Government Abstraction Reform and Water ‘Rights’ Henry Leveson-Gower - PowerPoint Presentation

Government Abstraction Reform and Water ‘Rights’ Henry Leveson-Gower 19 March 2013

Contents - Context: Water White Paper and Bill Abstraction Reform Why we are reformingEmerging reform optionsImplications for ‘rights’Research and engagement processQuestions 2

Water White Paper and Bill 3

The vision from the Water White Paper 4 A resilient water sector, more efficient and customer focused companies, and water valued as the precious resource it is. Water resources managed in a way that supports growth and needs of societyA reformed water industryA reformed water abstraction regulation systemBalance between supply and demand An interconnected water supply system which can move water around easily A catchment-based approach to water management Sustainable abstraction levels within all catchments An affordable water supply for allWater efficient behaviour by businesses and consumers

Why reform is necessary Current regime not adaptive Not responsive in protecting the environmentNot flexible in sharing water to get most value Long-term risks Risks of excessive costs, environmental damage & system collapse

What do we want to achieve?To give clear signals and regulatory certainty on the availability of water, to drive efficient investment to adapt to climate change and meet water needs; To better reflect the value of water to customers, its relative scarcity, and the value of ecosystems services to ensure our rivers, lakes and aquifers are protected;To reflect the benefit of discharges to river systems;To drive efficiency in water use, using market forces and smart regulation to lower costs and reduce burdens;To be fair to all abstractors, taking into account current licences;To be flexible and responsive to changes in supply and demand, including providing greater access to water when more is available; andTo meet our water needs for people and the environment at least cost to water bill payers, and the consumers of other products and services which depend on water. 6

What will the new system deal with?Water abstraction in England and Wales Helping to ensure the environment doesn’t deteriorate Helping to build resilience to climate change But: 7Not Current Environmental DamageNot drought

Reform OptionsWe propose 2/3 new options for the future of water abstraction, plus business as usual Working names: 1. Current system 2. Current system plus3. Water shares[4. Pay as you go]Basic design challenge: to minimise impacts of water scarcity while avoiding deterioration of the environment with smarter regulation

Option 1: Current System Abstractor 3 Abstractor 2 Abstractor 1 Abstractor 4 Environmental Water Fixed charge per unit of water licensed When flows are low the environment can lose out Trading is rare. Transaction costs are high RSA process used where environment needs more water Some time limited licences

Abstractor 2 Abstractor 1 Option 2: Current system plus Environmental Water Abstractor 3 Abstractor 4 ‘smarter’ HoFs Shorter term trading easier Reviews to ensure environment is protected to required level

4 3 Option 3: Water Shares Available water divided into shares. Shares available at different levels of reliability As water availability changes, the size of the pie is adjusted. This defines ‘allocation’ As water availability changes abstractors with less reliable shares receive reduced allocations 2 1

Option 3: Water Shares Abstractors can trade allocations Abstractor 2 Abstractor 1 Environmental Water Abstractor 3 Abstractor 4 Abstractor 4 In this case to adapt to low flow Wide range of trading is easy e.g. Up stream

Emerging cross-cutting themesProportionate implementationDriven by environmental risks and net trading benefits Adaptive systems Potential to evolve if water becomes scarcer ‘Unbundling’ to reduce transaction costsSystem more flexible and easier to tradeDischarges integrated into the systemControl based on consumptionRecognises water re-used downstreamCatchment management and reviewsTriggers and hands off periods13

Key Transition principles14 Quasi-grandfathering Taking into account use and licensed volumes Taking into account current HoFs or lack ofNot used to address unsustainable abstractionWFD, Habitat Directive etc will drive environment protection levels under current system rulesNo compensation for any loses

So what might this mean for water ‘rights’?Across the board‘Rights’ being more within a collective catchment socio-economic and environmental stewardship While grandfathering relative security and quantity Introducing a duty to discharge Abstractors facing future water scarcity risksWater SharesCreating potentially a more secure ‘right’ in the form of a share, not an absolute rightAnd allowing much easier trading, particularly to promote investment in increased collective water security15

How are we assessing the options? Research project assessing the impacts that different abstraction reform options might have on people and organisations. Catchment case studies to explore how water is managed within different catchments; under different climate scenarios to assess the potential benefits, costs and risks Assessment of overall costs and benefits across England and Wales

What next?Digital engagement. Consultation and Impact Assessment later this year Bill early next Parliament completed ~2017 Implementation to follow asapMore information www.defra.gov.uk/abstraction-reform/ 17

Questions ? Henry.leveson-gower@defra.gsi.gov 18