www.wales.gov.uk www.defra.gov.uk River Basin Planning Guidance Volume 2 August 2008 Department for Environment, Food and Rural Affairs Nobel House 17 Smith Square London SW1P 3JR Telephone 020 7238 6000 Website: www.defra.gov.uk © Crown copyright 2008 Copyright in the typographical arrangement and design rests with the Crown. This publication (excluding the royal arms and departmental logos) may be reused free of charge in any format or medium provided that it is re-used accurately and not used in a misleading context. The material must be acknowledged as crown copyright and the title of the publication specified. Information about this publication is available from: Defra Ergon House London SW1P 2AL Tel: 020 7238 5420 E-mail: [email protected] Cover photo: Rainham Marshes Nature Reserve, Purfleet, Essex, courtesy of Simon Luker This document is also available on the Defra website at: http://defraweb/environment/water/wfd/management.htm Published By The Department For Environment, Food And Rural Affairs Product Code PB13154 Chapter Contents Page 1 Role and status of this guidance 3 2 Standards and criteria 6 Use of standards and criteria in river basin planning 6 Classification of surface water bodies Identification of high status Identification of good Status Heavily modified and artificial water bodies 7 Classification of groundwater bodies 8 Use of standards in regulation – surface water 8 Use of standards in regulation – ground water 10 Certainty about standards 10 Objectives 12 Protected area objectives 12 Drinking water protected areas 12 3 Extending deadlines rather than setting less stringent 13 objectives 4 Consideration of other policies 16 Impact of other policies and activities on baseline status 16 Consideration of the impacts of climate change 17 5 Range of measures and mechanisms available 21 6 Relationship between technical feasibility, effectiveness and disproportionate costs 7 Natural conditions 24 8 Technical feasibility 24 Assessing technical feasibility 24 National evidence for technical infeasibility 25 cost 23 River basin district and local evidence for technical 26 infeasibility 9 10 Cost effectiveness of measures 27 Assessing cost-effectiveness 27 National information on cost effectiveness 29 River basin district and local cost effectiveness 30 Disproportionate costs 31 Assessing disproportionate costs 31 National information on benefits 33 Economic efficiency: national balance between costs and 34 benefits River basin district and local benefits 34 Distributional arguments 35 National information on distributional arguments 38 River basin district and local assessment of distribution 39 issues 11 References 40 Table or figure Page Figure 1 The relationship between the WFD and other Community legislation 14 Figure 2 Flowchart for determining the application of WFD objectives 15 to water bodies and protected areas Table 1 Measures and mechanisms not currently available, but which are included in Option 2 of the updated WFD Impact 20 Assessment Table 2 Guiding Principles Of Cost-Effectiveness Analysis Table 3 Summary of Guiding Principles for Disproportionate Cost 32 Analysis 27 1 Role And Status Of This Guidance 1.1 This document is guidance from the Secretary of State and Welsh Ministers to the Environment Agency in relation to river basin planning in England and Wales. Defra and the Scottish Government have issued guidance to the Environment Agency and the Scottish Environmental Protection Agency on joint delivery of river basin planning in the Solway Tweed river basin district (October 2007). Under this guidance, where there is no special Solway Tweed arrangement in place or required, the Environment Agency should have regard to the River Basin Planning Guidance (volumes 1 and 2), which applies to the rest of England and Wales. It does not apply to the Scotland river basin district, river basin districts in Northern Ireland or the Gibraltar river basin district. 1.2 This is guidance to the Environment Agency on the practical implementation of the Water Framework Directive (WFD), issued under regulation 20(3) of the Water Environment (Water Framework Directive) (England and Wales) Regulations 20031 (the “transposing regulations”); and that provision as applied by regulation 5 of the Water Environment (Water Framework Directive) (Northumbria River Basin District) Regulations 20032 (the “Northumbria regulations”). It is also issued under paragraph 16(2) of Schedule 1 to the Water Environment (Water Framework Directive) (Solway Tweed River Basin District) regulations 20043 (“the Solway Tweed Regulations”). The references in this guidance to the transposing regulations should be read as including references to the transposing regulations as applied by the Northumbria regulations (with statutory modifications where appropriate4) and to the equivalent provision in Schedule 1 to the Solway Tweed Regulations. 1.3 The guidance is made by the „appropriate authority‟, namely by: the Secretary of State so far as it relates to river basin districts that are wholly in England and so far as it relates to those parts of the Solway Tweed and Northumbria river basin districts in England; Welsh Ministers so far as it relates to river basin districts that are wholly in Wales; and the Secretary of State and Welsh Ministers jointly so far as it relates to river basin districts that are partly in England and partly in Wales. 1.4 Following a consultation later this year the Secretary of State and Welsh Ministers will issue Directions to the Environment Agency on the principles of classification and the biological and environmental quality standards to be used in classification. This direction will be made under Section 40 of the Environment Act 1995. 1 SI 2003/3242 SI 2003/3245 3 SI 2004/99 4 See Regulation 5(2) to (5) of the Northumbria regulations for the modifications. 2 3 1.5 This guidance is an addition to the River Basin Planning Guidance volume 1, which the Secretary of State and the National Assembly for Wales5 issued to the Environment Agency in August 2006. By issuing this guidance, the Secretary of State and Welsh Ministers intend to assist the Environment Agency in carrying out its river basin planning functions, and in particular to help it to develop the River Basin Management Plans (RBMPs) which it will submit to the „appropriate authority‟ for approval. 1.6 The document covers the approach which the Environment Agency should take in relation to environmental standards and criteria, objectives, natural conditions, technical feasibility, cost effectiveness and disproportionate costs. The sections on technical feasibility, cost effectiveness and disproportionate costs all have a similar structure. They give guidance on how to interpret and assess these WFD terms and requirements include national information which relates to each of them, and discuss what further work the Environment Agency will need to do at the river basin district and local levels. 1.7 This guidance includes some of the key conclusions and outcomes from a great deal of work which has been carried out by Government, Environment Agencies and stakeholders. In particular: UK Technical Advisory Group recommendations on environmental standards and conditions; work on cost-effectiveness, disproportionate cost, and benefits which has been carried out by the Collaborative Research Programme on River Basin Management Planning Economics; and the preliminary Cost-Effectiveness Analysis, which Defra and WAG co-ordinated with the help of the Environment Agency and key stakeholders. The References section sets out where to find out more about this supporting information and evidence. 1.8 As the first volume of River Basin Planning Guidance explains, the Environment Agency cannot carry out river basin planning alone. Although the Environment Agency has overall responsibility for drawing up RBMPs, the WFD requires integration of water management issues across the hydrological cycle and with other environmental, social and economic priorities. To achieve this, the Environment Agency will need to work in partnership with the range of public, private and voluntary sector organisations that will be affected by the RBMPs. 5 By virtue of section 162 of and paragraph 30 of Schedule 11 to the Government of Wales Act 2006, the executive functions of the National Assembly for Wales are now exercisable by Welsh Ministers. 4 1.9 This guidance represents the views of the Secretary of State and Welsh Ministers at the time of issue. However there is ongoing European and national work in relation to the implementation of the WFD. This guidance cannot prejudge the outcomes of these work programmes, or other future developments, and it may be necessary to issue further guidance documents in future to reflect developments or changes in our understanding. 5 2 Standards and criteria Use of standards in river basin planning 2.1 The Environment Agency should use the standards and other criteria defining water body status set out in the final6 UK Technical Advisory Group (UKTAG) reports for: physico-chemical quality elements in surface water specific pollutants in surface waters the groundwater framework standards for the toxic, persistent and bio-accumulative priority substances that have been identified in accordance with Article 16 of the WFD and are set out in the daughter directive 7. for the relevant river basin management planning processes in England and Wales until they are formally adopted. For links to these documents see reference 5. 2.2 The relevant processes here are classification, objective setting, identifying the nature and extent of measures required to achieve objectives, assessing the costs of achieving good status, monitoring the effectiveness of measures, and monitoring to ensure no deterioration of water body status. 2.3 Standards and criteria developed by UKTAG will be formally adopted, following public consultation and further consideration by the UK Administrators of Specific Pollutants, on a statutory Direction under section 40 of the Environment Act 1995 to the Environment Agency concerning classification of water bodies. Environmental quality standards for Priority Substances will be formally adopted as criteria for good chemical status following transposition of the daughter directive. 