Part 6: Deciding on strategies for meeting the forecast demand

Local authorities: Planning to meet the forecast demand for drinking water.

6.1
In this Part, we discuss:

Our overall findings

6.2
All of the eight local authorities had identified their main challenges to meeting the forecast demand for drinking water.

6.3
Those local authorities effectively managing their drinking water supply to meet the forecast demand had consistently used a wide range of supply and demand strategies. They were also more likely to have an ongoing focus on water supply efficiency.

6.4
Those local authorities adequately or poorly managing their drinking water supply were using a more limited range of supply and demand strategies or had been less consistent in the implementation of chosen strategies.

6.5
The local authorities had two approaches to assessing the strategy options for meeting forecast demand. Four had recently completed a major strategic review to identify options for meeting the forecast demand. The other four assessed options for meeting demand as an ongoing part of asset management.

6.6
However, the evaluation of the costs and benefits of options was variable and limited. The types, quality, and quantity of information used varied widely. Five of the eight local authorities had incomplete asset management information and two had better information. The eighth had a lot of information but its systems did not allow it to make best use of that information.

6.7
The performance measures and levels of service varied widely and, in some cases, were poorly defined. This is generally consistent with findings we reported in 2008 (see The Auditor-General's observations on the quality of performance reporting).7

Main challenges to meeting the forecast demand for drinking water

All of the eight local authorities had identified their main challenges to meeting the forecast demand for drinking water.

6.8
The most common challenges in meeting the forecast demand for drinking water were:

  • upgrading infrastructure to comply with the drinking water standards (this was a challenge for six of the eight local authorities);
  • improving the efficiency of water supply systems (four local authorities);
  • managing demand for drinking water in order to reduce consumption (four local authorities);
  • accessing new sources of water to increase the quantity of water available (four local authorities);
  • improving information available for forecasting, planning, and asset management (four local authorities); and
  • funding infrastructure upgrades (three local authorities).

6.9
Six of the eight local authorities need upgraded infrastructure to comply with the drinking water standards. The other two may need some upgraded infrastructure to improve their water grades (discussed in Part 5). The upgrades mostly involve improved water treatment plants that are able to remove a wider range of potential contaminants.

6.10
Four of the eight local authorities (Central Otago District Council, South Taranaki District Council, Kapiti Coast District Council, and Tasman District Council) had identified problems with the efficiency of their drinking water supplies. An indicator of this is how much water is unaccounted for or lost (that is, not apparently used by a consumer). The efficiency of water supplies matters when it comes to meeting the forecast demand. For example, the demand for water may appear to be more than it actually is if supplies are leaking, resulting in infrastructure and expenditure that is larger than it needs to be. The suppliers of drinking water need to give priority to minimising "unaccounted for" water, fixing leaks within the distribution network, and assessing water pressure reduction possibilities (because high pressure increases the potential for leaks).

6.11
These four local authorities have also identified managing demand to reduce consumption as a challenge.

6.12
Four of the eight local authorities needed to find new sources of water to meet the forecast demand. In three districts, this was a particular challenge because the potential supply was limited (South Taranaki District Council, Kapiti Coast District Council, and Tasman District Council). Access to water was becoming more problematic as water resources in some catchments approached full allocation (for example, some surface water resources in South Taranaki were nearly fully allocated). The South Taranaki, Kapiti Coast, and Tasman districts also experience drought, which further reduces the availability of water at times.

6.13
Some regional councils, such as Taranaki Regional Council and Environment Canterbury, are starting to link access to water with demand management. This means that drinking water suppliers will need to show they are managing demand and reducing consumption as part of their planning. This approach is expected to contribute to the overall sustainability of water resources.

6.14
Three of the eight local authorities (Central Otago District Council, Kapiti Coast District Council, and South Taranaki District Council) faced most, if not all, of the challenges identified in paragraph 6.8. Cumulatively, this is more challenging because it results in a requirement to upgrade much of a drinking water supply system rather than parts of it.

