Environment, Food and Rural Affairs CommitteeWritten evidence submitted by Ofwat

We welcome the Government’s Natural Environment White Paper and the inclusion of some commitments to improving the quality of our rivers and water bodies.

We support fully efforts to embed the value of ecosystems in decision-making and believe a key component of this is valuing water. Ensuring that we understand the value of this precious resource to people and the environment, at different times and in different places, will help drive sustainable behaviour and sustainable investment.

The creation of Nature Improvement Areas has the potential to lead to the restoration of ecosystems by encouraging partnership working. Without knowing the anticipated scale of the Areas, it is difficult to understand how they may work in practice, but we believe that water availability and quality is a key component. In some Areas where over-abstraction is a concern, it will be appropriate to work with the water companies. There may also be the opportunity to implement schemes that combine benefits, such as the catchment management schemes being piloted by several companies.

We are committed to fully exploring the potential for catchment management solutions as cost-effective and low-carbon solutions. We will be reviewing the operation of these schemes to ensure that customers receive value for money and that the companies manage the risks appropriately. We believe that in pioneering payment for ecosystem services in this area, we will have a valuable evidence base from which others may draw in the future.

It is right that efforts to comply with the Water Framework Directive are at the heart of future management of our water ecosystems. We agree with the Government that measures must be fair and sustainable, and believe that this should consider fairness to customers.

So far, the costs of compliance with the Water Framework Directive have fallen mainly on customers of the water and sewerage companies, but it is essential that in future these costs are shared fairly and not placed entirely on customers.

An important part of meeting the Water Framework Directive’s requirements will be tackling diffuse pollution and we are pleased that the White Paper outlines several specific measures. We look forward to seeing more detail on how these commitments to deal with agricultural pollution will be met, along with the new strategy for tackling non-agricultural diffuse pollution.

Finally, we welcome the commitment to reform the abstraction licence regime and the demonstration that the challenges facing our rivers and water bodies are serious. It is important that solutions work both for the environment and customers, who may be required to pay for improvements. By considering the value water has, we can ensure that sustainable and innovative decisions are made, rather than simply focusing on investment, as 2.77 of this White Paper may imply.

As with most of the work to protect and enhance our water ecosystems, the Government has an opportunity to provide clarity on changes to the abstraction regime in the Water White Paper expected later this year. This is a significant opportunity to make lasting reforms that embed the value of water into decision-making by customers, the companies and economic and environmental regulators.

21 June 2011