LEAKING MONEY – NON-REVENUE WATER AND THE HIDDEN OPEX DRAIN
What if half the water we produce never reaches a single tap but still costs us millions?
Across the globe, clean, treated water vanishes into the ground or disappears unaccounted for—quietly bleeding budgets, accelerating climate emissions, and eroding public trust. It is not just a plumbing problem—it is a systemic failure hidden beneath the surface of our cities. As utilities chase new megaprojects, a silent crisis is leaking away opportunity, equity, and billions in operational waste.
Welcome to the world of Non-Revenue Water (NRW)where every drop lost is
a dollar drained.
1.
Introduction
When
was the last time your water provider told you how much water was lost—and what
they did about it? For most consumers, water loss seems intangible; they expect
every drop they pay for to arrive at their tap. However, imagine a family in
Jakarta whose supply dries up midday, only to discover they are still charged
as if nothing happened. The reality is far more haunting: many urban water
systems lose between 20 % and 50 % of treated water before it reaches
customers, and in extreme cases, this can exceed 70 % (Jariol, 2024). NRW
covers both physical leaks in distribution pipes and commercial losses such as
unmetered consumption and meter errors (Hanjahanja & Omuto, 2018). Such
losses drain operational budgets, worsen water scarcity, and erode public trust,
impacting everything from utility finances to environmental sustainability
(Mohanty & Rout, 2022).
The
hidden strain of NRW on operational expenditure is alarming yet rarely visible
to the average household. A large share of produced water never generates
revenue, putting municipalities in a bind: they must sell more water or hike
tariffs to cover maintenance, upgrades, and service expansion (Lai et al.,
2017). Most people remain unaware of these breakdowns in the system, and
despite regulations meant to curb losses, transparency around NRW is scant in
many regions (Kanakoudis & Muhammetoğlu, 2013).
Cities
around the globe wrestle with the challenge of meeting rising demand from ageing
infrastructure. This is not merely a budgetary issue: lost water yields no
revenue to fund conservation projects or day-to-day operations, threatening
equitable access to safe drinking water (Tzagkarakis et al., 2020). However,
efforts to track, monitor, and report NRW often falter, hampered by outdated
technology and weak community engagement, and initiatives to reduce losses
usually lack urgency (Alkasseh, 2018; Burger & Jansen, 2014).
NRW
is more than a technical hiccup; it intertwines with social equity,
environmental stewardship, and governance. Financial drains caused by
persistent water loss can tip municipalities into crisis, deepen scarcity, and
widen access gaps for underserved populations (Ong et al., 2020; Zeff &
Characklis, 2013). Understanding the full scope of NRW—and its ripple
effects—is essential for citizens and policymakers alike to curb waste and
promote sustainable water management.
In
light of these challenges, a paradigm shift is overdue in how utilities operate
and harness data to combat water losses. Rigorous auditing, smart metering, and
proactive leak-control measures are vital (Baum et al., 2018). Equally
important are public awareness campaigns that enlist communities to spot and
report leaks (Sitishe et al., 2023). The sections that follow will unpack NRW's
dimensions, its root causes, and the solutions that can turn the tide.
2. What Is Non-Revenue Water?
Non-Revenue Water (NRW) refers
to treated water that utilities produce and pump into their distribution
networks but never bill to customers. This gap arises from various breakdowns
within the system. NRW falls into three main categories:
- Physical losses: leaks, bursts, and overflows in pipelines.
- Billing errors and theft: inaccuracies in metering, unauthorised connections, and
consumption.
- Unbilled authorised uses: water used for firefighting, street cleaning, or system testing
that is not charged to customers (Hanjahanja & Omuto, 2018; Jang et
al., 2019; Γαλιατσάτου et al., 2024).
Sidebar: Physical losses in action—In Lima, a single
main burst in 2022 released over 200 million litres of water and cost the
utility more than USD 5 million in emergency repairs.
Across many regions, NRW
accounts for 20 %–50 % of total water production, and in some systems even
exceeds 50 % (Evaristo et al., 2023; Gupta et al., 2020).
The global scale of NRW
highlights a critical inefficiency in urban water services. González-Gómez et
al. (2011) show that NRW levels vary widely by city, indicating significant
room for improvement in operational performance. These losses not only translate
into billions of dollars in lost revenue each year but also waste the energy,
chemicals, and labour already invested in treating that water (Hastie et al.,
2020; Lai et al., 2017). In fact, developed countries lose an average of 35 %
of treated water due to ageing infrastructure and insufficient monitoring
systems (Gupta et al., 2020).
