Depleting water resource availability is arguably the greatest challenge the water industry faces. The Environment Agency classifies the UK as a “water-stressed” nation — particularly in the southeast, where I live. A heady blend of population growth (from a UK population of 67m in 2019 to 75 million in 2050), climate change (summer rainfall could fall by as much as 24% by 2050), and leaky infrastructure (around 20% drinking water supply is lost through leakage) means that demand could outstrip supply by as much as 40% in some regions of the UK by 2050.
Looking to energy for inspiration, AMP8 (the 8th AMP since water privatisation in England & Wales in 1989; an AMP being a five-year asset management plan period used to set allowable price increases with Ofwat, the economic regulator) will see a substantial roll out of smart metering across households and businesses in England and Wales (at a potential £2billion sector-wide investment), under the assumption that more frequent and detailed information about household water usage will enable a sizeable 22.5% consumption reduction per person by 2050 — from an average of 142 to 110 litres per person per day. Interestingly, according to a recent Behavioural Insights Team report in 2023, the impact of smart meters on energy consumption has been an average of 3.3–3.6% reduction in electricity, and 2.9–3.1% reduction in gas (measured over a 1-year period across verified studies). So, whilst there are sources of inspiration to inform strategy, there is no playbook for guaranteed success here in the UK, and the biggest takeaway from BiT’s report is that the devil is in the detail across customer engagement during roll out, meter install, IHD (In-Home Display) quality, and accompanying programme of behavioural interventions.
Water is not energy
Whilst it’s important to draw from the energy sector’s successes and failures in pursuit of household consumption reduction, it’s crucial to identify what is unique to the UK water industry as determinants to design for. The context of any behaviour is crucial to understand, and the UK is unique in many ways — from the dynamics of private monopolies to wet British weather; low customer awareness (of industry process and scarcity issues) to the historically low cost of water company services. It’s important to increase our understanding of the extent to which society and perception impact both individual and collective consumption, as the basis for strategy, and to inform the most effective system of interventions to reduce household consumption (something I’ll come back to later).
“The determinants of household water consumption: A review and assessment framework for research and practice” highlights existing global knowledge across:
Observable determinants: can be physically seen or measured, such as occupant age or household value;
Latent determinants: which need to be inferred and can be subjective, such as attitudes to water saving and value placed on garden aesthetic;
External determinants: external to the home, influencing a suburb or community, such as rainfall.
Perhaps unsurprisingly, most academic research and consumption modelling has been focussed on observable data (cheaper and easy to access), but there are glaring gaps in our understanding of latent determinants — to what extent awareness and perception can influence overall consumption.
It is undeniable that increased frequency of consumption data (enabled by smart metering) is essential if the industry is to try and influence behaviours, but we also need to have a frank conversation about the limitations of that data so that we can identify complementary insight needed, and how it will be obtained. Latent determinants — such as a household’s enjoyment of gardening; awareness of local issues and the value of water; and an individual’s perception of behavioural control — are glaring gaps in knowledge, and I want to home in on awareness specifically as I believe it is a critical success factor in sustainably reducing consumption.
Scarcity
“You’re telling me that there’s not enough water in the UK? But it rains ALL the time! Tap water = rain water > It rains a lot in the UK > So there must be plenty of water in the UK?!” A nationwide survey of 2,000 British adults in 2020 evidenced that 77% believe the UK is a ‘wet and rainy country’ and 72% believe we have enough water to meet our needs in the future, and my personal experience with friends and family (none of whom work in the industry or utilities sector) is that there may be some awareness of water scarcity claims, but there is a way to go for this to become belief and motivation.
Scarcity has a psychological impact on people as we have evolved to pay attention to risks and restrictions. Scarcity bias results in people placing higher value on a resource that’s perceived to be in limited supply; if something is scarce it is more valuable, and often more desirable — think of toilet paper at the height of the Covid pandemic! Scarce resources are also more likely to be savoured, so it’s an essential shift in perception for UK customers to begin believing that water supply is at risk if the industry wants a more active dialogue about wasteful behaviours and mindful consumption.
But how do we know that something is scarce? What are the familiar — now intuitive — signals of a limited or depleting resource that customers would recognise?
