Table of contents
2. Supporting Information
2.1 Indicator definition
The indicator is split into two elements: a) Financial cost recovery of water services for public water supply; and b) Affordability of water services. The former is a simple plot of the average price level for water supply and sanitation services in European RBDs against their respective financial cost recovery levels, both as reported by the Member States. The latter is a ratio of household expenditure on ‘water supply and miscellaneous services relating to the dwelling’ to household income, compared to an ‘affordability threshold’ set at 5% for indicative purposes. It is presented along with ratios of expenditure on other household needs to consider the third dimension of water affordability.
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Thanks. We have adjusted the text accordingly.
a) Financial cost recovery of water services for public water supply;
I assume this should read
a) Financial cost recovery of the water services for public water supply and sanitation services;
Since you are presenting the results for two water services, not one.
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You would like to plot price levels with cost recovery rates? I thought you said in the beginning that data are incomparable. Of course, one can plot anything against anything, but what solid message can we get out of that?
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The lack of comparability we point to before is not between price levels and financial cost recovery, it is between those two elements across countries and RBDs.
You would like to plot price levels with cost recovery rates? I thought you said in the beginning that data are incomparable. Of course, one can plot anything against anything, but what solid message can we get out of that?
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Due to the legal requirements of the municipal levy laws, it is generally assumed in the German parts of the river basin communities that there is full cost recovery.
To verify this, the various federal states are carrying out further selected surveys and benchmarking projects. The result of these surveys confirm that the cost recovery rates for drinking water supply in Germany are currently around 100%. The individual results of the state projects for drinking water supply ranged from 95% to 107%, while the cost recovery rates for wastewater disposal ranged from 93% to 105%.
There is no regular central survey of cost recovery rates in Germany.
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Thanks. We will explore how to add this (together with the NL case example) to the Accuracy and Uncertainties sub-section.
Due to the legal requirements of the municipal levy laws, it is generally assumed in the German parts of the river basin communities that there is full cost recovery.
To verify this, the various federal states are carrying out further selected surveys and benchmarking projects. The result of these surveys confirm that the cost recovery rates for drinking water supply in Germany are currently around 100%. The individual results of the state projects for drinking water supply ranged from 95% to 107%, while the cost recovery rates for wastewater disposal ranged from 93% to 105%.
There is no regular central survey of cost recovery rates in Germany.
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- Edit the sentence from „a) Financial cost recovery of water services for public water supply“ to „a) Financial cost recovery of water services for public water supply and sanitation services“.
- It should be define what particular expenditures are calculated under „miscellaneous services relating to the dwelling’“. (i.e. classified under the Harmonized Indices of Consumer Prices (HICP) data category “Water Supply and Miscellaneous Services related to the Dwelling”. This aggregates the subcategories “Water Supply”, “Refuse Collection”, “Sewerage Collection”, and “Other Services Relating to the Dwelling, Not Elsewhere Classified”).
- The definition „Financial cost recovery of water services for public water supply = is a simple plot of the average price level for water supply and sanitation services in European RBDs against their respective financial cost recovery levels“ is not correct. Recovery (on left side) can not be defined by recovery (on right side). We suggest to define cost recovery by using the formula: income/outcome x 100 = cost recovery (%).
- There should be provided also a definition for cost of water services (see part 1 Indicators, i.e. The financial costs of water supply and sanitation services include operational and maintenance costs, capital investments, and management costs of water service providers (EC, 2003).) and exapmles of tools for recovery (see part 1. Indicators, i.e. These can be recovered through revenues from tariffs, associated taxes, and transfers of public funds (national and EU).)
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- Edit the sentence from „a) Financial cost recovery of water services for public water supply“ to „a) Financial cost recovery of water services for public water supply and sanitation services“.
