A high-level “Water Pressures” workshop at Singapore International Water Week (SIWW) 2011, organized in partnership with Black & Veatch and SIWW as part of the Water Leaders Summit, featured approximately 110 global leaders from more than 20 countries. Twelve internationally renowned chairpersons led delegates through 25 rapid-fire conversations focused on three types of pressures the water sector is facing today: policy pressures, innovation pressures, and public pressures.

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In-depth discussion allowed some common themes to surface during the hour-and-a-half roundtable. The majority of the concerns these participants raised seemed to echo the findings in the previous five conversations, which took place in the following locations:

• New Orleans, Louisiana – WEF’s WEFTEC 10
• Washington, D.C. – AWI’s American Water Summit
• Berlin, Germany – GWI’s Global Water Summit
• Adelaide, Australia – AWA’s OzWater 11
• Washington, D.C. – AWWA’s ACE 11

During the lunch dialogue, participants shared some best-practice examples of how they were coping with the challenges presented by these tough economic conditions. They mentioned the following approaches for dealing with pressing issues:

• Prioritizing water infrastructure investment
• Educating the public without alarming them
• Working collaboratively to promote water
• Bridging the funding gap
• Squeezing the assets
• Considering the benefits of PPPs
• Finding new revenue sources
• Focusing on cost efficiency
• Balancing agricultural and urban water needs

Prioritizing water infrastructure investment

The discussion began with the question of how to keep water on the forefront of people’s minds while many are distracted by other economic pressures. In the words of one participant from the United States, “It’s so tough because there are so many other issues that are facing all of us and does this really rise to the top? The reality is water infrastructure is first and foremost on all of our minds at this table, no doubt. But is that on the forefront for ‘electeds,’ for local government or for our constituents?

“All of that water infrastructure is underneath our feet. If it’s not visible to the ratepayer, it’s not important to the ratepayer,” she explained and then asked: “So how do we convey to them the importance of addressing water infrastructure issues?”

She then shared her own experience, saying, “For a lot of my constituents, water isn’t on the forefront. As long as they can walk into the kitchen and turn on the faucet and water comes out, life is good. Now if you talk about water rates – that may be very different. But that’s only going to be very different for a couple of months until they get used to those new water rates and then life is good again.”

In her community of well-educated people who have generally higher incomes, her constituents on the one hand are somewhat detached from their local government; on the other hand, they very much care about the environment and want to do the right thing, she said. “If they can make a connection between what the right thing is and having to spend a little bit more money, they’re good to go. But there’s a great deal of variation between one point and the next.”

So far her budget has been able to take care of minor catastrophic occurrences. “But anything major is going to be a whole different ballgame because the money, quite frankly, just isn’t there,” she added. “We know that we’re going to have some big failures, so how are we going to address those huge failures? If we don’t have fresh potable water to deliver, what’s going to happen? We’re going to have a sick population that can’t even get to hospitals, and it’s going to be an issue. So how do we prevent that?”

Educating the public without alarming them

Another participant from Australia responded to her comments and raised a note of caution. “You’ve got to be a little cautious that you don’t frighten the public,” he said. “One of the things that we as an industry live on is the reputation that we’re providing the public with a safe water supply.”

In general, he added, they’re not really interested in water because when they turn on their tap, they get clean, safe drinking water; when they flush their toilet, it’s taken away and cleaned up. “So you’ve got to be careful if you start too much of a campaign of our infrastructure’s being run down or you might create a backlash of ‘You’re incompetent; what have you been doing?’ Then you’ll lose your reputation and your license to be there,” he warned.

“And how can we tell people where we’re going to have this big failure?” he asked. “It’s going to happen. And when it happens, it’s going to be a lot of pressure on us as a utility, but we just don’t know where in our system is that pinch point.”

“We’ve got a pretty aggressive effort to educate the public about the path of water, like the hydrologic cycle, and we talk about how water goes through system and how we treat it and return it,” one U.S. panelist said. “That makes it easier when we go and ask for rate increases.”

In his experience, involving the scientific community has helped them raise awareness of water issues. “You can go blue in the face trying to talk to people about what you’re doing, but some professions they’ll believe more than others,” he said.

“We actually did some surveys and found out that if the scientific community comes out and says the same thing you do, that they’ll believe them more. So we started partnering with universities and paying them to do research for us, and they reinforced what we were saying,” he explained. “We then took that to the environmental community, and they started going to the newspaper and talking about how we were doing a pretty good job.”

