Water sector resilience in the United Kingdom and Ireland: The COVID-19 challenge.

The outbreak of COVID-19 led to restrictions on movements and activities, which presented a serious challenge to the resilience of the water sector. It is essential to understand how successfully water companies responded to this unprecedented event so effective plans can be built for future disruptive events. This study aimed to evaluate how the water sectors in the UK and Ireland were affected from a holistic sustainability and resilience-based perspective. Using pre-COVID data for 18 indicators of company performance and comparing them to the first year of the pandemic, the direction and magnitudes of change varied across companies. Financial indicators were significantly negatively affected, with interest cover ratio, post-tax return on regulated equity, and operating profit, exhibiting the greatest average declines of 21%, 21%, and 18%, respectively, a trend that would be dangerous to provisions and company operations if continued. Despite this, service and environmental indicators improved during the first year of the pandemic, exemplified by unplanned outage, risk of sewer storm flooding, and water quality compliance risk decreasing by a mean average of 37%, 32%, and 27%, respectively. Analysis using the Hicks-Moorsteen Productivity Index concluded that average productivity increased by 35%. The results suggest that the water sector was relatively resilient to the COVID-19 pandemic in terms of services, but adverse effects may have manifested in a deteriorated financial position that could exacerbate future challenges arising from exogenous pressures such as climate change. Specific advice for the UK water sector is to scrutinize non-critical spending, such as shareholder payments, during periods of economic downturn to ensure essential capital projects can be carried out. Although results are temporal and indicator selection sensitive, we recommend that policy, regulation, and corporate culture embrace frameworks that support long-term resilience to since the relative success in response to COVID-19 does not guarantee future success against differing challenges. This study generates a timely yet tentative insight into the diverse performance of the water sector during the pandemic, pertinent to the water industry, regulators, academia, and the public.

Pitfalls in international benchmarking of energy intensity across wastewater treatment utilities.

The collection, treatment and disposal of wastewater is estimated to consume more than 2% of the world's electrical energy, whilst some wastewater treatment plants (WWTPs) can account for over 20% of electrical consumption within municipalities. To investigate areas to improve wastewater treatment, international benchmarking on energy (electrical) intensity was conducted with the indicator kWh/m3 and a quality control of secondary treatment or better for ≥95% of treated volume. The core sample included 321 companies from 31 countries, however, to analyse regional differences, 11 countries from an external sample made up of various studies of WWTPs was also used in places. The sample displayed a weak-negative size effect with energy intensity, although Kruskal-Wallace analyses showed there was a significant difference between the size of groups (p-value of 0.015), suggesting that as companies get larger; they consume less electricity per cubic metre of wastewater treated. This relationship was not completely linear, as mid to large companies (10,001-100,000 customers) had the largest average consumption of 0.99 kWh/m3. In the regional analysis, EU states had the largest average kWh/m3 with 1.18, which appeared a result of the higher wastewater effluent standards of the region. This was supported by Denmark being the second largest average consuming country (1.35 kWh/m3), since it has some of strictest effluent standards in the world. Along with energy intensity, the associated greenhouse gas (GHG) emissions were calculated enabling the targeting of regions for improvement in response to climate change. Poland had the highest carbon footprint (0.91 kgCO2e/m3) arising from an energy intensity of 0.89 kWh/m3; conversely, a clean electricity grid can affectively mitigate wastewater treatment inefficiencies, exemplified by Norway who emit just 0.013 kgCO2e per cubic meter treated, despite consuming 0.60 kWh/m3. Finally, limitations to available data and the analysis were highlighted from which, it is advised that influent vs. effluent and net energy, as opposed to gross, data be used in future analyses. The large international sample size, energy data with a quality control, GHG analysis, and specific benchmarking recommendations give this study a novelty which could be of use to water industry operators, benchmarking organisations, and regulators.

Aligning efficiency benchmarking with sustainable outcomes in the United Kingdom water sector.

