HomeNatural environmentThe Levelling Up Bill will stall water company investment in nature recovery

The Levelling Up Bill will stall water company investment in nature recovery

This post is by Guy Thompson, group sustainability director at Wessex Water and managing director of EnTrade, a not for profit Wessex Water subsidiary.

One of the most eye catching features of the Global Biodiversity Framework, agreed at the recent COP15 nature summit, was the pledge to reduce nutrient pollution by half.

Nutrient pollution, especially nitrogen and phosphorus, is one of the biggest challenges facing our rivers and coasts.  Across the country, decades of agricultural inputs and our use of household domestic products have created a legacy of excess nutrients in the water system which is disrupting natural ecological processes and harming wildlife populations and sites.

This is a crisis and the urgent need to deal with it is driving sub-optimal solutions. Since last March, housing developers have been required to ensure new developments are nutrient neutral. But, as the predominant sources of the pollution are agriculture and wastewater treatment works, it is patently unfair that the housing industry is being saddled with financing the entire solution.

To address this inequity, the Department for Levelling Up, Housing and Communities (DLUHC) has amended the Levelling Up and Regeneration Bill to require water companies to upgrade all significant wastewater works in affected catchments to what is known as Technically Achievable Limits. While the water industry supports DLUHC’s intent and wants to solve the problem, the amendment will have the unintended consequences of slowing down delivery and preventing transformational water company investment in nature recovery.

A mix of solutions is needed
Traditionally, water companies have reduced nutrient loads entering rivers through engineered upgrades of wastewater treatment works. But these use lots of chemicals, are energy intensive and increasingly unsustainable and expensive.

Since 2012, Wessex Water has demonstrated other approaches with nature-based solutions. In the Poole Harbour catchment, we have removed nutrients by using a mix of our treatment works and working with farmers. From 2015 to 2020, Wessex Water was obliged to reduce nitrate pollution by 40 tonnes. Traditionally the Environment Agency would have insisted on us investing in a carbon intensive treatment process, with an estimated cost of £31,000 per tonne of nitrate removed. Instead, we have achieved the same outcome by paying farmers to plant cover crops, at a cost of £9,000 per tonne of nitrate removed, ie 71 per cent cheaper and with biodiversity benefits instead of more carbon emissions. This is robustly monitored and modelled using the Environment Agency’s Nitrate Leaching Tool, providing strong regulatory oversight.  The farming baseline is set, as is the water company baseline, and rules are in place to prevent double counting.

This pilot has spawned EnTrade, which is now developing high integrity markets in environmental services from permanent nature-based solutions, such as wetlands and woodlands, including nutrient reduction. Use of a market mechanism to bring together buyers and sellers and standardise delivery reduces the cost of longer term measures.

Water bills could rise
This argument is not about whether water companies should be legally obliged to take action – the industry supports this – but about how the obligation is implemented. By prescribing engineered solutions, the government will effectively prohibit water companies from considering the carbon, the concrete and the cost of the upgrades, and the missed opportunity of the additional environmental benefits delivered by nature-based solutions.

In its current form, DLUHC’s amendment will prevent water companies from investing in nature-based solutions to the nutrient problem and working with partners on catchment schemes, in the way Wessex Water has in Poole Harbour. This could lead to higher water bills in the middle of a cost of living crisis.

To demonstrate why bills could rise, 43 per cent of Wessex catchments are affected by the rules. If we are restricted to engineered solutions, the company will end up having to carry out a very expensive upgrade programme as, having already installed phosphate and nitrate removal plants at many of our treatment works, we are approaching the technically achievable limits of what can be done. But using nature-based solutions and working with farmers to implement them is both low carbon and can be more cost effective, so would minimise the impact on customers’ water bills.  As nature-based solutions take less time to plan and establish than engineered solutions, having the option to use other approaches would release new housing more quickly too.

The water industry can do much more for nature
This ultimately boils down to a more fundamental question: what kind of water industry do we want?  There has rightly been lots of concern about storm overflows and sewage pollution, and valid criticisms of the industry and the way it has been regulated.  But water is a system and needs to be managed as such. There is an opportunity for the industry to contribute more to nature recovery and river restoration. Given the nature and climate crises, companies should be enabled to play their part in delivering nature-rich landscapes, rather than restricted to the use of slower solutions that rely on more concrete, chemicals and carbon.

Defra has been clear that it wants to see water companies invest in nature-based solutions and work in partnership to restore rivers, and the 25 year environment plan was clear that the government wants to catalyse private investment in nature recovery.

A tweak to the amendment to allow companies to choose the most efficient way of delivering the obligation would open up more investment in nature-based solutions, where they are more cost effective. It would also create a potential annual £50 million water quality market for farmers.

The Environment Act is the basis for the long term solution to problems like nutrient pollution. Holistic, ambitious targets to deal with river health and nature decline and a coherent Environmental Improvement Plan would enable all sectors to play their part.

Taking this simple step now will, in the meantime, be the incentive needed for those involved in a catchment to collaborate on a more equitable solution to the immediate nutrient crisis.

Written by

Green Alliance is a charity and independent think tank focused on ambitious leadership and increased political support for environmental solutions in the UK. This blog provides space for commentary and analysis around environmental politics and policy issues as they affect the UK. The views of external contributors do not necessarily represent those of Green Alliance.

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