To paraphrase a recent article in The Economist “regulate first, innovate never” could be the motto of the European Union. The instinct of the European Commission is to regulate everything in sight through harmonised Standards and the Construction Products Regulations, which have the force of laws in the Member States. This over-regulation strangles innovation at birth and establishes the status quo as the norm to be followed in all cases. This works against developments that could achieve the larger goals of sustainable growth, water management and protection of public health.
Such regulation has had a significant effect on trenchless technology markets, especially in the rehabilitation sector. The UK provides stark examples, albeit not from within the European Union. OFWAT, the industry regulator, mandates the water utilities to reduce water system losses by 15% in the current 5-year Asset Management Period (AMP). The Drinking Water Inspectorate, another regulator, quite rightly requires approval for products in contact with potable water, known as Reg(ulation) 31. But the capacity to test and approve products under Reg 31 is inadequate and not fit for purpose, it can take years and the scope and cost change as it progresses with mobile, often receding goalposts. So, one regulator requires action but another impedes the use of the very technologies that can achieve the targets set by the first one.
To add to the farce, OFWAT, for political reasons, imposes a time limit of 3 hours for interruption to water supply to customers for undertaking the works. In this time all that’s possible is a quick fix of a single problem, a sticking plaster approach to repairs. The result is repeated repairs as the sticking plasters fail. Is this better for the customer than a single, longer, planned and notified interruption that solves the problem for the long term? The UK water utilities are vilified for their poor performance but are locked into a farcical straitjacket of conflicting regulations. The result is a sluggish or non-existent market for rehabilitation of a very old network that is operating way beyond its service life. One must feel some sympathy for the legions of clever, committed, talented and hard-working engineers and managers at those utilities.
Is there a better way?
There must be. Consider the USA’s approach to regulation.
When in the 1990s the number and size of sewer overflows became excessive the US Environmental Protection Agency (EPA) acted. Wastewater utilities, usually municipal organisations, were given fines for the environmental damage caused. But fining utilities, as the UK and others still do, does nothing to solve the problem, it merely reduces the utility’s financial ability to do so. So, the EPA had a system of Consent Decrees; if the utility presented a plan to spend the amount of the fine on fixing the problem they could continue to operate under a Consent Decree while they did so.
Funds were raised through local taxes and the result was a significant reduction in overflows and their consequences. A further result was the emergence of the largest and strongest sewer rehabilitation market in the world, with much innovation, as the utilities needed trenchless solutions to achieve their objectives as cost-effectively as possible. This can be seen as a more enlightened regulatory approach that gave more positive results. Although I must note that the system no longer operates in this way.
Similarly in drinking water. While Europe is hemmed in by regulation, including different requirements and approval processes in each country, the North American market is growing strongly. It is not unregulated; ANSI NSF61 approval is required for products in contact with potable water in order to ensure that it is indeed potable and safe. European regulators are quick to look down their noses at NSF61 and to say that it is easy to obtain and not sufficiently rigorous.
Lighter, more co-operative regulation
To this there are two responses: we do not see multitudes of people sick or dying in North America because of drinking water contamination caused by mains having been lined; and the lighter regulation in the USA is backed up by a ferociously aggressive legal system. This acts as a self-regulating mechanism because nobody will risk ruinously expensive litigation.
Thus, the lighter regulation supported by an aggressive legal system that does not allow operators, designers and suppliers to hide behind the regulation has resulted in a thriving market for trenchless rehabilitation that is solving the problems more effectively than is happening in the more heavily regulated European markets.
Regulation is necessary
Clear regulations and standards, introduced at the right time in the market life cycle, can legitimise developments and create a strong foundation for growth. For example, the introduction of the four classes of pressure pipelining in the AWWA Manual M28 and the ISO Standard EN ISO11295 has clarified which solutions are appropriate for which problems. This has given users more confidence and supported better market growth. But regulate too soon and innovation is indeed stifled. A careful balance is needed.
The examples cited are just that, examples. They are not direct comparisons. But they illustrate that there are different approaches to regulation and that good, thoughtful regulation, introduced at the right time and with a clear understanding of its objectives, will support the development of innovations to the problems of managing ageing sewer and water infrastructure. In contrast, excessive regulation stifles innovation and also fails to achieve its core objectives as regulations become conflicting and contradictory.
There are lessons to learn from the heavy-handed and confrontational regulation in Europe, the contradictory regulation in the UK, and the lighter, more co-operative regulation supported by the risk of litigation in North America.
How well or poorly do they achieve their objectives: protection of public health through reliable, clean and safe drinking water; effective, non-polluting wastewater conveyance and treatment; and improved conservation of water, an increasingly scarce resource?
