Pinpointing pressure points

A joint Singapore International Water Week (SIWW) and Black & Veatch event identified three key water pressures industry must solve together. Dan McCarthy, President & CEO, Black & Veatch’s Global Water Business provides a detailed overview of the multi-faceted discussion

A high‐level ‘Water Pressures’ workshop at Singapore International Water Week (SIWW) 2011, organised in partnership with Black & Veatch and SIWW as part of the Water Leaders Summit, featured approximately 110 global leaders from more than 20 countries. Twelve internationally renowned chairpersons led delegates through a total of 25 rapid‐fire conversations focused on three types of pressures that the water sector is facing today: policy pressures, innovation pressures and public pressures.

• Encouraging an innovation‐friendly urban environment
• Working collaboratively within broad frameworks
• Engaging multiple stakeholders in setting policy
•  Pricing water to reflect its true value
• Using pressure to drive necessary change
• Walking the talk as leaders
• Communicating clear messages about intertwined water issues

The event was moderated and facilitated by the author. This overview document examines the chairpersons’ observations in further detail.

Encouraging an innovation‐friendly urban environment

In order to oil the wheels of innovation, participants recommended creating progressive policies that promote investment in technologies to reduce costs, improve efficiency and drive new revenue streams.

An innovation‐friendly climate, said Jeanette Brown of the Water Environment Federation (WEF), can stimulate technological innovation for better revenue collection or other efficiency measures that will reduce cost. She pointed out how some utilities are integrating tools that are already available in a smarter way, like in Africa where people are using Smart Phone systems to pay for water or adopting technical solutions for the detection of non‐revenue water through Smart Metering.

Success in those efforts will mean more money for investment by water utilities. But it’s also important, Professor Chen Jining of Tsinghua University explained, to encourage additional investment in research and development within the private sector in order to promote new innovations.

Olivia Lum, Founder of Hyflux Group pointed out that public‐private partnerships (PPP) can act as a stimulus to innovation because business investors always want to reduce the costs of water and thereby maximise profits.

However, she added, one of the disadvantages of PPPs is that they can be a hindrance to the sharing of data. What’s needed is an innovation‐exchange platform that allows data to be shared faster. Ideally that data would be presented in a way that different regulatory entities, utilities and consultants globally can trust the data and apply it to their own urban environments, she said.

Unfortunately, having confidence in others’ data and trusting new technologies does not come naturally to many in the water industry. Participants said that some conservative utility leaders and politicians are reluctant to adopt new technologies because they don’t want to risk failure. That’s one reason why they often only want to have technology with a proven track record.

Public perceptions also need to be addressed when adopting and applying innovative technologies Prof. Chen Jining explained. Transparent communication of the specific benefits of each new technology will help ensure public acceptance. Using pressure to drive necessary change, Olivia Lum pointed out that some countries lack drivers for innovation because the quality of water is sufficient or the supply isn’t restricted or the true cost is subsidised.

In Oman, for example prices are subsidised so there’s a lack of public incentive for innovation to reduce costs or pressure to reduce demand for water, Khoo Teng Chye of Singapore’s PUB explained. Similarly, in Hong Kong the ready supply of water from China keeps subsidised tariffs low right now, but that trade agreement with China expires in 2047 so the public may need to be more concerned about water security than they currently are. Pressure isn’t always bad, he added. In fact, it can actually result in good policy frameworks, regulations, processes and institutional arrangements. He asked delegates to think about how best to create the pressure necessary to make water leaders act.

Participants also said that pressures may vary between developed and developing countries. Citizens in developing nations can’t take reliability for granted; so public pressure often focuses on the need for a more reliable water supply, Michael Wehner of Orange County Water District, California explained. He used the example of how the media in the US sometimes creates public pressure, particularly regarding emerging contaminants; but that topic that isn’t of great concern in most developing countries.

And in some parts of the third world, Olivia Lum added, citizens are so accustomed to not having tap water to drink that they don’t see domestic supply as important. It’s difficult to create pressure for change when the incentive doesn’t exist, she said. Working collaboratively within broad frameworks once the case for change has been established, the next step is to set up broad policy frameworks. One such framework should focus on innovation to stimulate creativity and collaboration, which will benefit the public by having a positive impact on the bottom line. Creativity drives innovation, while collaboration drives better decision‐making and can even drive down costs, participants pointed out.

Gretchen McClain of ITT Fluid and Motion Control recommended an approach to collaborating with technology partners to determine the most creative, cost‐effective solutions. When utility leaders define a broad framework for a solution, the private sector can then be innovative about cost‐saving measures for implementation. Citing an example of a utility that collaborated with a technical partner but left the specific solution in that company’s hands, she explained how the company found a cheaper solution that ultimately saved the utility a significant amount of money, which could then be re‐invested in needed infrastructure improvements.

