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Water sector resilience in the United Kingdom and Ireland: The COVID-19 challenge

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  • Walker, Nathan L.
  • Styles, David
  • Williams, A. Prysor

Abstract

The outbreak of COVID-19 led to restrictions on movements and activities, which presented a serious challenge to the resilience of the water sector. It is essential to understand how successfully water companies responded to this unprecedented event so effective plans can be built for future disruptive events. This study aimed to evaluate how the water sectors in the UK and Ireland were affected from a holistic sustainability and resilience-based perspective. Using pre-COVID data for 18 indicators of company performance and comparing them to the first year of the pandemic, the direction and magnitudes of change varied across companies. Financial indicators were significantly negatively affected, with interest cover ratio, post-tax return on regulated equity, and operating profit, exhibiting the greatest average declines of 21%, 21%, and 18%, respectively, a trend that would be dangerous to provisions and company operations if continued. Despite this, service and environmental indicators improved during the first year of the pandemic, exemplified by unplanned outage, risk of sewer storm flooding, and water quality compliance risk decreasing by a mean average of 37%, 32%, and 27%, respectively. Analysis using the Hicks-Moorsteen Productivity Index concluded that average productivity increased by 35%. The results suggest that the water sector was relatively resilient to the COVID-19 pandemic in terms of services, but adverse effects may have manifested in a deteriorated financial position that could exacerbate future challenges arising from exogenous pressures such as climate change. Specific advice for the UK water sector is to scrutinize non-critical spending, such as shareholder payments, during periods of economic downturn to ensure essential capital projects can be carried out. Although results are temporal and indicator selection sensitive, we recommend that policy, regulation, and corporate culture embrace frameworks that support long-term resilience to since the relative success in response to COVID-19 does not guarantee future success against differing challenges. This study generates a timely yet tentative insight into the diverse performance of the water sector during the pandemic, pertinent to the water industry, regulators, academia, and the public.

Suggested Citation

  • Walker, Nathan L. & Styles, David & Williams, A. Prysor, 2023. "Water sector resilience in the United Kingdom and Ireland: The COVID-19 challenge," Utilities Policy, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:juipol:v:82:y:2023:i:c:s0957178723000620
    DOI: 10.1016/j.jup.2023.101550
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