Examination of Witness (Questions 40-59)
MR PATRICK MURPHY
WEDNESDAY 23 OCTOBER 2002
40. Turning to the benefits, how do we work those out? We have again had advice that ecology is often rather more robust that we would imagine, and that therefore significant changes in chemical quality of water may not produce quite the dramatic effects, one way or the other, either the deterioration or the improvement, that one might expect. How do we measure the benefits that we are expecting to achieve?
(Mr Murphy) First of all, the Directive does not require the benefits to be measured. It is a results-based Directive, so that the necessity is to have the least-cost path to achieving those results.
41. So there is an objective but the benefits are not actually quantified.
(Mr Murphy) It is not part of the process of the Directive. It is not a cost-benefit approach. You have an objective which you try to achieve by a least-cost path. I mean, having said that, there are a lot of benefits associated with the Directive. There are social benefits as well as environmental benefits, some of which are easier to give a value to than others.
42. Can you see any economic benefits in the Directive, ones that we can directly quantify and say, "Well, yes, that is going to mean that this particular sector will improve its effectiveness and profitability" or "This one will not thrive where before it was not possible to see it"?
(Mr Murphy) Yes, there are lots of them.
43. Such as?
(Mr Murphy) First of all, if you were to talk to the water industry, particularly the water providers, there are significant costs associated with the clean-up of drinking water: you have to take out pesticides, you have to take out industrial chemicals. Also, for industries abstracting water, they quite often have to clean up the water, and if the water is cleaner then that is a reduction in their costs. The benefits in terms of amenity value: if you have the potential for fishing or for recreational uses, then that also will have been a clear economic benefit. There are clearly and have been significant negative impacts for river pollution and water pollution on the shellfish industry and also on inshore fishing industries, so, again, there would be an economic benefit there. And, again, amenity value in terms of a recreational value in coastal areas as well as in inland areas.
44. Has anyone quantified any of those?
(Mr Murphy) Piecemeal they have. There have been a lot of studies done in terms of looking at different individual parts, such as—
45. Say the shellfish sector. That is an obvious one. The Chairman has mentioned it in the French example but presumably it is possible to define those sorts of benefits.
(Mr Murphy) It is possible.
46. But no one has tried to do that.
(Mr Murphy) There are individual studies. Whether or not there is one in relation to the shellfish industry, I do not know, but I know that there are studies in relation to rod and line fisheries or salmon fisheries or trout fisheries.
47. Turning back to the cost issue, the thinking is to reallocate these costs back, almost, in a sense, to polluter pays or something like that.
(Mr Murphy) Yes.
48. What sort of models do we have to show how that might happen?—particularly with diffuse pollution, where, by its very nature, it is a bit difficult to say who is responsible for what and when.
(Mr Murphy) Yes. The diffuse pollution issue is going to be a major challenge, but if I may explain the concept and then where the challenges or the barriers are I will come to in a second. When looking at a particular river basin, you are going to have impacts from abstraction, you are going to have impacts in terms of industrial discharges, sewage discharges and then you are going to have diffuse pollution. When looking at the type of pollution, the type of pollution that we get from agriculture and diffuse sources is essentially pesticides and it is nutrients. There are problems with erosion but the main problems are with nutrients and with pesticides. If within a particular river basin it is clear that you have a chronic and ongoing problem with either too many nutrients or too high pesticide levels, then I think it is legitimate that in that case you know where it is coming from. It is coming from agriculture.
49. Yes, but not from a particular farm.
(Mr Murphy) No.
50. And it is a particular farm that has to pay the bill.
(Mr Murphy) Sure. But what you can do, by sampling, is you can identify the area where it is coming from.
51. Many of these sectors are internationally competitive. Therefore, by allocating a cost to them, while one can say within the EU, for those who sign up to this Directive, that is a level playing field, if you are a pig breeder, for example, you are competing against someone from well outside the European Union who may well not be bound by any of these concerns. Is that something that people have thought through?
(Mr Murphy) I think it is a consideration for us.
