In this video, we're going to look at examples of how the UK's water development path changed course in the past and it pressures for it to change in the future. This will help us emphasize that local conditions as well as national and international aspects matter for a water development path. We're going to talk about changes in the organization of the U.K.'s water system, as well. There has been consolidation and ownership changes with the U.K.'s water utilities going from private ownership to public, and back to private again over time. In other words, we'll be looking at both spatial and temporal features of the U.K.'s water development path. To illustrate how both of these aspects matter in a water development path, let's look away from the capital, London, for a moment, which was the focus of our previous videos. Now, we'll look briefly at Manchester here in the North of England. Manchester seems to have followed a similar water-first development path to London. It even used the same approach of protected and canalized spring water sources than aqueducts to bring more rural water to the city as demand for water increased alongside increasing population and industrialization. But in Manchester things happen later. This variation of timing across two cities within the UK, shows again that water problems are largely local as we stressed back in week one, when we covered basic facts about water. Manchester's conduit was built around 1506. It protected a natural spring and used stone and wooden pipes to supply water to the city. By around the 1770s, demand for water had increased to such a point that the conduit supply was considered insufficient. And also, the conduit itself had not been well maintained apparently, the Manchester city authorities and other in, early industrialists sought other water sources from the outskirts of the city. Water was pumped in from the nearby River Medlock. Abandoned clay pits at Shudehill just go the north of the city where filled to make simple reservoirs for this. Like London, some richer households also had a limited private water supply around this time. We should also put things in context here by noting that the average life expectancy around this time. Say in the early 1800's was about 35 years. The stone and wooden pipes that were put in from around the 16th century onward has actually been uncovered in the city of Manchester. You can see some of them here in these photos from over 100 years ago taken from the Manchester government archives. On the left is a stone pipe on the right is a wooden one. Both of these streets are only a short walking distance from where we are here on the University of Manchester Campus. By the time of the mid 19th century in Manchester, a reliable clean source of water was important for the booming textile industry among other things. This was formally recognized in the 1844 commission of inquiry into the health of large tans. Like London's new river project, some two centuries early that we saw in the previous videos, Manchester needed to get more water to support economic growth. A consultant was employed by the city's council, the Manchester corporation, in around 1846 to plan water resources for the city. This resulted in a program of aqueduct building to supply more water to Manchester. First, a series of reservoirs and an aqueduct were built to bring in water from the Pennine hills that lie fairly close to the east of Manchester. Water from this project first arrived around 1851, but the project itself continued on well into the 1880's, but this simply wasn't enough water to keep pace with growing demand. Where could more water be got? Well, to the north of Manchester lay the English Lake District. Three lakes there, Thirlmere, Hawswater, and Ulswater, were all believed to be good, uncontaminated surface water sources. Incidentally, once again reflecting unintended consequences theme from the previous video on path dependency from the London Sewers. These lake sources are now known to have some problems with crypto Berdium, from live stock that graze near them. Crypto can need removal with membrane filtration. Of course, this wasn't all known about when these sources were selected in the 19th century. Next, and somewhat merging the similar, but up to this point largely separate water development paths of Manchester and London, an 1869 royal commission actually suggested the Thirlmere Lake as a potential water source for London. In other words, there was a kind of competition for water sources to support industrialization and growth in London and in Manchester. The cost of building a 400 or so kilometer aqueduct from the north of England to London was simply too high, though. This never happened. However, in the process, the potential to use Lake Thirlmere to supply Manchester was realized. In spite of still significant cost implications, this is what happened. Decision making was accelerated on this point, by reports in 1875 that water demand in Manchester would outstrip supply in about just seven years. So, in 1879 a special Manchester corporation water act authorized this enormous project, which would build, at the time, the largest aqueduct in the U.K. In this photo, you can see the six-kilometer long stretch of Lake Thirlmere. This was the source for the aqueduct. Around 1885, it was dammed for the aqueduct construction to start. Construction of the aqueduct took nearly 10 