Demand for water is rising fast but England’s system for tracking water use is outdated, patchy and opaque, leaving regulators in the dark, and can even reward businesses for using more, experts have warned.
Water licensed for farming has more than doubled in five years, from nearly 3 billion cubic metres in 2015–2019 to almost 6 billion between 2020 and 2024. The energy sector’s use has also soared, with the sector’s annual demand rising from 4.1 billion cubic metres in 2013 to 7.3 billion in 2023, a joint investigation by the Guardian and Watershed Investigations revealed.
Part of the rise reflects previously unlicensed activities now entering the system. The Crown and Government category, which includes the Ministry of Defence, had no recorded volumes before 2021, but by 2023 had reached nearly 3 million cubic metres.
Some water use is classed as non-consumptive, such as navigation or power station cooling, because it is returned shortly after use.
Currently, large parts of England are officially classed as water-stressed by the Environment Agency. The north-west and Yorkshire are already in drought.
Neil Entwistle, professor of river science and climate resilience at the University of Salford and head of science at Rebalance Earth, is watching his local reservoirs vanish. “This time last year, they were 86 to 91% full. Now they’re half-empty,” he said.
Water use varies sharply across England. In the Midlands, 72% of abstraction is for energy. In the north-west, industrial and commercial users dominate, accounting for 62%. In the Anglian and Thames regions, public water supply is the biggest user according to the analysis of abstraction licences.
But the abstraction licence system was “designed for a completely different era,” said Entwistle. “Back then, abstraction looked very different. The population was smaller, demand was lower, and the system worked for the time. But we’re now living in the digital age and we haven’t kept up.”
There are significant gaps in accounting for who is using water and in what quantities.
Many users are not required to report their water use, and those taking under 20 cubic metres a day – enough for 140 people – do not need a licence.
“Twenty cubic metres a day is a lot of water,” said a water industry insider. “That’s roughly two-thirds of a large tanker, every single day. It really should be tracked.”
Entwistle says shrinking budgets have made things worse: “The government has cut funding to the Environment Agency and Natural England over the years. That means fewer checks and more opportunities for people to manipulate the system.”
An Environment Agency officer confirmed that many licences, especially in agriculture, go largely unchecked and when they do “we just have to take people at their word”.
Although Environment Agency inspections have recently increased, the officer said: “Most inspections are pointless … no one knows what’s really being used … If a farmer says they’ve used one litre all year, we wouldn’t be able to prove otherwise.”
Technology could close this gap. “There’s no reason you couldn’t have a live-based system showing what’s being extracted to the nearest 15 minutes … the technology is there,” said an industry expert. “But I get why a farmer might not want to pay £3,000 to £4,000 to install a monitor that needs power, telemetry, maintenance and someone to check it every few years … it would feel like a real burden.”
There are other problems with the system. Some licences, many issued decades ago, permit volumes far higher than would be approved today. Others have no expiry dates or set volume limits at all.
And over the past five years, one in every 25 reported water returns exceeded permitted limits – twice the historical average. Yet enforcement by regulators remains rare.
This week, the government set out the scale of the water resource problem and unveiled plans to fix the system, including abstraction reform and building reservoirs, but experts are sceptical they will deliver the cuts in water use.
“Once again the Environment Agency loses track of its function and tells us about a problem when their job was to ensure there wasn’t a problem in the first place,” said musician and rivers campaigner Feargal Sharkey. “We need a proper root-and-branch review of the system, not this tinkering.”
“From 2028, the agency can revoke abstraction licences that are damaging rivers without compensating the abstractor but I doubt they have a real plan to do it. They’re banking on fixing leaks and cutting consumption – two things they’ve failed to do in any meaningful way for 35 years. Meanwhile, every chalk stream hangs in the balance.”
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A fragmented system makes it hard to assess a company or sector’s total water use. Businesses can draw from rivers, aquifers, wholesalers, retailers or the public mains, but each source is tracked separately – making it difficult to gauge overall demand or pressure on local catchments.
Many businesses, including datacentres, rely on the public water supply, making their overall water use largely invisible to the Environment Agency.
An Environment Agency officer said they are aware of “some businesses switching from abstraction to mains water”, increasing pressure on drinking water supplies. “The water company gets paid for it,” they added. “There should be hard and fast rules about not using public water supply.”
Fees for bulk water use also create perverse incentives. Industrial and business users often pay less per unit as their usage increases – unlike in countries such as the US, where charges rise with volume to promote conservation.
Daniel Johns, chair of Water Resources East, said: “Non-household customers pay less per cubic metre, the bigger their bulk tariff is … It sends all the wrong incentives. Bigger businesses should pay more, and the extra income should be recycled back as grants.”
“If water is made more expensive, you create a twin incentive to use less now and to invest in rainwater harvesting for the future,” said Johns. “Water bills are immaterial compared with energy. If you’re a datacentre choosing between energy-intensive air cooling and water cooling, you’re going to go for water every day of the week.”
Mark Betson from the National Farmers’ Union said: “Abstraction reform is going to have a critical impact on a number of agricultural abstractors. It’s going to be a challenge to build resilience into farm businesses so they can access the water they need for primary crops.
“Reservoirs play a key role but they can only be built where there is sufficient water available. Farmers need clear, long-term assurance about how much water they’ll be allowed to take and when – particularly through winter abstraction licences – to justify the cost of constructing them.”
As outdated licences are reviewed and removed, more businesses are likely to turn to water companies for supply, while others may drill private boreholes – many of which remain unregulated, according to Johns.
“The Environment Agency has no idea how much they are abstracting,” he said. “It could be absolutely huge.”
An Environment Agency spokesperson said: “Our national framework for water resources includes a range of measures to help farmers build water resilience, support local water solutions, and build in real-time data to manage water abstraction more sustainably.”
A Water UK spokesperson said: “Our water supplies are increasingly at risk because of the fundamentally flawed way in which official forecasts are made for how much water we will need in the future. Our economy is increasingly paying the price, with businesses in some parts of England unable to expand for no other reason than a lack of water. We need planning hurdles cleared so we can build reservoirs quickly and we need major reform to the way we forecast water demand so that we are not in this situation again.”