SPREE Country Feasibility Study Report Water Sector in Spain Deliverable 7.1.3

Transcription

1 SPREE Country Feasibility Study Report Water Sector in Spain Deliverable Pedro Villanueva-Rey, Yago Lorenzo-Toja, María Teresa Moreira & Gumersindo Feijoo University of Santiago de Compostela, Spain SPREE Servicizing Policy for Resource Efficient Economy Grant Agreement No Duration: European Commission s Seventh Framework Programme (FP7) Partners: Research Council of Lithuania, Lithuania Oxford University - Transport Studies Unit, United Kingdom University of Surrey - Centre for Environment Strategy, United Kingdom Lund University - International Institute for Industrial Environmental Economics, Sweden University of Santiago de Compostela - ICEDE Research Group, Spain Finnish Environment Institute, Finland Delft University of Technology - Faculty of Technology, Policy and Management, the Netherlands Jerusalem Institute for Israel Studies, Israel Tel Aviv University - Faculty of Management, Tel Aviv University, Israel Ben-Gurion University of the Negev - the Department of Business Management, Israel Website: March 2015 This project has received funding from the European Union s Seventh Programme for research, technological development and demonstration under grant agreement No SPREE. All rights reserved. This report was produced by SPREE consortium with the financial assistance of the European Union and is available on SPREE website free of charge to visitors for non-commercial use, provided that the European Union is duly credited. The contents of this document are the sole responsibility of the SPREE Consortium and can under no circumstances be regarded as reflecting the position of the European Union. SPREE - Servicizing Policy for Resource Efficient Economy - is a project within the Seventh Programme and is co-funded by the European Union (Grant Agreement ). The project duration is from July 1, 2012 June 30, 2015

2 Executive Summary The SPREE Country Feasibility Study is the key deliverable for Work Package (WP) 7. The objectives of WP7 are: To test the identified Servicizing systems 1 and their impacts on achieving absolute decoupling and social benefits using three sector specific models with local country conditions; To assess the feasibility of pursuing Servicizing opportunities and anticipated policy outcomes for the different partner countries; To set the ground for the preparation of the more general Policy Packages using the insights from qualitative assessment, models simulations, and sensitivity analysis. The case study in Spain that was designed as a feasibility study is based on the servicizing system chosen in SPREE for the water sector. The servicizing system selected is grey-water recycling (GWR) and rain-water harvesting (RWH) services. The water case study explores the potential to expand services around GWR and RWH at the household level in order to move away from using potable mains-supply water for all uses in the household to using potable mains-supply water only for essential uses such as drinking and cooking. GWR & RWH systems reduce the quantity of water that needs treating to achieve potable standards, and are piped by a central supplier to the household which in turn, can reduce negative environmental impacts. In Spain, water saving is becoming more and more important. Spanish governmental campaigns raising awareness regarding water scarcity have resulted in substantial reduction in water consumption per person during late 90s. During the last decade, population has increased and following that, increasing demand for drinking water triggered problems in water supply during dry periods, even in the Northern regions. As a consequence, the installation of water saving systems such as the double-flush cisterns in bathrooms and tap flow reducers, reducing water use by 50%, became common in households and public buildings since the early 2000s. Since then, the installation of these systems has become mandatory for new public buildings and for remodelling activities that imply intervention in bathrooms, plumbing, and so on. Other than installation of the systems described above in almost every household, new and old, the most widely used systems for water saving are the grey-water recyclers (GWR) and the rainwater harvesters (RWH). However, the key barrier for wider implementation is the price, especially for rainwater harvesters, which is even higher for old residences due to the 1 This report does not include the policy aspects of SPREE research in the Water sector. Policy measures to promote servicizing in the Water sector and their impact on absolute decoupling will be presented and discussed in length in the key outcome of SPREE project: "Servicizing Policy Packages". 2