2.4 It is likely that some standards and criteria will be reviewed over time in the light of further research, knowledge gained through monitoring and experience of the impact on the ecology of the aquatic environment of using them in regulation. Where this occurs UKTAG (or its successor) will carry out the appropriate peer and public reviews and the Direction on classification will be updated to reflect the amendment. Defra and WAG will advise whether any revision to standards or criteria should be applied within the current planning cycle, or introduced for the next cycle. 6 This means the reports once all changes to the recommendations have been made following the technical reviews, and in response to the outcome of intercalibration 7 Council of Ministers reached Political Agreement June 07, which text will now be the subject of a European Parliament Second Reading' 6 2.5 Should there be any amendment to any of the standards or criteria, once they have been formally adopted, the Environment Agency should review classification of a water body and any objectives set on the basis of the original standard, if it considers that there is a risk that the amended standard may significantly change the result of the classification, or require the objective to be amended. Classification of surface water bodies 2.6 The WFD requires each surface water body to be classified according to the worst rated quality element, including biological quality elements. This means that if any relevant quality element is assessed as being below, for example, the standard for good status, the water body must be classified as less than good status. 2.7 However, sub elements or metrics within a biological quality element may be combined in order to classify the quality element overall. 2.8 In identifying the status of individual water bodies, the Environment Agency should use the best available results of monitored quality elements and, in reporting the status of individual water bodies to the European Commission, indicate any additional information that has been taken into account in arriving at the classification and state the overall level of confidence and precision that applies to the classification. 2.9 So far as practically possible the Environment Agency should use the detailed technical guidance on the classification of surface water bodies covered in the UKTAG paper on classification (reference 5). Identification of high status surface water bodies 2.10 Each relevant biological, chemical, physico-chemical and hydromorphological quality element must meet the standard identified as consistent with a high status water body. “Relevant” means each monitored biological quality element and each monitored environmental quality element. Identification of good status surface water bodies 2.11 Each relevant biological, chemical and physico-chemical quality element must meet the standard identified as consistent with a good status water body. 2.12 Hydromorphological conditions must be capable of supporting the ecology of the water body. Failure of a hydromorphological condition limit for good status should not, in itself, be taken as a reason to classify a water body as less than good status if standards for the relevant biological quality elements are achieved. Heavily modified and artificial water bodies 2.13 The same standards should be used by the Environment Agency for classification of heavily modified and artificial water bodies, except where a physical modification that contributes to the heavily modified designation is 7 the direct cause of the failure of an environmental quality standard. Where this is the case, the maximum status (maximum ecological potential) is the value that can be achieved for the affected parameter when all appropriate mitigation measures that do not have an adverse effect on use or on the wider environment have been implemented. The target for such water bodies is Good Ecological Potential (GEP), which excludes measures making only a slight contribution to ecological potential. The Environment Agency should follow the guidance set out in UKTAG classification guidance for heavily modified water bodies. Classification of groundwater bodies 2.14 Groundwater status is determined by assessing the impact of human activities on a wide range of receptors (surface waters, wetlands, drinking water, general uses). 2.15 The Groundwater Directive (118/2006/EC) recognises that groundwater quality and roles can vary considerably from one groundwater body to the next; and that an approach involving a simple pass/fail against common standards would not result in an appropriate or reliable status classification. It therefore requires Member States to adopt a more bespoke and risk-based approach when assessing the chemical status of a groundwater body. 2.16 Member States must set threshold values at an appropriate level (i.e. nationally for groups of groundwater bodies, or for individual groundwater bodies) for substances which may pose a risk to the environmental or amenity uses of the groundwater body. Failures of these threshold values, or of the EU “standards” for nitrates and pesticides, will not automatically result in a “poor chemical status” classification but, rather, act as a trigger for investigation into whether the status objectives (including the protection of the amenity/environmental functions) of the groundwater body are being met. 2.17 The Environment Agency should follow the approach set out in the UKTAG classification guidance for groundwater bodies (reference 5), which provides a methodology for setting or amending threshold values and an approach to the use of these threshold values (and the nitrates and pesticides “standards”) when assessing whether groundwater is at good or poor chemical status. Use of standards in regulation – surface water 2.18 The Environment Agency should incorporate the new standards and criteria into existing regulatory processes in order to achieve WFD objectives. 8 2.19 Failure of a standard or criterion in a small part of a water body should not necessarily preclude action being taken to correct that part of the water body even if the damage is too small to affect the reported status of the water body. For example, the Environment Agency should also take account of the significance of the failure for wider (non WFD) objectives (e.g. amenity value or biodiversity objectives). Preventing deterioration 2.20 A key WFD objective is to prevent deterioration in the status of all water bodies (i.e. deterioration from one status class to a lower one). If the assessment of compliance with environmental standards indicates that a water body is unlikely to be able to accommodate further activities or developments such as additional abstraction or increased loading of a pollutant without causing failure of an environmental standard or condition, or an impact on biology, the Environment Agency should not normally authorise or endorse such activity without a detailed environmental assessment. 2.21 An environmental assessment would have to show that the activity would not prevent any WFD objectives being met (including non-deterioration) and consider alternative ways of meeting the objectives of the activity. However, this is further explained in the paragraphs below. 2.22 A proposal to modify the morphology of a water body may be assessed against the morphological condition limit, or suitable alternative. If this assessment suggests that the modification would have a negligible impact on the status of the water body, the Environment Agency may allow the modification without further investigation if it considers it appropriate to do so. 2.23 If the proposed modification would cause the relevant condition limit, or suitable alternative, to be exceeded for a high status water body, the proposal should normally be rejected, unless deterioration can be justified under the WFD (e.g. using the defence set out in Article 4.7), which applied from December 20068. 2.24 If the proposed modification would cause the condition limit, or suitable alternative, to be exceeded in a water body classified as good status, the Environment Agency should require an appropriate environmental impact assessment to inform its decision. This may be an existing suitable environmental impact assessment, providing it meets Environment Agency requirements for the assessment. 2.25 The same general principles apply to hydrological condition limits. The existing catchment abstraction management approach to managing flows should continue to apply, incorporating the thresholds recommended by the UKTAG. 8 8 See WFD Common Implementation Strategy position paper, endorsed by Water Directors at their meeting of 30/11/2006 - 1/12/06. 9 2.26 The Environment Agency may undertake or authorise activities that would be likely to cause a deterioration in water body status if the benefits of allowing the activity would outweigh the adverse environmental consequences and otherwise comply with WFD requirements, notably Article 4.7. The Environment Agency may advise other public bodies who undertake or authorise activities which would be likely to cause a deterioration in status as to the acceptability of the proposed activity. However, the decision to undertake or authorise the proposed activity in accordance with the WFD requirements remains the responsibility of the other public body. Use of standards in regulation – groundwater 2.27 For groundwater quality, classification “standards” are different to the conditions that are placed on permits (this is explained in the UKTAG paper 11b(iii) – “Application of Groundwater Standards to Regulation”). The differences arise because permits have to comply with the requirement to prevent or limit the inputs of pollutants to groundwater, which applies at a more local scale and is therefore normally more restrictive than the status objectives. 2.28 The EA should ensure that all permits are adjusted as necessary so that they comply with the new Directives, when legislative amendments are introduced. In addition to avoiding pollution, permits must not allow any deterioration in the status of groundwater, must not result in any significant and sustained upward trends in pollutants and should be consistent with the achievement of the status objectives of the groundwater body and any associated surface water bodies. Certainty about standards 2.29 If one or more standard is failed in a surface water body, the default assumption is that measures would be taken to address the failure of the standard. Similarly if an assessment of groundwater status reveals that an amenity or environmental criterion is not met then the default assumption would be to take necessary remedial measures. 