Future investment in water supply and sewage treatment were among the topics for discussion when the Environment Agency Board met in Huddersfield yesterday

"There are many factors that will influence water prices, such as capital investments, the cost of borrowing, operational obligations and the scope to improve efficiency" explained Environment Agency Chairman Sir John Harman.

"It is equally important to ensure environmental obligations are recognised. There has been considerable reduction in the environmental impact of water company abstractions and discharges over the past 20 years, and this has led to an improvement in the quality of our rivers and beaches.

"However, there is still much to do. At the current rate of replacement it will take some companies hundreds of years to lay new water and sewage pipes, and build new water treatment plants. Issues surrounding the ever-increasing demand for water, the effects of and climate change and further environmental improvements are all important and will influence the review."

The Environment Agency has identified five broad priorities:

Supply and demand: Further investment is required in water efficiency measures, leakage prevention, new resource development and household metering, especially in areas of water stress caused by housing and population growth and climatic variability.

National environment programme: More investment is needed to prevent damaging sewage discharges, improve rivers and beaches and to protect habitats at risk from over abstraction.

Maintenance, improvement and protection of infrastructure: The summer floods highlighted the need for companies to protect their water distribution and sewage treatment plants.

Climate change: Water companies need to take action on mitigation and adaptation as they are in the front line of tackling and managing the effects of climate change.

Reducing surface water floods in urban areas: Urban flooding is a mix of water from sewers, rivers, groundwater, and intense rain run-off from roads, roofs and land. Responsibility for managing these different sources of water is fragmented between different organisations, including water companies, local authorities and the Environment Agency and others. The problem will increase with development pressures, climate change and ageing infrastructure.

According to the background papers, the most pressing issues relate to the gaps in policy revealed by the floods - including the defence of critical infrastructure, the management of urban flooding, the role of other operators, the ability to map and warn about the onset of urban flooding and the accuracy of weather forecasting.