Memorandum from English Nature
SUMMARY
1. AMP4 is of major importance for the protection
of statutory nature conservation sites. Schemes proposed by English
Nature and the Environment Agency are based on a robust assessment
process using best available information and expert judgement.
We have advised the Government that the majority of these schemes
are necessary to achieve compliance with the EU Habitats and Birds
Directives and the Countryside and Rights of Way (CRoW) Act 2000,
by protecting European sites known as Natura 2000 and Sites of
Special Scientific Interest (SSSIs).
2. Under AMP 3, 90 schemes received funding
to protect wildlife on 45 SSSIs. We have advised that AMP4 should
include schemes to address water quality on 63 SSSIs and Natura
2000 sites, and water resources schemes on 46 sites, as well as
over 120 investigations which may lead to the need for further
schemes by 2010. The Habitats Directive and the Government's Public
Service Agreement (PSA) target that 95% of SSSIs (by area) should
be in favourable condition by 2010 require these schemes to be
implemented by 2010, and therefore funded under PR04. Another
43 schemes have been proposed to contribute towards Government
commitments to restore priority habitats under the UK Biodiversity
Action Plan (UK BAP).
3. In 1998, the Environment Agency and English
Nature began a joint Review of Consents process to identify all
consents, including water company discharges and abstractions,
affecting Natura 2000 sites. This review of over 60,000 consents
affecting water quality or water resources will be completed in
three phases from 2004, 2006 and 2008, and the Agency must affirm,
modify or revoke damaging consents within two years of the completed
investigations (ie all within the AMP4 period 2005-10). There
is no scope for delaying implementation beyond 2010. Any attempt
to do so will pose infraction risks for late or non-compliance
with EU Directives, and risks failure to achieve the PSA target
for SSSI condition.
4. We have advised the Government that additional
schemes are likely to be identified during the AMP4 timetable
as the Review of Consents process is completed. These will require
funding under logging up or interim determination orders. It is
essential therefore that the present impediments to logging up
are addressed.
5. Despite a rigorous assessment process
by the Environment Agency and English Nature, and robust scrutiny,
Ofwat has proposed a constrained environmental programme which
we believe would reduce the scope and number of nature conservation
schemes below that required to achieve statutory obligations.
This would lead to infraction risks, achieve only a minimal reduction
in the average overall size of the bill increase and will probably
have to be reversed within the AMP4 period to achieve compliance.
1. Introduction
English Nature is the statutory body that champions
the conservation and enhancement of the wildlife and geological
features of England. We work for wildlife in partnership with
others, by:
— advising—Government,
other agencies, local authorities, interest groups, business,
communities, individuals on nature conservation in England;
— regulating—activities
affecting the special nature conservation sites in England;
— enabling—others to manage
land for nature conservation, through grants, projects and information;
— enthusing—and advocating
nature conservation for all and biodiversity as a key test of
sustainable development.
We have statutory responsibilities for nationally
important nature conservation sites: SSSIs, the most important
of which are managed as National Nature Reserves.
Through the Joint Nature Conservation Committee,
English Nature works with sister organisations in Scotland Wales
and Northern Ireland to advise Government on UK and international
nature conservation issues.
2. English Nature's role in the PR04 Process
2.1 English Nature's role in the periodic
review is to advise the Secretary of State on the nature conservation
component of the environmental programme in England, including
both water quality and water resources aspects, in conjunction
with the Environment Agency. English Nature is a member of the
regulators group for the PR04 process, and was a member of the
working group that designed and commissioned surveys of customer
opinions in 2003 and 2004.
3. Nature conservation components of the
environmental programme
3.1 Initial Ministerial Guidance (January
2003) identified three key legislative and policy drivers for
nature conservation schemes in PR04: the EU Habitats and Birds
Directives, the CRoW Act 2000, and UK BAP. Schemes proposed under
the Habitats and Birds Directives are needed to comply with the
Government's legal obligations to protect European sites known
as Natura 2000, to ensure the achievement or maintenance of favourable
conservation status for habitats and species protected at such
sites.
3.2 Initial Ministerial Guidance required
that where schemes under the Habitats and Birds Directives and
CRoW Act drivers are identified at a high level of certainty,
action must be taken to cease or modify discharges, and that funding
must be made available where abstraction licences need to be varied
or revoked to ensure favourable conservation status. Work to affirm,
modify or revoke consents under the Environment Agency's Review
of Consents affecting Natura 2000 sites will be completed by 2006,
2008 and 2010 for high, medium and low priority sites respectively
(see para 4.2 below). We advise that there is no scope for delaying
implementation beyond 2010, the review programme already fully
exploits the time allowable for implementation and any further
delay will pose infraction risks.