Strategies chosen by the eight local authorities

The local authorities that were well placed to meet the forecast demand for drinking water focused on water supply efficiency, and consistently used a wide range of supply and demand strategies. Local authorities that were less well placed were using a more limited range of options.

Supply strategies

6.15
Figure 11 summarises the range of strategies that the eight local authorities chose to manage their drinking water.

6.16
All eight were planning for maintenance and renewals, and had proposals for new or replacement infrastructure (as evidenced by asset management plans and LTCCPs).

6.17
Four of the eight local authorities (Central Otago District Council, Kapiti Coast District Council, Opotiki District Council, and South Taranaki District Council) had only recently started to focus on making their drinking water supplies more efficient. They have more work to do.

6.18
Two of the local authorities (Tauranga City Council and Christchurch City Council) reported water losses within the industry standard of 10-20%. The other six could not accurately estimate water losses. Of the six, five (Central Otago District Council, Nelson City Council, Tasman District Council, Kapiti Coast District Council, and South Taranaki District Council) were actively carrying out research to identify the extent of water loss.

6.19
Only Tauranga City Council reported an active leak control programme that included measuring performance using the Water New Zealand8 Infrastructure Leakage Index. It achieves good to excellent ratings on that Index. Christchurch City Council will begin an active leak detection programme in 2009/10 by inspecting at least 12.5% of its water supply network each year, with an emphasis on repairing the larger leaks first.

Figure 11
Strategies used by the eight local authorities to meet the forecast demand for drinking water


 Tauranga City Council Nelson City Council Tasman District Council Kapiti Coast District Council Opotiki District Council Christchurch City Council Central Otago District Council South Taranaki District Council
Supply strategies
Ongoing capital upgrades and renewals programme Tick. Tick. Tick. Tick. Tick. Tick. Tick. Tick.
Significant upgrades to existing infrastructure
Tick.


Tick. Tick. Tick.
Building new drinking water supply infrastructure Tick.
Tick.




Looking for new sources of water Tick. Tick. Tick. Tick.

Tick. Tick.
Assessing non-potable sources of supply, such as greywater Tick. Tick. Tick. Tick.



Ongoing leak detection and water loss programme Tick.
Tick. Tick.
Tick.

Ongoing pressure management programme Tick. Tick. Tick.




Investigating and improving management of water losses and other system efficiencies Tick. Tick.
Tick.

Tick. Tick.
Using a supply standard to reduce the quantity of water supplied Tick.

Tick.
Tick.

Taking development contributions Tick. Tick. Tick. Tick.
Tick. Tick.
Water Supply Bylaw 2008 Tick.
(Adopted in 2007)		 Tick. Tick.
Tick. Tick. Tick.
Complying with the drinking water standards Tick.
(1 plant)		 Tick.


Tick.
City

Planning to upgrade existing infrastructure to comply with the drinking water standards Tick.
(1 plant)
Tick. Tick. Tick. Tick.
Banks Peninsula		 Tick. Tick.
Preparing integrated catchment management plan for water supply catchment Tick.






Proposing District Plan changes to require all new homes to install rainwater tanks and/or greywater systems for toilets and lawn irrigation


Tick.



Demand strategies
Using some metering and/or charging (volumetric pricing)




Tick. Tick.
Using universal metering and charging (volumetric pricing) Tick. Tick. Tick.
urban supplies
Tick.


Investigating universal water metering and charging


Tick.

Tick. Tick.
Running a public conservation education programme (information and free services to ratepayers) Tick.

Tick.



Running a public conservation education programme (information)
Tick. Tick.
Tick. Tick. Tick. Tick.
Running a schools education programme Tick.






Preparing a general water conservation policy or demand management policy



Tick. Tick.

Using water restrictions when required Tick. Tick. Tick. Tick.

Tick. Tick.
Using policy on use of compulsory dual-flush toilets, low-flow showerheads, and rainwater tanks

Tick.




Demand strategies

6.20
All eight local authorities had public conservation education programmes aimed at reducing consumption. The programmes generally included providing consumers with information about the need for conserving water (through mailouts, websites, and local media sources). The information might be supported by water restrictions, depending on pressure on the water resource. These sorts of programmes can be useful, but there is little evidence that they significantly reduce consumption.

