJohannesburg Water has announced that it will spendR500 million ($61.5 million) over five years to replacea large swathe of ageing water pipe infrastructure, inan attempt to finally cure leaks and bursts in thesystem.

EGYPT: OCI claims best bid for Cairo wastewatertreatment plantEgypt’s Orascom Construction Industries (OCI) hassaid that its joint venture with Spain’s Aquila submittedthe best bid for a 250,000m3/day capacity wastewatertreatment plant for Cairo. OCI said the bid value was$459 million, but that bids are still being evaluated.The winning consortium will build and operate theplant for 20 years.

ZIMBABWE: Reports claim need for $40 million spendon Harare water systemNews reports from Zimbabwe claim that Hararerequires over $40 million to refurbish its watertreatment plant and improve the capital’s watersupply. Reports suggest the city could be sufferingup to 45% leakage. Major repairs to the planthave already begun, following the city’s decisionto take control of its water supply from the stateutility, Zinwa.

ABU DHABI: Adwea agrees finance for majordesalination projectAbu Dhabi Water and Electricity Authority (Adwea)has agreed a deal to finance construction of the$2.5 billion Shuweihat Two power and desalinationplant. The new plant will have a daily capacity of1500MW and 1MGD (454,610m3/day) but itslocation has not yet been decided. The 1.2km2

plant will be built as a turnkey project by SiemensEnergy and its partners Doosan Heavy Industriesand Samsung Engineering and Construction. The

plant is due to go into operation in September 2011.

MACAO: WABAG announces new subsidiary withColoane plant startupWith the start-up of operational management of thelarge-scale Coloane wastewater plant in Macao,WABAG has announced it has gained both a newsubsidiary, in the form of WABAG Water Services(Macao), and a further order. The 130,000 m3/dColoane wastewater treatment plant has beenenlarged and updated on the basis of SBR(Sequencing Batch Reactor) technology.

GREECE: Country announces moves to privatisewater utilityGreece’s finance ministry has announced that thecountry will begin the privatization of its second-largest water utility, Thessaloniki Water (Eyath),by starting the procedure to find a strategic investor forthe utility. The first step will be to choose the govern-ment’s advisors, and the government says that foreigncompanies have already shown an interest.

US: Black & Veatch wins Georgia water developmentand conservation projectBlack & Veatch has been chosen by the GeorgiaEnvironmental Protection Division to help preparewater development and conservation plans for three ofthe state’s regional water planning councils. Theproject is part of the state’s comprehensive watermanagement plan, which focuses on development ofwater plans for all ten of its regions. The company willwork with the neighbouring Middle Chattahoochee,Upper Flint and Lower Flint-Ochlockonee regionalplanning councils, using water resource assessmentsand population projections for up to 40 years in thefuture to develop realistic estimates of future wateruse. These will then be compared to the availableresources to identify any shortfalls. The companywill then work with the councils to choose the rightmix of new water source development and waterconservation actions.

The city of St Petersburg in Russia will reduce theamount of untreated sewage discharged into the

Baltic Sea to just 6% of total effluent in three years’ timethanks to a new project jointly financed by the EuropeanBank for Reconstruction and Development (EBRD), theinternational community, the Russian budget, the localgovernment and the city’s water utility.

The EBRD funds will be used to upgrade StPetersburg’s Northern wastewater treatment plant andto finance the construction of a tunnel pumping stationin the main underground collector sewer for the north ofthe city.

Currently, 85% of the effluent discharged into theGulf of Finland is biologically treated because of a seriesof projects over the last 12 years funded by Russia’sneighbours and international institutions. The newproject will take this figure to 94% by 2012.

The city’s ultimate goal is to eliminate all dischargesof untreated sewage to reduce pollution and safeguardthe vulnerable Baltic Sea.

The EBRD will contribute a 15-year loan of €17.5

million ($24.4 million) and a €6 million ($8.37 million)grant from its Shareholders’ Special Fund to the€187.1 million ($260.96 million) cost of the project.

The borrower is the city water utility, whose officialname is the State Unitary Enterprise Vodokanal ofSt Petersburg. The Nordic Investment Bank (NIB) isalso lending €25 million ($34.87 million) and theEuropean Investment Bank (EIB) another €17.5 million($24.4 million). The project is also receiving financialsupport from the governments of nearby Finlandand Sweden.

The Neva Discharge Closure project, like severalprevious major environmental schemes in the area, ispart of a programme launched by the NorthernDimension Environmental Partnership (NDEP) and isbacked by a €24 million ($33.47 million) grant, thelargest ever allocated for a single project by the NDEPSupport Fund.

The NDEP was set up by the internationalcommunity in 2001 to tackle the region’s main pollutionproblems, particularly in north-west Russia. �

Banks fund St Petersburg wastewatertreatment improvements

WATER UTILITY MANAGEMENT INTERNATIONAL • JUNE 2009 • 3

Loans and Tenders

BURKINA FASO: World Bank provides IDA grant for urban watersector projectThe World Bank has provided an IDA (International DevelopmentAssociation) grant of $80 million to Burkina Faso to help with its urbanwater sector project. The project aim is to support the improvement andexpansion of potable water and sanitation services in the cities ofBobo-Dioulasso, Dédougou, Koudougou and Ouagadougou. Theoperation follows a project to supply water to the city of Ouagadougou fromthe Ziga dam, which was funded by IDA and around ten other donors.

LESOTHO: World Bank loan supports water sector improvementThe World Bank has provided $16.5 million to Lesotho for the secondphase of its water sector improvement project, which has three aims: tosupport the country in developing and sustaining an environmentallysound, socially responsible and financially viable framework for theMetolong dam and water supply programme (MDWSP); increasing thequantity of safe, bulk water supplied to Teyateyaneng; and strengtheninginstitutions and related water sector instruments.

ALBANIA: EC provides funds to upgrade and rebuild infrastructureAs part of its pre-accession partnership, the European Commission hasannounced that it will grant €60.9 million ($86.24 million) to Albania for 24projects in administrative reform, education and rural infrastructure, toalign Albania closer to other European states as a precursor to EU mem-bership. The parties also signed an agreement to help Albania rebuild avillage near Gerdec that was damaged in a munitions explosion last year,with the funds financing a school, water supply and wastewater system.

JORDAN: EIB lends funds for water transfer projectThe European Investment Bank (EIB) has signed a $100 million loanwith the Jordanian government to finance construction of a pipeline tobring 100M.m3 of water each year from Disi, in the south of the country,to the capital, Amman. The project will include construction of 325kmof pipeline.

ZIMBABWE: NGOs fund Bulawayo water and wastewater improvementNews reports from Zimbabwe press say that Non-GovernmentalOrganisations (NGOs) are funding the rehabilitation of Bulawayo’s decrepitsewer and water networks to prevent outbreaks of waterborne diseases.Residents have voiced fears about flows of raw sewage in various districtsdue to bursts in aging sewer pipes. NGOs include World Vision, UNICEF,Africa Sales and residents associations.

INDONESIA: ADB approves infrastructure development fundingThe ADB (Asian Development Bank) has approved investment of up to$140 million in the government-backed Indonesian InfrastructureFinancing Facility to support urgent infrastructure development inIndonesia. Critical infrastructure shortages are holding back economicgrowth and poverty reduction in Indonesia but private-sector investmenthas been low because of the dearth of long-term financing from banks orthrough the capital markets. The facility will provide financial assistance inthe form of long-dated debt instruments, equity, or guarantees for infra-structure projects. Through this move the bank aims to attract six to seventimes more private sector investment to Indonesia’s infrastructure sectorthan there currently is.

EUROPE: EBRD takes stake in equity investment vehicleThe EBRD (European Bank for Reconstruction and Development) is totake a minority stake of up to €80 million ($114 million) in Aqualia EquityInvestment which will make investments in full or partial water cycleconcessions, acquisitions, service contracts and contracts for theconstruction and management of hydraulic infrastructure in the Bank’scountries of operations. This operation will support and expand privatesector participation in the water utility sector in Central and EasternEurope, including Hungary, Slovak Republic, Romania, Poland, Russiaand other countries of operations. The project will play a key role insupporting a major international water operator as it expands into newmarkets. The investment will help to restructure and improve water andwastewater operations in its target markets, ensure availability of fundingsources necessary to address urgent infrastructure needs, therebypromoting long-term sustainability.

NEWS

The US EPA’s 2010 budget includes $3.8 billion for maintaining andimproving outdated water infrastructure and wastewater, the regulator

has announced.The funding will support efforts around the country to build and renovate

an estimated 1000 clean water and 700 drinking water infrastructureprojects, support green infrastructure and create thousands of technicaland construction jobs. Funding will also be available to help communitiesrepair and upgrade aging networks of drinking water and wastewater pipesthat are overwhelmed and breaking down.

The budget includes a $475 million multi-agency Great Lakes initiative to

protect and clean up the world’s largest freshwater lakes through restorationefforts, invasive species control, non-point source pollution mitigation andprotection of critical habitats.

The funds also support key efforts to protect, maintain, and restore theChesapeake Bay and the Anacostia river, Puget Sound, San Francisco Bay,Lake Champlain and other large water bodies.

The EPA will also make significant investments in its greenhouse gasemissions inventory, including new analytical tools and upgraded testingcapabilities, and it will coordinate with other agencies on research andgreen initiatives. �

Record EPA budget includes significant fundingfor water and wastewater

The World Bank has approved a loan for $840 million in supportof the Matanza-Riachuelo river basin sustainable development

project. The loan will support the government’s integrated basincleanup strategy, which aims to progressively eliminate dischargesto the Matanza-Riachuelo river, thus improving water quality andenvironmental conditions.

The Matanza-Riachuelo river is polluted by industrial discharges,wastewater from households not yet connected to sewerage systems,overflows from contaminated storm drainage systems and other sources.In order to resolve these issues, the project will improve sewerage services

in the river basin and other parts of the province and in the capital city,Buenos Aires, by expanding transport and treatment capacity.

The funds will also support reductions in industrial discharges to theriver, by providing industrial conversion grants to SMEs (Small toMedium-sized Enterprises) and promoting improved decision-making forenvironmentally-sustainable land use and drainage planning, as well aspiloting urban drainage and land use investments in the river basin.

The project will also strengthen the institutional framework of the basinagency, ACUMAR, for the ongoing and sustainable clean-up of theriver basin. �

WorldBank approves funding to support sustainableriver basin development


ANALYSIS

The World Bank’s new document onguiding principles for successful

reform of urban water supply andsanitation sectors is described as ‘astructured methodology to help thinkoutside the box’. As the text points out,there is no such thing as ‘one size fits all’and the approach used in a French-speaking west African country may wellnot be directly replicable in an English-speaking south Asian country.

If solutions differ, issues are oftensimilar, the report adds. This allows theauthors to propose a structured method-ology for engaging in the reform processand for building a broad consensus onthe design of its key components.

The practical, unifying nature of thereport is also stressed. The authors note:‘Several reports have recently beenpublished by the Bank on specific topicsrelated to urban water supply andsanitation (WSS). Bank teams involved inoperations may not always be aware ofsuch reports, let alone publications byother institutions, even if the new websiteof the Bank water practice makes a largevolume of information available. Also,Bank teams involved in operations oftendo not have sufficient time to readlengthy papers and extract what isneeded to advise on specific reforms.This report is also meant to be asourcebook, pointing Bank teams torelevant Bank publications and indirectlyto publications by other institutions, aswell as summarizing key issues coveredwhile proposing a logical framework forestablishing a link between them.’

The report is also intended to improvethe output of consultants. As it says,‘Bank teams are seldom responsible fordirectly advising governments on thereform process. The performance ofconsultants engaged by governments,and sometimes by the Bank, to carry outsuch tasks has been variable eitherbecause of irrelevant experience,ambiguous terms of reference (TORs) orinadequate guidance provided duringreviews of consultants’ reports. This reportshould help to draft more focused TORs.’

The report, like many, is also aimed athelping countries to get on track to meettheir Millennium Development Goals(MDGs), as it is acknowledged that manyin sub-Saharan Africa and south-east

and southern Asia will struggle to achievetheir targets in time.

The report introduces the typicalreasons why even well-developedinfrastructure may not guaranteegood service – unreliable supplies,unsustainable charging systems,unsustainable resource depletion, andsupplies that are, despite complex tariffs,unaffordable by low-income groups.

The report focuses on improving theservice provision of official providers –given that they may have limited cover-age and poor performance, they are oftennot the sole providers of services, withbackyard wells and boreholes and smallentrepreneurs with tankers or watervendors also a part of the picture.

The first chapter provides a quickanalysis of the United Nations Children’sFund (UNICEF)/World HealthOrganisation (WHO) Joint MonitoringProgramme data for monitoring theevolution of access to urban watsaninfrastructure, and reviews the IBNET(International Benchmarking Network)indicators for measuring efficiency,reliability, financial sustainability,environmental sustainability andaffordability of piped watsan services,given the normal lack of reliable data.

Chapter 1 also stresses the need tounderstand the role of substitutes whenthe official service is insufficient. Thefollowing chapter provides a summary ofthe proposed methodology for assessingthe ‘accountability framework’ of urbanwater and sanitation sectors, which itdefines as the ‘set of mandates of its keyactors, contractual arrangements thatclarify both interaction between actorsand the instruments used by each actorto implement their mandates’.

This segment focuses on key functionsof the sector: policy formulation, assetmanagement and infrastructuredevelopment, service provision, financingof operations and economic regulation ofthe service. It also recommends thatattention be paid to incentives, eitherproductive or counter-productive, whichinfluence performance, and suggestsidentifying vested interests that may beaffected by moves towards better practices.

Chapter 3 provides a summary ofrecommendations for design andimplementation of reform, focusing on a

number of key issues. One is theinvolvement of stakeholders in reform,because as the report says, ‘reforming anon-performing urban WSS sector oftenleads to emotional debates that couldrapidly get out of control if not properlyframed.’ The service quality andoperations efficiency diagnostic thereforeaims to provide rational arguments forengaging in constructive dialogues withkey stakeholders. The report notes that‘identifying the losers in the reformprocess is as essential as identifying thewinners to estimate the potentialeconomic return of the reform.’