years, from 1885 to 1894. The aqueducts length is over 150 kilometers, that's 90 kilometers longer than the new river aqueduct we saw, that supplied London. According to my colleague, Professor Roger Ford, the water on the aqueduct makes about a one or two day journey to reservoirs at Prestwich. A few kilometers northwest of the Manchester to city center. The water comes by gravity flow, falling about 30 centimeters per kilometer, flowing about 4 miles per hour, all by gravity flow, with no punts but siphons along the way. The historical cost of this project was about 3 to 4 million British pounds. That's around about 180 to 240 million pounds in 2011 prices. In current money again, that equates to about 880 to 1,170 pounds per household if we take the census data that shows around 205,000 households in the city of Manchester in 2011. And actually, because of changes in population growth, there were, probably a similar number of households in 1890's Manchester too. Realizing the magnitude of this cost, incidentally, helps us understand why, even though plans were made for additional water supplies from other lakes in the Lake District, to meet demands for water in Manchester, these did not happen right away. For instance, Lake Ullswater was suggested for use in around about 1874 but was not actually used for nearly another century until 1971. Also in 1919, Lake Haweswater was authorized for use but building work there had to wait until around about 1934 to 1941. And the supply was not fully complete until 1955 because of World War II. You'll recall the grand Roman aqueduct that Dale showed in week one of the course. The design of the Thirlmere Aqueduct differs from this. That's because it's better to have the water flowing in a protected channel whenever possible. Probably at least partly underground. The Thirlmere, a mixture of tunnels bored out of bare rock, some cast iron pipes and so called cut and cover or infield sections were used. Here, a channel would be cut out, the concrete aqueduct section put in, then the soil replaced on top. The photo here, from the time of the construction of the aqueduct shows this cut and cover process happening. It must have been extremely hard work, especially with the kinds of tools you can see in this picture. In other photographs from this period, I've also seen that some rail track mounted drilling machines were used. Once the aqueduct was complete, the arrival of its water supply into Manchester was a cause for celebration. The photo here shows the official opening ceremony of the completed Thirlmere Aqueduct supply into a commemorative temporary fountain in Albert Square Manchester on 13th of October, 1894. There is no permanent fountain near this spot, a short distance from our university. Although, it has been rebuilt and moved a few times. Here is a photo of it. The Thirlmere aqueduct like the large sewer building program in London in the late 19th century also raises issues of path dependency and long-term consequences. The aqueduct raises the issue of once it's there, what can you do with it? Thirlmere was expensive to build. It can't easily be completely rebuilt or abandoned for another water supply. Fortunately, it does still work well, but it does require maintenance and repair now. But it's perhaps surprising how little until recently the aqueduct had been inspected to check on it's condition. There were inspections in 2005, but the Thirlmere aqueduct was only shut down for the first time since around about the 1950's in 2006. This meant cutting off the water supply. And in the case of Thirlmere, this meant taking supplies from neighboring Wales instead. It also takes about a day or so for the water to empty out before the aqueduct can be safely entered. Clean working conditions would also probably have to be used for working in the aqueduct to avoid contamination. There have now been annual shut downs since 2006. And these cost around about 200 to 400 thousand British pounds each time. When they happen, engineers improve ventilation in the aqueduct, stop any outside water infiltrating into the aqueduct. They also repair some of the structure, replace pressure relief valves, and so on. The Grandon hillside, within which the cut and clear parts of the aqueduct sit, also have to be checked for structural integrity. In 2010, engineers had to glue some hillside sections together to stabilize them. This was done, as you can see in the picture here, by injecting cement grout between rocks. This part of the project was actually done at Nab Scar. And that's the location we just saw in black and white, for some of the original construction works. This work was part of an overall six-year, 25-million British pounds project to renovate and maintain the Thirlmere aqueduct. From around this time, the development paths of Manchester and London take on a more or less national character and less of a local one. In other words, there's some convergence in the nature and timing of the path. Manchester, at this time, like London, had installed an interceptor seal this was in 1889. In Manchester though, this was prompted by commercial concerns to avoid pollution of the textile industries export trade route of the Manchester ship canal that went out to sea by Liverpool. However, in another feature of the UK path that happened in both London and Manchester, there was transfer of ownership from the private to the public sector of the