The proposal was issued by the European Commission in the spring (ENDS Report 266, pp 41-44 ). It is intended to repeal much existing EC legislation on water, and replace it with a general framework for maintaining and improving the quality of all surface and groundwaters and for sustainable use of water resources.
A key target in the proposal is that "good" status should be achieved in all waters by 2010, albeit with provision for delays or derogations in defined circumstances. "Good" status is the second of five quality classes, but is not defined in any detail. Instead, this task would be left to a committee of national officials.
Another key requirement is that water resource management should be carried out on a river basin basis. A multi-stage assessment of the status of each river basin and the pressures acting on it would culminate in 2004 in a river basin plan and a programme of measures to meet the Directive's objectives.
Backing this up would be a duty on Member States to ensure full recovery from customers of the costs of providing water services by 2010. The proposal also makes provision for environmental costs to be incorporated in water charges. Member States would be able to give exemptions from full cost recovery, in particular to allow a "basic level" of household water consumption at "affordable" prices.
Environment Ministers held an initial debate on the Directive in June, but negotiations are certain to stretch well into the future.
The need to achieve "good" status would be the Directive's main cost driver. The DETR says that the definition of this status is so fundamental that it cannot be left, as the Commission has proposed, for later agreement by the committee of officials, but must be considered by Ministers themselves.
The DETR also argues that there should not be a single uniform definition of the various components of "good" and the other statuses, but an approach which allows for the wide variation in climatic, geographical and ecological conditions across the Community. Equally, it wants "consideration" given to the "potential for a more flexible approach to setting objectives reflecting priorities for improvement" - meaning that Member States should be given more discretion to determine the pace of water quality improvement programmes rather than aim for a single 2010 deadline.
Moves are already under way to get a fuller definition of the various statuses to enable Ministers to understand the potential cost implications of the Directive before they agree it. The issues are likely to be tackled by groups of experts who will work in parallel with, and feed their conclusions into, a group of officials from Member States who are discussing the Directive between Ministers' quarterly meetings.
However, Kevin Lloyd of the DETR's Water Quality Division told the Lords inquiry on 2 July that "it is important not to understate the problems" that the expert groups will face.
Three different statuses are envisaged by the Directive. The simplest, chemical status, would be defined in terms of environmental quality standards already set at EC level for dangerous substances.
The second, the quantitative status of groundwaters, has received little attention to date. The UK, said Mr Lloyd, has been arguing that it needs a great deal more attention "because it is quite hard to see how the balance between the level of recharge and the abstractions made from it is actually to be expressed in terms of the objective to be achieved."
Most attention has focussed on the third status, the ecological quality of surface waters. This in turn has three components - physico-chemical parameters, biological quality and the physical structure of watercourses - and defining ecological quality in terms of these becomes "increasingly more difficult as you move down the three," said Mr Lloyd.
In England and Wales and some other EC countries, the biological quality of rivers is defined in terms of their invertebrate populations. However, less work has been done on classifying the biological status of lakes, estuaries and coastal waters, most of which are also covered by the Directive.
In addition, said Mr Lloyd, there are difficult questions about how ecological objectives should be set. The Directive envisages that this should be done in relation to a reference state, but while the state cited most often is the biological quality of pristine waters it could instead be a "semi-impacted" state, he suggested.
Difficulties such as these have led some witnesses to caution against the setting of ecological quality objectives at an early stage. Consultants WRc, for example, contended in a written submission that "the assessment of ecological quality of waters is still a developing science and the feasibility of the development and application of a sufficiently robust and comparable system across all regions of Europe still needs to be established through a substantial European-wide research programme. Until such a system is established and proven it does not seem sensible to proceed too far in the direction of integrating it into a Directive."
In similar vein, the Environment Agency said that it would be a "very big hurdle" to have a single EC-wide water classification system, and suggested that the aim should be a convergence of national systems. And the Water Services Association (WSA) proposed that the definitions of the various water statuses should be sorted out at Member State level, but within a "common accepted framework".
Many witnesses also questioned the practicality of achieving "good" status in all waters by 2010. WRc pointed out that if the Directive defined "good" quality in a similar way to the classification system used in England and Wales, then 42% of UK rivers would need improvement by 2010(see table ).
For the WSA, John Sexton (Director, Environment and Science, Thames Water) suggested that the Directive could be "one of the most expensive that Europe's produced," potentially requiring "unlimited" expenditure. The WSA argued that the goal for 2010 should be limited to having river basin plans and improvement programmes in place, with continuous improvement towards "good" status as a long-term aspiration.
The Environment Agency was less pessimistic, suggesting that the practicality of the 2010 target would not be known until "good" status was defined. However, it also pointed out that the improvements needed to achieve this status would not be known by 2004, when river basin plans would have to be completed, since measures required under recent Directives on urban wastewater treatment, nitrate from agriculture and integrated pollution prevention and control will not be fully in place by then. A more flexible "stepping stone" approach allowing Member States and river basin authorities to set interim targets and priorities would be preferable to a single uniform deadline, the Agency suggested.
The Agency was much less confident about the feasibility of achieving "good" status in groundwaters by 2010. Particularly in industrial areas, it said, "remediation and self-purification of groundwaters may take decades to take effect."