Another key recommendation is torevisit water and sanitation policies. Thereport notes: ‘Options for structuringurban WSS sectors should be investigat-ed as part of the reform process. Thismight include decentralizing or aggregat-ing operations, splitting or combiningdrinking water production, distributionand wastewater collection and disposaloperations or merging them with othernetwork services, such as electricitydistribution.’ Resource managementissues such as trading of water entitle-ments also need to be clarified, it adds.

The third key recommendation is tochange the culture of water andsanitation service providers. The reportrecommends that service providers becorporatised, and that the selectionprocedures and operation of boards ofdirectors, management teams and staffof such entities are clarified. Contractualcommitments between providers andgovernments, which are often the mainsource of finance for utilities, also needto be considered. Instruments toincrease accountability also need to bedeveloped, the report adds.

Another requirement is to optimisewater and sanitation asset managementand infrastructure development. Thisrequires a special focus because, as thereport notes, ‘significant inefficienciescan result from inadequate demandassessment, planning, design,procurement and project implementa-tion procedures, as well as substantialdiversion of public funds throughfraudulent or corrupt practices.’

A further recommendation is toimprove service provision throughinternally-developed programmes, whichwould include outsourcing non-corefunctions. The report also notes:‘Improving technical operations usuallyrequires a special focus on reducingnon-revenue water (NRW) and energyconsumption, improving procurement ofgoods and parts and increasing staffproductivity.’ Customer relations,metering and billing and collection

World Bank report advises on reform processesA new report from the World Bank lays out a structuredapproach to reforming urban water and sanitation sectorsthat can be applied to different countries. LIS STEDMAN looksat how the report aims to act as a source of reference forboth Bank teams and consultants in terms of developingbetter service provision.

procedures also normally need to beoverhauled, it adds. ‘A special focus onpublic customers, who could represent alarge share of sales revenues, and low-income customers is often needed,’ thereport concludes.

The document also recommendsimproving provision through privatesector partnerships, and the findingsand recommendations of several Banknotes and toolkits are summarised. Thefocus is on the key steps for designingand implementing successful PublicPrivate Partnerships (PPPs), the limits ofthese structures for raising commercialfinance, and the allocation of risksand responsibilities, developmentof institutions to manage them andchoosing private operators.

Financing operations in a sustainableand affordable way (a key MDG require-ment) is also recommended. The reportadvises: ‘Gradually transferring theburden of financing the full cost of theservice to customers and building the

creditworthiness of service providersso that financial markets can eventuallybe accessed make sense in developingcountries whose governments areoften faced with fiscal constraints anddebt ceilings.’ This can be a longprocess, and easing the transitionoften means that developinginfrastructure is undertaken througha mix of cash generation, debt andgrants, the latter of which have to bedesigned to encourage efficiency andphased out in the short to medium term.

Regulating the service in atransparent and predictable manneris also advised. The report observes:‘While economic regulation has oftenbeen associated with PPPs, it is mostlyabout stopping the monopoly abuse ofWSS service providers that could providea bad quality service and charge priceabove costs to increase their profits orcover their inefficiencies; thus publicservice providers should be regulated asshould private ones.’ The report provides

a summary of recommendations forregulatory arrangements and keyoperating principles for a regulator.

A further key recommendation isimplementation of water and sanitationreforms. Prioritised issues suggestedinclude fixing the sector’s financialsituation (via a mix of actions such asbalance sheet cleaning and cost-savingprogrammes), building in the autonomyof service providers, transferringinfrastructure development responsibilityto corporatised service providers, anddevelopment of plans to increase thequality of service and consumeraccountability. The report alsorecommends that consultation shouldbe maintained throughout the reformprocess. It concludes: ‘If credibleactions plans reflecting the above aresubmitted, the chances of mobilisingfinancing for rehabilitating andexpanding the infrastructure atfavourable terms should greatlybe increased.’ �


of irrigation and drinking water. Thedownside is that upstream there are bigcities like Cairo, and a number of others– there are 60 million living in the Delta,and one of the main concerns ispollution of the river and canals.It means farmers using water forirrigation have to stand in sewagewater, it is so polluted.’

What the Bank found, working withthe Egyptian government on the IIIRP,was that it was not enough to improvethe way the water reached the farmers,Mr Jagannathan says, but it was alsonecessary to improve the quality. ‘That iswhat led to this project. Initially it was allsupposed to be one project, but theproblem was so huge we had toseparate it out.’

The project concept will combine thetraditional approach of constructingsewer systems to take and treat blackwater, and will also try to work out theoptimal way to treat the water before it isallowed to flow back into the canalsystem, he adds. ‘There is a technicalchallenge over the size of the treatmentplants. You have got villages scattered allover, but you get economies of scale withrelatively large treatment plants. Theproblem is you need to spend hugeamounts of money getting the sewage tothem in the first place.’ The treatmentworks will instead serve ‘village clusters’,a compromise between size anddistance to treatment.

The project will additionally leveragethe Bank’s donor coordination expertiseand the experience of other donors inthe sector. Co-financing is being

Egypt’s Integrated Sanitation andSewerage Infrastructure Project

(ISSIP) project is being financed by aWorld Bank loan of $120 million. Thelatest Bank statistics on Egypt show that98% of the urban population have accessto an improved water source, and 86% ofurban residents have access to some formof improved sanitation. However, the ruralsanitation figure is weaker, with 58%having some form of access but just 13%of the population having access tosewerage systems.

The participants in the recent work-shop that introduced the new projectwere a complex mix of senior officialsfrom the two lead agencies in theMinistry of Housing, Utilities and UrbanDevelopment, the National Organizationfor Potable Water and Sanitary Drainage(NOPWASD) and the Holding Companyfor Water and Wastewater (HCWW,responsible for financial and technicalsustainability of a number ofgovernorate-based utilities), andrepresentatives from a range of otherministries covering health, waterresources and international cooperation.Also present were members of the donorcommunity, local councils in the targetareas and staff from the project’simplementing agencies as well asregional units of NOPWASD and HCWW.

The project is seen as an integralelement in the Egyptian president’spriority national village sanitationprogramme, and is in line with ongoingefforts to extend the potable water supplyand create sanitation for the gover-norates in the Delta and Upper Egypt.

The sustainable development of waterresources in the country faces a numberof challenges, including a rapidly-increasing population, water qualitydeterioration and limited resources,burgeoning industrial and agriculturaldemand, fragmented water managementand cost recovery issues.

ISSIP is seen as a model for coordina-tion among the country’s developmentpartners, and is also intended as ashowcase for integrated planning as itcovers the same region and is closelyaligned with the Integrated IrrigationImprovement and Management Project(IIIMP), which is also Bank funded.The aim is to pioneer a cross-sectorimplementation model that is a practicaldemonstration of IWRM.

Vijay Jagannathan, the World BankMENA Water Sector Manager, explainsthat the history and hydrology of the NileDelta area mean that for millennia peoplehave been building canals, taking waterfrom the Nile for both irrigation andpotable uses. ‘It is one integrated system

Egypt’s Integrated Sanitation and Sewerage InfrastructureProject, financed by the World Bank, is aiming to improveand expand water supply and sanitation to the Delta andUpper Egypt. LIS STEDMAN looks at what the project entails.

World Bank project aims to improve Egypt’s sanitation

ANALYSIS


ANALYSIS

7% to 40%.’The new approach also provides

a first-time link between access toinvestment in rural sanitation andquantifiable water quality and healthimprovements in a given hydraulicbasin, according to World Bank taskteam leader Ayat Soliman. She noted:‘The partnership between Ministry ofHousing, Utilities and UrbanDevelopment and Ministry of WaterResources and Irrigation in planningsanitation resources is in line with theoverall water management andmonitoring programs. Using villageclusters to reflect this planning modelis an important element of the newapproach, and we are pleased that it isbeing adopted in the overall nationalstrategy for rural sanitation.’

The project has now completed itsfirst stage and is moving towardstendering for the various componentprojects. Mr Jagannathan says thatthe construction phase will last atleast four years, as much of theconstruction is in denselypopulated areas. �

provided by GTZ and the Netherlands. DrHussein El Atfy, first undersecretary atthe Ministry of Water Resources andIrrigation (MWRI), told the two-dayworkshop that ‘[there] is no doubt thatthe water supply and sanitation sector isone of the significant service provisionsectors with strong environmental andsocial aspects. In this regard, the projectwill contribute positive environmentaland social impacts, resulting from theoverall improvement of the water qualityin a number of drains and canals in theproject area. We are looking forward tothe establishment of the monitoring andevaluation system across the twoministries as an important strategicplanning and management tool.’

World Bank country directorEmmanuel Mbi told the meeting that theBank was particularly pleased to have asolid partnership with the Egyptiangovernment to help improve access tosustainable rural sanitation services. Henoted: ‘The project’s approach to ruralsanitation service planning and deliverywill ensure that the rural communities willbe able to access this service and see the

impact on their living conditions andenvironment. We are pleased that thedesign of the project and the collabora-tion among the different partners thatare involved in its implementationdemonstrates in many ways a newmodel for doing business.’

The ISSIP and IIIMP projects link forthe first time in an Egyptian contextirrigation and agricultural drainagework with potable water and sanitationservices, a combination that would nothave been considered in the past, whenplanning focused on individual villagesand hotspots. The global move to IWRMhas changed this approach, according toDr Abdel Qawy Khalifa, chairman of theHolding Company for Water andWastewater. He told the meeting:‘We look forward for the project’s newapproach in planning and low costtechnology adoption to be replicatedacross the country under the nationalstrategy for sanitation in a bid to deliverimproved sanitation services to allEgyptians, increasing urban coverage to100% and rural coverage over thecoming five years from the current

PUBLICATIONS

Water and Sanitation ServicesPublic Policy and ManagementEditors: Jose Esteban Castro and Leo HellerDespite the progress being made towards waterand sanitation service (WSS) provision, driven byMillennium Development Goal (MDG) targets ofhalving the world’s population without access toservices by 2015, there is still a large problemwith regards to access to clean water suppliesand adequate sanitation.

The editors felt there was a lack of debate anddetailed information regarding the relationsbetween technology and public policy and thatgreater organisation was needed in order tosupport policy design and planning with regardsto its interaction with other areas such as healthand water resources. The issue of serviceprovision is addressed by taking a historical viewof public policy and management, and wherethese have failed. Conceptual models arediscussed and the drawbacks of current models,including the debate surrounding public-,market- and community-led WSS systems.

The first chapters cover the underlying socialproblems which affect the provision of services,and the potential negative impact of approachingservice provision in purely profit-driven terms.The financing of services and the transfer of pipeinfrastructure developments from the northerndeveloped countries to southern developingcountries are covered, including the challengesfacing each. Water management and theoperation of sewerage systems are discussed,focusing on experiences in Europe and the issueof affordability with regards to increasing WSS indeveloping countries. The issue of integratingtechnology and policy is addressed in order todevelop a more successful implementationof WSS, and the history surrounding the

development of current frameworks and thechanges needed with regards to policy surround-ing public health. In the second half, country andregional experiences taken from around theworld are used to reflect the range of policies inexistence worldwide and the challenges whichaffect their implementation. These chapterscover decentralisation in European and Nordiccountries, financing WSS in poor urban areas inSouth Asia and the debates and conflicts sur-rounding access to water and sanitation in bothdeveloping and developed countries.Earthscan, February 2009352 pp. HardbackISBN 9781844076567Price: £65.00To order, visit: www.earthscan.co.uk

Workforce Planning for Water Utilities’Successful Recruiting, Training, andRetaining of Operators and EngineersWater Research Foundation Report 91237+ CD-ROMAuthors: A Manning, T Brueck, M Isbell, andP BrinkSeveral factors are converging simultaneously tocreate a ‘perfect storm’ in today’s utility work-force: the mass exodus of utility employees that isanticipated due to retirement in the next tenyears, the increasing diversity in the currentworkforce, fewer US college graduates earningscience or technical degrees, and valuesdifferences in younger generations of employeesentering the labour market. A shift in approach toutility operations is required in order to beprepared for this pending labour crisis.

The objectives of this project were to identify:future labour pools for engineer and operatorpositions; utilities’ short and long term needs for

operators and engineers; ‘attractors’ that willdraw the younger generations to utilitiesas a highly desired place of employment;recruiting, training, and retention methodsthat have elicited successful results in otherindustries and guidelines for applying thosestrategies in the utility industry; recommenda-tions for improvements in training andcertification programmes; and elements ofutility culture that will build an organization’sreputation as an employer of choice to multiplegenerations of employees.

Primary research consisted of a survey ofutilities that identified the current state of theindustry in terms of success of recruiting,training, and retaining operators and engineers.Also, interaction with students and youngprofessionals took place, first in a ‘reversecareer fair’ conducted at ACE and WEFTEC thatinvolved completion of an online survey thatassessed important job factors for the GEN Ypopulation and then in focus groups alsoconducted at ACE and WEFTEC.

Secondary research was conducted thatincluded identifying successful recruitment andretention strategies from other industries andcompleting a demographic analysis on new andexisting pools of potential workers as well aschannels to reach those pools. The results of theresearch were then compiled into industry-wideand utility specific strategies for recruiting andretaining engineers and operators.IWA Publishing, 20 April 2009ISBN: 9781843392491224 pp. PaperbackPrice: £120.00/US$240.00/€180.00IWA members price:£78.00/US$156.00/€117.00To order, visit www.iwapublishing.com


BUSINESS PLANNING

It may seem an obvious thing tosay, but successful organisations

are those that know what they aredoing and do it well.‘Businessplanning’ is precisely about thefirst part of the statement, and forwater utilities it provides a basisfor professional management ofone of the most important lifeenhancing services. Many waterservices organisations have longbeen managed by professionalmanagers in circumstances ofstable political environmentsimbued with a culture thatpromotes and supports publicservice, and an altruisticcommitment from governmentbodies that allows the poorest andneedy to benefit from access toessential community services.However many are not. It iscommonplace to talk about theuntold sums of Dollars,Yen,Sterling and Euros that have beenspent in Africa on water andsanitation; about the ‘here todaygone tomorrow’ consultants andexperts; about ‘this’ or ‘that’ newinstitutional model and theplethora of career developingreports from the brightest brainsin our international fundinginstitutions and researchestablishments. However, thecondition and prospects of waterservices in many parts of theAfrica and Asia remains low,especially in small urban areas or‘towns’. Locally, good expertise isdrawn away from managingutilities as the brightest engineersget sucked into the consultancyworld and become detached fromdelivering services to people andcommunities.Therefore, based on

a project in Ethiopia where fourtown water utilities were providedwith training and advice inpreparing initial business plans, abusiness planning toolkit for theplanning of an affordable townwater supply has been developed(see box).

