Does showering really save water?

An interesting study by Unilever that monitored Brit’s showering habits has found that having a shower uses almost as much water as a bath – with power showers using more. It seems that on average we spend 8 minutes at a time in a shower. This would cost the average family of four £416 a year (90% is the energy cost) and 90 000 litres of water.

This may not seem revolutionary but behind the figures are two important learning points. Firstly and surprisingly it seems the Unilver work is the first significant scientific study of showering. The scientists used a shower sensor devise to monitor 2600 showers taken by 100 families. All too often people assume they know what is best, this report challenges the assumption that showering will save significant amounts of water. 

Secondly it highlights the importance of thinking holistically. The saving does not come from reducing water consumption – it makes very little financial difference - but from the huge cost of heating the hot water. Perhaps if people want to save money the advice should be to have a bracing cold shower!

Unilever has also published its research into how to bring about behaviour change. The ‘Five Levers for Change’ Unilver identified are:

             

    Make it understood. Sometimes people don’t know about a behaviour and why they   should do it. This Lever raises awareness and encourages acceptance.

              

        Make it easy. People are likely to take action if it’s easy, but not if it requires extra effort.  This Lever establishes convenience and confidence.

              

        Make it desirable. The new behaviour needs to fit with how people like to think of themselves, and how they like others to think of them.  This Lever is about self and society. 

              

        Make it rewarding. New behaviours need to articulate the tangible benefits that people care about.  This Lever demonstrates the proof and payoff. 

Make it a habit.  Once consumers have changed, it is important to create a strategy to help hold the behaviour in place over time. This Lever is about reinforcing and reminding.  

Water low priority in corporate board rooms

Water management trials behind climate change on the board room agenda, despite significant near term risk and opportunities. The Carbon Disclosure Project (CDP) Water global report has found that 57% of the publically listed organisations that took part in the survey report board level oversight of water issues compared with 94% of global 500 companies that address climate change. 

Over half (59%) of companies surveyed report exposure to water-related risks such as flooding, scarcity, and reputational damage. The majority of these risks are near term: 64% of risks in direct operations and 66% of risks in the supply chain are identified as occurring between now and 2016. Illustrating the urgency of water risk, more than one-third of responding companies (38%) have already experienced water-related business impacts, such as disruption to operations from severe weather events (e.g., flooding) and water shortages.

Underscoring the opportunities associated with effective water management, 63% of respondents say that water presents commercial opportunities, most of which (79%) are near term. The most commonly identified opportunities are associated with cost reductions from increased water efficiency, revenue from new water-related products or services, and improved brand value.

While its encouraging to see that so many companies recognize that water is both an opportunity as well as a risk, we need to see a lot more companies really taking water issues seriously. 

Changing owners in UK water sector

It has been all change in the ownership of Northumbrian Water with UK Water acquiring the company for £2.41 billion. UK Water is a consortium of Hong Kong companies ultimately owned by Li Ka-shing, supposedly Hong Kong’s richest man. Cambridge Water has been sold to South Staffordshire Water and a Canadian Infrastructure fund Capstone Infrastructure has bought a 70% stake in Bristol Water with Agbar, the Suez Environment subsidiary retaining 30%.

It is not hard to see why the water sector is proving so attractive. It offers secure long term investment that is almost risk free and an attractive rate of return of somewhere between 6 and 13%. With the 5 year regulatory cycle investors can be certain of the return until the next periodic review and even then with so much investment linked to the existing asset base and of course with zero risk of demand for water reducing investors can be confident that similar returns will continue. There is not many investments in the current climate that are so safe.

The water industry does need investors given the need to finance the massive capital programmes. But the question has to be asked that if investors continue to be willing to value companies at well above the regulated asset value is the returns set by Ofwat too generous and are customers getting a poor deal?