High NRW places immense strain
on utility budgets. When water is lost before it can be billed, utilities must
ramp up production, driving up operational expenditures (OpEx) even as revenue
stalls or declines. This vicious cycle forces municipalities to forgo other
critical investments, leaving communities without funds for upgrades or
conservation programs (Macharia et al., 2021; Kaminsky & Kumpel, 2018).
Asiedu et al. (2019) demonstrate that overburdened budgets lead to service
disruptions and undermine long-term sustainability.
To tackle NRW, utilities are
deploying a mix of technological and managerial strategies. Smart water meters
and real-time monitoring systems can pinpoint leaks and unauthorised use almost
instantly (Sharma et al., 2018; Perera et al., 2018). Comprehensive audit
programs enable accurate accounting of water flows and help prioritise
interventions (Macharia et al., 2021; Creaco & Pezzinga, 2018). However,
these efforts often falter when funding falls short, political will wanes, or
communities remain disengaged (Mohanty & Rout, 2022; Al-Bulushi et al.,
2018).
Clear performance indicators are
essential for tracking progress. By benchmarking NRW levels against peer
utilities, providers can identify best practices and set realistic reduction
targets (Marques et al., 2021; Mvongo et al., 2024). Public awareness campaigns—explaining
why every lost litre matters—can mobilise citizens to report leaks and support
conservation measures (Cervancia et al., 2022; Nguyen, 2020).
Understanding the full scope of
NRW empowers stakeholders—utilities, regulators, and communities—to collaborate
on innovative solutions that improve efficiency, cut costs, and protect water
resources. Such partnerships not only bolster service reliability but also
strengthen public trust in the institutions charged with safeguarding our most
vital resource (Evaristo et al., 2023; Wang et al., 2015).
3. Why Are You Paying Twice for Every Drop
3.1 Hidden Costs Affect Your Bills
The concept of Non-Revenue Water
(NRW) carries significant financial implications for consumers, often unnoticed
by the public. Every litre of water lost due to leaks or inefficiencies
represents a cost, including expenses for energy, chemicals, and labour, that
utilities absorb and pass on to you (Lai et al., 2017). Consequently,
the financial burden of these losses ultimately falls on households, as
utilities seek to recover costs either by increasing tariffs or relying on
subsidies—strategies that inevitably drive water prices upward (Khalil &
Pandow, 2020). In City Y, for example, NRW added 15% to the average monthly
water bill, disproportionately affecting lower-income households (Stein et
al., 2023).
Even if individuals never
directly observe leaks in their neighbourhood, they are financially impacted by
the waste embedded in the system. Research shows that inefficiencies in water
management increase utility bills as service providers attempt to mitigate
budgetary shortfalls caused by NRW (Li et al., 2018). In areas where tariffs do
not reflect actual operational losses, the quality and reliability of water
services degrade, further compounding the problem (Karamage et al., 2016).
This cycle of deferred maintenance and underinvestment prevents essential
infrastructure upgrades, resulting in hidden long-term costs for consumers
(Ecklu et al., 2024).
3.2 Environmental Impact
The environmental consequences
of NRW are equally alarming. Each litre of lost water wastes not only the water
itself but also the energy used to treat and pump it, increasing carbon
emissions and contributing to climate change (Altman et al., 2021; Villar &
García‐López, 2023). NRW forces utilities to extract
additional water from rivers and aquifers already under stress, exacerbating
ecosystem degradation and biodiversity loss (Kaminsky & Kumpel, 2018).
In regions facing recurring
drought or groundwater depletion, NRW accelerates the collapse of fragile
ecosystems. Studies confirm a direct link between high NRW levels and the
depletion of critical water sources needed for local biodiversity (Segura
et al., 2018). These losses disrupt natural hydrological cycles and undermine
long-term sustainability targets (Valero et al., 2018). Raising public
awareness is essential—not just about the rising costs, but also about the invisible
ecological toll of unmanaged water loss (Moshfika et al., 2022).
3.3 Ageing Infrastructure & Deferred Investment
Persistently high NRW levels are
often symptomatic of ageing and deteriorating infrastructure. Old and leaky
pipe systems are the primary culprits behind escalating water losses,
requiring proactive maintenance to avoid service breakdowns and emergency
repairs (Cervancia et al., 2022). Delayed investment in maintenance leads to
ballooning costs, as emergency fixes are far more expensive than preventive
upgrades (Ecklu et al., 2024).
