Infrastructure and services (3 of 3)

Water, waste and utilities

About 8 minutes to read in full, or 1 minute for the short version belowFacts checked 30 September 2026

In one minute

Companies and public bodies supply clean water, take away and clean dirty water, and collect, recycle, burn or bury the rubbish that homes and businesses throw away.

The big idea: A water network is a local monopoly, so a regulator or the state sets the price: allowed revenue covers efficient running costs, the wear of the assets and a fair return on the money invested, and a company earns more only by beating those allowances. Waste is a route and volume business: collection cost depends on how many homes a truck serves, and where waste ends up depends on gate fees, landfill taxes and recycling rules. In the Gulf, most drinking water is desalinated, so energy and plant security decide the cost.

One unit, in numbers: One household's yearly water and sewerage bill at a regulated company in England: GBP 641 comes in, and GBP 161 (25%) is left after its own costs.What is left is the unit's contribution, before the costs of the whole company. See the worked example
Typical margin: About 15 to 30 percent EBITDA margin for large operators; regulated water earns a set return on its assetsRoughly how much of every 100 of sales (or income) is left as profit after the running costs. More on margin
Capital intensity: Very highVery large sums must be tied up before the business earns anything, so the cost of that money weighs heavily on profit. More on capital intensity
The number to watch: Non-revenue waterWater produced but never paid for (leaks, theft, unmetered use), as a share of water produced.

Ask this first in a case

Who is the client: a regulated company, a city, a state buyer or a private developer?

Words used above (3)

Non-revenue water:: Water produced but never paid for, through leaks, theft or missing meters.
Gate fee:: The price per tonne charged to accept waste at a plant or landfill.
EBITDA:: Profit before interest, tax, depreciation and amortisation: a rough measure of cash profit from operations.

The industry's other words are explained in Words to know (13).

On this page (17 sections)

How money is made

Regulated water companies charge tariffs that a regulator sets to cover efficient costs, depreciation and an allowed return on their asset base.
Desalination plant owners are paid per cubic metre, and often for being available, under contracts of 20 to 30 years with a state buyer.
Waste collectors earn contract fees from cities (per home or per tonne) and fees per bin lift from businesses.
Recyclers earn a gate fee for taking waste plus money from selling sorted materials.
Landfills and waste to energy plants earn a gate fee per tonne, and waste to energy also sells electricity or heat.
Companies beat the plan by running for less than the regulator allows and earning rewards for good performance.

Worked example: one unit

Unit economics means the money in and out for one unit of the business. Start from the revenue, take away the unit's own costs, and what is left is its contribution. More on unit economics

The unit: One household's yearly water and sewerage bill at a regulated company in England (from the lesson example, GBP). Illustrative, rounded figures.
Line	Amount	ShareShare of revenue
Average bill set by the regulator	GBP 641	100%
Minus Operating costs: energy, chemicals, staff, repairs	GBP 320	50%
Minus Run-off: the yearly wear of the asset base	GBP 160	25%
What is left (contribution)	GBP 161	25%

Check: GBP 641 minus GBP 480 of costs leaves GBP 161.

So what: The GBP 161 left is the allowed return on the asset base, which pays interest to lenders and profit to owners. The company cannot raise the bill, so its levers are running for less than GBP 320, meeting performance targets, and investing in assets the regulator will add to the base.

Key measures(9)

Key measures (also called KPIs, key performance indicators) are the numbers people in this industry track. Ask for the first one or two early in a case.

Non-revenue water
Water produced but never paid for (leaks, theft, unmetered use), as a share of water produced.
Typical: About 126 billion cubic metres a year worldwide, worth about USD 39 billion[6]
Allowed return
The yearly return on the asset base that the regulator allows, set to match the cost of capital.
Typical: 4.03 percent a year after inflation for 2025 to 2030 in England and Wales, raised to 4.20 percent for five companies that appealed[3]
Regulated asset base (RCV in England and Wales)
The value of the network on which the regulator lets the company earn its return.
Cost per cubic metre
The full cost to make and deliver 1,000 litres of water, including energy and the plant.
Typical: About USD 0.41 to 0.46 in recent Saudi reverse osmosis tenders (Jubail 3A about 0.41, Rabigh 4 about 0.46)[7]
Collection rate
The share of bills that customers actually pay.
Tap water coverage
The share of households with a piped water connection at home.
Typical: About 82 percent (15.8 crore of 19.36 crore) of rural households in India by March 2026, up from about 17 percent in 2019[10]
Recycling rate
The share of municipal waste recycled or composted.
Typical: About 48 percent across the EU in 2024, against a 65 percent target for 2035[12]
Gate fee
The price a landfill, sorting plant or waste to energy plant charges per tonne received.
Cost per home collected
The yearly cost of the truck, crew and fuel divided by homes served; lower with denser routes.

