Nationally and internationally, this really is a time of great challenges for your industry and I do look forward, ladies and gentlemen, to keeping in touch with your activities as much as possible, through the Institution and by making further visits to see some of the many interesting and worthwhile things you are all doing.

(Introductory remarks after the President had introduced His Royal Highness in verse)

Mr President, ladies and gentlemen, I only wish that my muse would run to the extent of being able to produce a versed version of this speech, but unfortunately you will have so sit through a rather dreary prose one, so I apologise in advance. But if my information is correct, there are, I believe, something in the region of 700 water engineers and scientists gathered in this room today. I am old enough and wise enough, I think, to feel a growing sense of unease at this situation because experience tells me that I may easily get blamed for a whole series of water-related problems that occur during the course of today! No doubt I am already being blamed for the fact that all sorts of people have been without water over the weekend because over 700 water engineers were preparing to go to London to listen to The Prince of Wales make a fresh outburst, as The Sun newspaper says, against yet another unfortunate professional body! If you get blamed for the fact that councils have painted lavatories before Royal visits, what possible hope have I got today?!

But, ladies and gentlemen, it occurred to me recently that if there was ever a time when water engineers and scientists lived relatively quiet, peaceful lives supplying water to appreciative customers and disposing of waste water without difficulty, then it certainly cannot have been in the last three years.

During that time much of your industry has not only had to get used to the idea of operating in the commercial world for the first time, but also to react to a whole series of outside world events - the formation of the National Rivers Authority, the concept of Integrated Pollution Control, the implications of several powerful European community directives, the Camelford disaster and a significant change of policy on sewage disposal at sea - while dealing with two exceptionally dry years and under ever-increasing pressure from environmentally aware consumers and pressure groups.

As an Honorary Fellow of your Institute I have been watching all these changes with keen interest. It was not always thus. In common, I suspect, with many other people I must confess that I have tended to take the provision of water for granted. It appears, as if by magic, out of the tap and it vanishes conveniently down a plughole to become someone else's problem. The same is even more true of sewage. The pulling of that plug induces a delightful state of "out of sight, out of mind", and owing to the wonders of modern engineering we have been lulled into a false sense of security. We have no longer been able to see water as a precious resource, and we have ignored sewage as a waste product with enormous potential. But now, with a growing awareness of the long-term environmental costs of such a conveniently profligate approach, our attitudes are, I think, beginning to change.

Clearly you face immense problems in coping with unprecedented demands from both public and government, but there are also huge opportunities, and the overall conclusion must surely be that this is an immensely challenging and exciting time to be involved in the water industry. New technology is creating new solutions. At the same time, new ideas are emerging, some stimulated by the move to the private sector, and some indeed from the convergence of the two - because they are by no means mutually exclusive.

In the midst of so much turbulence, and with so many important decisions to be taken, it seems to me to be more important than ever to be clear about the principles and the long-term issues which, as in any walk of life, can all too easily be forgotten in a world of upheaval and management changes.

The aim of "sustainable development" is much discussed in many quarters these days and, like many over-used phrases, has come to mean a lot of different things to a lot of different people - but all too often closely approximating to what they would each like it to mean. Perhaps a more useful, more specific, aim is 'the sustainable use of natural resources', and of our natural resources none is more vital than water.

Closely allied to the aim of sustainability is the concept of stewardship, which to me means not just taking a long-term view, but actually putting it into practice with a clear, unblinking eye regarding the needs of future generations, as well as our own. This is a crucial concept, and it may be that our attitude to water provides a good test of our ability to make it work. Because if we can't apply the concept of stewardship to water, which in this country is a self-contained, renewable and (by the standards of most of the world) plentiful resource, I very much doubt if we can apply it to anything.