Olivia Lum agreed with this collaborative approach, saying that it was important to go to market whenever possible with a programme or project that allows for innovation through the use of performance criteria rather than prescriptive criteria. A wider range of technology can then be employed to solve problems, and innovation in the marketplace can create a competitive advantage for all stakeholders.

Engaging multiple stakeholders in setting policy

Participants recommended engaging multiple stakeholders in designing transparent processes for mitigating policy pressures. This collaborative policy framework, according to Khoo Teng Chye, enables resolution of concerns from private operators, the public sector, consumers and other stakeholders. He explained that policy is all about tradeoffs and choices to resolve those tradeoffs – whether balancing long‐term and short‐term needs or cost and quality, for example.

Walter Kling from the International Water Association (IWA) emphasised the importance of including regulators in policy processes from the beginning in order to ensure transparent decision‐making and build consensus. Erna Witoelar of Asia Pacific Water Forum also supported the idea of creating a public or community consultation team to work closely with industry and politicians on policy issues.

Collaboration creates a political environment that facilitates the implementation of difficult but necessary water policies, participants said. Ramesh Negi of Delhi Jal Board recommended that the private sector, non‐government organisations and other international organisations should work together to help politicians make rational economic and policy decisions about water. Water is often a battlefield so it’s necessary to minimise political divides and build political good will before taking steps forward.

He also pointed out that although too much bureaucracy can be a hindrance, it’s important to have a strong policy framework that helps policy makers analyse issues, gives them clear options and, once decisions are made, supports them during implementation.

Anders Berntell of Stockholm International Water Institute agreed, saying that private industry and public utilities must present solid cases to decision makers and then make sure that politicians have all the information they need to deliver on difficult policy decisions and to carry the appropriate messages to their constituents.

Pricing water to reflect its true value

One of the most urgent, critical messages to convey to the public is the true value of water. Berntell said that the Human Rights Commission’s recognition of water as a human right can create policy pressures today. Although water should be affordable to all segments of society, each segment might have different pricing, he explained, adding that recognition of water as a human right is not the same as saying that water is free.

Khoo Teng Chye agreed, saying that one of the biggest challenges today is to ensure that the price of water always reflects its true value. He explained that Denmark, like Singapore, has full cost‐recovery pricing for urban use, but setting the right price for agricultural use is more difficult.

Similarly, Wehner of the Orange County Water District pointed out that the price of water needs to reflect what it actually costs to provide the level of reliability and quality of water that consumers are receiving.

In order for the public to understand the real cost for delivering water services, such as costs attributed to pumps and pipes, it’s necessary to increase the transparency and increase the accountability in the system, according to Berntell. And transparency in communicating the true value and costs of water will encourage public trust, Wehner added.

Walking the talk as leaders

Overcoming many public and policy pressures begins with having strong leaders deliver messages in the right format with the appropriate level of language. Dr William Muhairwe of the National Water and Sewerage Corporation of Uganda said that community and utility leaders need to enact clear, coherent water policies and “walk the talk” in order to persuade the public of the value of this critical resource.

He gave two specific examples to illustrate the point. Because the Singapore Prime Minister drinks NEWater in public, people believe the water is good and mindsets are changed. And in Cambodia, the Prime Minister goes to the water utility’s office and pays his own water bill, so he’s seen as a good role model.

Others agreed, pointing out the absolute importance of having strong leaders who not only provide a transparent direction for water but also are able to align others in the community with that vision.

Sue Murphy of the Water Corporation of Western Australia cautioned delegates not to underestimate community support for tough water policies or the public’s receptivity to water messages if delivered in the right way. As an example, Witoelar pointed out that language carries meaning so it’s important to reflect new ways of thinking about wastewater as a resource by changing the nomenclature from wastewater to reuse water. Communicating clear messages about intertwined water issues Water policy pressures often are intertwined with energy and food, Khoo Teng Chye pointed out, so it’s important to educate the public, particularly youth, about the impact of water on energy and food.

Witoelar added that the close links between water and health should also be emphasised. In India, for example, consumers are hearing the message that choosing to pay for safe drinking water now can actually be less expensive than the alternative of spending more money on healthcare later.

Communication of the inter-related nature of water and food, energy and health – as well as the true cost of providing a safe, reliable water supply – needs to start early. Participants recommended targeting youth and helping them understand and then convey through their wide networks important messages about the value of water. And getting more young engineers energised can change the face of the industry, ITT’s McClain suggested. Wehner reminded the delegates that although education of youth is the key to preparing the next generation of voters, it’s also necessary to get today’s generation of voters to understand the complexity of water issues.

Key conclusions

Several common themes emerged during all 25 conversations because of the interrelated nature of policy, innovation and public pressures. In all three pressure groups, pricing water to reflect its true value was considered a key cornerstone for success. Making sure that the full costs of water service are transparent to the public will help them be more accepting of rate increases for sound infrastructure investments.