We have adressed to this
- It should be define what particular expenditures are calculated under „miscellaneous services relating to the dwelling’“. (i.e. classified under the Harmonized Indices of Consumer Prices (HICP) data category “Water Supply and Miscellaneous Services related to the Dwelling”. This aggregates the subcategories “Water Supply”, “Refuse Collection”, “Sewerage Collection”, and “Other Services Relating to the Dwelling, Not Elsewhere Classified”).
This information is available in the accuracy and uncertainties section
- The definition „Financial cost recovery of water services for public water supply = is a simple plot of the average price level for water supply and sanitation services in European RBDs against their respective financial cost recovery levels“ is not correct. Recovery (on left side) can not be defined by recovery (on right side). We suggest to define cost recovery by using the formula: income/outcome x 100 = cost recovery (%).
The definition here does not refer to the concept of financial cost recovery in the theoretical sense, but to how we employ it in the design of the indicator. We will further internally discuss how to better adress it.
- There should be provided also a definition for cost of water services (see part 1 Indicators, i.e. The financial costs of water supply and sanitation services include operational and maintenance costs, capital investments, and management costs of water service providers (EC, 2003).) and exapmles of tools for recovery (see part 1. Indicators, i.e. These can be recovered through revenues from tariffs, associated taxes, and transfers of public funds (national and EU).)
We will make sure the sufficient reference to the Guidance Document
2.2 Unit of measure
a) average price level in Euros per m3;
b) recovery rate of financial costs in %;
c) ratio of household expenditure on various products and services against total household income
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See previous comments on the fact that in the Netherlands for wastewater we use pollution equivalents instead of m3, and that for drinkingwater I don't know whether the numbers you use only cover the variable costs.
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You say yo will plot against household income. Total household income or disposable household income after deducting costs for housing? From the text I had the impression you do the latter, which triggered me to comment on the fact that in the Netherlands many people have serious problems finding an affordable home. So what is then disposable income?
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The prices/fees for drinking water supply are strongly influenced by regional and legal conditions (water extraction fee) in der German Federal States (Länder), and therefore differ considerably in the various municipalities in Germany.
In addition to a consumption-based charge, the drinking water price in Germany includes a basic charge to cover fixed costs not related to consumption. The average consumption charge varies between €0.96/m³ and €1.88/m³ in the individual German river basin communities. The average basic charge varies between 52.87 €/a and 102.08 €/a (https://www.lawa.de/documents/wa_bwp_2021_schlussbericht_2_1607682745.pdf).
Even if the prices for wastewater disposal do not vary quite as much, it is therefore not possible to conclude from a comparison of an average water price for Germany whether or not water prices are affordable nationwide.
An analysis of affordability should therefore start at a lower level of aggregation and, for example, survey costs for water services on national parts of the river basin communities.
Furthermore, there is a basic security scheme for people in need and jobseekers in Germany. People who fall under this basic income support are reimbursed for housing expenses including water services. This lower income group entitled to benefits must therefore be taken into account methodically for a plausible assessment of the affordability of water services.
Prices for water services in Germany are under municipal sovereignty. Therefore there is no regular central survey in Germany.
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- Ad „in %“ at the sentence under letter c).
Policy/environmental relevance
Improved reporting on water service prices and financial cost recovery is increasingly pertinent in light of the large investments needed to meet the objectives of the WFD, to comply with Urban Wastewater Treatment Directive (UWWTD) and Drinking Water Directive (DWD) requirements, and to ensure adequate infrastructure renewal.
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'Improved reporting on water service prices and financial cost recovery is increasingly pertinent ...'
This comment suggests that if a country does not report a price/m3, that it does not have insight in its situation. And the same applies if a country does not report on cost recovery for sanitation in an identical way as the other countries (that is having collection and treatment of wastewater as one water service). The fact that you did not find a number for the cost recovery for the combination of the collection and treatment of wastewater tends combined with your comment referred to above can easily drive to the conclusion that the Ntherlands still has a lot to do. Even though the only problem is that we have presented collection of wastewater and treatment of wastewater as two seperate water services and you cannot present that in one graph with the data from the other countries.
