Calculating the Cost of Water Scarcity on the NHH Market

Applicant: Public First

Sponsor: South East Water

Delivery Partner: Waterwise

Aim

This project aims to assess the economic impact of reducing business water demand and the consequences of inaction. It will explore business attitudes towards water scarcity and its implications for commercial growth. By analysing water use trends, economic impacts and policy influence, the project seeks to create awareness and encourage regulatory action to support demand reduction.

Project Update

Date	Update
30 September 2025	The project team will present their progress at the RWG Water Efficiency Sub Group on 16 Oct. This will cover: - The review of data shared by MOSL - The approach and methodology used in the project's modelling - The findings of the project's literature review, which includes characterisation of the landscape and potential policy change - Early scoping on the design of the business polling, which will provide validation on the findings to date.
12 August 2025	Public First, working with MOSL, has defined the data needed for a complex, forward-looking analysis of water scarcity. Measuring scarcity is challenging due to uncertainties in projecting growth and demand. To overcome this, Public First has built an aqua-economic model that integrates local, regional, and national datasets, plus recent non-household water use trends and sectoral breakdowns. The model links development and business growth to water availability, quantifying where scarcity constrains growth and expressing this in monetary terms. Making this data available delivers clear benefits: enabling customers to take informed action to support national water security; providing sector-specific insights into behavioural shifts and emerging risks; and positioning water alongside energy and carbon in corporate risk planning. Economic benefits are assessed by mapping water resource plan data to local economic indicators, estimating unmet demand from new growth drivers, and valuing lost growth. Potential interventions are then modelled for their capacity to unlock constrained development. Project milestones are: August 2025 - Project start and kick off meeting - Review of data on changing customer water use, and macro policy changes - Initial characterisation of the landscape August/September 2025 - Economic modelling of the benefits of demand reduction October 2025 Business polling to understand customer attitudes November 2025 Final Report
January 2026	This project is approaching its final report. It gathered feedback from 607 business decision-makers in England to understand attitudes to water scarcity, water use, and preparedness for future risks. Initial findings suggest that non-household water usage is not declining, which risks up to £10.2 billion of economic growth. Public First noted that just two days of drought-related curtailment could cut business revenues by an average of 23.2%. Smaller business customers recognise water scarcity as a risk but are not acting at scale. Many expect their water use to grow with business activity, and although most express interest in efficiency, smaller firms are more likely to say they do not know how to reduce consumption. In contrast, larger customers are more likely to recognise water shortages as a material business risk and to have clearer strategies in place, but they also expect continued growth in water demand. Together, this gap between concern, capability, and rising demand increases the economic risk of inaction across the business retail market.