The provision of fundamental services by water and sewage companies (WaSCs) requires substantial energy and material inputs. A sustainability assessment of these companies requires a holistic evaluation of both performance and efficiency. The Hicks-Moorsteen productivity index was applied to 12 WaSCs in the United Kingdom (UK) over a 6-year period to benchmark their sustainability, based on eight approaches using different input and output variables for efficiency assessment. The choice of variables had a major influence on the ranking and perceived operational efficiency among WaSCs. Capital expenditure (utilised as part of total expenditure) for example, is an important input for tracking company operations however, potential associated efficiency benefits can lag investment, leading to apparent poor short-term performance following capital expenditure. Furthermore, water supplied and wastewater treated was deemed an unconstructive output from a sustainability perspective since it contradicts efforts to improve sustainability through reduced leakage and consumption per capita. Customer satisfaction and water quality measures are potential suitable alternatives. Despite these limitations, total expenditure and water supplied and wastewater treated were used alongside customer satisfaction and self-generated renewable energy for a holistic sustainability assessment within a small sample. They indicated the UK water sector has improved in productivity by 1.8% on average for 2014-18 and still had room for improvement, as a technical decline was evident for both the best and worst performers. Collectively the sample's production frontier was unchanged but on average companies moved 2.1% closer to it, and further decomposition of productivity revealed this was due to improvements in economies of scale and scope. Careful selection of appropriate input and output variables for efficiency benchmarking across water companies is critical to align with sustainability objectives and to target future investment and regulation within the water sector.

Key performance indicators to explain energy & economic efficiency across water utilities, and identifying suitable proxies.

Water companies consume up to 8% of global energy demand, at billions of dollars' cost. Benchmarking of performance between utilities can facilitate improvements in efficiency; however, inconsistencies in benchmarking practices may obscure pathways to improvement. The aspiration was to conduct an unbiased efficiency comparison within a sample of 17 water only companies and water and sewerage companies in England and Wales, accounting for exogenous factors, whilst evaluating the accuracy of common proxies. Proxies were tested, and bias-corrected energy and economic efficiency scores with explanatory factors were analysed using a double-bootstrap data envelopment method. Bias correction altered the rankings of two companies for energy efficiency only. Results imply that on average, companies could reduce energy inputs by 91.7%, and economic inputs by 92.3%, which was symptomatic of the companies specialising in drinking water supply considerably out-performing combined water and sewerage companies. As exogenous influences were likely to be a factor in the disparity between the companies, five indicators were evaluated. The results varied but of note were average pumping head height, which displayed a significant negative effect for energy efficiency, and proportion of water passing through the largest four treatment works, that exhibited a significant negative effect on economic efficiency. Within proxy performance, population served for drinking water was an adequate replacement for volume of water produced, with results matching the core variable apart from two companies changing rank in the economic analysis. Conversely, length of water mains performed poorly when replacing capital expenditure, implying companies were on average 12.6% more efficient, resulting in ten companies changing their rank and causing explanatory variables to contradict direction of influence and significance. The findings contribute new insights for benchmarking, including how different types of water companies perform under bias-correcting methods, the degree to which factors affect efficiency and how appropriate some proxies are.

Economic and environmental efficiency of UK and Ireland water companies: Influence of exogenous factors and rurality.

For water companies, benchmarking their performance relative to other companies can be an effective way to identify the scope for efficiency gains to be made through infrastructure investment and operational improvements. However, a key limitation to benchmarking is the confounding effect of exogenous factors, which may not be factored in to benchmarking methodologies. The purpose of this study was to provide an unbiased comparison of efficiency across a sample of water and sewage companies, accounting for important exogenous factors. Bias-corrected economic and environmental efficiency estimates with explanatory factors were evaluated for a sample of 13 water and sewage companies in the UK and Ireland, using a double-bootstrap data envelopment analysis (DEA) approach. Bias correction for economic and environmental efficiency changed the rankings of nine and eight companies, respectively. On average, companies could reduce economic inputs by 19% and carbon outputs by 16% if they performed at the efficiency frontier. Variables explaining efficiency were: source of water, leakage rate, per capita consumption and population density. Population density showed statistical significance with both economic (p-value 0.002) and environmental (p-value 0.001) efficiency. Consequently, a rurality factor was defined for each company's operational area, which was then regressed against normalised water company performance data. More rural water companies spend more per property (R2 of 0.633), in part reflecting a larger number of smaller sewage treatment works serving rural populations (R2 of 0.823). These findings provide new insight into methods for benchmarking, and factors affecting, water company efficiency, pertinent for both regulators and water companies.