Speaking at a seminar organised by the Institute for Public Policy Research think-tank, Mr Pearson told delegates "assumptions about an old wet Britain need to change."
"Predict and provide will no longer be enough," he continued. "We are moving to a new dry Britain where we need to be smarter and more flexible in our water use."
Referring to last summer’s drought and the prospect of a long hot summer to come, he revealed DEFRA is working on a new water strategy to be released later this year. It will put climate change and greenhouse gas emissions reductions centre stage and replace the "tired and outdated" Directing the flow strategy, published in 2002.
The strategy will change "preconceptions and policies" and set "a vision for 2030 and beyond", the minister said.
He emphasised the water industry will have to play its part in meeting proposed emissions reductions contained in the government’s draft Climate Change Bill (ENDS Report 386, pp 5-6 ). The Bill includes targets for a 60% cut in carbon dioxide emissions by 2050 and 26-32% by 2020, on a 1990 baseline.
The industry uses 7,700 gigawatt hours of energy per year and emits just under 1% of the UK’s greenhouse gas emissions.
Unlike other major energy-using sectors, water firms are not covered by Climate Change Agreements and are not under an obligation to reduce emissions. Recent reductions in the sector’s energy use have been driven by high prices (ENDS Report 385, pp 34-38 ). But water companies may be among the biggest firms to be included under the government’s Energy Performance Commitment, expected to go ahead in 2009 (ENDS Report 382, pp 38-39 ).
Mr Pearson also believed there was "scope for ambitious voluntary agreements" from companies, in addition to mandatory action. And he challenged the industry to set a sector-wide target.
Water firms must deal with shifting rainfall patterns, changes in water supply and maintain adequate drainage systems. Intense rainfall is likely to test sewage infrastructure to its limits.
The water framework Directive is "a real opportunity to achieve clear and long-standing improvements to our water environment," he concluded, but stressed "we also have to ensure that current and future levels of demand are sustainable and can be provided at an acceptable cost - and that includes the cost of carbon."
On leakage, the minister gave a clear steer on what the government is expecting from Ofwat’s ongoing review of leakage targets.
"The current framework… has neither the understanding nor the confidence of the public. I will reinforce the government’s tough stance on what is acceptable and what is not."
The Environment Agency has advocated the need to consider leakage in a wider context than the current ‘economic leakage level’ and to give more weight to resource protection and energy saving. Water companies also realise that the sight of leaks damages the sector’s image, particularly during drought.
Charging and metering are also likely to feature in the strategy. "We cannot expect rateable values from the 1970s to be a sensible basis of charging customers in the 2030s," Mr Pearson warned.