4.4 Funding of measures

Measures to tackle key pressures and impacts, which lead to failure of achieving the WFD objectives, can only be carried out with sufficient funding. Adequate financing of WFD measures is as essential for fulfilling the goals of the Directive as administrative and technical capacity, scientific knowledge, and political willingness. Funding obstacles have been identified as the most common reason for delaying or not completing the implementation of supplementary measures in the first Programmes of Measures as well as one of the key reasons causing delay or non-completion of basic measures at EU level (EC, 2019).

The sources of funding for WFD measures are a combination of EU, national, regional, and municipal funds, direct financing by sectors and the general public as consumers. For financing measures in the RBMPs, the WFD relies to a certain extent on the recovery of the costs of water services (WFD Article 9), especially via the water prices charged. Box 6 presents the example of the “water cent” in Germany which is an additional charge levied on groundwater abstraction and used to fund pollution reduction measures in agriculture. Also in France, the river basin agencies (Agences de l’eau) collect water abstraction and discharge charges from water users in a given river basin and allocate those funds as grants to water users in the same basin. The majority of these funds initially financed piped water and sewer network expansion and rehabilitation, as well as investments in wastewater treatment plants. In 2016, the French river basin agencies received an additional mandate through the biodiversity law, which requires that they also fund projects with a climate adaptation and biodiversity focus (Trémolet et al., 2019). In Denmark, fish care management is financed by funds from the Danish fishing license fees and among others covers activities such as the improvement of the living conditions and habitats for fish (Danish Fisheries Agency, 2020). Similar schemes are found in other European countries.

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Box 6                  “Water cent” in Germany

13 of the 16 German federal states have introduced the so-called “water cent” as a charge for water abstraction from surface and groundwater[1]. The first federal state which introduced the “water-cent” did so already in the late 1980s, while several other states followed after the adoption of the WFD in 2000.[2] The objective of this instrument is, on the one hand, to encourage the conservation of precious water resources.[3] On the other hand, the collected surcharges have been mainly used to compensate farmers for reducing the use of nitrogen and pesticides in order to reduce the pollution levels of key drinking water sources. In at least one federal state, however, plans have been announced to use the revenue from the “water cent” (whose amount has recently been increased) also for flood protection measures.[4]

[1] https://www.umweltbundesamt.de/themen/wasser/wasser-bewirtschaften/oekonomische-fragen#nationale-abgaben-und-entgelte

[2] https://recht-energisch.de/2018/12/10/wie-viel-cent-kostet-der-wasserpfennig/

[3] https://www.bmu.de/en/topics/water-waste-soil/water-management/policy-goals-and-instruments/water-protection-policy-in-germany/

[4] https://www.swp.de/suedwesten/staedte/sachsenheim/langer-atem-gegen-nitratbelastung-26790436.html

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For several decades now, a large part of funding available for water resource management is being invested to improve water quality via investments in sewers and wastewater treatment. In a recent study, the OECD estimated that all EU countries together spend on average EUR 100 billion per year on water supply and sanitation (OECD, 2020). This needs to increase to meet compliance with the Urban Waste Water Treatment Directive and the Drinking Water Directive. Total cumulative additional expenditures by 2030 for water supply and sanitation amount to EUR 289 billion for the EU Member States including UK. The main sources of finance for water supply and sanitation expenditures in the EU are revenues from water tariffs, taxes, and EU funds. Some countries rely heavily on EU funding, which is bound to decrease over time and these countries will need to find new financing sources. When assessing Member States capacity to finance the water sector, for some it will be difficult to increase levels of public budgets allocated to water supply and sanitation. While affordability constraints are mentioned to justify tariffs below cost recovery levels, data shows that in most EU Member States, more than 95 % of the population could pay more without facing an affordability issue (OECD, 2020).

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Concerning EU funding sources targeting the WFD, it is worth noting that the WFD does not have its own specific EU funding for implementation, but it is integrated into the budget of the EU LIFE financing instrument for environment and climate (Carvalho et al., 2019). LIFE funding amounts to €3.4 billion for the period 2014–2020. As a result of this vast difference in EU funds, the implementation success of EU water policy is highly dependent on using financial instruments in other sectoral policies, or “water-mainstreaming”, as well as on national funding. A common approach to water-mainstreaming has been to establish standards and certification schemes to promote best practice technologies or best management practices (e.g. Industrial Emissions Directive). Recently, environmental safeguards and economic incentives were introduced in EU Structural and Investment Funds, including the European Agricultural Fund for Rural Development (EAFRD), the Cohesion Fund and the Regional Development Fund, in a drive to reduce the environmental impact of economic development (Carvalho et al., 2019).

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In this context, it becomes highly important to understand synergies of water policy with other policy areas. In the CAP (reform 2014-2020), there are for example various instruments to improve sustainability also in term of EU water policy objectives: cross-compliance (linking certain CAP payments with specific environmental requirements), the Green Direct Payment which rewards farmers for respecting three obligatory agricultural practices with potential indirect impacts on water quality (maintenance of permanent grassland, ecological focus areas and crop diversification) and rural development which provides financial incentives for actions going beyond compulsory legislation (EC, 2013).