Working collaboratively to promote water

It’s hard but important for industry leaders to raise their profile carefully as they focus on educating the public and the government on the value of water. One participant observed: “I think as an industry we have been like our infrastructure – out of sight and out of mind.”

Another participant agreed, saying, “In Australia, we as an industry have never been good lobbyists. The irrigators in Australia are terrific lobbyists, but the utility industry has never been good in that zone.”

A participant from the United States raised a similar point about another group’s efforts to persuade the public. He began by asking rhetorically whether the Tea Party was a blessing or a curse. “I would say they’re doing what we’re not doing. They’ve organized, and they’re yelling and they’re screaming about ‘Don’t raise rates and don’t raise taxes!’ but nobody’s on the other side saying, ‘Here’s what’s going on in our infrastructure. Here’s the problem if you don’t make that investment. Here’s the good science,’” he explained. “We have to be smarter as an industry about that and we need to work collaboratively.”

Consultants and trade association members, for instance, should support utility leaders at ratepayer hearings, he said. “We have to be more organized to show up and to speak about the needs and the value and the importance of long-term investment. Collectively we have to recognize that we’ve got to get in the game.”

As another example, he cited how the Royal Bank of Canada sponsored the PGA golf tournament recently and ran many commercials about their water projects. “We need to even look beyond our industry for partners like that or the ‘Nestle types’ of companies,” he said. “There are so many industries that get it and are concerned and are doing smart things, but we need to link with them better than what we’ve done.”

Another U.S. participant picked up on the idea of having a highly visible advertisement about the value of water and the conditions of water infrastructure during the Superbowl. “That takes money; certainly one group couldn’t do it, but maybe a conglomeration of people.”

Public service programs, like the “Liquid Assets” series on public television, were cited as best-practice examples of how the public can effectively be educated.

Bridging the funding gap

Keeping water on the forefront can help attract investment in infrastructure, panelists said. But it’s still difficult to bridge the gap between the public’s understanding the value of water and their willingness to invest in it and pay higher rates.

A U.S. participant explained the issue in this way: “I think people all over the world understand the value of water, but they may not want to pay for it. If you ask them is water important, they’re going to say yes. And you ask where it is on the list from 1 to 10, it’s going to be a high number.”

However, governments often don’t understand or recognize the importance of water infrastructure, he said. The United States was given as a case in point, where recent funding proposals focused on transportation, etc., rather than water solutions. “There needs to be some leadership at the federal level that steps up to the plate and makes the case that this is not only important for you locally, but it’s also important for your economy, the state economy, the national economy and national security,” he said.

One of the U.S. participants suggested that relating water security to economic security might help reframe the conversation with government and the public. She said, “Most of us in the United States rely on ratings from Standard and Poor’s and Moody’s; so maybe if we explain how they put a value on our water infrastructure, the public will realize that water infrastructure has a value and works toward getting a better rating.”

A U.S. utility leader agreed, saying, “You don’t want to push the message, like the infrastructure itself, too far because you don’t want to go over the edge. You don’t want to have that failure; but at the same time, I find myself not wanting to ‘cry wolf’ with my ratepayers and my customers. You don’t want to say, “Hey, we need to do this or our bond rating could be in danger,” and then all of a sudden once it’s clearly not in danger, they think they’re good.”

Squeezing the assets

Australia is well known worldwide for their asset management best practices, according to one of the U.S. participants, and it serves as a best-practice case for how careful asset management can reduce risk. The Australian participant responded in this way: “One of the things that we’ve done a lot of work in, and I hear other utilities have done a lot of work in, is identifying risks with our assets. To some degree we’ve continued to be a little bit risk averse. We could probably push our assets harder because every time we squeeze, then we don’t have a catastrophe. So the people that are squeezing us have another squeeze, but eventually the lemon will dry up.”

He cited the example a 600-kilometer ground pipeline that had been laid, dug up, re-laid, lined, etc. “If you read all of the asset management guidelines, it’s beyond its life. But now that we’ve done some repairs on it and actually increased its pumping capacity, it could last another 50 years,” he said, pointing out how difficult it is to predict failure. “Our problem is that our assets are long-life assets, and they don’t fall apart on day 100 years plus one.”