2.30 However, when setting objectives the Environment Agency should consider how certain it is that the standard or criterion has been failed (taking account of the uncertainties inherent in monitoring) and; the likely ecological impact of the failure, taking account of all relevant information. 10 2.31 For standards and criteria whose derivation was supported by a lot of data on cause and effect, which provides confidence that failure of the standard causes a harmful impact9, the Environment Agency should take proportionate action to achieve compliance with the standard appropriate for the target class. For instance, to resolve a failure in the standard for dissolved oxygen, ammonia or a specific pollutant. 2.32 For some standards and criteria where the links between the standard/criterion and the biology are complex and less certain (e.g. standards for nutrients), failure of an environmental quality standard is not always enough to judge whether the biology the standard supports is truly impacted. Where this is the case the Environment Agency should take into account biological information, and any other available supporting evidence, in considering the case for improvement action. 2.33 The Environment Agency should ensure that its monitoring arrangements (including arrangements for gathering monitoring data from other regulators and deliverers) are sufficient to assess whether biological quality elements are impacted where this is necessary to allow it to make judgements on whether to require improvement action. 2.34 In cases where there is uncertainty surrounding the failure of the standard or criterion, it may be justifiable to set an alternative objective if: it is technically infeasible to achieve the default objective because “There is no information on the cause of the problem; hence a solution cannot be identified.” (see chapter on technical feasibility); or it is disproportionately costly to achieve the default objective because costs outweigh benefits as a result of the reduction in the estimation of the benefits which is necessary to reflect the low certainty that they will be achieved (see chapter on disproportionate costs). In these cases the Environment Agency must prioritise further monitoring and assessment to improve certainty. 9 Or an unacceptable risk of such an impact 11 3 Objectives 3.1 This section builds on chapter 9 of River Basin Planning Guidance volume 1, published by Defra and Welsh Assembly Government in August 2006, giving further guidance about WFD requirements in relation to objectives. Protected area objectives 3.2 As mentioned in volume 1, paragraph 9.1, the WFD establishes several types of objective for the water environment. Some of these are new requirements introduced by the WFD, but the WFD also incorporates objectives and requirements of some other water-related Directives so that these also become WFD objectives and requirements. Areas which are subject to the requirements of both certain pre-existing Directives and the WFD are known as WFD protected areas. 3.3 In some cases the pre-existing Directive is repealed and its requirements become WFD requirements instead, but in other cases the other Directive remains so there is a dual requirement to implement it – under the WFD and the Directive itself. This is shown in Figure 1. 3.4 When proposing objectives for WFD protected areas, the Environment Agency should follow the approach described in the UKTAG protected areas paper (reference 5). 3.5 As explained in volume 1, paragraph 9.11, the WFD alternative objectives and defences can only be used in relation to the standards and objectives arising from the mechanisms of the WFD itself, not in relation to standards or objectives arising from other Community legislation. 3.6 If the protected area is not also a water body, the WFD imposes a deadline for compliance of 22 December 2015 – unless the Community legislation under which the protected areas was established specifies some other date. Where the protected area is also a water body, the deadline also applies but that may be extended, where appropriate, in accordance with articles 4.4 or 4.5 of the WFD provided that, in so doing, compliance with the requirements relating to the particular protected area are not undermined. See the flowchart in Figure 2 for an explanation of this10. Drinking Water Protected Areas 3.7 For drinking water protected areas, the Environment Agency should aim to prevent any deterioration between or within status classes for the parameters set out in the EC Drinking Water Directive, as measured at the 10 Note: Defra Ministers have agreed that certain Sites of Special Scientific Interest (SSSIs) should be defined as water bodies on the basis of their significance according to CIS and UKTAG guidance and so be covered by WFD measures. These will be in addition to those riverine SSSIs already identified as waterbodies and those underpinning Natura 2000 and Ramsar sites. Proper management of both water quality and quantity is intrinsic to securing the favourable conservation status of such sites. 12 point of abstraction, so as to help reduce the level of treatment required to meet the standards of the EC Drinking Water Directive. 3.8 The Environment Agency will be more certain of meeting some WFD objectives than others as a result of variation in the level of confidence that applies to the classification of the water body and certainty about the effectiveness of measures. 3.9 Absolute certainty is not necessary for the setting of objectives. The Environment Agency should bear in mind that the WFD makes provision for the programme of measures to be reviewed and changes made if it appears that the set objectives will not be met. Provided that it can be demonstrated that reasonable efforts have been made to achieve set objectives, this will satisfy the requirement of „aiming to achieve‟ those objectives. 3.10 It is not necessary for the Environment Agency to associate a level of certainty/confidence with each objective it proposes. However, it should take certainty into account in objective setting. The benefits of meeting the objective will be uncertain if there is uncertainty about the classification of the water body or effectiveness of measures. It will therefore be more likely that action to achieve objectives will be disproportionately expensive and there will be greater benefits associated with action to improve the confidence in the classification and/or effectiveness of the measures. 3.11 Where confidence levels are low, the Environment Agency should take action to improve confidence so as to set objectives with greater confidence in future planning rounds. Extending deadlines rather than setting less stringent objectives 3.12 Where the conditions of both Article 4.4 and Article 4.5 are met, and the Environment Agency is faced with a choice between the two alternative objectives, its preference should be to propose an objective of reaching good status by an extended deadline, rather than setting a less stringent objective than good status (i.e. use Article 4.4 rather than Article 4.5 of the WFD). 3.13 The option to apply a less stringent objective remains available. The Environment Agency should propose a less stringent objective if it is clear from the outset that it will be infeasible or disproportionately expensive to achieve good status by 2027. Objectives must be reviewed every 6 years, and it may become necessary to set a less stringent objective in a later planning cycle if, as more information becomes known, (e.g. monitoring information, information about effectiveness of measures or new pressures) it becomes apparent that it is not going to be possible to reach good status by the extended deadline. (This would, of course have to be justified in accordance with the requirements of Article 4.5.) 13 Figure 1 The relationship between the WFD and other Community legislation Water Framework Directive 2000/60/EC WFD Daughter Directive on groundwater WFD Daughter Directive on priority substances (adoption anticipated Autumn 2008) WFD protected areas (ANNEX IV) To remain: Bathing Water (76/160/EEC, as replaced by 2006/7/EC) Drinking Water (80/778/EEC, as amended by 98/83/EC) Urban Waste Water Treatment (91/271/EEC) Nitrates (91/676/EEC) Other relevant Directives: Integrated Pollution Prevention and Control (IPPC) (96/61/EC) Major Accidents (Seveso) (96/82/EC) Environmental Impact Assessment (85/337/EEC) Sewage Sludge (86/278/EEC) Plant Protection Products (91/414/EEC) Habitats (92/43/EEC) Birds (79/409/EEC) The above are WFD basic measures to be included in programmes of measures (WFD Art. 10, Art. 11.3(a) & (d), Annex VI Part A) Drinking water protected areas Econ. significant aquatic species Recreational water incl. bathing waters Nutrient sensitive areas Habitat or species, incl. N2K sites Repealed: 2000 Dangerous Substances (76/464/EEC) Note: Partly repealed from 2000 with transitional provisions until 2013. 2007 Surface Water for the abstraction of drinking water (75/440/EEC) Exchange of info on quality of surface freshwater (77/795/EEC) Surface water sampling/analysis (79/869/EEC) [Reporting (91/692/EEC)] To be repealed: 2013 Water for Shellfish (79/923/EEC) Water for Freshwater Fish (78/659/EEC) Groundwater (80/68/EEC) [Dangerous substances related directives in Annex IX: Mercury Discharges, Cadmium Discharges, Mercury, Hexachlorocyclohexane Discharges and Dangerous Substances Discharges Directives] 14 Figure 2 Flowchart for determining the application of WFD objectives to water bodies and protected areas YES YES Is the protected area also a water body within the meaning of the WFD? Comply with articles 4(1)(a) or (b) as appropriate – unless stricter controls apply in relation to the particular protected area – in which case comply with those. In this case it is possible to rely on the extension & derogation provided for by articles 4(4) & 4(5) provided that such reliance does not undermine compliance with the requirements relating to the particular protected area. Is the element of water a protected area within the meaning of the WFD? NO The deadline for compliance is 22 Dec 2015 – unless otherwise specified under the Community legislation under which the protected area was established [Art 4(2)]. NO YES Comply with articles 4(1)(a) or (b) as appropriate. Is the element of water a water body within the meaning of the WFD? NO WFD objectives in respect of water bodies do not apply. 