Government role in providingwater servicesGovernments all over the world haverightly placed themselves under a lot ofpressure to achieve better water andsanitation coverage for developingcountries.The MillenniumDevelopment Goals (MDGs) aim tohalve the proportion of people withoutaccess to water and sanitation servicesby 2015.Most governments indeveloping countries have consistently

failed to deliver affordable and sustain-able water and sanitation to the poor. Itis difficult to summarise the causes forthis failure as each situation is differentand complex.However, some broadproblems cut across many publicutilities and municipal services, suchas bad financial management, lowfunding priority, lack of staffexperience and qualifications, absentor weak customer service orientation,political interference, and little or noindependent regulation or oversight.Many of these problems have been

attributable to weak governmental andutility management capacity.Since themid 1990s the introduction of policiesto encourage the involvement ofprivate sector participation (PSP) hasbeen seen as an important measure totackle many of these underlying causesof the failure of water utilities indeveloping countries to deliverimproved access to water andsanitation to their communities and intheir service to the poor in particular.Some progress was no doubt made bysome international companiesinvesting to improve water services inthese countries.Nevertheless in someimportant areas such as capacitybuilding, community participation,finance and institutional reform,majorproblems persist and international

As the urban population in developing countriesincreases, improved services are required to meet thedemand, but often poor utility management structuresand a lack of skilled workers hinder expansion andimprovement in smaller urban areas. SIMON GORDON-WALKER

explains the development of a business planning toolkitdesigned to assist the development of urban water supplyprovision, and improving operational efficiency in towns.

Toolkit aid for townwater supply provision

Business planning toolkit

A toolkit for ‘Planning affordable town water supply’ has been developed to help towns develop their ownbusiness plan. The toolkit is a disc with a Pro-forma and an Excel workbook with guidance notes that canbe used to create a financial model of the town water utility. It is user-friendly and provides guidance,explanation and examples to help the person using it.

The toolkit works by first using the Pro-forma and guidance notes to start writing a business plan. Theapproach links technical design to willingness to pay. This may result in new construction being done in aphased approach that will ensure that the town water utility is financially sustainable.

The user is guided to the input screens of the spreadsheet indicated on the welcome page of thefinancial model. The model works by taking data and financial inputs on costs on operations andinvestments and inputs on revenue such as tariffs to provide a long term projection of costs and revenueand provide a financial profile of the utility. The data inputs areas are clearly marked and a HELP text isavailable for each input.

The financial results are the predicted performance of the town water utility over a 20-year period.Financial performance is measured by the results of: the profit and loss account; the cash flow; the balancesheet; and selected indicators.

The results from the toolkit show how costs for investment and operations match income fromcustomers and therefore whether the utility can remain financially viable.

Although the toolkit is a stand-alone document and spreadsheet, it is advised that some training takesplace. Training course material and guidance documents are available for the application of the toolkit.

Information and documentation regarding this can be downloaded free of charge from:www.waterbusinessplanning.com


BUSINESS PLANNING

water utilities as private sector investorsand their sponsors have beenre-assessing their roles in a way that willmake a significant impact towardsachieving the MDGs.Withoutadequate management capacity withinthe governing institutions of the watersector,no reform processes can beentirely successful.Urban centers inAfrica andAsia are

growing rapidly. It is expected that thecurrent 60% rural/40% urban split inthese regions will soon shift to thecurrent 25:75 split found in Europeand theAmericas.Much of this growthis taking place in smaller urban centersor ‘towns’.At present between 20% and40% of the population live in towns,but as villages grow and develop tobecome towns, and towns get bigger,the number of people living in townsinAfrica,Asia and LatinAmerica isexpected to double within 15 years,and double again within 30.

Increase in urbanizationIn terms of water supply, the standardof service in towns is typically theworst in the urban sector, and isdeteriorating as more and more peopleeither live in towns or depend on themfor their livelihoods. In confrontingthis challenge,new approaches areemerging that address the need forimproved, sustainable services andexpansion to keep up with growthin demand.From the point of view of water

supply, towns must be understoodto have a mix of urban and ruralcharacteristics.Within their boundariesthere is wide variation not only in thephysical density of settlement,but alsoin the range of different types ofconsumers, socio-economic groupsand classes of housing.This is true ofmost urban settings,but for towns,withtheir smaller revenue base, it is evenmore important not to overlook anypotential customer group.Performance of national utilities in

towns has been poor where the classicpublic sector national utility model hashad a broad range of responsibilitiesincluding planning, investment, serviceprovision,quality and performancemonitoring, and sometimes policy andstandard setting. In most countries,performance of these organizationshas fallen well short of promise.Fundamental to this has been theexpectation of providing universalservices at very low or no direct cost toconsumers, and a failure to understandor provide the means to do so.Highfailure rates in towns can be attributedto overly centralised management andrelated bureaucratic complexities thatleave no person directly responsible forthe quality of services and reward noone for good performance.Decisions

made at the head office are based onstandard practices for all towns.Theydo not take local conditions, consumerpreferences and willingness to pay intoconsideration, and lack customerrelations and operation andmaintenance capacity at town level.The tendency is to minimize financiallosses by minimizing services in towns.Municipal water departments lack

autonomy and professional capacity –where management has been decen-tralised to local government,decisionsare moved to a local level but oftenresources are not, and the results havenot been good.Operation andmaintenance is carried out throughcreation of a municipal waterdepartment,or less formally byassigning tasks to the existing worksdepartment. In most cases, performancehas been poor due in large part to alack of management and financialautonomy, and to weak managerialand technical skills.Officials do notappreciate what is involved inimproving operational efficiency andin expanding the system.Often,decisions about water supply areinfluenced by political considerationsand water revenues are used to financeother pressing municipal activities(sometimes understandably and this iscertainly not unknown in so calleddeveloped countries).Accountabilityis usually imprecise and not basedon business plans with agreedperformance targets, and technical staffhave other municipal duties and fewperformance incentives.As a result, thestrategy is generally one of keeping theoperation afloat rather than improvingand expanding services.In recent years, good success has

been achieved in rural villages with a‘bottom up’ approach based on‘community management’ anddevelopment of local supply chains forgoods and services.Urban utilitieshave also benefited from thisdecentralization process by being ableto consolidate their operations inlarger,more profitable urban centers.Municipal water departments are

most common in towns,but otherapproaches are emerging.Theseapproaches are characterised bydecentralisation away from centralgovernment and greater autonomy.They include community waterassociations, townWater Boards, andpossibly small-scale private watercompanies.Also, aggregated approachesare being tried, including existing,larger utilities absorbing smaller towns,and through creation new regional entities.Lack of maintenance,poor

operational efficiency and inability toexpand to meet growth in demandhave ruined more water systemsthan anything else.

Systems are often designed and builtwithout consulting end-users,usingstandardised approaches that do notmeet their needs.Furthermore, tariffsare often set at a higher administrativelevel and do not reflect systemoperational and investment needs.Even contracting of operators,wherethis has taken place,has tended to becentrally managed.These issues reflecta centralised planning process withlittle attention to building localmanagement capacity.As a result,autonomy is limited to nominalcontrol of operations andbank accounts.Above all else, it is apparent that

town water supply has been managedas a ‘business without a plan’.Investments and designs have not beencross-checked against water sales andprojected revenues or customers’expressed willingness to pay.Noplans have been made to improveoperational efficiency or for expansion– or to secure the professional supportneeded to develop these.Financialmanagement, reporting and auditinghave been inadequate, and transparen-cy and accountability have deteriorat-ed.At best, towns have been providedwith the ‘business case’documentrequired for ‘one-time’ investmentfinancing – but not with thecapacity to understand,developand update their business plans asan ongoing process.

Poor sustainability of water servicesVarious technical and financial issuesaffect sustainability of town watersupplies as outlined in this section.Since the technical issues are financialin nature, the two are combined here.Taken together, the fundamental issueis the introduction of managementreforms and planning processes thatmake for a viable business.Government and donor financing of

town water supply projects have oftenfailed to result in sustainability.Towns

Credit: SimonGordon-Walker

have been selected for investmentwithout regard for their capacity tomanage and maintain the systems,nor with any attention given to thewillingness and ability of the localpopulation to pay the ongoingrunning costs of the system.Wheretariff and management reforms havenot been addressed in conjunctionwith water supply and sanitationimprovements, facilities have quicklyfallen into disrepair and the utilitieshave remained financially weak,unable to secure financing for requiredrehabilitation or expansion from anysource but the government.Strict design standards have led to

poorer service in towns.Many townwater supplies have been designedand constructed based on standardsappropriate for larger urban centers,but unaffordable to town customers.Excess capacity means unnecessaryproduction and maintenance costs.The result has been rapid deteriorationof the systems as revenues have beeninsufficient to provide for ongoingoperation and maintenance. It is notunusual to find a town water supplysystem that serves only the core of thetown,often with daily interruptions inservice, and with no attention paid tofringe areas.New customers cannot beconnected to the system and manyresidents must purchase water fromvendors at high prices or resort tounsafe sources.Growth in individual towns is

uncertain in terms of demand andlocation, and so it makes sense toexpand the system only when actualdemand and settlement patterns areknown.Responding as quickly aspossible to demand for privateconnections is then critical to bringrevenues up to cover costs.Thiscalls for a dynamic planning/expansion process.The revenue base in towns is small,

often insufficient even to cover thefixed costs of a local operator,notincluding the cost of specialist servicesto advise on business planning,efficiency improvement, andexpansion.Provision of publicstandpipes alone does not takeadvantage of the more affluent house-holds in a community who would bewilling to pay considerably more forhouse connections.Subsidies too often finance poorly

performing utilities and wealthiercustomers connected to the systeminstead of those truly in need.Lowtariffs and high connection fees arecommon.This combination onlybenefits the relatively wealthy peoplewho can afford to connect to thesystem.The poor often cannot affordconnection fees and are left to paymore for water obtained from vendors

or neighbours – or pay indirectly byspending increased time fetching waterfrom alternative sources and in terms ofpoorer health.Subsidies to utilityoperations that are not appropriatelytargeted at the poor and performance-based have created disincentives forefficient operations and have wastedpublic funds.Decentralisation in many countries

has shifted responsibility for watersupply and sanitation to the local level.However, local governments do nothave sufficient resources to fully fundneeded improvements to water supplyand sanitation, and do not appreciatewhat is involved in managing a watersupply system.As a result, town watersupply facilities fall into disrepair whilelocal officials wait for financial supportfrom central government.Even whenfinancing is provided to rehabilitatetheir facilities, towns tend to ‘go italone’without securing the technicalsupport needed to plan expansion andoperate their system effectively.Tomake matters worse, revenue fromwater sales is often used to financeother pressing government functions,and decisions about the water systemare often influenced by other politicalconsiderations.

The importance of business planningBusiness planning helps town waterutilities to plan operations, investmentsand finance in a sustainable andaffordable way.• It provides a means to shareinformation with employees,customers, political leaders andpotential investors, so that there isagreement on the utility’s plans.

• It makes sure that investmentdecisions take account of whatconsumers want and are preparedto pay for;

• It ensures that revenues are sufficientand that the utility is financiallysustainable;

• It helps the utility to monitorfinancial and technical performance;

• It supports performance-basedcontracts with employees or aprivate operator,by helping toidentify and agree onperformance targets;

• It helps to support activities neededfor performance improvements, suchas water quality monitoring,benchmarking, and external audits.

For town water supply,businessplanning is the process of outlininghow the utility will develop over timeto provide the level of service requiredby its customers,owners and regulators.In traditional project-based

approaches to town water supply,where systems have been designed andbuilt by the Government and handedover to the town on completion, the

business planning process has oftenbeen overlooked.Often,design hasbeen restricted to technical, economicand financial feasibility studies preparedby consultants without adequatestakeholder consultation. If those whoinherit management of a water supplysystem have not been involved in itsdesign and do not understand thechoices made or what is required forsustainability, they may be reluctant orunable to maintain tariffs at a levelrequired to cover costs and to pay foradequate maintenance of facilities or toretain qualified staff and contract forprofessional support.The business plan is not a static

document. It will need to be adjustedover time to take into account actualperformance and changed circum-stances. Generally, the business planshould be revised every three to fiveyears and updated on a rolling basiseach year between these revisions.Annual budgets and requests for tariffadjustments should be prepared andreviewed in the context of the businessplan to ensure consistency with thelonger term plans of the utility.Business planning is best understood

as an iterative process. Initially anassessment of regulatory requirements,current service levels and operationsand demand assessment are carried out,which serve as the basis for identifica-tion of an initial technical design and amanagement and operations plan.The design is then cross-checked tocustomer willingness and ability to payand a financial projection is prepared. Ifthe design cost is not affordable, ifcustomers would not be willing to paythe cost of the system or if the utilitycould not be financially viable, thedesign and/or management andoperations plan must be revised. �

About the author:Simon Gordon-Walker, ArtesiaConsulting. Email: [email protected]

WATER UTILITY MANAGEMENT INTERNATIONAL •

BUSINESS PLANNING

JUNE 2009 • 9


DEMAND MANAGEMENT

In India, 310 million people or30% of the country’s total

population live in urban areas(Mathur, 2007).As a consequenceof urbanization and associatedenvironmental impacts, the issueof providing water services to thegrowing urban population isbecoming critical (Paris statement2007).The challenges however aremore due to the urbanizationassociated with higher standardsof living,which lead to increasedper capita demand of water,depletion of conventional sourceslike surface and groundwater dueto unregulated extraction of water,and reduced replenishment of thegroundwater.The quality of existingsources is also deteriorating due topollution.The densification ofpopulation living in urban areasand associated constructions resultsin an increase in impermeable areassuch as paving and roofs.Thesepermanent physical changes resultin changes to runoff patterns,frequency of flooding anddrainage problems in some

locations (Jounathan, et al., 2005).The traditional approach of increasing

supply is not sufficient to meet theincreasing demand.Water supplysystems in urban areas of India haveoffered linear solutions,drawingincreasing volumes of water intocities and discharging waste at everincreasing levels, thereby causing stresson the receiving environment.Theconventional supply managementoptions for India’s urban areas havebeen found to be inadequate.Waterdemand management techniques havebeen experimented with in varioussituations,with positive results alongwith increases in supply in various partsof the world,but such techniques havenot been applied in India to augmentthe demand supply gap of the urbanwater supply.This paper aims to reviewthe various water demand managementtechniques through using referencesfrom representative case studies acrossthe world.Various aspects of waterdemand management approaches andtechniques such as metering, toiletretrofit, rainwater and greywaterreuse,water saving fixtures and their

efficiencies will be discussed.Furtherin this paper, the potential of some ofthe demand management approachesand techniques for Dwarka, a sub-cityof Delhi are evaluated to suggest somepolicy guide lines for the city for betterwater management.

