Non-revenue water index

The non-revenue water index (NRW) is the percentage of the drinking water produced and distributed that does not generate revenue for the operator, either through physical losses (leaks in the network) or apparent losses (fraud, metering errors, illegal connections or unrecorded consumption). It is an internationally recognised indicator and a critical measure of operational efficiency in the management of the urban water cycle.

In practical terms, if a city produces 100 million litres a day and only bills 75, the index is 25%. That 25% is a direct loss for the operator and, in conditions of water stress, an unsustainable waste of a vital resource. The International Water Association (IWA) recommends assessing performance through indicators such as the Infrastructure Leakage Index (ILI) rather than a single universal target, since acceptable levels depend strongly on local context.

Why it matters for sustainability

Reducing non-revenue water not only improves the financial margins of public and private operators, it also relieves pressure on increasingly threatened water sources. Every unaccounted-for litre still has to be abstracted, treated and pumped, generating unnecessary energy and environmental costs.

In regions with structural water scarcity, such as eastern and southern Spain or parts of the global South, a high index intensifies competition between urban, agricultural and industrial uses. Many authorities therefore treat it as a priority metric within their water efficiency plans and climate governance.

Types of loss: physical and apparent

Physical losses arise from the deterioration of water infrastructure. Ageing networks, a lack of preventive maintenance and high-pressure episodes cause underground leaks that can go unnoticed for years. A significant share of distribution networks in many countries, including parts of Spain, is several decades old, which materially increases this risk.

Apparent losses have an administrative or fraudulent origin: incorrect readings, obsolete meters, unauthorised connections or tampering. These do not involve a real loss of water, but they represent a serious failure in the traceability and fairness of the system.

Tools to measure and reduce NRW

Reducing the non-revenue water index requires a combined strategy of diagnosis, investment and digitalisation. The most effective solutions include:

• Hydraulic modelling and water balance: to identify low-performing areas and prioritise interventions.
• District metering areas: dividing the network into monitored sectors improves the rapid detection of anomalies.
• Leak detection technologies: such as acoustic sensors, correlators and thermal cameras.
• Smart metering and big data: Advanced Metering Infrastructure (AMI) systems that send readings in near real time.
• Technical and legal audits: reviewing internal processes and contracts to minimise administrative losses.

Several leading European utilities have brought their index below 15% by deploying these tools, with direct benefits for both sustainability and profitability.

Regulatory and financial implications

In the European context, the non-revenue water index already forms part of the assessments associated with the Water Framework Directive and features in river basin management plans. EU recovery funds have also prioritised investments that reduce these losses, treating them as structural measures for climate adaptation.

From a financial perspective, multilateral banks such as the World Bank and the Inter-American Development Bank often require detailed reporting on non-revenue water for water infrastructure projects. In many cases, its trajectory influences access to preferential credit lines or green financing schemes.

NRW as an ESG indicator

The rise of environmental, social and governance (ESG) criteria has placed non-revenue water at the centre of corporate sustainability reporting. Concession holders, listed utilities and large asset managers use it as a metric to assess the environmental performance of their operations and projects.

Crucially, water losses are also linked to a utility's carbon footprint: because abstraction, treatment and pumping consume energy, reducing leakage lowers Scope 2 emissions from electricity use, connecting hydraulic efficiency directly with climate goals.

Towards smart, transparent water management

The non-revenue water index is more than an operational figure: it is a barometer of the health of the water system, its governance and its relationship with the public. Continuous monitoring makes it possible to plan investment efficiently, prioritise vulnerable areas, mitigate climate risks and build institutional trust.

In a global context of rising demand, energy pressures and ecosystem degradation, reducing non-revenue water is one of the most cost-effective and viable actions to help guarantee the human right to water. At Manglai we help organisations measure their environmental impact and prepare their sustainability reporting, including the emissions linked to water management. Discover how Manglai can help you.