15 4 Consideration of other policies Impact of other policies and activities on baseline status 4.1 Action taken as a result of other policies will have an impact on the amount of action which needs to be taken to meet WFD objectives. Some other policies will assist with achieving WFD objectives, and others will conflict. The likely contributions which implementation of other policies will make towards achieving WFD objectives is described in the updated Impact Assessment (reference 2) and the policy context chapter of the pCEA (reference 9). 4.2 An analysis of how pressures on water bodies may change as a result of policies and activities already in place or planned is presented in the WRc report titled “Water Framework Directive (WFD) Economic Analysis: Information on trends to improve the baseline scenarios” (reference 10). This is also summarised in the policy context chapter of the pCEA. 4.3 The study undertaken by WRc revealed relatively little quantitative trend information and what trend information was gained was characterised by significant uncertainty. 4.4 The pressure-activity relationships where the potential impact of trend data was highest and where confidence was at least „reasonable‟ are: - Diffuse sources- Agriculture; Morphology - Flood defence; Diffuse sources – Transport – acidification; Navigation – Morphology; Navigation – Alien species. The Environment Agency should consider the information on trends contained in the WRc report in the river basin management planning process. 4.5 The pressure-activity relationships where the potential impact of trend data was highest, but where confidence in the information provided on trends was low are: - Diffuse sources – Urbanisation; Point sources – Urbanisation; Morphology – Urbanisation; Abstraction and flow – Transport; Point, diffuse sources, abstraction and flow – Industry. The Environment Agency should consider undertaking further work to improve the confidence in the trends and risk assessments associated with these pressure-activity relationships. 16 4.6 The pressure-activity relationships where high local variation was highlighted are: - - - Diffuse sources – Urbanisation, particularly with regards to combined sewer overflows and their programmes of improvement under the Asset Management Plans programme; Morphology – Transport; Agriculture – Diffuse source pollution, particularly in relation to the areas of land taking up the High Level Entry Schemes under the Common Agricultural Policy; All pressures – Ports and marinas and navigation; Morphological – Flood defence, with particular pressure on the South East. The consideration of these pressure-activity relationships will be particularly relevant for the Regional Liaison Panels in developing river basin district plans. 4.7 Given the uncertainties, the Environment Agency may wish to make different assumptions about the impacts of policies on trends in baseline status for the alternative scenarios in the draft river basin management plans (and options for the accompanying impact assessments) which are discussed in chapter 7 of the first volume of River Basin Planning Guidance. These assumptions may vary between river basin districts, and in particular may need to reflect policy differences between England and Wales. 4.8 In future river basin management planning cycles, the Environment Agency should review the impact of other policies and activities planned or in place at that time on the status of water bodies and take this into account when developing programmes of measures and setting objectives. Consideration of the impacts of climate change 4.9 The UK‟s strategy for tackling climate change11 is set out in the Climate Change Programme 2006. Our efforts include striving to reduce greenhouse gas emissions, with the long-term aim to reduce carbon dioxide emissions by some 60% by about 2050, and adapting to cope with the impacts of climate change. In Wales, the Welsh Assembly Government‟s 2007 programme for government – One Wales, a progressive agenda for the government of Wales12 aims to achieve annual carbon reduction-equivalent emissions reductions of 3% per year by 2011 in areas of devolved competence. 11 12 http://www.defra.gov.uk/environment/climatechange/uk/ukccp/pdf/ukccp06-all.pdf http://wales.gov.uk/strategy/strategies/onewales/onewalese.pdf?lang=en 17 4.10 Climate change is likely to increase the risk of pressures affecting the water environment. The Environment Agency should consider the likely change in pressures caused by climate change and how this may impact on the effectiveness of measures. In so far as it can be, the Programme of Measures in the first RBMPs should be „climate-proofed‟ with the aim of ensuring that measures are effective, sustainable and cost-efficient under changing climatic conditions. 4.11 The Environment Agency should aim to identify Programmes of Measures that contribute to UK and Welsh Assembly Government efforts to reduce greenhouse gas emission and related targets, help manage the consequences of climate change and do not add to the overall burden of climate change causes and impacts. It should seek to mitigate any additional potential burden by adapting the measure or identifying alternative measure(s). The carbon impacts of WFD measures should be factored into the decision-making process along with other relevant impacts and costs but they cannot be used as an excuse for not achieving WFD objectives. 4.12 The Environment Agency should, where possible, seek to identify measures that both reduce the pressure they seek to address and reduce the impact of climate change as a pressure in its own right. 4.13 The Environment Agency should seek to make best use of its WFD monitoring programme to detect climate change trends. It should seek to improve its understanding of the rate of climate change, the pressure exerted by climate change on the water environment and the indirect impact climate change has on other pressures for consideration in future planning cycles. 4.14 Work is on-going at a European level on the process to include climate change in WFD implementation. The Environment Agency should consider future outputs of the EU WFD Common Implementation Strategy‟s Strategic Steering Group on Climate Change and Water when taking account of climate change in the river basin management planning process. 4.15 Fuller consideration of the effects of climate change should be given in future planning cycles in accordance with any relevant guidance that may be available at that time. Climate change should be considered at several steps within the river basin management planning process, including characterisation, analysis of pressures and impacts, economic analysis, monitoring, design of programme of measures and setting of objectives. In its review of river basin characterisation, the Environment Agency should consider how climate change affects reference conditions and the typology of water bodies and take these into account. 18 5 Range of measures and mechanisms available 5.1 As explained in River Basin Planning Guidance volume 1, Chapter 10, a measure is any action which will be taken to help achieve WFD objectives, and a mechanism is the policy, legal and financial tools used to bring about those actions. There is a very wide range of possible WFD measures and mechanisms. 5.2 As mentioned in River Basin Planning Guidance volume 1, Chapter 4, river basin planning principle x “Develop methodologies and refine analyses as more information becomes available”, there may be changes in the range of available mechanisms as policies and legislation develop. When developing river basin management plans, the Environment Agency should take into account both measures and mechanisms which are already available, and those which the Secretary of State and Welsh Ministers have indicated are likely to become available in the near future (for example measures which are under consultation in England and Wales, or are included in the Water Strategy for England – Future Water – that Defra Ministers issued in early February 2008). The Environment Strategy for Wales sets out the Welsh Assembly Government‟s long-term strategy for the environment of Wales, which will be underpinned by a Policy Statement on Water in Wales. The Environment Agency should maintain dialogue with Defra and the Welsh Assembly Government to ensure they are apprised of mechanisms under development. 5.3 It is not possible, or right, to prejudge the outcomes of future consultations and Ministerial decisions on changes to measures and mechanisms. But in order to carry out the river basin planning process the Environment Agency will need to make some assumptions about future legislative changes. For these purposes the Environment Agency should, pending further information, make assumptions based on the measures and mechanisms which were included in the option 2 for the WFD Impact Assessment. 19 Table 1: Measures and mechanisms not currently available, but which are included in Option 2 of the updated WFD Impact Assessment Measure/mechanism Current situation in England and Wales Consultation on transposition Implementation of new groundwater launched May 2008 and is due to directive close on 20 August 2008 Adoption Anticipated Autumn 2008. Implementation of priority substances Methods of transposition being directive investigated England: Consultation on draft order and guidance for WPZs planned New arrangements for establishing September 2008 Water Protection Zones Wales: Need for new WPZ arrangements is under consideration. Making barriers passable for more Principle approved. Consultation on types of fish and eels statutory instrument planned. Power included in NERC Act 2006. Consultation on proposals for first use Ban on sale of some aquatic invasive of this power closed in January 2008 species and summary of responses is expected in summer 2008. General Binding Rules General binding rules for non- Policy development for GBRs is currently at a preliminary stage. agricultural diffuse water pollution Control on phosphates in domestic Phosphates & SUDS laundry detergents Consultations for both were launched Sustainable Urban Drainage Systems April 2008. The Summary of (SUDS): adoption and maintenance responses on phosphates was responsibilities for permeable published in July and the SUDS surfaces, filter strips and swales, responses will be published within the Surface Water Drainage summary in infiltration devices, basins and ponds Autumn 2008. A Government response will be issued thereafter. New delivery mechanism morphological restoration Consultation on hydromorphological measures ended May 2007. Next steps being considered, including for looking at mechanisms to restore morphological conditions in water bodies though Catchment Restoration Funds. 