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Ress & Roberson | http://dx.doi.org/10.5942/jawwa.2016.108.0026
Peer-Reviewed
The Financial and Policy Implications of Water Loss
ERIN RESS1 AND J. ALAN ROBERSON2
1Tetra Tech Inc., Fairfax, Va.
2AWWA, Washington, D.C.
This research analyzed the financial and policy implications of
potentially using a regulatory requirement as a mechanism to
reduce water loss. This research compared validated water audits
from North America, voluntarily submitted in calendar years
2010 to 2013, with audits from Georgia, required to be submitted
to the state in calendar years 2011 and 2012. The analysis did
not show any significant differences between the two data sets.
Keywords: nonrevenue water, performance indicators, return on investment, water loss
Public drinking water systems are treating and distributing
billions of gallons of safe drinking water every day. In a perfect
world where pipes never leak, the total volume of water that
enters the distribution system should be equal to the volume of
water that reaches, and is accurately billed to, its consumers;
however, this is never the case. Distribution systems are losing
10 to 30% of their water supply every day with some reporting
close to 50% losses (Fiut et al. 2013). The nation’s population
is expected to increase by 100 million by the middle of the 21st
century, which will increase the demand for water and increase
stress on water resources for many drinking water systems
(Cohen 2012). Water system managers need to take a holistic
risk-management approach to their enterprise when planning
to meet future demands. A range of tools need to be considered
for this holistic approach, including drought management, water
conservation, energy efficiency, and the focus of this paper,
water loss reductions.
The need to appropriately manage water losses is becoming
especially important in some areas during the summer months
when temperature and water demand typically increase and water
supplies typically decrease. Droughts can exacerbate water supply
problems for systems that are near capacity during peak summer
demands or are facing increasing demands as a result of popula-
tion and job growth. Drought management plans are an impor-
tant part of the overall risk management for water systems
(AWWA 2011).
Water conservation is another tool that can be used in tandem
with the appropriate management of water losses to “stretch”
water supplies. Traditionally, some states have established regula-
tions promoting demand-side water conservation, which includes
limiting outdoor water use and providing incentives for purchasing
water-efficient appliances such as faucets, toilets, and showerheads.
JOURNAL AWWA 2016 © American Water Works Association
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This article also compares performance indicators on the basis
of the size of the utilities and their geographic distributions and
found no trends. Two methodologies are presented for calculating
the benefits of reducing losses, which could be used as part of an
analysis to assess the return on investment when prioritizing
among competing infrastructure needs and when evaluating a
water loss control program.
Beyond traditional conservation measures, efforts to stretch water
supplies also need to take place on the supply side (e.g., implement-
ing water loss control programs at utilities).
Leaking pipes across the nation lose an estimated 2.6 tril gal
of total water every year, which results in an annual loss of
$4.1 billion in electricity costs (Cohen 2012). The water–energy
nexus is the connection and dependence of water and energy
between and on one another; water is needed by electricity-
generating stations to produce energy, while energy is essential
to treat, pump, and transport water. Reducing water losses not
only increases the amount of available water, but through the
water–energy nexus, operational costs can be reduced by requir-
ing less energy input use (Baird 2011). Through the water–
energy nexus, increasing the water efficiency at a water utility
will result in more available water and a reduction in energy
input costs, which in turn reduces greenhouse gas emissions
from power-generating stations (Aubuchon & Roberson 2014).
MANAGING DISTRIBUTION SYSTEMS AND LOSS
As discussed previously, individual water systems are losing
millions of gallons of drinking water every day. This is water that
could be generating revenues for the system if not lost in the
distribution system. In order to adequately support their custom-
ers’ needs and be good stewards of their financial resources, water
systems need to take the necessary steps to better manage their
distribution system and their water loss.
Nonrevenue water (NRW). To improve water and energy effi-
ciency at drinking water systems and decrease water losses, sys-
tems need to know exactly how much water is being lost in the
distribution system, which is just one component of NRW. The
water balance in Table 1 shows that water loss, either real or
apparent, is the difference between the total system input volume
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and the volume of authorized consumption (AWWA 2009). Real
losses are physical losses that result from leaking service connec-
tions or storage tank overflows and leaks, while apparent losses
are commercial losses that result from theft, customer metering
inaccuracies, or systematic data handling errors (AWWA 2009).
Typically, real losses are valued using the production cost, which
includes the cost of treating and pumping the water, while appar-
ent losses are valued using the retail cost because the water has
been consumed but not paid for (Mathis et al. 2012). The use of
production and retail costs will be discussed later in this article
as part of the return on investment (ROI) analysis for reducing
water losses. The other component of NRW, unbilled authorized
consumption, is water that is used for flushing of the distribution
system, street cleaning, firefighting, and other acknowledged or
permitted uses for which no payment is received or measured.
Managing NRW is important for utilities to benchmark and track
their progress toward target goals to conserve water and energy
and to become better stewards of their financial resources.
Cost implications. Generally, decreasing NRW is cost-effective,
but several factors need to be considered when evaluating the
cost–benefit analysis for a specific water system. Financial
resources must be allocated for the upfront cost to pay for equip-
ment and hiring a crew to find leaks, inaccurate or faulty meters,
and to make repairs, which are then followed by a payback
period. Fixing every leak or faulty meter is not economically
feasible or even possible in some cases. The water saved from
repairing an individual leak can vary significantly, from saving
53.4 gpm for repairing a 0.5-in.-diameter hole to saving 213.6
gpm for a 1.0-in.-diameter hole when operating at 80 psi (AWWA
2009). Therefore, water system managers must decide the level
of financial investment that will result in a positive ROI.
ROI is the benefit that results from an investment, and in this
case the benefits are the value of the water and the potential
energy savings. To produce a positive ROI, systems will repair
only the leaks that provide more benefits than the repair costs.
TABLE 1 AWWA/IWA water balance
Water exported
(corrected for
known errors)
Authorized
Volume from consumption
Unbilled authorized
own sources System
(corrected for
input
known errors) volume
Water supplied
Water losses
Water imported
(corrected for
known errors)
Source: AWWA 2009
IWA—International Water Association
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In other words, the money saved by reducing losses needs to be
greater than the cost of repairing the cause of those losses. How-