3.3 Failure to include schemes identified
under the CRoW Act driver will place at risk the Government's
PSA target that 95% of SSSIs (by area) should be in favourable
condition by 2010, and will make it difficult to convince others
to play their part. It would also undermine the statutory duty
(s28G of the CRoW Act) placed on public bodies, including the
Environment Agency, Ofwat and the water companies, to conserve
and enhance SSSIs in carrying out their functions.
3.4 Around 43 nature conservation schemes
which are not linked to statutorily protected sites have been
proposed, which would contribute to meeting UK BAP targets to
restore specific priority freshwater habitats. These have been
subject to cost benefit analysis. Although falling into the category
of schemes for which choices can be made, we believe they offer
significant gains with a very small impact on prices. To exclude
BAP schemes would delay the achievement of the UK BAP targets
and desired outcomes of the England Biodiversity Strategy (October
2002). It would also reflect poorly on Government's regard for
the commitments it made with others: (a) at the World Summit on
sustainable development in Johannesburg in 2002 to reduce the
rate of biodiversity loss by 2010; and (b) to halt biodiversity
loss in the EU within the same timescale.
3.5 Three water companies have proposed
schemes which should help to tackle some water quality issues
at catchment level through land management actions, such as reducing
livestock density and blocking moorland gripping, that could be
funded through the PR04 process. The majority of these land management
actions are directed at water companies' SSSI landholdings and
will make a significant contribution to the achievement of favourable
condition for these sites. We support these proposals both as
schemes or investigations for funding under AMP4, and as an objective
for future AMP rounds as part of a more integrated and sustainable
approach to managing inputs.
4. Process for providing advice on the size
and scope of the nature conservation programme
4.1 Schemes needed to address problems with
water quality or water resources in Natura 2000 sites and SSSIs
were determined in close collaboration with the Environment Agency.
Joint guidance was developed to determine the need for schemes
(at a given level of certainty, from LoC 1—high, to LoC
6—low certainty, see Box 1 below) or investigations. The
level of certainty with which schemes were proposed for specific
sites was determined jointly with Environment Agency, based on
jointly agreed criteria for: (a) degree of risk to or impact on
a site; and (b) strength of association with water company activity.
4.2 The basis for considering individual
sites under this process, depended on present scientific understanding
of the association between water quality or water resources/flows,
and ecological response within a given water or wetland habitat.
In the case of Natura 2000 sites, a programme of research and
assessment to inform the Environment Agency Review of Consents
process was begun in 1998. Following an initial phase of risk
assessment, sites were categorised as high, medium and low priority
for completion of the review, with completion dates for the assessment
of consents (alone or in combination ) by 2004, 2006 and 2008
respectively. Any necessary revocations or variations in permits
must be identified and planned within two years of these dates.
The selection process for relevant schemes under AMP4 is therefore
underpinned by a programme of several years of investigation.
Implementation of schemes will take place only when each site
assessment is complete and the roles of all other permissions
assessed.
Box 1
EXPLANATION OF LEVELS OF CERTAINTY USED IN
RECOMMENDING NATURE CONSERVATION SCHEMES
| Level 1 | There is a proven link between a water company abstraction or discharge and damage to the ecological integrity of the site, or failure to meet relevant Environmental Quality Standards (EQS)
|
| Level 2 | Signs of deterioration in, or risks to, the ecological integrity of the site are apparent and/or EQS are breached. The current understanding of the site is that there is a high risk that the problem is caused by a water company discharge or abstraction. Investigation work has not established this with sufficient confidence but we expect that such work can resolve the issue.
|
| Level 3 | A link between a water company abstraction or discharge and potentially detrimental impact on the hydrology or water quality of a site has been demonstrated sufficiently. Ecological damage may not be readily observable, however, there may be initial signs of the site condition deteriorating.
|
| Level | As Level 2 however, there is no established link with water company abstractions or discharges. The site will be showing signs of deterioration in ecological integrity or EQS failure but the risk of this being caused by authorised water company activities is viewed as moderate.
|
| Level 5 | The site is showing signs of deterioration in ecological integrity or EQS failure but there is a low risk that this is due to authorised water company activities. There are other factors in evidence, which could have caused the ecological integrity of the site to deteriorate or failure of the EQS.
|
| Level 6 | There are no signs of damage to the ecological integrity of the site and that the risk posed by water company abstractions and discharges is low
|
4.3 For AMP4 planning purposes, our joint advice with
the Environment Agency is that all schemes at LoC 1-3 should be
included for funding within final business plans (or for funding
options appraisal where the precise scheme is uncertain for water
resources schemes). Once the assessment process for sites under
the Review of Consents is completed, we anticipate that a number
of schemes currently at lower levels of certainty are likely to
require to be brought into the programme, and there may be some
movement of scheme certainty in the opposite direction.
