Staying in the loop

3rd July 2020

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Brian Handcock

How can circular economy principles be applied to the water industry? Oliver Heidrich, Majed Khadem and Brett Cherry investigate

While the term 'circular economy' has become widespread in trade and industry, it doesn't usually focus on our most valuable resource: water. According to the latest estimate, global demand for water will exceed our supplies by 40% in a decade if we take the 'business as usual' route. A circular approach could help us to realise the true value of water resources and avoid the linear 'take-make-dispose' mindset that is plaguing the global water sector.

Newcastle University hosted a Global Water Security Symposium in early 2020 to discuss water and the circular economy, attended by industry (P&G, ARUP and HR Wallingford), academia (Leiden University and Newcastle University) and some 50 audience members. This article takes its inspiration from the discussions and views expressed by the panel and audience.

The circular economy principle has historical and philosophical origins. The thinking around feedback loops, biological cycles and systems understanding is ancient and covers various schools of philosophy, from Karl Marx to Kenneth Boulding. Most recently, industrial ecology redefined industrial processes by introducing the idea of a circular flow of materials, in which the by-products of one process are used as an input for another process.

“It is possible to optimise resource usage through digital technologies and platforms“

The circular economy concept can be narrowed down to four basic principles:

1. Working with nature. The key element of a circular concept is to minimise, if not avoid, waste. In doing so, we must maximise our harnessing of nature. Examples are producing renewable energy or using green (natural) infrastructures instead of grey (concrete) counterparts.

2. Keeping resources in use as much as possible. This can be achieved by maximising the lifetime of our assets through the frequent maintenance, repair and upgrade of a system's components. Additionally, it would be ideal if we could use digital and online platforms (eg online asset-sharing marketplace for companies) to optimise resource use in a supply chain.

3. Designing out waste externalities. This is closely tied to the reduction of wastes, and could be done by improving consumption behaviour, minimising energy and resource use, and considering alternatives that yield the same outcome without wasting natural resources.

4. Regenerating natural capital. For instance, we can sell performances, rather than goods (eg leasing instead of buying). We can also assign a higher value to energy and resources that are normally undervalued. We understand that this would require a substantial rewrite of existing business models but, as with cars, it is possible.

A water circular economy creates opportunities for business and environmental sustainability, and boosts profitability. There are many examples of how the circular economy concept could work in the sector.

Working with nature

Green infrastructure is vital to the water circular economy in both urban and rural areas. Green roofs, retention ponds and other green features help to slow, store and filter the water runoff that can lead to flooding.

To find out how green infrastructure can provide water circular economy solutions, it needs to be measured and evaluated, so that its full-scale benefits can be understood. The National Green Infrastructure Facility, part of the UK Collaboratorium for Research in Infrastructure & Cities and based at Newcastle Helix, makes this possible.

The facility has many noteworthy features, such as a unique sustainable drainage system consisting of a swale that holds 600m3 of water captured from nearby residential sites. It is designed to cope with a 1:100-year return interval storm, plus a 30% increase in rainfall, which allows for climate change. Data generated is freely available at

“The 'cap and trade' policies designed to reduce industry carbon dioxide emissions could also be used for water“

Keeping resources in use

How can the water sector better manage opportunities and optimise water usage from a water circular economy point of view? The answer is twofold. First, we need to do something to minimise losses in the water sector, especially leakage from piped networks. This can be done via the latest advances in this field. Twenty65, a research consortium in the UK, addressed this by creating leakage-detecting robots that can inspect pipes for damages and signal where they need to be mended.

Second, it is possible to optimise resource usage through digital technologies and platforms that allow such optimisation by providing live monitoring and tracking of water resources. It could be like the smart grid revolution for power systems,which enables the energy network to be managed in real-time and communicate directly with energy consumers.

Designing out waste externalities

A wastewater treatment plant can become an energy provider through, for example, anaerobic digestion or microbial electrolysis for hydrogen production. The former is already widely used by the water sector, and its use is growing; the latter could be use in the future, especially if market demand increases for renewable energy sources such as hydrogen.

Wind power to hydrogen – 'power-to-gas' – is already cost-competitive by comparison. A steady supply of clean water is necessary to generate hydrogen, meaning the water sector could play a major role; hydrogen is also used for a wide range of industrial purposes, such as manufacturing and steel production.

A range of valuable materials could also be upcycled from wastewater. In some cases, gold and other precious metals are attached to the sludge of municipal wastewater, along with many other useful materials.

Regenerating natural capital

Water is often viewed as a 'freebie' from the environment. It can be extracted at little to no cost, unless it is piped and metered. Based on circular economy principles, it should be the other way around – even volumes of water in a small lake should be assigned a value. There are some approaches to doing so. For example, Khadem et. al (2020 – developed a method to estimate the economic value of water stored in reservoirs. The method finds the value per unit of water for every reservoir within a system that leads to maximised economic gain from system-wide allocation.

The 'cap and trade' policies designed to reduce industry carbon dioxide emissions could also be used for water. With water cap and trade in place, households and businesses that go over their designated allowances would have to buy the extra allowance from the water company at a much higher price than the cost of water below that 'cap'. If a user has an extra allowance, they could sell it to others who have exceeded the 'cap'. But they could 'trade' at a higher price than the water company charges below the cap, and lower than what the water company charges above the cap. Users could also sell the extra allowance back to the water company. This could prompt people to improve their overall consumption behaviour, but would require installing (smart) water meters for every user.

Additionally, the treating of household water alone is blamed for 3% of global electricity consumption. Cap and trade could be a big win in areas where energy use for operating water and sewerage systems is very high – such as California, where 20% of electricity is used to supply water.

Policy and technology can work together

Policies and technologies that help to reduce water consumption are urgently required. We also need to be thinking about water as a service by incentivising water conservation rather than exploitation. The '50L home challenge' supported by P&G brings companies, policymakers and communities together. They want to develop and scale innovations for the home that help solve the urban water crisis, considering water access, quality, and innovation in the sector. Accepting that most water is used by food, agriculture and industry, it is a step in the right direction.

What we do in the food sector also has massive implications, as 70% of freshwater resources is used for agriculture. Thinking about water in a more circular way within a changing environment leads to the energy-water-food nexus, which encompasses a wide variety of public, business and international opportunities for sustainability.

There are many opportunities out there for delivering a truly circular water system – some of which are already being taken, many of which are not. As in other areas of the circular economy, there need to be incentives for reducing water usage, valorising water resources and interfacing with other sectors in smart ways.

It is imperative that circular economy principles are practised for water on a global scale for its numerous opportunities and benefits to be realised. However, there are barriers in our way, many of which are social and political rather than technical.

A better framework for understanding the true value of water may be needed – one that puts people to the forefront of water policies and considers the human right to water as a resource. Through an in-depth holistic understanding of the value of water, a circular economy is more likely to work in practice.

Dr Oliver Heidrich is a senior lecturer in the School of Engineering at Newcastle University

Dr Majed Khadem is water resource scientist at HR Wallingford

Brett Cherry is a science writer for Newcastle University

All authors work with the Water Group and Environmental Engineering in the School of Engineering at Newcastle University.

Picture credit: iStock | Alamy


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