First questions to ask

When a case lands in this industry, these questions get you to the numbers that matter.

Who is the client: a regulated company, a city, a state buyer or a private developer?
How is the price set: by a regulator, a tender, a contract or a market?
How much water is lost or unbilled today, and how much is used per person?
What is the cost per cubic metre or per tonne, and which block (capital, energy, labour) is largest?
Which rules or targets apply, and by when?

Value chain: where the margin sits

The value chain is the steps a product or service passes through, from the first supplier to the customer. Each step below shows how much of the value it keeps. More on value chains

Step 1: Sources: take water from rivers, reservoirs, groundwater or the sea
Margin varies
Water utilities, state water agencies, bulk suppliers
Where fresh water is scarce, as in the Gulf, the sea is the main source.
Step 2: Treatment and desalination: clean water to drinking standard, or remove salt from seawater
Medium margin
Utilities; independent water plants built by ACWA Power, Metito, Veolia and others under long contracts
Desalination plants are paid per cubic metre by a state buyer for 20 to 30 years; recent Saudi tenders were won at about USD 0.41 to 0.46.
Step 3: Distribution: pumps, tanks and pipes to every home and business
Medium margin
Regulated or city-owned water utilities
Earns a regulated return on the asset base; leaks and unbilled water are lost here.
Step 4: Billing and customer service: meters, tariffs, collection
Thin margin
The same utilities; in some countries separate retailers for businesses
Low tariffs and unpaid bills make this step loss-making for many city utilities.
Step 5: Wastewater: sewers and treatment works, then release or reuse
Medium margin
Water and sewerage companies, city bodies, PUB in Singapore (recycled NEWater)
Heavy investment to stop sewage spills; paid through the same regulated bill.
Step 6: Waste collection: trucks on fixed routes for homes and businesses
Medium margin
Cities and contractors such as WM, Republic Services, Veolia, Remondis, Beeah
Route density decides the cost per home.
Step 7: Sorting and recycling: separate paper, plastic, metal and glass and sell them
Margin varies
Waste companies and specialist recyclers
Swings with prices for recycled materials and with how clean the input is.
Step 8: Disposal: waste to energy plants and landfills, paid a gate fee per tonne
Fat margin
Landfill owners, waste to energy operators, cities
Scarce, permitted sites earn strong margins; landfill taxes push waste toward other routes.

Profit pool: who keeps the money

Where in the value chain the profit ends up, which is often not where most of the sales are. More on profit pools

In water, profit sits in the regulated network and in long desalination contracts, where the return is set in advance and depends on beating cost allowances and financing well. In waste, the steadiest profit sits in scarce permitted disposal sites and in dense collection routes, while recycling margins rise and fall with material prices.

Cost structure(5)

The main costs, each as a share of revenue (the money from sales).

Operating costs (energy, chemicals, staff, repairs) in a regulated water bill: About half in the illustrative bill
Run-off (depreciation of the asset base): About a quarter in the illustrative bill
Return on capital (interest and profit): About a quarter in the illustrative bill
Energy in the cost of a new reverse osmosis desalination plant: About 30 percent of the cost per cubic metre in the lesson example
Landfill tax in England, standard rate from April 2026: GBP 130.75 per tonne on top of the gate fee[14]

Benchmarks(6)

Typical figures for the industry, to check a client's numbers against.

EBITDA margin, Veolia (2025): About 16 percent[15]
Operating margin, WM (2025): About 17 percent (EBITDA margin above 30 percent adjusted)[16]
Allowed spending, England and Wales water, 2025 to 2030: About GBP 104 billion in 2022 to 2023 prices, about 71 percent more than for 2020 to 2025[1]
Average household water and sewerage bill, England and Wales, 2026 to 2027: About GBP 639, up 5.4 percent[5]
Municipal waste generated per person, EU (2024): About 517 kg[12]
Share of Gulf municipal drinking water that is desalinated (2023): About 76 percent[8]

Typical cases(6)

Case prompts you might hear in this industry.