ever, a water system with scarce water resources could make the
policy decision to have an aggressive water loss reduction pro-
gram (with potentially a smaller ROI). With a fixed budget,
critical decisions must be made beforehand regarding which leaks
and meters to repair in order to maximize the amount of water
and energy saved. This article presents two water system case
studies using two methodologies that could be used to determine
the maximum amount of money to spend on water loss control
programs to produce a positive ROI.
Policy implications. Currently no national standard regulates
the amount of water loss permissible at a drinking water system.
Frequent droughts and increasing energy costs are two of the
reasons some states have imposed regulations with the intention
of reducing water losses and operating costs while increasing
water supplies. The need for a national regulation can be debated
on both sides—one side could say that a single standard is not
feasible because of all of the site-specific factors inherent in a
water loss program, while the other side might say a national
standard would provide uniformity and be comparable to energy-
efficiency standards, automobile fuel-efficiency standards, and
standards for low-flow plumbing fixtures.
OBJECTIVES
This water research investigated some of the policy and finan-
cial implications of water loss programs through three analyses:
•• Determining whether a regulatory requirement for water
audits would decrease water loss by comparing validated
water audits from North America, which were voluntarily
submitted in calendar years 2010 to 2013, with audits from
Georgia, which were required to be submitted to the state in
calendar years 2011 and 2012.
•• Comparing performance indicators on the basis of the size
of the utilities and their geographic distributions.
Revenue
Billed water exported water
Billed authorized Billed metered consumption Revenue
consumption Billed unmetered consumption water
Unbilled metered consumption
consumption Unbilled unmetered consumption
Customer metering inaccuracies
Apparent losses Unauthorized consumption
Nonrevenue
Systematic data handling errors water
Leakage on transmission and distribution mains
Leakage and overflows at utility’s storage tanks
Real losses
Leakage on service connections up to the point of
customer metering
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•• Using two methodologies for calculating the benefits of
reducing losses that could be used to calculate the ROI when
prioritizing among competing infrastructure needs and when
evaluating a water loss control program.
BACKGROUND
Water loss has been an issue for water systems for many years,
but the terminology and calculations for the concept have evolved
over time. When assessing water flow into and out of the distribu-
tion system, utilities traditionally referred to water losses as unac-
counted-for water. In the past, the definition of unaccounted-for
water varied between utilities across North America, as many
utilities would account for some known amount of losses as
accounted-for and other losses as unaccounted-for (USEPA 2010).
The lack of standardized terms and definitions led to commu-
nication challenges between utilities and inconsistent measure-
ments that made benchmarking difficult. New and consistent
terminology was needed, as well as a standard methodology for
calculating water losses.
This led to the International Water Association (IWA) and
AWWA partnering to develop a water audit methodology cur-
rently recommended by the AWWA Water Loss Control Committee
(WLCC) as the best management practice for accounting and
controlling losses in drinking water systems (AWWA 2009). In
2009, AWWA published the third edition of Manual of Water
Supply Practices M36, Water Audits and Loss Control Programs,
a manual that is used as guidance for drinking water utilities on
how to use water audit methodology to economically control
water and revenue losses by tracking how effectively water is
moved from its source to its consumers. It uses consistent and
sound definitions and terms that should be adopted by every
drinking water utility. This methodology discourages the use of
the term unaccounted-for water to assess water loss and instead
recommends the use of the term nonrevenue water. It also dis-
cusses the inaccuracies inherent in using water loss on a percent
volume basis as an operational performance indicator and instead
recommends the use of several other performance indicators.
Performance indicators. Water loss expressed as a percentage of
total volume is not the optimal performance indicator because of
the influence of variable consumer demand. For example, a water
utility with an average consumption of 200 gpcd with a total
system input of 3,000 mil gal/year and a total metered consump-
tion of 2,700 mil gal/year would have total losses of 300 mil gal/
year (10%). Assume in this example that this utility decreases
consumption to 150 gpcd through demand-side conservation,
which results in total metered consumption of 2,025 mil gal/year
and a total system input of 2,325 mil gal/year. With no reduction
in losses, the system is still losing 300 mil gal/year, which results
in a 12.9% loss compared with the initial 10%. The percentage
of water loss increased without any real change in losses. This
example shows why the percentage of system input volume is a
poor operational performance indicator for assessing water losses
(Thornton et al. 2008).
Two operational performance indicators used to assess water
losses as suggested in M36 are apparent losses and real losses
expressed as gallons per service connection per day. These
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performance indicators can be used for benchmarking within
the utility to show improvements in efficiency. Using these per-
formance indicators for comparison with other utilities is chal-
lenging at best because of the differences in the gallons per
service connection per day. Therefore, the infrastructure leakage
index (ILI) was designed specifically as an operational perfor-
mance indicator for comparison among utilities and benchmark-
ing within a utility. As shown in Eq 1, ILI is the ratio of the
current annual real losses (CARL) to the unavoidable annual
real losses (UARL) and quantifies how well a distribution system
is managed for controlling real losses at the current operating
pressure (AWWA 2009).
CARL
               ILI =  (1)
UARL
Ultimately, utilities aim to achieve a low ILI by reducing the
CARL as close as possible to the UARL.
Financial performance indicators are also used to view the
overall financial impact of the water losses at the utility. This
research analyzed NRW percent by cost and NRW percent by
volume, which are defined by M36 in Eqs 2 and 3, respectively:
Cost of NRW
        NRW % cost =  (2)
Total cost of operating the system
Volume of NRW
         NRW % volume =  (3)
Total system input volume
As previously discussed, NRW percent by volume cannot be
used to demonstrate operational efficiency because of changes in
demand and the variability between systems (AWWA 2009).
Therefore, it is used only as a reference point and not for any
analyses. Other financial indicators used include the annual cost
of real losses and the annual cost of apparent losses.
Water audits. Another tool used for managing water losses is
the AWWA/IWA Free Water Audit Software, which is used to
conduct a water audit and serves as an initial assessment of the
losses and the associated costs (Chastain-Howley 2007). The
software provides specific results for operational and financial
performance indicators after entering site-specific factors. The
water audit methodology and the software are two tools that
serve as best management practices for utilities to easily track
