The provision of water services

The Irish Times ran a series on water services in Ireland.

The first article is perhaps the most interesting. It leaks the yet-to-be-published report on the water sector by PWC. PWC will apparently be fairly critical of the current system, which nicely fits with the plans by the Minister for a radical overhaul. There will be more investment in water infrastructure. There will be a water regulator. Word on the street has that the Commission for Energy Regulation will have its mandate extended to water (but not to transport). There will be national water utility. Bord Gais, Bord na Mona and the National Roads Authority are bidding to run Irish Water. Only Bord Gais has experience in mass retail.

The piece discusses the transfer of Shannon water to Dublin, but the Minister disappears from the story at that point. I would think that we first want to promote water conservation and fix the leaks.

The piece is silent on the future role of the county councils in water. If Irish Water runs the show, what will happen to the water infrastructure owned by the county councils? What will happen to the civil servants who run this?

Another article wonders what will happen to the private water schemes. Will they be nationalized? Will households with a private well and a septic tank have to pay the water charges? That would be grossly unfair.

The inspection fees for septic tanks are unfair too. Us city folk poo for free — or rather, waste water services are covered from general tax revenues. That is, septic tank owners pay for urban waste water, but city dwellers do not pay for rural waste water.

The second main piece is on drinking water quality, the problems with which are typically overlooked even though they are serious.

The third main article is on water meters. It is summarized in an editorial, and repeats a number of points I made in August. My main concern is the plan for the centralized roll out of water meters. I think that it makes more sense to have people install their own meters and let these meters use the same communication network as the smart electricity and gas meters. See the discussion here.

Conor Pope cites 1000 euro per household per year. I said that. If we maintain the current spending on water (incl. investment), if we keep the business rates for water as they are, and if we exempt those on private schemes from the water charges, then full cost recovery (as required by EU legislation) implies an annual charge of 500 euro per household per year.

15 thoughts on “The provision of water services”

  1. With major infrastructure like water supply, long-term planning is the key.

    As we are talking about long-term planning, future population growth is a key element, indeed THE key element.

    So, we need to know what population forecasts are going to be used when drawing up the plans for the provision of water services over the next few decades? And who is going to make them? Recent history does not inspire confidence that they will get it right.

    Let’s face it, with Ireland’s heavy rainfall, getting water from reservoirs to homes, offices and factories is not rocket science. All you need is an accurate forecast of future demand, and the rest is just a bit of building and tunnelling.

    It is therefore imperative that proper professional non-politically-motivated population forecasting be employed.

    We had the recent debacle over the migration estimates. The population at census 2011 turned out to be 200k greater than what was being forecast by ‘experts’ a few months before the census. But, this pales into insignificance compared with what happened in the early 1990s. A report published by Davy Kelleher McCarthy (yes, that McCarthy) in 1991 forecast that the population would fall from 3.5m then to 3.3m in 2011. It didn’t. It rose to almost 4.6m. As a result of planners taking that absurd report as their guideline, Ireland ended up in the late 1990s with a serious housing shortage and a massive infrastructural deficit. The infrastructure in the late 1990s in Ireland simply couldn’t handle the growing population, as the ‘experts’ had forecast a few years before that there would be a falling population. There were bottlenecks everywhere, on the roads, at airports, housing provision, etc. When the FF-led government moved to rectify this infrastructural deficity by a massive, much-needed and ultimately highly successful construction program, they were then labelled as crooks and in the pay of developers, quite often by the same people who had forecast earlier that the population would be falling throughout the 1990s and 2000s.

    It is imperative that the same error is not repeated, otherwise there will be water shortages in a decade or so. Projecting the trends of the past half-century, Ireland will have a population of 10.5m by 2051. I am referring to All-Ireland, of course, as it is inevitable that the artificial partition will be gone long before then. Planning for the provision of future water services needs to be based on both these assumptions.

  2. @ Richard,
    agree with all of that.

    Also, I find it amazing that we (as far as I know, uniquely in Europe) refuse to supply public water to many areas of the country. In other countries, water is a right of householders -but here, it’s a privilege that is in the gift of politicians.

    The sooner it is taken from county councils the better.

  3. @JTO
    Sounds overcomplicated. it’s only a bit of pipework.

    We’re not talking about some permanent infrastructure here, only piping to carry water to homes. Sure it will all be banjaxed again in a few years and have to be replaced so there is no need for overkill in planning. As long as there’s an efficient system for constantly renewing the pipework.

  4. @Ciaran
    In England and Wales, there are strongly regulated but private regional monopolies.

    Irish Water is still vague, but it may well be like that.

    @Ger
    Reform should be paced. Once upon a time, we wanted to take health care away from the county councils in a rush.

  5. Ger
    AFAIK it costs approx EUR 1,000 to repair 1 meter of pipe in Dublin
    It doesn’t get much cheaper down the country

  6. @Richard Tol

    Are there plans to introduce a system whereby toilets are flushed with unfiltered water as distcinct from water that has been filtered for human consumption?

  7. @Richard, I was pointing to the mutualised element in the Welsh system, which is distinctive to England’s public company model. It essentially means that Glas Cymru’s directors have debt-raising powers similar to those of limited liability companies but not the duties to shareholders.

