1. WATERNOMICS
“ The economics of water spending & cuts for the European Union”
Author:
Kiriti Rambhatla
Project Leader, Electronic Bidets
Indesit Company
Via Aristide Merloni 47, Fabriano 60044 Italy
Kiriti.rambhatla@indesit.com
+39 340 7344162

2. “Water is life ! It is a precondition for human, animal
and plant life as well as an indispensable resource for
the economy. Water also plays a fundamental role in
the climate regulation cycle. Protection of water
resources, of fresh and salt water ecosystems and of
the water we drink and bathe in is therefore one of
the cornerstones of environmental protection in
Europe” – European Commission
One of the least talked about relations on this
planet is the relation between economic growth
and water conservation. “Water Stress” is the
pressure on the quality and quantity of water use
in public households, industries and irrigation.
Analysis of the effectiveness of demand side vs
supply side strategies for alleviating water stress
should be considered- European Commission on
Water Stress. Due to lack of European data,
sometimes the paper uses American statistics
and references.
The European Union statistics show nearly 14% of
public water supply is used in households.
Source: Source: EEA-ETC/IW
Note: Public water supply is used by households
and industry. Businesses with direct water
abstraction, e.g. from boreholes, are included in
the industry sector.
The focus of this paper is on public water
conservation in Europe and application of
innovative technologies to improve its
contribution to the renewable energy pool at the
household level. 55% of public water supply
comes from ground water and not surface water
like lakes. Ground water is therefore a scarce
resource.
The paper will also use the WEI ( Water
Exploitation Index) an index used to understand
the exploitation of water in Europe.
Source: CSI 18 indicator
With the increasing need for using renewable
energy sources in the European Union, there
should be an increased emphasis on use of
technology to enhance the process of renewable
energy( hydro) production. Contribution of water
to the pool is of importance. Hence efficiency of
public water usage is needed.
But there isn’t sufficient work done in the union
to understand the wastage of public water. Even
to be able to deploy effective solutions, one
needs to understand the nature of public water
consumption and how wastage contributes to the
economies .
This paper would also draw upon references
Jason Schumpeter’s economic theory of
innovation stating market power through
innovation is a better alternative as opposed to
the invisible hand. The paper introduces
“Toilonomics” an innovative way to focus on
water conservation in toilets through an
innovative product. Our proposed product cuts

3. down water consumption and thereby
contributes to the overall economy and
renewable energy pool.
Spanish Water Model:
Between 1986-2008 Spain received nearly €21
Billion funding for water infrastructure. With the
crisis, EU funding to Spain is set to fall by 40%.On
average the water bills in European cities vary
from €112 to €413 Euros a year. So considering a
sample city ( Barcelona ) and the average number
of households at near 600,000 ( UN statistics on
Households) each household annually on average
spends €400 euros on water bills, the total
amount of water bills in Barcelona alone amounts
to €240 million . If an average household can use
water effective devices in toilets and save €100
Euros, Barcelona could save €60 Million annually.
Barcelona ( Spain) €
Average Household 400/year
Projected Saving 100/year
Number of Households 600,000
Avg. Household Expense 240 Million
Avg. Household Saving 60 Million
Table 1
If Barcelona alone could save €60 Million annually
by using water effectively in homes, Spain could
have bailed it’s banking system during the Euro
crisis by effective water usage in homes.
An independent agency AGA estimated that the
Spanish system spends about €250 Million
annually on the hydrological cycle ( given the fact
it is difficult to receive an exact estimate of the
amount of money spent by governments on
hydrological cycles).
Public Spending = f( defense , development ,
education, health, infrastructure , law & order
maintenance etc).
We have just highlighted one component of
public infrastructure being public water
infrastructure. Main source of income for Public
spending is public taxes.
Water Pricing is the dilemma the governments
have today. The more water the public uses, the
more money needs to be spent by State on
generating it. In turn raising the cost of tariffs for
the end consumer.
Water Price = (Fixed Component + Variable
Component )
Fig 1
So there is an incentive for the end user to
consumer less water.
If fuel is considered a scarce resource, we ask
where is water ? Energy labeling exists to brand
vehicles energy efficient, we are asking where is
Water labeling for water efficient devices for the
home ? Effective water metering also needs
effective devices to be recorded into within the
homes.
European Commission stated that by 2020, nearly
20% of its renewable energy should come from
Hydropower.
HydroPower Output (P) = Water Flow ( Q) by Fall
Height (h) plus efficiency of water supply (n).
Demand & Supply Perspective
There is a great social demand to reduce the
inefficient use of a near quarter of public water
usage in toilets. There is a great demand for