4.4 Ofwat has proposed a constrained programme under
which only those schemes at LoC 1 should be included. We have
advised that schemes at LoC 2 and 3 are not optional—there
is a high probability that these schemes will be confirmed once
the Review of Consents process has been completed. Limiting funding
to schemes at LoC 1 will lead to infraction risks and misrepresents
the costs to water companies of the programme required to achieve
compliance. These costs will have to be passed on to customers
and funded by Ofwat through logging up or interim determinations.
Excluding them now will not achieve real cost savings and will
potentially mislead customers about future bill increases.
4.5 Some schemes have been challenged (before or during
the development of draft business plans) on the basis of high
relative or absolute costs. These have been reviewed with the
Environment Agency, and in a limited number of cases where we
have agreed that there is uncertainty over the outcome of a proposed
scheme, further investigation has been required rather than a
costed scheme at this stage.
5. Nature conservation achievements under AMP3
Achievements under AMP3
5.1 PR99 was the first in which substantive consideration
had been given to schemes for the protection of nature conservation
sites. Included in AMP3 are schemes and investigations on 72 SSSIs.
This constitutes a capital investment of £100 million. £40
million is being spent on phosphorus or nitrogen removal at 72
sewage treatment works on 29 SSSIs. £60 million is being
spent on schemes to combat over-abstraction on 18 SSSIs and investigations
into water resources problems on 27 SSSIs. The AMP3 investment
period (covering 2000-05) is not yet complete, and the majority
of nature conservation schemes are scheduled for completion towards
the end of that period. At the last full reporting period in March
2003, 10 SSSIs had completed investigations and nine SSSIs had
completed schemes.
5.2 Examples of schemes under AMP3 include:
— restoration of flow levels to parts of the River
Eden, Cumbria, a Site of Special Scientific Interest (SSSI) and
Special Area of Conservation (SAC) under the EU Habitats Directive,
which has enabled fish to migrate through one of the major tributaries;
— restoration of water levels in parts of North
Dartmoor SAC and SSSI which have improved habitats for brown trout
and valley mire vegetation;
— removal of phosphates for sewage treatment works
discharging into Bure Broads SSSI and SAC in Norfolk, Woodwalton
Fen in Cambridgeshire, and Loe Pool lagoon SSSI in Cornwall;
— investigation of the impact of numerous point
source discharges into the river Wye SAC, which has enabled more
targeted recommendations for phosphorus removal at sewage treatment
works under AMP4. Installation of some phosphorus and ammonia
reduction schemes has already led to reported favourable condition
on downstream stretches of the river;
— reduced abstraction has, with other action to
restore wetland conditions, allowed a return to good quality reedswamp
at East Ruston Common SSSI and improvements are expected to waterfowl
populations.
The AMP4 nature conservation programme
5.3 A summary of the environmental programme has been
published in A Good Deal for water (September 2003). A
list of schemes was submitted to water companies for costing at
the end of May 2003 and has subsequently been further reviewed
by English Nature and the Environment Agency in the light of additional
information. Table1 shows numbers of sites affected by schemes
submitted under the statutory nature conservation drivers. Around
260 schemes to tackle water quality problems at 63 statutory nature
conservation sites were identified at higher levels of certainty.
Similarly, schemes are needed at 46 sites to deal with water abstraction
problems. A further 121 site investigations also require funding
under the AMP4 programme.
Table 1
SITES SUBMITTED BY EA/ENGLISH NATURE FOR AMP 4 FUNDING
FOR SCHEMES OR INVESTIGATIONS UNDER STATUTORY NATURE CONSERVATION
DRIVERS
| | Sites with schemes at LoC 1-3
| Sites with investigations |
Water quality | HD
| 43 | 35 |
| SSSI | 20
| 25 |
| Total | 63
| 60 |
Water resources | HD
| 35 | 42 |
| SSSI | 11
| 19 |
| Total | 46
| 61 |
| |
| |
HD refers to Habitats and Birds Directive and Ramsar sites,
LoC refers to the Level of Certainty with which a scheme has been
identified.
5.4 For water resources schemes, it is difficult to identify
schemes without further options appraisal (eg of water availability
or use within a catchment) even though impacts on or risks to
sites (and hence need for action) from water abstraction were
clearly recognised at a high level of certainty. Hence, where
water resources schemes could not be proposed at this stage, the
Environment Agency recommended to water companies the use of a
"sustainability reduction" approach, to enable an estimate
of the scale of compensatory water provision that would need to
be made in order to protect sites. Estimates based on sustainability
reductions should have been included within draft business plans
for schemes with high levels of certainty and on this basis a
forecast of the scale of the cost of water resources programme
could be made.
