The Institution of Civil Engineers says that the introduction of a proposed new ‘water shares’ system which would see all licensed water extractors own a share in their local water catchment, could create a sense of mutual responsibility to preserve water supplies and incentivise trading of water during droughts.

In response to Defra's 'Making the Most of Every Drop' consultation, which seeks to reform the water abstraction management system, ICE said meeting England's future water needs under current circumstances would become 'increasingly challenging' and agreed on the need for abstraction reform.

The leading engineering institution has welcomed the concept of the 'water shares' option put forward by Defra which it believes could increase the value placed on water and help to bring about a more collaborative approach to managing catchments – thereby ultimately helping to make the water sector more resilient.

'The 'Water Shares' option has trading at the centre of its proposal, a concept ICE promoted in its 2012 State of the Nation: Water report. However, the Institution is warning that its benefits would depend on effective implementation, responsible management and regulation, and ensuring the system is workable for all concerned.

Chair of ICE's Expert Water Panel, Michael Norton said:

'Water trading will require increased storage and interconnections. Water companies should be incentivised through the regulatory regime, to develop multi-use water resources which benefit society, the environment and industry.'

ICE also urged Defra to push ahead with a proper strategy or 'roadmap' which sets out the objectives for the UK's water resources and how these benefit society, the economy and the environment – also a key call in its State of the Nation: Water report.

Michael Norton Norton added:

'While ICE supports the concept of abstraction licence reform there is still no overarching water security strategy.

'Abstraction licence reform would form a part of an overarching strategy – however, without this strategy there is a risk that abstraction reform will progress in isolation and not account for other aspects of improving the UK's water security, such as increased water storage, interconnections and demand management.'

Next month ICE's State of the Nation: Infrastructure 2014 report – a 'scorecard' style report grading each of the economic infrastructure networks – will set out more recommendations for the UK's water sector ahead of the May 2015 general election.