water supply, including consolidation of the previous number of utilities into larger more centralized organizations. On this aspect Manchester was first. We saw in the earlier video that private undertakings were also put into public ownership under a more or less unitary London authority in 1903, as the Metropolitan Water Board. This fare was largely due to water quality concerns. In Manchester, in 1808, the Manchester and Salford Water Works Company had been formed as a private water supplier. It was apparently owned by south of England Gloucestershire based Stone Quarrying Company. This waterworks company actually fitted its own limestone pipes for the water supply. Although, it was known that these pipes would burst under pressure. And they did do so. This lead to the company being handed over to a trust in 1815. And to the use of cast iron water mains from around 1817. In 1846, the city council, the Manchester corporation then bought the Manchester and Sulfur Water company from the trust. The photo here shows a cast iron water mains. This one is being fitted in London in 1925. But probably a smaller one would've looked similar to this in Manchester. Across the UK and more specifically in England and Wales, by 1913 about 80% of the water and sewer sector was in public ownership under municipal authorities. This was after a period of private water supply companies in both Manchester and for a longer period too, London as we've seen. And there was still around 30 or so significant private water supply companies at the start of the 20th century in the UK. By 1989, the England and Wales Water Sector was 100% in the private sector. After having undergone the world's first full-scale, full-divestiture privatization. Along the way, from 1945 to 1974 and for reasons that are not entirely clear, other than a general move toward more centralization, administration, and state control. The number of public water supply authorities, under municipal authority control, was consolidated down, from over 1000 to about a 150. However, sewage disposal was still done by about 1400 municipal sewage authorities at this time. There are then, at least two other major organizational institutional reforms, at this point in the UK water development path. First, in 1963, municipal water supply functions were brought under the control of 27 public sector river authorities. These organized some of their operations around river basins. Second, in 1973 to 74, in one of the UKs other interesting firsts, full integrated river basin management was adopted by the formation of ten regional water authorities that had responsibility for both water and sewage organized around river basement boundaries. So, overall we have the U.K. pathier as being an emergence of mainly private sector water companies first in the 19th century. This was followed by nationalization or transfer of ownership into the public sector in the early 20th century. Then, this was followed, by a return to full private sector ownership, by the end of the 20th century. Albeit helped by the fact, that public reforms up to this point, had created ten distinct river based in structured water and sewers organizations that could easily be sold as separate entities. We're going to see, the capital expansion details over this period, in the next video. In that, we'll see a major different expenditure during the early 1970's to late 1980's when some of this reorganization around the other boundaries was taking place. But for now, it's sufficient to say that the assets that were sold by the time of privatization were in rather poor condition. There was maintenance backlog, and sewer collapses were common. Budgetary incrementalism or in other words the short term horizon financial planning system in Governmental ministries or departments, where they typically get their previous year's budget, except for perhaps a small increment of upwards and downwards. This had made large capital investments challenging. It was also clear at this point that the Victorians, the 19th century installers of water and sewer systems, had built in overcapacity. For some time, later generations had in a sense been somewhat free riding on these investments, but now new investment for network rehabilitation, replacements and expansion was needed. But there was little political will to invest or to raise water bills to allow this kind of investment. Privatization was the eventual policy proposal to deal with this situation. Regulatory systems would also have to be arranged as the private water industry could not regulate it's self. The River Water authorities were also concerned at this time, about any lapse of the relatively newly introduced, integrated river based management,. We're going to look properly at privatization around the world in our follow on Mook. They will consider arguments and evidence for and against this kind of institutional change. Here, as we're looking at it from the perspective of the UK's water development path, I simply want to give you an idea of the scale and costs involved. First, to give you an idea of the scale of the infrastructure assets that would have been involved in the privatization part of the UK's water development path. Let's take a look at the example of just one of the ten water utilities involved. This is United Utilities, the now privatized water utility that covers the area around the area of Manchester and, in