Transforming the way we assess and manage our water resources isn’t just an Ofwat requirement; it’s our obligation to future generations, say the scientists behind a revolutionary new bottom-up approach based on systems thinking.

Dr Peter Coombes of Urban Water Cycle Solutions and Dr Michael Barry from BMT warn that,by continuing to use conventional top-down assessment techniques based on averages, we risk getting things dangerously wrong and not understanding why.

Dr Peter Coombes and Dr Michael Barry: Scientific breakthroughs, which apply bottom-up systems thinking to the assessment and management of water resources, reveal the potential scale of miscalculation - and missed opportunities – occurring with traditional methods.

Although it has been the standard approach to water resource management for decades, top-down thinking based on averages is not fit for purpose in the face of rapidly ageing infrastructure, population growth, climate change, and increasing urbanisation, and it severely compromises our ability to understand, manage, and deliver essential water services.

Simply put, applying averages makes no conceptual sense – is there such a thing as an average household with 2.3 occupants, and a corresponding average water demand that is isolated from an urban system? If not, then how could we expect that using such an unreal thing in water resource analysis would produce real outcomes that can be relied upon?

Water regulators and suppliers must change their mind-sets now if they are to future-proof our natural resources for generations to come. In order to properly understand water resources and economic policy opportunities, they must reject traditional average-based engineering and economic assumptions in favour of holistic bottom-up analyses of the complex and competing demands of real urban and environmental systems. These approaches must be incorporated into the real feed-back loops in society and ecosystems.

The Systems Framework enables this approach. A world first, it has been supported by increases in computing power and advanced algorithms and is already delivering more than 120 sustainable projects across the world and underpinned government policy discussions. It is the key to delivering reliable, robust, and cost-effective water sustainability, and to meeting Ofwat’s demand for resilience-in-the-round business planning.

What is a systems approach and why is it imperative?

Developing a successful public policy for allocating scarce resources requires an understanding of the myriad trade-off decisions involved within the complex society that uses them. In particular, the broader consequences of decisions cannot be evaluated when individual elements of policy – water quality, flooding, wastewater handling, and so on - are considered in isolation, both from one another and from the interconnected environment as a whole.

All are linked from a system perspective,meaning that decisions in one area invariably impact others; yet the sector traditionally operates in siloes. Taking a systems approach and considering these systems as a whole obviates the need for reductionist analyses and the inevitable accompanying siloed approach to the thinking and policy development.

Further, the financial viability of a utility or an item of infrastructure must be assessed in the context of its economic, ecological, and social impact. These benefits and costs will be cumulative and wide ranging, occurring throughout society and across many scales, from household and neighbourhood to city and nation. The operation of a utility has an impact on water resources, flooding, water quality, business investment and employment opportunities, household welfare, the economy, global climate systems: the list goes on.

One operational decision may create such substantial far-reaching benefits that it simply cannot be weighed against financial value alone, while another may produce unexpected costs across other sectors of society. It is vital that regulators, governments, and business know about these trade-offs, which traditional analysis has limited ability to uncover, but which the Systems Framework exposes clearly.

Clear visibility of the big picture encourages support for strategies that would traditionally be dismissed as marginal that would actually benefit wider societyand protects against schemes shown to impact negatively in unexpected areas.Ofwat, the government, and the utilities themselves, need to know how they are performing from a whole-of-society perspective and for future generations. The Systems Framework can supply the answers.

The detail revealed by the Systems Framework underpins the Natural Capital approach advocated by Ofwat: an approach which incorporates ecosystems into resilience evaluation.In fact,the SystemsFramework was developed out of the systems thinking at the root of the Natural Capital concept. The power and accuracy of the systems analysis has been dramatically increased by our bottom-up methods, and also by our use of discoveries from molecular sciences (around DNA processes) and economic decision theory (for example,the Nash equilibrium) which enable rapid processing of complex systems.

Ofwat wants to understand the costs of investment strategies versus resilience outcomes for households, businesses, government, and the nation, both now and in the future. This involves:

• valuing ecosystems and resilience
• evaluating innovative economic market mechanisms, such as targets for water efficiency on buildings, or sustainable urban drainage systems (SUDS) to reduce storm water runoff into sewers
• adopting smart new solutions in place of those traditionally preferred by the water industry

What’s wrong with traditional analysis?