Urban water management approachesGenerally water managementapproaches in the context of urbanareas are of two types – supply sidemanagement approaches and demandside management approaches.Thesupply side management approachesinclude increasing the quantity ofsupply from existing sources – largeprojects (dams, reservoirs, long distancewater transfers etc.), additional sources(rainwater harvesting for a largercontext) or alternative sources likeextraction of groundwater. In thecontext of India the crisis of water isviewed as a crisis of availability ofwater.Thus the solution is prescribedas being increasing the availability ofwater for use i.e. in bringing more ofthe finite quantum of water available innature into the usable category

As a consequence of urbanization and associated environmental impacts, the issue of providing waterto the growing urban population of India is becoming critical. Traditionally the solution has been to drawincreasing volumes of water into cities and discharge waste at ever increasing levels to the receivingenvironment. This approach has been found inadequate for water deficient urban environments inIndia, so there is urgent need to change from the existing supply side approach to an alternative waterdemand management approach. RABIDYUTI BISWAS, DEEPAK KHARE and RAMASURBRAMANIAM SHANKAR in this paperaim to review some of the demand management techniques from case studies across the world andtheir applicability to India. Some of these techniques like water harvesting and wastewater recycling arealready mandatory in Dwarka, a sub-city of Delhi, but rarely in practice, therefore to demonstrate thebenefit of these techniques Dwarka has been considered as case study.

Water demand management for an urban area:the case study of Dwarka, a sub-city of Delhi


DEMAND MANAGEMENT

through supply side solutions in theform of big projects (Iyer, 2007).Theconsequences of large projects are notalways positive, especially when urbancentres are far from the water sources.The unregulated extraction ofgroundwater in urban areas with rapiddepletion and pollution of groundwa-ter levels is a serious concern.Waterharvesting is also not gaining propermomentum in most of the urban areasas an alternative source of waterbecause of limited rainy days.Thetraditional supply-oriented approacheshave proved to be insufficient to dealwith strong competition for availablewater, growing per capita water use,increasing population,urbanization,pollution and shortages of funds(Kolokytha and Mylopoulos, 1999).However,demand side management

reduces misuse by introducing pricingpolicies, for example compulsoryinstallation of water meters,waterconservation,water harvesting and itsdirect use to reduce the potable waterdemand, increase wastewater recyclingand reuse, reduce leakages, increase theinstallation of water saving devices,maintaining pressures,maintaining 24-7 supply systems and so on.By limitingdemand, resources are conserved andenvironmental impacts can be reduced.

Urban water demand managementUrban water demand managementaims at achieving desirable demandsand desirable uses. It influencesdemand in order to use a scarceresource efficiently and in a sustainablemanner.The water demand manage-ment approach (also referred as softpath water management) refers to theuse of improved techniques rather thanlarge physical investment, in new waterinfrastructure such as dams, canals andwell fields (Agthe, et al., 2003).Theexamples of soft path management inresidential cluster may include: raisingprice of water to reduce the quantityof water demand;offering water billrebates to encourage xeriscaping innew and existing houses; and updatingbuilding codes for new constructionand resale properties to force installa-tion of low flow toilets, shower headsand faucets.There is a need to evaluatethe benefits of proposed alternatives,both structural and nonstructural aswell as to identify the optimal combi-nations of these alternatives (Holtz etal., 1978).The optimum integration ofthese techniques within conventionalwater supply systems in order to form acoherent water management strategy isnecessary.The concept of demandmanagement is widely gaining recog-nition worldwide and its effectivenessin practice depends on the politicalwill to implement the available possiblemeasures. In many water-using sectors

there is the scope for water demandmanagement, especially in India.The different techniques within the

urban water demand management aregenerally classified into threecategories: economic techniques,structural and operational techniques,and socio-political techniques.Economic techniques rely upon a

range of incentives and disincentives(taxes, rebates, subsidies) to promotewater conservation and demandreduction, aiming to change thebehaviour of water users.Water pricingis a fundamental economic tool toinfluence water demand.The rebateprogrammes used to promote the waterconservation and demand reductioninclude water bill rebates, distributionof free toilet retrofit kits, council taxrebates etc.Structural and operational

techniques used in different cities forwater conservation and demandmanagement are metering, toiletretrofitting with water saving devices,controlling flow,pressure reduction,leakage detection and repair, rainwaterharvesting, and wastewater recyclingand reuse etc.Socio-political techniques refer to

policy options to encourage waterconservation and demand reduction,the creation of the institutional andpolicy environment that enables thereduction of reduce water demand bythe user.The commonly usedsocio-political measures are publicawareness, information, and education.Socio-political techniques also includethe promotion of the advantages of alldemand management practices andpartial privatization of some parts ofthe water system.

Review of urban water demandmanagementEconomic techniquesMaddaus (1984),Renwick and Green(2000),Campbell and Johnson (1999),and Maddaus (2001) have assessedthe outcomes of different demandmanagement programmes and theirimplementation.Maddaus (2001)analyzed the effect of metering andvariable charges of water.White andHowe (1998) andWhite and Fane(2002) evaluated the potentialcost effectiveness of a range ofdemand management policies suchas price increases,outdoor water userestrictions, shower head rebate,washing machine rebate, etc.considered for implementation attwo locations inAustralia.Campbell and Johnson (1999)

investigated the impact of variousconservation measures on the waterprices for the residential users inPhoenix,Arizona,over the period 1990to 1996.The study shows that water

price can be an effective conservationmethod.Another study shows that a10% price increase reduces demand by3.4% and increases revenue by 6.6%(Agthe, et al., 2003).As per the study by Maddaus (2001)

the water consumption declined by13% in the year 1999, compared towhat it was before the rate change inDavis,California.The studies byMaddaus (1984),Renwick and Green(2000),Campbell and Johnson (1999),and Maddaus (2001) were ex-post inthe sense that they measured conse-quences of demand managementpolicies after those policies wereimplemented.However,planningstudies can be ex-ante in the sense thatthey analyze expected consequencesbefore policies are implemented.

Structural and operational techniquesMetering, retrofitting and using dualsystems are among the most popularstructural and operational methodsused to reduce water demand in theurban water sector.Leidal (1983),Barclay (1984),Bishop (1995), andGumbo (1998) presented the results ofusing metering and other water savingdevices,whilst Haney and Hagar(1985) indicated the water savingsachieved through using dual supply andgreywater systems.Greywater reusesystems have been investigated byDixon,et al. (1999),Sayers (1998), andNolde (1995), and the benefit of thesystem for water management discussed.Metering is not a direct conservation

measure,but it is a means of accountingfor all uses in the system such as easierleak detection and repair, and enablesdemand management programmessuch as volumetric pricing structures toencourage reductions in water use.Maddaus (2001) analyzed the effect ofmetering and variable charges of waterbased on use in Davis,California,USA.The installation of water meterstypically reduced consumption in therange of 10-30% and sometimes ashigh as 50% (Maddaus,2001).Studiesfor metering cities in BritishColumbia,Canada present evidence fora 15-20% reduction in residential wateruse (Leidal, 1983).Preliminary resultsfrom analysis of metering programmesin NewYork City,NewYork,USAreport 12-25% savings for the first twoyears (NewYork City,1997).Washington experienced a 43%reduction in water consumptionduring peak summer months as theresult of a metering programme and anaggressive pricing structure (WaterConservation Guidelines, 1993).Residential retrofitting resulted in a

20% drop in water use in Ontario,Canada by using water saving devices(Barclay,1984).Dual systems or ‘greywater systems’ can save up to 39%


of water for indoor uses (Haney andHagar,1985).Gumbo (1998) estimated the

quantity of water used for flushing,which constitutes about 30% of totaldomestic water use.Adjusting floats inexisting installations,or simply puttingone or two standard bricks in thecistern would reduce cistern capacityby 10% or more.Each householdwould reduce its consumption byapproximately 3%.Federal law in theUS prohibits sale of toilets that exceeda maximum water flow capacity of 1.5gallons (5.7 litres) (Agthe, et al., 2003),but in urban areas of India the majorityof people use toilet cisterns with a

capacity of ten to12 litres,which useswater of drinking water qualityfor flushing.Maddaus (1984) presented many

studies comparing water conservationprogrammes.Results of the several(water conservation) demonstrationprojects have been presented,whichinclude the effects of water-savingfixtures,water pressure, and watermetering on household water use.Theprincipal quantitative results presented

by the Maddaus (1984) have beensummarized inTable 1.Renwick and Green (2000)

presented the results of variousCalifornia water conservationprogrammes and the effects of each(restrictions, rationing, retrofit kits, apublic information campaign, rebatesand affidavit requirement) onresidential water consumption.Retrofitkits were distributed for free,whichincluded low-flow showerheads, tankdisplacement devices, and dye tabletsfor leak detection.This measureresulted in a 9% reduction inresidential consumption.Greywater is normally collected

from hand washbasins,bathtubs/bathrooms,washing machinesand dishwashers (Khare et al., 2006).Several filtering methods are availableto treat the greywater before it iscollected in a storage tank.The water ispumped into storage at a higherelevation and then distributed bygravity.Greywater contains less organicmatter and pathogens than wastewaterfrom a mixture of sink and toilet wasteresidue.Thus, greywater can be reused

for domestic purposes such as toiletflushing and irrigation.Greywaterreuse systems have been investigated(Dixon et al., 1999;Sayers, 1998) inseveral countries and there are alsosystems in the market that allow housesto be retrofitted with greywaterrecycling systems.The technology usedvaries among different countries,withgreywater usually treated to higherlevels and applied to larger housingestates in Germany and the UK(Nolde,1996;Dixon et al., 1999;Sayers, 1998).Various qualitative and monitoring

studies conducted by Haney and Hagar(1985),Nolde (1996),Naisby (1997),and Khare et al., (2006) have demon-strated the various aspects (efficiency,treatment required, type of treatment)of greywater reuse.Theoretically,greywater can replace the waterrequired for toilet flushing.This canconstitute up to 34% of a household’stotal water consumption (Haney andHagar, 1985).Haney and Hagar (1985)reported a reduction of 39% in mainwater supply through indoor uses ofgreywater,while Khare et al., (2006)reported a 35% reduction for agroup-housing scheme in Dwarka,India. Sayers (1998) claimed thatdomestic main water supply demandcould be reduced by 30.6% throughthe reuse of greywater, and Karpiscak,et al., (1990) claimed that about 31% ofthe total water budget can be recycledas greywater, representing the largestsource of water savings. Smerdon et al.,(1997) estimated that about 30% ofwater usage could be saved if a greywa-ter system was installed.Karpiscak, etal., (1991) described a desert house inthe US where water-conservingfixtures, greywater recycling and waterharvesting reduced potable drinkingwater use by up to 50% without majorexpense or change in lifestyle.Dube and Zaag (2003) shed light on

some of the possibilities and constraintsof both choices,whether to go thedemand management route,or tocontinue constructing new infrastruc-ture through a case study of the city ofMasvingo in Zimbabwe.The paperfirst looks at the long-term water usepattern of the city as a whole and thefactors which have caused theobserved pattern using multiple linearregressions. In projecting futuredemand, the paper then considers anumber of interventions that couldinfluence demand,which includeleakage control, pressure management,awareness campaigns, free technicaladvice to water users, and a new tariffstructure.Water losses in the city arearound 15%.Some of these losses arethe result of high static pressures, pipebursts, leaking valves and reservoirs andwater treatment processes. Static

Table 1: Results of water conservation programmes (Maddaus, 1984)

Water conservation measure Observed water savingsInstallation of water meters 20%Reduction of pressure from 30 to 40 psi 3-6%Fix toilet leaks 36.34 litres per capita per day

(lpcd)0.5 gallon (1.9 litre) per minute shower head 52.23 lpcdThree gallon (11.35 litre) per minute shower head 27.25 lpcdRetrofit kits 15.1 to 26.5 lpcdWater-efficient washing machine 6.43 lpcdWater-efficient dishwasher 3.78 lpcd

Figure 1: Map ofDwarka; Source:Website of DDA,2006(www.dda.org.in)

DEMAND MANAGEMENT


of certain water uses, such as washingdown sidewalks or driveways, andbanning landscape irrigation duringpeak evapotranspiration hours,which achieved a 29% reduction inconsumption. In rationing, a fixedquantity of water was allocated to eachhousehold and severe marginal pricepenalties were imposed for exceedingthe allotment.This measure reducedthe residential consumption by 19%.The public information campaignhelped in alerting households toshortages, attempted to motivate morewater efficient behaviour, and providedinformation on ways to reduce theusage.A reduction of 8% residentialconsumption was observed fromthis measure.