3 level of intervention that implies bricklaying and plumbing. Additionally, the difficulty to install rainwater harvesters in buildings, where the decision has to be made by all owners, limits their installation, focusing on newly constructed structures or single-family dwellings. Moreover, the absence of public aid that could foster their installation makes it completely unfeasible for a family to acquire one/both of these systems. Concerning the grey-water recycling system, as in the rainwater harvester, the level of intervention will depend on each particular case, and therefore the final cost may vary considerably. In these cases, servicizing might be the best alternative for their implementation. The case study delves into consumer perception concerning these systems, in the hypothetical case that water supply companies would offer these among their services. Today there is no company offering this option. The analyzed case study deals with the feasibility and constraints of implementing water saving systems such as GWR and RWH+GWR through servicizing. The consumers' survey provides information about consumers perception towards the water saving systems assessed, as well as their willingness to install them. Several types of contracts were evaluated to encourage consumers towards the installation of water saving systems: A.1 Grey-water recycler self-installed no service contract B.1 Grey-water recycler self-installed with only a maintenance contract C.1 Grey-water recycler installed by a servicizing company, with ownership transferred to the consumer at the end of the agreement A.2 Combined grey-water recycler and rainwater harvester self-installed no service contract B.2 Combined grey-water recycler and rainwater harvester self-installed with only a maintenance contract C.3 Combined grey-water recycler and rainwater harvester installed by a servicizing company, with ownership transferred to the consumer at the end of the agreement Spanish consumers have shown to be willing to install one or both water saving systems analyzed. However, it is important to underline the constraints to implement these systems in Spanish households. First, the level of intervention in home infrastructure makes the installation unattractive or the level of hassle involved in the installation triggers consumer rejection. Second, the high cost derived from the installation of these systems, especially the combined system, together with the absence of public aids which would foster their installation, makes these systems unaffordable for Spanish households, especially in the current economic context. Finally, the lack of water supply companies offering these systems 3

4 at servicizing level impedes the consumers access to them and therefore the emergence of a new market related. Consequently, despite the consumers perception and willingness to install these systems, the lack of public aids and water supply companies that could promote them, does not allow the entry of these systems into the Spanish households. 4

5 Table of Contents Executive Summary Background Sector-specific indicators Country research case definition Water Sector Specific Methodology Behavioural Data Business Data Country-Specific Methodology Selection of the city Expert interviews Survey Background information on the selected cases Results Main Conclusions Appendix

6 1. Background 1.1 Sector-specific indicators Decoupling in the water sector can be interpreted as weakening the link between economic growth and growth in water consumption. A decrease in mains supply water consumption is assumed to reduce environmental impacts as less water will be withdrawn from the environment. The UK s water case study explores the potential to expand services around grey water recycling (GWR) and rain water harvesting (RWH) at the household level in order to reduce the use of potable mains water in the household to essential uses only. Economic and environmental assessment: absolute decoupling indicator The decoupling indicator for the water sector in this project is defined as the ratio of household mains water consumption to GDP. Decoupling will be shown to have occurred if mains water consumption at the household level has declined as a result of the adoption of grey water recycling and rainwater harvesting systems without impacting upon national economic growth. This absolute decoupling indicator can be measured on a per capita basis as well as on a total basis. i.e. household water consumption per capita compared to GDP per capita, and total household water consumption compared to total GDP in the country. Social Impacts In order to measure the social impacts of shifting to servicizing rainwater harvesting and grey water recycling systems at the household level, several indicators were selected. These were: - Affordability: the cost of greywater recycling and rainwater harvesting compared to household income. - Well-being: a self assessment of quality of life and overall well-being - Uptake of grey water recycling and rainwater harvesting systems by different sectors of society and household types. (i.e. low income versus high income; young families versus retired couples.) 1.2 Country research case definition Water saving is becoming more and more important in Spain. Indeed, Spanish governmental campaigns raising awareness about water scarcity have resulted in a substantial reduction of the water consumed per person during late 1990s. Spain could be divided into two areas in terms of water scarcity, typically associated to different climate conditions: the north part of the country is characterized by high 6

7 precipitation and scarce or almost negligible- dry periods, while in the south part there has relatively low precipitation and longer dry periods. As a result of this polarization", concern, and consequently, behaviour towards water consumption, varies depending on the region under assessment. Thus, consumer needs and priorities are significantly different. For instance, it is common to irrigate gardens, either public or private, using drinking water in Northern regions whilst it would not be considered as an option in some Southern regions. During the last decade, population has increased and, therefore, the increasing demand of drinking water triggered problems in water supply during dry periods, even in the Northern regions. As a consequence, the installation of water saving systems such as the double-flush cisterns in bathrooms and tap flow reducers -reducing water use by 50%- became common in households and public buildings since early 2000s. Since then, the installation of these systems is completely mandatory for new public buildings and for those remodelling activities that imply intervention in bathrooms, plumbing, and so on. Following the installation in almost all households new and old ones- of the systems described above, the most widely extended systems for water saving are the grey-water recyclers (GWR) and the rainwater harvesters (RWH). Nonetheless, the key barrier for implementation is the price -especially the rainwater harvesters- which is even higher for old residences due to the level of intervention that implies bricklaying and plumbing. Additionally, the difficulty to install rainwater harvesters in buildings, where the decision has to be made by all owners, limits their installation, focusing on newly constructed ones or single-family dwellings. Moreover, the absence of public aids that could foster their installation makes it completely unfeasible for a family to acquire one/both of these systems. Concerning the grey-water recycling system, as in the rainwater harvester, the level of intervention will depend on each particular case, and therefore the final cost may vary considerably. In these cases, servicizing might be the best alternative for their implementation. As a consequence, the installation of water saving systems through servicizing is the case selected for SPREE s Water Research in Spain. The case study delves into consumer perception towards these systems in the hypothetical case that water supply companies offer them among their services. Today there is no company offering this option. During the project, consumers were surveyed about their willingness to install one or both systems, as well as the kind of contract since the water saving systems need maintenance, which can be included within water fee. Also, the installation costs -depending on the contract type- can be included within the fee. Thus, the contract options that are studied to implement through servicizing are the following: 7