fact, the whole of the northwest of England. United utilities is also the largest listed water company, with a 2013 market capitalization of around five billion british pounds. The area highlighted red here, on this map of the UK, shows the area covered by United Utilities. Again, that's the northwest of England. And, remember that this is just one of ten major water companies, each serving a region more or less like this. And you can actually see the rough boundaries of the other nine regions on this map. Remember as I've said before, Scotland to the North is still a public water system as is Northern Ireland of to the west. Although, they are taking some of the features from the regulation part of England and Wales. You can see here the massive system scale that's involved. And this is just one of the ten water companies that was privatized. United Utilities has tens of thousands of kilometers of water pipes and sewers. And over a thousand kilometers of aqueducts. It has scores of water treatment works. And hundreds of wastewater treatment works. It's also a significant landowner. The company serves about 7 million people or that's about 3 million households. On top of that, it serves about 200,000 businesses. Overall, it supplies nearly 2,000 megaliters of water a day. So this now brings us to the issue of what this massive asset base was sold for during the water, UK's water development path when the whole system was privatized in England and Wales in 1989. What should it have been sold for do you think? What is the right sale price here? Well, the systems market value is not an easy matter to determine. It was conditional upon on not entirely clear or transparent costs, apparently need to meet incoming European water, waste water, and environmental quality standards. In political documents of this time, this was said to be a cost of up to about 30 billion British pounds, but very few details were given about what this level of investment would achieve, or over what period it needed to be spent. The system was also known to have an investment deficit, but the exact size of that hadn't been unambiguously quantified. Some idea of how the valuation worked has been traced by our University of Manchester colleague, Professor Jean Chiule in her published work on critical accounting. These are the figures shown here. First, of course, the sale price is known, and it was just over 5 billion British pounds, but this was most likely an undervaluation. Even taking the historic asset cost, that's the original cost at the time that they were put in, the industry value was nearer nine billion Pounds. Now, of course, the cost to replace the assets with the same type, in 1989, would have been more like 34 billion Pounds. Restructuring and selling the industry itself cost more money about another 370 million Pounds. The government in 1989 also wrote off nearly 5,000,000,000 pounds of outstanding debt, and gave a 1,500,000,000 pound cash injection towards the apparent eminent 30,000,000,000 pounds investment that was going to be needed. This 1,500,000,000 billion pound cash injection was called a green dairy for the sale. Later, the National Audit Office, the body here that scrutinizes public spending on behalf of Parliament, revised the 34 billion replacement cost valuation to more like 124 billion. And I've also seen in later government policy documents a figure of over 200 billion pounds for this. There is still controversy in the UK about whether this privatization of the England and Wales water industry was a positive or was a harmful step. Following a manifesto committment, the new government in the UK in 1997 took a windfall tax of just over 5 billion British pounds across all the privatized utilities. And about 1.7 billion was levied on the Water Industry, the tax was payable in 2 installments; one in 1997, the other in 1998. This apparently was done in response to a sort of general view, that the prototype utilities had been sold off too cheaply. Also in my research, I've seen that decisions and strategies of the U.K. water companies; after privatization were seen as problematic. Water companies quickly diversified into higher risk areas of business, such as taking on international consensus to run utilities elsewhere in the world in more politically risky environments. And they also expanded into a number of non water business. Publicly and popular pay rises where also given to water company leaders. And the sector has had long-term difficulties in investing in more innovation. Overall though, these controversies about privatization are actually now part of the attitudes embedded in the U.K.'s water development path. Customer and popular media responses to any major changes of path proposed by the privatized water utilities are always now mediated by this kind of framing of privatization. We'll return to privatization in our follow on MOOC as I've said. For moment, what I want to do here is highlight some of the challenges faced now in the U.K.'s water development path. These suggest that a change of course is going to be necessary, and given what I've just said and what we've covered up to this point in the course. You might want to reflect on how easy or difficult these changes will be. First, here you can see the energy usage of U.K. water industry in recent years. This graph comes from sustainability indicators, created by Trade Body for the U.K. water