Another common point was that innovation – not just in technology, but also in policy‐making and community outreach – can help reduce costs, improve efficiency and drive new revenue streams. Setting a broad framework for innovation and allowing the private sector to determine the most cost‐effective solution in each particular situation can benefit all stakeholders.

Participants also emphasised the importance of educating the public, particularly youth, on the importance of water. Consumers’ receptivity to that type of messaging shouldn’t be underestimated, and increased awareness is sustainable, so governments should take a more active role in communication.

In conclusion, even today’s most challenging pressures for the world’s water leaders, whether they come from developing or developed nations, can be overcome by creating the political will for change. That takes strong partnership between policy makers, industry leaders and the public, according to these Water Leaders Summit delegates; but such collaboration is necessary to ensure a safe, reliable water supply for future generations.

Note: Full results from all of the ‘Pressure Cooker’ discussions are available on www.waterdialogue.com, the site for Black & Veatch’s award‐winning, global Water Dialogue series.

Note: Full results from all of the ‘Pressure Cooker’ discussions are available on www.waterdialogue.com, the site for Black & Veatch’s award-winning, global Water Dialogue series.

Voices from the Middle East

In the workshop, a sprinkle of participants from the Middle East provided valuable insights into the water pressures in their respective countries and the region at large.

In the Policy Pressure segment, an interesting observation was how water is “messaged” helps politicians make tough choices. Putting this in a Middle East context, a Saudi delegate explained that while water security was not always an issue on the table, the passing of a government decree made it an easier problem to tackle.

“Our government has made the decision not to mine groundwater for food production but to source for food by another way to protect the precious groundwater resources,” he explained. “And although this government decree was largely for environmental and sustainable reasons, it enabled action.”

Policies dealing with public-private partnerships (PPPs) too were discussed, with some Middle East delegates sharing their largely positive experiences on this front. In one of Berntell’s and Negi’s groups, an Omani delegate noted that PPP has opened up many opportunities in Middle East for private companies. He said that PPP has allowed private partners to invest in desalination plants in Oman which helped solve at least part of the water shortage problems in the country.

In the Innovation Pressures segment, during the discussion on the solutions and best practices for dealing with innovation pressures, Saudi Arabia was discussed as a best practice case with the authorities in the Kingdom adopting innovative technologies to augment current resources and make the system more efficient.

In all three pressure groups, pricing water to reflect its true value was considered a key cornerstone for success; also discussed was making the full costs of water service transparent to the public so as to help them be more accepting of rate increases for sound infrastructure investments. A delegate observed that high level of water subsidy in Saudi Arabia prevented people from appreciating its real cost. A delegate from Oman added that while paying the full cost of water is essential to water efficiency, in his country, people pay only about 10% of the cost of water. As a result, it’s difficult to control demand for expensive desalinated water, and they also can’t cover the cost of treating wastewater to a standard suitable for discharge into the environment.

In the Public Pressure roundtable, educating and informing the public about the true costs of water and water service was seen as a crucial to dealing with public concerns of pricing of water. Dr Muhairwe’s roundtables identified informed, under-informed, misinformed or uninformed as the different levels of information. A delegate pointed out that in Saudi Arabia, where water is heavily subsidised, the public are under-informed about water issues despite educational campaigns. People would not value this resource until the price went up. But the annual tariff increases that reflect the true cost of water are frequently rejected or the government lowers the tariff.

When water issues are misunderstood, water is more likely to be undervalued, Ms. Murphy’s participants said. It’s important that the public understands the complexities of managing water. Also lack of information about the true value and cost of water is a stumbling block for increasing investments in infrastructure. A Middle Eastern delegate taking part in one of her sessions summed up the problem with an uninformed public this way: “They don’t understand what’s involved because previously there has been no need for them to. (But) This is changing.”

Participants also emphasised the importance of educating the public, particularly youth, on the importance of water. Consumers’ receptivity to that type of messaging shouldn’t be underestimated, and increased awareness is sustainable, so governments should take a more active role in communication. A participant from the Middle East said that education at youth camps in one of the region’s countries includes water demand and quality issues, as well as information about the need to manage resources.

The reasoning was sobering: “Education is very important, especially for those of early school years, because the future will be worse than the present.” At the same time, the right message in one location may not be the most important in another, several participants pointed out. In Europe, consumers may be likely to heed conservation messages; but in the Middle East, one message that resonates is that the water authority is taking care of them.

Source: Joint Singapore International Water Week and Black & Veatch Event Identifies Three Key Water Pressures Industry Must Solve Together: A White Paper with In-Depth Findings by Dan McCarthy, President and CEO Black & Veatch’s Global Water Business