Making the case for Outcomes-based Environmental Regulation in the water sector

Making the case for Outcomes-based Environmental Regulation in the water sector

Wessex Water and Frontier Economics have launched an important report today making the economic case for Outcomes-based Environmental Regulation (OBER) in the water sector to enable society and households to pay less for more environmental improvements.

Water companies directly influence many of the outcomes targeted in the government’s 25-Year Environment Plan (YEP), but are limited in their ability to contribute due to inefficiencies in the current approach to environmental regulation. This report demonstrates how outcomes based environmental regulation (OBER) can meet the goals of the 25YEP in a far more efficient way and deliver a range of benefits, including improving the environment for lower private and social cost, encouraging cross-sector collaboration and facilitating private investment in the environment. 

Guy Thompson, Group Director Environmental Futures Wessex Water said: “We are delighted to launch our report with Frontier Economics today and enjoyed working collaboratively with the team on this report. It clearly and powerfully sets out the economic case for a decisive shift to a genuinely outcomes-based approach, benefitting water customers, the environment and society.  We will be working with Frontier Economics and our partners to continue this conversation at a national level.” 

With the passage of the Environment Act 2021, this report sets out the opportunity and need for the Government to regulate differently. The climate and nature emergencies coupled with the pressure on the cost of living have created a renewed focus on how the sector can deliver environmental improvements efficiently.  Instead of traditional methods using energy and chemicals OBER would encourage the use of nature-based solutions and collaborative approaches that provide an opportunity for the sector to deliver greater improvements more efficiently. 

OBER involves setting outcomes-based targets that allow companies to choose solutions that deliver the biggest environmental benefits (across a range of dimensions) at the lowest costs. It therefore unlocks the inefficiency with the current approach to environmental regulation.  This approach also provides a new and bold template for incentivising other sectors on delivering their environmental obligations.

To read the full report, please click here.

For further information please contact or call +44 (0) 20 7031 7000.