sector; Water U.K. They've been in collecting this important information for a number of years now,. You can see on the graph, that energy usage has increased from about 8000 gigawatt hours a year to 9000. This increase was over a period of less than a decade from 2002-3 to 2010-11. Taking off is from national statistics data, there were about 26.4 million households in the UK in 2013. This tells us that the UK's water industry's energy usage for 2013 is around about 340 kilowatt hours per household. That's equivalent to about ten percent of the average UK house hold annual electricity usage, which is about 3,300 kilowatt hours. Or put it another way, to deliver a year of water and waste water services; the U.K. water industries, uses the equivalent of the annual energy use of around about 3 million average U.K. households. Also, overall the U.K. water industry accounts for about 2 to 3% of total U.K. energy use, and about 1% of the U.K.'s carbon emissions. Returning to the upward trend we can see here in the graph, this is a challenge particularly because the UK's climate change act requires carbon footprint reductions if its targets are to be met. Now, one of the main reasons I've heard put forward about why the energy usage levels are going up in the UK, is that more treatment has been required to meet stricter quality and environmental regulations over time. Of course, there are assumptions built in here about what technologies and approaches are used to achieve these higher standards. And you might want to think about what innovative approaches could be used to bring down energy use while still maintaining or expanding quality levels. One of the things the UK water industry itself has been doing is to generate renewable energy from sources such as bio gas, generated and captured from sludge digestion and using combined heat and power systems. You can see the effect of these kinds of new effort in the lower right hand portion of water U.K.'s energy graph. They showing as renewable heat and renewable energy generation, these initiatives are of course important. But you can see here that so far they've only had a minor effect on the overall path that's been developing. In 2010, Professor Martin Cave, who a few years earlier had led an independent review of competition and innovation in the U.K. water sector, along with Seven Trent, published a report called Changing Course. The title of that report is actually what inspired my title here for the video. Professor Martin Cave and Seven Trent were aiming to highlight how the past development path of the U.K. water industry. If it's continued into the future without a major change of direction will bring significant challenges ahead. The data you can see here are adapted from this report. First, in constant prices, average annual household water bills could go up about a third over the next 20 years in the UK as compared to their level during the past two decades according to this report. That's because of increased investment needed. Second, there is little sign of any slowing of capital expenditure in the sector. The report suggests that this will go up about 10% in the coming years. Depending on what systems are installed and how much they echo the problems and challenges of the past. This could be a real problem. Overall then, if we want to characterize the U.K.'s past water development path and to think about where it may go in the future, I'd use the keywords for the past system like expensive, centralized and unintended or unforeseen consequences. The U.K.'s assets from the 19th century were seen as a significant step forward to be celebrated at the time. But they are now, expensive to maintain. They also have problems, like unsatisfactory combined zero flows, and other issues, that leave them with only limited resilience, to a changing climate that is more likely to feature more frequent extreme weather events. The UK's network is also highly centralized. The pumping and treatment approaches, among other things use a lot of energy and generate a significant carbon footprint, as we've seen. And, the direction of travel for the carbon footprint runs counter to the U.K.'s carbon targets. The future system that politicians regulate as customers and other stakeholders, seem now to want, needs to be more resilient, affordable and sustainable. Plan as a role so using various tools look ahead more to try to foresee and anticipate future problems. But at the same time water bills need to be kept affordable, especially following the global economic recession and cost of living pressures. To wrap up this video, we've seen local variation and when similar developments occurred at two different locations in the U.K.'s water development path. That's in London and in Manchester. We saw that Manchester followed a similar water first path to London but started later. We then saw convergence in the local paths followed in the UK with Manchester, like London, needing to draw upon new water sources as it grew and following a similar aqueducts approach. And this may or may not affect the UK's chances of addressing the kinds of challenges we see, that it now faces as it goes forward onto it's future water development path. In the next video, we are going to explore what more we can tell about the UK's path from the capital expenditure profile of the England and Wales water sector. Thanks for watching this video. [BLANK_AUDIO]