20 6 Relationship between natural conditions, technical feasibility, cost effectiveness and disproportionate cost 6.1 The WFD differs from previous EU water legislation in that it allows for consideration of natural conditions, feasibility, costs and benefits when setting environmental objectives. 6.2 As river basin planning principle vi “Make use of the alternative objectives to deliver sustainable development” makes clear, these provisions are the mechanism in the WFD for considering other environmental, social and economic priorities alongside water management priorities, and prioritising action over successive river basin planning cycles. 6.3 The following chapters cover the key considerations which the Environment Agency will need to take into account when drawing up river basin plans: natural conditions, technical feasibility, cost effectiveness of measures, and disproportionate costs. 6.4 Natural conditions, technical feasibility, feasibility and disproportionate costs are key criteria in justification of the use of alternative objectives and defences (see River Basin Planning Guidance volume 1, chapter 9 of the first volume of River Basin Planning Guidance), whereas cost effectiveness is a consideration when selecting measures (see River Basin Planning Guidance volume 1, chapter 10). 6.5 The concepts are inter-related and to some extent the Environment Agency will need to consider them in parallel. However, it is important that the Agency does not confuse the meanings of these terms, in particular when justifying alternative objectives. 6.6 There is a logical sequence of considering these factors: natural conditions, technical and other feasibility of achieving the objective (can the objective be reached?) cost effectiveness of measures (what are the most cost effective actions to achieve the objective?) and then disproportionate costs (is it proportionate (i.e. both efficient and equitable) to reach the objective by taking the most cost effective actions (or otherwise)?) The concepts are therefore considered in that order in the following chapters. 6.7 In addition to this guidance, there are 4 key pieces of European guidance to which the Environment Agency should take into account when setting WFD objectives: EU environmental objectives paper (reference 6a) EU guidance on exemptions allowed for new modifications Article 4.7 (reference 6b) 21 EU guidance on exemptions - Articles 4.6-4.8 (reference 6c) EU guidance on Economics and the Environment (reference 7) EU guidance on the use of Exemptions and Disproportionate Cost13 (reference 6d) 13 Not available at time of publication 22 7 Natural conditions 7.1 The WFD includes references to “natural conditions” in Article 4.4(a)(iii): one of the justifications for extending a deadline is that "natural conditions do not allow timely improvement in the status of the body of water" and Article 4.5: one of the justifications for setting a less stringent objective is that "natural condition [of a water body] is such that achievement of [the default] objectives would be infeasible or disproportionately expensive". 7.2 The situations in which the Environment Agency should consider natural conditions may be a justification for setting an alternative objective includes where: it takes time, after a damaging or polluting activity has ceased, for the conditions necessary to support good ecological status to be restored and for the plants and animals to recolonise and become established; due to varying natural hydrogeological conditions, groundwater bodies may take time to reach good chemical status; or natural background levels of a substance in the environment are such that the level in water body cannot be reduced sufficiently to meet the WFD standard. 23 8 Technical Feasibility Assessing technical feasibility 8.1 The WFD includes references to technical feasibility in Article 4.3 (b) in relation to Heavily Modified and Artificial Water Bodies Article 4.4 (a)(i) in relation to the justification required for extension of deadlines, and Article 4.7(d) in relation to justification for new modifications and new sustainable human development activities. 8.2 The Environment Agency should consider it technically infeasible to achieve an objective only where: No technical solution is available, or There is insufficient information on the cause of the problem to allow a solution to be identified, or Practical constraints of a technical nature (e.g. gaining permissions or commissioning new plant) prevents implementation of measures by an earlier deadline. 8.3 In principle, technical feasibility of achieving an objective relates only to issues of a technical nature, not cost issues. In practice, the greater the effort expended in trying to overcome issues of a technical nature, the greater the likelihood that ways of making the improvements will be found. This means that the Environment Agency will need to consider the costs and benefits alongside technical feasibility. Where the benefits resulting from achieving an objective would be substantial, a much higher degree of effort to find a technically feasible option is likely to be appropriate than where the benefits of an improvement are expected to be low. 8.4 Where it is technically infeasible to achieve a WFD objective, the Environment Agency should ensure that action is taken to improve technical feasibility. This may involve carrying out monitoring or research, or encouraging/requiring others to do so, to improve understanding of the problem and/or potential solutions. 8.5 The Environment Agency should also take account of the European paper on “Key Issues and Research Needs Under WFD” (reference 7). Infeasible is wider than technically infeasible 8.6 Article 4.5 which relates to setting less stringent objectives uses the term 'infeasible' rather than “technical infeasibility”. 24 8.7 The Environment Agency should interpret the meaning of the term “infeasible” as being wider than the term “technical infeasibility”, in that “infeasible” also includes situations where addressing a problem is out of the control of a Member State (see EU paper on exemptions under Articles 4.4-4.6 reference 6). 8.8 This point about “infeasible” in Article 4.5 including not just technical infeasibility, but also other types of infeasibility, is taken from the draft EU paper on Articles 4.4-4.6. National evidence for technical infeasibility No technical solution is available 8.9 There may be different reasons why the Environment Agency might suggest that “no technical solution is available” to reach an objective, in particular: Standards are below limits of detection or monitoring: Meeting the standards which are due to be set for some of the specific pollutants and priority substances might be technically infeasible if the levels were below current limits of detection and monitoring. For example, the current analytical methods for tributyl tin do not enable measurement at the proposed Environmental Quality Standard. (That said, it may still be possible to model pollutant levels which are below the level of detection and/or to detect the level of a substance present in an effluent even if it is below the limit of detection in a water body). No measure is available to tackle the problem: There is a very wide range of actions which could be taken to help achieve WFD objectives, but there may be some problems for which there is no measure which can be deployed in practice. For example it may be impossible to remove a population of an alien species once it has become well established within a given habitat (e.g. the North American Signal Crayfish is established throughout the Thames catchment). Or there may be a new a technique for tackling a problem which has been proven to work under controlled conditions in a laboratory, but has not yet been sufficiently developed to be effective in practice. 25 There is no information on the cause of the problem; hence a solution cannot be identified. 8.10 There are two main types of information gap which the Agency should consider here: Data on the extent and cause of the pressure There is a lack of data on the extent and cause of pressures from: morphological changes alien species some of the specific pollutants and priority substances, and sediment. There is more information on these data gaps in the relevant pCEA pressure chapters (reference 9). Scientific information about the impact of the pressure upon ecological status There are gaps in scientific information about the impacts upon ecological status of some types of pressures from; morphological changes abstraction alien species and sediment. There is more information on these data gaps in the relevant pCEA pressure chapters (reference 9). 8.11 These justifications for technical infeasibility are linked to the discussion above about certainty/confidence in classification. It is likely that the Environment Agency‟s understanding of this will improve through successive planning cycles. The cases where it is technically infeasible to meet an objective are likely to include ones where there is low certainty/confidence in classification. In these cases the Environment Agency‟s monitoring programme will be key to improving their understanding of the relationship between pressures and environmental outcomes. River basin district and local evidence for technical infeasibility 8.12 In addition to these national situations, there may be instances where technical infeasibility occurs at the river basin district or local level (for example where none of the measures which are nationally available to tackle a particular pressure or impact will be effective in a particular local situation). 26 9 Cost Effectiveness of Measures Assessing cost-effectiveness 9.1 The WFD requires Member States to “make judgements about the most cost-effective combination of measures in respect of water uses to be included in the programme of measures” [Annex II (b)]. Where there are a number of potential measures that could be implemented to achieve a WFD objective, the most cost-effective combination of measures is that which delivers the objective for the least overall cost. 9.2 The Defra and WAG led Collaborative Research Programme has developed a UK methodology for cost-effectiveness analysis as well as a cost calculation tool and a cost database (reference 8a, project 2c,). The guiding principles from this methodology are reproduced in the table below. The Environment Agency should make the best use of these methodologies and tools to compare measures for the purposes of river basin planning. Table 2: Guiding Principles Of Cost-Effectiveness Analysis 1. CEA is a process that can be used to support decisions by identifying the most cost-effective option for achieving a particular WFD objective. 