New leakage formula will not fully value water

The new formula for calculating water company leakage levels will not factor in water’s environmental value, although it may estimate this

The calculation that regulators will use to set leakage levels for water companies from 2015 will not factor in the value of water, a government review has revealed.

The review of leakage economics concluded that a consistent way of valuing water at catchment level, including the environmental benefits of reducing leakage, is several years away.

It also found that accounting for the value of water would not necessarily reduce leakage substantially. Two thirds of Ofwat’s leakage formula is fixed so would not respond to a rise in the value of water, it says.

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