6.21
Two of the eight local authorities (Tauranga City Council and Kapiti Coast District Council) had extended this approach to offering free advice to consumers on water conservation and efficient water use through home visits and workshops (see Figure 12).

Figure 12
Kapiti Coast District Council's conservation and water efficiency programmes

The Council offers free advice through two initiatives – Green Gardener and Green Plumber.

Green Gardener publishes articles and offers workshops and home visits to provide tips for improving the health of a garden and reducing water needs. Green Gardener encourages residents to reduce reliance on town water by using water efficiently and installing a rainwater tank, or installing a bore or greywater system to irrigate lawns.

Green Plumber replaces washers on leaking toilets, taps, and showers for free. Green Plumber will also help homeowners locate major leaks and offers workshops on simple plumbing maintenance. Green Plumber will also visit homes and offer advice on rainwater tanks, bores, and greywater.

6.22
Nelson City Council, Opotiki District Council, and Tauranga City Council used universal water metering and charging to manage demand (as well as for funding purposes). Tasman District Council used water metering and charging for all of its urban water supplies. However, as at September 2009, only 11 of the 73 territorial authorities in New Zealand had universal water metering and charging in place.

6.23
Christchurch City Council had universal water metering but charged only its commercial and industrial consumers. Central Otago District Council is progressively installing water meters and had budgeted $3 million in its 2009-19 LTCCP for this purpose. South Taranaki District Council was actively investigating the use of water metering and charging.

6.24
Water metering and volumetric charging can be used in several ways to improve the efficiency of water supplies and reduce the investment required from ratepayers. It reduces demand and can be used to identify leaks.

6.25
The four local authorities that used metering and charging recorded lower residential water consumption rates than those local authorities not using water metering and charging (see Figure 13).

Figure 13
Drinking water consumption in the eight local authorities

Local authority Household water meters? Charge for water used? Average drinking water consumption (litres per person per day)
Tauranga City Council Yes Yes 198 (residential only)
270 (all users)
Opotiki District Council Yes Yes 300
Nelson City Council Yes Yes 180 (residential only)
500 (all users)
Tasman District Council Yes Yes
(for urban supplies)		 250-375 for larger supplies
125-250 for smaller supplies
Christchurch City Council Yes No 435
Central Otago District Council Some No 228-1169, depending on the supply
Kapiti Coast District Council No No 404-763, depending on the supply
South Taranaki District Council No No 408 (excluding farms)
888 (including farms)

6.26
Tauranga City Council estimated that the 2002 introduction of water metering and charging on a volumetric basis had reduced average daily water demand by about 25%. It also estimated that metering and other demand management initiatives had enabled it to defer investment in a new water source by 10 years. It meant that existing water resources would be able to provide for 50,000 additional people in future years.

6.27
Charging for water use is based on recovering the costs of supplying drinking water. We found no evidence that the local authorities were pricing with the intent of reducing demand to a specified level.

6.28
However, two of the local authorities have introduced targets for reducing demand to a specified level. Christchurch City Council's 2009-19 LTCCP includes performance standards for reducing the drinking water delivery from 369m3 per property each year to 325m3 (plus or minus 10%) per property each year by 2019/20. Tauranga City Council had set a performance measure related to average consumption of drinking water, with a target of decreasing it each year over the 10 years from a baseline set at the actual level in 2008/09.

Combining a range of strategies

6.29
Those local authorities effectively managing their drinking water to meet the forecast demand had consistently combined a strong emphasis on both supply and demand strategies (Tauranga City Council and Nelson City Council). Figure 14 sets out Tauranga City Council's supply and demand strategies.