4. cutting public spending by governments in the
European Union in this period ( reference to the
Euro Crisis). So, we wanted to understand the
components of the demand and what could
possibly constitute the supply.
Building on Jason Schumpeter’s Economic
Theory of Innovation
Economic Growth = f ( innovation,
entrepreneurship)
Jason Schumpeter, the Austrian economist stated
that Innovation is at the heart of economic
growth and is a much stronger force than the
invisible hand. So I believe there is a great
incentive for a firm ( private or public) to create a
temporary monopoly through innovation to
create a market power within economies which
would create a surplus of wealth ( in terms of
resources & money). So innovation in public
water consumption would lead to an economic
gain for the public spending. We have illustrated
the potential market gains for an innovative
product through a Bass Model simulation later in
the paper.
This paper would specifically address innovation
to address the wastage of toilet water
consumption in households.
Introducing “Toilonomics”
It is already established that nearly 55% of public
water is from groundwater .An American Study
shows that more than 25% of public water is
consumed in toilets and there is a lot of wastage
in this 25%. The demand is there to reduce the
wastage of this 25% , where is the supply ? Our
new project & product addresses this demand
issue through innovation in toilet water
consumption.
Toilonomics is the proposed study of efficient
water usage in toilets and the positive impact it
could have on the economies. The study would
like highlight the two basic functions of water
usage in the toilets being the Flush Function and
the wash function carried out by toilet papers
and bidets conventionally.
We would like to call the flush function f and the
wash function w in this study.
The average person’s flush usage on an annual
basis for various flush capacities in the toilets.
Source: American WaterWorks Association
Research Foundation
So a household of 4 people can alone consume
up to 108,040 liters of water per year only during
the f function. Now we add the wash function w.
What are some of the ways typically in which we
make use of the wash function ? We use toilet
papers or in some parts of the world we use
bidets. Either ways , the study shows per usage
consumption of water could be anywhere
between 2-4 liters .
So we tried to push our focus back to the
consumption of water in the average household .

5. Source: American Waterworks Research
Foundation
So we see, on average in a residence in the US ,
f+w accounts for 26,7% of the public water
consumption.
We wanted to understand the economic
implications of water usage ( partly wastage) in
this scenario. Efficient use of water can actually
lead to a Billion gallons of public water being
saved everyday in an economy like the USA.
This would mean savings to the state in line with
billions of $’s. Instead of unilateral focus on
monetary and fiscal policies , it is time for
effective water policies or efficient devices ?
Is it time for a European level Water Standard ?
There is a lot of discussion and research being
done on energy consumption and energy
efficiency. The sample of the EU energy label
Fig2: Energy Label of EU
However, we would like to propose a water label
which tracks the amount of water consumption in
household devices. This would allow the user to
be more water conscious and buy water efficient
devices. Proposed sample of a water label
Fig 3: Proposed Water Label
We believe there needs to be more discussion
and policy making to start the new water label
standard. But the label needs to adopted by
equipment used in the house. Our focus is toilet
and bidets specifically.
New Product & Business Model
Private Sector – Public Sector collaboration for
policy making to set a new water standard in
Europe. This would create better water
consumption awareness.
Fig 4 System of Proposed Product
A model that would address the three
fundamental blocs in a renewable energy eco
system
1) Social System
2) Technical System
3) Environmental System

