More Nationalist No-No Confessions

If there’s one country in the world that ought to have learned the lesson that you can’t use your natural resources as an economic trump card it’s Wales.

YesCymru’s official account posted wacky figures for the “true value” of Welsh water abstractions on Twitter a few months ago. It was suggested that a litre of untreated, raw water abstracted from Welsh reservoirs (to England, naturally) could be worth 1p – a figure around 10 times higher than the price for treated drinking-quality water.

Now, 1p-per-litre doesn’t sound like a lot.

The average four-person UK household uses 165m3 (165,000 litres) of water a year. Assuming all of the water came from Wales in the first place, at 1p-per-litre that would be the equivalent of an annual water bill of £1,650 before sewerage charges and other associated fees. The average household water bill is currently around £420 a year.

The idea that there’s a massive windfall or income stream we’re missing out on from water and electricity abstractions is in danger of becoming the Welsh independence movement’s “red bus”. I’m not putting it down to an “honest mistake” because this unflushable fact seemingly resurfaces from the depths of the bowl every few months.

That’s not to say that there aren’t some truths there: the drowning of Welsh villages for reservoirs was a despicable act (remembering is important but we can’t let it cloud our judgement) and the likes of Severn Trent probably should be paying a bit more for abstractions than the current £2.5million-a-year contract until 2073. We were diddled there.

Similarly, there’s electricity. Wales has unquestioned untapped potential for renewable energy. We don’t benefit enough from the exploitation of our own resources. There are anomalies such as the asymmetric devolution of the Crown Estate and higher transmission charges paid by Welsh householders despite being a net exporter of electricity.

However, offshore licensing aside (a Crown Estate issue) there’s no economic bonanza and our hand is a lot weaker than you think.

Wales has its own water supply issues (particularly in the south west, as we saw over the summer of 2022). That’s before some madcap fantasy about turning giant stopcocks off, leaving Brummies and Scousers to die of thirst unless London bends knee in independence negotiations or pays Austin Powers-level prices for liquid Welsh gold. Won’t happen.

At some point, desalinisation – or even building more reservoirs and dams – becomes affordable and that price point is lower than you might expect. The real money in water (though it’s wrong to consider water a commodity in the first place) is in providing the commercial service (processing, supplies etc.). In that respect, Dwr Cymru’s tax revenues will likely already be counted somewhere. If we want to benefit from abstractions, the best move would be for Dwr Cymru to buy out Severn Trent more than anything else.

It’s not a one-way street on electricity either. The south hasn’t always been a net exporter of electricity. The grid in Wales is already creaking to provide enough capacity for a switch to electric vehicles and additional renewables generation. Also, being a net exporter of electricity is pretty meaningless in itself as it suggests we’ve got very little to power ourselves (meaning it has to go somewhere anyway because the grid needs to stay balanced), while producing too much of something under the standard rules of economics often leads to prices falling.

It would be next to impossible to take Wales out of the “National” Grid for a whole host of reasons. So there’s likely to be a single electricity grid across Great Britain even after independence – there are only five grids covering the whole of Europe!

It’s an economic plus point, but Wales needs to be a bit more than a giant dynamo and water bowser to have any sort of economic future.