The U.S. participant followed up, saying: “What I hear you saying is even with all of that expertise in Australia and all of that work that’s been done there, you still feel like much more needs to be done to understand the risks of where the failures are going to be and how that’s going to happen.”

“We can’t be confident when that’s going to happen, so we’ve got to do more work on really understanding those risks more and working with them,” the Australian panelist replied. “Then when we do go back with our hand out asking for funds, they understand it’s real and they can’t squeeze more.”

“By pushing back and squeezing our asset investment over the last decade or so, only 3 percent of our customer base in England and Wales are living in water poverty and that actually is quite a low number set against our European neighbors,” the UK participant explained. “I think we’ve got some headroom in pricing; but we still need a sizeable investment over the next decade.”

The challenge he is facing is that of the vast majority of funds are raised through debt, not equity. “That means in the current economic economy, there’s a great deal more exposure,” he said. “Even though they’ve got long lead-in times until many of those deals need to be restructured, it may be a long time before we see any substantial recovery, and therefore, we’re going to have to renew those debts at probably quite a difficult time.”

He also said he was concerned about macro-economic issues. “There’s real contagion in Europe with regard to debts and that could have a big impact on banks, banks’ sustainability or banks’ ability to actually service debts. If debts are called in or they’re not able to be funded or serviced, this could affect how private water companies operate.”

Considering the benefits of PPP

The question was posed about whether public-private partnerships (PPPs) brought more to the table during these difficult economic times than just access to capital. “Not just access to capital – no, no, no, no, no,” the participant from India said. “In Asia where there’s such a low level of technical and managerial capacities, PPPs provide operational expertise and experienced operators.”

One U.S. participant explained his community’s experience with privatization: “We privatized in 1998, and we have a very good operator right now operating our system for us. We’ve maintained our rates very low through the privatization. We keep a pretty heavy hand on those private operators and make sure they maintain the system for us.”

A participant from Singapore talked about the positive experience PUB has had with PPP: “Industry is producing water at two water plants very cheaply and sending it back to PUB, so we have that benefit.”

A U.S. participant remarked that PPPs don’t always work. “But I’m really hoping that that’s the direction that we’re going to be able to go in so that we’re going to be able to match private industry monies with public sector needs.”

 Several participants predicted that more assets will be brought back in house once they are run down. “I think the pressures these days have changed dramatically but not from whether PPPs are being thought of as a good thing or not,” the UK participant said. “But it’s the ability to refinance the debt that could be the driver that will bring the asset back in house.”

He added: “Five years ago that thought would be completely unthinkable and heresy to say so, but now people are starting to use that language again – not publically, but it’s out there.”

Finding new revenue sources

The discussion then moved to the topic of finding new revenue sources to supplement traditional revenue sources like tariffs or like connection charges, which have dried up as growth has slowed. “Our new revenue sources are our ratepayers,” one U.S. participant quipped. “We raised rates in the middle of the winter. They’re not happy about it, but they’re paying more and necessarily so.”

“The big opportunity in Asia, in terms of revenue stream within the tariff-based framework, is non-revenue water,” the panelist from India explained. “You’ve got between 50 and 70 percent non-revenue water anywhere in Asia and every single cubic meter volume you can increase means a huge inflation of your revenue stream.”

The participant from the Philippines added: “Every single cubic meter recovered can be sold because there are still millions of people unconnected. But our tariffs are so negligible that they’re practically irrelevant in one’s operations. This is why it’s important to recover non-revenue water because we can’t expand when there’s no money for expansion.”

She clarified that in the Philippines, unlike in some other countries, tariffs aren’t subsidized. “There’s no money from the central or local government that covers the gap,” she said. “But all is not lost, as it’s slowly changing – very, very slowly.”

Focusing on cost efficiency

Tariffs are the only revenue source for Singapore, according to a participant from that country, so they are encouraging innovation. “Our only revenue stream is tariffs, and we all know tariffs increase slowly,” he said. “Singapore has to emphasize investment in technology because we really need to look at ways to be more cost efficient and to focus on cutting costs.”

Deferring costs is another way to survive in these tough economic times. “On the retail side, we’re in this ongoing discussion with our customers on rates right now, so we’ve kind of pared everything back,” a U.S. panelist explained. “We basically took a lot of our conservation programs and said, ‘You know what? Those are all wonderful things to do, and we highly believe in them; but we don’t have to do that this year. What we want to bring you is what we absolutely, positively have to do this year to stay alive.’”