6. An Incremental Innovation for Toilets, a
Disruptive technology for Hydropower Energy:
Electronic Bidet
Already a successful product in Japan, there is a
need for the inclusion of an electronic bidet in
European toilets. A bidet that would address the
social , technical & environmental components in
the proposed new model.
Fig 5: Sample Bidet
It has a system of water spray that uses air and
cuts down the water level usage by a near 50%
compared to a regular bidet. It has other
technical features equipped for the drying
function after using a toilet. Eliminates the use
for toilet paper ( which also needs water and
chemicals during production). The electronic
bidet ( also called the Washlet by Japanese firm
TOTO) invented in early 80’s in Japan today has
evolved with complex integrated systems to
enhance the process of f & w functions. This
system addresses. social, technological and
environmental concerns
The electronic bidet does need electricity to run,
but the electricity consumption is outweighed by
the water utility bills paid by an average home
while using the regular toilet systems.
Our effort lies in successfully installing Electronic
Bidets in smart cities of Europe to publish the
statistics of water conservation which is not just a
requirement but a need .
Bass Model to understand the Potential Market
in Europe:
We have applied the Bass Model of Product
Diffusion with innovation and imitation quotients
at the industry average being
P = 0,003
Q = 0,380
Assuming a very conservative potential European
market for an innovative product at 25,000 (M)
units and running the simulation , we have the
following projections for the projected sales
N(t) = pM+(q-p) N(t) – q/M ((N(t))2
Year
Predicted
Sales
Predicted Cum.
Sales
2013 0 0
2014 750 750
2015 1.004 1.754
2016 1.317 3.071
2017 1.682 4.753
2018 2.070 6.823
2019 2.430 9.253
2020 2.687 11.940
2021 2.762 14.702
Table 2
May be the numbers might not look high, but the
slope of the sales curve is what is of extreme
interest for the private industry to commercialize
such a product and build services around it to
create water awareness . This would result in the
temporary monopoly in Europe that Joseph
Schumpeter refers to in his theory.
0
0,002
0,004
0,006
0,008
0,01
0,012
0,014
0,016
0
0,0005
0,001
0,0015
0,002
0,0025
0,003
SALES
YEAR
Sales

7. Fig6.
A new European Water Standard will not only
create awareness among the industries about
water consumption, but will also allow the end
consumer to buy products which are water
efficient. An electronic bidet should successfully
be branded and commercialized for effective use
of water in public households and its positive
impact on European Economy is enormous.

8. References :
Joseph V. Sinfield, Edward Calder, Bernard
McConnell & Stevel Colson “How to Identify New
Business Models” MIT Sloan Management Review
Winter 2012 Vol 53 No 2, Page 85-90
“Measuring Business Cycles” by Arthur Burns
Chapter 8 of Environmental Indicator Report
European Environmental Agency
http://www.eea.europa.eu/publications/environ
mental-indicator-report-2012/environmental-
indicator-report-2012-
ecosystem/part2.xhtml#chap8
Randall S. Wright “Why Innovations Are
Arguments” MIT Sloan Management Review
Spring 2005 Vol 53 No 3 , Page 95-96
Professor Freek Vermeulen “Winging It” Strategy
Section, Business Strategy Review, Vol 128
Alumni News May 2012, London Business School
Kay Plantes in the Blog Plantescompany
http://www.plantescompany.com/blog/
Case Study by Akbar Adhiutama & Seiichi
Yoshicubo in “Diffusion of Electronic Bidet Toilet
in Japan http://www.sbm.itb.ac.id/wp-
content/uploads/2010/01/Vol-2-No-2-December-
2009-Diffusion-of-Electronic-Bidet-Toilet-in-
Japan-Case-Study-TOTO-Washlet.pdf
Product Description of TOTO Washlet TCF4731A
http://asia.toto.com/product_details.php?id=664
“Barcelona demographic statistics” from United
Nation Statistics Table 6
http://unstats.un.org/unsd/demographic/sconcer
ns/housing/comp1995/TABLE06.pdf
European Union Environmental Agency
Publication on Signals 2000,
Page13http://www.eea.europa.eu/publications/s
ignals-2000/page013.html
Bass, Frank “A New Product Growth Model for
Consumer Durables” in Vol 15 of Management
Science, 1969
Norton & Bass, “ Evolution of Technological
Generations, The Law of Capture” in Sloan
Management Review MIT, 1992.
The Description of “Hydrological Cycle”
athttp://geofreekz.wordpress.com/the-
hydrosphere/