Cities and regions are intensely complex systems featuring innumerable variations in behaviour which drive an intricate circular economy. This makes a nonsense of using global averages and linear processes to manage the allocation of scarce resources.

There are three main problems with using a conventional top-down approach to water resource management:

•           It can dramatically over-estimate requirements for infrastructure and provide highly uncertain estimates of water security and costs

•           It almost always shows little or no benefits of alternative options across scales

•           It often provides an illusion of limited options for innovationin policy, strategy and implementation.

In contrast, bottom-up analysis examines processes as they actually operate within a complex system, providing a whole-of-society perspective for a deeper and more accurate understanding of water resources and economic policy opportunities.

Ballarat case study

A first ever systems analysis of the Ballarat region of Victoria, Australia revealed critical insights that challenged the assumptions underpinning proposed water grids for the state.

A Systems Framework was developed to include high future population growth and climate change scenarios, as well as whole-of-water-cycle processes at every key scale. This structure captures uniquely detailed spatial, temporal, and behavioural variations of the water cycle across a region with links to regional irrigation districts and the Murray Darling Basin (Australia’s most significant river system); detail that would not be reflected in analysis using monthly or annual average assumptions.

The framework can be reliably applied to precise “what if” analyses, including assessments of future water security and economics under a range of scenarios. The detail within it allows greatly improved understanding, reproduction, and testing of the complex interactions between waterways, reservoirs, operations, water demands, and water restrictions.

Melbourne case study

With a water cycle management system critically sensitive to variations in climate and population, the coastal capital of Victoria was facing significant challenges for the future. The systems analysis showed how different management options could offer technically, commercially, and environmentally viable alternatives. It also exposed the variances and inconsistencies in data previously being used to inform decisions and provided additional insights and opportunities.

We tested more than 40 combinations of options and scenarios using a bottom-up systems approach to provide a rich data set for understanding the issues and the opportunities, and we compared four alternative options with the performance of the existing water cycle management system. The systems analysis incorporated the climate change scenarios from the IPCC and was also used to evaluate a range of potential economic shocks (such as downturn in the manufacturing industry and a global economic crisis) on water industry and whole of society in Greater Melbourne.

We were able to demonstrate options that:

• almost eliminated the challenges of variable population and climate
• generated significant reductions in water demand, wastewater generation and storm water runoff
• cut the cost of providing water and wastewater services
• reduced the transfer costs of providing water and sewage services
• increased the resilience of the system in response to climate and economic shocks

Wider benefits of the Systems Framework

Systems approach accuracy also drives improvements in natural flood management, SUDS strategies, asset management, and agriculture.

Proving the case for integrated catchment management

We used all available system-wide data to analyse the impacts of cumulative loads of pollutants on regional waterways, catchments and urban areas in the Australian Capital Territory (ACT). This analysis supported the ACT government’s business case for integrated catchment management, and the territory was awarded $85 million by the federal government to implement the new policy.

Saving a Saudi lake

In Saudi Arabia, we developed a whole-systems understanding of the Al Hasa irrigation and drainage system to analyse the viability of Al Asfar Lake and investigate strategies for optimising its potential.This revealed the lake was threatened by pollutants draining into it and was dependent on management actions within the city of Al Hasa but that improving the quality of water entering the lake would allow its ecosystem to recover.

This regional analysis also provided some unexpected clarity about the state of regional water resources and the need to optimise the use of wastewater and irrigation approaches. This is a common characteristic of systems analysis to provide important new perspectives on traditionally well understood challenges and opportunities.

Meeting the Ofwat challenge

Adopted in stages, the Systems Framework enables water companies to achieve the systems-thinking approach that Ofwat requires and should inform their 2020-25 business plans, in time for the submission date of September 2018.

Act now: our future depends on it

Failure to adopt a systems approach will condemn us to continuing down the path of inconsistent and inefficient management of our resources, harming this and future generations.

We cannot meet our obligations with a piecemeal approach to water, or any other resource, management. Only a holistic systems approach can deliver the required level of insight.