Figure 14
Tauranga City Council's range of strategies to meet the forecast demand for drinking water

Supply strategies Demand strategies
Developing a new source of water supply Universal metering and charging introduced in 2002
Ongoing investment in capital upgrades and renewals programme Waterline programme – free service promoting efficient water use (new money for a third education person)
Leak control programme and monitoring of real water losses Schools education programme
Pressure management programme
Distribution and passive leakage control
Taking development contributions
Preparing integrated catchment management plan
Investigating alternative water sources and emerging technologies, such as greywater use and rainwater harvesting

6.30
Those local authorities adequately or poorly managing their drinking water supplies were using a more limited range of options or had been less consistent in the implementation of chosen strategies. For example, Kapiti Coast District Council appeared to be largely implementing supply strategies, despite previous commitments to demand management strategies. There was more it could be doing to reduce demand, compared with some of the other local authorities in our sample.

6.31
Others of the eight local authorities were using a more limited range of strategies but were planning to use more in the future. For example, Figure 15 sets out the demand management improvements Tasman District Council proposed to implement.

Figure 15
Tasman District Council's planned demand management improvements

Task Description of task Cost estimate Year
Bulk meter installation and night flow monitoring Bulk meter assessment
Installation of bulk meters (10 assumed)
Night flow monitoring		 $10,000
$60,000
$25,000		 2009-2019
2009-2019
2009-2019
Further demand analysis Collate, process, and assess demand data $25,000 2010/11
Assess level of water loss Undertake water balance in each scheme and assess economic level of leakage to prioritise leak reduction $20,000 2012/13
Proactive leak reduction in pilot community Develop a leakage reduction programme in a pilot community to prioritise high leakage areas $40,000 2012/13
Hydraulic modelling upgrades Recalibrate Waimea and Richmond supply system
Recalibrate Mapua supply system
Recalibrate Brightwater supply system
Recalibrate Wakefield supply system		 $45,000
$25,000
$25,000
$25,000		 2009/10
2010/11
2015/16
2015/16
Meter replacement programme Develop a database of bulk and customer meters and develop a proactive meter replacement programme $20,000 2010/11
Cost-benefit analysis Assess relevancy of demand management measures to each scheme and undertake a high-level cost-benefit analysis for the short-listed options $20,000 2011/12
Demand management plans Develop a water demand management implementation plan for each scheme $25,000 2012/13
Pressure management Assessment of potential pressure-managed areas and implementation of pilot study area (assumed 2 valves and 2 pressure-reducing valves) $30,000 2012/13

Total $395,000

Source: Tasman District Council (2009), Tasman District Council Water supply activity management plan 2009-2019, Tasman District Council, Richmond.

6.32
An ongoing focus on water supply efficiency also distinguished those local authorities well placed to meet future demand from those less well placed to do so. As mentioned in paragraph 6.18, two of the selected local authorities reported water losses within the industry standard of 10-20% (Tauranga City Council and Christchurch City Council). The other six were not able to accurately estimate their water losses. Initial calculations by Central Otago District Council indicate potential water losses during winter ranging from 40% to 80%, depending on the water supply system. This range is significantly above the industry standard.

Other potential strategies

6.33
Some potential strategies were little used by the eight local authorities, including:

  • re-using wastewater and storm water;
  • carrying out proactive catchment management;
  • promoting water-efficient technologies; and
  • preparing comprehensive demand management plans.

Assessing the strategy options for meeting forecast demand

The local authorities had taken two approaches to assessing the strategy options – either carrying out a major strategic review or as an ongoing part of asset management. The types, quality, and quantity of information, and cost/benefit evaluation, were variable and limited. Five had incomplete asset management information, two had detailed information, and one had a lot of information but its systems did not allow it to make best use of that information.

6.34
We expected the eight local authorities to have identified a range of possible options for meeting the forecast demand for drinking water before choosing strategies. We also expected them to have assessed the suitability of the options for their district and for communities within their district.

6.35
The local authorities took two approaches to this. Two (Tauranga City Council and Nelson City Council) used an ongoing process of assessing whether current water supply systems were capable of meeting the forecast demand and, if not, identifying those matters that needed to be addressed. This was generally an ongoing part of asset management planning. Tauranga City Council supplemented its approach with specialist reports when required (for example, on building a new water supply system).

