£115m
invested over eight years
Invested between 2012 and 2020
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The Independent Water Commission has identified three weaknesses in England and Wales: poor knowledge of asset condition, fragmented planning, and a supply chain that may not absorb a fourfold rise in environmental investment. The United States has already tested a response to each, and this paper examines which elements may be transferable.
Resilience in the water sector has been a longstanding concern. Climate change, population growth and ageing infrastructure face growing pressures on water systems in both countries, and both need to keep water services safe and reliable while protecting environmental and social outcomes. This paper uses the Commission's interim report as its starting point and reads it against US practice, drawing parallels and identifying where transatlantic learning is available.
It means more than keeping pipes and treatment works in good condition.
Resilience is the ability of a water system to absorb shocks such as droughts and floods, and to adapt to long-term pressures such as climate change and population growth. The Commission frames resilience as a "strategic imperative", which places it at the highest levels of planning and regulation rather than treating it as a technical afterthought. In the United States, the same outcome is pursued differently, through an interplay of federal environmental standards and state-level economic regulation, which forces a continuing balance between affordability, environmental protection and infrastructure renewal.
Three: ageing infrastructure, fragmented planning, and climate pressure. They recur despite the two regulatory systems having little in common.
The Commission found a lack of underlying condition data for water company assets in England and Wales, and that renewal is often driven by past failures rather than forward assessment. Companies have taken different approaches: one follows a "map as you go" principle, building knowledge during routine maintenance, while another maps reactively only when an asset fails. Ofwat has published a roadmap for enhancing asset health understanding, but the Commission notes it is not mandatory. Condition data was collected on 70 per cent of assets at Price Review 2024, though that covers mains, sewers and bioresources only, with no robust data on service reservoirs or treatment works, and even the 70 per cent rests partly on failure metrics rather than a prognostic assessment. In the US the same problem is particularly acute for small systems that lack the resources for regular maintenance.
Ofwat's concern, recorded in the Commission's report, is that planning and decision-making in the UK water sector are fragmented, which complicates any coherent response to environmental and supply challenges. The Commission describes a complex patchwork of system planning and management arrangements that does not bring together all the demands on regional water systems.
Strategic direction has been attempted. The Water Strategy for Wales in 2015 and the UK Government's Plan for Water and Environmental Improvement Plan in 2023, all sought to set it. The Commission heard that these plans have not articulated prioritisation or provided accountability mechanisms to ensure delivery, and Ofwat has commented that investment has historically resulted from fragmented company planning and prescriptive environmental programmes with relatively little strategic direction from Government. Existing strategies in England contain little or no guidance on how regulators should balance conflicting objectives, such as affordable bills against the investment needed to meet environmental standards.
The US faces a similar challenge, although for different reasons and on a much larger scale.
In the United States, 97.8 per cent of community water systems serve fewer than 50,000 people, and between them they supply about 40 per cent of the population. The remaining 1,066 systems, just over 2 per cent of the total, supply the other 60 per cent. The concentration is starker still at the top: 482 systems serving over 100,000 people each supply nearly half the country between them.
The National Infrastructure Commission estimates a 1 in 4 chance over the next 30 years that large numbers of households in parts of England will have water supplies cut off for an extended period because of severe drought. North Carolina and Indiana are addressing the issue through drought resilience and demand management.
Figure 2: Breakdown of drivers of 2050 water need, England
England needs an additional 5,539 million litres a day by 2050. Protecting the water environment accounts for just over half of it, more than population growth, drought preparedness and climate change combined.
Not with confidence, and the scale of the increase explains the doubt.
The Commission records serious doubts from the National Infrastructure Commission, several water companies and supply chain firms about whether the supply chain can deliver the increase set out in Price Review 2024. Part of the pressure comes from other sectors competing for the same contractors and materials, so the water industry is bidding for capacity against buyers it does not control.
Their peak construction periods are sixty years apart, so the two companies face the same obligations at very different times.
More than a third of Thames Water's network, 36 per cent, was laid before 1921, and 15 per cent predates 1881. The comparable figure for Severn Trent is 8 per cent laid before 1921, with nothing at all before 1881. Severn Trent's network is concentrated in the later twentieth century, with almost half of it, 49 per cent, laid between 1961 and 2000, against 21 per cent for Thames.
