Climate Resilience in Focus
Climate Resilience in Focus
How the Bank’s first deal in the water sector aims to tackle the impacts of climate change and protect biodiversity
15 March 2023
By Ian Brown, Head of Banking
In 2022, data from the Met Office recorded the lowest rainfall between January and June across England and Wales since 1976 - the year the UK experienced what was then an unprecedented drought and heatwave.
With temperatures exceeding 40 degrees centigrade in parts of the UK for the first time since records began, the South of England reported its driest month on record, in a series that goes back to 1836, with just 10.5mm of rain falling.
In response, some water companies took the difficult decision to bring in hose pipe bans, urging customers to conserve precious resources and, after months of below-average rainfall, an official drought was declared in many parts of England.
The impact of climate change felt all too close to home last summer, with the rising temperatures putting further pressure on already strained water systems, which have continued to suffer due to population growth.
It was a stark reminder that climate change is a lived reality for us all – it’s happening now.
That puts the resilience aspect of the Bank’s mandate into sharp focus. We’re not just here to deploy capital to help avert future climate change. We are also tasked with helping to ensure our infrastructure is resilient to the effects of climate change already being experienced.
Today we have announced a double first - our first deal in the water sector and our first deal focussed on supporting climate resilience.
We will be providing up to £50m to support Portsmouth Water’s Havant Thicket Reservoir project in Hampshire, enabling the first reservoir to be built in the UK since the 1980’s. This environmentally-led project will play a vital role in protecting internationally-rare chalk rivers by providing a new, sustainable source of water.
Reservoirs will play a vital part in the UK’s water sector becoming more resilient, as noted by Government. It’s recent “Environmental Improvement Plan 2023,” stresses that the impact of climate change on our water resources is apparent and will only increase over further years without significant action. Building new reservoirs and facilitating collaboration between water suppliers is key to this.
Hence this innovative and collaborative project, which is worth £340m, and will span 160 hectares between Leigh Park, Havant, and Rowlands Castle in East Hampshire.
There are a large number of natural springs in Portsmouth Water’s supply area, which deliver a high quality, sustainable supply of water all year round. In winter, and during periods of high rainfall, there is surplus water in these springs which flows straight out to sea. The company wants to make better use of this water, pumping via a new pipeline through Havant, to store it in the reservoir.
The Bank’s funding will enable Portsmouth Water to start construction of the reservoir which will, once completed, allow the water company to provide up to 21 million litres of water to neighbouring Southern Water Services to help bolster its supply - particularly important in times of drought.
In addition to addressing the need to shore up the water systems in an area particularly affected by prolonged periods of dry weather, the project will also target a net gain in biodiversity, protecting some of the country’s rarest chalk streams.
There are currently 200 such streams in existence globally, of which 85% are found in the Southeast of England, and these rare and valuable habitats for nature have to date been used to draw water due to shortages. Now this reservoir will help water companies move away from relying on them during dry spells, which has been detrimental to local biodiversity.
This project will have an indirect positive impact on nature, which is another reason why it is important for us to deploy our capital to support it. Portsmouth Water has committed to planting and improving more than 200 hectares of woodland and wood pasture in the local area, as well as creating a new green leisure facility on site, comprising a visitor centre, wetland and network of footpaths, cycle routes and bridleways.
It will also contribute to 84 jobs in the local area, in line with our mandate to support local economic and regional growth. Furthermore, supporting the resilience of Southern’s water supply will provide the Southeast with much needed protection against droughts, and the associated loss of economic activity that result, as well as providing capacity to accommodate future population and economic growth in this area.
Construction is expected to get underway this Spring with the final build due for completion in 2029. As our first resilience project, and the first reservoir to be built in many years, it’s not just an important milestone for the Bank, but for the country as whole.
You can read the factsheet about this deal.
You can read the news story about this deal.
For further details or to get in touch with UKIB about investible projects please go to the enquiries page on our website.