Neglecting NRW management
results in a vicious cycle where operational costs soar and consumers bear the
brunt of deferred investment (Figueiredo et al., 2024). Tackling NRW early is a
cost-effective strategy for ensuring system longevity and service reliability
(Farouk et al., 2021). Unless water utilities adopt transparent strategies and
prioritise infrastructure renewal, the public will continue paying twice:
once for infrastructure that does not work, and again for the consequences of
its failure (Kaka, 2020).
Engagement between utilities and
the public is essential. Communities must demand transparent reporting, fair
tariffs, and long-term maintenance plans that reflect actual operational
realities. Only through collaboration and accountability can we address the
financial, social, and ecological burdens of NRW (Barbosa et al., 2024).
4. The Global Cost of Leakage
The
financial implications of Non-Revenue Water (NRW) are staggering, with the
World Bank estimating that utilities worldwide lose over $32 billion
annually due to inefficiencies in their water distribution networks
(Karadirek, 2016). That translates to an average of $45 per customer per
year, assuming global urban water utility coverage. This substantial loss
is a critical concern, as many major cities, such as Mexico City, Manila,
and Jakarta, experience NRW rates exceeding one-third of their total
treated water (Chini & Stillwell, 2018). Such figures illustrate the
alarming inefficiencies present in water management systems across the globe.
However, despite these known losses, many utilities do not disclose NRW rates
or the associated financial impacts, leaving the public largely unaware of the
magnitude of the problem (Pathirane et al., 2024).
The urban
water systems of cities like Mexico City and Jakarta have long been plagued by
outdated infrastructure and insufficient investments in repair and upgrade
strategies. Consequently, NRW has persisted in these locations as a systemic
issue that needs urgent attention. Without proper transparency and
accountability, this problem remains unresolved due to a lack of initiative
from both utility managers and local governments to tackle the underlying
causes of NRW (Wibowo & Alfen, 2015). Proven solutions to reduce NRW exist,
ranging from technological innovations in monitoring and managing water losses
to policy reforms that incentivise efficient operations (Hanjahanja &
Omuto, 2018; Malek et al., 2021). However, without political will and adequate
funding, these strategies are often stalled or inadequately implemented,
perpetuating the cycle of waste and inefficiency (Karadirek, 2016).
Moreover,
the hidden costs of NRW extend beyond mere financial losses; they contribute to
broader socio-economic challenges affecting urban populations. In Manila,
for instance, households spend up to 8% of their income on water due to
elevated NRW levels and the resulting service inefficiencies. Higher tariffs to
recoup losses from NRW often burden low-income households disproportionately,
exacerbating existing inequalities (Moncaleano et al., 2024). This financial
strain may have considerable effects on community welfare, as households are
forced to allocate more of their resources toward utility bills that could have
been avoided with effective water management (Γαλιατσάτου et al., 2024).
Ultimately,
without active engagement from the public and efforts to demand accountability
from utilities, these issues are likely to persist, detrimentally affecting
both household finances and community infrastructure as a whole. The lack of
awareness regarding NRW and its impacts also creates a public trust
deficit, as consumers may feel disconnected from the water governance and
management processes affecting their lives (Pathirane et al., 2024). Engaging
citizens in discussions about NRW can empower communities to hold utilities
accountable, advocate for transparency, and actively support initiatives aimed
at reducing wasteful water practices (Chini & Stillwell, 2018).
This
grassroots involvement is essential for creating systemic changes in how urban
water systems operate and how they communicate their challenges to the public.
The challenge presented by NRW is significant but not insurmountable. As
demonstrated in various case studies, utilities that actively pursue NRW
reduction strategies often experience long-term economic benefits, improved
service delivery, and increased consumer satisfaction (Mvongo et al., 2024).
If cities
like Mexico City, Manila, and Jakarta can successfully
implement comprehensive NRW management plans, the financial savings realised
could better support the development of reliable, sustainable water
infrastructures that serve all citizens. Thus, concerted efforts—combining
technical innovation, community engagement, and strong institutional
governance—are imperative to overcome the challenges of NRW and establish a
more sustainable future for urban water management worldwide.
In
conclusion, the global cost of leakage represents a significant challenge for
water utilities, local governments, and communities alike. By recognising the
wide-ranging implications of NRW, including financial losses and environmental
degradation, and by fostering public awareness and engagement, it is possible
to build a path towards practical solutions that ensure water resources are
managed sustainably and equitably for future generations.
5. Case Study: Phnom Penh, Cambodia and Indonesia
In the
1990s, the city of Phnom Penh, Cambodia, faced a pressing issue with
Non-Revenue Water (NRW), which exceeded approximately 72%. This
statistic highlighted systemic inefficiencies within the municipal water supply
system, necessitating urgent reforms to ensure both the financial
sustainability of the utility and the community's access to clean and reliable
water (Lai et al., 2017). To address these challenges, Phnom Penh's strategy
benchmarked a global standard by implementing several strategic measures
aimed at reducing NRW, setting a compelling example of effective water
management.
