Wise Water Management – A Demand Management Manual

This report was produced for the Urban Water Research Association of Australia, a now discontinued research program.

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Wise Water Management – A Demand Management Manual

Report no. UWRAA 86

November 1998


This manual aims to provide water utility management and staff, planners, elected members and community decision-makers with an understanding of urban water demand management issues together with comprehensive and up-to-date reference material. It also provides guidance on developing and implementing a cost-effective demand management plan and reducing the urban ‘footprint’ i.e. our adverse impacts on the environment.

Demand management can enable a water utility to improve the financial performance of its business, its level of customer service and its environmental outcomes. This is achieved by helping customers to use water efficiently, reducing wastage and losses by the water utility and providing opportunities for contact with the customers and the community.

The benefits of demand management will be greatest in areas where the water supply system is constrained through growth in demand, the capital or environmental cost of new or increased supplies, or community concern.

A water utility which is facing the need to augment its water supply headworks, distribution or treatment capacity is likely to be able to reduce costs by deferring or avoiding the need for such works through reducing the demand for water. Some water utilities face high operating costs associated with pumping, treatment or purchase of water. Others face a regulatory or environmental constraint through pressure on groundwater supplies or streamflow requirements. In all these cases, there are likely to be financial and other benefits associated with reducing the demand for water.

A water utility that is working to improve the efficiency of water use is also helping its customers to use its customers to use its product wisely, and sees its business as more than just the supply of water, but rather the satisfaction of its customers’ needs for water related services.

Demand management for un urban water supply utility encompasses a range of possible measures. Some measures which are discussed in this manual are: cost-reflective pricing; universal customer metering: reticulation leakage detection and repair; zone and customer pressure reduction; use of reclaimed water; temporary or permanent water use restrictions.

Strategic planning is a key aspect of a successful demand management strategy. This means understanding the constraints; analysing how much water is used, when, by whom, for what purpose and at what level of efficiency; determining the potential reduction in water use that can occur through improvements to water-using equipment and behaviour and developing programs to achieve these improvements.

Economic evaluation of demand management measures is important to ensure that cost-effective measures a reimplemented. Such evaluation needs to take account of the different perspectives – the customer, the water utility and the community. The most appropriate test for determining the economic benefits of a demand management measure is the total resource cost test, carried out from a community perspective.

The sequence in which measures are implemented is also important. For example, it is not possible to establish a fair and efficient pricing system for water unless all customers are metered. Similarly, community education will not be effective unless the pricing system is such that customers can obtain a financial benefit from reducing their water usage. Although these three measures: metering; pricing and education are fundamental building blocks for developing a sound demand management strategy, other measures may also be warranted. For example, the price of water alone is not sufficient to guarantee the most appropriate level of investment in improved water efficiency, because of insufficient customer interest or inadequate access to capital. In many instances, therefore, there is an opportunity for the water utility to reap a financial benefit by investing in cost-effective means to improve its customers’ water use efficiency.

The potential reductions in water use from improved efficiency and the financial savings to the community are significant. A water-efficient house uses 40% less water indoors than atypical house. The reduction in outdoor water use varies more widely depending on the type and size of garden, but water savings of over 30% are often achievable. For non-residential customers, reductions in water use of more than25% with a payback on the required investment within two years is common. It has been estimated that a 15% reduction in water use nationwide could save Australian customers $240m annually in treatment and operating costs and a further $240m on reduced capital expenditure.

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