their progress toward better managing NRW (AWWA 2009). An
important feature of this software is a validity score, which is the
confidence behind the values that are submitted in the audit. That
is, with each entered value, a validity score is submitted on a scale
of zero to 100 as an estimate of the confidence in the accuracy of
that specific number, leading to an overall average validity score.
Validating the data is an important process because of the many
calculations and potential for errors when assessing water losses
(Jernigan 2014).
Developing a water audit is the first step in assessing water loss.
Once the water audit is completed, utilities have some insight into
where they are losing the most water, whether it is from faulty
meters, leaking pipes, or elsewhere. Once the problem is found,
the associated cost must be assessed to produce a positive ROI
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(i.e., the net benefits of an investment). In this case, the net ben-
efits are the value of water saved and that the cost covers all of
the necessary interventions, including hiring workers and crew,
training the crew, purchasing equipment, allotting time, and many
other site-specific factors. If the total cost is greater than the net
benefit of repairs, the result is a negative ROI, meaning more
money is being spent than recovered. Therefore, in most cases, it
is not economically sensible to make the investment.
According to M36, in most cases controlling losses will follow
the law of diminishing returns in that when losses are excessive,
a relatively large reduction in losses can occur at a relatively low
cost. As utilities employ additional resources to manage water
losses, the effort requires greater costs and efforts to recover ever-
diminishing returns. Repairing every leak is not economically
feasible; therefore, an important part of ensuring a positive ROI
is balancing the costs and benefits by operating at the economic
leakage level (ELL) (Thornton 2008). The ELL is when the value
of the water lost—real and apparent—plus the cost to reduce
losses, known as the cost of intervention, is at a minimum
(Thornton 2008). Above the ELL, the effort to control the losses
costs more than the value of the recoveries, and it is not eco-
nomically feasible to pursue. When examining a marginal cost
curve, many utilities lack sufficient resources or the necessary
expertise in water loss management to decide what leaks to
repair to produce a positive ROI (WRF 2014). This article
examines the potential savings and benefits from reducing water
loss by a small percentage and reducing the ILI.
National and state regulations. The Energy Policy Act of 1992
(EPACT92, P.L. 102-486) mandated the development of regula-
tions for low-flow plumbing fixtures such as showerheads,
faucets, and toilets. In response to frequent droughts, consumers
are sometimes required to reduce water use by using less water
for outdoor purposes and to promote additional reductions in
indoor water use. While both of these efforts decrease water
demand, this type of water conservation can only decrease water
use to a certain point because of baseline indoor demand.
Diminishing returns on demand-side conservation means that
water systems must turn to supply-side efficiency but, unlike
demand-side use (e.g., low-flow plumbing fixtures), there is no
national regulation. Currently no national policy or regulation
mandates the specific amount of water loss permissible from a
public water distribution system.
This lack of a national policy or regulation has prompted some
states to pass their own legislation that requires utilities to sub-
mit water audits. Most state requirements focus on submitting
audits as opposed to setting a maximum amount of water loss,
but by requiring audits the goal is for utilities to benchmark
themselves, compare among other similar utilities, and appropri-
ately manage their water loss. Georgia has adopted the most
stringent regulations for managing water loss. While Georgia has
abundant water resources, they are not evenly distributed across
the state, and the rainfall is unable to replenish the sources evenly
(CNT 2014). A task force found three key goals that led to the
passing of the Georgia Water Stewardship Act, signed into law
in June 2010: to conserve water by reducing demand, to capture
and identify new sources, and to control the water supply by
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changing policies and procedures (Ashley & Kirkpatrick 2011).
The act requires all drinking water utilities serving more than
3,300 people to conduct an annual water audit using the AWWA/
IWA methodology, which includes validation and the software
to implement a water loss control program (CNT 2014). The
regulated systems provide 80% of the potable water in the state
(CNT 2014). The audit requirement in Georgia and other states
could be the start of a regulatory trend toward better manage-
ment of water losses across the nation.
This article discusses the results and trends from the water
audits submitted by the Georgia utilities from calendar years
(CYs) 2011 and 2012, as well as a North American data set
collected by the AWWA WLCC from CYs 2010 to 2013. The
goal of this research was to analyze whether the regulatory
requirement for water utilities in Georgia to submit audits
results in decreased water losses or overall improved efficiency
when compared with the North American data that were vol-
untarily submitted.
DATA AND METHODS
Two data sets, one from North America and the other from
Georgia, were used for this research. The North American data
were compared by their respective US Environmental Protection
Agency (USEPA) region and by the system size. The Georgia data
were compared by the system size and then compared with the
North American data using a hypothesis test. These comparisons
were made using the following performance indicators: apparent
losses in gallons per service connection per day, real losses in gal-
lons per service connection per day, and ILI and NRW percent by
cost. NRW percent by volume was not used for comparisons, but
only as a reference point.
The North American data used in these comparisons were vali-
dated water audits for four CYs, 2010 through 2013. These data
were collected by the AWWA WLCC using the AWWA Free Water
Audit Software (www.awwa.org). Table 2 shows the summary
statistics for the four performance indicators used in the analysis
and for NRW percent by volume. Each of the four years were
subdivided into two system sizes—large systems serving a popula-
tion greater than 10,000 and small systems serving a population
less than 10,000—using an online tool provided by USEPA to
determine system size (USEPA 2015). Over the four years, audits
were submitted from 42 utilities from across North America
(Figure 1). Only 11 utilities submitted audits for all four years.
The four performance indicators used for comparisons in this
study are real losses in gallons per service connection per day,
apparent losses in gallons per service connection per day, ILI, and
NRW percent by cost. These indicators were first analyzed across
all four years for any trends that could result from conservation
efforts, decreases in demands, changes in population, or any com-
bination of these. It was hypothesized that the 11 utilities that
reported across all four years would show a decrease in perfor-
mance indicators, as these systems may have been improving sys-
tem efficiency. Second, given the geographical distribution as shown
in Figure 1, an analysis was conducted to determine whether any
regional differences could be made from these data, based on the
USEPA regions. Because only 42 utilities reported, not every region
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TABLE 2 North American summary statistics, CY 2010–2013