8 A.1 Grey-water recycler self-installed no service contract B.1 Grey-water recycler self-installed with only a maintenance contract C.1 Grey-water recycler installed by a servicizing company, with ownership transferred to the consumer at the end of the agreement A.2 Combined grey-water recycler and rainwater harvester self-installed no service contract B.2 Combined grey-water recycler and rainwater harvester self-installed with only a maintenance contract C.3 Combined grey-water recycler and rainwater harvester installed by a servicizing company, with ownership transferred to the consumer at the end of the agreement The contracts proposed to consumers were defined following the UK case study, but some features were adapted to the reality of Spanish consumers since servicizing was a new concept for them especially in the water sector. Hence, it was explained through the comparison of this new service with those provided by internet, mobile, or cable and satellite TV suppliers. 2. Water Sector Specific Methodology This section describes the consumer behaviour research methodology that was developed and deployed in the water sector s research and adjusted to the water case studies, Spanish case study included. 2.1 Behavioural Data Preliminary understanding of consumer behaviour variables In order to identify the generic variables that might affect consumers behaviour, our work has focused on four ground levels: First, a characterization of several basic variables related to consumer behaviour was drawn from the consumer behaviour literature. These variables were chosen based on their assumed relevance on the decision to switch to Servicizing. Second, we conducted several interviews with marketing and consumer behaviour exports from the academia in Israel. The goal was to get opinions and insights about the variables that have been identified through the literature review, in addition to widening the list of variables related to consumer behaviour which might be involved in the decision to move to servicizing. Third, we conducted focus groups to better understand consumer' motives and opinions toward Servicizing and to try identifying generic aspects that repeat, regardless of the specific Servicizing examples provided. 8

9 Fourth, the outcomes of the previous steps served us in the following step of the research interviewing a wide range of marketing and consumer behaviour experts from the academia and industry and building specific tools for collecting empirical data in the field for the different SPREE case studies. The generic consumers' variables are all summarized in the internal report of "task 2.7: Consumers" and are available by demand. These variables were deliberated among the partners and presented to the entire SPREE consortium in Workshop 3 in Helsinki (August 2013). The internal 2.7 report (including consumer side's aspects, as well as a thorough evaluation of the additional key components of servicizing: business models, innovation, ICT, complexity and infrastructure) served as the basis for the sector-specific research in the Water, Mobility and Agri-food sectors. 2.1 Business Data General Description of Data collection Data collection was conducted through desk research, Semi-structured interviews with businesses, interviews with policy experts, industry experts, expert meetings and surveys. It included the following items: level of servicizing in the business in order to understand whether servicizing the only offer or offered jointly with other product based offers, cost structure, servicized offer characteristics, type of contract in the offer, required organizational and cultural adjustments or parameters linked to the servicized offer (for example impact on sales persons training etc.), differentiation of servicized offer, customer segmentation, strategic fit and added value as perceived by businesses, barriers and opportunities for adoption and market structure. Data collection differed in the case of the transport sector, where sharing schemes already existed and the water and agri-food sectors, where the servicized offer under consideration existed partially or did not exist at all and had to be extrapolated Sector Specific Descriptions The water case studies analyze two types of household water service systems in South East England, Spain and Israel. Data collection included desk research on structure of water market, site specific characteristics (water scarcity, cost of water etc.), available companies and service of water to consumers. A water experts consultation with policy makers, regulators, water company representatives, and NGOs was conducted to review alternatives for a servicized business model and to understand the market for water and business feasibility of a servicized offer. Grey water recycling (GWR) and rainwater harvesting (RWH) servicizing models (Business to Consumers) were chosen as the most feasible (see elaborated account in Deliverable 4.1: "Water Sector Report"). Then, semi-structured questionnaires were conducted for water companies and municipalities as well as small businesses providing GWR & RWH to examine their business 9

