The Environment Agency has launched a consultation on a proposal to use Environmental Improvement Unit Charge funds to implement hydromorphological measures - the outcome could have potentially significant implications for the amount of compensation currently paid to water companies when abstraction licences are withdrawn.

The Environment Agency issues abstraction licences to anyone who wants to take more than 20m³ per day from rivers, lakes or groundwater sources and the EIUC forms part of the abstraction charge that funds the costs of compensation payments in relation to the licences.

The Government’s Water White Paper published in 2011 (Water for Life) asked the Environment Agency to consult on using EIUC income to fund hydromorphological measures that address the environmental effects of unsustainable abstractions. The Agency has been collecting EIUC funds since 2008 to pay compensation when it modifies or removes part or all of a licence without the agreement of the licence holder to address unsustainable abstraction. The consultation also asks whether the Agency should include the EIUC funds that have been collected since 2008.

With water resources under growing pressure as demand for water increases whilst its availability is becoming more uncertain, the Agency is taking more action to address abstractions which cause environmental problems.

In some circumstances hydromorphological measures – solutions designed to mitigate river flows – can enable the regulator to address unsustainable abstraction more cost- effectively, more quickly and with less disruption to business activity than licence modification or revocation. In addition they can reduce or remove the need to secure new sources of water supply. 

To date the funds have not been used to pay for hydromorphological measures –in the Agency’s view extending the use of the funds to include paying for the implementation of hydromorphological measures would allow it to increase the speed at which it addresses unsustainable abstraction and, at the same time, reduce impacts on businesses.  

The European Water Framework Directive (WFD) has set challenging targets for understanding the pressures on water bodies and taking action to address them in order to improve the chemical and ecological quality of the natural water environment. There are more than 15 main categories of hydromorphological measures in WFD river basin plans across Europe.

The Water White Paper states that "such measures could protect water ecosystems and restore sustainable abstraction at a lower cost than changing licences, while still enabling abstractors to take the water they need. …… Hydromorphological measures will only be used in practice in locations where investigation of their costs and impacts demonstrate value for money and protects water ecosystems."

Use of funds could save £millions in water company compensation

The outcome of the consultation could have potentially significant implications for the amount of money spent on compensating water companies where abstraction licences are withdrawn by the Agency. The consultation documents cite several interesting case studies, including;

• A wetland habitat affected by the public water supply groundwater abstraction. Hydromorphological measures were in place within a matter of months of the floodplain restoration funding being made available: The Environment Agency installed sluices in the flood banks of the river at the upstream end of the site so that the flood plain could flood at high flows. The carefully managed flooding is used to offset the effects of groundwater levels being lowered by the public water supply abstraction. Compensating the water company for compulsory reductions in their licensed abstraction volume would have taken between 1 – 7 years before compensation payments could be agreed and made, and these could have totalled £15 million
• Mixed abstraction uses affecting a fen Site of Special Scientific Interest (SSSI) Groundwater modelling show that abstraction is likely to have reduced groundwater levels at the site, but it is suspected land drainage around the site has a greater effect. The preferred approach incorporates some tree clearance and hydromorphological measures to expand the fen land and reed bed - the improvements and site monitoring to check their effectiveness are estimated to cost £585,000. This could begin within a matter of months of this funding being made available. Compensating abstractors for compulsory reductions in their abstractions licensed volume would take between 1 – 7 years before compensation payments could be agreed and made, and these could total £19 million. 

One of the Agency’s key principles is that preference will be given to measures that provide a passive solution to delivering the necessary environmental outcome, over more carbon intensive measures such as pumping water, or those requiring active intervention, such as manually setting, adjusting, and maintaining sluices. However, formal agreement would also have to be reached on who bears responsibility for the maintenance and/or restoration of physical hydromorphological measures before they are implemented.

Deadline for submission of responses to the consultation is 14 June 2013. Click here for further information.