Urban water demand managementin IndiaThe studies related to the concept ofwater demand management are quali-tative in India.Detailed investigationsrelated to practical implementation,feasibility, economic analysis,water

saving efficiency etc. are very few.Thewater conservation and demandmanagement options suggested includethe use of low flow toilet fixtures,recycling of rainwater, and reuse ofgreywater for toilet flushing.(Suryawanshi, 2006;Gautam,2006;Chakrabarti et al., 2006; Jain,2006;Khare et al., 2006;Kapila, 2006).Khare et al., (2006) demonstrated the

feasibility of greywater recycling for agroup housing apartment in Dwarka.They found that about 35% of thedomestic water supply can be saved byusing recycled greywater.Kapila, (2006) has presented different

type of treatment processes suitablefor the wastewater recycling forindustrial use.Membrane technology,in particular using a membranebioreactor in addition to tertiarytreatment,has been found to besuitable and economical for reuse ofwastewater for non-potable uses.Further,with reverse osmosis treatmentthis can be used for potable purposes.Gupta and Gupta, (2006) presented

some of the successful examples ofwater conservation and recycling oftreated wastewater achieved in com-mercial and official buildings acrossIndia.The ITC Green Center,Gurgaon, India has achieved a 40%saving of water through wastewaterrecycling.The office complex ofGrundfos Pumps Private Ltd,Chenni,India has also achieved about 40%saving in potable water use throughrecycling of wastewater.Detail studiesof wastewater reuse and its integrationwith other water supply sources havenot been reported.

Major urban water demandmanagement techniquesThe major water demand managementtechniques as implemented in differentcities are found to be as follows:• Economic techniques:waterpricing and tariff structure; taxbenefit; and rebate (incentives) etc.

• Structural and operationaltechniques:water metering; in-house retrofitting with water saving,flow controlling devices and fixtures;recycling and reuse of wastewaterand rainwater harvesting; leakagedetection, reduction and repair; anddual supply systems, etc.

• Socio-political techniques:encouragement of water conserva-tion; education and training – publicawareness, in-school education,promotion of the advantages of alldemand management practices,training and education of the staff inwater related agencies; partialprivatization of system; restrictions;rationing; affidavit requirement etc.;reduction of illegal connections;institutional measurements and

pressures are between 80 and 90 m formost of the city. It was necessary toreduce pressures to between 30 and60 m in order to reduce water losses byat least 7%.Burn et al., (2002) analyzed the

effect of employing demand andpressure management techniques onthe cost of a water reticulation system.The analysis was based on the cost ofsupplying a cluster of 4000 householdsserving a range of hourly demandsusing pipes of various pressure classes.Demand management reduces costs by25-40% and pressure managementincreases the savings further to 55%.

Socio-political techniquesDuring 1976-77 in California,restriction on selected uses of waterand rationing plans were reported toreduce water use by up to 65%(Dziegielwski, 2003).Restrictionswere also covered as part of Renwickand Green’s (2002) analysis ofCalifornia water conservation pro-grammes and include the prohibition

Table 2: Relative benefits of different water demand management techniques on watersaving. Source: Compiled by Rabidyuti Biswas.

Demand management Saving in water demand Author/referencesmeasures/ techniques

A Economic Techniques1 10% price increase 3.4% reduced demand

and 6.6% increased revenue Agthe, et al., 20032 Increase in price 13% Maddaus, 2001

B Structural and operational techniques3 Residential retrofitting 20% Barclay, 19844 Dual systems or greywater systems 39%, indoor uses Haney and Hagar, 19855 Install water meters 20% Maddaus, 19846 Fix toilet leaks 36.34 lpcd Maddaus, 19847 0.5 gallon (1.9 litre) per minute

shower head 52.23 lpcd Maddaus, 19848 Three gallon (11.35 litre)

per minute shower head 27.25 lpcd Maddaus, 19849 Retrofit kits 15.1 to 26.5 lpcd Maddaus, 198410 Water-efficient washing machine 6.43 lpcd Maddaus, 198411 Water-efficient dishwasher 3.78 lpcd Maddaus, 198412 Installation of water meters 10-30%

sometimes as high as 50% Maddaus , 200113 Metering 15-20%, 43% Leidal, 1983, Water Conservation

Guidelines, 199314 Putting one or two standard

bricks in the cistern 3% Gumbo, 199815 Water saving fixture,

greywater recycling Up to 50% Foster, 199116 Greywater system installed 30%, 35% Smerdon et al., 1997,

Khare et al., 200617 Recycling of wastewater 40% Gupta and Gupta, 200618 Reduction of supply pressure 7% Dube and Zaag, 200319 Pressure management 25-40% cost reduction Burn et al., 2002

C Socio-political techniques20 Restriction on selected water use

and rationing plan 65% Dziegielwski, 200321 Restrictions of water use 29% Renwick and Green, 200022 Rationing 19% Renwick and Green, 200023 Public Information Campaign (PIC) 8% Renwick and Green, 2000

DEMAND MANAGEMENT


effective legislation; and regulationsfor water demand management andwater reuse.

The relative benefits of some of thesetechniques of water demand manage-ment for water saving from differentcase studies from the literature arecompiled inTable 2.However, these techniques are not

considered in India in a comprehensiveand integrated manner.The applica-tions of many of these techniques arefeasible in urban areas of India andproper application of these techniquescan reduce water demand substantially.To demonstrate the benefit of thesetechniques Dwarka has been taken ascase study.Dwarka is predominantlymultistoried group housing develop-ments so therefore the water demandmanagement measures rainwaterharvesting, reuse of greywater, toiletretrofitting,metering, and a publicinformation campaign are consideredfeasible to implement, and the quantityof water saving for these options areestimated.The water saving efficiency(water saved as a percentage of totalwater supplied) of the water demandmanagement measures considered forDwarka are presented inTable 3.

Case study DwarkaThe Dwarka sub-city is a part of theurban extension of Delhi in thePlanning Zone K (Nazafgarh District)with a population of one million and atotal area of 5648 hectares (Figure 1).Dwarka enjoys a semi arid climate withabout 80% of the annual rainfallreceived during the south-westmonsoon period between July andSeptember (27 rainy days).The averagerainfall is around 611mm.About 70%of the housing in Dwarka is grouphousing of multistoried developmentwith minimum plot size of 4000 m2,with 48.54 % residential, 7.05%commercial, 14.33% transport, 19.94%recreational, 3% public semipublic and0.94% government land uses.

Urban water management in DwarkaThe Master Plan for Delhi 2021 hasconsidered the water requirement 360lpcd (litres per capita per day) with abreakup of domestic and non-domesticof 225 lpcd and 135 lpcd respectively.Therefore the total domestic waterdemand of Dwarka for the projectedpopulation of one million is 225mld(million litres per day).Dwarka isgetting around 50% of their demandfrom the Delhi Development

Authority (DDA) (bulk received fromDelhi Jal Board and from bore wells).The residents manage the rest of theirdemand by procuring water fromgovernment tankers or purchasingwater from private tankers or ground-water extraction within their plots.Almost all Group Housing Societiesand plotted housings have their ownprivate bore wells, leading to the over-exploitation of groundwater, and theamount of freshwater is decreasingat a rate of 0.5 m per annum.Theestimated breakup of the per capitawater demand (Khare, et al., 2006,Table 4) clearly shows that 40% of thedomestic demands in Dwarka neednot to be potable water and recycledgreywater can be used instead.

Water demands managementmeasures for DwarkaRainwater harvesting potentialThe Central GroundwaterAuthoritymade it mandatory for buildings (forplot area 100 m2 or more) in Delhito make provision for rainwaterharvesting.The bylaw is applicablefor Dwarka also.However theimplementation of the same is notbeing monitored by the governmentagencies concerned.A primary survey(2008) undertaken by one of theauthors of this piece,RabidyutiBiswas, showed that the group housingsocieties have made some provisionsfor rainwater harvesting but itstechnological appropriateness andmaintenance is doubtful.Plotteddevelopments do not have theprovision of rainwater harvesting,however through the bylaw exists thepotential for adopting rainwaterharvesting for domestic use.Considering 50% of the total

developed area as rooftop along withpaved areas, the total potential waterwhich can be harvested from rainfallwas found to be 37.76 mld (Table 5),with savings of around 16.78% of thetotal demand.

Wastewater recycling potentialThe Delhi Government has modifiedthe building bylaws (GOI notification

Table 3: Various demand side management measures and range of their efficiency as considered.Source: Compiled by Rabidyuti Biswas.

Demand management measure Range of water saving efficiency Reference Adopted values(efficiency) for thepresent study

Rainwater harvesting (RWH) 10-15%, 30-60% CPWD, 2002 EstimatedGreywater recycling (GWR) 15%, 27%, 39%, Haney and Hagar, 1985; Khare et al., 2006 EstimatedToilet retrofitting (TR) 15%, 20%, 25%, Maddaus, 1984; Barclay, 1984; Dube,

Pieter van der, 2003 20%Metering (M) 15-20%, 10-30%, 43% Leidal, 1983; Maddaus, 1984;

Lisa A. Maddaus, 2001; Water ConservationGuidelines, 1993 20%

Public information campaign (PIC) 8% Renwick and Green, 2000 8%

Figure 2:Integration ofwater demandmanagementoptions in Dwarka

DEMAND MANAGEMENT


28 July 2001) to promote reuse ofwastewater in buildings where dailywastewater generation is 10,000 litresor more.DDA initiated use of dualwater supply systems in Dwarka in2002-03 to promote the reuse ofrainwater and recycled wastewater.The Master Plan for Delhi 2021 hasalso emphasized the recycling oftreated wastewater through dualsupply systems,however, theseconcepts have not been implemented

in Dwarka until today.The primarysurvey (2008) revealed that peopledo not even know that wastewaterrecycling is mandatory for all grouphousing developments, because thewastewater generation from suchdevelopment is always more than10,000 litres per day.Literature shows that the treatment

of black wastewater requires elaboratetreatment facilities which are not costeffective,but greywater can be treatedand reused.The greywater generatedfrom the group housing developmentin Dwarka is 100 lpcd (Khare, et al.,2006).When calculating the quantityof greywater for reuse, an amount of80% of greywater generated (of 100lpcd) (Table 6) is considered.The totalamount of greywater available for

reuse is found to be 80 mld,whichgives a saving of 35.5% of total domes-tic demand (Haney and Hagar,1985estimated 39%).

Water meteringThere is no individual metering systemin the group housing developments inDwarka.The bulk water is metered atthe group housing or community level.Therefore, all the members in grouphousing share equally the total waterbill.On the plotted developmentalthough a meter is there, the authoritydoes not bill for the metered consump-tion.A lump sum amount of Rs.157($3.18) per connection per month ischarged.As the water bill is notcharged on actual consumption by theconsumer,people do not care for watersaving and there are no incidenceswithin the housing of water savingtoilets or any other water savingfixtures.The saving due to metering isconsidered as 20% of the demand(Maddaus,1984 estimated 20%,LisaA.Maddaus,2001 estimated 10-30%,

Leidal, 1983 estimated as 15-20%)(Table 2).The total domestic watersaving due to implementation ofmetering is estimated to be 45 mld(Table 7).

Toilet retrofittingThe primary survey (2008) mentionedearlier in this piece revealed that theaverage toilet flush cistern capacity ofthe households in Dwarka is ten litres.A market survey also undertaken byRabidyuti Biswas showed that conven-tional toilet flush cisterns available inDelhi ranged from nine to 12 litres incapacity, and water saving dual flushcisterns were available with a capacityof three to six litres.The unit cost ofthe water saving dual flush cisterns washigher in the market however, so

people prefer to purchase the cheapertoilet, but the use of water saving dualflush systems can save up to 60% ofwater used for toilet flushing and about17-20% in total water demand.So fortoilet retrofitting a 20% saving isconsidered (Barclay,1984 estimated20%).Total daily domestic water savingdue to toilet retrofit and water savingfixtures are estimated as 45mld(Table 8).

Awareness programmeBesides rainwater harvesting andgreywater recycling there are watersaving equipment and fixtures,whichcan be used by people to reducewastage of water and thereby reducedemand.The primary survey (2008)showed that even educated people inDwarka have no idea about suchequipments and techniques.Also, inIndia water use equipment and fixtureswith water saving ratings as nowavailable for electrical equipments andappliances are not available on themarket.Therefore public information

campaigns can make people aware ofsuch techniques. Substantial amountsof water saving can be done byadopting such techniques andapproaches, so the daily estimatedwater saving due to an awarenessprogramme (considered as a saving of8% as estimated by Renwick andGreen,2000) can be 18mld (Table 9).

Integration of five demand managementtechniquesAll these options are combined toestimate the water demand reduction.OptionsA,B,C,D,E, and F areconsidered and cumulative saving iscalculated (Table 10 and Figure 2). Itis observed that a net daily saving ofup to 68.42% is possible if all thesetechniques are implemented and thepresent estimated requirement of 225mld can be reduced to only around71.05 mld.

ConclusionIt has been observed that a considerableamount of reduction in water demandcan be achieved if some of these watersaving techniques are implemented inDwarka. If the government initiatesthese schemes with proper policyand technological support in aphased manner, the scarcity of waterin Dwarka will be largly reduced.

Table 5: Estimated water harvesting potential for Dwarka

Water demand Total Area (ha) Built-up , rooftop and Rainfall Runoff Total runoff Potential saving Water requirement Savingmanagement measure all paved area (ha) (mm) coeff. (m3) (mld) (mld) (%)

Rainwater harvesting 5648 2824 610 0.80 13,781,120 37.76 225 16.78

Table 4: Estimated break up of Domestic WaterDemand in Delhi. Source: Khare et al., 2006

Purpose Potable water at Non-potable at30 gpcd (135 lpcd) 20 gpcd (90 lpcd)

1 Drinking 52 Cooking 103 Washing cloths 304 Washing utensil 205 Washing hand

and faces 106 Bathing 607 Floor washing 308 Flushing of toilets 60

Total at 225 lpcd 135 lpcd (60%) 90 lpcd (40%)

Table 6: Estimated potential of reuse of greywater in Dwarka

Population Total greywater potential Water requirement Saving(80% of 100 lpcd) (mld) (mld) (%)

1 million 80 225 35.56

Table 7: Estimated potential saving due to metering in Dwarka

Saving from metering (%) Potential water saved from metering (mld) Water requirement (mld)20 45 225

DEMAND MANAGEMENT


However, this requires a seriouseffort by the government.Some ofthe policy considerations that can begiven immediate attention by thegovernment are listed below:• Government should considerseriously the demand water manage-ment approaches rather than onlyfocusing on increasing supply.

