An approach to
Cost Recovery Analysis
Workshop “Supporting a better economic analysis for the
2nd RBMP and beyond” – October 2013
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Water services
WFD defines water services
WFD Article 2 (Definitions). 38
(Water services):
a)
b)
abstraction, impoundment, storage,
treatment and distribution of surface
water or groundwater,
waste-water collection and
treatment facilities which
subsequently discharge into surface
water.
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Spanish related water activities
1)
Bulk water supply (abstraction,
impoundment, storage and supply
throughout common public
infrastructures for all uses)
2)
Groundwater abstraction and supply
3)
Irrigation water distribution
4)
Urban water supply (treatment and
distribution)
5)
Sanitation throughout the public
network (waste-water collection and
treatment facilities)
6)
Sanitation outer the public network
(public service of control and
management of discharges into
surface waters)
Financial Cost Recovery Instruments in
Spain
Recovery instruments are applied for all services provided
Financial costs recovery instruments include: operational, maintenance and capital cost
WFD water
servicies
Spanish water activities
Bulk water supply
Groundwater abstraction &
supply
Water supply
Distribution of irrigation water
Urban water supply
Waste-water collection
Sanitation
Waste-water treatment
Control and management of
discharges into surface waters
Activities/Service providers
RB Agencies
Public water infrastructure companies
Municipalities
Municipalities
Irrigation communities
Individuals
Irrigation communities
Public water infrastructure companies
Individuals
Municipalities
Autonomous regions
Water service companies
Municipalities
Autonomous regions
Water service companies
Municipalities
Autonomous regions
Water service companies
RB Agencies
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Water uses
Recovery instruments
Household, Agriculture
& Industry
Regulation canon, Use tariff
& Regional canons
Household, Agriculture
& Industry
Service tariffs fixed by
municipalities & irrigation
communities
Agriculture
Irrigation fees/ contributions
Household
Water supply tariffs
Household
Waste-water collection tariff
Household
Waste-water treatment
canon & service tariffs
Household & Industry
Discharge canon
Financial Cost Recovery Instruments in
Spain
Storage &
Abstraction
Regulation Canon
& Tariff Use
Regional canons
Water service
companies
Households
Municipal tariffs
Regional canons
Discharge canon
Industry
SANITATION
HYDRAULIC PUBLIC DOMAIN
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Irrigation
communities
Public
entities
Irrigation fees/
contributions
Irrigation
farmer
Crop
Financial Cost Recovery Instruments in
Spain
• Most of recovery instruments are dissuasive in terms of
consumption or pollution reduction
• Instruments differed from one district to another as for their
structure and tax levels
– Municipalities approve urban supply water tariff levies
– Autonomous regions are responsible for legislation and approval of
sanitation taxes
– Legislation, approval and implementation of recovery instruments for
bulk water supply and groundwater abstraction & supply lies on
o National authority where RBD area extends through more than one
autonomous region
o Autonomous regions where RBD area is coincident with the region one
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Financial Cost Recovery Analysis Methodology
in Spain
•
Analysis has been done at RB level
•
Different methodologies have been applied depending on
1. Data availability: budget & subsidies analysis; cost accounting
analysis; surveys
2. Whether water related activities beyond water services have been
considered in the analysis, i.e.: flood & drought prevention, public
management of water resources (monitoring, surveillance, etc.),
diffuse pollution minimisation, invasive species control…
3. Whether self-operated services (groundwater abstraction, river
transportation, energy non water consumptive, etc.) have been
included in the analysis
4. Whether EU Funds have been integrated among the cost
5. Whether justified subsidies have been included among the cost, i.e.:
irrigation tax exemptions during drought periods, insularity, etc.
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Main concern arising from the analysis
Water related activities/measures beyond water services
1. Global public goods that benefit not a particular user but the whole
society and they are necessary to reach good water status
–
Flood & drought prevention, public management of water resources,
monitoring, public domain surveillance…
2. Activities/measures not directly linked to a water service/user
–
Measures/activities to combat pollution caused by non water users:
diffuse pollution minimisation
–
Measures/activities with unidentifiable users: hydro-morphological
restoration derived from past centuries deteriorations…
These water related activities/measures beyond water services have
traditionally been financed through the General State Budget
At the present time, facing budgetary constrains, these
activities/measures present a financial sustainability issue
Without additional financing resources (EU Funds?), public water
management is under risk
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Cost recovery in the Guadiana RBD
•
Analysis has been done at RB level and management system
•
Financial cost include: operation, maintenance and capital cost
•
Non financial cost include: resource and environmental cost
Water supply
Service/ Cost
Financial cost
Groundwater abstraction
and supply
Bulk water supply
x
x
Sanitation
Treatment & distribution Sanitation throughout &
outer the public network
x
x
Cost of service provision: operation, maintenance & capital cost
x
Resource cost
Environmental cost
x
Resource cost resulting from water allowance
transactions among different uses
(agriculture & industry)
x
x
Cost linked to some
Restoration measures
Cost linked to some
measures of Empowerment
& Governance, and Point
Source Pollution
Minimization
Uses
x
Household
x
Industry
x Hispano Lusas
Agriculture
EL río Guadiana en las relaciones
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
x
x
x
x
x
x
x
Environmental cost assessment in the
Guadiana RBD
Spanish Management Normative (*) (developing WFD) defines environmental
cost as the valuation of the necessary measures to achieve the good
status of the water bodies (GES/DPS). Some of these measures exceed
the WFD designation of water services.