6.36
Four of the eight local authorities had recently carried out a major strategic review, including public consultation, to establish what the challenges were and identify options for meeting the forecast demand (Central Otago District Council, Christchurch City Council, Tasman District Council, and South Taranaki District Council). Figure 16 sets out an example of this.

Figure 16
South Taranaki District Council's non-statutory drinking water supply strategy

The District Water Supply Strategy (September 2007) sets out a framework for upgrading water supply in South Taranaki. It is focused on:
  • reliability of supply – increasing reservoir capacity;
  • connecting the schemes to provide more resilience and to reduce vulnerability to loss of supply;
  • new sources of supply (bore water);
  • demand management (leak detection and conservation); and
  • complying with the drinking water standards.
Specific capital works to implement the strategy will be identified in LTCCPs. This strategy also includes expanding water supply into new areas of the district. Water supply activity since 2006 includes:
  • between 2006 and 2008: district water supply strategy, public health risk management plans, mains renewals, water resources investigations, a focus on demand management, pressure control, backflow prevention, unaccounted for water, new Kapuni water treatment plant under construction, other water treatment improvements, and new reservoirs for supply security;
  • between 2009 and 2010: more planned maintenance, planning for future development, new water supply bylaw, ongoing renewals and replacements, unaccounted for water work continues, two more new water treatment plants under construction, and various upgrades to comply with the drinking water standards; and
  • between 2011 and 2015: consolidation of strategies already started, securing new water resources to meet future demand, and further water quality treatment improvements.
The Council plans to fund the infrastructure development programme through loans, with uniform annual charges and metered water rates (where properties are metered) covering the interest and principal over time.

6.37
In our view, the ongoing approach and the major strategic review approach are both acceptable, provided they lead to improved planning and greater integration.

Evaluating the costs and benefits of options

6.38
Six of the eight local authorities were unable to model or assess accurately the effects of demand management strategies because they did not have sufficiently accurate data or the modelling capabilities. Therefore, their ability to quantify the costs and benefits of, for example, increasing water supply versus demand management, was limited. Local authorities in this situation had generally relied on the professional judgement of qualified staff or consultants to identify and prioritise options.

6.39
Further approaches used to evaluate costs and benefits were:

  • commissioning studies to evaluate project options;
  • identifying and ranking costs and benefits during the preparation of a water supply strategy (see the example about Christchurch City Council in Figure 17);
  • commissioning research – for example, a Kapiti Coast District Council domestic water use study that found that leak detection can be very cost-effective (more so than rainwater tanks and greywater use); and
  • assessing benefits of demand management by quantifying the savings from deferred expenditure on infrastructure (Tauranga City Council).

Figure 17
Method used by Christchurch City Council to identify and evaluate strategy options

In 2006, Christchurch City Council started preparing a 30-year water supply strategy. It used an internal Council working group in consultation with stakeholders (through surveys and meetings) to identify a variety of options. These options were then roughly priced.

The draft was released in early 2009 for public consultation. Further public consultation occurred as part of the 2009-19 LTCCP process. The extract from the draft strategy below shows some of the options prioritised and priced after that consultation was complete.
Option
#		 Ranking Option Rough order cost
(-20% to +50%)		 Preferred time frame
1a M N Benchmarking exercise to determine target economic level of loss $50,000 – $100,000 2009-10
1b M N Enhanced water loss reduction programme (if benchmarked economic level of loss less than current level of loss) $ Unknown (depends on benchmarked level of loss – Option 1a) 2011-12, if needed
2a H L Pressure zone modelling to optimise equalised pressure management zones $150,000 2009-10
2b H N Infrastructure upgrades for new pressure management zones – feasibility study/cost benefit analysis $130,000 2011-12 to 2012-13
2c H N Infrastructure upgrades for new pressure management zones – capital programme $ to be determined (TBD); depends on results of Options 2a and 2b 2013-14 onwards
3 H C North West Zone – installation of UV disinfection systems (some locations in NW zone) and replacement of shallow wells with deeper wells (other locations in NW zone) $8,600,000
(Capital expenditure)

$80,000
(Operating expenditure, per annum)		 2012-15
M – medium, H – high, L – included in draft LTCCP for 2009-19, N – not included in draft LTCCP for 2009-19, C – considered as part of the capital programme budget

6.40
We found one example (at Tauranga City Council) of an in-depth analysis of alternatives that included a quadruple bottom-line assessment9 of various options.

