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The turbulent future for water in the UK

by John Drummond

The water sector is revving up for PR24, its next periodic review. Things are moving on with a fresh Ofwat1 strategy, a regulatory focus on the longer-term and COP262 on the horizon. There is increased urgency in responding to the climate emergency. This feels like progress but look at the scale of the challenge.

Ripple effect

The UN independent climate change report of August 2021 details five future impact scenarios, each with a growing ripple effect on our world3. Earlier this year, the UK 2021 independent assessment of climate risk couldn’t have been clearer: “climate change is here, now”. Winters will be warmer and wetter. Summers will be hotter and drier. We face increased frequency of extreme events; there will be more flooding like the recent floods in London, China and Eastern Europe, and increased frequency of drought.

In addition, nations are underestimating the impact of rising sea levels. The website Climate Central, staffed by scientists and science journalists, has maps of how our coasts could change by 2050. The iconic map of the UK could look very different within just 30 years.

A new report in April this year on the economic impact of climate change concluded that sea level rises pose the biggest risk to the UK economy. In July the government announced a £5bn investment in flood and coastal risk management over the next six years.

Sectoral transformation

The scale of transformation required in the water sector is the biggest it has ever faced, said interim CEO of Ofwat David Black in a speech in June. But it is not just the impact on the water sector that is key. Sea level rises will hit coastal communities and cities. Flooding and heat waves will affect infrastructure and the built environment. People will struggle to insure their homes. Drought will affect food supplies, with many businesses dependent on water to produce their products.

The focus on reducing carbon emissions intensifies. But we need to focus more on adaptation if climate change is here now. And there is concern about the will to act of regulators and governments.

While the independent climate change report identified 15 opportunities for the UK government to integrate adaptation into public policy, it was only integrated in four policy announcements. The independent review is clear that the government’s response to the climate emergency is, at best, mixed. This is the same government that has cut the Environment Agency budget from around £120m to £40m over the last 10 years.

Taking the lead

Is it time for the sector to go beyond the reference frame of the UK government and regulators? Is it time to put people first, beyond satisfying regulators?

There is an urgent need to increase community resilience, to raise public awareness of the challenges we face, to drop the business-to-business jargon, and to make climate action an everyday choice for humans in their homes and neighbourhoods.

For the water companies to lead, to go beyond regulators and politicians, is a risk. But the bigger risk is to fail to lead if politicians fail. And, increasingly, companies taking the lead is what people expect. In the 2021 Edelman Trust Index4 68% of respondents said that CEOs should step in when governments do not fix societal problems.

Sources:

  1. https://www.ofwat.gov.uk/
  2. https://ukcop26.org/
  3. https://www.swissre.com/media/news-releases/nr-20210422-economics-of-climate-change-risks.html
  4. https://www.edelman.com/trust/2021-trust-barometer
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