Financing A Water Utility ( Financial Capacity )

The need for water in all of society is of the upmost importance in order for humankind to survive. The United States Geological Survey (USGS) states that the Earth’s surface is made up of about 70% water and only 3.5% of the water is fresh water suitable to consume (Perlman, 2013). In order to have the resource of water that society needs, companies such as the Trinity River Authority (TRA) are formed in different communities around the globe. Water supply and reclamation companies range in size and structure from public to privately owned and run.

In order to address the issue of clean water availability, the objectives must address multiple levels of the social-ecological model simultaneously. Three overarching objectives will be addressed. 1) The current public water system must increase in capacity. The current public water system is small and up to 40% of households do not have access to the public water system (2). 2) Due to the rural nature of the population, expansion of the current system should begin

The goal of this paper is intended to provide the legal, political, social, economic, ecological dimensions of water resource policy

In the 1930s, Saskatchewan faced numerous amounts of droughts and decided it was necessary to improve water security for agriculture, municipalities and industry. Lake Diefenbaker provided water to the province through canals and pipelines. Since the 1930s, southern Saskatchewan and the Moose Jaw-Regina Industrial Corridor have grown substantially. The demand for water is already coming close to meeting the capacity of the existing water supply infrastructure through the Upper Qu’Appelle. This limited water supply can be detrimental to both the economy and social growth. Studies have proved that the water use in the Qu’Appelle River Basin is going to increase in the near future. -

Texans need to change their mindset regarding water conservation if they are going to overcome water shortage. In fact, San Antonio is the only sizable Texas metro area with an aggressive and effective water conservation program (McCormick). Austin has a decent water conservation program, but its per capita water use is still very high (second only to Dallas) and its reduction goals are weak. Houston’s current per capita water use is low, but the City of Houston is actively seeking new water rights and supplies to meet projected future water demands (McCormick). Houston could address those needs on a more cost-effective basis by implementing an aggressive water conservation program like San Antonio. The Texas State Water Plan also fails to address the fourteen percent water loss by water utilities from pipe leaks and water theft (Texas Living Waters Project). Houston is one of the biggest offenders regarding water loss. Texas needs to aggressively monitor water loss and make water loss reduction and the required use of leak detection equipment part of the water rights permitting process. The more than twenty six hundred water utilities who routinely fail to file their annual water loss reports as required by law should be penalized (Texas Living Waters Project). Clearly politics and public opinion regarding the need for conservation have made the current water plan less balanced and sustainable by

“The Water Act 2007 specifically requires that the Basin Plan include a Water Quality and Salinity Management Plan. The overarching objective of the Water Quality and Salinity Management Plan is to protect and enhance water quality to ensure it is suitable to meet the environmental, social, economic and cultural values of the Basin’s water resources.” - Government. Focusing on water used for aquatic ecosystems, drinking supplies, irrigation water and recreation.

The ability to generate future revenues and meet long-term obligations is referred to as: Solvency

For Nick Hepworth, Director Witness International, water scarcity is not only the problem of the CEO Water mandate, it is a global issue that we should all address and it is not an issue of water shortage but it is mainly due bad water management. In order to overcome this issue we have to monitor water management by government’s institutions for better and more efficient water supply. Also the government must let private companies participate in water

Even though, Thames Water, protected by barriers to entry, be able to still create big profits even if it is not using the most efficient system. It has less motivation, therefore, to be efficient. For this motive, costs may be privileged under Thames Water.

As water becomes a more scarce resource across the globe due to climate change, there are debates on whether water is a human right versus a commodity. A commodity, meaning a good, or service that needs to be bought in the capitalist economic system. Privatization is one way of attempting to solve the water crisis, which the U.N. has been dealing with since the 1990s. It is estimated that “40 % of the world’s citizens do not have dependable access to potable water supplies.” By opening the market for privatization of water allows companies to bring their technology and resources into areas that lack quality drinking water. Although there are many critiques of the corporations and the World Bank’s argument favoring privatization of water, which will be addressed later on.

In the latter part of the 90s, the Australian government was more concerned with environmental content, and included better water to the goals. The biggest serviceable component was Water Services, which combined Retail, Engineering and Projects, Operations, and Infrastructure. This component served with United Water to finish and supervise projects. The EDP (Economic Development and Procurement) role was liable for extended preparation, and guiding the multi-million dollar ventures that was obligated with South Australian Cabinet espousal (Thorogood & Yetton & Vlasic & Spiller, 2004).

McLaughlin (2009) states that the example organizations balance sheet (p. 125) does not show adequate cash assets (line 45), given a supposed annual budget of $3.5 million dollars, to provide adequate daily cash flow needs (p. 124). With year-end cash assets of only $16,190, working down the list of liquidable assets—using McLaughlin’s ‘water’ metaphor—savings and short term cash investments, A/R, and (in the case of for profit industry) inventories for sale, the companies working capital could be substantially increased providing more cash reserves.

Allowing privatization of water as a way to improve infrastructure could work great as long as checks are put in place to prevent the company from acting soling out of motivation for profit. However relying on companies to fund improvements may not be necessary. In a survey in Ethiopia households were surveyed asking whether they would be willing to pay more to improve their water supply, they would that; “Households are willing to pay up to 60% extra for improved levels of water supply over and above their current water bill. Especially those households living in the poorest part of the city with the lowest service levels demonstrate that they are willing to pay more despite significant income constraints they are facing”(Tarfasa). If the government ran the water supply and found it needed funding to improve its services, people would likely pay to fund it, even those in poverty. So privatizing water does not have much reasoning behind it. Also when the government is in charge, there is more pressure for it to serve its people, in this case water. On the contrary, when water is treated as a commodity it would be simply given to the highest bidder, whether or not he needs it.

To improve water management practices by: using effective networks of capacity builders to impact on the ground, and developing partnerships with international agencies to improve their outreach and collaboration on capacity building To develop and implement knowledge management systems that ensure access to the best of international and local knowledge, measure the effectiveness of capacity building services, and establish indicators and monitoring systems.

In 1989 the water and sewage industry was privatized, and is now regulated by the Water Services Regulation Authority (Ofwat). However, private companies are responsible for providing services, treatment and the provision of water to the users. The Water Act 2003 ensures all companies comply with regulations and are cost-effective by offering a reasonable price of their products. As the demand of water is incredibly high the companies must be able to finance themselves and to properly achieve obligations (Water Act, 2003). They are constantly monitored and all their actions are recorded. The companies chosen for investment comparison are; United Utilities Group Plc (United Utilities) , Pennon Group Plc (Pennon Group) and Severn