• A comprehensive plan should beprepared for each water division,subdivision, zone or sector alongwith urban water policy ormunicipal water policy to ensurewise use of water and which shouldincorporate principles of waterdemand management.The policymust also state the strategies forimplementation and monitoring ofwater demand management.

• Appropriate bylaws should bedeveloped to incorporate watersaving measure within the buildingsto limit the inefficient and wastefuluse of water.

• National Performance Standards orWater Saving Rating for waterfittings, appliances and devicesshould be prepared.Governmentmust seriously consider introducingappropriate technology that does notuse more water than required, suchas automatic or push taps, automaticor water less urinals,water savingdual flush cisterns, low flow shower,water saving washing machines and

introduction of appropriate fiscalincentives for water harvesting,water recycling and use of watersaving equipment.

• Water metering is to be instigatedfor all consumers, and billing shouldbe based on the actual consumptionof water by the consumer.

• Stakeholders involvement andraising awareness of water saving anduse of appropriate equipments isurgently required.Public awarenesscampaigns on water conservationmust be encouraged through theprint and electronic media.Awareness must particularly betargeted at consumers at the house-hold level and at public institutions.

• Efforts must be made to train staff inthe water supplying institutions forapproaches and aspects of waterdemand management.Sucheducation must emphasize thesignificance of water demandmanagement and must also promotea change in peoples’ attitudestowards efficient use of waterresources.The role of serviceproviding authorities,ResidentWelfareAssociations (RWAs),Non-Governmental Organizations(NGOs) and politicians for promot-ing water demand managementapproaches should be defined.�

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water use patterns for demand management: thecase of city of Masvingo,Zimbabwe,Physics andChemistry of Earth 28,p.805-815.Dziegielwski,B. (2003).Water supply

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systems: is it just another pipe dream in proceed-ings of the International Conference on Small

About the authors:Rabidyuti Biswas, Assistant Professor, Department ofPhysical Planning, School of Planning and Architecture, NewDelhi. (Presently a research scholar at the Indian Institute ofTechnology, Roorkee, India)Email: [email protected] Khare, Professor, WRDM, Indian Institute ofTechnology Roorkee, Roorkee, India, Email:[email protected] Shankar, Professor, Department ofArchitecture and Planning, Indian Institute of TechnologyRoorkee, Roorkee, India, Email: [email protected]

Table 8: Estimated potential saving due toilet retrofitting (low water flushing system, bath/shower, water saving faucets) in Dwarka

Saving from toilet retrofitting (%) Potential water saved from Water requirement (mld)toilet retrofitting (mld)

20 45 225

Table 10: Estimated demand after the integration of demand management options inDwarka

Saving due to awareness Potential water saved due Water requirement Net watercampaign (%) to awareness campaign (mld) (mld) requirement (mld)8 18 225 207

Table 9. Estimated potential saving due educational awareness campaign in Dwarka

Scenario Water demand management measure Existing Saving Saving Final waterdemand demand(mld) (%) (mld) (mld)

A Existing condition 225.00 0 0 225.00B Rainwater Harvesting (RWH) 225.00 16.78 37.76 187.25C RWH +Greywater Recycling (GWR) 187.25 35.56 66.58 120.66D RWH+GWR+Metering (M) 120.66 20 24.13 96.53E RWH+GWR+M+ Toilet Retrofit (TR) 96.53 20 19.31 77.22F RWH+GWR+M+TR+ Awareness

Campaign (PIC) 77.22 8 6.18 71.05Total saving in mld 153.95Total saving in % 68.42

DEMAND MANAGEMENT


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limit, justice, harmony,Sage Publication IndiaPvt.Limited,New Delhi.Jain,A.K (2006).Sustainable Habitat –

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Press Information Bureau,Government of India,Jounathan,P. and Mark,O. (2005).Urban

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(2006).Wastewater Management in GreenBuilding, Journal of Indian Building Congress,Vol.13,No.3. p.99-108.Kolokytha,E.G,Mylopoulos,Y.A.& Mentes,

A.K. (2002).Evaluating demand managementaspects of urban water policy –A field survey inthe city ofThessaloniki,Greece,UrbanWater,Vol.4 Issue.4, p.391-400.Leidal,G. J. (1983).The British Columbia

experience of universal metering,The BritishColumbiaWater andWasteAssociation.Lund, J.R. (1986).Metering Utility Services:

Theory andWater SupplyApplications,WaterResources SeriesTechnical Report No.103,University ofWashington.Lund, J.R. (1988).Metering Public Utilities:

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Maddaus,W.O. (1984).ResidentialWaterConservation Projects:Summary Report,U.S.Department of Housing and UrbanDevelopment.Office of Policy Research.Maddaus,W.B. (1987).The effectiveness of

water conservation amasses, Journal of theAmericanWaterWorksAssociations,79(3),p.52-58.Maddaus,W.O.,Gleason,G.,Darmody, J.

(1996). Integrating Conservation intoWaterSupply Measure Up?AnAnalysis of EightCaliforniaWaterAgencies, Journal ofEnvironmental Planning, JournalAWWA.88(11), p.57-67.Maddaus,L.A. (2001).Effects of Metering

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the Business Standard,March 12,2007.Mustow,S.,Grey R.,Smerdon,T.,Pinney,

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Designing Cost EffectiveWater DemandManagement Programs inAustralia.WaterScience andTechnology.46(6-7): p.281-8.

DIARY

AssetManagement of Mediumand SmallWastewater Utilities3-4 July 2009, Alexandroupolis, GreeceContact:KonstantinosTsagarakisTel:+30 28310 77433Email: [email protected]:http://iwasam.env.duth.gr

2nd International Conference onWaterEconomics, Statistics & Finance3-5 July 2009, Alexandroupolis, GreeceContact:KonstantinosTsagarakisTel:+30 28310 77433Email: [email protected]:www.soc.uoc.gr/iwa

SustainableManagement of Water &Wastewater Sludges8-11 August 2009, Harbin, ChinaContact:GuorenXuTel:+86 451 8628 2559Email: [email protected]:www.iwasludge2009.org.cn

5th IWA SpeciaisedMembrane Conference forWater andWastewater Technology1-3 September 2009, Beijing, ChinaWeb:www.iwa-mtc2009.org

2nd Specialised Conference on NutrientManagement inWastewater TreatmentProcesses10-11 September 2009, Krakow, PolandContact:Gunter LangergraberEmail:[email protected]:www.bnr-iwa2009.pl

CustomerMeteringWater 2009 - Policy:Defining a National Strategy on CustomerMetering for theWater Industry14 September 2009, LondonIWAmembers receive a 15% discounton the delegate feeWeb:www.customer-metering-water.com

CustomerMeteringWater 2009 - Executionand Technology: Implementing and IntegratingCustomerMetering Strategy15 September 2009, LondonIWAmembers receive a 15% discounton the delegate feeWeb:www.customer-metering-water.com

5th IWA Specialist Conference On Efficient UseandManagement of UrbanWater Supply19-21 October 2009, Sydney, AustraliaWeb:www.efficient2009.com

1st IWA Development Congress15-19 November 2009, Mexico City, MexicoContact:Darren SaywellTel:+31 703 150 791Email:[email protected]:www.iwa2009mexico.org

DEMAND MANAGEMENT


PRICING

The JapanWaterWorksAssociation (JWWA) and

Tokyo MetropolitanWaterworksBureau (TMWB) organised inTokyo, 2-3 February 2009, their5th Japan RegionalWorkshop on‘Tariff and pricing for sustainablewater services’.IWA holistically sponsored the event

that was chaired by Professor HidekiIde from Keio University, Japan, andPaul Reiter, the Executive Directorof IWA.On the one hand,utilities’financial

resources depend strongly on watercharges,while on the other, the topcustomers’ concern lies with the levelof water rates and water supply.The impact of climate change, the

deterioration of water infrastructure,massive urbanisation and economicrecession all challenge the maintainingof a sustainable water supply in thefuture, as well as keeping a soundinfrastructure asset base, getting enoughwater resources and supplying safe andreliable drinking water.Properly designing a water tariff

structure which is able to fully coverthe costs of providing water servicesand cope with the utilities’ economic,social and environmental inputs is thusthe vital top issue challenging waterprofessionals all around the world.Using the above as a starting point,

the workshop intended to focus onthe topic of ‘Tariff and pricing forsustainable water services’, aiming atutilising the experience and knowledgepresented by an international panel ofspeakers in order to seek measures thatbest meet the challenges facingsustainable water supply.The IWA Specialist Group on

Statistics and Economics was invited todeliver its know-how and experiencegained during years of activity in theinternational water communitythrough its chairman,who presentedthe results from the last survey,under-taken in 2007,on water regulation and

water charges around the world, andtwo case studies on water servicecharge and regulation in Italy,specifically in the city ofTorino.

International charging and regulationof water servicesInternationally, comparing water pricesand regulation systems involves relatingdifferent organisational systems,overarched by different rules foraccounting and allocating costs, anddifferent political priorities that maystrongly influence the operators’performance levels and then requireclose explanation of the regulatoryregimes that underpin waterpricing policies.Direct links between tariffs and

regulatory schemes do exist: pricingprinciples emphasise the need for waterprices to be based on both ‘economicand environmental efficiency’ and‘broad (social) equity’ goals rather morestrongly than in the past, and stress thedesirability of consumption-basedpricing and (more generally) ofimproving pricing signals in order tomove towards efficient and sustainableuse of natural resources.That is the reason why good

governance schemes are vital in orderto give the water sector a properfunctioning framework, as waterpolicies cannot be effective without aclear breakdown of responsibilitiesbetween public authorities, serviceoperators and financing organisations.Most updated information on

charging water levels and policies, for asignificant number of countries in theworld, shows that water is chargeddifferently worldwide by using bothUniform and Increasing Block models,which seem to be the most applied ratedesigns, and where the first one showsin general a higher trend.Experience suggests that expressing

prices in a uniform currency(normally US$) allows for informationto be compared;nevertheless,when

comparisons cover different periods,movements in the exchange rate dueto the depreciation of the commoncurrency may enhance or depress thegap checked during the time period.Therefore,when analysing econom-

ic data as part of evaluating growth inprices, particular attention needs to bepaid to the influence the double digitdepreciation of US$ exerts againstboth the Euro and in general all othercurrencies of considered cities.The Millennium Development

Goals concern above all developingcountries where many water-relateddifficulties are challenging the access towater services.Tariff structure is thus a crucial issue,

to make and maintain an affordableprice for water,whilst also securing astable revenue stream that financesboth daily operation and the futureimprovement of water services.Relating drinking water charges to

the average annual Gross DomesticProduct in the country (which canbe assumed as a broad indicator ofeconomic living standards) may depicta macro idea of how water chargesmight be related to the averagedomestic richness, from which a firstapproach to water charges affordabilitycan be drafted.This seems to show that water

charges are generally coupled to aconsiderable degree to affordability,and that they have a low priority in ahousehold’s budget.Nevertheless, thetreatment of non-payments greatlyimpacts on access to water,whilemacro-economic development,population growth and otherdemographic changes, rather thanwater policy, influence water demand.Consumers’‘willingness to pay’ for

safe drinking water can be demonstrated,but in many cases it is the politicians’‘unwillingness to charge’ that is the realobstacle to tariff increases.When awater utility does not recover the costsof providing its service, it is often

Tariffs and pricing policies are pivotal issues challengingsustainable water services. DR RENATO PARENA, Chairman ofthe IWA Specialist Group on Statistics and Economics,reports on the Group’s contribution to the workshop ontariffs and pricing held in Japan earlier this year (see alsofollowing article).

Tariffs and pricing policies: an opportunity tonetwork with Far East water professionals


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unable to extend the system,leaving poorer and marginal areasunconnected to the water grid.Consumers who are connected

often receive poor-quality water andintermittent service because there isnot enough revenue for treatment andmaintenance.Unconnected poorconsumers generally pay much morefor water than consumers withaccess do.So the challenge is finding a way to

subsidize services while tariffs areraised to cost recovery levels withoutundermining the incentives to makeservice provision,billing, andcollection more efficient.Particularly where the high price of

piped water makes collecting waterbills inconsistent, a clear distinctionshould be made between customerswho cannot pay and those who do notwant to pay for water services.Those who cannot pay need to be

helped with subsidies that are welltargeted and effective because no‘one-size-fits-all’ approach exists.Those who do not want to pay for

the drinking water delivered to theirhomes need persuading that theyshould pay, so that potential financialcrisis and subsequent reduced access towater can be avoided.Continuously improved customer

relationships, tailored tariffs andpayment policies are thus theunavoidable prerequisites to reconcil-ing water costs and water rights, giventhat mostly in developing areas the lowpaying capacity of customers does notalways make the ‘full cost recovery’principle realistic, so a move shouldthus be made towards ‘sustainable costrecovery’ criteria.

