Better incentives needed to stimulate widespread water reuse, recycling, says GE

TREVOSE, PA, Mar. 22, 2011 -- The world's urban and industrial water use is projected to double by 2050, yet one fifth of the world's population, or some 1.2 billion people, already lives in areas of water scarcity...

Mar 22nd, 2011

• On World Water Day GE announces new white paper highlighting successful and practical incentive policies for water reuse

TREVOSE, PA, Mar. 22, 2011 -- The world's urban and industrial water use is projected to double by 2050, yet one fifth of the world's population, or some 1.2 billion people, already lives in areas of water scarcity. One of the best ways to stretch our planet's dwindling supply of available water is through increased reuse and recycling, yet progress in these areas has been limited for a host of economic, political and social reasons.

One major stumbling block is a lack of effective incentives, according to a new white paper to be issued by GE (NYSE: GE). The paper describes the multifaceted nature of the problem and highlights various incentive policies and structures from around the world to illustrate those which have been effective in encouraging water reuse and recycling. GE will present the white paper at its Water Summit, From Used to Useful -- Middle East, taking place on April 5-6 in Saudi Arabia.

"Our goal is to stimulate action to preserve fresh water supplies," said Heiner Markhoff, president and CEO -- water and process technologies for GE Power & Water. "Cost-effective technologies already exist to solve virtually all water challenges, thus the focus needs to be placed on the human side of the equation. In that regard we see four main approaches: increased education and outreach so that people can see the need and the benefits; removal of bureaucratic and other barriers; effective use of mandates and regulations; and establishment of effective incentives, which is the focus of our latest white paper."

GE's Creating Effective Incentives for Water Reuse and Recycling white paper discusses four possible policy options: water pricing/discharge fees, water quality and demand trading, tax financing/public grants and public-private partnerships. It says that regardless of the incentive type, experience shows that incentives are most effective when implemented within a regulatory structure that already exists and functions well. For example, Singapore's goal is to use reclaimed water as a key part of its water supply. The island city-state merged several governmental units into a centralized Ministry of Environment and Water Resources, and it has been a major factor in helping the country realize a 30 percent water reuse rate.

Some of the specific incentive structures and approaches detailed in the white paper include:

  • Water pricing/discharge fees -- Raising the price of water isn't always an option, but sometimes it can be used to reflect water scarcity or to incorporate external environmental costs. New York City offers one example where a reduction in the price for water, based on the volume consumed, can drive reuse. Buildings with a comprehensive water reuse system (CWRS) that meet water-usage targets are granted a 25-percent rate reduction on water and sewer charges, which can amount to millions of dollars in reduced operating costs for large users. A CWRS building captures, treats and recycles sanitary wastewater or wastewater from showers, clothes washers, etc.
  • Water quality and demand trading -- Water quality trading programs allow firms with high pollution-abatement costs to purchase pollution reduction credits from other firms or sources with lower abatement costs. Similar programs can be implemented with respect to water demand. For example, when a drought in Australia's Murray-Darling Basin in the 1980s reduced farmers' water entitlements to 10-20 percent of normal, many quickly opted to trade the limited water allocations they received rather than attempt to plant a crop with insufficient resources.
  • Tax financing/public grants -- Governments can help improve the economics of investments in water reuse via incentives and financing using various tax credits, exemptions and grants. Noting the significant growth in the renewable energy sector over the past several years driven by production tax credit/investment tax credit programs, the white paper discusses in detail the many parallels and opportunities in the water sector.
  • Public-private partnerships -- Public water utilities still provide most water and wastewater services worldwide, but public-private partnerships (PPPs) are increasingly viewed as an effective means of stimulating investment in water reuse infrastructure. The number of people served by private companies grew from 51 million people in 1990 to nearly 300 million by 2002. Especially in areas such as the arid western United States, where new communities are cropping up in areas where basic water infrastructure doesn't yet exist, private operators often can provide the type of decentralized, ad hoc solutions necessary to meet such demand.

United Nations-designated International World Water Day is held annually on March 22 to raise global awareness of water scarcity and associated problems.

About GE
GE (NYSE: GE) is an advanced technology, services and finance company taking on the world's toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's Web site at www.ge.com.

GE serves the energy sector by developing and deploying technology that helps make efficient use of natural resources. With more than 90,000 global employees and 2010 revenues of $38 billion, GE Energy www.ge.com/energy is one of the world's leading suppliers of power generation and energy delivery technologies. The businesses that comprise GE Energy -- GE Power & Water, GE Energy Services and GE Oil & Gas -- work together to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; and other alternative fuels.

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