Eureau: Water prices should include budget for investing in infrastructure
Water service providers should be able to invest in water infrastructure on the basis of charged water prices. Thus the Cost Recovery Principle, also known as Article 9 in the Water Framework Directive (WFD), should be strengthened. Eureau, the organisation of private and public water service providers across Europe, pleas for introducing water prices that ensure these investments.
In a recently published position paper Eureau states the upcoming revision of the WFD-legislation in 2019 is the right moment to address this issue. ‘This revision should make sure that an appropriate proportion of the fixed component is provided in the water tariff. This would guarantee that water and waste water operators will have a more stable and predictable revenue stream allowing them to better plan investments.’
Introduce ‘User Pays Principle’
The WFD requires those who benefit from public water services to cover the cost of providing these services. According to Eureau therefore the ‘Polluter Pays Principle’ should be extended and include the ‘User Pays Principle’ as well. Cost recovery should be assessed for the class of users and water service users. At the moment the Water Framework Directive identifies households, industry and agriculture.
Anticipate on climate change
But not only the type of user should play a role when pricing water. Across the EU the climatic differences are enormous. Water availability varies geographically and seasonally. Water operators need to take these effects into account. Currently in most countries this is not covered in water pricing. Climate change adaptation needs have to be included in pricing policies in order to finance the necessary upgrade of the water infrastructures. New technologies may become available with implications for the cost structure of the water industry.
The risks and uncertainties inherent in the unpredictable context of the effect of climate change should be taken into account when designing a water pricing system. For example, the abstraction of water for agricultural purposes in areas with water scarcity is subject of a price, a so-called abstraction fee. In case of water allocation conflicts, water abstraction for drinking water purposes should a priority over other uses. The water supply and waste water infrastructure in many parts of Europe is ageing. In some countries, the charges collected from the users are not sufficient to maintain and renew the systems.