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The University of Southampton
EconomicsPart of Economic, Social and Political Science

Effects of Water Metering on Consumption

Research challenge

The necessity of promoting an efficient use of water receives widespread consensus, but there is no a similar consensus on how water metering and tariffs should be designed to reach this goal. For instance, in 2014, Irish Water, the national water utility in Ireland, started an ambitious programme to install over one million meters but, because of the opposition by residents, two years later the programme was stopped (when more than 900 thousand meters had already been installed), water charges were scrapped and the Irish Parliament passed a law to fund water services through general taxation. This testifies that there is a tension between having tariff schemes that, on the one hand, encourage households to save water and, on the other hand, ensure that water remains affordable for all households. Using data of the first universal metering programme implemented in England, a research team of the University of Southampton has provided the first exhaustive analysis of the effects of metering on water consumption, social welfare and equity (for the UK).

Context

In the UK, water consumption is up to 60% higher than in other EU member states. At the same time, 6% of the UK’s carbon footprint is associated with water and a very large proportion of that 6% is due to water usage in households. 

Water-meter

By successfully managing down water demand, there are significant benefits to the environment as well as to individual consumers’ costs. In 2010 Southern Water, the water utility operating in the Southeast of England, started a programme to install more than 400,000 meters across its supply area in the South East of England, an area classified by the government as under water stress. At the time of completion of this programme, known at Universal Metering Programme, on the 31st of March 2015, 87% of household properties in the region were metered, compared to the rate of about 40 per cent at the beginning of the programme. A similar project was initiated in 2014 by Thames Water, the largest water utility in England serving more than 15 million people, with the aim of having all households metered in the firm’s supply region by 2030.

Our solution

Our research team has found that after meter installation, households in the Southeast region decrease consumption by 22%, a percentage substantially higher than assumed in the literature. This finding represents an important input into policy making. In particular, such a large reduction in average consumption suggests that it would be advisable to extend compulsory metering to other areas of the country. The research team has also found that there is large heterogeneity in the way households react to metering. In particular, the analysis shows low responsiveness in the group of households that are better-off under the metered tariff, typically small households living in expensive dwellings. These results suggest that the optional metering in England is inducing the wrong types of households to choose a meter. Furthermore, this study provides the first large-scale evidence that the percentage reduction in water consumption is very similar across income groups. However, high-income households gain financially upon switching to metering while less affluent households are, on average, around £10 worse-off.

What was the impact?

The findings of this study provide much needed evidence on the usefulness and importance of water metering programmes. In particular, this research represents a crucial endorsement of governmental policies pushing for water metering and other innovative measures to reduce water usage. This research has been instrumental in the government’s understanding of the behavioural impacts of water metering and supported capacity building across a range of key organisations in the water sector. In particular, the research has directly influenced the National Infrastructure Commission in the UK and the Joint Committee on the Future Funding of Domestic Water Services in Ireland on sustainable use of water resources. The findings of this research are also helping water utilities in other region of the UK to design and implement their own universal metering programmes in a more effective way.

Research staff

Carmine Ornaghi, University of Southampton

Mirco Tonin, Universita’ di Bolzano, Italy

 

List of all staff members in
Staff MemberPrimary Position
Carmine OrnaghiProfessor in Economics
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