Directing the flow: Priorities for future water policy

In November 2002, the Department for Environment, Food & Rural Affairs (DEFRA) published a report entitled "Directing the flow: Priorities for future water policy" setting out its strategic aims and priorities for government policy on water over the longer term. The report seeks to set out government priorities for the next 20 years. It is a high level document with most of the issues dealt with in more detail elsewhere.

There are 4 key messages in the document:

• All three pillars of sustainable development – economic, social and environmental – should be embraced in our approach to water.
• Water and the water environment cannot be taken for granted but need us to nurture and support it.
• More integration is needed between different strands of water policy and between water and other policy areas.
• There is a virtue in stability and certainty in the institutional and management arrangements for water: if we are expecting necessary investment to continue, there must be clarity and confidence about what is required and expected.

The report sets out:

• Chapter 1: Introduction – water policy objectives and our vision for the future.
• Chapter 2: General Principles
• Chapter 3: Delivery: the story so far.
• Chapter 4: Challenges we now face and responses to them
• Chapter 5: Summary of Action Points.

In this article, we summarise Chapter 4 of the report, dealing with the challenges ahead and the proposed responses.

The Challenge Ahead and the proposed responses

Agriculture and Fisheries

Challenge: The report highlights the serious problem of agricultural diffuse pollution which leads to elevated levels of nitrates and phosphates in water, which has implications for drinking water supplies and water quality of rivers fed by groundwater. It also causes microbiological pollution of bathing waters.

Response: DEFRA intends to issue a consultation paper in the near future on how to address this issue. So far the Government has introduced the Pesticides Voluntary Initiative, and is also extending implementation of the Nitrates Directive.

Challenge: Fish farming poses a number of issues, having potential to cause pollution from uneaten food, fish and chemicals.

Response: DEFRA is funding further research into these issues.

Land Use

Challenge: Continued urban growth and increases in urban diffuse pollution create various difficulties including changes in demand levels, the nature of demand, and increase in flood risk.

Response: The Government is considering how planning policy can best promote sustainable solutions with regard to water policy. The Environment Agency, DEFRA and the Forestry Commission are all carrying out research on the effects of changing land use. The report mentions sustainable urban drainage as a potential measure against urban diffuse pollution, although issues of responsibility and maintenance would need to be addressed.

Climate Change

Challenge: The climate is changing, leading to more extreme weather events, increased stress on water resources and increased flood risks.

Response: DEFRA is researching the likely impact of climate change on demand for water. Results, due in Spring 2003, will be available to water companies and the Environment Agency. The climate change levy is intended to incentivise companies to plan appropriately. The Government's climate change programme sets out its strategy to tackle the causes of climate change.

Biodiversity

Challenge: The report highlights the need for protection and enhancement of biodiversity, as part of its focus on sustainable development.

Response: The Water Framework Directive sets minimum quality standards for all water bodies. It also emphasises integration of planning and requires statutory controls to tackle diffuse pollution and other man-made pressures: all these measures should deliver benefits for biodiversity. The report asserts a commitment to setting objectives that are more stringent than those imposed by the Directive, if necessary.

Integration of Water Plans

Challenge: A number of existing plans exist which are concerned with water management.

Response The Government intends to encourage integration of separate plans and the Environment Agency, with DEFRA, is examining the scope of integration to meet the requirements of the Water Framework Directive. The Government proposes to work closely with stakeholders on this.

Flood Management

Challenge: DEFRA requires flood management activities to result in no net loss to biodiversity. DEFRA has published guidance to help ensure that different options for flood prevention, and their implications, are considered in decision making.

Response: In the future DEFRA intends to emphasise the need to ensure benefits to water policies as a whole are maximised, and to continue developing procedures to progress integrated consideration of all flood risk management matters.

Water resources

Challenge: It is not clear whether water supplies will meet demand in the medium to long term, as a result of climate change and increases in housing and in household water consumption.

Response: Less wasteful water use is to be encouraged at home and in business. This year, the Government is extending the Green Technology Challenge to include enhanced capital allowances for water objectives. Implementation of the Water Framework Directive and of strategic river basin planning will provide the long term framework for balancing supply and demand. Other measures include: better resource planning; promotion of a clear framework for abstraction decisions by the production of the Catchment Abstraction Management System; changes to the abstraction licensing system; imposition of a duty to use water efficiently; and measures (including performance targets) to reduce leakage.

Viability of the water industry

Challenge: The report sets out a commitment to ensure a strong water industry with a secure future, which is therefore capable of delivering public policy objectives on water.

Response: The Government proposes to contribute to industry stability by promoting effective and stable regulation; encouraging a long term view of industry obligations and requirements, and engaging in open dialogue with the industry and its stakeholders. At the same time, water companies are urged to structure themselves to be adaptable and to meet all obligations; whilst taking account of interested parties including customers, employees and the wider economy.

Sewers Flooding

Challenge: Sewers are liable to overflow during exceptional rainfall. An undertaker is currently appealing to the House of Lords against a finding of nuisance and breach of human rights for failure to rectify external sewer flooding: the outcome of this case could have important implications.

Response: Investment has already reduced the risk of sewer flooding. Ofwat has carried out consultations and is discussing the findings with Government. The forthcoming periodic review will assess financial programmes for construction, maintenance and repair of sewers.

Regulation

Challenge: There remains scope for improvement in regulation of water, especially in relation to EU regulation.

Response: The report emphasises the Government's commitment to regulatory impact assessments of any proposals for regulation. There is also a drive, given momentum by principles of cost attribution in the Water Framework Directive, towards identifying and reconciling where costs and benefits of water services accrue.

The Environment Agency is focusing on principles designed to improve its regulation, including an outcome-focused approach; standardisation; risk-based approaches to inspections and permits, and co-ordinated delivery teams.

Following consultation, the Government is proposing a number of changes in the Water Bill to improve economic regulation. These include a duty on Ofwat to take into account sustainable development; a focus on protection of consumer interests, and setting up a fully independent consumer council for Ofwat. The Government is also considering how future periodic review periods can be aligned to future investment requirements.

The report also highlights the need to ensure that proposed European directives are subject to the same assessment of costs and benefits as domestically. It proposes that this be achieved by wider consultation, comparability of monitoring data, and taking into account wider cost/benefit implications.

The European Commission has proposed that from 2003 minimum standards will be used for consultation at European level during policy development; social, economic and environmental impacts will be assessed for major initiatives when policies are being devised, and all legislative proposals will be accompanied by justification for choosing the proposed instrument, by reference to the financial implications of the proposal.

Water Customers

Challenge: Customers expect good services to be readily available at a reasonable price.

Response: The Water Bill will propose an independent customer council for water, whose function will be advocacy of the consumers' interest.

Water Pricing

Challenge: The key challenge identified is the balance between consideration for water resources and the environment, against social, economic and health implications of changes.

Response: The report identifies the role water metering has to play in managing demand, whilst acknowledging the need to prevent measures that could threaten public health. Vulnerable groups can choose to have bills capped at an average level. Ofwat is monitoring the effect of metering on bills.

To view a copy of the full report as a PDF, please copy click here.

Annex A contains useful information on existing EU directives with major impacts on water while Annex B contains the timetable for implementation and negotiation of EU directives.

For further information please contact Richard Temple at [email protected] or on +44 (0)20 7367 3738.