The first
approach taken by Phnom Penh's water utility focused on rigorous leak
detection methodologies. By leveraging advanced technologies such as acoustic
sensors and Geographic Information Systems (GIS), the city enhanced
its capabilities to effectively identify and locate leaks within the
distribution network (Jariol, 2024). Coupled with this was an accelerated meter
replacement program, aimed at replacing outdated and inaccurate metering
systems that contributed to commercial losses due to under-reporting and
unbilled consumption (González‐Gómez et al., 2011).
Moreover, staff
accountability was a core element of the city's reform strategy, linking
employee performance metrics directly to NRW reduction targets (Lai et al.,
2017). This shift in organisational accountability fostered a culture of
responsibility within the water utility, incentivising staff to engage in
monitoring and actively minimising water losses. As one utility manager noted: "Our
success did not come from funding alone, but from empowering our staff to care
about every drop" (Jariol, 2024). Alongside internal reforms, the city
also introduced community incentives, empowering residents to report
unauthorised pipe connections and leaks. Public progress reports further
enhanced transparency and built trust in the reform process.
By 2010,
the comprehensive strategy adopted by Phnom Penh yielded remarkable results: NRW
fell to around 10%, and revenue surged as billed consumption
increased dramatically (Lai et al., 2017). This turnaround not only stabilised
operational costs but also significantly improved customer satisfaction
among residents. Phnom Penh's experience stands as a powerful regional case
study, illustrating that strategic investment, community engagement, and
organisational discipline can yield dramatic improvements in water
efficiency (Farouk et al., 2021).
In
contrast, many utilities in Indonesia still grapple with persistently
high NRW levels. For example, Jakarta reported an average NRW of 45% in 2023,
reflecting challenges in both infrastructure and institutional performance
(Nahwani & Husin, 2021; Kanakoudis & Muhammetoğlu, 2013). Indonesian
utilities face systemic issues, including ageing infrastructure, limited
funding for proactive maintenance, and inadequate capacity for leak repair.
These challenges are compounded by fragmented policy frameworks,
resulting in inconsistent enforcement and insufficient long-term planning
(Oberascher et al., 2020; Nahwani & Husin, 2021).
Despite
these barriers, the lessons from Phnom Penh offer valuable insights for
Indonesian water providers. By adopting similar technologies for leak
detection, creating internal accountability frameworks, and
empowering citizen involvement, Indonesia's water utilities could begin
reversing high NRW trends. The integration of community reporting systems,
in particular, has proven effective in Phnom Penh—not only empowering residents
but also creating a shared sense of ownership over the water system (Lai
et al., 2017; González‐Gómez et al., 2011).
Benchmarking
against Phnom Penh's success, Indonesian cities can realise the
transformative power of data-driven strategies and stakeholder
engagement. For instance, initiatives such as outdated meter replacement,
paired with consistent public education on water conservation, could
bring measurable improvements in NRW (Rahman, 2024). Furthermore, building a
culture of performance accountability, similar to Phnom Penh's reforms,
could enhance operational efficiency and reduce water losses over time (Jariol,
2024; Farouk et al., 2021).
While Phnom Penh has demonstrated notable
success in tackling NRW, many cities across Indonesia continue to struggle
with deeply rooted structural and institutional barriers. Nonetheless, by adapting
Phnom Penh's practices to local conditions, Indonesian utilities can chart
a path toward better water governance, financial sustainability, and community
satisfaction. The practical implementation of these lessons across both
countries can strengthen regional commitments toward sustainable and
equitable water management, offering long-term benefits for both citizens
and ecosystems.
6. Toward a Leak-Free
Future
The road to
a leak-free future in urban water supply systems is built on the foundation of transparency
and community engagement. To truly address the pervasive challenge of
Non-Revenue Water (NRW), water utilities could establish rigorous reporting
protocols that provide clarity on the complexities of water loss.
Specifically, utilities should commit to publishing annual NRW rates,
detailing both the percentage and volume of water lost, while categorising
losses by cause—be it leaks, theft, or metering errors (Lai et al., 2017). Such
transparency is critical not only for accountability but also for enhancing
public trust and increasing citizen involvement in local water issues.
