Reforming water abstraction in the UK: a parliamentary perspective

Jerome Mayaud, DPhil student at Oxford University’s School of Geography and the Environment, shares his experience of a recent UK Government posting.

It can be daunting for both policymakers and academics to interact productively. Luckily, the UK’s Parliamentary Office for Science and Technology (POST) is designed to bring scientific research to parliamentarians (MPs and Lords) in short, accessible formats, primarily through four-page policy briefings called ‘POSTnotes’. In the spirit of accessibility, POSTnotes are freely available to the public, and can be useful sources of information for researchers too.

I received funding from the Natural Environment Research Council (NERC) to undertake a 3-month fellowship at POST starting in September 2016. This involved producing my own POSTnote on ‘Reform of Freshwater Abstraction’. The topic was very different to what I normally study for my PhD, so it provided a fascinating insight – from right in the heart of Westminster – into the Government’s proposals to reform the UK’s abstraction regime.

Freshwater resources in the UK are under increasing pressure. While total freshwater abstraction has declined by 15% since 2000 (mainly within the electricity industry), demand for water will likely increase over the coming decades due to population growth. Climatic changes, although uncertain, could also contribute to dwindling freshwater supply, due to a reduction in summer rainfall and increased evaporation from surface water. By the end of the century, serious droughts like that of 1975/6, when standpipes were installed in parts of the country to ration water, could have a 1 in 10 annual chance of occurring. Without adequate quantity and quality of water, the ecology of freshwater bodies may deteriorate. There could be tough economic consequences, too: Water UK estimates that imposing the most severe water restrictions will cost the UK economy £1.3 billion per day.

The current system for licensing water in England and Wales was introduced in 1963. At the time, water supply seemed ample and there were fewer concerns about the environmental effects of abstractions. Today, the system is dated and inefficient, and too inflexible to both protect freshwater environments and to meet future business and public water supply needs. As a result, the Department for Environment, Food and Rural Affairs (Defra) and the Welsh Government have proposed reforms to the regime that should be implemented by the early 2020s. Their focus is to link abstraction volumes more closely to water availability.

An interesting proposal is for the abstraction system to be managed collaboratively by both abstractors and regulators, using rules adapted to the needs of each catchment. The most water-scarce catchments (less than a third of the total) will be designated as ‘enhanced catchments’, with specific rules for environmental controls and trading of permits. In these enhanced catchments, abstractors will be provided with a proportion (or ‘share’) of the total available water, as well as well as short-term allocations based on these shares. This would allow a range of pre-approved trades to occur quickly and easily, including ‘put and take’ water transfers (e.g. from reservoirs and re-use schemes). Trading setups are likely to vary by catchment, but will be based on an electronic system that allows water prices to be agreed between the buyer and seller directly.

In theory, trading reduces adverse environmental and economic effects in times of water stress, and may encourage efficiency and promote innovation. Australia is often held as an example of how the introduction of tradeable licences has led to efficient new usages of water. However, the extent to which this can be attributed to trading is disputed, and some commentators have cast doubt on the applicability of the Australian experience to the UK. For instance, Australia’s large rivers lend themselves to being dammed far better than smaller rivers in the UK, so water can be stored, regulated and allocated over much longer timescales. Challenges of trading include the possibility of large abstractors dominating the market at the expense of smaller users, the emergence of hoarding and third party ‘water brokering’, and a perverse increase in abstraction that could result from reduced prices following efficiency gains. It is clear from the Australian case that strong regulation and clear communication of information, risk and permit reliability will be essential for establishing a functioning water market in England and Wales.

Alongside the proposed abstraction reforms, Ofwat, the water regulator in England and Wales, expects water companies to build ‘resilience’ into their business plans. A ‘twin track’ approach will likely be needed to improve water security in England and Wales, with strategies that both enhance supply (e.g. transfers between rivers, new reservoirs and dams, desalination, effluent reuse) and reduce demand (e.g. smart metering, improving building standards, tackling cultural and behavioural barriers).

The latest focus on resilience also encourages companies to use innovative modelling to improve evidence around future risks. Water companies can stress-test policy options, or assess them against multiple success criteria over hundreds of scenarios using approaches such as Robust Decision Making (e.g. as is done by Water Resources in the South East, a regional grouping of six companies).

For a fully integrated abstraction system to succeed, however, water companies should not work in isolation from other stakeholders. The UK Climate Change Risk Assessment 2017 evidence report promotes the notion of ‘collective arrangements’ for water, such as farm-based water-sharing schemes and river catchment management groups. Indeed, over 100 catchment partnerships (composed of 1,500 organisations) already exist in the UK, potentially forming a basis for Defra’s catchment-based approach. The abstraction system may also benefit from interactions with land management, for instance through rewarding land users that conserve water and invest in natural storage. Exit from the Common Agricultural Policy (CAP) could present an opportunity to introduce new incentives for land managers to improve water efficiency in the UK.

Researching my POSTnote was a challenge, especially when it came to balancing some very opposing views on a subject matter that is inherently highly political – access to water. But it was also an incredibly exciting time to be in Parliament. The ‘corridors of power’ were abuzz with the fallout from Brexit, Theresa May’s appointment as the new Prime Minister, and of course Donald Trump’s accession to the White House. It is our duty as researchers to connect with the policy world to a certain extent, and if done carefully and creatively, policy engagement can be rewarding and enriching. I would highly encourage any PhD students with an interest in policy to apply to RCUK’s policy internships scheme.