5.5 In its advice to Ministers, Ofwat has proposed a
constrained capital programme of £15 billion. We believe
that this would significantly reduce the scope and number of nature
conservation schemes below that required to achieve statutory
obligations. As the nature conservation programme comprises only
around 10% of the cost of the total quality programme, this reduction
is likely to have only minimal impact on the average overall size
of the bill increase and will probably have to be reversed within
the AMP4 period for reasons set out above (see paras 4.2-4.4).
The Environment Agency has advised that the assessment on which
Ofwat's recommendations are based has overestimated the costs
of environmental improvements, and that there is scope for greater
scrutiny of the other pressures for bill increases. We refer you
to the evidence from the Environment Agency on this point.
5.6 English Nature joined the other regulators, as well
as Water UK and Wildlife and Countryside Link, in commissioning
a survey of customer views on the services provided by the water
companies. Nationally, customers confirmed that it is important
to maintain current levels of service, rather than allow reduced
levels. They also wanted to see some improvements and support
was given by the majority of customers to environmental improvements.
A similar picture of national support for environmental improvements
was evident from the responses to the joint statement launched
by regulators in August 2003 (see Ofwat website for a summary
of responses).
Parallel action on diffuse pollution
5.7 In joint advice to Ministers (November 2003), the
Environment Agency and English Nature have made it clear that
measures to reduce impacts by other sectors are needed in parallel
with action on the discharges and abstractions made by water companies.
Nutrient pollution, especially from phosphates, causes changes
in aquatic plant communities and eventually can lead to algal
blooms. Both point and diffuse sources contribute in different
ways to this problem and both sources must be tackled together.
Diffuse water pollution from agriculture (DWPA) is a major source
of nutrient enrichment in many freshwater SSSIs and Natura 2000
sites and English Nature has recently identified those sites most
at risk (Prioritising designated wildlife sites at risk from
diffuse agricultural pollution. English Nature Research Report
551, November 2003). We have proposed a two tier approach with
basic measures across all catchments at risk, and targeted action
where additional SSSI protection is necessary. We expect Defra
to be consulting on its DWPA proposals in the Spring, and it is
important that swift action is taken following the consultation.
Such action is needed by 2010, in addition to sewage schemes under
AMP4, to meet legal obligations under the Habitats Directive,
to help achieve the SSSI PSA target and to ensure proportionate
action by other sectors in tackling water quality impacts on SSSIs.
6. Dealing with uncertainties in this AMP round
6.1 The timetable for the Environment Agency Review of
Consents for Natura 2000 sites does not match that for the price
review (para 4.2 above) and so a number of assessments to determine
which discharges or abstractions are adversely affecting Natura
2000 sites will not be completed in time for this price review
6.2 Similarly, a number of investigations or options
appraisals have been identified for funding by the water companies
under AMP4, where it is not certain whether schemes, or what type
of schemes, are needed to achieve favourable condition of SSSIs.
In order to ensure that the PSA target for SSSIs is achieved,
it is likely that investigations funded in this price review will
lead to a need to take remedial action before the next review.
6.3 Some companies may therefore face changes to costs
between this price review and the next. The licences by which
water companies operate provide for changes in price limits between
reviews under the interim determination order (IDOK) process,
where extra costs arising from new obligations exceed a particular
threshold related to the turnover of the company. Where the net
additional costs do not exceed this threshold, the company must
carry these costs under the logging up process until new price
limits are set out the next review.
6.4 It is likely that many of the additional nature conservation
schemes will be insufficient to trigger the IDOK threshold for
changing price limits, although the scope for this is currently
being assessed by the Environment Agency with Ofwat. However the
uncertainties associated with the present logging up procedure
have led to concerns about reliance on it for bringing forward
essential nature conservation schemes. We think that measures
should be put in place to give companies confidence that funding
(including financing costs up to the next price limit period)
will be made available for schemes that are justified under the
Habitats Directive and CRoW Act drivers outside the timetable
for the price review.
6.5 Given that the scale and nature of uncertainty of
this element of the environment programme is known already, as
well as the timetable for producing further information that will
enable schemes to be determined, a planned approach to logging
up is both possible and justifiable. We suggest that serious consideration
should be given to amending the present procedure such that companies
receive assurance that schemes will receive funding as soon as
they have been approved by the quality regulators (having considered
the additional information), rather than at the end of the AMP
programme, so that action can be taken to implement schemes within
the timetables required to comply with statutory drivers.
February 2004
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