Turning environmental responsibility into a competitive advantage: the Case Study of Water Credits for Water Neutrality

As the UK tackles challenges of water scarcity, legislation promoting water neutrality has created a significant shift in the regulatory landscape. Water neutrality legislation (the “Legislation”) mandates that any new development or operational activity does not cause an increase in the overall water demand in the relevant region. Whilst the concept is crucial for environmental preservation, it presents challenges for businesses and developers who must find ways to align with these requirements. 

Among the innovative solutions emerging to address this challenge is the concept of a water credit – a mechanism driving collective action towards common climate adaptation goals.

As a B Corp certified organisation, we are proud to assist clients including landowners who are turning to water credits as a method of promoting sustainable resource management while aligning with our ethical and environmental commitments. Water credits enable businesses to offset their water usage and our clients play their part by investing in solution which have a wider environmental benefit such as conservation areas whilst improving access to clean water, and supporting responsible water stewardship.

Water Neutrality Legislation

In its simplest form water neutrality can be achieved where “the predicted increase in total water demand in the region due to the development should be offset by reducing demand in the existing community”.

This means that any increase in water usage from new developments must be offset by equivalent reductions elsewhere in the region. The Legislation is mandatory and developers are required to provide evidence of water neutrality as part of the planning and approval process.

Within a designated area where water neutrality applies, developers, are therefore compelled to find innovative solutions to meet their water neutrality obligations as part of any new site and have now turned to water credits as a promising alternative to meet this obligations.

Water Credits

Water credits can be bought or sold, and they represent the offset of water usage (i.e. balancing out water use by saving the same amount elsewhere) or actions taken to reduce water consumption from existing mains supplies. These credits can be generated by landowners implementing measures such as boreholes (or water wells), rainwater harvesting, greywater recycling, or other water-efficient fixtures. These credits can then be sold to other businesses, such as developers, who need to demonstrate compliance by offsetting their water consumption to meet neutrality requirements.

Water credits can provide a practical solution to comply with the Legislation without the need for significant upfront investment in infrastructure. Instead of implementing costly water-saving measures on-site, companies can purchase credits from landowners who have already invested and implemented such solutions. This is particularly interesting for Developers planning new developments in water-stressed regions, where obtaining approval for new projects may hinge on meeting neutrality requirements. Therefore, particularly in areas with strict neutrality mandates, there is a growing demand for these water credits.

At KaurMaxwell, we have first-hand experience in assisting clients in multi-party agreements from negotiations all the way to the completion for the sale of water credits. This includes having careful consideration for our clients’ needs, particularly in relation to the drafting of undertakings that are provided to the relevant Local Authority and any restrictions that may affect the land from a landowners’ perspective. By guiding clients through these initiatives we are able to help them enhance their ESG (Environmental, Social, and Governance) strategies, and contribute to global water sustainability efforts. This not only strengthens client relationships but also highlights our commitment to champion ethical business practices, proving it’s possible for businesses to have profit with purpose.

If you have any queries about water credits or want to discuss any important upcoming decisions and how they could impact you, please do not hesitate to get in touch with our Corporate and Commercial team by telephone on 0207 052 3545 or by email info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice.

Please contact KaurMaxwell for advice before taking any action in reliance on it. 

By: Garance Vaughan and Hiten Patel