Water for all? is an Economist Intelligence Unit report, sponsored by Oracle, which looks at the relative preparedness of water utilities across ten major markets—the US, Canada, UK, Australia, France, Spain, Brazil, Russia, India and China—to meet future water supply challenges to 2030. It highlights potential risks and shortfalls, while also outlining the broad nature of the responses by utilities to these risks and shortfalls. To develop this study, the Economist Intelligence Unit conducted a survey of 244 senior water utility executives across the ten countries under review and carried out 20 in-depth interviews with experts and executives.

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For most water utilities, increased water stress by 2030 is largely a foregone conclusion. Overall, about four in ten (39%) executives polled for this report think that the risk of national water demand outstripping supply by 2030 is “highly likely”, or essentially certain. A further 54% think such a risk is moderately likely. But the nature of such stress varies hugely, depending on local circumstances. Brazil, for example, has some 42,232 cubic metres of fresh water per person per year available, one of the highest amounts in the world, yet 42% of water utilities in the country worry about supply issues. This is because of ongoing urbanisation and economic growth, much of which is occurring in places where the country’s water supply is limited.

For utilities, increased water productivity is the core of the response needed. None of the executives interviewed for this report doubt that demand by 2030 will, somehow, be met. But to get there, wide-ranging efforts and investments are being made to improve water productivity—from stemming leaks to making better use of recycled water. There is much that can be achieved. In Delhi, for example, the city is supplied with nearly 50% more water than London or Paris, but the Indian capital’s residents only get to use about 50% less of the level of their developed-market peers. Across the ten countries polled, average investment among water utilities is rising to meet supply challenges, with 93% increasing their investment. More than one in five (22%) will increase investment by 15% or more in the next three years.

Wasteful consumer behaviour is seen as the biggest barrier ahead. Across much of the world, and in stark contrast to the costs and difficulties of getting water to the tap, the precious commodity flows out of our taps at almost no cost to the user. As such, it is unsurprising that consumers, business and farmers have little incentive to curb their usage. Overall, 45% of utilities—especially in developed markets—see this as their biggest barrier to progress, while a further 33% believe that tariffs are too low to stimulate greater investment. Other issues add to the mix too. In developing countries, a lack of capital for investment tops the list (selected by 41%), while worries over climate change lie third overall (38%). Regulatory difficulties, along with persistent difficulties in attracting the right skills, further deepen the challenge.

A far greater focus on demand management is seen as the leading overall response. The historical response to water demand pressures has been to build up supply and  distribution networks, but much more emphasis is now being put on moderating how much water people use. From both a strategic and technological perspective, new metering and usage awareness approaches to encourage conservation top the list of what utilities think will do most to help. This is effective: research suggests a 10%-15% average drop in usage once a meter is installed. But the core of this is a psychological change, a push to make wasted water more of a social taboo. For water operators, this is a considerable shift—John Ringham, the CEO of SA Water, the state-owned utility that operates in South Australia, admits to being “schizophrenic” in balancing the desire to sell more water versus instilling a conservation ethic among users.

Developed countries are increasingly focusing on resilience, while developing ones are still scrambling to roll out, or refresh, basic infrastructure. For countries like the UK, Canada or Australia, where population and economic growth are moderate, the overall priority within the sector is shifting away from a focus on quality and price towards increased resilience. Uncertainty over future weather patterns is at the heart of this response, particularly given the decades-long lifecycle of any planned infrastructure: building for a future of drier summers, or more severe storms, for example, requires different priorities. “Resilience has become the watchword,” says Colin Skellett, the chairman of Wessex Water in the UK. By contrast, developing markets face sustained infrastructure rollout challenges. By 2010, for example, China was building water treatment plants at a rate of more than one per day, while India has a long development road ahead on this front.

From improved water desalination to aquifer recharge, necessity is prompting innovation in a once-staid industry. For an industry that struggles to attract talent, the water sector is becoming an increasingly prominent innovator, prompted largely by necessity. Israel has become a global expert in water reuse—it recycles some 70% of its wastewater, a country far ahead of Spain, the second best, which reuses just 12%. From California to Queensland, desalination technology is booming, with growing efficiency gains that are helping to make it more affordable. Network sensors and smart meters, which often link back to consumers’ smartphones, are helping utilities both to moderate demand and to find costly leaks more accurately. Taken as a whole, a quiet boom in water innovation is well under way. But more utilities need to improve their ability to identify and implement such advances: more than one in three (36%) profess to being generally unaware of the innovation options available to them.

Utility operators expect regulators to focus on metering first, price later. As the pressures to ensure supply continue to rise in many countries, utilities expect regulators to focus primarily on promoting increased use of metering. But between 2020 and 2030, there is an expectation that reality will finally catch up, with regulators starting to give way on pricing, more realistically pricing the commodity in line with market pressures. A further strong shift will be the increased globalisation of water markets, as regulators open up to competition in order to bolster preparedness.

Drought and increased water pollution are seen as the two most severe risks faced by operators. They are also considered among the most likely to occur. The risk outlook for utilities is not an easy one, with a diverse set of potential stumbling blocks between now and 2030. And risk management is not made any easier by various barriers. Externally, for example, 50% of executives say that information and support from government is lacking; internally, 43% confess to not having the requisite risk management techniques in place, such as the ability to model more precisely future water availability or rainfall. A shortage of skills further exacerbates the situation, as it does in other aspects of the business.