  8. @Richard Tol

    I am referenced in the first article as sceptical of the Shannon Scheme without any context being provided as to why that was so. Below is a list of my main points that I sent to the Dail committee last week (minus the demand projection report).

    @JTO

    Agree with the early 90’s underestimation but the mid 2000’s official demand projections are already way out (on the optimistic side) after only 5 years – see point 2 below

    1. Need for Shannon Scheme is solely based on the future demand projections of RPS/DCC of an extra 300 megalitres per day (MLD) needed within the next 20-30yrs (see accompanying report for alternative view)

    2. Demand predictions made by RPS/DCC in 2006 were basically a straight line continuation of the Celtic Tiger years into the distant future and this projection is already some 40 MLD out in 2011 (Total of 589 MLD predicted in 2006 will be around 545 MLD in reality in 2011)

    3. Before any new water becomes available from the Shannon some €500m will have to be spent with no shortcuts possible – this is completely inflexible and will lead to very high costs per cubic meter of water of possibly up to €1

    4. Opportunity costs of government spending are very high in current environment – people will directly equate this €500m amount with number of hospital closures, carers’ allowance removal, etc.

    5. Building such large infrastructure before introducing metered water charges is putting the cart before the horse and there is ample historical evidence of this from other countries

    6. Once built, the Shannon Scheme will require expensive fixed annual O&M costs and will steadily depreciate (independent of load factor)

    7. The current Water Services Investment Programme (leakage reduction programme, Leixlip extension, Barrow Scheme etc.) should meet demand sufficiently for the next decade and no major extra construction should be necessary for the next five years

    8. In the meantime alternatives to the Shannon Scheme should be seriously assessed in a comprehensive manner and not with the artificial restriction of having to provide 300 MLD

    9. These alternatives should be able to be implemented in a flexible way with a much lower upfront capital cost to reflect the prediction risk involved – of the order of €100m vs €500m – for example:

    > Lower Liffey compensation flow scheme could free up an additional 60 – 100 MLD for extraction from Leixlip reservoir

    > Source options of over 100 MLD have been identified from regional groundwater supplies and opportunities in this area are very poorly studied – e.g. where does the current leaking water end up?

  9. @Tim Morrissey

    Agree with the early 90’s underestimation but the mid 2000’s official demand projections are already way out (on the optimistic side) after only 5 years –

    JTO again:

    The demand for water in 2011 may be lower than projected (temporarily) because of the recession, but I was referring to population forecasts. Population growth has certainly not fallen behind forecasts, in fact the 2011 population is 200,000 greater than was forecast in ESRI’s Quarterly Bulletins.

  10. @JTO

    Not sure what point you are trying to make.

    Water demand in Sydney has plateaued since the 1970’s yet there is now 1 million more people living there – so population growth does not necessarily lead to increased water demand.

    My own projections for 2031 would be for an average demand of 657 MLD versus 800 MLD for the 2006 RPS/DCC report (now changed to 800MLD in 2040 in their most recent projections). This allows for growth at more reasonable levels than seen in the recent past.

    If water supply issues for Dublin in this timeframe can be solved by spending in the region of €100m above and beyond the current Water Services Investment Programme, why would you spend €500m trying to solve the same problem?

  11. Ireland does have a water problem and that is too much water. It is laughable to suggest that Ireland suffers from a shortage of water. In Ireland fertile minds create problems and then expects the national government to fix them. In most countries the first line of attack is on consumption. 6 litres per flush toilets not 3 to 5 gallons, reduced rate of flow taps, user fees pay a flat rate for each litre used. The end user pays for the foregoing it does not need to come out of general revenue.

    Water and sewage are natural monopolies in most cases and there is no reason why municipalities and county councils cannot manage water filtration, water distribution , sewage treatment and disposal.

    Property taxes would be levied by municipalities and county councils to allow the provision of cost effective and safe water and sewage services. The national governments role would be confined to regulating and providing a testing laboratory for the mandatory testing of samples sent in by municipal and county council water works.

    If Dublin is too big for the East Coast water collection capability then development should be stopped in the Dublin area. Athlone, Galway, Limerick, Cork, Waterford are quite capable of taking up the slack.

  12. The first Irish Times article is, of course, completely biased towards the introduction of water charges but it does unwittingly offer some interesting insights into the motivations behind them.

    In other countries with rainfall shortages it is just about plausible to label water charges as an environmental tax, but that is not the case here where we get a huge amount of rain every year. Apart from nonsensical ‘think of the starving children in Africa and eat your vegetables!’ arguments, there is absolutely no environmental connection between water shortages in other countries and the water situation here. Unlike climate change or declining oil reserves, this is not a global problem and us not running the taps while we brush our teeth will make no difference whatsoever.

    As a result, the piece conjures up some convoluted waffle about water shortages elsewhere meaning FDI might relocate here at some future point from countries that do have water shortages and mentions that major MNCs like Intel need massive amounts of water and are currently using a huge proportion of our water supply.

    So now it turns out we have to ‘save’ water in order to give it to big business and the government would naturally prefer us to pay for this through regressive consumption taxes, rather than the progressive general taxation system. So in addition to yet another unfair tax to throw into the black hole of the banks, water charges turn out to be about subsidising corporations with more of a cheap public resource paid for by us.

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