Commission paves way for more efficient water pricing

The European Commission today adopted a Communication on pricing policies to enhance the sustainability of water resources. Water charging is a key element of the proposed Water Framework Directive, on which the Council and the European Parliament reached agreement on 28 June. The Directive promotes pricing as an incentive for the sustainable use of water resources and to recover the costs of water services by economic sector. A growing number of stakeholders in the EU agree that it is necessary to make existing pricing policies more efficient, and to develop common guidelines for the use of water charging. With this Communication the Commission aims to provoke a debate, which will result in effective implementation of the water pricing Article of the Water Framework Directive. This will contribute to meeting the environmental objectives of the Directive in the most cost-effective way.

Environment Commissioner Margot Wallström declared: "As with other scarce resources, water has a price, which users and polluters must pay. Through adequate water pricing we can ensure that water resources are protected at lower costs and help preserve water resources of high quality for future generations." She added: "Several Member States already make use of water charging, and we are not starting from scratch. With this initiative the Commission wishes to contribute to improving the efficiency of existing instruments and develop more cost-effective charging mechanisms across the EU. This will help us achieve a high level of protection of our water resources".

Overall, the key messages set out in the Communication are as follows:

The sustainability of water resources (quantitatively and qualitatively) is at stake in many river basins in Europe. Appropriate water pricing has a key role to play in the development of sustainable water policies.

To play an effective role in enhancing the sustainability of water resources, water pricing policies need to take into account both the financial costs of providing services as well as environmental and resource costs. A price directly linked to the water quantities used, or the pollution produced, can ensure that pricing has a clear incentive function for consumers to improve water use efficiency and reduce pollution.

Pricing policies that better account for the environment will build on: (i) a firmer application of the principle of recovery of costs; (ii) a wider application of pricing structures that provide incentives and the promotion of metering devices; (iii) the assessment of major environmental costs and, where feasible, the internalisation of these costs into prices; (iv) a transparent policy development process with the participation of users and consumers; and, (v) a phased implementation of pricing policies that better integrate sound economic and environmental principles.

Water pricing will need to be integrated with other measures to ensure environmental, economic and social objectives are met cost-effectively. The proposed Water Framework Directive offers the right framework to do so in the context of the preparation of the river basin management plans.

Other sectoral, structural and cohesion policies need to be designed and implemented so as to ensure consistency with, and effectiveness of, water pricing policies. As far as agriculture is concerned, reconciling water and agriculture remains a key priority for the Common Agricultural Policy (CAP) and existing policy instruments. The CAP should support the sustainable use of water resources in line with the economic and environmental principles promoted in the proposed Water Framework Directive and in this Communication.

The Commission is not advocating a policy of "pricing alone". Pricing is not the only instrument that can (and will) solve water resources problems. However, pricing must be given due consideration to ensure it promotes more efficient and less polluting use of our scarce water resources.

Effective integration of sound economic and environmental principles into water pricing policies will be the focus of the forthcoming Lille II Conference co-organised by the French Ministry of Environment, the Agences de l'Eau and the European Commission in Lille in September (13 & 14).