2010 2011 2012 2013

n = 21 n = 26 n = 26 n = 26
Apparent losses—gal/service connection/day Range 2.4–65.9 1.2–57.7 1.9–40.6 1.1–50.9
Mean 14.9 14.4 11.5 12.0
Median 9.7 10.6 9.0 7.2
90th percentile 29.7 31.6 20.6 29.8
Real losses—gal/service connection/day Range 17.1–149.7 8.2–156.7 16.5–134.7 20.9–133.9
Mean 63.3 58.9 56.0 69.7
Median 53.9 42.5 44.9 55.8
90th percentile 119.0 111.6 128.1 119.1
Infrastructure leakage index—CARL/UARL Range 1.2–12.7 1.1–13.1 0.8–10.8 0.7–11.2
Mean 3.6 3.5 3.0 3.6
Median 2.6 2.4 2.2 2.7
90th percentile 7.5 6.3 6.9 7.7
Nonrevenue water—% by cost Range 1.7–23.0 1.8–27.2 1.9–27.1 2.2–49.6
Mean 10.0 9.3 9.6 12.3
Median 6.7 7.2 7.5 6.9
90th percentile 17.5 17.8 21.3 28.9
Nonrevenue water—% by volume Range 6.8–45.5 5.1–48.7 5.2–46.3 5.8–45.0
Mean 22.6 19.9 21.0 24.0
Median 20.0 15.3 16.5 22.0
90th percentile 39.6 40.5 38.2 40.8