I believe that the aim of our stewardship should be to pass on to future generations water resources that will allow them no less a range of uses and benefits that we currently enjoy. We cannot foretell their precise requirements. They may have much greater needs than us, or new technology may enable them to exist with less high quality water than we need today. But I do believe that certain aspects of human nature do not change and that they, like us, will see plentiful supplies of clean water as making an important contribution to their quality of life. They will want healthy bathing beaches, clean rivers and lakes to fish in, sail on, and walk by, with a wide variety of unspoiled aquatic wildlife habitats - in addition to ample water from the tap. A clear goal for our generation to set itself is to work out how we can hand on at least the same quantity, quality and variety of water resources as we currently enjoy. And to do whatever we can actually to improve things. If each succeeding generation can set itself the same goal we will really be on course for the sustainable use of water.

Now this is not something that you can take for granted, though many of your consumers do. The measures needed will have considerable costs attached to them, as those of you who have done the calculations will know, I suspect, only too well. But sustainability doesn't come free, and nor does water. To use the jargon of the environmental economics it is not a 'free good' but is something for which we must be prepared to pay a realistic price. Perhaps the only way through this is to use the price mechanism, so that everyone can see water as a valuable environmental resource to be managed, rather than as a virtually limitless commodity to be exploited?

Two exceptionally dry years have highlighted the fact that we have been abstracting too much water from some of our rivers and ground waters, particularly in the chalk regions, in order to meet consumer demand. As a result, some beautiful and much-loved streams have ceased to exist altogether or have been reduced to mere trickles. Valuable wildlife sites are drying out and, of course, low flows make what is left of a river more vulnerable to pollution and de-oxygenation.

This is not a new problem, but with all the uncertainties of things like global warming looming over the horizon the time must surely be right for new solutions. The National Rivers Authority is well aware of the situation and I was delighted to read in a recent speech by Lord Crickhowell that a national policy is being prepared to address the problems of over-abstraction and that the solutions may include the withdrawal of some of the abstraction rights. This seems to me to be exactly the sort of problem which a national authority is uniquely well placed to address. The NRA has, in its short life, become a real champion of water quality and I very much hope that it will be able to obtain the resources, the cooperation and the support which it will need to make a success of this and other important work.

Long-term solutions to the problems of over-abstraction are clearly going to depend on finding ways of balancing the demand, from both individual consumers and from industry, with the supplies that can be made available on a sustainable basis. I therefore agree entirely with Lord Crickhowell's statement, in the speech I referred to earlier, that "if we are to ease the mounting pressures in the South East, increasingly charging schemes must reflect not only the cost of providing a scarce resource, but the damage that is being done to the environment".

I know that water metering for individual consumers is already on trial in certain parts of the country, including The Isle of Wight, and I know also that it is a controversial subject which raises real fears in the elderly and families with several children, but I believe that in some parts of the country, at least, it may be one of the most effective means of restricting wasteful and unnecessary practices. I'm sure many people here have seen garden sprinklers left on all night and hoses running throughout marathon car-washing operations. The message must surely be that water can be made available, but that those who want it must be prepared to pay the full cost (including all the environmental costs) of supplying it.

On the other hand it is not possible to separate the question of metering, as a form of demand management, from issues of social equity. Charging policies would need to take into account the very strong public health arguments for readily available water for drinking and hygiene purposes; these are obviously basic human needs which should not be constrained by economic forces. As a society we must obviously protect those who are unable to meet the basic needs - the poor, the elderly and the infirm - but that does not mean rejecting schemes that bring true environmental costs home to the average consumer.

There are, in any case, many other ways or reducing water usage, starting with reduction of waste, wherever it occurs. Consumers have a part to play, and educating them is obviously a major challenge, but so too do the Water Companies. I know that 'leakage' is a term applied by the water industry to any unexplained shortfall, and that a precise calculation of the amount of water lost through faulty or ageing pipework is said to be difficult, but vast amounts of water are apparently lost in this way, and not all of it finds its way back into the aquifers.

Industry too can help, and recent efforts to encourage businesses of all sizes to look critically at their environmental management and use of resources have tried to emphasise that water efficiency is just as important an aim as energy efficiency.

It seems to me that this sort of approach, in which all users have to balance their requirements for water against the costs of meeting them, is sustainability in action. And if we are serious about our role as stewards then the sooner we get used to thinking this way, the better.