52. It is rather like the one Phil raised earlier about his shoe factories and so on moving elsewhere.
(Mr Murphy) It has to be a consideration for all aspects of legislation which have an effect upon producers' costs. But the concept of sustainable development, although it is always possible that manufacturers and producers here decide to relocate, the basic requirement in the Treaty is to achieve a good, high level of environmental protection, and, as the Treaty obligation stands, that has to be a primary consideration which cannot be diluted by saying, "If we do this . . ." We cannot compromise on that primary objective.
53. What you are implying there is that, while you note it, it is not a matter of relevance to the implementation of this Directive.
(Mr Murphy) I think the obligation is to achieve a certain environmental standard. But, working back from that, the secondary objective is to achieve that in the most cost-effective manner and not to be soft on the environmental objective.
54. Finally, presumably we ae going to move to a stage in which within a particular river basin there may have to be consents for certain activities to take place so that ecology may not be damaged in the future. Has someone conceived of how a consent process may occur, in which someone said, "I'd like to set up this particular operation here that may involve abstractions from this river" or "It may involve the release of some material into our environment"? Is that something that people have imagined might happen in future? Of course some of those things already happen.
(Mr Murphy) Yes.
55. To get an abstraction, you cannot just dig a hole and start. It has to be done through the environment agency now. What process are you imagining might occur in those circumstances?
(Mr Murphy) The only thing that is foreseen in the Directive is that there has to be a licence for abstractions, for abstractions from ground water—
56. Which in this particular country we already do and I would imagine in most other European states that must be true now.
(Mr Murphy) Yes. It is almost invariably the case, with one or two exceptions, that any abstractions from either ground water or surface water has to be licensed.
57. But there is no particular reason to suppose that in the planning process this Directive will add to the time involved in determining an application to proceed with a particular land use.
(Mr Murphy) No, in terms of the change in the current parallel, the impact is more likely to be in relation to agricultural land uses, because we already have systems for permitting, for regulating emissions and for controlling abstractions, and also for things like fish farms, etc, etc. So they are all more or less controlled and regulated reasonably well at the moment. The difficult area is the area of diffuse pollution, because of—the point you made earlier—where is it coming from. How do you make the polluter pay if you do not know exactly what he is polluting? The fact that that is a problem, we still have to tackle it, because the diffuse pollution is going to be the major challenge in the next 50 years.
58. In your submission you indicate that the technical guidance documents are agreed by consensus and are non-binding on Member States but they are going to be used as the reference documents when they design their implementation plans. How are we going to ensure that there is not the cry—as is so often the case with European legislation in the United Kingdom—that other people do not do it as well as we are doing it? How will there be some element of uniformity? Because there seems to be in fact an element of subsidiarity in this, in that Member States are going to design regimes that are suitable for their circumstances. In the context of the long European rivers to which your presentation referred, I can well see the benefit of that, because it is a very different scenario than in the United Kingdom, but in terms of equivalence how are we going to approach that, given this amount of subsidiarity to Member States and determining the strategy?
(Mr Murphy) One of the reasons why we embarked upon this process of the Common Implementation Strategy was the trying to develop a common understanding of how the Directive should be implemented. But, as I said earlier, Member States are free to interpret that as they so wish because implementation is the responsibility of the Member States. We are not going to intrude on that. Member States have that legal responsibility. Collectively the Commission as a guardian of the Treaty will be responsible for monitoring that the Directive is implemented correctly throughout the European Union, but we will have the national legislation, the way it is transposed, in the Member States. We will also be able to examine the River Basin Management Plans and the action programmes which are developed for each river basin and which have to be published by each Member State. Also the requirements to carry out an economic assessment and also an assessment of the pressures and impacts and also to establish monitoring requirements. What it means is that we will have a yardstick against which to judge whether the Member States are actually fulfilling their requirements under the Directive. There will always be an expert judgment, but there will be a reference point. If we decide to challenge a Member State and say, "We do not consider that you have developed your River Basin Management Plans in an adequate manner" if they are so far away from the reference point defined in the technical guidance documents, then I think we will have a legitimate case to say, "There is no reason why national conditions have caused you to deviate so far from the—
59. Are you going to look at it the other way round? If you thought that somebody had gone a bit over the top, saying, "You do not actually have to do all of that," compatible with your comment earlier about least-cost solutions.
(Mr Murphy) I think it is unlikely that we would tell anybody that they do not have to go that far. The Article of the Treaty says that is a minimum requirement; Member States can go further if they want to.
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