An RTI researcher says the first way to meet this fast-rising demand is to reduce losses from existing production rather than building more reservoirs and water treatment plants.
"Water from new plants and storage costs about three times as much as water from efficiency gains in existing production," said Alan Wyatt, RTI water supply and sanitation specialist. "If utilities recover the water that gets lost in distribution, they can sell that water, increase revenue, and serve more people while offsetting the need for new production capacity."
The World Bank estimates that less-developed countries lose about US$5.8 billion a year from "non-revenue" water that is not paid for because of physical losses (pipe leaks or bursts) and commercial losses, including unmetered public users, illegal connections, meter error, and unpaid bills.
However, utilities must weigh the costs of capturing this non-revenue water, through leak reduction, metering, and other tactics, against the savings and revenue they would recover.
A new financial model developed by RTI through self-funded research determines the optimal non-revenue water losses that a utility in a developing country should target, based on its unique scenario. The model also tells a utility how frequently it should carry out water loss-reducing tactics, like checking pipes for leaks and replacing water meters.
"The importance of the model is that utilities now have a rational target to aim for," said Wyatt.
Other models that calculate a utility's optimal non-revenue water do not account for commercial losses and require data that are not readily available in developing countries. Consequently, policymakers resort to generic targets for acceptable levels of water and revenue loss.
RTI's new model calculates the diminishing return of reducing non-revenue water losses for a specific utility by comparing the marginal costs of controlling physical and commercial losses to the marginal savings in production costs and the marginal revenues from water sales. For utilities that lack sufficient data to fill in all the parameters of the model, it estimates default values based on trends in developing countries.
An application of RTI's model to regional water utilities in Zambia revealed the three utilities with the worst non-revenue water losses, showing operators where to focus their attention. In these three regions, the production cost savings and increased revenue from optimizing water losses could pay for expanding distribution from 74% to 100% of the population.
"If utilities in developing countries fully exploit their existing capacity, they have the water and the finances to achieve the Millennium Development Goals for water coverage," said Wyatt. "Rather than building the next treatment plant, priority one should become making the water distribution system more efficient."
RTI is seeking to collaborate with donors and water utilities to refine its model and develop guidebooks for applying it. Those interested should contact Alan Wyatt at email@example.com.About RTI International:
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