Outcome Based Environmental Regulation

We’ve developed an idea that will revolutionise regulation and give water companies the opportunity to make greater environmental improvements without burdening bill-payers.

Our concept, Outcome Based Environmental Regulation (OBER), would meet goals of the government’s 25 Year Environment Plan (25YEP) in a far more efficient way. It would deliver a range of benefits, including environmental improvements for lower private and social costs, more cross-sector collaboration and more private investment in the environment. 

A need for change

The water industry has a significant role to play in improving our local environment and there is an overwhelming consensus that it needs to raise its game. However, to deliver the improvements without putting even more pressure on household bills, we have to innovate.  Traditional solutions are becoming increasingly unsustainable because they involve significant energy and chemical use. They are also becoming increasingly inefficient with small marginal gains for high marginal cost. To become a Net Zero industry and build the resilience of our catchments at an affordable price, we need to invest in nature-based solutions and collaborative approaches.

OBER involves setting outcome-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.

“Through outcome-based environmental regulation we could leave the environment in a better state”

Opportunity for Government to regulate differently

The approach would have benefits for water customers, regulators and taxpayers.  It will generate new sources of finance for environmental improvement, attract private investment in nature and climate recovery and support a green economic recovery.  It would also accelerate place-based environmental leadership by water companies.  Finally, with the focus back on the domestic environmental agenda post-COP26, it would demonstrate how to finance and deliver the environmental targets introduced by the Environment Act.

Our report:OBER: Enabling the water sector to make its contribution to the 25 Year Environment Plan was produced in partnership with economic consultancy experts Frontier Economics. It explains the economic case for a decisive shift to a genuinely outcomes-based approach with a regulatory framework that enables, supports and incentivises catchment and nature-based solutions as a core part of water companies’ service delivery.

Read our news release to find out more.