Of course, a commitment to sustainable use involves more than just ensuring an undiminished volume of supplies in the long-term. It also means doing whatever we can to improve the quality of our rivers, including the poorest, such as the River Mersey, for instance, and not taking the position, which I understand is common in other European countries, of condemning certain rivers as hopeless cases, not worth cleaning up and destined to remain little more than conduits of industrial and other wastes.

There may, perhaps, be people who are under the illusion that we can somehow return to an idealised past of pristine waters untouched by human impacts, but I am most emphatically not one of them. A population of more than 50 million people cannot live, eat and work on a small island without having an effect on the quality of the water. Nor can we, with or without the undoubted energy and powers of the National Rivers Authority, clean up the accumulated mess of centuries overnight. Those who imply that this is in some way possible are, I would suggest, as unhelpful as they are unrealistic.

What we can do, and what I know the NRA is determined we should do, is to make steady, sustained improvements. There are, after all, some spectacular successes to which your industry can already point with some pride. I heard a fascinating presentation last week about the restoration of the River Taff, which reflects great credit on all those involved. The River Tyne has improved beyond recognition in the last decade, and we ought not to forget the Thames, which started improving at a time when being 'green' had a rather different meaning to the one it seems to have acquired today. Those of us who grew up in or near London 30 years ago will remember when the Thames was not just dead but deadly. If you fell in you were well advised to have your stomach pumped immediately. And any fish venturing downstream had to get out at Putney and hope for the best. In fact I remember years ago watching a television programme with The Queen one evening, which I think must have been one of the best spoofs of all. It showed a man catching a salmon in the Thames, which was quite a long time before it had all been cleared up, and we both believed it and were frightfully excited about it - along with everybody else who was watching the television. I suspect it was April 1st, but still...

Ensuring that things go on getting better requires careful monitoring and analysis of the actual standards of new technologies, for which there is a huge and growing market worldwide. Only recently I heard about the Merlin, that invention of the NRA's Wessex region which looks like a floating dustbin, but is very much more useful. It continually monitors the quality of the flow of water going past, checking six key parameters, and when it detects any sort of problem it reports the details back to base through the Cellnet telephone system. It then takes a physical sample and waits for help to arrive. About the only thing it doesn't do as far as I can make out, is issue the warning or write out the summons to the person responsible for the pollution, but that may come a little bit later. Although it is still at the development stage, the Merlin is a good example of the water industry's ability to innovate. This country has a remarkable record of innovation and I believe that there is still tremendous potential for progress in your particular area.

It is one thing to monitor water quality. It is quite another to set the standards which should be achieved in each of our rivers. This latter task must surely be substantially aided by the new system of statutory Water Quality Objectives which is now being drawn up. Setting these objectives, and the discharge consents which will be based on them, will be far from straightforward, and no doubt spirited resistance can be expected from all sorts of powerful vested interests. But I do hope that companies affected will take into consideration the long-term benefits of investing in good environmental controls.

They can, of course, be encouraged to take this view by the practice known as 'incentive charging'. Those who are not familiar with this process will find a good description in Annex A of Mr Patten's recent White Paper, but it appears to me to be an entirely logical development of the 'polluter pays' principle, and I know it has been a great success in certain other countries.

Returning, once again, ladies and gentlemen, to the theme of stewardship and the sustainable use of resources, I think it is important to look beyond what appear to be the immediate priorities and start to address issues of a more chronic and intractable nature. This will require a commitment to identify and attack those of our activities which have long-term harmful effects on the quality of our water supplies.

Some of you will no doubt already have encountered the horrendous difficulties, uncertainties and costs which arise in trying to clean up groundwater. Considering that in the abstraction process the water that emerges is sometimes, I believe, hundreds of years old, we may be bequeathing something potentially rather nasty to our descendants.

We also need to guard against any discharge into the water environment, and not just into groundwater, of substances which are either toxic or non-biodegradable. And we must be alert to the dangers of over-enrichment by nitrates and phosphates, which can so easily change the character of our rivers and lakes in a way that may be so costly to rectify as to be just about irreversible.