Water service charges andregulation in Italy - the casestudy of TorinoThe Italian water sector,wherelocal public water services are theresponsibility of each Municipalitywhich owns,by civil law, theconnected assets, is historically apublicly-owned context. Since theearly 1990s the sector has been under adeep reform,which aims to continueboth the process of transferring to theregions the competences for water use,and the adherence to Europeandirectives that mostly affect the proce-dures to be observed when waterservices need to be contracted out.The so-called ‘Galli law’green-

lighted the reform in 1994, aiming tore-boost lacking investments andovercome the widespread mushroom-ing of water operators,most of whichwere small and inefficient, through thepromotion of the entrepreneurialmanagement of IntegratedWaterServices (IWS).This was to be

underpinned by water industrydevelopment and infrastructureimprovement within the widercontext of environmental safeguard.A new market-oriented business

organisation focusing on the criteria ofefficiency and cost effectiveness, as wellas a new charging policy fully coveringoperation and investment costs andgranting adequate return to theinvested capital became the milestonesof the reform.In accordance with the reforming

law, the IWS includes every process ofthe water chain, from raw waterscatchments to treated water returnedto the environment, and has to bemanaged by water companies withinterritorial dimensions wide enough toallow entrepreneurial operatingconditions (OptimalTerritorialAreas (OTAs),basically coveringhydro-graphic basins).In every OTA,which actually covers

the territory of each Italian Province,the lowest number of entrepreneurialwater operators may exist while theencompassed Municipalities decide theorganisational model of the IWS,evenentrusting the local regulator forcontrolling activities.Local regulators may currently

appoint the water operator in charge ofthe OTA’s IWS by public tender (thatis the normal way) or,under particularconditions,by direct appointment (thatis the alternative ‘in-house providing’way) to a pre-existing local publicwater operator.The appointed operator is required

to operate the IWS with regards to theMaster Plan (this has to be consideredto be a substantial part of the under-signed concession contract) and isentitled to use,preserve and refurbishthe water assets owned by the servedMunicipalities.On maturation theseassets and the new constructed oneswill be transmitted to the successoroperator against a book value reward.When analysing the Master Plans in

a significant number of OTAs, theNational Supervisory Committeefound an average general need for newinvestments of around €35 ($46)/yearper inhabitant (€16 ($21)/year indrinking water services and €19($25)/year in sewerage and wastewatertreatment services) on an average planperiod of 25 years.More than €51 billion ($68 billion)

is thus expected to be globally investedin Italy to both improve the IWSs andrealize the goals the reforming law wasaiming for in 1994!The drinking water tariff is fixed by

the local regulator in a general contextof full cost recovery and is based on anational ‘standard methodology’,whichis defined by law, is oriented towardscapping prices, and is implemented as

an increasing block tariff.Sewerage and wastewater treatment

related fees (44% of IWS referencetariff) are structured using the Uniformmodel and charge the consumedvolumes (as measured fordrinking purposes).Drinking water, sewerage and

wastewater treatment fees are thencoupled with a connected fixed chargeto send customers a strong price signal,aimed at making them aware that thewater service is not free and, at thesame time,water uses need to belimited and the full cost covered.The predicted tariff dynamic coming

from the Master Plans analysed by theNational Supervisory Committee,compared with the weighed averagewater charges existing before thereform, is expected to raise the IWSprices from €0.88 ($1.2) to €1.32($1.76)/m3 on average andwithout inflation.The city ofTorino is located at the

feet of theAlps, and is the capital of theTurin Province, in the north-westernPiedmont Region.The OTA ofTurin Province includes

306 Municipalities (48% in thehighlands and 52% in the lowlands)where more than 2.2 million peoplelive,mostly in the lowlands (86%).In late 2004 the OTA’s local

regulator undersigned the contractwhich ‘in-house’ appointed SMAT(Societa MetropolitanaAcqueTorinoSpA), a globally publicly owned Plc.who merged the previous entitieshistorically managing drinking waterand wastewater services inTorino, tooperate the IWS according to the20-year Master Plan, that was approvedin 2002.SMAT,as the OTA’s water operator,

is committed to maintaining andupgrading the existing infrastructures(to increase efficiency and reliability inprovided service) and to implementnew small and medium infrastructures(in extension, improvement orreplacement purposes),using €750million ($1 billion) in investmentsover 20 years.Realizing new largeinfrastructures (to improve quality andquantity of raw water sources, toextend the sewage network to theunserved areas and to upgrade thewastewater treatment capacity) willrequire a further €590 million($788.8 million) of investments in thesame period.The €1.34 billion ($1.79 billion) to

be invested in the 20-year plan periodwill be split 33% to the water supplyservice,42% to the sewerage service,19% to wastewater treatment and 6% togeneral actions.Such a huge investment is predicted

in the Master Plan to be underpinned70% by the internal cash flow,26% by


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long-term senior debt and 4% bypublic free contributions.After the first four-year period of

OTA’s in-house assignment,SMATreported a significant growth in bothturnover (near doubling from €121 to€245 million ($161.8 to $327.6million)) and annual investments (afivefold increase from €15 to €70million ($20.1 to $22.8 million)),whilethe average unit water charge increasedfrom €0.66 ($0.88)/m3 to €1.11($1.48)/m3.The annual water bill in2007 scored around €216 ($288.9) for200 m3 consumed.

ConclusionsThe international experiencespresented at the RegionalWorkshop inJapan basically confirmed what theSpecialist Group on Statistics andEconomics has been verifying throughits institutional networking activity andperiodic survey.All over the world, sustainable water

service provision needs to incorporatea triple bottom line: the utility’s stablefinancial sustainability, the water for allsocial target, regardless of consumers’income, and the waterconservation signal.Water charging worldwide is

approached in different ways and seemsgenerally coupled to a considerabledegree to affordability.Properly designing a water tariff

structure able to fully cover the costs,to grant financial stability and to copeat best with the above three issues isthus the top challenge for waterprofessionals all around the world.On the demand side,water charging

sustainability and the treatment ofnon-payers greatly impact on access towater,while macro-economicdevelopment,population growth andother demographic changes, ratherthan water policy, influencewater business.This emphasises therefore the

importance for water professionals toincrease their understanding of thebroader social, economic and politicalcontext,while politicians and otherkey decision makers need to be betterinformed about water resource issuesin order to provide solutions combin-ing an optimal debts recovery rate anduniversal access to water.TheTokyo RegionalWorkshop

greatly contributed to sucha purpose. �

About the author:Dr Renato Parena is CFO of SMAT Plc,Torino, Italy, Chairman of the IWASpecialist Group on Statistics andEconomics, and Member of the IWAStrategic Council.

Appropriate, effective tariffsthat accomplish a spectrum of

results are becoming an increasingfocus as the inherent possibilitiesbecome apparent.IWA Executive Director Paul

Reiter says that a key message whenconsidering tariffs is to ‘start withwhat you are trying to accomplish.What a tariff has to do as a minimumis to recover the cost of service.Fundamentally they have to do thatjob.’Typically, these costs are recoveredthrough the water rate, though someutilities have a mixed funding system,with some money provided throughthe government and the remainderthrough the tariff.‘An aspiration for utilities in

developing countries is working tofull cost recovery so they are notsubsidising through outside sources,’Mr Reiter observes.‘In lower incomecountries, in many cases the tariff is setto cover operational costs with the goalof moving to full cost recoveryover time.’

Tariff structureThe way in which the tariff is structuredmakes a difference,he explains.‘Tariffscan be a very important tool,not just inrecovering the cost of service but inshaping consumption.’A tariff can be built around a single

fixed charge,he continues.‘And it issurprising, even today in the UK thetariff is largely structured around thatconcept.’ In most countries,meteringis in place,which enables moresophisticated tariff structures.‘A tariff can be used as a tool for

creating more efficient use of water,’Mr Reiter says.‘Some utilities have

increasing block rates, some have adifferent philosophy of decreasingblocks – the more you use the cheaperthe water is, and some take a uniformblock approach.Utilities are roughlyevenly divided between these three.’Logically,decreasing block tariffs

tend to be found where water is ampleand increasing block tariffs are morefrequently used where water is scarce(such as inAustralia and the US).Theuniform block tariff is found wherecircumstances are somewhere inbetween these extremes, and isnormally used in conjunction witha fixed charge.Mr Reiter explains:‘If you introduce

a meter, the most basic thing that youhave to decide is how much revenuerecovery will be from the fixed chargeto customers and how much from thevariable charge.’ If there is a variableelement, a cost per cubic metre mustalso be set.Variable block tariffs work on the

principle of a set price per unit for acertain amount of water, then when athreshold is reached this either falls orrises (or remains the same) dependingon the type of tariff.‘With these ideas in mind, in general,

depending on whether scarcity is animportant part of the utility’sconsideration, rates will be used toshape demand,’Mr Reiter adds.‘Thetariff is a way of both recovering costsand influencing demand.’In terms of larger objectives,utilities

have to ask whether they simply wantto recover costs, or whether they alsowant to influence demand eithernegatively or positively.‘Anotherdimension is the impacts of costs onlow income and elderly customers,’ he

Setting the charge for water services was the topic ofdebate at the tariff and pricing workshop held in Japanearlier this year, covered in the preceeding article. LISSTEDMAN speaks to IWA executive director PAUL REITERwhoco-chaired the workshop about the link between aneffective tariff structure and a sustainable water service.

Structuring tariffs:getting the mostfrom water rates

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and revenue stability.’In lower and middle-income

countries,where there is a history ofundercharging, this ideal has to bemodified to reflect people’s ability topay,he adds.‘We say as a minimum youshould cover your operation andmaintenance expenses, and bit by bitgrow the tariff so that over time itcovers all costs. Sometimes in reallypoor countries you can’t do muchmore than cover operation andmaintenance costs.’If a utility does not collect enough

money, it will systematically starve itssystems and create chronic problems.‘Even in developed countries, peopleare afraid to lift rates to reflect whatthe system needs,’Mr Reiter observes.‘It’s a bit like having a car and notmaintaining it.This is common amongutilities around the world.An adequatelevel of revenue collection is key tobeing able to sustain a system.’He adds:‘If you look at the evolution

in thinking,40 years ago thinking oftariffs strictly meant recovering costs,but bit by bit people have come tounderstand the power of a pricingscheme to achieve other objectives.’Tariffs vary to extremes across theworld, still – some are verysophisticated and in some countries,there is a very simplistic approach.‘In a country the size of the US it

varies greatly,’ he says.‘If you thinkaboutAustralia, before, climate change

impacts [tariffs] varied widely.Now, inmost places resources are in shortsupply and you see very creativepricing schemes, even in China. Ifwater is short,we have got to take allthe measures we can to get theincentives right.’One of the principles is that rates in

increasing block scenarios are built tosend signals that equal the long runmarginal costs, he adds.‘This is sittingbehind the scenes and guidingthe thinking.’The fifth IWA workshop ‘Tariff and

pricing for sustainable water services’held in February inTokyo, Japan,waspart of a series held almost every year inthe country.‘It is built around the issuesthat Japanese members feel are reallyimportant, and this was one such,’MrReiter explains.The workshop wasattended by international experts whospoke principally on different aspects ofrates and rate design.‘This workshop raised a whole

range of issues from developed anddeveloping countries,’ he adds.‘Somespeakers focused on one and others onthe other, and some on both.Therewere also broader-based presentationsand I gave an international report, thenthere were a variety of case studies. Itwas a very well received and verysuccessful workshop.The JWWA(JapanWaterWorksAssociation)sponsored it, and was very pleased withthe outcome.’�

explains.‘Pricing for the poor is arecognition you have to think through– there has to be a strategy within therate design that will address this.’One way of addressing this is

through a differential or concessionrate – where the price is either fundedthrough other ratepayers,or via agovernment subsidy. In the US, forinstance, the ratepayers subsidise suchconcessions,whereas inAustralia this isachieved through government subsidy.

Development of an effective tariffWhat then makes a good tariff? ‘Agood tariff must recover costs,’ explainsMr Reiter.‘A good tariff in anupper-income country will recovercost, and shape demand in a way that isconsistent with the circumstances thatthe utility faces, typically through anincreasing block rate, and it would be atariff that recognises that you’ve got acommunity of people including thepoor and it would address that.’There is a trade-off in the increasing

block scenario between putting therevenue requirements on thecommodity charge,he notes, againstthe fixed element of the charge.‘If thefixed charge is too small, there can beinstability – revenues can vary toomuch, for instance if there is a drought.If it is too big, there is no incentive tosave water.A good tariff strikes abalance between water usageefficiency,price signals around this,

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trust necessary to resolve them?What philosophies and tools areavailable to guide them throughfuture challenges?This paper clarifies the concept of

theTriple Bottom Line (TBL).This issometimes known as 3BL orCorporate Responsibility.This paperidentifies how implementation ofTBLreporting and management can helpaddress these challenges.The paper isdrawn from a project to develop aninformative and practical guide to thereporting and management ofTBLperformance (Kenway et al. 2007).Theproject methodology included a wideliterature review,detailed case studiesof three utilities and a workshoprepresenting 15 utilities from theUnited States,Australia,United

Water utilities globally facemulti-dimensional

pressures. Costs and infrastructureneeds continue to rise andconsumer, ratepayer, regulator,staff, shareholder,media, politicaland board expectations areincreasing.A growing skills

shortage threatens futureworkforce viability and forecastclimate and environmentalchanges could undermineprevious planning and investment(Means et al. 2006).How canutilities cope with thesecompeting pressures and build the

Triple Bottom Line (TBL) reporting is a method of definingcriteria to measure company success as well asdeveloping long term strategies, and it was the subject ofa workshop held at the IWA World Water Congress inVienna, 2008. In this paper, STEVE KENWAY, CAROL HOWE,

SHIROMA MAHEEPALA, TONY KELLY and CHERYL DAVIS explain howTBL can be used to improve water utility performance(see also following article).

Triple Bottom Line reporting and managementfor improving utility performance


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help give managers confidence thatprogress is being made simultaneouslyin environmental, social andeconomic dimensions.Developmentand incorporation of a balancedperformance indicator set (e.g.including energy use, greenhouseemissions and total wastes) in typicalbenchmarking programmes such asthe IWAWater andWastewaterperformance indicators (Alegre et al.2006), andAWWA (AmericanWaterWorksAssociation) Qualserveprogrammes (Lafferty and Lauer 2005)will help improveTBL managementof water globally. �

ReferencesAlegre,H.,Baptista, J.,Cabrera,E.,Cubillo,F.,Duarte,P.,Hirner,W.,Merkel,W.andParena,R. (2006).Performance Indicators forWater Supply Services.London, IWAPublishing.

Elkington, J. (1998).Cannibals with Forks:TheTriple Bottom Line of 21st CenturyBusiness.Gabriola Island,New SocietyPublishers.

Foundation, J. (1997).‘The Natural Step toSustainability’.Wingspread Journal.

GRI (2002).Sustainability ReportingGuidelines.Boston,Global Reporting Initiative.

Hawken,P.,Lovins,A. and Lovins,H.(1999).Natural Capitalism:Creating the NextIndustrial Revolution,Little Brown andCompany.

Kenway,S. J.,Howe,C.and Maheepala,S.(2007).Triple Bottom Line Reporting ofSustainableWater Utility Performance.Denver,Colorado,AmericanWaterWorksAssociationResearch Foundation.

Lafferty,A. and Lauer,W. (2005).Benchmarking Performance Indicators forWaterandWastewater Utilities:Survey Data andAnalyses Report Denver,AmericanWaterWorksAssociation.

