How Much Does Water REALLY Cost?

May 18, 2010 at 5:59 am Leave a comment

How much does water cost? The answer may not be as simple as you think. True, like most commodities, it is priced differently in different parts of the world, and the retail price does not always reflect the wholesale price, so the right answer is “depends”. But things actually get much more complicated than that when we try to estimate the true cost of delivering water.  

Water production is a complex process involving pumping, treatment and phased distribution. Costs are hidden across the entire ‘delivery chain’. Take, for example, the not-too-rare case of a water main burst. How much does a burst cost the water utility? Having spoken to quite a few utilities about this, I can say that the answer is made up of several aspects.  

  • Direct costs: That’s the nominal cost of water lost through the burst pipe until the flow has stopped. True, this is not straight-forward either, as quite often a visible burst is the result of an ongoing leak, or invisible burst, so water loss may have been going on for quite a while. And also true – some utilities have excess water, so the cost of lost water is negligible. If you are interested in water prices worldwide you may want to read the thorough analysis in the Global Water Intelligence website, or  just take a glance at the graphic illustration below:

            Water Prices Worldwide  

  • Indirect costs: Not surprisingly, this is harder to quantify and typically more significant. Indirect costs are a ‘catch all’ for the cost of damages to the water infrastructure, roads and property, businesses and citizens.  Parts of this can be priced in retrospect by calculating the cost of repairs and compensation paid; the rest is hard to estimate even after the fact (can you quantify ‘bad publicity’?)
    Many utilities are held liable for damages incurred after a certain time has elapsed from the moment the burst became visible, in case the water flow has not been stopped by then. Utilities like Severn Trent in the UK have a ‘Guaranteed Standards Scheme’ which compels them to pay consumers for any breach of the service guarantee. United Utilities has a “Guaranteed Standards of Service pledge” and is offering immediate compensation to affected consumers, as in this example. In Thames Water, if water flow resulting from a burst is not stopped within two hours, all incurred damages from that point on are to be paid by the utility. The utilities may be insured, but bursts yield increased insurance premiums – just add that to the tab.
  • Environmental and Social impact: The costs don’t stop there. Water loss has environmental ramifications ranging from increased vulnerability to contaminations and reduced water quality, to overhauls and complete reconstruction of parts of the burst-prone areas of the network. Unscheduled maintenance and fixing comes at the expense of scheduled, planned work, and by delaying the routine work, utilities run the risk of losing more water in other parts of the network. The social impact shouldn’t be trifled with either. In some cases, things can get completely out of hand, as was the case in Boston a few weeks ago. One can only start to speculate how much that burst really cost.

Water Main Burst - Source: Daily Telegraph
Water Main Burst – Source: Daily Telegraph

If water indeed costs so much, it is clear why utilities are investing heavily in finding leaks before they turn into bursts. Unfortunately, current technologies and best-practices leave quite a lot to be desired, and most utilities have ‘blind-spots’ in their network. Our goal in TaKaDu is to give utilities the tools to minimize the number and size of these blind spots. Gaining visibility into ‘darker’ parts of your network could be worth a lot of money – whether easily quantifiable or ‘hidden’ in indirect, environmental or social impact.

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Entry filed under: Leaks and Bursts, Water Cost. Tags: , , , , .

Water and Energy – and Even More Energy Ferrara: Smart Water Networks, or: No Water Left Behind

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