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METERING GETS POLITICAL

James Jenkins* unravels the politics and ethics of water metering.

With world demand for water resources increasing and showing no sign of abatement, the metering of domestic water supplies is often heralded as being central to reducing consumption. In the UK, water resources are under particular strain in the south-east. In the developing world and the poorer societal sections of developed countries, expenditure on drinking water accounts for a larger percentage of financial outgoings. This in turn raises an ethical issue of how the world's governing institutions should be seeking to provide the poorest sections of society with access to drinking water if, as proven, metered charging affects them adversely. 

The fundamental criticism of metering has been the potential impact it can have on those on low incomes. The costs involved in universal metering would mean increased charges for all consumers, heavy usage being penalized by increased charges. While many would be able to manage and be willing to pay them, there will be certain sections of society that may be unable to meet these increases. Indeed, is it equitable, or right ethically, that the poorer and less able sections of society should pay proportionally more for something that is regarded by many as a right?  It is also argued that the role of domestic metering in conserving and reducing water demand is flawed in numerous respects, in particular, that metering is devoid of the political realities that surround water usage.

The long-term effects of domestic metering are not well understood. In the UK it has been found that the metering of domestic users can reduce water consumption by about ten percent initially (National Metering Trials Working Group, 1993). However, what happens to water consumption in the long-term, particularly when people become used to metering, and when it is not a particularly burdensome part of domestic financial outgoings, is far from certain.
 
Although the fitting of a water meter may encourage consumers to restrict their water usage to start with, as time passes they may become less concerned. This is complicated by many meters being fitted in inaccessible locations that do not remind of their presence. The estimation of water consumption by water companies can then be argued to exacerbate further the disinterest of the consumer in monitoring water usage. If consumers have had a meter fitted, water companies should lead by example and bill people for actual use.

Although metering has been shown to regulate demand in the short-term, it must be recognised, far more openly, that in reality the economic rationale underpinning metering is flawed in two key respects. Firstly, it is questionable whether it will ever be acceptable politically to price water at such a level that discourages use. Secondly, if governments refuse to disconnect people for non-payment, which to many is socially just, the economic rationale of increasing charges to discourage use is undermined.

Even where disconnection is an option to force payment for water services, such an approach does not sit well with the UN Millennium Development Goal (MDGs) of halving the proportion of people without sustainable access to safe drinking water by 2015. It is these people who are amongst the poorest and least able to pay.

Crucial to the effective functioning of water metering is the ability of providers to increase charges to control demand. However, it is questionable whether any government, which is ultimately responsible for regulating water services and dependent upon the electorate, would allow the demand for water resources to be controlled by pricing -  a basic human requirement beyond the reach of consumers. This situation is exacerbated in water-scarce areas, such as the south-east of England, where the problem of water shortages are not caused necessarily by over-usage but by the underdevelopment of sufficient resources. 

The decision of the economic regulator (Ofwat) in England and Wales is meant to be independent. However, the government minister responsible is able potentially to influence the price charged for water services. This is evidenced by the guidance reports issued. The existence of party politics calls into question the ability of metering to control effectively water demand in the long-term. It will not be justifiable politically to price water out of the reach of consumers, particularly if water companies are shown not to have developed sufficient resources to meet demand.

Just as much as safe and accessible drinking water is not limitless, neither are the financial resources of the water industry. More importantly, the financial resources of consumers are not limitless either. Consumers have the right to expect water services to be delivered at least possible cost, particularly in a society underpinned by market economics.

Although the installation of water meters has the potential to encourage more efficient usage, it is not the most cost-effective approach . According to the National Consumer Council discussion report, 'Towards a Sustainable Water Charging Policy', the demand management cost of compulsory water metering is 94 pence per cubic metre, with voluntary metering costing 113 pence per cubic metre. These costs contrast markedly with the costs for other demand-management measures. For example, the cost of converting a nine-litre lavatory cistern to seven-and-a-half-litres costs 27.2 pence per cubic metre, with the conversion of a nine-litre cistern to a dual flush costing 17.2 pence per litre.

The costs associated with fitting domestic meters have not remained stable, increasing by a staggering 63 percent between 2000-2001 and 2005. For 2000-2001, Ofwat estimated that the average cost of fitting an optional meter to be £119. By 2005 Ofwat estimated that the average was £194 outside the south-east of England, where the average cost was £226. The increased fitting of water meters does not appear to be lowering the unit cost.

Encouraging domestic water users to have a meter fitted because it could save them money is to misrepresent the economic and obligatory rationale behind charging consumers in relation to demand. While it is perfectly correct to suggest that a single occupant living in a property with a high ratable value will save money (Ofwat, 2006), this financial saving does not translate automatically into water-efficient behaviour. Indeed, the more astute individual might very well increase usage, having become used to spending a certain amount of their disposable income on water services. It is also unlikely that an individual will be encouraged to lower consumption further by fitting water saving devices if their bills have already fallen.

If the industry is intent on fitting ever more meters it must, together with government, become more aware of how a consumer-driven market economy works and what are the consequences of failure.  Where people are forced to have meters fitted, as in the Folkestone and Dover supply area, consumers in a market-based democracy will have the expectation that their water needs will be met. To fail to meet demand while the individual is able to pay is a clear sign of failure. Metering does not remove the obligation to meet consumer needs, it merely increases it. If the industry wants to operate in a free market system it must ensure that it can meet demand. It cannot pick and choose what aspects of the economic system it wants without considering the needs of the consumer. For the water industry to ignore its consumer obligations is to challenge its right to operate.

The metering of water use is fundamentally flawed. I would argue that consumers should have their behaviour modified by stealth. This should be carried out by government regulation and initiatives, targeted at encouraging increased water efficiency.

It is proposed that the suppliers of devices that use water should be subject to a water efficiency labeling scheme. This scheme could be funded by curtailing the fitting of domestic meters to where absolutely necessary (i.e. to high-end domestic users, such as those with swimming pools). Similar to those of the EU energy label scheme. This scheme awards electrical appliances a grade from 'A', indicating most energy efficient, to 'G', indicating the least energy efficient. Government should then set strict limits on the water usage levels of such devices, with economic incentives, such as reduced VAT for those that fall within the top water efficiency category. Consumers should also be entitled to a rebate from the water company if they have installed certain water-efficient devices. 
 
If the water industry is not willing to look at alternatives to water metering and embrace more cost-effective methods of reducing water consumption, then government should act accordingly.  In relation to administering the water efficiency grading scheme, this could be delegated to the Consumer Council for Water which has been charged with encouraging the sustainable use of water resources, by both the consumer and the water industry in England and Wales.

Policy makers should reflect carefully on the use of metering, particularly when financial resources are subject to competing demands in relation to the need to improve the quality, access and availability of water resources within society. While it is not suggested that domestic metering is abandoned altogether, I would argue that more careful consideration should be given to lower-cost solutions that are capable of bringing about permanent, water-efficiency savings. If the water industry is not willing to embrace more innovative solutions and to be proactive in this area, then government should act.

*James Jenkins is from the Department of Life Sciences, University of Hertfordshire.