EC: Member States should raise water prices

Member States must ensure water is priced in line with the Water Framework Directive, states the European Commission in the EU Strategy on Adaptation to Climate Change that was presented the 24th of February 2021. According to the Cost Recovery Principle, also known as Article 9 in the Water Framework Directive, water service providers should be able to invest in water infrastructure on the basis of charged water prices. Thus they should raise water prices.

Vice president Frans Timmermans of the European Commission (EC) presented the new EU Strategy on Adaptation to Climate Change as part of the Green Deal. The Commission is calling for faster and smarter measures to deal with the effects of climate change. Setting a right price for water is part of this strategy. ‘The European Commission and the Member States must promote the transition to water-saving technologies and practices by setting a price that correctly reflects the value of water. This can be achieved by promoting instruments such as water resource allocation, water-permitting systems and by incorporating environmental externalities’, can be read in the EU Strategy.

Sources of finance

The OECD and the EC joined forces to examine current and future water-related financing challenges faced by EU member states. These include investments needed to comply with EU regulation for water supply, wastewater collection and treatment and flood protection. The OECD-study Financing Water Supply, Sanitation and Flood protection identifies three sources of finance for water supply and sanitation expenditures. They refer to revenues from water tariffs (1), taxes (2) and transfers from the international community (3). These three sources are named shortly the 3Ts.

Financing capacities

According to the OECD financing capacities of Member States reflect the room to manoeuvre with 3Ts. Some countries rely mainly on water tariffs, like for example Denmark. Others countries shift the burden to taxpayers, like Ireland. There are also countries where public budgets allocated to water supply and sanitation heavily rely on EU funding. OECD warns this is not sustainable as EU funds available for water supply and sanitation will decline over time. OECD: “Therefore, EU Member States need to consider more systematic reliance on domestic sources of finance.” Romania and Bulgaria face the biggest financing challenges in the EU as the projected additional level of effort is very high and room for manoeuvre for financing appears to be limited.

Fair distribution of costs

The European association of public water operators Aqua Publica adds water utilities are already facing a wide financing gap. “In the future they have to comply with increasing requirements. This is the result of new EU directives, like the revised Drinking Water Directive and the upcoming revision of the Urban Waste Water Treatment Directive. These are two important updates for the benefit of human health and the environment, but they are expected to come with increasing costs. If you consider the need to implement the cost-recovery principle all these developments they are likely to lead to higher prices”, reacts Jovana Gojkovic from Aqua Publica. “We believe a fairer distribution of costs among the different water users and the full implementation of key principles such as the polluter-pays principle, are essential conditions to address increasing financing needs for sustainable water management in an equitable manner, as well as affordability risks for households.”

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Taxonomy

• Water
• Water Charging & Pricing
• Pricing

3 Comments

1. bohžiaľ, zníženie spotreby vody bude viesť k nárastu nákladov a tendencii k zvyšovaniu ceny. Voda nie je majetok jednotlivca (skuiny) a nemala by byť zdrojom zisku pre jednotlica (skupinu).  To si žiada centrálne riadenie aj keď sa pri tom priživia jednotlivci, či už ako úradníci, alebo obslužná skupina.

2. Let’s not forget that most of the water that is being ‘used’ by houselholds is going through the toilet, shower, bath and sinks. Much of this water could be ‘lower grade’ water instead of drinking water. For instance more rainwater could be collected and used at least for flushing toilets, if not for showering. Building codes should incorporate this idea (which has been piloted some decades ago, but never stuck due to problems originating from faulty installation) - at least in the Netherlands. So a separate network of pipes for high grade drinking water and one for ‘grey water’. Tax the drinking water high (comparable to bottled water) and the ‘grey water’ from pipes lower, and the water used collected at home not at all. That would already be a more fair pricing of water. 

3. If they are Going to raise prices the money should be ring fenced to incentivise users cut down on water waste and usage. Or Supply realtime water meters to users so they can actually tell if there is an issue. Most users don't actually know they have an issue.

   "What you dont Know you cant fix"

   With the installation of a SMART FLOW device users including government bodies have reduced water consumption in excess of 30% in all cases.

   Check out https://www.linkedin.com/posts/mysmartflow_an-post-60-reduction-on-their-water-consumption-activity-6788757975881318400-lWzT

   If we dont use the money to make a change all it will do is line rich peoples pockets