Non Revenue Water (NRW)

Definition of NRW

Non Revenue Water is defined as water produced by treatment plants, but which is not billed to customers.

NRW  = Volume of Water Produced - Volume of Water Billed

Understanding Physical Losses

Water losses occur in all distribution networks, even new ones. Physical losses, sometimes called ‘real losses’ or ‘leakage’, includes the total volume of water losses minus commercial losses. However, the water balance calculation, might have errors and the resulting leakage volume may simply be incorrect.

The three main components of physical losses include:

  • Leakage from transmission and distribution mains
  • Leakage and overflows from the utility’s reservoirs and storage tanks
  • Leakage on service connections up to the customer’s meter

Understanding Commercial Losses

Commercial losses, sometimes called ‘apparent losses’, include water that is consumed but not paid for by the user. In most cases, water has gone through the meters but is not recorded accurately. In contrast to leaks or reservoir overflows, the lost water is not visible, which leads many water utilities to overlook commercial losses and concentrate instead on physical losses.

Commercial losses can amount to a higher volume of water than physical losses and often have a greater value, since reducing commercial losses increases revenue, whereas physical losses reduce production costs. For any profitable utility, the water tariff will be higher than the variable production cost, sometimes up to four times higher. Thus, even a small volume of commercial loss will have a large financial impact.

Commercial losses can be broken down into four fundamental elements, which are:

  • Customer meter inaccuracy
  • Unauthorised consumption
  • Meter reading errors
  • Data handling and accounting errors

IWA Standard Water Balance


The following are definitions of principal components of the IWA water balance:

  • System Input Volume is the annual volume put into the part of a water supply system that relates to water balance calculation.
  •  Authorized Consumption is the annual volume of metered and/or nonmetered water taken by registered customers, water suppliers, and others who are implicitly or explicitly authorized to do so for residential, commercial, and industrial purposes. It includes water that is exported.
  • Water Losses can be identified by calculating the difference between system input volume and authorized consumption. They consist of apparent losses and real losses.
  • Apparent Losses result from unauthorized consumption and all types of inaccuracies associated with metering.
  • Real Losses result from losses at mains, service reservoirs, and service connections (up to the point of customer metering). The annual volume lost through all types of leaks, bursts, and overflows depends on their individual frequencies, flow rates, and duration.
  • Non revenue Water is the difference between system input volume and billed authorized consumption, and it consists of the following:
      • Unbilled Authorized Consumption (usually a minor component of water balance)
      • Apparent Losses
      • Real Losses

World Scenario

The global volume of non-revenue water (NRW) is staggering. Each year more than 32 billion m3 of treated water are lost through leakage from distribution networks. An additional 16 billion m3 per year are delivered to customers but not invoiced because of theft, poor metering, or corruption. A conservative estimate of the total annual cost to water utilities worldwide is US$14 billion. In some low-income countries this loss represents 50-60% of water supplied, with a global average estimated at 35%. Saving just half of this amount would supply water to an additional 100 million people without further investment.


Source: World Bank Discussion Paper No. 8, December 2006

Benefits From Reducing NRW

Benefits from reducing NRW include the following:

  • Water utilities gain access to more money in the form of improved self-generated cash flow 
  • Reducing illegal connections supporting greater fairness between users 
  • More efficient and sustainable utilities improves customer service 
  • New business opportunities creating thousands more jobs 
  • Improved water supply and distribution system management 
  • Improved level of services for pressure and quality & quantity of supply
  • Improved Billing revenue and optimized capital investment 
  • Reduction of water losses and controlled NRW 
  • Having the latest technology transferred including managerial system, software, tools and equipment 
  • Development of a comprehensive long term pipe rehabilitation programme

Challenges in Asian Water Utilities

Non-Revenue Water (NRW) is an indicator of operational performance of a water company.NRW is a good indicator of both asset performance and of the company’s overall financial performance. The lower the level of NRW indicates that higher revenues are being billed or that operating costs are low.

There are areas of plentiful water across Asia, just as there are water-scarce areas, as a result of both regional geography and a country’s ability to pay for water. Although reducing NRW cannot solve such global contrasts, it can help to improve the quantity and quality of water available in water-scarce areas.

 Not all countries or regions, particularly those in parts of Asia, have the infrastructure and established operational procedures to begin tackling NRW. Many are struggling to ensure that customers receive a reasonable water supply to sustain health and life. Water utility managers in Asia will invariably face greater challenges including the following:

  • Rapid urbanization
  • Diminishing water supply
  • Environmental pollution
  • Outdated infrastructure
  • Poor operations and maintenance policy, including ineffective record-keeping systems
  • Inadequate technical skills and technology
  • Greater financial constraints, including an unsuitable tariff structure and/or revenue collection policy
  • Political, cultural, and social influences
  • A higher incidence of commercial losses, particularly illegal connections