2005 - 2006 - Pinsent Masons Water Yearbook 2012

£2bn was achieved by increased efficiency and customers are now seeing the benefits of the
improvement programme during this period, with continuing improvements in drinking water
quality and the water environment.
Investment spending, moreover, is planned to continue at these levels during AMP4 and
beyond.
In Scotland, however, there is less ground for optimism, with the first programme of work under
the unified Scottish Water being heavily back-end loaded, with the prospect of a worrying carryover
of uncompleted work distorting the market in the next O&S period.
European regulatory framework
In the EU generally, change is being driven by the staged implementation of the Water
Framework Directive (WFD) and the rolling revision of the Drinking Water Directive (DWD),
which will impact most heavily on the countries of central and eastern Europe.
In part, this is a reflection of European society’s rising expectations on responsible use of
natural resources and increasingly effective environmental management. At the policy level, it
also derives from the European Commission’s own agenda for a managed response, to climate
change, sustainability issues and Millennium Development Goals objectives, pointing to a
further extension of regulation.
This could be good for the industry, but it signals yet more changes in market conditions, and
industry lobbying efforts must be directed at ensuring the outcome is appropriate, proportional
and manageable. The role of the industry supply base will be critical as it will be the prime
source of the efficiencies demanded by the regulators.
The impact of the WFD will be far-reaching, with consequences not readily foreseeable. It has a
momentum of its own, data accumulated in the course of its progressive implementation feeding
into further detailed policy formulations that are as yet merely outline objectives under the WFD
banner. It will have a ripple effect, too, on other regulations, such as those governing bathing
water quality, groundwater protection and urban wastewater treatment, and will trigger the
revision of other EU policies, such as pollution prevention, soil protection and priority
substances among others.
The DWD, too, will have further implications elsewhere in the course of its revision, particularly,
for example, for regulations covering materials in contact with drinking water, which will
inevitably raise concerns for the effects on the equipment and process design segments of the
industry.
Regulation, however, if it is to underpin environmental improvement , can only work when
backed by effective and efficient monitoring and enforcement procedures, under an overarching
and rigorous penalty regime, which is a determination yet to be demonstrated by the
Commission.
The International arena
A primary influence in the international market is the attempt through the Millennium
Development Goals to halve by 2015 the proportion of the world’s population without access to
safe drinking water and adequate sanitation. In addition, the Global Water Partnership
estimates that, in order to provide full water and sewerage access, and at least primary
wastewater treatment, for urban populations, investment will have to reach $180bn a year until
2025. Even allowing for the inevitable huge investment shortfalls, this amounts to an enormous
surge in market potential for the UK water and wastewater industry in the coming years.
The scale of the problem is evident from the wide variations in regional need and the disparities
they reflect between the developing and the developed worlds, although even in the latter they
reflect very large-scale requirements. The USA, for example, needs to invest upwards of
$300bn to upgrade its ageing water infrastructure and within the EU the requirements of EU
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Pinsent Masons Water Yearbook 2005-2006