Another serious, long-term problem of which we should be more aware, and which I believe deserves much more research, is the apparent capacity of conifer plantations in upland areas to trap acid rain and eject it into nearby rivers and streams. Acid rain undermines the renewal process inherent in the water cycle and studies have shown that many affected upland areas have been utterly deprived of trout, salmon and sea trout. Sixty-five miles of Welsh rivers have been downgraded since 1980 for that reason alone, with losses to the capital values of riparian owners estimated at up to £5 million. I certainly do not believe that sufficient attention is given to the potential for this sort of environmental damage when large grants are handed out for planting or re-planting in inappropriate areas, nor do I believe that the man in the street (with or without a fishing rod in his hand) will accept the current feeble explanation that it is not the trees but the air pollution which is causing the problem.

I think most people have an image of pollution as something hideously coloured that comes frothing and steaming out of a large factory out-fall pipe. But the facts are, as many of you will know only too well, that whilst industry - which is by no means the only source of pollution - is making increasingly effective efforts to put things right, agricultural pollution arising from changing land use is becoming an increasingly serious problem in some areas. This, of course, is a consequence of intensive farming practices, where the link between the size of farm and the number of animals on it has been severed, and a very real worry for all concerned especially at a time when farm incomes are under such pressure.

In the Duchy of Cornwall we have been involved in over 40 pollution control schemes since 1980, but we still have a number of problems to solve. Only yesterday I visited two adjacent farms in Devon which are on low-lying land close to a river. The potential for pollution is most worrying, and it looks as if we shall have to do a complete re-organisation to sort things out. So, ladies and gentlemen, I am only too aware, in case anybody tells me I am not, of the problems in my own backyard!

Apart from the direct threats of leaking or overflowing slurry tanks and silage liquor, there are all the diffuse forms of pollution, such as nitrate and pesticides, to be considered. Because these enter the water system through natural drainage and do not result in single major incidents they are easily overlooked at their point of entry and very difficult to control. But the fact remains that even when they can be easily detected, they are very difficult to remove and a source of great and growing public concern. And whether or not one believes that concern to be justified, the fact is that the majority of the customers out 'there' are concerned.

Part of their concern is because they believe, rightly in my opinion, that we do not know enough about the long-term effects (and when we're talking about drinking water that does mean life-long exposure) of consuming even individually minute doses of pesticides. Consumers may also be concerned that the cost of removing these substances, such as nitrates, from their drinking water will end up being added to their water bills, in a clear violation of the 'Polluter Pays' principle.

A good deal has been said recently about another principle - the so-called 'Precautionary Principle', much of it in the form of lip-service. To me, and I daresay a great many other people, this is just an elaborate term for what used to be called common sense. As such we understand it and support it, and would like to see it put into practice, and more frequently. I was, therefore, fascinated to see the reaction from certain quarters to the British Medical Association's report on pesticides and health. This report seemed to me to be a classic example of a responsible body drawing attention to the need (which the Government also explicitly accepts) to act in accordance with the precautionary principle. But, not for the first time, we immediately saw a powerful lobby responding to something it didn't much like with quite ludicrous accusations of 'political bias'. I just hope that those quiet and professional individuals who politely pointed out how much easier it is to stop something getting into the water system than it is to remove it once it has got in, and the implications of that point, will have been heard in the uproar.

Another area of debate which has seen some heated claims and counter-claims in recent years is that of bathing water quality. Of more than 400 'identified bathing waters' in this country, the majority now do pass the mandatory standards of the European Community directive. This is a real success story and one that deserves more recognition that it has hitherto received. However, there is still a long way to go before all our popular coastal bathing waters meet the standards.

Of course, the policy on bringing coastal bathing waters up to standard changed radically in March of this year. The Secretary of State took everyone by surprise, including many of his European critics (and I suspect many people in this room!) by announcing an end to the direct disposal of raw sewage into the sea. I suspect many people had been concerned, as I was, to read of the degree of local opposition to many sea disposal schemes which relied solely on long sea outfalls, without any form of proper treatment. And I was delighted to learn that the Fylde Coast scheme (about which, you may be interested to know, I received more than 100 letters) was to be reviewed in the light of local opinion and the Secretary of State's announcement. I understand that rapid progress is now being made towards a solution to this particular problem, involving full conventional treatment and this is obviously very much to be welcomed.