2. The basic principles of CEA are straightforward. Most planning and decision-making processes already include various forms of options appraisal that follow the same principles, although these may not always be called CEA. 3. CEA is a relative process. It aims to identify the most cost-effective of the available options. As such, the assessment needs to consider significant differences in the cost-effectiveness of different options. 4. This guidance covers the process of assessing the cost-effectiveness of potential measure options to meet particular objectives within the WFD River Basin Management Planning process. 5. This guidance is designed to provide information to anyone undertaking options appraisals as part of the River Basin Management Planning process. 6. CEA should be used to appraise operational options to address the gaps that will remain in achieving WFD objectives after the effects of existing and planned measures have been taken into account, including measures required under other Directives. The effects of agreed nationally-implemented measures will be included in this baseline. 27 7. CEA should be undertaken at the highest level at which it is possible to identify the most cost-effective solution. It may be possible to identify options that (a) will always be the most cost-effective options and therefore obviate the need for local assessments; (b) are never likely to be the most cost-effective options and hence do not need to be included in local assessments; and (c) are likely to be more costeffective than other options in some circumstances. Doing this nationally or at the River Basin District level will simplify local assessments. 8. CEA should only be undertaken to the level of detail necessary to differentiate measures and to therefore identify the most costeffective measure. 9. CEA is a process for identifying suitable measures. It forms only one part of the WFD decision-making process to determine the Programme of Measures, which also includes Disproportionate Costs Analysis (DCA). The final decision on which measures will be implemented rests with the relevant Competent Authority and/or codeliverers. 10. Uncertainty must be considered in CEA, and CEA may involve making judgements about the appropriate balance to strike between having certainty about the effectiveness of measures and avoiding unnecessary costs. The way in which any uncertainty about the effectiveness of options and their costs has been taken into account in the CEA should be made clear. 11. In some circumstances the application of the CEA procedures outlined in this guidance will require economist or other specialist input. These situations are anticipated in the guidance where appropriate. 9.3 There is also an EU paper on cost effectiveness which the Environment Agency should take into account (reference 7). Amongst other things, this paper recognises that all Member States are going through a learning process and cost-effectiveness methodologies will need to be reviewed over time. 9.4 As river basin planning principle vii makes clear the Environment Agency should consider the full range of measures which are available carry out a level of analysis proportionate to the decision being made and bear in mind the Better Regulation agenda, which aims only to use regulation when necessary and to use it in a way which is proportionate to the risk being addressed. 28 9.5 The WFD requirement is to make judgements about the most costeffective combination of measures, so it is important that the Environment Agency considers; the inter-relationships between measures and all of the pressures which a measure could help to address when assessing the cost-effectiveness of measures and how they could be used in combination to deliver WFD objectives. 9.6 When comparing cost-effectiveness of measures, the Environment Agency should estimate the level of uncertainty and take it into account in river basin planning. For example, if it is less certain that a measure will be effective, the effectiveness for that measure should be reduced. Where there is significant uncertainty about costs or effectiveness it may be most cost-effective to choose measures that can be readily and iteratively added to, reversed or adapted as more information becomes available. 9.7 Some WFD measures will help deliver other environmental, social or economic benefits, in addition to helping to deliver WFD objectives (for example they may help to address requirements under other Directives, or targets for carbon reduction). When considering which measures to include in a programme of measures, the Environment Agency should also take into account these possible wider benefits, including whether they justify selection of a measure which would not be the most costeffective one available for delivering WFD objectives alone. National information on cost effectiveness 9.8 Defra and WAG co-ordinated a preliminary Cost-Effectiveness Analysis, which considered the relative cost-effectiveness of a wide range of possible WFD measures and mechanisms (including some which are not currently available in England and Wales). 9.9 This valuable source of national cost-effectiveness information (reference 9), will be a key source of information for the Environment Agency in carry out river basin planning. 9.10 The pCEA information was used to develop the preferred WFD implementation option which is described in the updated Impact Assessment (reference 2). This shows clearly that costs need to be phased significantly in order to achieve a proportionate implementation of the WFD, given the likely level of benefits. 9.11 The pCEA also shows that, given the uncertainty associated with classification, source apportionment and the effectiveness of measures, a longer term adaptive approach to river basin planning will ultimately be more effective and cost-effective than an unphased approach, given the current state of knowledge. 29 9.12 The pCEA findings, in terms of the relative cost-effectiveness of different measures, are summarised in the tables of measures for each pressure (reference 9). For each of the measures considered in the pCEA these tables indicate: an assessment of cost effectiveness whether the measure was included in either or both of the implementation options considered in the updated WFD Impact Assessment whether the measure is implemented nationally, regionally or locally sector responsible for implementation, and possible wider benefits of the measure. River basin district and local cost effectiveness 9.13 Evidence about how cost-effectiveness has been taken into account in developing programmes of measures will need to be included in all of the River Basin Management Plans. This should include national evidence from the pCEA as well as river basin district and local evidence. 9.14 The Environment Agency should make best use of the national information, including the cost effectiveness methodology, costs calculation tool, cost database and pCEA, to deliver consistency of approach and to streamline the river basin planning process. 9.15 The Environment Agency must ensure that cost-effectiveness considerations are sufficiently tailored to river basin district, local and site specific circumstances. In particular the Agency will need to consider the cost effectiveness of River basin district, local, and site specific targeting of nationally led measures and Measures identified and led at river basin, catchment or local levels that are not incorporated into nationally led initiatives. 9.16 The Impact Assessment and pCEA include information about cases where the cost-effectiveness of measures is likely to vary significantly between river basin districts, local areas and/or sites. 30 10 Disproportionate Costs Assessing disproportionate costs 10.1 The WFD includes references to disproportionate cost or disproportionate expense in Article 4.3(b) in relation to Heavily Modified and Artificial Water Bodies Article 4.4(a)(ii) in relation to the justification required for the extension of deadlines Article 4.5 in relation to the justification required for less stringent objectives and Article 4.7(d) in relation to justification for new modifications and new sustainable human development activities. 10.2 The WFD refers to “disproportionate costs” and to improvements and objectives being “disproportionately expensive”. The Secretary of State and Welsh Ministers consider that there is no material difference between the terms. References to “disproportionate costs” in this guidance should be read as including both terms. 10.3 Through a Collaborative Research Programme, Defra and WAG have developed guidance on the evidence required to justify disproportionate cost or expense decisions under the WFD. The Programme has also developed proformas for recording evidence of disproportionate costs and a benefits database (CRP project 3, reference 8). The Agency should make best use of these methodologies and tools, to ensure that the appropriate level and type of justifications are provided to support the objectives included in the River Basin Management Plans, submitted to the „appropriate authority‟ for approval. 10.4 There is also EU guidance14 on the use of Exemptions and Disproportionate costs, which the Agency should take into account in its assessments. 14 This guidance is not currently available as at time of publication. 