Means,E.,Ospina,L.,West,N.and Patrick,R. (2006).A StrategicAssessment of the FutureofWater Utilities Denver,Awwa ResearchFoundation,AmericanWaterWorksAssociationand IWA Publishing.

Norman,W.and MacDonald,C. (2004).Getting to the Bottom of ‘Triple Bottom Line’.Business Ethics Quarterly 14(2):243-262.

VictorianWater IndustryAssociation (2002).VicWaterTriple Bottom Line ReportingGuidelines.Melbourne,VWIA.

Kingdom and Canada.The concept ofpublic reporting ofTBL performancehas global application and is arguedhere as a beneficial and manageablestep for water utilities.

What is TBL?At its narrowestTBL is viewed as aframework for measuring andreporting performance.At its broadestit aims to capture all approachesnecessary to ensure utilities (andpolicy makers) make balanceddecisions and maximize benefit fromcompany activities.TBL principlesinclude development of long-termvalue-adding strategies, transparency,partnership building (Elkington 1998)and efficient use of natural capital(Foundation 1997;Hawken et al.1999).Critics argue that the termTBLis misleading and suggest that actualsocial or environment ‘bottom lines’cannot be calculated like a profit or lossstatement (Norman and MacDonald2004).TBL advocates argue that thesimultaneous pursuit of environmental,social and economic goals is critical tolongevity and profitability.However,TBL can help find more sustainablesolutions by focusing attention where again in one dimension is not at thecost of others.We definedTBL reporting and

management as the systematicplanning,management,performanceimprovement and public disclosure inenvironmental, social and economicdimensions at local, regional and globalscales.The environmental dimensionconcerns organizational impact onliving and non-living ecosystems, land,air and water.The use of water, energyand materials, rates of effluents,emissions and wastes, biodiversity andriver health are powerful performanceindicators.The social dimensionconcerns impacts on public health,other stakeholders, customersatisfaction, labour practices and humanrights.The economic dimensionconcerns financial performance as wellas indirect economic impacts.Explanation of these and otherperformance indicators, the benefitsof reporting, a stepped approach toproduction ofTBL reports andnecessary internal measures to developto have reportable performance havebeen described (Kenway et al. 2007).

How can TBL principles help waterutility performance?Water utilities and managers oftenhave close association with theenvironment, it is the source of theirmain product.Typically too,utilitiesoperate with long planning horizons.TBL reporting can help improve theunderstanding of the existing urbanwater system in environmental, social

and economic terms.This can help findsustainable solutions to emergingchallenges.For example,TBLmethodologies can guide theevaluation of options when investmentis necessary to comply with oftenvague local goals such as ‘improvingwater quality as far as possible’.A widerange of tools including life-cyclecosting, embodied energy analysis, lifecycle assessment, conjoint analysis,least-cost planning and externalitiesvaluation can help estimateenvironmental, social or economicimpacts,or parts of them, in isolation.TBL principles help deliver

performance gains by directinginvestments to solutions whereenvironmental, social and economicbenefits are greatest – and therebymanage a wider set of risks.By betterunderstanding the use of energy, rawmaterials and other inputs, energy useor consumption of energy-intensivematerials can be minimised.This canhelp avoid future water price increases.Public reporting ofTBL performancefurther improves benchmarking andtests the rigour of strategies (GRI2002;VictorianWater IndustryAssociation 2002).Many forces will continue to

drive the need for improvedTBLperformance.These include thecompetition that globalisation brings,the need for increased trust in businessoperations and the costs that carbonand other natural resources accountingwill add to businesses.Many steps arenecessary to achieveTBL performanceimprovement.A critical element is thatstrategic and business plans includegoals in allTBL dimensions.Assetmanagement plans and service levelsneed to articulateTBL benefits andperformance targets.Formalmanagement systems, stakeholderengagement,wider trainingTBLprogrammes, a supportiveorganisational culture, and participa-tion in benchmarking activities,including public reporting, are allsupportive approaches.

Conclusions and recommendationsAdoption ofTBL principles willhelp utilities identify areas forimprovement in their urban watersystem and deal with future challengesrelating to water.While guidance isavailable regarding how to producepublicTBL reports (Kenway et al 2007;VictorianWater IndustryAssociation,2002;GRI,2002), there is a noticeablevoid detailing the internal measures ormethods necessary to deliver thisperformance.Many utility managerswill feel more comfortable with publicreporting once internal systems areestablished to trackTBL trade-offs thatare occurring with decisions.This will

About the authors:Steve Kenway, University of Queensland, Advanced WaterManagement Centre, Brisbane, Australia.Email: [email protected]

Carol Howe, UNESCO-IHE, Delft, The Netherlands.Email: [email protected]

Shiroma Maheepala, CSIRO, Victoria, Australia.Email: [email protected]

Tony Kelly, Yarra Valley Water, Melbourne, Australia.Email: [email protected]

Cheryl Davis, San Francisco Public Utilities Commission,USA. Email: [email protected]

Acknowled-gements:AmericanWater WorksAssociationResearchFoundationand CSIROLand & Waterand Water for aHealthyCountryProgram fortheir supporttogether withall contributorsacknowledgedin the report(Kenway et al.2007).


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Triple Bottom Line (TBL)management – the systematic

improvement of environmental,social and economic performance– is gathering momentum in thewater sector.Water utilities acrossthe globe are dealing with thechallenges of water shortages,environmental degradation, costpressures and rising communityexpectations.A workshopconvened by the SustainabilitySpecialist Group of the InternationalWater Association (IWA) at theWorld Water Forum,Vienna,September 2008 focused on howTBL thinking and measurementcan help water utilities addressthese challenges. Key PerformanceIndicators (KPIs), tools andprocesses was a particular focusof the workshop.In the past decade, a suite of

approaches and tools have emerged tosupport the increasingly challengingdecisions that water managers mustmake,withTBL thinking advocated asfar back as 1997 (Elkington).However,embeddingTBL into the businesssystems and cultures of water utilitieshas progressed slowly.In seeking to leverage the collective

wisdom of the assembled group, theworkshop adopted theWorld Caféapproach (Dunn 2004).This is foundedin the comfortable conversations thatoccur between small groups.TheWorldCafé process is designed to enable keythemes to emerge by facilitating,recording, sharing, aggregating andprioritising issued raised in natural

conversations.Four formal presentations were

delivered to set the context. StevenKenway of CSIRO (CommonwealthScientific and Industrial ResearchOrganisation),Australia summarised arecent guidebook forTBL in waterutilities (Kenway et al 2007).Heclarified howTBL principles, tools andreporting will help utilities addressemerging challenges including skillsshortages, burgeoning and sometimesconflicting legislation and risingenergy prices.PeterVan Den Steen of UNESCO

(United Nations Educational, Scientificand Cultural Organization),TheNetherlands, challenged the use ofTBLKPIs at utility level.He suggested thatthis could lead to harmful sub-optimi-sation. He concluded that it is betterfor politicians to develop an overallvision of the city and for all managers,including water managers, tomeasure progress towards that vision.Cheryl Davis of San Francisco

Public Utilities Commission putforward that a primary benefit ofTBLreporting is that it reconfigures howwe define our challenges. It offerstransparency to us and our stakehold-ers. Cheryl also summarised the‘sustainability toolbox’which has beenrecently added to IWA’s website(www.iwahq.org) and containsresources to help with understandingTBL and sustainability.Harry Zhang of CH2MHill,USA

identified that there is a growing needfor a practical tool that can mapwater use and assess risks for global

companies.Harry described such atool called ‘GlobalWaterTool’ that hasbeen developed for theWorld BusinessCouncil for Sustainable Development(WBCSD). The GlobalWaterToolenables creation of Global ReportingInitiative (GRI)Water Indicators,inventories, risk and efficiencyperformance metrics andgeographic mapping.These contrasting presentations

sparked vigorous discussion includingthe appropriate scale for optimisation.Some felt strongly that catchments,regions,nations or other scales weremore appropriate levels around whichto manageTBL as opposed to utilitiesor cities.The debate moved on to address the

following questions:• WhatTBL KPIs or related tools orprocesses can deliver the greatestvalue or performance benefits towater utilities and why?

Triple Bottom Line (TBL) reporting can be used to improve water utility performance. At the IWA WorldWater Congress a gathering of water sector practioners utilised an innovative workshop methodologyto share insights on how water utilities could apply TBL to produce better outcomes (see alsopreceeding article). STEVE KENWAY, PAT MCCAFFERTY and FRANCIS PAMMINGER summarise the key conclusionsand emerging themes.

How can the Triple Bottom Line delivergreater value to water utilities?

World Café processin action. Credit:Pat McCafferty


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• How mightTBL KPIs influencestrategy and decision-making inwater utilities?

Five key themes emerged from thediscussion.These included:• KPIs need to reflect circumstance• Time-frames are important• KPIs need to be meaningfuland aligned

• Formalisation of KPI selectionprocesses is warranted

• Awareness ofTBL analysis tools issurprisingly low

TBL KPIs need to reflectcircumstanceIt was recognised that water utilitiesaround the world are faced withdifferent critical issues, and henceTBLKPIs need to reflect these issues. Insome countries access to adequatereliable water,minimising water loss(non-revenue water) or havingequitable tariff structures are critical.While in developed countriesaddressing total life-cycle costs (not justimmediate cost-benefits), energy use,greenhouse gas emissions and rawmaterials use are more important.Distinction was also noted between

private and public companies, becausefinancial indicators often have greateremphasis with privatisation.Service disruptions, regulatory

non-compliance and staff turnoverrates and engagement levels (surveyed)were seen as good indicators as wasbenchmarking of best planningpractices. It was recognised that KPIsneed to ‘look beyond utility borders’particularly with regard to social andenvironmental impacts.For example,considering the influence of policy oncustomers behaviour,not just onoperational impacts.There is also aneed to recognise that some KPIscannot be quantified but arestill important.

Time-frames are importantThe relative importance of KPIs canchange over time,however in thelong-term they may merge.Forexample, externalities of climatechange associated with greenhouse gasemissions end up being paid for in thelong-run. It was suggested that ‘Lengthof planning horizon’ could be a goodindicator to test the ‘think long-term’principle which is central toTBLapproaches. Sometimes decisions toimprove short term results can havenegative repercussions in the long termand this needs to be considered.Indicators therefore need to betime-bound to be meaningful.It was also recognised that

organisations also often take a ‘journey’in relation to building and analysingTBL KPIs.For example the selection

of a particular KPI (say environmental),may affect other outcomes that thebusiness is seeking to achieve.Overtime patterns emerge identifying thelinkages, and the KPIs themselveschange to reflect that understanding.

KPIs need to be meaningful and alignedTo have a genuine impact on decision-making,KPIs have to influence effortand investment.Board-level KPIs forstrategy and finance should align withorganisational KPIs addressing strategyand operations.Participants agreed that‘what gets measured get done’, andthat the performance assessment ofmanagers,when linked toTBL KPIs,was a critical success factor in achievingimprovement in KPI results.Where financial incentives or

penalties exist for employees theseshould be balanced across all KPIsendorsed by the organisation.Thiscould improve the linkage betweenexecutive actions and plans withday-to-day project operations andorganisational vision and values. In asimilar vein,‘nesting’or at leastdemonstrating the alignment ofTBLKPIs from utility, through city tonational and global scale is warrantedto ensure that sub-components of thesystem are not optimised in isolation of– or to the potential detriment of –the whole.

Formalisation of KPI selection processesis warrantedA key issue with indicators related tohow they are set and agreed.This isimportant because it is effectivelytrading environmental, social andpublic goods.Negotiated andtransparent agreement onTBL KPIsbetween the utility and government arerecommended to maximise publicbenefit and improve transparency.There is a need for a framework and

process supporting the identification ofspecific KPIs at a suitable spatial andtemporal scale.This will lead todifferent indicators and targets ineach region.

Awareness of TBL analysis tools issurprisingly lowAt the workshop inVienna it wasfound thatTBL analysis tools andprocesses were neither well understoodnor widely used.This is surprisinggiven the group was articulate in andexperienced withTBL in general.Thissuggests that a major gap exists hereand that capacity building programmesare warranted at many levels.In reflecting on the workshop

objective the authors of this articlebelieve the concept and application ofTBL can deliver greater value to waterutilities. In many utilities this is alreadyoccurring (Kenway 2007).Specifically

it does this by helping systematiseperformance by clarifying goals,involving stakeholders and measuringperformance simultaneously in theincreasingly interrelated environmen-tal, economic and social dimensions.However, for benefits to be realised,the concept has to be seen as importantand embraced at all levels through anorganisation – including its integrationinto business strategy.There are a number of ways

that adoption ofTBL principlesand KPIs could be accelerated.Forexample, environmental and socialindicators recommended by IWAcould be strengthened, for exampleto include reporting of energy useand greenhouse gas emissions.Development of training and capacitybuilding programmes and fosteringand rewarding publicTBL reportingare also suggestions.�

ReferencesKenway,S.J.,Howe,C.and Maheepala,S.(2007)Triple Bottom Line Reporting ofSustainableWater Utility Performance.Denver,Colorado,AmericanWaterWorksAssociationResearch Foundation and CSIRO.Availablefrom IWA Publishing andWater ResearchFoundation.

IWA SustainabilityToolbox available atwww.iwahq.org/templates/ld_templates/layout_633184.aspx?ObjectId=644318

World Business Council for SustainableDevelopment GlobalWaterTool for SustainableWater Management.(www.wbcsd.org/web/watertool.htm)

Other references mentioned in this article ormeeting notes from the workshop are availablefrom [email protected].

AcknowledgmentsCheryl Davis,PeterVan Den Steen andHarry Zhang for contributing presen-tations and comments.Bruce Beck andmembers of the ManagementCommittee of the IWA SpecialistGroup on Sustainability in the UrbanWater Sector for supporting andencouraging the concept of aTBLworkshop.All workshop participantsare thanked for contributing ideas.

Small groupsdiscuss andprioritise emergingissues in answer toagreed pre-definedquestions. Credit:Pat McCafferty

water can the triple bottom line deliver greater value to water utilities? by steve kenway, pat...

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