Information used for strategy development

6.41
We expected the eight local authorities to be using accurate water asset management information to help identify and evaluate options. We expected this to include information on the water supply assets, asset age and condition, performance utilisation, capacity, and financial value. We also expected this to include an assessment of the reliability of the information held.

6.42
Five of the eight local authorities had incomplete asset management information (Opotiki District Council, Central Otago District Council, South Taranaki District Council, Kapiti Coast District Council, and Tasman District Council). For example, Central Otago District Council and South Taranaki District Council had recently completed an asset register but had yet to include condition assessment information in it. South Taranaki District Council had limited data about water usage but was progressively upgrading and installing new water meters, which will provide accurate data and assist with improving the efficiency of its water supply.

6.43
Nelson City Council had developed a detailed water asset management information system. It included information about the asset age, size, material, condition (of pipes encountered in maintenance and other operations), performance, capacity, and financial value.

6.44
Tauranga City Council also had detailed and current water asset management information that included asset age and condition, performance utilisation, capacity, and financial value. It had invested in developing and maintaining a detailed computer model of the drinking water supply system, which contained water asset information and formed the basis for integrated planning of the water supply network – from maintenance to asset renewals, to forecasting the implications of future growth on the network.

6.45
Christchurch City Council had a lot of asset management information. However, the information was fragmented, and its asset management system was characterised by several stand-alone systems that were not integrated with its financial systems. The Council had identified the business need to integrate these systems. We were told that progress had been made in the past two years on standardising all its asset management functions, tools, and reporting.

Levels of service and performance reporting

The local authorities' levels of service and performance measures varied widely and, in some cases, the performance targets were poorly defined. This is consistent with previous observations we have made about performance reporting.

6.46
As part of assessing strategy options, we expected the eight local authorities to have performance measures in place, and take into account levels of service for drinking water supply. We expected the performance measures to be:

  • specific, measurable, achievable, relevant, and time-bound;
  • consistent with industry benchmarks and legal obligations;
  • meaningful to consumers; and
  • useful as a management tool.

6.47
All of the eight local authorities had performance measures in their LTCCPs related to complying with the drinking water standards and the reliability of supply. We expected this, because it is a legal requirement that they do so. However, the level of detail of these measures and each local authority's target (intention to improve) varied significantly. Variation is not necessarily a problem because these measures should relate to the individual circumstances of each local authority.

6.48
Service levels and performance measures were generally well defined. However, some local authorities had not set specific performance targets in their LTCCP, which makes it hard to track progress. For example, Central Otago District Council stated only that the quality of supply would comply with the drinking water standards. In contrast, Tasman District Council plans to achieve Bb and Cc water quality grades (see Appendix 3 for the definition of grades), while Christchurch City Council is aiming for a gradual improvement of water grades for Banks Peninsula and some city supplies.

6.49
Some of the eight local authorities had measures for the amount of time residents were without drinking water. Some also had a measure for being on site to fix water issues within a certain period. For example, Nelson City Council had a performance measure that residents would have access to a supply of drinking water 99.6% of the time, with a maximum outage time of 24 hours.

6.50
Three of the eight local authorities had a measure to assess consumers' approval of the water supply from an aesthetic perspective (unpleasant taste, odour, or lack of clarity). This is an indicator of the health of the water supply.

6.51
One of the eight local authorities had a performance measure that tracked progress on carrying out capital expenditure projects. We consider this good practice. Capital expenditure can involve significant amounts of ratepayer funding, so the measure allows for greater transparency for ratepayers. It allows them to see how the different parts of the water supply connect (for example, water quality cannot improve until a new treatment plant is built). We expect that, where there is significant expenditure on capital items, there would also be an increase in the levels of service able to be provided through that expenditure.