CARL—current annual real losses, CY—calendar year, UARL—unavoidable annual real losses

was accounted for. All four years had a majority of the utilities
reporting only from USEPA Regions 3, 4, and 6, which cover a
large portion of the East Coast from Pennsylvania down to the
southeast and stretching across the southwest to New Mexico.
Lastly, the utilities were compared by system size—small versus
large—to determine any differences in performance indicators.
The Georgia data were validated water audits for CYs 2011 and
2012 for large and small utilities, respectively, as shown in Table 3.
FIGURE 1 North American utilities by location (calendar years
2010–2013)
These audits were submitted to the Georgia Environmental
Protection Division as a requirement under the Stewardship Act
previously discussed. Large systems (those serving more than
10,000 in population) were required to submit audits by March
2012 covering CY 2011, while small systems (those serving
3,300–10,000 in population) were required to submit audits by
March 2013 for CY 2012. This data set was a much larger
sample size that included 107 large systems reporting in 2011
and 100 small systems reporting in 2012. The performance
indicators from the small and large systems in Georgia were
compared to determine whether utility size made any difference
in water loss.
Lastly, the Georgia data and the North American data were
compared to test the hypothesis of this research: does having a
state requirement reduce the water loss from a system? To test
this, a hypothesis test—specifically a t-test—was performed to
compare the four performance indicators among the large systems
from the North American data set with the large systems from
the Georgia data set using a p value of 0.05.
To lessen the complexity in assessing the potential financial
implications of water losses, this research calculates the poten-
tial savings of reducing water losses using two methods. The
first method calculated the value of water saved by reducing
water losses by 0.5, 1.0, 1.5, and 2.0%. Using the given amount
of water loss in millions of gallons per year and the percent
reduction, two potential savings were calculated: one using the

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production cost and one using the retail cost. The two costs saved water at the production cost, which includes the cost for
provide the lower bound (production) and upper bound (retail) treating and pumping because the water never reaches the con-
costs that can be used by a water system in determining a sumers, compared with apparent losses, which are valued at the
system-specific ROI. The actual benefit (water and energy saved) retail cost because the water has been consumed but not paid for.
from a water loss program is likely somewhere in between these The necessary reduction in real losses is calculated by multiplying
two numbers, depending on several system-specific factors. the target ILI by the given UARL specific for each system. The
The second method assesses the savings of reducing only real new level of water losses are then multiplied by the production
losses using a target ILI approach. This methodology values the cost to give the annual cost of the real losses, which is compared
with the current annual cost of real losses to determine the poten-
tial savings. The potential savings helps determine the maximum
TABLE 3 Georgia summary statistics, CYs 2011–2012 amount of money the utility should spend in order to keep the
benefits greater than the costs. Utilities can use either or both of
2011 2012
n = 107 n = 100
these methods to decide on an appropriate investment for a water
(Large) (Small) loss control program that will result in a positive ROI.
Apparent losses— Range 0.5–48.4 1.2–94.6
  gal/service connection/day
Mean 9.8 8.9 RESULTS
Median 6.7 5.9 North America. The North American data set is summarized
90th percentile 21.4 15.4
across all four years reporting the range, mean, median and 90th
percentile for each of the performance indicators and NRW per-
Real losses—gal/service Range 3.4–184.4 0.7–301.2
 connection/day cent by volume in Table 2. The mean apparent losses decreased
Mean 49.8 52.1
from 14.9 gal/service connection/day in 2010 to 12.0 in 2013.
Median 34.6 39.6
However, the mean real losses increased from 63.3 gal/service
90th percentile 117.9 114.0 connection/day to 69.7 over the four years. Also, the NRW per-
Infrastructure leakage Range 0.3–11.3 0.04–28.7 cent by volume for CY 2013 shows that 90% of the systems that
 index—CARL/UARL
Mean 2.5 3.3 reported water audits have NRW percent volume less than
Median 1.8 2.3 40.8%, with 45.0% being the highest reported in 2013. This
90th percentile 5.2 6.6 means this system is not recovering revenue for almost half of its
Nonrevenue water—% by Range 1.1–49.0 0.9–58.1 total water supply.
 cost
Mean 9.2 8.5 Although the means of the performance indicators did not
Median 6.5 6.4
decrease for all of the systems, of the 11 utilities that reported all
four years, a few had one or two performance indicators decrease.
90th percentile 17.2 16.0
For example, Orange County, Fla., had a reduction in apparent
Nonrevenue water—% by Range 3.4–55.0 2.7–79.6
 volume losses from 7.4 to 5.8 gal/service connection/day. On the other
Mean 20.5 26.8
hand, Orange County experienced a significant increase in real
Median 19.4 24.4
losses starting at 17.1 gal/service connection/day in 2010 and
90th percentile 34.6 41.9 increasing to 55.8 in 2013. This dramatic increase in real losses is
CARL—current annual real losses, CY—calendar year, UARL—unavoidable annual real most likely a result of the simultaneous increase in the validity
losses
score, which increased from 75 in 2010 to 87 in 2013. Figure 2
shows the comparison of real losses with validity score for Orange
County, both of which increased significantly over the four years.
FIGURE 2 Real losses versus validity score for Orange County,
This figure shows that with increasing validity, the parameters in
Fla.
the water balance are likely to shift. As more annual audits are
Real losses submitted, more trends may be visible and more familiarity with
Validity score
60.0 88 the process will likely lead to an increase in validity, which may
Water—gal/service connection/day