10 model, size of company, business drivers, barriers, customers choice, views on servicizing GWR & RWH, how to encourage GWR&RWH uptake etc., possible customer segmentation, investment required, extrapolation of cost structure for a servicized offer which currently does not exist, implications for business set up, organization and culture and estimates on payback time. 3. Country-Specific Methodology 3.1 Selection of the city The location selected to carry out the study was Santiago de Compostela (100,000 inhabitants approximately), the capital of Galicia (NW Spain). Two big clusters comprise the community: civil servants working for the regional administration and academic staff and students within the university. The high educational profile of the aforementioned groups implies also higher environmental concerns that promoted in involving the parties in the country feasibility study. Some other reasons for this choice were the feasibility of data gathering thanks to the on-line survey and the access to water supply companies through existing research projects in collaboration with the Department of Chemical Engineering of the University of Santiago de Compostela. The previous experience of this group in the field ensured quality and reliable data, with higher levels of valid respondents and non-bias data. In addition, it should be highlighted that the high percentage of commuters and students who do not live in their own apartments (flat sharing or parents home), allowed to gather data from different locations and types of housing. Moreover, the respondents were able to refer to two personal states; one in Santiago de Compostela and the other in their location of origin. Therefore, despite the fact that the survey was performed in Santiago de Compostela, the features of respondents (commuters, students, etc.) and social network sharing of the on-line survey allowed obtaining data from different Galician areas. 3.2 Expert interviews After interviewing the management staff of several companies (e.g. CETaqua and Viaqua), business surveys which deal with water management and company s strategies were sent to them. Due to the survey complexity and the absence of servicizing among their services, it was difficult to extract data from these companies. Therefore, the majority of the data came from water saving reports provided by the companies, which deal with the water saving systems proposed by SPREE project. 3.3 Survey Data collection was carried out through on-line surveys which were spread via or social networks, and hosted in the website of the Department of Chemical Engineering of the University of Santiago. The access to surveys was available during three months in which up to 74 valid respondents were obtained. 01

11 The survey was based on the UK case study, but it was adapted due to the differences between water supply companies and consumer perceptions. The respondents were asked about environmental concerns, wellbeing, happiness and health, income level, studies, etc. Furthermore, consumers were also surveyed concerning water related issues such as water supply metering devices, willingness to install water saving systems and if so, which kind-, loyalty towards their current water supply company, and the kind of contract they would sign, following the classification above (A.1, B.1, C.1, etc.). For the case of the business survey, several water supply companies were contacted to explain the SPREE project and its aims. After interviewing companies managers and research and development staff, data collection for ABM implementation was impossible due to the absence of servicizing, at water saving system level, within their services. Consequently, some data from business sector were taken from bibliography or from the reports of water related companies it should be noted that these are not water supply companies. 4. Background information on the selected cases Water consumption in Spain is dominated by agriculture, which represents 75%, followed by households (12%), industry (10%), and services (3%). As has been mentioned before, water consumption per person has remained steady during the last decade. However, it should be noted that it was possible due to governmental campaigns to engage people in reducing water consumption during the late 1990's and early 2000's. Currently, the governmental efforts are focused not only on saving water, but also on water recycling. Also, given the fact that water used in agricultural sector is recycled water from other processes, households are a potential target to reduce water consumption. The most commonly used systems to reduce water consumption in households are the rainwater harvesting and grey-water recycling systems. Indeed, grey-water use is regulated under the laws Real Decreto 041/2113 -which provides the applications and uses of recycled grey-water, as well as the quality parameters and requirements- and Real Decreto 865/2113 which establishes hygienic-sanitary criteria for diseases prevention (e.g. legionella) in those cases that use grey-water for irrigation. Concerning rainwater harvesters, at the moment, no law regulates its use. However, the installation of rainwater harvesters is included in the Technical Building Code, which indicates that the uptake, filtration, storage, pumping and conduction places must be indicated through labels, texts, and/or signs to avoid crossing water connections. Concerning servicizing, the Spanish water supply companies do not offer these water saving systems within their services, i.e. the installation and maintenance are on the consumers' responsibility. Several water-related companies did write technical guidance for both systems that consumers can use. This guide provides basic information regarding the 00