He also used that outreach opportunity to explain why long-term investments were needed. “We pointed out that this asset lasts 100 years and you’re replacing the whole system on a cycle of 290 years, so that doesn’t make any sense – and they got it,” he added. “It’s kind of a work in progress to figure out how we communicate that better with our customers going forward.”

Balancing agricultural and urban water needs

Communicating with all stakeholder groups, especially the farmers, is critical, according to the panelist from India. “The people who really should have been center stage in the discussion on the entire cycle of water source and management are the farm communities. They take more than two-thirds of my water,” he said. “Where are they? I’m not hearing how they’re going to become more efficient on irrigated agriculture.”

Water quality and water stress issues are pressing in Asia, he explained. “The problem in China is going to be a problem in India in the next 10 years, too, which is massive contamination of fresh water sources by agriculture and industry. You’ve got 21-23 percent of China’s surface water sources that cannot be used for either irrigated agriculture or for drinking. In fact, last year I was told by a senior Chinese government official that 300 million people were drinking contaminated water in China – that’s the population of the United States.”

Conclusion

Participants concluded on a more optimistic note by observing that there are weak signals of change in a more positive direction. “If you look at the situation in India through the political economy lens, you’re beginning to see very weak signals of change but signals nonetheless,” the panelist from India said. “The hard reality now is that people are not only willing to pay for water, for good water, but are demanding it. We want to have 24/7 water that meets WHO standards, and we’re willing to pay a price for it.”

Businesses, too, are demanding better water management, he added. “Businesses are saying that we’re not prepared to have water as a business continuity risk; therefore, we’re going to band together and use technology. The next 30 years in Asia are going to see technology and innovation drive water resources management,” he predicted.

“We’re getting our messages out, and we’re starting to see the public turn around; so now we’re looking to the future,” a U.S. participant added. “We’re just about to get there, but we’re not there yet.”

“All of that water infrastructure is underneath our feet. If it’s not visible to the ratepayer, it’s not important to the ratepayer.”

“You’ve got to be a little cautious that you don’t frighten the public.”

“I think as an industry we have been like our infrastructure – out of sight and out of mind.”

“There are so many industries that get it and are concerned and are doing smart things, but we need to link with them better than what we’ve done.”

“I think people all over the world understand the value of water, but they may not want to pay for it.”

“We could probably push our assets harder because every time we squeeze, then we don’t have a catastrophe.”

“We’ve maintained our rates very low through the privatization.”

“Our new revenue sources are our ratepayers.”

“The big opportunity in Asia, in terms of revenue stream within the tariff-based framework, is non-revenue water.”

“What we want to bring you is what we absolutely, positively have to do this year to stay alive.’”

“We’re just about to get there, but we’re not there yet.”

In-depth discussion allowed some common themes to surface during the hour-and-a-half roundtable. The majority of the concerns these participants raised seemed to echo the findings in the previous four conversations, which took place in the following locations:

• New Orleans, Louisiana – WEF’s WEFTEC 10
• Washington, D.C. – GWI’s American Water Summit
• Berlin, Germany – GWI’s Global Water Summit
• Adelaide, Australia – AWA’s OzWater 11

During the breakfast dialogue, participants shared some best-practice examples of how they were coping with the challenges presented by these tough economic conditions. They mentioned the following approaches for dealing with pressing issues:

• Finding creative sources of additional revenue
  • Raising rates
  • Reducing non-revenue water
  • Installing meters
  • Leasing to oil companies
  • Reducing costs
    • Gaining efficiencies by focusing on savings, optimization and streamlining
    • Regionalizing procurement
    • Delaying or postponing infrastructure investment
    • Taking advantage of lower construction costs
    • Collaborating more closely with all stakeholders
      • Learning from others’ experiences
      • Preserving bond ratings
      • Working closely with regulators
      • Balancing needs of domestic, agricultural and commercial users
      • Educating the public
        • Promoting the value of water
        • Determining common, uniform messages
        • Delivering persuasive messages to the public

Finding creative sources of additional revenue

Raising rates

Like many of the participants in previous roundtables, these panelists said they were looking for creative ways to generate additional revenue during these challenging times. Rate increases are a fact of life, they said, in order to offset rising costs and change in demand.