I am afraid for quick and easy but wrong conclusions.
Affordability of water supply and sanitation services is largely missing from national and global monitoring initiatives and there is currently no universal agreement as to the concept’s definition, appropriate assessment methodologies or monitoring schemes (UNICEF-WHO, 2021). There is thus a need to find suitable approaches that allow us to use regularly reported data to help policy and decision makers identify segments of society that might be disproportionately affected by increases in the prices of basic household needs, like water supply and sanitation. This is directly related to the ‘Leave no one behind’ principle of the 2030 Agenda for Sustainable Development, its Sustainable Development Goals (SDGs) and the EU 2030 target on poverty and social exclusion.
EEA topics - https://www.eea.europa.eu/themes
- Nature - European freshwater
- Resource efficiency and waste – Resource efficiency
Methodology
Given the known operational challenges with Article 9 of the WFD, referring to the lack of concrete harmonised methodologies and large contextual differences that restrict comparative analyses, the element on water pricing and financial cost recovery of this indicator has been kept limited to a visualisation of reported data without further computation. The WFD 2016 tables containing data on average price levels and financial cost recovery for public water supply services were reviewed, the data sorted and arranged according to service types and used to produce the charts and conduct the analysis. The following types of water services, mentioned in the WISE WFD database, have been considered:
- “Drinking water abstraction (surface and/or groundwater), treatment and distribution” (available reporting on average price levels from 47 RBDs and on financial cost recovery from 54 RBDs)
- “Sewage collection and wastewater treatment” (available reporting on average price levels from 43 RBDs and on financial cost recovery from 45 RBDs)
- “Drinking water abstraction (surface and/or groundwater), treatment and distribution AND sewage collection and wastewater treatment (when considered together)” (available reporting on average price levels from 71 RBDs and on financial cost recovery from 82 RBDs)
Reported levels of financial cost recovery for each of the above services are plotted for illustrative purposes only, as their calculation can vary greatly across RBDs and localities, and detailed information is largely unavailable from official and regular reporting.
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'Illustrative purposes only'
I still have seriuous doubts whether one should do that, since you are presenting incoparable data in a way that might suggest that one can compare those data. No matter how many disclaimers you include, any graph will be used somewhere, and then often without the various disclaimers. If we want to prevent that, we should not present those graphs, not even for illustrative purposes only.
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We try to best use of reported data by the Member States to adress different aspects of the integrated water management under the EU WFD. Soemtimes, due to intercalibation issues, the data collected under the certain directives might not be comparable. Therefore, we use disclaimers. Nevertheless, your point is relevant. In order to avoid from potential misinterpretation, we will not use such chart in the indicator.
'Illustrative purposes only'
I still have seriuous doubts whether one should do that, since you are presenting incoparable data in a way that might suggest that one can compare those data. No matter how many disclaimers you include, any graph will be used somewhere, and then often without the various disclaimers. If we want to prevent that, we should not present those graphs, not even for illustrative purposes only.
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Please note, that the 2nd RBMP of Hungary has included cost-recovery levels for the third type of water service (water supply AND sanitation combined) and our corresponding WISE report included cost recovery data differentiated for water supply and sanitation. The Excel table "Public water supply_Prices&Cost recovery_WFD2016.xlsx" does not reflect the information provided.
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We recommend to cotact with Eurostat on this issue.
Please note, that the 2nd RBMP of Hungary has included cost-recovery levels for the third type of water service (water supply AND sanitation combined) and our corresponding WISE report included cost recovery data differentiated for water supply and sanitation. The Excel table "Public water supply_Prices&Cost recovery_WFD2016.xlsx" does not reflect the information provided.
