The UK’s water and sewerage sectors are subject to economic regulation (price control) to ensure that their customers do not fall victim to monopoly pricing. In this context, economic analysis is essential to ensure that tax payers’ money is allocated efficiently, to deliver customers’ needs at least cost.
WRc’s economists are proficient in a range of techniques used to assist water and wastewater companies in investment planning.
- Econometric modelling to produce cost models (Capex, Opex, capital maintenance and carbon costs) for water and wastewater assets.
- Whole life costing incorporating asset life times and capital maintenance profiles.
- Economic valuation techniques (including willingness to pay) to value non-market goods and services (e.g. social and environmental costs and benefits) to fully reflect societal costs and benefits.
- Cost Benefit Analysis (CBA) at various levels:
- At programme level – to determine the optimal level of service;
- At project level – to select between options.
- Cost effectiveness analysis (CEA) to achieve a given level of service at minimum cost.
- Uncertainty analysis – Sensitivity Analysis and Monte Carlo analysis.
We also offer bespoke training courses, for example, to help our clients understand economic principles and methodologies in order to prioritise proposed plans.
Examples of our recent work in this area include:
- TR61 Software: a fully integrated tool for estimating Capex, Opex, maintenance and carbon costs for water and wastewater processes.
- CBA tools: developed for various water companies to aid investment planning.
- CBA to consider interventions to address aesthetic drinking water quality, for UKWIR.