Water availability is under increasing pressure from climate change, population growth, industry and agriculture. Water abstraction licence trading offers one way to ease competition for this precious resource.
The challenge
Ever-increasing competition for water resources is a fact of life in the UK, and particularly so in water-stressed areas.
The potential for mains-water contamination also increases the risks faced by operations reliant on good supply.
New and/or expanded operations that rely on access to water are likely to find that water availability is a constraint on capital investment.
Regulating the flow
Not surprisingly, our access to, and ever-increasing use of, raw water is under correspondingly increasing scrutiny from regulators.
Our water regulators have a legal duty to protect our water environment.
The licensing regime exists to ensure that our abstraction and use of water, in our homes, farms and industries, does no harm to the water environment and leaves sufficient water in our rivers, lakes and/or aquifers for them to function naturally.
Abstraction of more than 20 cubic metres of water a day from a watercourse or underground water reserve in England requires a water abstraction licence from the Environment Agency.
Private water supplies below this limit are exempted and regulated by local authorities.
Having a water abstraction licence does not, however, guarantee the availability of water. Our climate is changing and weather patterns are too. The supply of water to our natural environment is also changing, as is the balance of water resources required to sustain our natural environment.
In water stressed areas, the Environment Agency (EA) reviews water abstraction returns and may, in any event, seek to agree a reduction in water abstractions with licence holders.
The EA has powers to revoke water abstraction licences where harm to the water environment is being caused. In future, additional powers will also enable them to revoke abstraction licences where there is a risk of harm.
The EA is under pressure to reduce the amount of water abstracted from our water-stressed catchments in particular. Approval of new or increased water abstraction in such areas is unlikely.
A new deal
To ease the pressure, the Environment Agency is promoting by Water Abstraction Licence Trading.
For historical reasons, some licence holders have licences allowing abstraction volumes beyond their needs. In such situations, a licence holder can apply to the EA to ‘trade’ the excess to a third party.
This licence trading gives third parties a way to overcome their inability to acquire a new water abstraction licence. In return, licence holders with under-used licences can reduce their costs and enhance their reputation.
The timing and quantity of water abstraction required by each party is negotiated.
So, if you want an abstraction licence, but are unable to get one because there is no water available in your area, you may be able to enter into an agreement with an existing licence holder.
If you already have an abstraction licence, you can agree to give rights to some or all of that water to someone else.
There are four main options.
- Whole, permanent: The whole of the trader’s abstraction right is transferred to the recipient on a permanent basis.
- Whole, temporary: The whole of the trader’s abstraction right is transferred to the recipient on a temporary basis.
- Part, permanent: Part of the trader’s abstraction right is transferred to the recipient on a permanent basis.
- Part, temporary: Part of the trader’s abstraction right is transferred to the recipient on a temporary basis.
It is not the Environment Agency’s role to identify suitable trading partners, but they welcome opportunities to reduce the overall burden on water resources, particularly in water-stressed areas.
The EA also does not wish to block future development where it is sustainable.
The trading negotiation is a three-way deal, with each party having something to gain.
How WHS can help
If your business plans to expand and needs more raw water or plans to down-scale and needs less, WHS can help you find trading partners, and assist with the technical aspects of your licence application.
WHS uses Environment Agency data to search for potential trading partners and review the local water resources setting. We follow this with technical assistance in support of the application for a new (traded) water abstraction licence or licences.
The last word
If you would like to explore these issues, we’d love to hear from you!
Our leading and unique methods and software, widely used as best practice by regulators, and our depth of knowledge and experience consulting in the water environment, are just a phone call away.
To arrange an initial, no obligation, conversation to better understand your business and how we can help you, contact:
Duncan Russell, WHS Technical Director, Hydrology & Hydrogeology
Mobile: +44 (0)7549 018136
Email: duncan.russell@hydrosolutions.co.uk