Using cost benefit analysis to appraise investments


Every morning millions of people in the UK have a bath or shower, make a cup of tea and wash the dishes before they start the day. Thousands of businesses use water in hundreds of different ways – from hairdressers and hospitals to factories and farms. Yet most people do not consider where water comes from or where it goes once they have finished using it. It is the job of United Utilities to bring three million households and 200,000 businesses in North West England an incredible 2,000 million litres of clean water each day – and take it all away again. It then treats it to make it safe to go back into the environment through rivers and the sea. United Utilities has a licence to provide water and sewerage services to around seven million people in North West England. Ofwat, the economic regulator, is responsible for overseeing companies like United Utilities to ensure they meet their obligations to customers. These obligations include meeting standards of service and charging fair prices. United Utilities also has to meet strict environmental standards set by the Environment Agency which manages discharges to the environment. These relate to the water quality of rivers,…

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