 “Our demands have dropped 10 years in a row now, and we haven’t seen an end in sight,” one participant pointed out. “We attribute that to the community having a conservation mindset, but that’s been a struggle for us with the revenues dropping each year.

“That has caused the need for rates to go up, so this year we requested a 13% rate increase,” he said. “Most thought the big capital program with the reservoirs and treatment plants was the cause; but in the end only 5% out of that 13% was for the capital improvements. The rest was to offset the changes in demand.”

“It’s a contradiction,” another participant explained. “The public feel like you’re fooling them because at some point if they become wiser water users, you still have an operation you’ve got to run so you’ve got to raise rates. It’s like we’re saying, ‘Because you’ve been better customers, we’re going to reward you with higher rates.”

Another utility leader explained that he had to raise rates 128% in 2006, not due to decreasing demand but to increasing costs. “It was impossible to survive,” he said. “And we’re going to have to raise rates another 20% in a couple of years.”

He also noted that when raising the rates to 128%, water consumption dropped only about 6% for several months and then came back up. “That’s why when media asks, ’Are you raising rates?’ I’ll say it all depends on the public. If the behavior of the public continues like this, eventually we have to do it to fund the need for more water sources.”

Reducing non-revenue water and installing meters

Reducing the amount of non-revenue water is paramount in these tough times. One participant explained that his utility had more than 50% non-revenue water so he went directly to the public to enlist their help. “We established a communications program about water theft and set up a hot line,” he said. “We’d do a media blitz and people would call into the hot line and say, ‘You know, so and so is stealing your water.’ We can’t catch up with the inaugural calls of people who now want to be connected legally.”

“Adding and replacing meters to capture more of that non-revenue water makes sense even though you’re actually spending money to make more money,” he said. “Last year we changed 130,000 meters, and this year we’re doing the same. It takes leadership to convince people you need to spend money but you’re going to make that and more back on the revenue side.”

Leasing to oil companies

Revenue streams from oil companies have helped keep taxes low in one community. “Because we’re in oil shale country, we’ve made a large number of leases available to oil companies,” the utility leader said. “But we’re not only a water supply; we’re also a flood control. On our flood control side, where most of the property ownership is through the levy systems and some of the reservoirs, we’ve seen a tremendous revenue stream and kept our taxes to a very small valuation amount for the flood control system.”

Explaining how fortunate his community is, the participant said: “Even a blind hog finds an acorn occasionally, and we happen to be sitting on top of huge reserves.”

Reducing costs

Gaining efficiencies by focusing on savings, optimization and streamlining

Participants explained that they are riding out the tough economic times by trying to gain efficiencies through looking at how they do their work and how they can streamline work processes. “We haven’t been talking about any new revenue streams at all,” one panelist said. “It’s mostly been a focus on savings.”

“Obviously a lot of utilities are looking at ways to save money – optimization, energy use, reduction of chemicals and things like that,” another remarked.

One participant agreed, saying, “That’s where we’ve been focusing, too, on internal processes. We’ve also been doing that in our engineering group by finding ways to streamline our designs and get more efficient at the way we make decisions – things like that.”

A key area for savings for several of the participants was energy, which makes up 25% of one utility’s total budget, a panelist reported. But another person said he didn’t have a problem at all with energy costs: “We don’t have high energy use. Our electrical bill is like 2% of our total operating budget, so it’s actually been difficult to find savings in a system that’s already been pretty well streamlined.”

Regionalizing procurement

“In some parts of the world, agencies team up with their adjacent utilities to increase buying power,” a participant reported, “so there’s a lot of creative thinking going on because money is just hard to come by these days. That’s why we have to all do more with less.”

“Drinking water, wastewater and energy utilities talk about how they’re dealing with financial barriers to implementing sustainability measures and goals,” one participant said. “Working with other communities and bringing their funds together to try to put together projects has been a big step. We’ve heard more of that happening on a local level.”

Another panelist gave a specific example of this savings: “Regional solutions like our integrated pipeline take time, but between our two agencies, just the capital savings alone is $300 million to $400 million on this one pipeline. It’s phenomenal.”

Simply using one ad agency for conservation campaigns throughout the region has yielded cost-savings for one of the participants, who strongly believes that regionalization of purchasing is important in these financially troubled times.

