Future water resources

The Environment Agency has projected both national and regional deficits in water supply in England. Water resource policy is a devolved area, and this paper largely focuses on the EA’s forecasts and actions undertaken by regulated water companies in England. However, the issues set out and the measures taken to address these have relevance for all parts of the UK.

The government has said that it will publish its next iteration of the national framework for water resources in 2025. This sets out England’s long-term water needs, the scale of action needed to ensure resilient future supplies and an improved and sustainable water environment.

Alongside this, water companies and regional water resources groups are currently finalising their strategic plans for water resources. Water companies have also recently entered the next five year ‘price control’ period following the water sector price review in late 2024. Combined, these changes indicate that the water sector has reached an important moment in planning for the future.

What are the current and projected water resource issues?

The Environment Agency has made it clear that securing future water resources is a significant challenge, and one that will increase with time. It estimates that by 2050 there will be a shortfall of nearly 5 billion litres of water per day. This is equivalent to over a third of the current water supply available for public consumption.

In some areas, water supply shortfalls are already being felt. Within water-poor regions, such as Sussex, Cambridgeshire, Suffolk and Norfolk, both housing and business growth have been affected by water supply availability and ageing or inadequate water infrastructure. The Chartered Institute of Water and Environmental Management has published research that estimates water scarcity could cost the UK economy £25 billion over the next five years due to halted housing developments, as there may not be enough water to supply new homes in water-scarce areas.

The Environment Agency has also expressed concern about the resilience of some water companies’ plans following 2022, when England experienced the hottest summer on record, which was also the driest since 1995. This high demand for water supply led to some water companies resorting to tankers and bottled water to ensure continuity of supply.

Additionally, new technologies, such as low carbon energy and artificial intelligence, come with water-heavy costs. Estimates for the future water consumption of these technologies are highly uncertain at present.

What are the plans for managing future water resources?

The current process for planning for water resources spans multiple levels, with government, regulators, regional groups, and water companies all playing a role. Water companies are required to produce statutory water resources management plans (WRMPs), which set out how they will plan for future water resources for the next 25 years.

The latest iteration of revised WRMPs were summarised by the Environment Agency in December 2024, and these are expected to be finalised in 2025. These plans will need to be implemented through funding mechanisms agreed with Ofwat (the economic regulator of the water sector), such as the price review process (which sets water company bill increases).

Government, regulators, regional groups and water companies have all proposed measures to address the future supply-demand deficit. Many of these are set out within WRMPS. These include supply-side measures, such as new resources (for example, reservoirs, desalination schemes and strategic water transfers), as well as demand-side measures (for example, reducing individual water use, changing patterns of business use, driving efficiencies in technology and increasing drought preparedness).

Current plans indicate that the measures proposed by water companies will be sufficient to meet the projected deficit in 2050. However, these calculations do not take account of the water needs of novel infrastructure or data centres, and future demand may mean that water resources are more difficult to plan for.