It is time for the government to waterproof economic growth   – Inside track

This post is by Nik Perepelov, head of sustainable development, Water UK 

The new government is wasting no time in progressing its ambitious plans for infrastructure. One and a half million new homes are at the centre of the economic growth mission, massive expansion of energy facilities such as hydrogen, gigafactories and carbon capture and storage (CCS) underpin the clean energy mission and the accelerated target to achieve net zero clean power by 2030. Achieving “mission accomplished” will require billions of pounds of investment, an army of skilled workers, regulatory support and a host of other delivery-enabling activities.  

A critical, but often overlooked necessity of infrastructure and economic expansion is a sufficient supply of clean water. We’re yet to see much explicit recognition of this dependence from policy makers, but to get from ambition to delivery, infrastructure plans must be ‘waterproof’.  

Our infrastructure is thirsty
AI is set to transform our economy, and is already driving significant growth of the big tech firms’ water footprints, attracting local controversies where poor planning sees the environment picking up the tab. Users of ChatGPT may be surprised to learn how thirsty their interlocuter is. By the end of a typical exchange, ChatGPT has glugged half a litre of water. Even a small data centre’s cooling demand will see it consume as much water as 200 British homes.   

Meanwhile, sales of electric vehicles are racing ahead of many people’s expectations, and whilst they are likely to use less water overall than their fuelled counterparts, siting decisions on where to locate manufacturing facilities can exacerbate water scarcity issues and turn space explorers into water prospectors. Forbes reports that Austin, Texas’s groundwater supplies are administered on the basis of a principle called ‘managed depletion’, with gigafactories seemingly pushing abstraction well beyond sustainable limits.  

Last in our list of thirsty industrial users, green hydrogen by electrolysis involves splitting water into its constituent elements of hydrogen and oxygen. Demand for water from hydrogen could be equivalent to growing the population by 3.3 million people. Net zero must be thought of as ‘wet zero’ if we are to have any chance of reaching it.  

Special mention must be given to housing as one of the new government’s boldest economic priorities. Plans for 1.5 million new homes would only account for one third of the estimated backlog, though would still require a nearly 50 per cent increase on the rate of build in 2022-23. Public water supply for domestic use accounts for more than two thirds of total water use in England. Population growth, rather than housing per se, will drive most demand for water.  

However, more homes tends to mean more demand overall, and water scarcity has been cited in objections to new homes across the south of England already, including in Cambridge and Sussex. The newly reintroduced central housing delivery target and mooted planning reform to enable it must navigate the water supply situation carefully, especially as we start to address the existing five billion litre per day deficit.  

Economic growth doesn’t have to be at the expense of water security
Despite these challenges, sustainably supplied (and used) water is not a mere pipedream. On the contrary, England already benefits from a robust, multisector National Framework for Water Resources, given life in each region by Regional Water Resource Plans where some of these dependencies are being considered. With a possible surge in demand from new infrastructure, updates, expansions and prioritisation of these frameworks can go a long way to ensuring that economic growth does not come at the expense of water security. Water companies’ Water Resource Management Plans are also a proven means of getting billions of private investment into supply infrastructure and demand management, though as with strategic level planning, aligning new ambitions with existing frameworks will be key.  

Worryingly, Ofwat’s recent draft determination of the plans for 2025-30 saw a nearly £500 million reduction in proposed investment to address the gap between water supply and demand. Ofwat should reconsider its decisions with Government’s infrastructure plans in mind. Additionally, consideration of water must run right through the Government’s ‘Mission’ boards to help ensure that these issues are mainstreamed from the outset and economic growth ambitions do not bump heads with water supply constraints. 

Making effective use of these existing levers could go a long way towards getting ahead of the water supply challenge. Though decision makers must also remain open to bolder approaches such as additional efficiency measures via building regulations, integrated multi-sector planning, innovative funding mechanisms or developer offsetting obligations to ensure that resilience is built into the heart of our infrastructure plans. With the government holding the purse strings, it can apply requirements or obligations directly as qualifying conditions, such as via the National Wealth Fund or Hydrogen Allocation Rounds.  

Having sowed the seeds of its economic ambition, the government must now take care to water them. Detailed planning is still in its early stages, making this the perfect time to reflect the fundamental role water plays in our economy and waterproof the delivery plans.