Non-revenue water
Encyclopedia
Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses (through leaks, sometimes also referred to as physical losses) or apparent losses (for example through theft or metering inaccuracies). High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself. NRW is typically measured as the volume of water "lost" as a share of net water produced. However, it is sometimes also expressed as the volume of water “lost” per km of water distribution network per day.
(IWA) has developed a detailed methodology to assess the various components of NRW. Accordingly NRW has the following components:
In many utilities the exact breakdown of NRW components and sub-components is simply not known, making it difficult to decide about the best course of action to reduce NRW. Metering of water use at the level of production (wells, bulk water supply), at key points in the distribution network and for consumers is essential to estimate levels of NRW (see Water metering
).
In most developed countries, there are no or very limited apparent losses. For developing countries the World Bank has estimated that, on average, apparent losses - in particular theft through illegal connections - account for about 40% of NRW. In some cities, apparent losses can be higher than real losses. Reducing apparent losses from illegal connections is often beyond what a utility can achieve by itself, because it requires a high level of political support. Illegal connections are often in slum
s, which means that their regularization in some cases particularly affects the poor. A water audit is a key tool to assess the breakdown of NRW and to develop a program for NRW reduction. Often a distinction is made between unvalidated and validated water audits. Unvalidated water audits are desktop studies that include many estimates and their results can have an error range for real losses of +/- 50% or more. Its main value is to identify where it is necessary to reduce the uncertainty of the water audit through validation. Validating water audits is a complex process that involves testing of production water meters, testing of a representative random sample of customer meters, eliminating systematic errors created through the billing process and validating the number of illegal connections through aerial mapping, field surveys or cross-references between various existing databases. In developing countries it is rare to find utilities that have undertaken validated water audits, and even in developed countries they are not systematically used.
NRW is sometimes also referred to as unaccounted-for water (UFW). While the two terms are similar, they are not identical, since non-revenue water includes authorized unbilled consumption (e.g. for firefighting or, in some countries, for use by religious institutions) while unaccounted-for water excludes it.
(IWA). Nevertheless, the use of percentage figures to compare levels of NRW remains common despite its shortcomings. The International Benchmarking Network for Water and Sanitation recommends to use different indicators (percentage, losses per connection or losses per km of network) together.
There are considerably less data on NRW levels in cubic meter per km of network per day, although this measure provides a more appropriate basis for comparisons than percentage figures. Here are some examples:
Please note that these levels are given per km of network and not per connection.
NRW in Denmark it has consistently been less than 10%. In Germany, according to a study commissioned by the German water industry association BGW, NRW averages only 7%. According to the same study it was 19% in England and Wales, 26% in France and 29% in Italy
levels of NRW in 18 Asian large cities vary between less than 10% (in Japan) and 60%.
According to a report by the European Environment Agency
NRW in Yerevan, Armenia, was almost 80% in 2003.
Leakage reduction may also be an opportunity to improve relations with the public and employees. A leak detection program may be highly visible, encouraging people to think about water conservation. The reduction of commercial losses, while politically and socially challenging, can also improve relations with the public, since some consumers may be reluctant to pay their water bills knowing that many others use services without being billed or being underbilled.
In the specific context of the United States NRW reduction can also mean reduced legal liability and reduced insurance payments.
Additionally the implementation of an Intelligent Pressure management system is an efficient approach to reduce the total real losses in the long term. It is one of the most basic and lucrative forms of optimizing a system and generally provides fast investment paybacks.
According to a study by the World Bank
some of the reasons why NRW levels in developing countries have not been reduced significantly are the following.
Another source quotes the seven most frequent reasons for failure of NRW reduction programs as follows:
These successes were achieved by both public and private utilities, in every continent, in emerging countries as well as very poor countries, in large cities and smaller towns. All required a long-term commitment by utility management and the government - local or national - over a period of at least four years.
of reducing NRW increases once the cheaper options have been exploited. Once the marginal cost of reducing NRW exceeds the marginal benefits or water savings, an economic optimum has been achieved.
In the United Kingdom the assessment of economic levels of leakage has a long history. The first national study on the topic was published in 1980 setting down a methodology for the assessment of economic leakage levels. This led to the implementation of sectors (District Metered Areas) in most water companies in the UK. The findings were reported in a major national research program in 1994. As a result of a drought in 1995/96 a number of companies initiated major leakage management programmes based on economic assessments. The situation in other parts of the world is quite different from the UK. Particularly in developing countries sectorisation is very rare and proactive leakage control limited. The benefits of pressure management are not widely appreciated and
there is generally no assessment of the economic level of leakage.
From a public health and drinking water quality point of view it is being argued that the level of real water losses should be as low as possible, independently of economic or financial considerations, in order to minimize the risk of drinking water contamination in the distribution network.