- Increased cost: Increased or sustained demand + limited or reduced supply = higher price point (see Centre Parcs holiday costs in school holidays vs. term time)
- Visible decrease in availability: empty shelves in a supermarket or closed pumps at a petrol station
- Rationing: limiting the volume each customer can purchase at a given time or time period (such as Cape Town’s severe restrictions on domestic and commercial water use in the summer of 2018)
In contrast, think about the characteristics of household water supply over the past few decades, and consider what it has signalled to household customers as a result:
- Cost: Tap water has always been cheap (compared with these average annual costs in the UK in 2024, an average water bill is approx. 33% of a household energy bill; 25% of a household council tax bill; and 14% of a household food bill);
- Visible availability: Tap water appears abundant from household taps (save occasional temporary use bans, which are rarely enforced);
- Rationing: Temporary use bans typically occur in summer during periods of low rainfall (reinforcing the belief that rainfall frequency and volume dictates resource availability)
Together, these characterise a plentiful resource and leave little opportunity for cost to act as a primary motivation to reduce consumption (especially with more affluent households consuming the most water). Whilst AMP8 will see an uplift in customer bills, it is impossible to ignore the context of this cost increase — customer trust in water companies at a 13-year low — which, I assume, will mean this will present more of a challenge than opportunity. The dominant narrative here is one of industry behaviours and historic underinvestment, not of scarcity and water as a precious resource.
It is common practice around the globe to keep costs of water low — for important, ethical reasons — but I wonder if the low social value placed on drinking water services in the UK (or relatively mindless consumption, with UK consumption far exceeding that of other European nations such as France, Germany and Spain) is, in part, a second-order effect (a subsequent, less obvious consequence) that we now need to overcome?
Crucially, we need more insight to determine current attitudes, awareness and influencing factors, but, in tandem, we can start to build hypothesis for testing by drawing on behavioural science to inform strategy. As an industry we continue to talk to the rational brain, and my hypothesis is that we need to appeal to emotions to land the scarcity message, and here’s a few concepts might help bring this to life:
Loss aversion: leveraging regional pride
A defining bias/heuristic of behavioural economics, the pain of losing something is felt more strongly than the pleasure of gaining something of equal value. Scarcity is linked to loss aversion, but it’s important to note that proximity really matters. If the loss feels ‘closer’ it feels more acute, and this proximity can be temporal (when the loss is imminent or soon); spatial (in your local community or region); and/or social (friends and family vs. strangers).
Coming together as an industry, there’s a recognised need for a co-ordinated, national approach, taking distinct examples such as Affinity Water’s Save our Streams campaign from 2021 as inspiration for local activation. One of the central questions the industry needs to face in to is: how do you make a distant threat like water scarcity feel so ‘close’ that it compels customers to act?
There’s an opportunity to scale Affinity Water’s ‘Save our Streams’ campaign and leverage regional pride in familiar local geography — specific rivers and landmarks above lesser-known aquifers. How might we visualise resource availability at a regional level so that the issue remains salient year-round? Reservoir levels communicated on local weather forecasts as an example. Could we reframe the feeling of individual loss (having to forgo you Friday night bath), as an environmental gain for the local community?
Input bias: craft and precious resources
Input bias is the tendency to judge the quality of a product based on the effort and/or inputs, rather than on the resulting quality of the product alone. The luxury sector uses this bias to great affect across all communications — justifying high price points based on generations of craft, rare materials, and technical skill of the makers. Perhaps there is an opportunity to elevate and even romanticise water process from source to tap in communications and storytelling to take advantage of the input bias?
Having come from outside the industry, I’ve noticed many positive attributes that the water sector overlooks as a communicable customer benefit — either because it’s an industry norm or a regulatory obligation. The knowledge and skill required to deliver some of the highest quality water in the world is something to boast and draw attention to, and may enable a reframe of long showers and toilet flushing as ‘wasteful’ where they are currently social norms. Fresh perspectives are going to be crucial in helping the industry identify some low-hanging fruit — like sharing fundamentals of industry processes — that might result in customers placing more value on the end product than they currently do.