Taking advantage of state contracts for purchasing is another way to increase buying power, according to a couple of the panelists. “We do have access to state contracts for buying power,” one person said. “We’ve tried to do things more innovatively internally in terms of flexible services contracts, which means we’re able to draw on a number of firms pretty quickly.”

Drawing on resources quickly is never more important than during a crisis. “For crises and emergencies, my state has a very good system of deploying equipment, manpower, and supplies,” one participant said. “The state’s fairly nimble on sharing resources that way. So you don’t have to add to your payroll enough manpower for a crisis—you depend on your neighbors.”

“In the past, we’ve tried to share resources with communities when they have had a need; but from a legal standpoint, our lawyers just wouldn’t allow it,” another participant said. “Then we set up a network for crisis planning and tried to find ways to be more communicative about what needs are across different communities. Now we’re more open and able to support other communities.”

Delaying or postponing infrastructure investment

With just in-time construction – and careful planning – some participants have been able to defer costly investment. “Our water-sharing agreement with a neighboring city has allowed us to delay or postpone infrastructure investment,” a panelist said. “Our planning is just in time for construction, and that’s what we’re doing. We don’t build until we have to because these are such expensive projects that will double our water rate. So we’re looking at how we can stage the program best to postpone building an additional pump station, for example. I can see tremendous savings from this approach.”

Asset management has been another important way to save money, according to one participant. “We’re looking at our assets more closely and understanding what their life cycles are and what their needs are and then focusing our money where the needs are instead of just launching a broad pipe-replacement program,” he said. “We’re able to streamline that a bit and focus on the areas that are of highest risk to us. Then we use our maintenance dollars to focus on assets that are more at risk.”

Taking advantage of lower construction costs

Several participants pointed out that instead of delaying projects, they are moving them forward to take advantage of economic climate and thereby save money. “With one of our major projects, we’ve been pushing the designs forward and trying to just take advantage of the economic environment that we have right now,” one person said. “We put the bids out for the first part of the project and saved more than $10 million on the construction just because of the economic climate; and at the same time, we were making jobs available in the local area.”

Another participant reported seeing some projects taken off the shelf now because of the favorable conditions for saving money on construction. “Before the economic crisis, equipment and construction bids came in and the cities decided they just couldn’t afford it and they would back out of a project,” he said. “They went back out after the dip and found they could save 20 or 25% over two years.”

Collaborating more closely with all stakeholders

Learning from others’ experiences

These industry leaders believe it’s essential to share best practices with others in the industry and educate the public widely about conservation and the value of water. One participant said he held conservation seminars and brought in speakers from across the country to look at innovation.

Another panelist brought to his community some best-practice learning from Australia and another neighboring city. “We’ve taken a more holistic view of our organization as a result. Our group, I think, has been in a leadership role in the United States by doing that,” he said. “We’ve taken a lot of learning from Australia; we’ve participated in many benchmarking programs down there with the Australian groups. That’s really helped us to set some strategic goals for our organization in terms of looking at how we do business and becoming more efficient in those processes. It’s also gotten our leadership to take a more holistic view of our organization.”

Preserving bond ratings

A couple of the participants mentioned the importance of preserving bond ratings in this difficult economic climate. “We have a Triple A bond rating that we’ve been working to protect even in this time of our big capital improvement program,” one panelist said. “That’s a benefit to the rates that we’re getting on the bonds that we do sell.”

Another participant pointed out that he had no trouble whatsoever getting access to funding through the bond market. “I work with our bond people to make sure we advertise the strength of our bonds because right now lots of people are saying municipal bonds are shaky,” he explained. “Ours are probably some of the most rock-solid there will ever be. So even though our debt’s going to be huge on our upcoming project, again through education and advertising, we’re essentially going to try to keep our Triple A rating because that’s a sweet deal right now.” 

Working closely with regulators

Participants discussed how much more efficient local government is compared to the federal government. Several participants bemoaned the fact that working with federal authorities is “painful” at times, but they try to work together collaboratively in order to find compromises. For example, some are trying to get regulatory variance on cryptosporidium tailored to the nature of their watersheds, a move that will save them money and help tight budgets.

“You’ll probably never see crypto at all, but yet you’re going to be required to filter for it,” someone pointed out. “You need to actually have rational regulations to govern water utilities; that’s always a struggle.”  