31 10.5 The table below is a summary of the principles for conducting disproportionate cost analysis taken from section 2.9 of the disproportionate cost guidance. Table 3: Summary of Guiding Principles for Disproportionate Costs Analysis [from Collaborative Research Programme guidance on disproportionate costs A) The purpose of Disproportionate Cost Analysis is to identify and collate the evidence to support decisions about whether to set an alternative objective. The decisions are made when the RBMPs, including objectives for each water body, are approved by the „appropriate authority‟. B) Analysis should be undertaken based on the minimum amount of evidence (i.e. lowest level of detail) required to make the decision within acceptable limits of risk and uncertainty, bearing in mind the full consequences of a decision. C) Analysis should be undertaken at the greatest geographic scale at which it is possible to identify whether costs are disproportionate or not. D) The initial focus should be on collecting readily available information only. This may be a mix of qualitative, quantitative and monetary information. E) There is a general presumption against putting monetary values (based on benefits transfer) on certain types of benefits which are not well understood (e.g. non-use values). F) Disproportionate cost should be assessed with regard to the marginal effects of the WFD only. The effects of measures necessary to implement other EU Directives and national policies, as well as the effects of known environmental and other trends, should be considered as part of the baseline. G) The way in which uncertainty is taken into account (e.g. any judgements or assumptions made) should be made clear in the evidence presented. H) The H.M. Treasury Green Book15 underlies the basis of all analyses. 10.6 As the disproportionate cost guidance makes clear, there are two main elements which the Environment Agency should consider when assessing disproportionate costs: economic efficiency (the overall balance between costs and benefits, which includes economic, social and environmental) and distribution (comparison of who pays and who benefits – winners and losers). 15 http://greenbook.treasury.gov.uk/ 32 10.7 Both considerations are important. When considering proposing an alternative objective on grounds of distribution, the Agency should also assess economic efficiency aspects, and consider whether the distributional consequences are significant in relation to the economic efficiency arguments. Where distributional issues are not considered to be important these should not be analysed in any detail. 10.8 In general, something should be considered to be disproportionate where the negative consequences (compliance costs, impacts on nonwater outcomes, distributional issues) outweigh the positive consequences (benefits of water status improvements). No margin between negative and positive consequences is needed, but account should be taken of the fact that costs may be known with more certainty than benefits, and hence an objective is not necessarily disproportionate if the costs exceed the quantified or monetised benefits. It is important however, to reflect any uncertainty in the costs which can sometimes be difficult to monetise. 10.9 The Environment Agency must ensure that when assessing disproportionate cost and using it as the basis for exemptions, the reasons for doing so are clearly set out within the river basin management plan. Any underlying data and assessments used to inform the decision must be available to the public. In cases where the deadline will be extended or the objectives lowered; the river basin management plan must contain, a description of the relevant reasons for using the disproportionate cost justification, an explanation of the consideration of alternative financing mechanisms and an indication of the benefits that will not be achieved due to derogating from the default objectives and how these will be addressed in the future. National information on benefits 10.11 The Collaborative Research Programme on WFD economics carried out a National Water Environment Benefits survey to provide information about the overall scale of benefits from WFD implementation and some initial information about relative public preferences for different types of improvements in the water environment (reference 8). The results of this survey were used to give the overall benefits estimates included in the updated Impact Assessment. The Impact Assessment also acknowledges the uncertainties associated with these valuations. However they are considered to be a useful initial step in determining the likely limit of benefits and hence what scale of action is likely to be proportionate. 33 10.12 The Collaborative Research Programme has also carried out work on direct market benefits (e.g. reduced treatment costs, increased revenues from commercial fisheries etc.) from WFD implementation. Initial analysis reveals little evidence of such benefits because the type of improvements envisaged under the WFD are rarely the limiting factor in terms of direct uses of the water environment and any new use opportunities are likely to displace existing uses of other water bodies (substitution). Economic efficiency: national balance between costs and benefits 10.13 The Secretary of State and Welsh Ministers do not wish the overall costs (i.e. negative consequences) of action to achieve WFD objectives to exceed the overall benefits (i.e. positive consequences). 10.14 As mentioned in the cost-effectiveness chapter above, the two indicative WFD implementation options in the updated Impact Assessment show that both costs and benefits will be reduced by taking a more phased approach to WFD implementation, and that phasing reduces costs by a greater proportion than it reduces benefits, and that for a non-phased approach overall cost would be greater than benefits. 10.15 Subject to the appropriate analysis under Article 4 WFD, the Environment Agency should therefore seek to draft river basin plans and propose objectives which will deliver an overall approach to WFD implementation which is outlined in option 2 of the updated WFD Impact Assessment. 10.16 To ensure that overall benefits of WFD implementation exceed costs, the Environment Agency will need to follow the river basin planning principles set out in volume 1 chapter 4. In particular the Agency should seek to: favour the most cost-effective measures; make use of the alternative objectives; and maximise benefits of WFD implementation. There is further guidance on how to maximise benefits in the paragraphs below. River basin district and local assessment of benefits 10.17 Through regional and local planning and analysis the Agency will be able to add to this national benefits information, and include this improved benefits information in the Impact Assessments which accompany the River Basin Management Plans. 34 10.18 The disproportionate cost guidance gives further guidance on the approach which the Agency should take towards environmental benefits, including presumption against putting monetary values on non-use values using information on uncertainty to scale benefits where appropriate and considering only the marginal benefits of WFD implementation 10.19 As explained in the “national information on benefits” section, national work has revealed limited evidence of direct market benefits from WFD implementation. If it can be established that new (additional) uses of the water environment would arise as a result of WFD measures, the means are generally available to value these improvements on a site specific basis. However, some of these benefits would be double counted as they would also have been captured by the national benefits survey. 10.20 When carrying out river basin planning, the Agency should seek to maximise the benefits of WFD implementation, taking into account information about relative public preferences for different types of improvement in the water environment. In particular, the Agency should focus improvements on areas near to where people live (see box below) as this will serve to maximise benefits. National benefits survey question 27: “The Government can affect the way sites or areas are selected for improvement. Which of these ways do you think should be followed? Responses were: Improvements focussed at areas near to where people live (44%) Areas judged by scientists to be in the worst state (36%) and Quick and low cost options (19%) 10.21 The Collaborative Research Programme carried out work to understand the general public‟s preferences for different outcomes related to the WFD. This provides qualitative information about public preferences between types of improvements to support the development of rules on what people would prefer is done first to maximise benefits. The results of this work should be reflected in the Agency‟s approach to benefits assessment. Distributional arguments 10.22 As mentioned above disproportionate cost is not just about the overall balance between costs and benefits, but also about the distribution of those costs and benefits (who pays and who benefits – the winners and losers). The Agency should note that negative distributional consequences may only be transitory – for example losses of business and jobs may be compensated by increases in the activity of other 35 firms within or outside the area being looked at. However some distributional impacts may be long term, particularly if they affect areas, sectors or groups without the capacity to adapt without further government intervention. 10.23 The arguments which the Agency should use to justify that costs and benefits are disproportionate because of their distribution are identified below. Adverse consequences for vulnerable or disadvantaged social groups 10.24 This includes situations where the adverse impacts of taking action have a significant differential affect on particular groups or sectors for which there are government objectives or concerns (at a national or regional level). For example, particular groups may include those classified by income level, gender, ethnic group, age, geographic location or disability. There may be groups within certain targeted areas or locations (e.g. areas that are the target of area-based objectives, such as priority regeneration areas, neighbourhood renewal areas, disadvantaged areas in receipt of EU structural funding etc.). There may also be economic interest groups or sectors for which the government has specific concerns. Evidence about the concern over these groups, locations or interests will be needed, together with evidence of the impact on these groups. Deviation from Polluter Pays Principle 10.25 This includes situations where, in taking action, it might not be possible to comply with the Polluter Pays Principle (PPP). In considering this the Agency should consider the total problem in terms of who is causing the impact, who is benefiting from the improvements and who is paying for the improvements. 10.26 This might occur if one or more groups of society would incur more or less than their fair share of costs in relation to the extent that they are polluting. This may simply be because a significant proportion of the pollution or risk is caused by groups that cannot be identified, are difficult to charge, or no longer operate. This may relate to uncertainty regarding the source or because the source of pollution stemmed from historical activities. 