Water Utilities & Society

Water utilities & Society

What is a water utility?

What is a water utility?

● Whole set of– Organization, processes,

activities, means and resources

● necessary for – Abstracting, treating,

distributing or supplying drinking water

– Collecting, treating and disposing of wastewater

– Providing the associated services

Water utilities in Monopoly board game.

Coliban Water

Water Utility Value Chain

Water Services Sanitation

Dis

trib

uti

on

R

etai

l

Ocean, rivers and groundwater (natural environment)

Raw Water

Dis

trib

utio

n

Customers

Drinking Water

Dis

trib

utio

n

Har

vest

Treatment Recycled Water

Dis

trib

utio

n

Treatment WasteWater

Nat

ural

Wat

er C

ycle

Col

lect

ion

Tre

atm

ent

Treatment

Water Services

● Core– Water supply

– Sewerage services

● Enhancing● Billing & payment● Information provision

● Facilitating● Developer support● Complaint handling● Information provision

Core service for water utilities is the supply of safe drinking water

Porter's Five Forces

● New entrants● Supplier power● Customer power● Substitute services

Porter, M. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2).

Water utilities & Society

Sustainability

Environmental Sustainability

● Nature as an economic externality

● Ecosystem services● Water as

commodity● Tragedy of the

commons

Economics

Ecology

EquitableViable

Bea

rabl

e

Sustain-able

Society

Source: World Conservation Union

Sustainability in water

“sustainable use of water requires the development and maintenance of a required flow of benefits to a particular group or place, undiminished over time without reducing benefits to other groups or ecosystems”

Gleick, Peter (1998), Water in Crisis: Paths to Sustainable Use, Ecological Applications 8 (3), 571–579.

Climate Change

Source: CSIRO

Victoria's Water Crisis

2000 to 2011 overall annual water consumption in Melbourne dropped by approximately 30 per cent.

Source: Office of Living Victoria

2000 to 2011 overall annual water consumption in Melbourne dropped by approximately 30 per cent.

Source: Office of Living Victoria

Dramatic reduction of reservoir inflows..

Source: Coliban Water

The Utility Death Spiral

Source: freese.com

Water: ᾿need᾽ or ᾽want᾽?

● Needs– State of felt deprivation

– Innate

● Wants– Shaped by society

– Learned

Source: timvandevall.com

Beyond Needs & Wants

Demarketing

● Lowering demand through marketing– Social marketing

– Price increase

– Restrictions

Water utilities & Society

Social Corporate Responsibility

Social Responsibility

The one and only obligation of business is to maximise is profits while engaging in open and free competition without deception or fraud”Milton Friedman, Capitalism and Freedom

Affordability

● Financial hardship● Empathy● No total

disconnection

Vulnerable customers require protection.

Public Health

● Walkerton Tragedy– E.coli contamination

from farm run-of

– 2500 people ill

– 7 deaths

p

Walkerton Tragedy: E.coli contamination from farm run-of. 2500 people ill. 7 deaths.

Is water a public good?

Excludable Non-excludable

Rival Private Common-pool

Non-rival Club Public

Water utilities & Society

Summary