or may not lead to increases in performance indicators.

86
50.0 An examination of all four performance indicators showed
84 that five utilities were consistently higher than the mean for the
40.0
Validity Score

performance indicators across all four years: Birmingham

82
30.0 Water Works Board (Ala.), DC Water and Sewer Authority
80 (Washington, D.C.), City of Griffin (Ga.), Philadelphia Water
20.0 Department (Pa.), and the City of Wilmington (Del.). Figure 3
78

10.0
shows the real losses for CY 2013 of these five utilities against
76
the mean real losses for all utilities that year; however, this
0.0 74 study examined only 26 utilities for that year out of the approx-
2010 2011 2012 2013 imately 53,000 community water systems across the United
Year
States (USEPA 2012). Future research is necessary to explain

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why these utilities have above-average values in these perfor-

FIGURE 3 Select real losses versus average of all utilities mance indicators over the four years.
in calendar year 2013 Geographically, USEPA Region 3 had much higher means for all
performance indicators than Regions 4 and 6 as seen in Figure 4.
Real losses
Region 3 had the highest mean real losses of 123.7 gal/service
Average all utilitiesa connection/day in 2011, which is more than double the 48.0 and
160
37.9 mean real losses for Regions 4 and 6, respectively. Philadelphia
Water—gal/service connection/day

140
Water and DC Water are in Region 3, which are both large systems
120 and two of the oldest systems involved in the data collection. These
100 systems have older pipes and service lines, which leads to a greater
80 chance of leaking pipes, main breaks, and meter inaccuracies. Both
60
of these cities encompass a large population that will continue to
expand as the nation’s population increases. Therefore, these sys-
40
tems will need to maintain their water loss control program to
20 meet expected future needs.
0 . Analyzing the size of the utilities for the North American data
.

across the four years showed the large utilities typically had
.

a.
.

el
Pa
.C
la

,G

,D
,A

,D

a,
fin

on
am

higher mean performance indicators than the small utilities

hi
n
to

rif

lp

gt
gh

ng

de
G

in

except on two occasions: ILI in 2012 and real losses in 2012.

in

ilm
hi

ila
irm

as

Ph

Table 4 shows the means of the performance indicators for CY

W
B

aAverage of all utilities for calendar year 2013

2013 in which the small systems had mean real losses of 47.5
gal/service connection/day compared with mean real losses of

FIGURE 4 North American performance indicators by region

Region 3
Region 4
Region 6
A Apparent Losses B Real Losses
40 140
35 120
service connection/day
service connection/day
Apparent Losses—gal/

Real Losses—gal/

30 100
25
80
20
60
15
10 40

5 20
0 0
2010 2011 2012 2013 2010 2011 2012 2013
Calendar Year Calendar Year

C Infrastructure Leakage Index D Nonrevenue Water—% cost

9 20
Nonrevenue Water—% by cost

8 18
16
7
ILI—CARL/UARL

14
6
12
5
10
4 8
3 6
2 4
1 2
0 0
2010 2011 2012 2013 2010 2011 2012 2013
Calendar Year Calendar Year
CARL—current annual real losses, ILI—infrastructure leakage index, UARL—unavoidable annual real losses