Figure 3: Share of pipe length by period of construction, Thames Water and Severn Trent
Share of pipe length by period of construction. Thames Water's network is weighted towards the pre-1941 period, Severn Trent's towards 1961 to 2000.
Table 1: Pipe age comparison, Thames Water and Severn Trent
Four things: consolidating small systems, supervising utilities directly, using scale deliberately, and using nature-based infrastructure.
The California Public Utilities Commission has worked to consolidate small, under-resourced water systems into larger companies where doing so is in the best interests of customers, with resilience and equity as the stated aims. Its own account is that many communities are served by very small privately owned or public utilities. Some of these have ageing, inadequate infrastructure and are either failing the state's standards for clean and safe drinking water, or at risk of doing so. Their customers are often more vulnerable than average. The response has been to let a larger, financially healthy utility purchase the smaller one and continue serving its customers, working with the State Water Resources Control Board.
Figure 4: Total investor-owned water utilities in California, end of 2006 to 2017
The number of investor-owned water utilities regulated by the California Public Utilities Commission, falling from 135 at the end of 2006 to 101 by August 2017. The fall of 34 matches the 34 acquisitions recorded over the same period.
Table 2: How California's 34 acquisitions and consolidations were absorbed, 2007 onwards
Consolidation did not simply mean bigger private companies. Exactly half the systems went to other regulated utilities; the remaining seventeen went to public agencies or to mutuals owned by their own customers. The CPUC presentation also records that 33 of the 34 were small utilities, in Classes C and D, meaning fewer than 2,000 and fewer than 500 connections. Only one was large: Valencia Water Company, at 30,000 connections.
The state's Utilities Commission takes a more hands-on approach than benchmarking allows, engaging directly with smaller utilities to understand and address local problems. It regulates 84 water and wastewater providers alongside more than 2,300 resale providers, a spread of sizes across which sector-wide comparison would tell a regulator very little. The Independent Water Commission's proposal for a supervisory function within UK regulation mirrors this, combining oversight with local knowledge.
Many of these small systems face the dual burden of limited customer bases and inherited infrastructure, echoing the UK's own concerns about fragmented small system planning.
Pennsylvania American Water serves around 2.5 million people across a network of more than 12,370 miles, and plans annual investment of $650 million to $800 million on system upgrades. Scale of that kind is what allows a sustained renewal programme rather than a reactive one.
Wales offers the UK's own example. The RainScape scheme in Llanelli and Gowerton uses green infrastructure to reduce stormwater flows and sewer flooding, and it parallels US initiatives such as the Staten Island Bluebelt. Welsh Water invested over £115 million across Llanelli, Burry Port and Gowerton between 2012 and 2020, and the scheme now keeps around 1.5 million cubic metres of rainwater a year out of the sewer network. New York has built more than 70 Bluebelts on Staten Island.
Figure 5: RainScape in Llanelli and Gowerton, 2012 to 2020
Two things, both pointing the same way as the US experience.
The UK is moving towards catchment-based regional water system planning, intended to overcome fragmentation by bringing local authorities and other stakeholders into decisions about investment and environmental protection.
Under the National Framework for Water Resources, five regional groups cover England and parts of Wales: Water Resources North, Water Resources West, Water Resources East, Water Resources South East and West Country Water Resources. Between them, they take in the 17 English water companies, and each group produces a Regional Water Resources Plan, so that strategic solutions can be developed at regional scale rather than within the boundaries of individual water companies. The Environment Agency intends that the plans will reduce water demand per person and across sectors, halve leakage rates by 2050, develop new supplies such as reservoirs and reuse schemes, move water to where it is needed, and reduce the use of drought measures that damage the environment.
Table 3: The five regional water resources groups, their member companies and the additional water each region needs by 2050
The Commission calls for a shift from reactive maintenance to proactive, long-term assessment of asset health, so that pressures such as climate change are built into planning rather than discovered through failure.
Three things the US has already tested, and one habit to drop.
Consolidate systems too small to be resilient on their own. Supervise utilities directly rather than only comparing them against each other. Use nature-based infrastructure where it is cheaper and delivers more than one benefit. The habit to drop is judging every company against a single sector benchmark, which Figure 3 shows misreads two of the largest companies in England at once.
None of this appears in the Commission's report, which is the gap this paper fills. The American evidence does not offer a model to copy. What it offers is proof that each of the three works in practice, and that the regulatory clarity they depend on is what attracts the investment the Commission's proposals will require.
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