Environment, Food and Rural Affairs CommitteeWritten evidence submitted by the Country Land and Business Association

1. The CLA represents 35,000 members who collectively manage and/or own about half of all rural land in England and Wales. CLA members can be individuals, businesses, charities, farmers and estate managers who collectively represent around 250 different types of rural businesses. They generate jobs; provide land and buildings for investment, housing for local people as well as producing food and a whole range of land-based environmental goods and services.

2. The rural economy makes a major contribution to the national economy. Land-based businesses, within the rural economy, provide the environmental and recreational benefits in the countryside that are valued by the population as a whole. Access to water provides security for rural areas and allows successful and sustainable rural economy to develop. A fair allocation of water for the land based business sector is essential to any reform of the abstraction licensing system.

The White Paper’s Aims

3. Defra thinks the current abstraction system is not up to scratch and wants to simplifying the licensing process by making them all time-limited while also encouraging more trading of water rights.

4. The CLA thinks that whatever failings have been identified we should give credit where credit is due. Abstractors have become ever more efficient in their use of water. They have developed abstractor groups and risen to the challenge of meeting the Environment Agency Catchment Abstraction Management Strategies (CAMS). There are six abstractor groups operating across England and more than a thousand farms rely on irrigation. On the other hand, the current framework has generated insufficient interest in the trading of water rights and the development of water markets.


5. It is essential we plan ahead for future needs while remembering that the allocation of water must be based on sound science and it must ensure food security and land management needs are met ie the need to protect the long run food production capacity of the EU, but do so while enhancing the natural environment. Farmers and land managers in England and Wales have the means to deliver food and environmental security. We need to deliver food and environmental security.

6. But it is essential they are not priced out of the market. As demand for water continues to increase, farmers and land managers can be guided by organisations such as Waterwise which help make the best use of the available resources.


7. Consideration must be given to agriculture and land management, particularly at times of drought, when allocating water. At the moment other users, domestic, industrial and the environment are given preference.

8. Otherwise, farmers and land managers will continue to be disadvantaged more than they already are, as for example water companies have powers to maintain their security of supply through legislation and recover costs through their charging structures. Government has to ensure that the needs of rural businesses are correctly supported.


9. The Government is rightly looking at long-term as well as short-term issues. In the long-term climate change may result in increased water variability and reduced water availability. This could affect river flows as well as groundwater recharge and there is the potential for increased risk of drought that needs to be planned for.

10. Population growth and climate change will mean that demand for water is likely to increase from all abstractors. According to Government this could be an increase of 3.5% by 2020 and as much as 35% by 2050 (The Case for Change—EA 2011). This is why the CLA would ask for safeguards to ensure the agriculture and land based industries receive a fair allocation of water.

11. It is also essential that land based business are not priced out of the market by the buying power of other industries and their ability to use pricing mechanisms to cover costs. The CLA thinks that very serious consideration should be given to developing a two tiered market that will allow a ring-fenced allocation of water for agriculture and land management. We recognise that this approach might be against the economic interests of some members who would benefit from selling water outside the sector but safeguarding the long-term needs of agriculture and land based businesses is crucial for long-term viability. In the future they may not be able to buy an allocation of water back to meet their needs.

12. The biggest user of abstracted water by far is the utilities sector. The next biggest user, although at significantly lower volumes, is agriculture, forestry and fisheries. Initial research from the Cave Review and the Environment Agency suggests it is mainly the food and agricultural sector that lacks sufficient water.

Further Policy Action

13. Two factors are thought to be limiting access to water rights and constraining growth:

Some holders of abstraction licences only partially use them or they do not use them at all, which in some cases may prevent others using these rights to support economic growth.

There are barriers to buying water rights from others due to lack of information to facilitate the market.

14. Addressing these problems will benefit many land based businesses. But there are still legitimate reasons for holding a licence even if the holder uses little or no water. A licence may be seen as insurance against uncertainty and as underpinning the asset value of a business.

15. Many rural businesses have serious concerns about the blight (the devaluation of property and business) which will be attached to their business when licences are revoked. Land that is currently worth £10,000/acre could be worth as little as £2,000/acre if the allocation of water is changed. The reduction in the business turnover will also be significantly less and its contribution to the local economy. In East Anglia alone agriculture contributes £3 billion annually to the economy.

16. It is also essential to reduce the regulatory barriers that stop the development of on farm reservoirs and other water storage initiatives. The CLA think that extending the permitted development rights for reservoirs could help in this area.

17. Changes to the licensing system and the allocation of water could have significant impacts on the value of rural businesses and that is why the CLA are calling for a framework that will:

Ensure agriculture and land managers receive a fair allocation of water.

Extend the current compensation arrangement beyond 2012 so that there is an increase in the security of water rights.

Remove the presumption of renewal and extend licence periods to encourage investment-subject to availability and environmental impacts.

Put in place measures to address security of supply for food production and land management within any further development of the water market by ring-fencing for agriculture.

Support sustainable water supplies by promoting on farm reservoirs through advice, incentives and encouraging a sympathetic planning and permitting system to evolve.

January 2012

Prepared 4th July 2012