Executive Summary Participants discussed the major challenges and opportunities facing the industry through panel discussions and interactive business simulations.
Participants discussed the major challenges and opportunities facing the industry through panel discussions and interactive business simulations.
During the Forum they prioritised their challenges, identified uncertainties and addressed how to integrate water in broader resource planning activities.
Based on those discussions, these are the key challenges the sector faces today:
Water is not priced appropriately
Correct pricing for water is central to managing increasingly scarce resources. It is one of the main factors that will determine whether much-needed private funding will be invested in the underfunded, infrastructure-heavy water sector.
Global water price data clearly shows municipal water rates trending up across the world, but the increase has not been substantial enough to address the fact that the final price paid by water consumers is generally lower than the cost of clean water production. Setting the correct water price is no easy task, as most discussions about tariffs have heavy societal implications. Prices have to be determined locally, dictated by a region’s needs and the willingness of its policy-makers and other stakeholders to make bold decisions. Until and unless water is priced at its true cost, the sector will continue to face a significant funding gap and the crucial question of addressing water scarcity will not be answered effectively.
Governance structures for managing water use are inadequate
When it comes to water resources, governance is shared between many stakeholders. In the US , water policy-making varies from state to state and is not generally harmonised, despite the fact that water resources and demand are both regional in nature. So long as inefficient coordination exists, making important and difficult decisions about water resource allocation and water management will continue to be a challenge. Bold new frameworks are needed that can provide clarity and visibility in the mechanism for water allocation and pricing.
More private sector involvement and new business models are needed
Globally, private sector participation in water has been extensive. The role of public-private partnerships (PPP) has been well established in many regions around the world, with many design-build- operate (DBO) contracts taking place in the Middle East and North Africa and even China. The recent example of a DBO contract awarded to Veolia from New York City suggests that there is growing interest in the US in this model. Large utilities can leverage their extensive expertise and become a service provider or provide advisory services.
Water planning must be integrated beyond the sector
Traditionally water policy-makers have operated in relative isolation from one another. The availability of enough water was always taken for granted; scarcity was regarded as far fetched.
The current environment presents a new reality in which water is mispriced and supply concerns are growing. Collaboration, clear understanding of the dynamics of water demand and supply, and the adoption of lessons learned from other industries that have addressed resource constraints are needed to ensure lack of water does hinder economic growth.
Please download the full report for more detailed analysis and coverage of the 2012 Water Leadership Forum.