Along with English Nature, the Agency also expressed concern that retention of the 2010 deadline in its present form would create pressure from Member States to weaken other features of the proposal, including the definition of "good" quality, so as to make it less costly.
English Nature and the Royal Society for the Protection of Birds (RSPB), which might have been expected to argue in favour of the 2010 deadline or something even tighter, did indeed suggest that in some cases it does not fit well with other objectives, such as the need for early review of discharge consents to protect sites designated under the EC Directive on habitats.
In general, however, they do not favour a uniform deadline for all waters. According to English Nature, greater emphasis should be given by the Directive to preventing deterioration of waters with high ecological quality than to restoring badly polluted surface waters, "which often involves extremely high costs for little wildlife gain." And the definition of "good" ecological quality should contain different categories because improverished aquatic ecosystems could not be expected to reach the same ecological quality as designated wildlife sites.
The DETR appears relaxed about the first phase of the proposed move towards recovery of the full costs of water use. According to Alan Davis, head of its Water and Land Directorate, "we do not see any difficulty in demonstrating that we meet the requirement of the Directive" - though the Environment Agency later expressed doubt whether full cost-recovery is currently being achieved.
However, Mr Davis said that the Commission's proposal, set out in an explanatory memorandum for the draft Directive, that it would be for Member States to determine if, how and when to introduce charges to cover the environmental damage and resource depletion costs of water consumption was not reflected in the text of the Directive itself.
Andrew Wells, Head of Water Supply and Regulation, added that there needed to be a "large public debate...about how far we wish to go down that route because the actual valuation of...environmental effects...is a major issue which is very far from being resolved. Then the question of `Do you want to take that valuation and impose it on water consumers?' is a further big issue. A further big issue is what you do with the money that you generate, because it is not money reflecting actual costs; it is either a tax or a charge you would use for some other purpose."
Other witnesses expressed divergent views about future environmental taxes on water. The European water industry federation Eureau, whose written evidence reflected the WSA's views, argued that charges should initially be based only on water and sewerage infrastructure costs, and problems in assessing the ecological costs associated with water use should not be allowed to delay important water resource improvement schemes.
In contrast, the RSPB contended that environmental costs should include the economic value of the functions of wetlands and "non-use" costs of the aquatic environment.
However, the RSPB's stance was somewhat ambivalent. The value of biodiversity, its evidence points out, is difficult to express in monetary terms, and charges should be set so as to influence water consumers' behaviour rather than aim to reflect environmental costs which are difficult to quantify.
Questioned by Lord Lindsay about whether charges intended to influence water consumption would be affordable by everyone, the RSPB acknowledged the need for a "social safeguard". Lower prices could be payable for a level of consumption which met basic household needs, with environmental charges perhaps being imposed for consumption above this level. The WSA and RSPB did agree on one point - that at least some of the revenue from environmental charges should be spent on environmental improvement rather than scooped up by the Treasury.
Jerry Sherriff, the Agency's Head of Water Resources, pointed out that the proposal only required forecasts of water supply and demand in the river basin planning process, without obliging competent authorities to look behind this at end-use consumption and leakage control. And the proposed definition of "good" and other quality statuses omitted any reference to water quantity, which was particularly important for wetland conservation. One member of the Committee, Lord Cranbrook, observed that the whole issue had been "shoved back" to Member States, which he found remarkable in a framework Directive.
The RSPB also stressed the importance of demand management to nature conservation. In the UK, it pointed out, a recent study had identified 354 rivers and wetlands which are affected by or at risk from overabstraction. Of the 300 areas in the UK of importance to bird protection, more than half are wetlands, but the Environment Agency and English Nature were "not very effective" in redressing water imbalance problems which were damaging some of these sites.
Similar pressures on wildlife are at work elsewhere in the EC. The RSPB told the inquiry that the biggest threat to nature conservation in Spain is a series of plans to irrigate 600,000 hectares of agricultural land which will require the construction of around 200 dams.
The Directive, the RSPB argued, needed to give greater weight to demand management to address threats to biodiversity. It currently features only in the list of possible "supplementary" measures to be included in river basin programmes rather than in the mandatory "basic" measures. The proposal also lacks any explicit powers for competent authorities to demand improvements in leakage control in water distribution systems. From a nature conservation viewpoint, these weaknesses are compounded by the absence of a duty on the authorities to assess the biodiversity of river basins when preparing their plans.
As well as looking for improvements in the Directive in these areas, the RSPB argued that a truly integrated approach to river basin planning would incorporate flood defence, land drainage and land use planning. Even in England and Wales, where catchment management planning has a lengthy history, integration of this kind is poorly developed.
However, the DETR told the inquiry that the Directive as it stands would not require any significant change in river basin management in England and Wales - though changes may be needed in Scotland where the arrangements are "rather less formalised".
The Agency was less sanguine. It is currently developing Local Environment Agency Plans in about 160 river basins, but many of these are for sub-basins rather than at the full river basin level envisaged by the Directive. According to Jerry Sherriff, plans at the latter level may result in loss of precision and detail.
Scotland has no formal river basin plans, although some have been drawn up by co-operation among interested parties. Control of water abstraction is also very limited, and both the RSPB and the Scottish Environment Protection Agency drew attention to reduced flows in rivers caused by over-abstraction of the Dumfries aquifer. Legal changes in both areas may well be needed to comply with the Directive.