Water minister, Rory Stewart (pictured) told the All Party Parliamentary Water Group yesterday that his gut instinct was we will need to build more reservoirs to make the country more resilient to drought.
Stewart urged the government to keep an open mind on spending more on infrastructure investment, adding it may need to convince “those sceptical, serious people at Ofwat…it may well turn out to be the case that it is worth spending a little bit more to make ourselves resilient to drought”. Any investment should be underpinned by consensus-building in society, on the back of an open conversation, Stewart said.
In particular, there is a need to be “more honest with people” when talking about resilience: what kind of risk are we willing to adopt; how should that risk be measured; and how much risk are we prepared to take? He gave an example: are we prepared to go through a drought every four to five years, or would we prefer to pay more to reduce that risk down to every 30 years?
The minister argued we shouldn’t pin our hopes on the emergence of a new technology or a massive culture change in tackling the problem, as governments that are short of cash often do when faced with a challenge. Rather, it was better to “plan for the worst”. With a nod to the uncertainty circling Westminster at the moment, he added the government needed a “serious 50-year plan” on this regardless of who occupied the ministerial seat.
Responding on Ofwat’s behalf, Trevor Bishop said the economic regulator’s benchmarks for giving the go ahead to investment had always been cost benefit analysis and willingness to pay. This, Bishop said, would continue to be the case for the most part, but resilience is “unique”: cost benefit analyses cannot be easily done, and relying on willingness to pay would boil down, for example, to asking customers to pay £5 more per bill despite the fact they may never see the benefit in their lifetime.
“How can we close that leap of faith?” Bishop questioned, observing this amounted to “an uncomfortable place for an economic regulator to be”.