Tapping into consumers

Posted January 2006

By Diane P. Dupont

Canadian municipal water utilities have had to face many difficulties in the past few years: increasing water treatment and processing costs, tighter fiscal constraints, changing regulations regarding water quality, and aging and rapidly deteriorating infrastructure. Not the least of these problems has been an erosion of consumer confidence in the reliability and safety of publicly supplied tap water. Many consumers have “voted with their feet” by choosing to install in-home water filtration devices or to purchase bottled water. This paper, which appeared in the Spring 2005 edition of the Canadian Water Resources Journal, reviews results from Canadian surveys on perceptions of the quality of municipally supplied tap water.

Next, it examines the approach to water management adopted by the United Kingdom (UK) over the last 15 years. This examination provides valuable lessons to Canada’s policy makers to encourage them to adopt integrated water resources management (IWRM). In particular, the paper argues that water utility performance can be enhanced by applying one of the most fundamental “economic instruments”, namely the use of information about consumer preferences. In so doing, water utilities promote IWRM.

This should result in more satisfied customers and a more efficient use of Canada’s scarce water resources. The key challenge for regulators will be the design of incentive mechanisms that encourage Canadian water utilities to adopt information-gathering practices similar to what is currently done in the UK.

For access to the complete article, visit www.cwra.org.