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Ress & Roberson | http://dx.doi.org/10.5942/jawwa.2016.108.0026
Peer-Reviewed
73.7 gal/service connection/day for the large systems. Table 4
also shows the apparent losses in gallons per service connection
per day between the small and large systems at 4.2 and 13.5,
respectively. The higher volume of water at large systems
requires more meters to maintain and more chances for error
in data handling. The large systems also have a higher audit
score of 78 compared with the small systems, which have a
mean audit score of 68. This indicates that the large systems
were more confident with the information submitted into the
water audit. Because the audit scores are not that high and are
still increasing, the authors cannot conclude any apparent trends
between the small and large systems. Once the validity of the
data is higher and consistent over multiple years, comparisons
and observation of trends could likely be made.
A review of priority areas for potential improvement for CY
2013 showed that 18 of the 26 utilities had “volume from own
sources” listed as the first-priority area out of nine other options.
“Volume from own sources” is the amount of water that leaves
the treatment plant and is recorded by the production master
meter(s) and includes raw water and sources such as wells, rivers,
lake reservoirs, or aqueduct turnouts (AWWA 2009). The AWWA
Free Water Audit Software uses a meter error adjustment for this
value because no water meter is 100% accurate, which makes it
a common first-priority area.
TABLE 4 North American small and large system averages,
CY 2013
System
Apparent losses—gal/service connection/day
Real losses—gal/service connection/day
ILI
Nonrevenue water—% by cost
Audit score
CY—calendar year, ILI—infrastructure leakage index
TABLE 5 Reduction in water losses and the potential savings
for Birmingham Water Works Board,a CY 2013
Potential Savings
Production Costb
Decrease in Water ($339.00/mil gal)
Loss—% $ $
0.5 20,149
1.0 40,297
1.5 60,446
2.0 80,595
CY—calendar year
aBirmingham
bLower
Water Works Board with a water loss of 11,887.159 mil gal/year
bound
cUpper bound
JOURNAL AWWA
E84
Georgia. The Georgia data set is summarized for 2011 and 2012
reporting the range, mean, median, and 90th percentile for each
of the performance indicators and NRW percent by volume
(Table 3). The range for NRW percent by volume is notable. Both
years show a maximum above 50%, meaning there is at least one
system that is not producing revenue for over half the amount of
water that goes into the system.
While the North American data set showed the large utilities
with higher performance indicator means than the small utilities,
the Georgia data set had different results. The Georgia data
showed that the small systems had a higher mean ILI and real
losses than the large systems. As seen in Table 3, the mean ILI
for large systems is 2.5 compared with 3.3 for small systems.
Also, the mean real losses for the large systems were 49.8 gal/
service connection/day compared with the 52.1 mean for the
small systems; however, the large systems had a higher mean of
apparent losses of 9.8 gal/service connection/day compared with
8.9 for small systems. Small systems may have higher ILI and
real losses because they typically lack the technical, financial,
and managerial capacity to repair leaks and overflows as quickly
and effectively as large systems. Although there is a difference
between the size comparisons within the North American and
Georgia data sets, the large sample size for Georgia increased the
reliability of the data.
Comparison. No significant difference was found between any
of the four performance indicators for the large Georgia and
the large North American utilities for CY 2011. For example,
there is no significant difference between the North American
ILI (mean 3.5 ± 3.2) and the Georgia ILI (mean 2.5 ± 2.0)
Small Large
System (p = 0.20). The p value was greater than 0.05 for all four per-
4.2 13.5
formance indicators for the large systems; so far, these results
suggest that requiring utilities to submit water audits does not
47.5 73.7
lower the amount of water loss. This result could largely be a
2.6 3.8
result of the Georgia data being from the first year of the
6.6 13.3
required audits; thus, utilities were not able to benchmark or
68 78
compare against other systems to potentially lower their water
losses. A comparison of performance indicators between systems
may add political or social pressure to increase the efficiency of
the system and reduce losses.
Financial. The first method to view the potential savings by
reducing water losses is shown in Table 5. Birmingham Water
Works Board lost 11,887 mil gal of water at a production cost
of $339.00/mil gal in CY 2013. If it was to reduce its losses by
0.5%, it could potentially save $20,149 on the basis of produc-
Retail Costc
($3.90/1,000 gal) tion cost. However, it can be argued whether to value the water
losses at the production cost or the retail cost, so using the same
231,800 methodology, the retail cost of $3.90/1,000 gal was converted
into cost per million gallons for consistency with units. This
463,599
resulted in potential savings of $231,800 at a 0.5% reduction.
695,399 These two numbers are the lower and upper bounds, respectively,
927,198
of the range of potential savings for Birmingham. This potential
investment could be economically feasible if Birmingham spends
between $20,149 and $231,800, depending on which cost of
water is used.
The second method to view the potential savings by reducing
losses is the target ILI approach, as shown in Table 6. In 2013,
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Ress & Roberson | http://dx.doi.org/10.5942/jawwa.2016.108.0026 E85
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DC Water lost 5,622 mil gal with an ILI of 7.35. To reach an ILI size, the large utilities typically had higher mean performance
of 7.0, DC Water would have to reduce its real losses by 270 mil indicators than small systems except for one year: ILI and real
gal to 5,352 mil gal/year. This results in a potential savings of losses in 2012. The limited number of systems in the North
$214,109 based on retail cost, and the investment would be American data set did not allow for a national comparison
economically feasible if DC Water did not spend more than this between regions, and future research should focus on collecting
