Evaluating carbon performance in the water industry: A longitudinal analysis of England and Wales

• Carbon performance of water companies did not improve across years. • Incentives adopted by the water regulator had not affect on carbon performance. • Lack of technical innovation is a key barrier to improve carbon performance. The transition to a zero-carbon water industry presents significant challenges for water companies and regulators. This study conducts both static and longitudinal assessments of carbon performance of water companies in England and Wales from 2008 to 2020. Carbon efficiency (CE) and carbon productivity (CP) metrics were estimated using the stochastic semi non-parametric envelopment of data method, which addresses the limitations of traditional parametric and non-parametric techniques. The average CE in 2020 was 0.628, indicating a 37.2% potential reduction in carbon emissions can be achieved by water companies. Despite regulatory efforts, the dynamic assessment shows negligible improvement in carbon performance, with average CP index value of 1.0009. The lack of technological innovation is identified as a key barrier, as technical change contributed negatively (0.9929) to CP, while efficiency change was positive (1.0091). The results highlight the critical role of raw water quality in achieving net-zero GHG emissions. Some strategies to accelerate the decarbonization of the water industry include prioritizing raw water protection, incentivizing technological advancements, and fostering knowledge sharing among companies.