Another panelist agreed, saying “When you’re starting to look at measuring chemicals in parts per billion and parts per trillion, folks aren’t understanding the real risk to them at this point; so it becomes another communication issue that we need to talk about. Otherwise the regulations could drive us to do a lot more expensive things than we are now.”

Sometimes utility leaders can defer some of the costs for a longer period of time and get extensions by negotiating with the authorities. One participant has found success in that approach: “I have to say the EPA is open to compromise. They know the economic difficulties right now, and it seems like they’re hearing from the White House, ‘Take it easy – we’re cutting money so don’t push the communities, don’t push the utilities.’”

“As long as you’re on a path for compliance in a reasonable period of time, it seems like that’s okay,” another person commented.

Balancing needs of domestic, agricultural and commercial users

Working closely with domestic, agricultural and commercial users will help balance demands for limited water resources, according to the participants. In the words of one panelist, “If we are going to preserve some type of an agricultural society, what water are we going to use? If you’re basically using all your water for domestic use, how do you guarantee supply for commercial use? When an industrial user is standing there saying, ‘I cannot expand my plant,’ then you start to see the economic value of water.”

The problem is, he continued, that energy prices are so high for these commercial/industrial groups that water rates and water supply don’t really concern them yet. “We can raise the water rates three times, and they will not notice,” he said, “but I’m starting to say to them, ‘We’re talking about scarcity here. I know it’s not a cost issue for you, but water is scarce.’ That’s a strong message for them.”

Another participant reported, “We’ve seen in California, especially southern California, where legislation has been enacted that ties new development to new water sources. They have to pay for the new water sources, so making those linkages is critical.”

Educating the public

Promoting the value of water

One participant discussed how he worked with other local entities to educate them and the public well in advance about the drivers for upcoming projects. “It’s like an education program on the value of water to make sure everyone understands where we’re going,” he said. “Because this next pipeline is going to double our rate, they need to realize that that’s the next closest water supply we have.”

“The value of water has been on our minds, too, and we’ve been trying to talk to our council about that fairly often because that’s a message that we need to get out into the public more often,” another person commented.

A participant explained how he talked to media in order to reach the public: “I say that I don’t like to talk about the water cost; I would like to talk about the water value. Let’s talk about that; I’m here to protect the water value, not the water cost. And that changed the conversation completely.”

Managing the “value message” well can make consumers more amenable to needed rate increases, according to one participant. “We don’t have much resistance from the public because I’m saying we’re building our own oil wells,” he said. “They need to understand that water is really the oil of the 21^st century.”

He added that the viewing water strictly as a human right could actually keep water as a low priority. “We did a survey when we raised the rates 128% and water was the fourth or fifth priority,” he said. “It cannot be that way, so we have to move that to the top in order to do what we need to do.”

Determining common, uniform messages

Determining a common message can be a barrier in itself as it’s sometimes difficult to work together with government agencies and other local entities. Some of the panelists, however, have reported being successful in those attempts. One person discussed how he was cooperating with a neighboring city: “Our conservation program is hand-to-hand the same message, and we’re each paying for TV spots. It’s the same spot so we can get a uniform message out on conservation, as well as save money.”

He explained that when they first realigned all their drought and conservation plans, they set up a five-year program in Spanish and English with creative awareness campaigns for the public in all of their customer cities. “We had a fairly uniform plan that everyone could follow, with bus wraps, billboards, benches, as well as television and radio,” he said. “This year we have the ‘lawn whisperer’ campaign, like the horse whisperer. We try to do really cute ads through our innovative ad firm. You wouldn’t know it’s a government ad unless you looked at the bottom line.”

Another participant reported having an innovative campaign to reach the public: “We had a 30-second ad with drops falling into municipalities that then splashed down and opened up to show the number and types of many projects in each municipality. Many people called to say, ‘We didn’t know it was so expensive to make water.’ That made people more conscious about this business.”

Choosing the right tone for the message helps to make it “stick” better. “Help politicians put it into ‘seventh grade language’ in order to explain a concept to the public,” one panelist recommended.

He also pointed out the importance of “persuading the persuaders” of the public. “What I learned from politicians is that you can come with all this technical information, and they’ll say, ‘I understand and I certainly back your ideas.’ But if the ‘seventh graders’ say, ‘No way you’re going to raise the rates,’ they’ll turn back and say, “Sounds good, but we can’t do that now.’ We have to convince the public, I think, rather than blame the politicians because we’re not helping them to explain it.”