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Funding options from other policy areas are also of relevance to hydromorphological measures such as the removal of barriers for re-establishing river connectivity which can be funded in various ways such as via the European Fisheries Fund (EFF). The EFF may fund measures relevant to the rehabilitation of inland waters, including spawning grounds and migration routes for migratory species. In some countries, there are specific schemes funding the removal of barriers which serve a specific sector. In Denmark, for instance, many weirs were built for fish farming facilities. Removing a weir at a fish farm means that fish farmers must change their entire water circulating system and at a cost (from flow-through to recirculated systems). To support fish farm weir removal on Danish streams and rivers, a governmental finance support scheme was set up (AMBER, undated).

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Also, the new Biodiversity Strategy for 2030 foresees that at least €20 billion a year should be unlocked for spending on nature (EC, 2020). As the new Biodiversity Strategy includes specific aims for water ecosystems (e.g. at least 25,000 km of rivers to be restored into free-flowing rivers by 2030 and restoring of degraded ecosystems), part of the forthcoming funding sources should be invested in water-related measures.

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Overall, there is need to explore in-depth and effectively communicate further policy synergies which can be used to increase the scope of funding for WFD measures. For instance, there is potential for more funding synergies with the rural development programmes (link to land use and planning issues) and the Green Infrastructure Strategy (link to the development of infrastructure in urban or rural settings). Especially, urban rivers and lakes are often target of combined aquatic ecosystem restoration and green infrastructure for reducing flood risk, thereby also securing funding from multiple sources (EEA, 2016).

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As already noted, national funding also plays a significant role in funding WFD measures. The first RBMPs were in many countries an opportunity to set up coordinated programmes to fund hydromorphological measures, which have been among measures requested for the first time explicitly by the WFD. Examples of such national programmes which fund hydromorphological measures include the following:

  • In Scotland, a ‘Water Environment Fund’ was set up to improve the physical condition of water bodies to meet WFD objectives (Box 7).
  • In Finland, a National Fish Pass Strategy was adopted in 2012 to steer the construction of fish passages during the first three periods of water management planning until the end of the 2020 (Vehanen et al, 2015).
  • In Ireland, an Environmental River Enhancement Programme was developed between 2008-2012 dealing in part with river morphology enhancement (O Grady et al., 2013).
  • In Germany, a connectivity programme for barriers at federal waterways, several federal states programmes and the Blue Ribbon Programme were adopted. The latter (see 4.3), started in 2017, shall run until 2050 with a budget of 50 million €/a for the restoration of rivers and their embankments and another 12-15 million €/a for the restoration of floodplains.[1] [1]https://www.blaues-band.bund.de/Projektseiten/Blaues_Band/DE/00_Home/home_node.html, https://www.gewaesser-bewertung.de/files/wrrl_englische_version_dez_2016.pdf

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Overall, however, public funds alone will not be sufficient to support the large number of measures needed for the achievement of WFD goals. Thus, innovative financing mechanisms are needed, and some have already been set up in European countries. For example, in Sweden, an industry fund (hydropower environmental fund) was set up in 2019 to fund mitigation measures in the hydropower sector related to the country’s new National Plan for the revision of hydropower licenses in the next 20 years (SWAM, 2019). The fund consists of contributions from all the main hydropower producers of the country and will support mitigation measures at hydropower plants which cannot otherwise afford this type of interventions.

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In addition, the EU has been developing standards to further link financial investment with environmental protection (see Action Plan for financing sustainable growth (EC, 2018)), which could pose restrictions to investments in sectors that cause impacts on water bodies (e.g. transport, energy production). Building on the 2018 Action Plan, the renewed sustainable finance strategy to be presented later in 2020 will provide a roadmap with new actions to increase private investment in sustainable projects to support the different actions set out in the European Green Deal and to manage and integrate climate and environmental risks into our financial system (EC, 2020b).

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Box 7     The Water Environment Fund in Scotland

The aim of the Scottish Government ‘Water Environment Fund’[1] is to improve the physical condition of water bodies to meet the objectives of the WFD. The program also aims to bring wider benefits to designated nature conservation sites, local fisheries and angling opportunities, community amenity and urban green space creation.

Launched in 2008, the ‘Water Environment Fund’ has provided funding of more than £14 million between 2013 and 2018 around the country. It is administered by the Scottish Environment Protection Agency, who works in partnership with local authorities, land managers, fishery trusts and angling associations, local communities and volunteers. One of the objectives of the program is to build a greater understanding of the benefits of river restoration in Scotland and the techniques available to achieve it.

The program has led to river channel restoration (including re-meandering), floodplain afforestation, the removal of flood embankments, wetland and peatland restoration, the removal of culverts and barriers to fish migration, and the elimination of non-native species along river banks. The fund also promotes catchment scale restoration and explores synergies with natural flood management.

[1] https://www.sepa.org.uk/environment/water/water-environment-fund/

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All in all, as adequate financing of measures is essential for fulfilling the goals of the WFD, it is key to mobilise as far as possible additional funding from EU, national and other sources. EU funds targeted at WFD measures are limited, therefore, implementation success depends on identifying synergies and financing opportunities with other policy areas including sectoral ones (e.g. agricultural policy, fisheries policy, biodiversity policy). Also, public funds (EU and national) need to be complemented with other innovative financing mechanisms, especially those that involve industrial and other private sector partners.


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