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DEFRA should be bold on water security

    As a result of falling water levels and reduced quality, it is now no longer possible to think of water as a permanently and immediately available resource. In our latest Growth Bulletin, “Britain must act on water security”, we argued that DEFRA can increase UK water security through radical reforms to the abstraction licensing system and by embracing water trading. Ultimately, abstraction reform will allow a more efficient allocation of water from areas of higher abundance to areas of higher need.  

    Britain’s water resources are facing increasing pressures from rising demand and supply-side constraints for example due to more frequent periods of drought. The two most important sources of demand are electricity generation and the public water supply which together account for 84% of abstracted water. The total volume of water abstracted saw a sharp rise from 11.4 billion cubic metres in 2011 to 13.8 billion cubic metres in 2012.

    Of the freshwater which is abstracted by the electricity generation sector, 95% is used for hydropower which makes up 2.5% of the UK’s electricity generation; although this share is only expected to rise. Moreover, emissions mitigating technology such as Carbon Capture and Storage could well lead to increases in water use by power stations.

    Water quality is also an increasingly important issue with 20% of rivers failing to reach adequate chemical level. The difference between rivers of good and high biological quality and rivers of bad and poor biological quality has gone from zero to 5% since 2009; a small but worrying deterioration. The Environment Agency has made the point that the UK’s decrepit abstraction system is one of the reasons for poor water quality.

    There is also a clear lack of investment. At the current rate of replacement, the existing installation of sewer pipelines would need to last for over 800 years – a farcically long time when you consider that specification decisions are being made on the basis of a design life of just 50 to 125 years.

    Crucially, DEFRA has already accepted the case for abstraction reform but the timeline that it has outlined is painfully slow with the eventual reforms not being enacted until the 2020s. This is too long to wait for such an important issue.   

    DEFRA should set out plans to implement the reforms to abstraction licences that it proposed in its recent consultation paper so that real change is achieved in the next Parliament. Not only does water trading carry the support of the relevant stakeholders but also it could lead to better storage and inter-connectedness. The licensing system should be modified under the “Water Shares” proposal which would allow abstraction licences to be redefined in terms of percentage shares of available water. The other less ambitious proposal, “Current System Plus” would also still be an improvement on the current system. DEFRA should get on and choose which proposal it aims to enact.

    The UK faces long term threats to its water security. An outdated licencing system alongside weak investment and rising demand are all contributing to the problem. By seizing the opportunity to enact bold reforms to the water abstraction licensing system, DEFRA can increase the UK’s water security and provide confidence to abstracters and households. 

    Adam joined the Centre for Policy Studies as Head of Economic Research in January 2014. 

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