Delivering persuasive messages to the public

Where you deliver your messages is equally important to how you deliver them, and participants report broadcasting their messages through traditional media channels and emerging media forums.

As one participant pointed out, “A lot of utilities and nonprofits are starting to use social media to really get the word out there because, as someone mentioned earlier, communicating with the press has been difficult.”

She explained the challenge with traditional media in this way: “It’s been getting even more difficult to get media attention because they’re just looking for that one story – are you increasing rates? That’s why water leaders are now trying to find ways to communicate what they’re doing through other mediums that go directly to the consumers.”

“One thing we’re doing is improve our messaging on watering lawns,” another panelist said. “Over half of our water in the summer is put on lawns and so we’re working with a local university to install weather stations to monitor evapotranspiration. Then within the next three to four weeks, we’ll be working with some TV stations to tell the communities when they really need to water based on evapotranspiration rather than just setting the cycle on their timers.

“We’re hoping just to educate customers through the TV stations’ weather people that, based on actual physical data, you need to water one inch this week or you don’t need to water at all this week,” he continued. “It’s hard to overcome that hurdle of spending money to get money back because you’re giving people information to tell them how to use less of your product.”

One participant concluded: “I think that we underestimate the public’s capacity to understand and be supportive. We approach it initially as if they’re going to be resistant, so we try to figure out how to convince them to see our point of view. But sometimes it’s just a matter of conveying the correct information and seeing how they react.”

A key challenge, therefore, especially in this difficult economic environment, is to be sure that the public actually hears and heeds the important messages being delivered about the value of water.

Stockholm, Sweden, will be the site of the final roundtable in this second annual series of thought-leadership discussions during Stockholm Water Week in August. Results from each of the six events, as well as a white paper summarizing all of the findings, will be posted on www.waterdialogue.com.

“In some parts of the world, agencies team up with their adjacent utilities to increase buying power, so there’s a lot of creative thinking going on because money is just hard to come by these days. That’s why we have to all do more with less.”

“We set up a network for crisis planning and tried to find ways to be more communicative about what needs are across different communities. Now we’re more open and able to support other communities.”

“We’re looking at our assets more closely and understanding what their life cycles are and what their needs are and then focusing our money where the needs are instead of just launching a broad pipe-replacement program. We’re able to streamline that a bit and focus on the areas that are of highest risk to us. Then we use our maintenance dollars to focus on assets that are more at risk.”

“I work with our bond people to make sure we advertise the strength of our bonds because right now lots of people are saying municipal bonds are shaky. Ours are probably some of the most rock-solid there will ever be. So even though our debt’s going to be huge on our upcoming project, again through education and advertising, we’re essentially going to try to keep our Triple A rating because that’s a sweet deal right now.”

“If we are going to preserve some type of an agricultural society, what water are we going to use? If you’re basically using all your water for domestic use, how do you guarantee supply for commercial use? When an industrial user is standing there saying, ‘I cannot expand my plant,’ then you start to see the economic value of water.”

“The value of water has been on our minds, too, and we’ve been trying to talk to our council about that fairly often because that’s a message that we need to get out into the public more often.”

“I say that I don’t like to talk about the water cost; I would like to talk about the water value. Let’s talk about that; I’m here to protect the water value, not the water cost.”

“We don’t have much resistance from the public because I’m saying we’re building our own oil wells. They need to understand that water is really the oil of the 21^st century.”

“It’s been getting even more difficult to get media attention because they’re just looking for that one story – are you increasing rates? That’s why water leaders are now trying to find ways to communicate what they’re doing through other mediums that go directly to the consumers.”

“I think that we underestimate the public’s capacity to understand and be supportive. We approach it initially as if they’re going to be resistant, so we try to figure out how to convince them to see our point of view. But sometimes it’s just a matter of conveying the correct information and seeing how they react.”

7 July 2011 – Black & Veatch featured on Channel News Asia, Business Tonight segment

5 July 2011 – “The Rising Influence of Water on Business,” By Black & Veatch for The Business Times (Singapore)

4 July 2011 – “True Value of Water,” Black & Veatch featured on CNBC Asia (video)

Various 2011 – “Joint Singapore International Water Week and Black & Veatch event identifies water pressures industry must solve together,” Black & Veatch news release, pickups

• WaterOnline
• Boston.com
• Environmental Expert
• Other online forums