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Box 4.5 Cost recovery and incentive pricing on agriculture under the WFD

Cost recovery of water services is a general principles in the Directive, which Member States should apply except where it does not compromise the purposes and achievement of the objectives of the WFD (ECJ, 2014). Cost recovery and incentive pricing principles under the WFD on agriculture can be outlined in the following way:

Element 1 – there is an incentive pricing policy to use water resources efficiently.

Element 2 – there is adequate contribution of the agriculture sector (including self-abstraction for irrigation) to the recovery of the costs of water services, including environmental and resource costs reflected in pricing policy.

• For MS/Regions to demonstrate full compliance with Article 9 of the WFD, the following conditions would be met:
• All abstractions from surface and ground waters (and reservoirs) for agricultural use are subject to a permit and are regulated by water meters.
• There is an inspection system and fines/penalties for a farmer who does not comply with the volume defined in the permit requirements.
• All abstractions from surface and ground waters (and reservoirs) by farmers are subject to a fee (i.e. price).
• The price paid for water is based on the volume of water abstracted by individual agricultural uses. The volume of water (paid for) is calculated by an individual farm level meter.
• There is a clear government commitment (i.e. regulation) to apply volumetric pricing policy for all agricultural users. The pricing policy provides incentives for the agriculture sector to shift to crops, irrigation technologies and practices that ensure efficient use of water or, in water-scarce areas, to less-water consuming crops.
• The price paid for water internalises environmental and resource costs, i.e. the water price charge to farmers goes beyond costs linked to infrastructure such as maintenance, energy, distribution, etc.

Source: Berglund et al., 2017