The World Bank
recommends that NRW should be "less than 25%", while the Chilean water regulator SISS has determined a NRW level of 15% as optimal in its model of an efficient water company that it uses to benchmark service providers. In England and Wales NRW stands at 19% or 149 liter/property/day.
In the United States the American Water Works Association
's (AWWA) Water Loss Control Committee recommended in 2009 that water utilities conduct annual water audits as a standard business practice. AWWA recommends that water utilities should track volumes of apparent and real losses and the annual cost impacts of these losses. Utilities should then seek to control excessive losses to levels that are economic for the water utility. In 1999 the California Urban Water Conservation Council identified a 10 percent benchmark for unaccounted-for water.
and control of real losses an Infrastructure Leakage Index (ILI) has been developed. The ILI is defined as the ratio of Current Annual Real Losses (CARL) to Unavoidable Annual Real Losses (UARL).
Breakdown of NRW into its components
The International Water AssociationInternational Water Association
The International Water Association is a self-governing non-profit organization which aims to cover all facets of the water cycle. The body is headquartered in London, with a global secreteriat based in The Hague and offices in Beijing, Bucharest, Nairobi, Singapore and Washington DC.The group's...
(IWA) has developed a detailed methodology to assess the various components of NRW. Accordingly NRW has the following components:
- Unbilled authorized consumption
- Apparent losses (water theft and metering inaccuracies)
- Real losses (from transmission mains, storage facilities, distribution mains or service connections)
In many utilities the exact breakdown of NRW components and sub-components is simply not known, making it difficult to decide about the best course of action to reduce NRW. Metering of water use at the level of production (wells, bulk water supply), at key points in the distribution network and for consumers is essential to estimate levels of NRW (see Water metering
Water metering
Water metering is the process of measuring water use through water meters.- Prevalence :Water metering is common for residential and commercial drinking water supply in many countries, as well as for industrial self-supply with water. However, it is less common in irrigated agriculture, which is...
).
In most developed countries, there are no or very limited apparent losses. For developing countries the World Bank has estimated that, on average, apparent losses - in particular theft through illegal connections - account for about 40% of NRW. In some cities, apparent losses can be higher than real losses. Reducing apparent losses from illegal connections is often beyond what a utility can achieve by itself, because it requires a high level of political support. Illegal connections are often in slum
Slum
A slum, as defined by United Nations agency UN-HABITAT, is a run-down area of a city characterized by substandard housing and squalor and lacking in tenure security. According to the United Nations, the percentage of urban dwellers living in slums decreased from 47 percent to 37 percent in the...
s, which means that their regularization in some cases particularly affects the poor. A water audit is a key tool to assess the breakdown of NRW and to develop a program for NRW reduction. Often a distinction is made between unvalidated and validated water audits. Unvalidated water audits are desktop studies that include many estimates and their results can have an error range for real losses of +/- 50% or more. Its main value is to identify where it is necessary to reduce the uncertainty of the water audit through validation. Validating water audits is a complex process that involves testing of production water meters, testing of a representative random sample of customer meters, eliminating systematic errors created through the billing process and validating the number of illegal connections through aerial mapping, field surveys or cross-references between various existing databases. In developing countries it is rare to find utilities that have undertaken validated water audits, and even in developed countries they are not systematically used.
NRW is sometimes also referred to as unaccounted-for water (UFW). While the two terms are similar, they are not identical, since non-revenue water includes authorized unbilled consumption (e.g. for firefighting or, in some countries, for use by religious institutions) while unaccounted-for water excludes it.
Indicators for NRW benchmarking
The most commonly used indicator to benchmark NRW is the percentage of NRW as a share of water produced. While this indicator is easy to understand and indeed has been widely used, it has increasingly been recognized that it is not an appropriate indicator to benchmark NRW levels between utilities or even to monitor changes over time. When absolute losses are constant the percentage of NRW varies greatly with total water use. This problem can be eliminated by measuring NRW not as a share, but in terms of absolute losses per connection per day, as recommended by the International Water AssociationInternational Water Association
The International Water Association is a self-governing non-profit organization which aims to cover all facets of the water cycle. The body is headquartered in London, with a global secreteriat based in The Hague and offices in Beijing, Bucharest, Nairobi, Singapore and Washington DC.The group's...
(IWA). Nevertheless, the use of percentage figures to compare levels of NRW remains common despite its shortcomings. The International Benchmarking Network for Water and Sanitation recommends to use different indicators (percentage, losses per connection or losses per km of network) together.
