Ofwat’s economic regulation of the sector through previous price reviews does not appear to have given sufficient priority to the preservation of natural capital. We recommend that, when it publishes its review methodology in 2022, Ofwat set out how it intends to reflect natural capital fully in its economic regulatory decisions for Price Review 24. PR24 must encourage water companies to make a substantial increase in their investment in nature-based solutions, so as to improve the quality of...

Ofwat’s economic regulation of the sector through previous price reviews does not appear to have given sufficient priority to the preservation of natural capital. We recommend that, when it publishes its review methodology in 2022, Ofwat set out how it intends to reflect natural capital fully in its economic regulatory decisions for Price Review 24. PR24 must encourage water companies to make a substantial increase in their investment in nature-based solutions, so as to improve the quality of effluent being discharged from sewage treatment plants. Type: recommendation | Number: 71 | Paragraph: 350 | Response status: not_addressed Government response: Ofwat agree that wherever possible a natural capital approach should be used in economic decision making. Ofwat will strive to reflect a natural capital approach in their decision making for the next Price Review (PR24). Water companies will need to provide high quality data to make this approach wo