Reciprocity: leakage AND consumption
Of all the focus group conversations I’ve overheard with customers, leakage is the greatest customer bug-bear; it is a simple problem for customers to grasp, and is instinctively interpreted as wasteful. Customer intolerance then escalates in the context of hosepipe bans, resulting in a back and forth based on reciprocity: the expectation that people will respond to others’ actions with similar actions by returning a favour or gesture. “How dare you ask me to use less when you’re letting so much leak from pipes!?”.
I believe tone and transparency will be crucial here, demonstrating that water companies do practice what they preach and seek to take care of every drop. In the context of dwindling customer trust and continued distain for leakage, every company will need to evidence leakage reduction to encourage greater customer involvement in the water resource challenge. Water companies need to really understand customer expectations here, and not just financial investment — which, without context can feel confusing. How might the industry effectively communicate leakage reduction to incorporate reciprocity as part of the national consumption reduction strategy? Smart metering will support greater transparency if the industry is brave enough to communicate the location of known leaks and data evidencing speed of resolution.
Messenger affect: someone else needs to do the talking
The credibility, likability and authority of the messenger can affect the impact of the message itself, regardless of the content. This is going to be a hard pill to swallow for an industry filled with deeply passionate people, but, for now, the water industry in England and Wales needs partners (or separate, objective industry representation) to deliver messages about scarcity and consumption. Though the regional reputations of individual water companies vary, industry trust may undermine any campaigning, with the risk of adverse effects. And beyond likeability, is there a level of cognitive dissonance for customers when they might interpret water industry economics like any other consumer product? If customers understand revenue and profit to align with ‘product’ consumption, do water companies really want customers to consume less, or is it this another regulatory obligation?
Whilst leading the Bluewave team at Southern Water, my team tested the appeal of different messengers, resulting in the National Trust being favoured and most credible of the four compared (including water company and regulator). Humility will be important here, prioritising what’s most affective in raising awareness in pursuit of behaviour change, not feeling the need to exert authority and ownership if it means customers just don’t want to hear it.
All this talk about scarcity, but is motivation even essential?
There’s debate in the behavioural science community as to how crucial motivation is when seeking to change a habit — like leaving the tap running whilst you’re brushing your teeth. According to Charles Duhigg, motivation is an important factor, but is not always sufficient to sustain behaviour change in the long run. Motivation fluctuates and wanes, so a better strategy for success is understanding the habit loop to intercept it:
Cue: A trigger that initiates the habit;
Routine: The behaviour or action that follows the cue;
Reward: The benefit or satisfaction you gain from the routine, which reinforces the habit.
Focussing on habit creation is an exciting opportunity — especially as we know not all customers will be sufficiently motivated by safeguarding the environment, or incremental financial savings — but the challenge as I see it is that we’re not seeking to change a single behaviour, we need to affect lifestyles (a collection of actions and habits) and potentially redefine social norms. The idea of habits is also heavily reliant on the individual when we know interactions, the dynamic nature of the world, and fluctuating human emotions are influential.
For years now, water company efforts have focussed on practical water saving tips and local campaigns to raise awareness — often accompanied by household efficiency visits — but it’s time for a wide-reaching, comprehensive system of interventions, and to recognise behavioural science as an essential strategic lens as customer uptake will be the defining success criteria. WaterWise’s Water Efficiency Strategy to 2030 goes some way to defining a holistic approach across education, data, fixtures and retrofits, but still — in my humble opinion — overlooks potential emotional drivers, overlooks the broader context and its impact on behaviour change, and downplays customer choice as a crucial dictator of success across many of the strategic objectives.
Strategy and systems, not tactics and individuals
There is no silver bullet here, so we need a system of solutions across communications, fixtures, service provision, tariffs, and cross-sector collaborations to drive sizeable, sustainable behaviour change. We also have the opportunity to co-ordinate on a national scale through Ofwat’s Water Efficiency Fund — so what would be most effective executed as a collective, sector effort, and what requires regional delivery? Considering context and systems also means regulatory incentives/penalties associated with PCC (per capita consumption) should be called into question — to what extent can water companies influence consumption, and does the performance commitment drive productive water company behaviours when it’s in everyone’s interest to reduce consumption as much as possible?