Overview of NRW levels
The World Bank has estimated the total cost of NRW to utilities worldwide at US$14 billion per year. Reducing by half the current levels of losses in developing countries, where relative losses are highest, could generate an estimated US$ 2.9 billion in cash and serve an additional 90 million people. Most available data on NRW levels are expressed in percentage terms, ranging from 7% in Germany to more than 90% in Lagos, Nigeria.There are considerably less data on NRW levels in cubic meter per km of network per day, although this measure provides a more appropriate basis for comparisons than percentage figures. Here are some examples:
- UK 5
- Russia 20
- Ireland 29
- Brazil 42
- China 52
- Bucharest 350 in 2000 and 176 in 2007
Please note that these levels are given per km of network and not per connection.
Europe
According to a report by the European Environment AgencyEuropean Environment Agency
European Environment Agency is an agency of the European Union. Its task is to provide sound, independent information on the environment. It is a major information source for those involved in developing, adopting, implementing and evaluating environmental policy, and also the general public...
NRW in Denmark it has consistently been less than 10%. In Germany, according to a study commissioned by the German water industry association BGW, NRW averages only 7%. According to the same study it was 19% in England and Wales, 26% in France and 29% in Italy
Asia
According to the Asian Development BankAsian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
levels of NRW in 18 Asian large cities vary between less than 10% (in Japan) and 60%.
According to a report by the European Environment Agency
European Environment Agency
European Environment Agency is an agency of the European Union. Its task is to provide sound, independent information on the environment. It is a major information source for those involved in developing, adopting, implementing and evaluating environmental policy, and also the general public...
NRW in Yerevan, Armenia, was almost 80% in 2003.
Benefits of NRW reduction
Benefits of NRW reduction, in particular of leakage reduction, include- financial gains from increased water sales or reduced water production, including possibly the delay of costly capacity expansion;
- increased knowledge about the distribution system;
- increased firefighting capability due to increased pressure;
- reduced property damage; and
- reduced risk of contamination.
Leakage reduction may also be an opportunity to improve relations with the public and employees. A leak detection program may be highly visible, encouraging people to think about water conservation. The reduction of commercial losses, while politically and socially challenging, can also improve relations with the public, since some consumers may be reluctant to pay their water bills knowing that many others use services without being billed or being underbilled.
In the specific context of the United States NRW reduction can also mean reduced legal liability and reduced insurance payments.
Programs to reduce NRW and their pitfalls
Reducing and controlling NRW is complex. Many programs to reduce NRW have failed in the long run. Often they focus on real losses, without sufficient attention being paid to apparent losses. If programs achieve an initial reduction in NRW levels, they often increase again over the years to the same or even higher levels than before the program. Both apparent and real losses have a natural tendency to increase if nothing is done: more leakage will occur, there will be more defective meters, and information on customers and networks will become more outdated. In order to sustain NRW at low levels, investments in fixing leaks and replacing meters are insufficient in the best case and ineffective in the worst case. To achieve permanent results, management procedures related to a utility's organization, precedures and human resources have to be changed.Additionally the implementation of an Intelligent Pressure management system is an efficient approach to reduce the total real losses in the long term. It is one of the most basic and lucrative forms of optimizing a system and generally provides fast investment paybacks.
According to a study by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
some of the reasons why NRW levels in developing countries have not been reduced significantly are the following.
Another source quotes the seven most frequent reasons for failure of NRW reduction programs as follows:
- Poor design
- Diagnoses based on preconceptions rather than experimentation
- Partial implementation
- Failure to mobilize the necessary human and financial resources
- Lack of coordination between the components of the program
- Underestimation of the difficulties
- Underestimation of the time factor
Successful examples of NRW reduction
In the following cities high levels of non-revenue water have been susbtantially reduced:- Dolphin Coast (iLembe), South Africa, 30% in 1999 to 16% in 2003 by the private utility Siza Water Company;
- IstanbulIstanbulIstanbul , historically known as Byzantium and Constantinople , is the largest city of Turkey. Istanbul metropolitan province had 13.26 million people living in it as of December, 2010, which is 18% of Turkey's population and the 3rd largest metropolitan area in Europe after London and...
, Turkey, from more than 50% prior to 1994 to 34% in 2000 by the public utility ISKI; - Jamshedpur, India, from an estimated 36% in 2005 to 10% in 2009 by the private utility Jamshedpur Utilities and Services Company;
- East ManilaManilaManila is the capital of the Philippines. It is one of the sixteen cities forming Metro Manila.Manila is located on the eastern shores of Manila Bay and is bordered by Navotas and Caloocan to the north, Quezon City to the northeast, San Juan and Mandaluyong to the east, Makati on the southeast,...
, Philippines, from 63% in 1997 to 16% in 2009 by the private utility Manila Water; - OuagadougouOuagadougouOuagadougou is the capital of Burkina Faso and the administrative, communications, cultural and economic center of the nation. It is also the country's largest city, with a population of 1,475,223 . The city's name is often shortened to Ouaga. The inhabitants are called ouagalais...
and other cities in Burkina Faso, by the public utility Office National de l’Eau et de l’Assainissement (ONEA) which achieved a level of 16% in 2008; - ParanaguáParanaguáParanaguá is a city in the state of Paraná in Brazil. Founded in 1648, it is Paraná's oldest city.It is known for its excellent port facilities, being the sea port for Curitiba, the capital of Paraná....