12 installation, requirements (i.e. space, materials, etc.), design, maintenance, as well as engineering features. Additionally, according to the guidance, these systems might reduce up to 40% the water consumed in Spanish households. The writing of the guidance was led by Aqua España (an association composed by 100 companies related to water treatment and management in Spain), aiming at giving solutions and fostering their installation since water saving has not traditionally been considered as a need in Spain, especially in northern regions. However, water supply restrictions, even in the North, during dry periods have triggered changes in people s attitude and behaviour towards water consumption, considering water as a valuable and scarce resource. This change in people s thinking recovering the tradition of collecting and using rainwater- has led to increase the demand of rainwater harvesters in arid and semi-arid areas in Spain (South and Mediterranean coast) to use collected water for garden irrigation. In the context of the Spanish case study, several indicators and data related to the Spanish water sector are listed below: Water consumption per capita: 157 L/day (at national level), only 0.18% is reused Galicia has 2,747,559 inhabitants, which means 6% of the Spanish population Galicia has the following water service breakdown: o 44% of inhabitants served with drinking water o 42% inhabitants connected to sewer network o 38% inhabitants connected to a wastewater treatment plant Water extraction by water companies at national level o 50% surface water o 48% groundwater o 2% desalination Spanish water mix: o 45% river o 30% groundwater o 20% lake o 5% other sources (mainly brackish water) Water costs (households at regional level): o Drinking water: 1.64 /m 3 o Sewage and water treatment: 1.43 /m 3 Previous national and regional data were obtained from the National Institute of Statistics and the Galician Institute of Statistics, respectively. 02

13 5. Results Main results from the consumer surveys are presented below. Up to 74 valid respondents (62% women and 38% men) were taken into account. The consumers preference towards the combined system (RWH+GWR) was higher than the small system (GWR): 70 and 30%, respectively. Regarding consumer s willingness to install these systems, 84% consumers would install one of these systems. Concerning the type of contract, consumers have shown their preference through servicizing contract type C contract- (51%), followed by only maintenance contract type B contract- (28%) and self-installed no service contract type A contract- (21%), regardless of the water saving system selected. When it comes to analysing consumers loyalty towards their water supply company, 61% of respondents would not move to another water supply company. However, it should be noted that 75% of them would not be willing to pay more for water fee to continue with their current water company. The following tables show detailed data obtained from consumer surveys. Table 1. Water saving system preference and contract choice by genre Genre System preference Contract choice 1 GWR RWH+GWR A.1 B.1 C.1 A.2 B.2 C.2 Men (%) Women (%) Number of respondents The contracts are described above in section

14 Table 2. Average contract choice and willingness to change water provider by genre Contract choice regardless Willingness to change water provider system selected 2 Yes No A B C GWR RWH+GWR GWR RWH+GWR Men (%) Women (%) Number of respondents Implies both systems Table 3. Average scores of consumers stated preferences by genre Stated preferences 3 Amount of water saved Cost per month Installation cost Type of contract with provider (options above) Type of provider (local vs. other company) Level of intervention in house infrastructure Men Women Score from 1 (the worst value) to 7 (the best value) based on average values obtained Level of hustle involved in the installation Table 4. Average consumers perceptions towards their water fee How do you consider your water fee? Very cheap 1% Cheap 4% Fair 44% Expensive 46% Very expensive 4% Table 5. Respondents sample breakdown based on home property Housing description Own house without mortgage 32% Own house with mortgage 20% Municipal housing/paying rent 3% Private landlord/ paying rent 39% Free rent 3% Other 3% 04

15 Table 6. Respondents sample breakdown based on home occupancy 6. Main Conclusions Type of home based on occupancy Single family home without children 59% Single family home with children 18% Shared dwelling 23% The analyzed case study deals with the feasibility and constraints of implementing water saving systems such as GWR and RWH+GWR through servicizing. The consumers' surveys provided information about consumers perception towards the water saving systems assessed, as well as their willingness to install them. Thus, the percentage of respondents that would install one/both water saving system was high, being the servicizing contract the preferential option. However, it is important to underline the constraints to implement these systems in Spanish households. Firstly, the level of intervention in home infrastructure makes the installation unattractive, or the level of hassle involved in the installation triggers consumer rejection. Secondly, the high cost derived from the installation of these systems - especially the combined system- and the absence of public aids, which would foster their installation, make these systems unaffordable for Spanish households, especially in the current economic context. Finally, the lack of water supply companies offering these systems at servicizing level impedes the consumers access to them and, therefore, the emergence of a new related market. Consequently, despite the consumers perception and willingness to install these systems, the lack of public aids and water supply companies that could promote them, does not allow the entry of these systems into Spanish households. 05

16 Appendix As aforementioned, the consumer survey template was adapted to Spanish consumers. The generic survey can be found in the "SPREE Country Feasibility Report, UK Water Sector". The complete consumer survey can be accessed in the following link: 06