A Gulf city will run short of water by 2030. What should it do?
Should we bid for a desalination plant tender in Saudi Arabia, and at what tariff?
A city water utility in India loses money. How do we fix it?
How can a UK water company fund a large sewage upgrade without a big bill rise?
A European city must reach 65 percent recycling by 2035. What is the plan?
Should a waste company buy a landfill or build a waste to energy plant?

Common traps(5)

Mistakes candidates make in this industry, and what to do instead.

Treating a regulated utility as if it can set its own prices. Work from the regulator's blocks.
Recommending a new desalination plant before checking leaks and demand.
Mixing up daily capacity with yearly output, which depends on how often the plant runs.
Assuming recycling always pays: material prices swing and dirty input can be worthless.
Forgetting that a government client cares about access, health and affordability, not only profit.

What changed, 2024 to 2026(5)

Recent changes a case could turn on.

England and Wales raised investment and bills: the 2024 price review allowed about GBP 104 billion of spending for 2025 to 2030 at a 4.03 percent return, and in March 2026 the Competition and Markets Authority raised the return to 4.20 percent for five companies that appealed.[3]
The UK government's January 2026 water white paper plans to replace Ofwat with a single new regulator for England, while the future of the heavily indebted Thames Water was still unresolved in September 2026.[4]
Water became a security issue in the Gulf: during the conflict that began in February 2026, desalination plants in Bahrain, Kuwait and at Fujairah were reported hit, in a region where about 76 percent of municipal drinking water is desalinated.[8]
Circular economy rules tightened: the EU Packaging and Packaging Waste Regulation applies from 12 August 2026, and EU targets require 65 percent recycling and at most 10 percent landfill of municipal waste by 2035.[13]
Waste keeps growing: UNEP expects municipal solid waste to rise from about 2.1 billion tonnes in 2023 to 3.8 billion tonnes by 2050.[11]

Players by region(6)

Well-known companies in each region. You do not need to learn them by heart; they help you picture the market.

Global: Veolia (water, waste, energy)
Suez
ACWA Power (desalination)
Metito (water treatment)
WM
Europe: United Utilities, Severn Trent and Thames Water (England)
City-owned utilities
Remondis (Germany)
FCC (Spain)
Middle East: Saudi Water Partnership Company (buyer)
National Water Company (Saudi Arabia)
EWEC (Abu Dhabi buyer)
DEWA (Dubai)
Tadweer (Abu Dhabi waste)
Beeah (Sharjah waste)
India: State water boards and city bodies
Jal Jeevan Mission (rural tap water)
VA Tech Wabag (treatment)
Re Sustainability (waste)
Southeast Asia: PUB (Singapore)
Manila Water and Maynilad (Philippines)
Air Selangor (Malaysia)
Sembcorp
United States: City-owned utilities
American Water and Essential Utilities (merger agreed in 2025, not completed by September 2026)
WM, Republic Services and Waste Connections (waste)

Words to know(13)

Linked words have a fuller entry in the glossary.

Non-revenue water: Water produced but never paid for, through leaks, theft or missing meters.
Cubic metre: 1,000 litres, the unit water is priced in.
Desalination: Removing salt from seawater to make drinking water.
Reverse osmosis: Pushing water through fine membranes at high pressure to hold back salt.
Regulated asset base: The value of the network a regulator lets a company earn a return on.
Allowed return: The yearly return on that base that the regulator allows.
Totex: Total spending, running costs plus capital spending, as a regulator allows it.
Independent water plant: A privately built desalination plant paid per cubic metre by a state buyer.
Gate fee: The price per tonne charged to accept waste at a plant or landfill.
Landfill tax: A tax per tonne of waste buried, to push waste toward recycling.
Waste to energy: Burning waste to make electricity or heat.
Circular economy: Keeping materials in use through reuse and recycling instead of throwing them away.
EBITDA (glossary entry): Profit before interest, tax, depreciation and amortisation: a rough measure of cash profit from operations.

Business model patterns

The ways of making money this industry follows. Spot the pattern in a new industry and you already know the first questions to ask.

Sources(16)

Facts checked on 30 September 2026. Worked examples are illustrative, shaped by these sources rather than one company's figures.

Go deeper and practise

Go deeper

The full lessons behind this brief, with sources and worked cases.

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Same pattern elsewhere

Industries that make money in a similar way. What you learned here carries over.