, Brazil, from 58% in 2000 to 38% in 2006 by a private utility; - Phnom PenhPhnom PenhPhnom Penh is the capital and largest city of Cambodia. Located on the banks of the Mekong River, Phnom Penh has been the national capital since the French colonized Cambodia, and has grown to become the nation's center of economic and industrial activities, as well as the center of security,...
, Cambodia, from 72% in 1993 to 6% in 2008 by the public utility Phnom Penh Water Supply Authority (PPWSA) (see Water supply in Phnom PenhWater supply in Phnom PenhWater supply in Phnom Penh is characterized by significant improvements in access, service quality, efficiency, cost recovery and governance since reforms were undertaken in 1993...
for more details); - Five municipalities in Rio de Janeiro State (Prolagos), Brazil, from 60% in 2000 to 36% in 2006 by a private utility;
- RabatRabatRabat , is the capital and third largest city of the Kingdom of Morocco with a population of approximately 650,000...
, Morocco, from 32% in 2002 to 19% in 2008 by the private utility REDAL; - Cities in Senegal, from 32% in 1996 to 20% in 2006 by the private utility Senegalaise des Eaux;
- Tangiers, Morocco from 41% in 2002 to 21% in 2008 by the private utility Amendis.
These successes were achieved by both public and private utilities, in every continent, in emerging countries as well as very poor countries, in large cities and smaller towns. All required a long-term commitment by utility management and the government - local or national - over a period of at least four years.
Optimal level of NRW?
There is some debate as to what is an economically optimal level of leakage. From a financial point of view, there are fewer incentives to reduce NRW if water production is cheap, if there is no or little metering (and revenues thus are independent of actual consumption), or if volumetric tariffs are low in metered areas. From an economic point of view, NRW reduction usually makes more sense than from a financial point of view, because the economic benefit from water use normally exceeds the financial revenues to the utility, since households typically derive a higher benefit from water than what they pay for it. However, even from an economic point of view it is not appropriate to try to reduce NRW to the lowest possible level, because the marginal costMarginal cost
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good...
of reducing NRW increases once the cheaper options have been exploited. Once the marginal cost of reducing NRW exceeds the marginal benefits or water savings, an economic optimum has been achieved.
In the United Kingdom the assessment of economic levels of leakage has a long history. The first national study on the topic was published in 1980 setting down a methodology for the assessment of economic leakage levels. This led to the implementation of sectors (District Metered Areas) in most water companies in the UK. The findings were reported in a major national research program in 1994. As a result of a drought in 1995/96 a number of companies initiated major leakage management programmes based on economic assessments. The situation in other parts of the world is quite different from the UK. Particularly in developing countries sectorisation is very rare and proactive leakage control limited. The benefits of pressure management are not widely appreciated and
there is generally no assessment of the economic level of leakage.
From a public health and drinking water quality point of view it is being argued that the level of real water losses should be as low as possible, independently of economic or financial considerations, in order to minimize the risk of drinking water contamination in the distribution network.
The World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
recommends that NRW should be "less than 25%", while the Chilean water regulator SISS has determined a NRW level of 15% as optimal in its model of an efficient water company that it uses to benchmark service providers. In England and Wales NRW stands at 19% or 149 liter/property/day.
In the United States the American Water Works Association
American Water Works Association
American Water Works Association was established as an international non-profit professional organization dedicated to the improvement of water quality and supply. Founded in 1881, it claims a membership of around 56,000 members worldwide as of 2010.AWWA has become the largest organization of...
's (AWWA) Water Loss Control Committee recommended in 2009 that water utilities conduct annual water audits as a standard business practice. AWWA recommends that water utilities should track volumes of apparent and real losses and the annual cost impacts of these losses. Utilities should then seek to control excessive losses to levels that are economic for the water utility. In 1999 the California Urban Water Conservation Council identified a 10 percent benchmark for unaccounted-for water.
Criticism of the indicator
The concept of NRW as an indicator to compare real losses of water utilities has been criticized as flawed, particularly because real losses depend to some extent on factors largely outside the control of the utility, such as topography, age of network, length of network per connection and water use per capita. As an alternative indicator for the benchmarkingBenchmarking
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost...
and control of real losses an Infrastructure Leakage Index (ILI) has been developed. The ILI is defined as the ratio of Current Annual Real Losses (CARL) to Unavoidable Annual Real Losses (UARL).
Sources
- Johnson, Paul V.: Unaccounted-for water puzzle: More than just leakage. Florida Water Resources Journal, February 1996