It remains to be seen how many other coastal resorts receive such excellent solutions. Early indications are that the most which can be expected for most schemes is some form of primary treatment, which may or may not provide the kind of reassurance demanded by local people, and bathers.

One process which may provide at least interim reassurance is the enhanced primary treatment provided by Energy and Waste Systems, the so-called Clariflow lime-assisted treatment system. This process, which I was able to see for myself on a recent visit to the Sandown plant on the Isle of Wight, is intended to provide a substantial degree of disinfection and phosphate removal to meet at least some of the concerns over microbiological risks and nutrient enrichment. This process does not, on its own, pretend to be the ultimate solution to everyone's problems, but as an interim measure which is significantly more effective than simple primary settlement, it certainly seems to have some merit. I understand that such a system is particularly appropriate in areas where local soils are acidic, because the alkaline nature of the sludge makes it an attractive option for re-use on land. The system development involved in a private company, what was then a water authority (Southern) and a polytechnic (Portsmouth) - I think an excellent example of what can be done with a little imagination and commitment.

One of the most significant consequences of the decision to end sewage dumping at sea will be a dramatic increase in the volume of sewage sludge produced. This is another area where I believe that the principles of stewardship should be given active consideration. I was therefore in total agreement with the previous Secretary of State's view that 'wherever possible sludge should be used beneficially', and with the subsequent recommendations of the House of Commons Environment Committee that there should be more support for research into beneficial uses and that industrial contamination of the sewage system (which is a major impediment to beneficial use) should be reduced.

Sadly, all the indications are that there is a distinct lack of interest in some quarters of your industry in the idea of sewage sludge as a potentially valuable resource, and that one consequence of stopping dumping at sea will be a marked increase in incineration. One highly respected institute has estimated that the water industry may be incinerating more than 40% of its sludge by 1998. I do understand that this may seem to be the neatest, tidiest, most convenient solution, but I do question, ladies and gentlemen, whether it is the best solution. It seems to me to violate the most profound ecological principle of all, which is to 'close the loop' by minimising resource use and energy wastage at every stage of every economic process.

There is no doubt that persuading farmers, local authorities and other end-users to take sewage sludge and its products requires tact and co-ordination, but the cause is hardly helped by the industry embracing the incineration option so enthusiastically. Rather than behaving as though it has an acutely embarrassing problem on its hands, should the industry not be trying to create an atmosphere of competition for a valuable resource?

Provided that sewage sludge can be rendered microbiologically safe (and various thermal treatments, including composting, can achieve this) and the chemical quality of the product meets EC and UK standards, then there is no reason at all surely why the various beneficial uses: agriculture, forestry, land reclamation, horticulture, amenity land (including new golf courses) should not absorb most of UK sludge production by the end of the decade. It will only require a leap of the imagination on the part of the producers and users and a guarantee of microbiological and toxicological safety for an embarrassing sludge glut to be turned into an embarrassment of riches. Once again, new technology has a part to play, and there are already examples, such as the Simon N-Viro process to show what is actually possible.

In some areas there will need to be a major shift in favour of clean technologies by industrial dischargers to the sewage system in order to prevent heavy metal and other contamination of the sludge produced. A commitment to 'incentive charging' will undoubtedly help to achieve this and indeed has already done so in certain other European countries. And individuals can help too, by reducing the inputs of some domestic contaminants, including household pesticides and pharmaceuticals, to the sewage system. Even dentists can avoid the release of mercury residues with the wastewater from their premises. When I was looking round the Sandown Wastewater Treatment works the other day I was astonished to discover the extraordinarily unlikely things which get stuffed down the drains. The Sandown people told me that a major leakage and flooding occurred recently as a result of somebody who had succeeded somehow in flushing a duvet down the drain - I only hope there wasn't anybody in it!

