Water - Dieter Helm

Price setting in regulated utilities and the potential application to the BBC
The determination of the BBC’s licence fee is the outcome of an opaque and non-transparent...

Some notes about Water

Recent floods have galvanised government to try to “do something”. As so often, the immediate concerns tend to dominate longer-term thinking, but at least the issues get aired. In addition to working out how to avoid a further crisis next winter – and in the period up to the next election – by showing that the government is spending more money on flood defence, there are more profound lessons that need to be learnt about the causes of floods and the management of river catchments.

Lesson one is obvious – and nevertheless often ignored. If more houses are built on the flood plains, these new houses and the existing houses already on the flood plain will be vulnerable to future floods.

Lesson two is that is the upper parts of river catchments are ploughed up and crops open to soil erosion are planted in these sensitive areas, rivers will silt up.

Lesson three is that concrete solutions, straightening rivers and digging ditches can often make matters worse by speeding up the flow of rivers and getting the water into the areas vulnerable to flooding much faster.

None of these have been learned. The proposals to take insurance policies across the economy to subsidise flood insurance in vulnerable areas creates a perverse incentive. FloodRe, the government backed scheme, does this, and worse still is the tax on all insurance policies to pay for immediate flood defences. Agriculture subsidies continue to support the planting of maize and similar crops in sensitive areas, whilst the environmental schemes within the CAP do not robustly capture flood risk considerations. Indeed, even worse, farmers are to be allowed to do their own dredging, which too often gets the water off their land faster and into the flood zones quicker. Finally, the removal of weirs, the facilitation of natural meanders and payments to land mangers to hold the water rather than allow it to run off quickly are at best slow and inadequate.

We can do much better. River catchments need to be managed on a system wide basis. They need a system operator – analogous to the system operator function for the electricity networks. Catchment natural capital plans; catchment natural capital accounts, and the integration of flood management with water companies and farmers incentives could produce a much better answer at lower total cost.

Latest publication

July 24, 2018

Water Publication

Who owns the water companies? Are publicly quoted companies better than private equity and infrastructure owned companies? Does it really matter? All sorts of claims are being made, and the merit of the discussion is that it asks very good questions...

Publications

Publication Water Water Boarding
February 14, 2018

The water industry is in play - with the regulators, and with the politicians. Labour proposes to renationalise the water companies, and the government and the regulators are determined to toughen up the regulation to show that privatisation works for...

Video Water Water Boarding
February 14, 2018

The water industry is in play - with the regulators, and with the politicians. Labour proposes to renationalise the water companies, and the government and the regulators are determined to toughen up the regulation to show that privatisation works for...

Presentation Water The Future of Flood Management
May 17, 2017

Presentation for Floodex Conference

Publication Water Flood defence: time for a radical rethink
January 5, 2016

Flooding crises tend to follow an established pattern. First, there is immediate help and assistance. Then second, there is a “review”. On occasions, this leads to a third stage of genuine reform, but in most cases “sticking plasters” are applied. These a

Publication Water Water Catchment management, abstraction and flooding: the case for a catchment system operator and coordinated competition
May 7, 2015

Since 2010 there have been a number of piecemeal reforms and developments across the water sector. These have included: the periodic review of the water and sewerage companies; the provision of further financing for the Environment Agency to address flood

Publication Water The Draft Water Bill
September 10, 2012

Such a mix of concerns provides the backdrop to the focus of the Draft Bill, and this critique starts off by considering what the aims and objectives of the proposed legislation are, before turning to its central contention that competition is the primary

Publication Water A new regulatory model for water: the periodic review, financial regulation and competition
May 6, 2008

Water regulation has been a rollercoaster ride for both the companies and the regulators.

Presentation Water Water Regulation: is it fit for purpose?
October 23, 2006

Presentation slides

Publication Water Water, the Environment and Regulation: Changing Functions, Changing Framework
February 20, 2005

The objectives in privatising the water industry were multiple. The then Conservative government considered that the private sector was inherently more efficient than the public sector, that share ownership could be widened and deepened by selling monopol

Publication Water Water: The Periodic Review 2004 and the Environmental Programme
February 13, 2004

Memorandum of Evidence submitted to the House of Commons Environmental Audit Committee. The periodic review of the water industry sets prices for the next five years. These prices should produce sufficient revenues to finance the functions of the water co