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Sustainable Water Management in European Agriculture: Pricing and Allocation Report

This report examines water pricing and allocation in EU agriculture, including case studies and recommendations. It covers policies, tariffs, cost recovery, and recommendations for sustainable water use.

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Sustainable Water Management in European Agriculture: Pricing and Allocation Report

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  1. Findings from the report on “The role of water pricing & water allocation in agriculture in delivering sustainable water use in Europe” Members of project team: Sarah Bogaert & Dieter Vandenbroucke (ARCADIS Belgium), Thomas Dworak & Maria Berglund (Fresh Thoughts Consulting), Manuel Herrero (Typsa), Eduard Interwies & Stefan Görlitz (InterSus), Guido Schmidt & Manuel Herrero (Typsa), Manuel Lago, Jennifer Moeller-Gulland & Chiara Mazzetti (Ecologic Institute).

  2. Report on water pricing & allocation in agriculture includes: 1. Theoretical part 2. Baseline situation in the EU 3. 7 case studies (river basins) 4. Recommendations Conference in Warsaw last September SCG water pricing experts consulted

  3. 7 case studies: Australia (Murrey-Darling) Mexico (Lerma Chapala) Cyprus Spain (Guadalquivir) France (Adour-Garonne) Romania (Buzau lalomita) the Netherlands (Schelde)

  4. Water allocation policies in EU: Generally the right to abstract or use water is issued by a public authority (authorisations, licenses, permits) Rationale behind the initial allocation can consider the availability of water resources, the aim of abstraction, environmental needs & other uses Authorisation procedures differ according to the quantity or pumping capacity Time periods or duration of permits can differ between MS

  5. Water allocation policies: if water scarcity or droughts, restriction of water use in all MS in some cases, restriction determined according to the hierarchy of water users abstraction rules can be more stringent in water stressed areas

  6. Water allocation policies: some MS incorporate the concept of minimum ecological flow in water allocation systems Australia has tried water markets but problem of over allocation of rights create pressure on ecosystems

  7. Water pricing policies (incentive pricing): large variability in tariff design & price level incentive to save water with pricing is weak but some good practices identified volumetric tariffs are increasingly used but levels are low to very low (often < 0.01E/m3) important share of water abstractions is not priced at all, even in stressed areas 1/3 of the MS has no tariff system for individual abstraction

  8. Water pricing policies (incentive pricing): Several MS take scarcity into consideration for pricing scheme Several MS penalise abstraction beyond quota or favour alternative sources with cheapest tariffs In some MS, area based pricing systems lead to situation where one pay less for water intensive crops than for other crops under volumetric pricing

  9. Water pricing policies (incentive pricing): lack of incentive pricing could be linked to conditions of art 9 (MS can adjust pricing to local conditions) low share of water cost in overall production costs higher prices do not always imply water savings but a shift to higher value crops water efficiency programmes can lead to intensification (“rebound effect”)

  10. Water pricing policies (cost recovery): Considerable lack of cost recovery in MS, both financial & environmental Big variability For one third of MS O&M costs for provision of water are only partly covered Capital costs (investments) more often subsidised with public money (indirect support for irrigation activities).

  11. Water pricing policies (cost recovery): environmental cost is not central several initiatives to take into account environmental and resource costs

  12. Beyond allocation and pricing: illegal water abstraction water metering often absent

  13. Overall recommendations: allocation & pricing won’t reach alone the target mix of command & control, social, economic policy measures is required more CIS guidance is needed to develop common definitions and methodologies policies should include flexibility to take into account local and regional circumstances policies work well if based on environmental flow regimes fighting illegal water abstraction is a priority

  14. Recommendations on water allocation: external auditing to improve the governance control & monitoring is necessary allocation should be based on environmental flows & sustainable groundwater use (guidance) should include water hierarchy short / medium term adjustments should be enabled

  15. Recommendations on cost recovery: methodology on how to calculate cost recovery should be debated at CIS level coherence between policies should be enhanced: when support to modernisation, a share of water should be returned to the environment impact assessment of irrigation projects should be mandatory

  16. Recommendations on incentive pricing: water should not be free volumetric pricing is required metering devices are necessary increase of price should be gradual but pricing should not encourage illegal abstraction payment for ecosystem services should be considered to complement water pricing

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