Water improvement costs higher than expected

The water framework Directive could cost up to £2.5 billion per year - five times the expected cost, the Environment Department (DEFRA) revealed in July. It may help DEFRA build a case for delaying costly improvements until after the Directive’s 2015 deadline.

DEFRA’s ‘preliminary cost effectiveness analysis’ is a crucial stage in implementing the Directive, which requires rivers, lakes and other water bodies to achieve good ecological status by 2015. Until now, the cost of achieving it - and who will pay - has been far from clear.

This autumn, DEFRA will use its final analysis to inform ministerial guidance to the Environment Agency on improvement measures in the first six-year cycle of river basin management plans due in 2009.

The analysis was led by experts from DEFRA and the Agency with input from key interest groups including the water sector, industry and farmers.

The draft results, revealed at a DEFRA workshop in July organised by Coastal Management for Sustainability, should be treated with caution.1 Kevin Andrews, the DEFRA economist who managed the project, warned "uncertainty was endemic".

DEFRA analysed the costs under two scenarios: achieving good status by 2015 implementing all tried and tested measures as soon as possible; or achieving the objective in later planning rounds ending in 2021 and 2027 by putting off disproportionate measures.

Under scenario one, the cost ranges from £1.3 to £2.5 billion per year. Under scenario two, the cost falls to £0.7-1.35 billion per year. Nevertheless, this is higher than DEFRA’s original £500 million per year estimate made when the Directive was transposed.

The analysis will provide grist to the mill of those concerned that the Directive is too ambitious. The higher the estimated cost, the easier it is to justify weaker measures.

The Directive allows member states to extend deadlines and set alternative objectives, but only where improvements would be ‘technically infeasible’ or ‘disproportionately expensive’. DEFRA and the Agency have already signalled they intend to make full use of the provision (ENDS Report 372, pp 42-43 ).

At the workshop, DEFRA’s head of water quality, Chris Ryder, praised the Directive’s focus on cost effectiveness as being "more rational" than other "prescriptive" EU Directives.

Environment and conservation groups - and the European Commission - will be keen to see DEFRA justify its reasons for delaying improvements.

The analysis is split into chapters on each impact:

  • Chemicals: DEFRA assessed the costs of achieving the Directive’s requirements for 42 priority substances, taking account of the European Commission’s proposed Directive on environmental quality standards for priority water pollutants (ENDS Report 388, pp 38-39 ).

    The focus is on 11 substances that water framework advisory group UKTAG predicts will fail the standards by 2015, including cadmium, trichloromethane and the phthalate DEHP. Copper and zinc, while not priority substances, are also expected to cause compliance problems.

    The estimated cost of meeting the 2015 deadline is £210-530 million per year, with £167-335 million of this falling on water companies. It assumes that 10% of wastewater treatment works will have to fit tertiary end-of-pipe treatment by 2015.

    The alternative assumes only one third of this investment is made immediately. The rest may be made in later planning rounds if necessary. It also assumes more reliance on source control measures such as the existing ban on the flame retardant PBDE, will reduce the need to upgrade treatment plant.

    This reduces the cost to £100-260 million per year, with £84-167 million falling to water companies. The analysis concludes that an "adaptive phased approach is preferable".

  • Water resources: Water abstraction can affect the flow of rivers, threatening the good status objective.

    Almost 59,000 megalitres of water per day is abstracted in England and Wales, almost a third for public supply. UKTAG says the ‘river flow deficit’ - where abstraction takes flows below acceptable standards - is 3,560Ml per day in England and Wales, with several hotspots in the Thames and Humber river basin districts. Most of the deficit is due to abstraction for public supply.

    The Agency has longstanding plans to reduce the deficit through the reform of the abstraction licensing regime, but DEFRA has delayed taking this forward (ENDS Report 383, pp 43-44 ).

    Other measures considered in the analysis include creating new resources such as reservoirs, reducing demand through household metering and improving appliance water efficiency. It calculates the average unit cost of reducing the deficit is £2-5 million per Ml.

    The estimated total cost for achieving good status in England and Wales by 2015 is £3.6-19.5 billion. This would require abstraction licensing reform plus all the other measures considered.

    Delaying good status to 2027 would cost £2.8-10.6 billion. The focus would be on tackling over-abstraction in hotspots through licensing reform before looking to other measures. Under both scenarios the bulk of the cost would fall on water companies.

    The analysis concludes that the cost of achieving the 2015 target is "unjustified" and "may not result in tangible benefits". It supports a phased approach up to 2027.