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The affordability of water supply services is often indicatively measured by calculating a ratio of household expenditure on such services against household income, and comparing it to an ‘affordability threshold’. Following recent recommendations by UNICEF and the WHO, this indicator incorporates a third dimension for the assessment of affordability which accounts for expenditure on other households needs such as health, food, housing, electricity, education, transport and communication. This puts the level of household expenditure on water services into perspective and it can indicate the magnitude of disposable income left after a defined set of household needs have been covered. For the affordability element of the indicator, household expenditure and income data were fully sourced from Eurostat [NAMA_10_CO3_P3__custom_1306597] and [lfst_hhnhtych]. National level data on final consumption expenditure of households by consumption purpose were extracted for the selected goods and services, adjusted for inflation using an available implicit deflator, and disaggregated to household level data using a dataset on the number of private households [ilc_di04]. EU-SILC and ECHP survey data on mean equivalised net income for all household types, income distribution by quantiles [ilc_lvph01], and average household size [ilc_di01], were collected and combined to compute total income levels per average household. Ratios were then computed for the disaggregated consumption purposes at the household level for medium income households (using mean income data) and low income households (using fifth percentile income data). A 5% affordability threshold reference was used for indicative purposes based on the most recent review work by UNICEF and the WHO, which refers to the UNDP, the World Bank, the European Commission and the OECD using thresholds that range from 3-5% (UNICEF-WHO, 2021). The threshold intends to provide a reference point above which affordability concerns would be likely.
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An example would be great to understand the 3 dimensons of the affordability calculation
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Hi Andreas,
we could not be sure whether is that the reference to the UNICEF-WHO study (which illustrates this concepts in depth) sufficient, or you request us to explain that here?
Could you please clarify that?
An example would be great to understand the 3 dimensons of the affordability calculation
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Data sources & providers
European Environment Agency - WISE Water Framework Directive Database
WISE Water Framework Directive Database — European Environment Agency (europa.eu)
Eurostat
- Final consumption expenditure of households by consumption purpose (COICOP 3 digit) - [nama_10_co3_p3]
https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_co3_p3&lang=en
- Number of private households by household composition, number of children and age of youngest child (1 000) - [lfst_hhnhtych]
https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfst_hhnhtych&lang=en
- Mean and median income by household type - EU-SILC and ECHP surveys- [ilc_di04]
https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_di04
- Average household size - EU-SILC survey - [ilc_lvph01]
https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_lvph01&lang=en
- Distribution of income by quantiles - EU-SILC and ECHP surveys- [ilc_di01]
https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_di01&lang=en
Geographic coverage
EIONET Member countries: Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, North Macedonia, Serbia.
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I would expect alphabetical order...?
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Thanks. corrected.
I would expect alphabetical order...?
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Time coverage
Water pricing and Financial cost recovery element – 2016
Affordability element – Period of analysis is 2005-2019; length of monitoring data series varies with minimum length of 7 years.
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I am not sure whether you actually mean 2016. If I understand correctly, you use data from the River Basin Management Plans as reported to the European Commission in 2016. But the data included in those River Basin Management Plans may (and most likely will) refer to other (earlier) years.
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Thanks. We use "2nd WFD RBMP reporting"
I am not sure whether you actually mean 2016. If I understand correctly, you use data from the River Basin Management Plans as reported to the European Commission in 2016. But the data included in those River Basin Management Plans may (and most likely will) refer to other (earlier) years.
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Frequency of dissemination
Water pricing and Financial Cost Recovery element – every 6 years
Affordability element – every 2 years
References
UNICEF-WHO (2021) The measurement and monitoring of water supply, sanitation and hygiene (WASH) affordability: a missing element of monitoring of Sustainable Development Goal (SDG) Targets 6.1 and 6.2. https://apps.who.int/iris/bitstream/handle/10665/341067/9789240023284-eng.pdf
Strosser, P., Delacamara, G., van Duinen, R., De Paoli, G., Kirhensteine, I. (2021) Economic data related to the implementation of the WFD and the FD and the financing of measures. Final report to the European Commission Directorate-General for Environment.
