Economic and efficiency indicators in non-revenue water (NRW) performance

Abstract

High rates of Non-Revenue Water (NRW) have adverse impacts on water supply services, environment, and finances of a country. It is a reflection of the country's performance in managing its water supply. Efforts to bring down the NRW rates are done at various levels of authority in different states. Despite a huge capital investment by the federal government in Malaysia and sector reformation, a majority of states in Malaysia still could not bring down the rates to optimal levels. The NRW reduction progress is often hindered by the lack of funding, inadequate involvement of the public, lack of motivation of the water service providers, political interference, corruption, and limited private sector involvement. However, what is also lacking is a holistic view in setting targets and KPIs, monitoring the implementation of the plan, reward programmes as well as awareness of consumers. In Malaysia, NRW performance indicator is still based on percentages and the function of economics and efficiency indicators are still not widely used and understood. A majority of water operators are still focusing on reducing the NRW percentage level and the target set at the national and state levels is also looking into a reduction in NRW percentages. It is empirical that NRW performance is assessed on its economic aspects so that investments are rightfully targeted for areas that bring the highest economic value to the country. The aim of this study is to demonstrate the use of economics and efficiency indicators in NRW performance. The specific objective of this research is to determine the actual volume and cost of NRW through the following components; i.e., unbilled authorised consumption and apparent and real losses.