WiseWater Management

ADemand Management Manual for Water Utilities

ReportNo WSAA 86

November 1998




This manual aims to providewater utility management and staff, planners, elected members and communitydecision-makers with an understanding of urban water demand management issuestogether with comprehensive and up-to-date reference material. It also providesguidance on developing and implementing a cost-effective demand management planand reducing the urban ‘footprint’ i.e. our adverse impacts on the environment.


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


The benefits of demandmanagement will be greatest in areas where the water supply system isconstrained through growth in demand, the capital or environmental cost of newor increased supplies, or community concern.


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


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


Demand management for un urbanwater supply utility encompasses a range of possible measures. Some measureswhich are discussed in this manual are: cost-reflective pricing; universalcustomer metering: reticulation leakage detection and repair; zone and customerpressure reduction; use of reclaimed water; temporary or permanent water userestrictions.


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


Economic evaluation of demandmanagement measures is important to ensure that cost-effective measures areimplemented. Such evaluation needs to take account of the differentperspectives – the customer, the water utility and the community. The mostappropriate test for determining the economic benefits of a demand managementmeasure is the total resource cost test, carried out from a communityperspective.


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


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


Copiesof the Report are available from WSAA, price $A50. Orders may be placed throughthe Bookshop at www.wsaa.asn.au or by email to info@wsaa.asn.au.