Water
utilities should also disclose the financial implications of NRW,
outlining how lost revenue translates into extra operational expenditures
(OpEx). In parallel, customers need to be educated on the impacts of NRW
and encouraged to demand comprehensive leak detection systems, smart
metering technologies, and community engagement programs that foster
active public participation in water management (Beal et al., 2020). Asking the
right questions about current NRW rates, historical trends, and key problem
areas not only informs utility management but also empowers consumers to hold
service providers accountable for their performance (Rolston et al., 2017).
Practical
action plans ideally encompass:
- Solid leak detection and repair programs
with measurable outcomes,
- Smart metering initiatives are supported
by data analytics that track investment levels and implementation
timelines, and
- Clearly defined channels for community
feedback enable customers to report leaks or theft and share their
experiences regarding utility response times (Rolston & Linnane,
2020).
Creating a feedback
loop between providers and consumers fosters public engagement and
strengthens water governance.
Key
inquiries that customers could pose to their water
providers include the following:
- "What is our NRW rate today, and how
has it trended over the past five years?"
This question encourages historical awareness and enables consumers to assess the effectiveness of previous reforms. - "Which areas or network components
contribute most to loss?"
Identifying weak spots in the network allows the public to focus advocacy on zones that require urgent attention. - "What programs are in place, and
what metrics do you publish to show progress?"
This inquiry evaluates the utility's commitment to transparency and ongoing efforts toward NRW reduction (Rolston et al., 2017). - "How do NRW losses affect my tariff
and the utility's financial health?"
Understanding the link between NRW and billing reveals the broader economic costs of inefficiency and helps build momentum for reform.
Empirical
studies support the assertion that enhanced stakeholder engagement and
participatory governance lead to improved water conservation outcomes
(Carpio et al., 2021). When service providers create space for dialogue with
communities, they unlock opportunities to develop shared visions of water
management that promote both sustainability and infrastructural health. A
particularly effective strategy includes nurturing community champions—local
advocates for responsible water use—who can mobilise broader support for leak
prevention initiatives and investments in long-term maintenance (Ajia, 2017).
In
conclusion, progress toward a leak-free future requires a collaborative
effort grounded in transparency, accountability, and public involvement.
Utilities should embrace their role as stewards of water resources,
working alongside consumers to cultivate a culture of responsibility and
shared awareness. As urban populations continue to grow and climate stress
intensifies, the call for efficient and equitable water management becomes ever
more urgent. By uniting around this cause, communities can reduce financial
waste, protect vital ecosystems, and secure water access for future
generations.
7. Conclusion
In
conclusion, Non-Revenue Water (NRW) represents far more than a mere technical
glitch in urban water supply systems; it constitutes a significant operational
expense that has substantial financial implications for utilities. The
financial and environmental impacts of NRW are profound, as evidenced by the
losses, estimated at over $14 billion annually, that utilities incur due to
inefficiencies in their systems (Malek et al., 2021; Ogata et al., 2021). This
drain on resources ultimately reflects in the bills presented to consumers,
amplifying the urgency for transparency and accountability within water
management strategies.
The public
must actively demand that water utilities embrace transparency in their
operations. This includes the publication of annual NRW rates, detailing both
the volume and percentage of water lost, as well as offering a comprehensive
breakdown of losses by category—leaks, theft, and metering errors (Cervancia et
al., 2022). Understanding the financial toll of NRW—comparing lost revenue to
the added operational expenses it generates—is crucial for fostering an
environment where stakeholders can hold utilities accountable (Farouk et al.,
2021). Such engagement will encourage improved practices, incentivising
investments in advanced leak detection technologies, smart metering
initiatives, and community-centric engagement programs that uplift consumers as
stakeholders in their water supply success (Chasiotis et al., n.d.).
To solidify
a path toward a leak-free future, community members can take action by posing
pertinent questions to their water providers, such as: "What is our
current NRW rate, and how has it trended over the past five years?" and
"What programs are in place to address this issue, and what metrics exist
to demonstrate progress?" (Jang et al., n.d.). These questions help ensure
that transparency translates into actionable improvements that can benefit both
utility performance and the financial well-being of consumers.
In
summation, the call to action is clear: demand transparency, insist on clear
targets and regular reporting, and support the investments needed to address
NRW effectively. With water scarcity escalating and costs on the rise, every
drop of water and every dollar spent matters immensely. Communities and
consumers must come together to advocate for reform and efficiency, promoting
sustainable water practices for today and future generations (Hanjahanja &
Omuto, 2018).
The closing
provocation remains: "Can we afford not to act when every drop—and every
dollar—counts?" The time for decisive action is now, as the implications
of inaction will reverberate far beyond individual utility bills, influencing
environmental sustainability and community resilience for the foreseeable
future.
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