10.27 It may also occur where historical investment has taken place such that the total costs of both the historic and proposed costs would result in an entity incurring a disproportionate share of total costs for meeting WFD objectives (i.e. there may be a lack of conformity with the PPP because of historical investment made worse by delivering the objective using the proposed measures). 36 The affordability of the improvement for those who would have to pay, taking into account the characteristics of the economic sector concerned 10.28 The ability of polluters or risk owners to pay is a key factor in the assessment of disproportionate costs from a distributional perspective and might be a factor in selecting an alternative objective. 10.29 Affordability can be one reason for justifying why a deadline will be extended, if it is based on a clear explanation of the consequences of not achieving the default objectives, how these will be addressed in the future, and that there are no other relevant alternative financing mechanisms available which would not result in affordability issues. 10.30 It should be noted however that affordability needs to be seen in the context of the characteristics of the firm and the sector in which it operates. For example, a firm that has failed to keep its environmental management approaches up to the level of industry good practice may well find the costs of measures unaffordable. But this would largely be attributable to the costs of the firm reaching a level of good practice, rather than as costs of the measures themselves. The scale of recent investment in environmental improvements already made by those who would have to pay 10.31 Where a sector or firm has already been required to undertake significant environmental investment to meet an objective it may be regarded as disproportionate for that firm or sector to undertake further improvements in the short term. It may be difficult for such firms to finance such improvements and there is a risk of the creation of stranded assets. Over the long term this is unlikely to be such a problem and as such this argument is likely to be more appropriate to the setting of an extended deadline as opposed to a less stringent objective. 10.32 There is a concern that such arguments would be advanced inappropriately. To guard against this, additional criteria need to be considered as identified below. 10.33 In particular the Environment Agency should consider the scale of the distributional issues in comparison to the economic efficiency benefits, so that where an alternative objective is proposed on the basis of avoiding negative distributional consequences, it is clear that the benefits of avoiding the negative distributional consequences outweigh the additional benefits of achieving the default objective. 10.34 The majority of distributional issues will be resolvable over time either because costs can be spread to make them affordable or alternative ways of paying for the benefits can be found. This might require further work by government or by the affected sectors/groups to adapt over the period of the time extension, so that the alternative objective is not 37 needed in the long term. These adaptation strategies should include the consideration of alternative financing mechanisms. National information on distributional arguments Consequences for vulnerable or disadvantaged social groups 10.35 The updated Impact Assessment (reference 2) includes information about the impact of WFD implementation on rural areas and small firms. 10.36 There is no evidence from the overall Impact Assessment to suggest that the WFD implementation will conflict with the objectives of race, disability and gender equality. The extent of any deviation from the Polluter Pays Principle 10.37 There are difficulties with making a national assessment of deviation from the Polluter Pays Principle at this stage, because of a lack of data about the scale and nature of pressures and impacts which can be attributed to each of the “main affected groups”. 10.38 The Environment Agency has information from its risk assessments and other work about the pressures to which each of the sectors or “main affected groups” contributes, including quantitative national data about the percentage contributions to phosphate pressures from the water industry, agriculture and non-agricultural diffuse pollution. This information was used to develop the options in the updated Impact Assessment. 10.39 The sectoral working groups which provided the cost data for the preliminary Cost-Effectiveness Analysis were asked to cost the action they thought necessary to address the proportion of the problem attributable to their sector. 10.40 The updated Impact Assessment gives a summary of the costs to each of the sectors or “main affected groups” (see table 2 reference 2). [Note: that this table indicates where the costs first fall. There are differences between the affected groups in their ability to pass on these costs to others. For example, water industry costs are likely to be recovered through increased domestic bills and charges for businesses, industry and institutions.] 10.41 As far as it is possible to ascertain from current national information, it appears that costs would generally fall to those “main affected groups” which contribute to the pressures (and hence are likely to contribute to the impacts), and both of the options included in the updated Impact Assessment appear roughly in line with the polluter pays principle. 38 The affordability of the improvement for those who would have to pay, taking into account the characteristics of the economic sector concerned 10.42 The Environment Agency should take into account the information in the updated Impact Assessment (reference 2) about affordability. The main affordability concerns relate to the impact on household water bills of increased investment by water companies, and the effect of Catchment Sensitive Farming policies on the agricultural sector in England. River basin district and local assessment of distribution issues 10.43 As most WFD measures will be implemented at river basin district or local (rather than national) level, so distributional issues are likely to arise in the context of river basin district and local assessments. 10.44 As required in River Basin Planning Guidance volume 1, chapter 7, the Environment Agency will produce an Impact Assessment alongside each river basin management plan. The Environment Agency should follow the latest Impact Assessment Guidance from Cabinet Office, including the guidance on the application of a series of Specific Impact Tests, which have been developed to ensure that policy development is joined up and that individual policy proposals take account of the Government's broad policy objectives. These include assessment of impacts on competition, small firms, carbon, sustainable development, race, disability and gender, amongst others. 10.45 Distributional issues should be taken into account in the objective setting process as explained in the disproportionate cost guidance. 39 11 References 1. First volume of England and Wales river basin planning guidance issued in August 2006 www.defra.gov.uk/environment/water/wfd/pdf/riverbasinguidance.pdf 2. Updated Impact Assessment for the WFD – available at www.defra.gov.uk/environment/water/wfd/ria.htm 3. Guidance on river basin planning in the Solway Tweed www.defra.gov.uk/environment/water/wfd/pdf/solway-tweedguidance.pdf 4. The Environment Act 1995: The Scotland River Basin District (Surface Water Typology and Environmental Standards) (Scotland) Directions 2007: www.scotland.gov.uk/Publications/2007/10/02104453/0 5. UK Technical Advisory Group outputs: a) Reports on environmental standards and classification www.wfduk.org/UK_Environmental_Standards/ b) Paper on protected areas h www.wfduk.org/tag_guidance/Article_0607/guidance_protected_areas/view 6. Outputs from EU strategic steering group on objective setting: a) EU environmental objectives paper b) EU guidance on exemptions allowed for new modifications Article 4.7 c) EU guidance on exemptions - Articles 4.6-4.8 www.circa.europa.eu/Public/irc/env/wfd/library?l=/framework_directi ve/thematic_documents/environmental_objectives&vm=detailed&sb =Title d) EU guidance on the use of Exemptions and Disproportionate Cost16 7. Other EU Common Implementation Strategy guidance: a) Guidance Document No. 1 Economics and the Environment The Implementation Challenge of the Water Framework Directive WATECO (2003) www.waterframeworkdirective.wdd.moa.gov.cy/guidance.html b) Key Issues and Research Needs Under WFD www.circa.europa.eu/Public/irc/env/wfd/library?l=/framework_directi ve/thematic_documents/relevant_research/research_2005pdf/_EN_ 1.0_&a=d c) Cost effectiveness Analysis document June 2006 (not publicly available at present) 16 Not available at time of publication 40 8. Outputs from the Collaborative Research Programme on WFD economics - available at www.wfdcrp.co.uk : a) b) c) 9. Project 2c Benchmark costs database and guidance on the application of the cost-effectiveness methodology as updated by Project 2e Deriving the Costs and Effectiveness of Delivery Mechanisms. This includes guidance on cost-effectiveness analysis, cost calculation tool and cost database [currently being reviewed]. Project 4bc – Nera survey report - Report on National Water Environment Benefits survey Project 3 Guidance on the evidence required to justify disproportionate cost decisions under the WFD. This includes revised summary guidance Results of Preliminary Cost Effectiveness Analysis of the Water Framework Directive Revised After Stakeholder Review December 2007(available on www.wfdcrp.co.uk) a) b) c) Introduction, policy context and methodology and methodology Synthesis report chapters for each pressure Chapter 4.1: Chemicals Chapter 4.2: Water Resources Chapter 4.3: Nutrients Chapter 4.4: Alien Species & Fisheries Chapter 4.5: Morphology & Biodiversity Chapter 4.6: Sanitary Chapter 4.7: Sediment Chapter 4.8: Microbiology Chapter 4.9: Minewaters Chapter 4.10: Planning Chapter 4.11: Temperature Chapter 4.12: Administrative Costs Chapter 5: Sector Summary Tables summarising measures included in options 1 and 2 of updated WFD Impact Assessment 10. Water Framework Directive (WFD) Economic Analysis: Information On Trends To Improve The Baseline Scenarios www.wfdcrp.co.uk/pdf%5CDEFRA%207242%20WFD%20Baseline.pdf 41
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