OECD (2020), Financing Water Supply, Sanitation and Flood Protection: Challenges in EU Member States and Policy Options, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/6893cdac-en.
Accuracy and uncertainties
Data uncertainties
Affordability calculations are dependent on country survey data. While data capacity for the databases consulted was sufficient, the surveys themselves may carry errors and/or inconsistencies that emerged during data gathering and reporting. These data are also aggregated at country level and in most cases average data is used for the computations.
Further, the data used to illustrate household expenditure on water supply and sanitation services is classified under the Harmonized Indices of Consumer Prices (HICP) data category “Water Supply and Miscellaneous Services related to the Dwelling”. This aggregates the subcategories “Water Supply”, “Refuse Collection”, “Sewerage Collection”, and “Other Services Relating to the Dwelling, Not Elsewhere Classified” and thus carries an associated error.
Lastly, for the calculations of the expenditure to income ratio for low income households, the expenditure data used were that of average income households (as these data for low income households is not available), while income data was that for the 5th income quintile. This results in the values for the ratio being (consistently) skewed upwards.
Methodological uncertainties
In the EU, the Water Framework Directive requires that the costs of water services provided to households are sufficiently recovered through water tariffs. Notably though, both water tariffs and their contribution to financial cost recovery are subject to a combination of intrinsic factors that often vary across, or even within, countries. Among others, such factors may range from disparities in the quality of the service itself to conceptual inconsistencies in the calculation of cost recovery levels, and from differences among management models and institutional frameworks to varying levels of dependency on public and EU funding. Thus, direct comparisons between countries are deemed unfeasible, and comparisons between national subdivisions (e.g. municipalities, RBDs) should carefully account for intrinsic differences (e.g. what services and other items, like asset depreciation, are included in the price and considered in the cost recovery calculations). Further, it should be noted that a higher rate of recovery of financial costs does not necessarily hold correlation with a higher average price for the water service. This responds to the fact that the weight of water tariffs in the mix of the service providers’ total revenue, and/or in the calculation of financial cost recovery levels, varies. For instance, reported average prices between 0.58 and 4.18 Euros per cubic metre all result in more than 100% recovery of financial cost in different RBDs.
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The text above gives a couple of potential explanations for differences in price levels within countries. Unfortunately, the most important one (at least in the Netherlands) is missing here: The cost structure may be different in various regions. With that I mean that in some regions in the Netherlands we use surface water as source for drinkingwater, which requires much more efforts (and costs) than when groundwater is used as primary source. This is the most important explaination why the price/m3 for drinkingwater varies between certain regions. Another reason why costs differ between regions is the housing intensity and need for infrastucture. In less densely populated areas, the costs for infrastruture has to be paid by less people, and thus higher costs per person.
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Many thanks for this feedback, we will take into account in the final version of the indicator.
The text above gives a couple of potential explanations for differences in price levels within countries. Unfortunately, the most important one (at least in the Netherlands) is missing here: The cost structure may be different in various regions. With that I mean that in some regions in the Netherlands we use surface water as source for drinkingwater, which requires much more efforts (and costs) than when groundwater is used as primary source. This is the most important explaination why the price/m3 for drinkingwater varies between certain regions. Another reason why costs differ between regions is the housing intensity and need for infrastucture. In less densely populated areas, the costs for infrastruture has to be paid by less people, and thus higher costs per person.
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Regarding the selection of an affordability threshold, there is no consensus as to what an adequate threshold level is or how to determine it, and while past studies by UNDP, the World Bank, the European Commission and the OECD have used thresholds ranging from 3-5, this remains a challenging aspect of affordability assessments.
a) Financial cost recovery of water services for public water supply;
I assume this should read
a) Financial cost recovery of the water services for public water supply and sanitation services;
Since you are presenting the results for two water services, not one.