Recovery instrument for environmental cost is foreseen by the Spanish Water
Law, but no subsidiary legislation has been developed to implement it
Environmental cost assessment in the Guadiana RBD:
•
Capital equivalent annual cost of PoM measures programmed and still to be
implemented (only measures linked to water services), to improve water status
•
While programmed measures to avoid that water services induce environmental
deterioration are not implemented, environmental cost will exist.
•
Environmental cost are conceived as a “penalty rate for polluting”.
•
Environmental cost disappears when the measures are applied although objectives
will not be immediately achieved
•
Financial Cost recovery of these measures/activities will occur after measures are implemented.
•
Costs are not double accounted as environmental cost and financial cost of measures
shall not coexist in the same time period analysis.
*Management
Planning
OrdenLusas
MARM/2656/2008 de 109 septiembre de 2008
EL río Guadiana
en lasInstruction:
relaciones Hispano
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Environmental cost assessment in the
Guadiana RBD
Measures from the Guadiana PoM taken into account in the
environmental cost assessment for the 1st RBMP
Water service
Water use
Group of measures
Bulk water
supply
All
Environmental restoration
Sanitation
throughout the
public network
Household
Point Source Pollution
Minimization
Measure
Control and protection of species potentially
afected by the exploitions of dams and
asociated infrastructure
Obstacles clearence and longitudinal
passage
Environmental flows implementation
WWTP improvement to terciary treatment
Septik tanks adecuacy
WWTP capacity increase
New WWTP
Other water treatment measures
Sanitation outer
Household &
Staff increase for control and management
the public
Empowerment & Governance
Industry
of discharges into surface waters
network
In the Guadiana RBD, environmental cost account for
4.4 % of total water services cost
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Resource cost assessment in the Guadiana RBD
Spanish Management Planning Instruction defines resource cost as the opportunity cost
in scarcity situations and it refers for their assessment to the market mechanism in
place to improve water allocation
Different forms of water markets exist in RBD that suffer from water scarcity:
Guadalquivir, Guadiana, Júcar and Segura
Resource cost assessment in the Guadiana RBD:
•
Opportunity cost arising from payments made in transactions for water use rights
and/or transactions of irrigation lands –for different usesPublic offer acquisition of groundwater private use rights, Guadiana RBD 2006-2009
Offer date
01/06/2006
01/07/2007
02/07/2009
01/08/2009
01/09/2009
02/09/2009
Total
Total
payment (€)
521.384
9.832.557
12.334.321
11.935.786
19.903.065
11.940.440
66.467.553
Irrigation land
(ha)
56,3
1.060
1.227
1.281
1.900
1.217
6.741
Water volume attained
Registered (m3)
Real (m3)
240.816
112.600
4.434.521
2.085.945
5.078.947
2.406.400
5.117.622
2.562.000
7.982.866
3.800.000
4.973.604
2.433.800
27.828.376
13.400.745
Payment in equivalent annual terms
( r = 2%, n = 40y)
3
(€)
(€/m )
19.060
359.436
450.890
436.322
727.571
436.492
2.429.771
0,17
0,17
0,19
0,17
0,19
0,18
0,18
Acquisitions
made to revert
groundwater use
rights from
irrigation to
public domain
(non use)
Acquisition of lands with associated irrigations rights transformed into water
rights for solar-thermal power Plants, Guadiana RDB 2006-2009
Thermal
central
Helios I
Helios II
Manchasol, 1
Manchasol, 2
Total
Rights acquired
(has)
88,6
110
399,1
447,2
1.044,80
Annual volume Total payment
(m3)
(€)
177.200
220.000
798.120
891.840
2.087.160
2.215.000
2.750.000
9.976.500
11.178.750
26.120.250
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Average price
Derived payment for
of irrigation
water rights (€)
lands (€/ha)
14.536
14.536
14.198
13.693
1.287.890
1.598.960
5.665.854
6.122.825
14.675.528
Payment in equivalent annual terms
( r = 2%, n = 40y)
(€)
33.891
42.077
157.579
184.823
418.370
(€/m3)
0,19
0,19
0,20
0,21
0,20
Irrigation

Thermosolar power
use
Resource cost assessment in the Guadiana RBD
Resource cost in the Guadiana RBD would be considered
– only for irrigation, null for other water uses
– delimitated to the Upper Guadiana system
In the Guadiana RBD, resource cost account for 3.6 %
of total water services cost
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Issues arising from the analysis
•
CIS-Commission should analyze methodologies and
sources of data from the different 1st cycle RBMP and
–
–
–
define criteria and appropriate methodologies
o
budget analysis, cost accounting, survey
o
how to assess environmental and resource cost
o
should EU Funds be included in the analysis?
incorporate in the analysis all economic services, including:
o
groundwater (self operated service)
o
river navigation
o
energy non water consumptive, etc.
give indications on how to ensure financial sustainability of
the measures/activities needed to reach good water status
and risk protection, but falling outside water services
o
is it necessary to make a CR analysis on a broader sense?
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
Many thanks for your
attention
EL río Guadiana en las relaciones Hispano Lusas
IV JORNADAS SOBRE EL RIO GUADIANA
Real Sociedad Económica de Amigos del País. Badajoz
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