Moving into AMP8, we don’t need the answers to all of these questions — in fact, it’s essential to be honest about all that we don’t yet know. One of my fears is that the industry continues to rely on desk-based planning and academic behavioural research when what we need is an environment for dynamic testing with our communities in the real world, as there are so many interventions that might prove effective. A recent article by Final Mile Consulting — Taking the Big Leap | understanding, accessing and improving behavioural science interventions — highlights both the potential and existing limitations of how behavioural science is being applied in the real world, and I want to highlight a few salient opportunities as we head in to AMP8 and £billions of activity:
We need to avoid one size fits all and embracing diverse needs, identities and social dynamics in any given community: work is already underway to understand the influence of faith and diverse cultures with South Staffs Water’s Ofwat Innovation project, and this needs to be built on over time. One of the most interesting questions might be — how might we collate data and insight from across the sector to identify consistent behaviours, important determinants, and evidence of effective interventions? Shared customer intelligence might just be a key advantage of UK water industry dynamics, but we need to realise the potential efficiency of collaborative monopolies.
We need to design a system that is sensitive to dynamic life changes: water companies have to serve all people through all life stages and events, so how do we sustain consumption reduction when teenagers are going through puberty; individuals move in to a house share; couples have children; or individuals suffer long-term illness..? Is it right to in all cases? Do we need to vary PCC targets and assess at a community level, knowing that certain vulnerabilities and stages of life require greater consumption?
My water consumption has soared since having my two children and was probably at its peak in the newborn stage when we were washing daily loads of spit-up covered muslins, cot-sheets and clothes. Becoming a parent is a very emotional, financially costly time, so how do water companies demonstrate sensitivity and understanding when a leaflet urging customers to take a shorter shower will be wasted on a household processing this life change? This level of customer intelligence and engagement may feel daunting for companies that seek to remain incognito, but I believe this is the brave new world the sector needs to embrace as a transformational opportunity.
We need to consider broad customer interactions within a household: water consumption is woven through the fabric of a human’s everyday existence, so there will be cross-over with industries and service providers — the most obvious being energy when people use hot water. But what opportunities lie in a broader understanding of UK household dynamics and local services that act as social infrastructure in support of livelihoods? What part do personal relationships and lifestyle preferences play in promoting excessive consumption, and how might we intervene?
We need to understand the emotions attached to water occasions: watching my children enjoy a paddling pool on a blazing summer’s day, it is pure joy enabled by a glorified bucket of water. My evening shower gives me some alone time to process the day’s events, it warms me up and brings comfort on a rainy autumn evening. Jumping in the pool on Brighton seafront — the feeling of moving through cold, clean water, panting for breath — exercise, yes, but really, it’s about feeling alive. Drawing attention to the human emotions associated with water might just help make it more visible in people’s daily lives. Water can be both a utility and a luxury, depending on the occasion — are these going to be useful distinctions when talking to customers?
Time to lean in, time to move
As the industry embarks on this fundamental — and I think incredibly exciting — challenge of consumption reduction in the face of water scarcity, we need to:
- Learn from the energy sector’s smart meter experiences, but keep our eyes wide open to the changing water sector context, including reputation and performance outside of potable water delivery
- Collaborate nationally to define actionable strategy, focussed (in part) on increasing awareness of water scarcity across the UK, but also being specific about what good looks like at an individual/household/community/regional level
- Translate data from smart meters into knowledge and intelligence — building data-rich pictures of household dynamics, and identifying the most influential determinants in each context, to support consumption reduction
- Map overlapping systems and services to identify opportunities for new product and service development
- Embrace experimentation so that we don’t get lost in the theory — modelling and prediction are industry comfort-zones, but the focus must be practical application in ‘the field’; testing, learning and adapting throughout
More extensive smart metering has been a long time coming, and the worst thing the industry could do is drag their heels on the challenge of consumption whilst they optimise the technology and prioritise leakage. Time to ask the difficult questions and work together to create a system that drives mindful consumption of this increasingly precious resource.
Lauren Tyler is former Head of Innovation at Southern Water. Lauren is currently open to hybrid and remote roles leading strategy, customer experience and applied behavioural science, and can be contacted via LinkedIn.
This article was originally published on Medium on 12th September 2024
Feature Image Source: Created by DALL·E