6.52
All of the local authorities had integrated their water supply strategies with specific community and regional outcomes in their LTCCPs. This is important because it enables a local authority to demonstrate how the activity will contribute to the overall outcomes it is trying to achieve for the community. However, only two of the local authorities (South Taranaki District Council and Kapiti Coast District Council) clearly reported how specific performance aspects contribute to achieving those outcomes. We consider this good practice.

6.53
Only Christchurch City Council's performance targets increased meaningfully throughout the 10-year planning cycle in the LTCCP.

Areas for improvement

6.54
We have identified some areas where local authorities could improve how they choose strategies for managing their drinking water. Our recommendations are likely to have broad applicability throughout the local government sector. Although they will not be all relevant to every local authority, we encourage local authorities to implement them where appropriate.

Improving the efficiency of existing water supply systems

6.55
In our view, local authorities need to put more emphasis on the efficiency of their water supply systems. That emphasis should include, among other things, active leakage and pressure control programmes. This should result in more efficient and sustainable use of water. It should also result in savings on expenditure on new infrastructure, because it will be sized and timed more accurately to actual demand.

6.56
One way to transparently measure progress would be to use an industry benchmarking tool to assess performance and encourage continuous improvement. An example is the Water New Zealand Pilot National Performance Review 2007/08,10 which involved eight water supply authorities. Another example is the Auckland water industry annual performance review 2006/07.11

Recommendation 3
We recommend that local authorities improve the efficiency of drinking water supplies by minimising water that is unaccounted for, to reduce the demand on existing water sources and the risk of over-investing in drinking water supply infrastructure.
Recommendation 4
We recommend that local authorities participate in an independent benchmarking programme to measure their progress in improving the efficiency with which they supply drinking water.

Improving demand management

6.57
Although all of the eight local authorities were using some demand management tools, we consider that the next step is to prepare demand management plans that integrate supply and demand strategies and are tailored to local circumstances. This will enable local authorities to get more benefits from demand management.

6.58
The benefits of more comprehensive and integrated demand management plans include:

  • saving capital costs through delaying or eliminating infrastructure development;
  • achieving cost savings in wastewater management through reducing the water that goes through the system;
  • saving operating costs associated with energy and maintenance, in both the treatment of water to a potable standard and its reticulation;
  • delivering consumer benefits from lower water- and energy-related costs; and
  • promoting the resilience of the overall water system, by reducing competing demand for water in areas where water resources are constrained.
Recommendation 5
We recommend that local authorities prepare comprehensive demand management plans that integrate a broad range of supply and demand strategies, to reduce the demand on existing water sources and the risk of over-investing in drinking water supply infrastructure, and to benefit from cost savings.

Evaluating costs and benefits of strategy options

6.59
The evaluation by the eight local authorities of the costs and benefits of options was limited. Therefore, we have identified this as an area for improvement.

Recommendation 6
We recommend that local authorities carry out rigorous evaluations of the costs and benefits of supply and demand strategy options, to choose the most cost-effective and sustainable options.

Levels of service and performance reporting

6.60
Given our conclusion that performance measures and levels of service varied widely and, in some cases, targets were poorly defined, we recommend improvements in this area.

Recommendation 7
We recommend that local authorities define targets for performance measures and demonstrate progress towards the targets to improve decision-making on investments in drinking water supply.

7: Available on our website, www.oag.govt.nz.

8: Water New Zealand is a national not-for-profit sector organisation comprising more than 1500 corporate and individual members in New Zealand and overseas. It represents the water sector, focusing on sustainable management and promoting the water environment. It encompasses fresh, waste, and storm waters.

9: A quadruple bottom-line assessment evaluates and measures the return on capital along with financial, social, environmental, and cultural dimensions.

10: Available from Water New Zealand (www.waternz.org.nz).

11: Available from Auckland City Council (www.aucklandcity.govt.nz/council/documents/awireview/default.asp).

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