But as with all marketing, it is important to create the right atmosphere for improving sales. A high quality product and an imaginative promotional campaign are pre-requisites for success. As commercial entities, the water companies should surely understand this as well as anyone.

There are, of course, encouraging examples to which one can draw attention. (I was very pleased to read recently that Wessex Water, I think whose area we are in Gloucestershire - and they are very good I must say, we've never had a hosepipe ban in the two dry summers, not that I've heard of anyway, but then my information might not be correct). Anyway, I was very pleased to read recently that Wessex Water have elected to follow a beneficial use option for sewage sludge, producing a peat substitute - and this is another very important factor - from sludge previously dumped at sea. Other companies, like Anglian, (whom I have also visited last year to see their composting activities with sludge and straw), other companies like Anglian, already have a successful composting project, which as I say I visited, and a well developed commitment to sewage sludge re-use on agricultural land. In this connection, I was interested to learn that Dumfries and Galloway Regional Council has assessed its situation carefully and has opted for re-use on land in preference to incineration, which they found not to be economically viable, even using optimistic costings. There is a great deal of other evidence suggesting that sludge incineration will be at least as expensive as beneficial uses, even allowing for the cost of heat treatment to destroy micro-organisms. And those who pin their hopes on an expansion of landfill should take a close look at the draft European Directive on the landfill of waste, because I think they will find that it will have significant cost implications.

I do hope that further consideration will be given to all the potential beneficial uses of sewage sludge, and that a much more creative and positive attitude will prevail. If not, I fear the water industry will fail one of its first major environmental challenges since privatisation.

Finally, Ladies and Gentlemen, and when we are discussing the problems and challenges facing the British water industry, I think it is important to recognise the terrifying scale of the problem of inadequate water and sanitation in the less developed countries, and the ensuing toll in human misery.

Every day, tens of thousands of parents lose children through diseases transmitted by contaminated water or because there is insufficient water to promote decent hygiene in the home. It is one of the most depressing features of worldwide population growth, and the consequent pressure on resources, that despite the immense efforts of the international community during the 'water decade' there are probably more people without access to safe water and sanitation in 1990 than there were in 1980. The scale of the problem obviously is vast. The groundwater level beneath the city of Lima drops, I am told, by a metre each year; highly persistent chemicals which have been banned for a decade in the industrialised countries are still widely used elsewhere; and many cities are growing faster than wastewater facilities can be provided, with the inevitable consequence of disease due to raw sewage being discharged direct into rivers, and I saw some of this on a visit to Indonesia last year.

It took epidemics of cholera to teach us in Britain the value of clean water, and a decent sewage system. Will it take huge epidemics in the exploding cities of the developing world before real action is taken? Your industry not only has the skills and technologies to help solve these problems, but you understand them better than most. I hope that you will be able to add your institutional voice to the debate on sustainable development that will take place in the run-up to the 1992 United Nations Conference on Environment and Development in Brazil.

Despite the difference in the scale of the problems, the principles of managing water resources with an eye to sustainable use are universal. But, when we are reported to be planning to spend £26 billion on our water industry, at a time when millions of people have no safe drinkable water whatsoever, I do think there is a moral obligation on us to invest that money wisely, asking ourselves how future generations will judge our decisions. I would also hope that there might be a way of putting even more emphasis on providing our water technology to the Third World. A good example of this is provided by 'Water Aid' which I believe now has projects all around the globe. We in this country are so well endowed with expertise and experience in this particular area, that we should surely be doing all we can to export it - if necessary as a concessional aid flow, bearing in mind all the necessary requirements of accountability and so on, which I think are also important factors - to those less fortunate than ourselves.

Nationally and internationally, this really is a time of great challenges for your industry and I do look forward, ladies and gentlemen, to keeping in touch with your activities as much as possible, through the Institution and by making further visits to see some of the many interesting and worthwhile things you are all doing. May I wish you at this point in the proceedings, a very Happy Christmas and a snow-free one and problem-free one.