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The Economics of Water Efficient Products in the Household (2003)

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Prepared for the Environment Agency by Elemental Solutions

Introduction

In the consideration of water-efficient goods the simple notion of ‘payback period’ is often used. This is calculated from the price difference between an efficient and an inefficient appliance (for example a washing machine), divided by the annual saving in the cost of water (assuming the property is metered). This is unlikely to represent the only benefit (or cost) to the customer. For example, an efficient washing machine will involve the use of less hot water thereby reducing the customer’s energy bill. This wider view of costs and benefits reveals a potential mechanism for promoting the uptake of water-efficient goods.

In Water resources plan submissions to the Environment Agency and in their water efficiency plans, no water company has seriously evaluated an appliance exchange programme. It is often suggested that (water) savings from conservation programmes are transient and therefore cannot be guaranteed into the future. However, appliances that work efficiently with a fixed volume (washing machine, dishwasher, toilet) should yield predictable and guaranteed savings.

This study aims to estimate these wider costs from the perspective of the domestic customer, and from the water company who could be in the position of implementing a wide scale retrofit program. In addition to water, wastewater, energy and detergent costs, CO2 emissions, the residual life of appliances replaced, life span and reliability of the new appliance and energy label inaccuracies were all considered. The products reviewed include washing machines, dishwashers, toilets, showers and direct water heating appliances (combination boilers).

The report contains the findings from this desktop study, including the fact that for many appliances there is now no relationship between price and performance. Also the energy label, undoubtedly a success in improving energy (and water) efficiency, does not provide accurate enough consumption data for economic assessments to be made. Economic analyses from the perspective of the householder and water company are presented and conclusions include the potential implications for demand management policies and programmes in England and Wales.

The first part of the report looks at individual product groups of water-using appliances to determine the potential water savings and practical issues of implementing best available technologies.

Whilst product development is in constant flux, the aim has been to try and identify market trends and examine relevant real-world issues rather than purely hypothetical scenarios.

The brief and budget do not extend to a full market survey but every effort has been made to identify ‘typically available products’.

Independent performance data is in short supply but where this has been available it has been used. For example the Consumer Association carries out independent testing of dish washers and washing machines and these data have been used in preference to manufacturers claims as stated on energy labels.