amount when reducing real losses to reach an ILI of 7.0. validated data from a larger number of systems.
Considerations. Several considerations arose from these analyses. The Georgia data showed that smaller systems had a higher
Most importantly, higher confidence is needed for the parameters mean ILI and real losses than large systems. Future research
submitted in the audits. Systems that submit audits in sequential should focus on analyzing more than two years of Georgia data.
calendar years are typically increasing the validity in their data, No significant difference was found between any of the four
which results in more accurate water loss calculations. Of the 27 performance indicators for the large Georgia and the large North
systems that reported two or more years, 12 increased their valid- American utilities for 2011. The small number of systems and the
ity while 15 stayed about the same or decreased a small amount. limited number of calendar years of data used in this study lead to
Once the validity is high and consistent, systems will have a more the conclusion that a national regulation mandating the maximum
accurate assessment of the amount they are losing and have bet- amount of water loss allowed from a system may not be necessary
ter knowledge of the cause of the water losses. Additionally, the at this time. More years of validated water loss data and more
North American utilities self-reported their audits; that is, they research are needed to evaluate what an appropriate number might
may be above or below the national averages for the performance be and which performance indicator might be used.
indicator, but there is no way to know how they compare with States that have recurring water scarcity issues are already
the balance of the 53,000 community water systems in the United developing their own regulations, and this is likely the most
States. Lastly, the dollar values for reported potential savings appropriate national policy direction at this time. More research
represent the value of water that will be saved for that year. It is needed with a larger number of systems and more years of
does not take into account the other benefits from reducing water validated water loss data before any national water loss policy
losses such as deferred treatment facility upgrades, recovery of can be considered. Given water resource constraints, some states
lost revenue, reduced pressure on water resources, and many may move forward with their own water loss regulatory require-
other benefits not quantified in this paper. ments, and that may be appropriate at the state level on the basis
of state-specific issues.
CONCLUSIONS AND RECOMMENDATIONS Additionally, water losses should not be ignored by any water
Two water loss data sets from North America (four years) and system, as tracking water losses by submitting water audits is
the state of Georgia (two years) were analyzed for trends by potentially beneficial for all systems. Once water loss is mini-
location and system size. For the North American data set, mized, the benefits go beyond reducing production costs through
USEPA Region 3 had higher means than Regions 4 and 6 for all using less energy. Not only will it result in more available water,
of the performance indicators because of two older systems but also in increased efficiency, deferred treatment facility
(Philadelphia and Washington) located in that region. By system upgrades, recovery of lost revenue, and reduced pressure on water
resources, and may lead to long-term water sustainability. An
active water loss control program may also lead to the replace-
TABLE 6 DC Water target ILI reduction strategy, CY 2013 ment and repair of pipes before the occurrence of larger leaks
that could result in more damages and potential liability costs to
Annual Real
Real Losses Loss Cost Potential Savings the utility. Appropriately managing water loss reduces energy use,
ILI mil gal/year $ $ which then indirectly reduces greenhouse gas emissions.
7.35 5,622 4,685,840 Current level While managing water loss has many benefits, the economics
behind managing water losses must be addressed using system-
7.0 5,352 4,471,731 214,109 specific factors before any investment is made, because repairing
every leak is not economically feasible. Using a percent reduction
6.0 4,588 3,828,324 857,515
in total water losses or a target ILI reduction strategy are two
methods to view the potential savings for reducing water loss.
5.0 3,832 3,186,446 1,499,392
The resulting savings from the production or retail cost can be
4.0 3,058 2,549,158 2,136,682 used as the lower and upper bounds, respectively, in determining
the appropriate investment for controlling or minimizing these
3.0 2,294 1,911,868 2,773,971 losses. Analyzing and understanding the necessary investment
needed to produce a positive ROI is an essential part of managing
2.0 1,529 1,274,579 3,411,261
water losses to improve the overall efficiency of the system. Water
system managers need to take a holistic risk management
1.0 765 637,289 4,048,550
approach when planning for future supplies to meet future
CY—calendar year, ILI—infrastructure leakage index demands, and understanding and minimizing water loss should
be a part of that approach.

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Ress & Roberson | http://dx.doi.org/10.5942/jawwa.2016.108.0026
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ACKNOWLEDGMENT
The authors acknowledge the AWWA Water Loss Control
Committee; Craig Aubuchon, manager at The Analysis Group
Inc.; and Samantha Rucinski of GE (both former AWWA interns),
as well as Steve Cavanaugh of Cavanaugh and Associates P.A. for
their input and advice on this paper. Erin Ress’ internship at
AWWA was funded by the Water Industry Technical Action Fund
(WITAF). WITAF is administered by AWWA and is funded
through AWWA organizational members’ dues. WITAF funds
information collection and analysis and other activities in support
of sound and effective legislation and regulations.
ABOUT THE AUTHORS
Erin Ress (to whom correspondence may be
addressed) is an environmental scientist at
Tetra Tech Inc., 10306 Eaton Pl., Ste. 340,
Fairfax, VA 22030 USA; erin.ress@tetratech.
com. Ress received her BS degree in
environmental science from Virginia
Polytechnic Institute and State University,
Blacksburg, Va. J. Alan Roberson is the
director of federal regulations at AWWA, Washington, D.C.
PEER REVIEW
Date of submission: 03/27/2015
Date of acceptance: 10/06/2015
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