Water Framework Directive, Cost-recovery Analysis & impact on water price

1. Water Framework Directive, Cost-recovery Analysis & impact on water price Illustration & hypothesis on the Black Sea River basin Arnaud Courtecuisse Resident Twinning Adviser Twinning Project BG 07 IB EN 01

2. Content of the presentation • The objectives of the twinning project • WFD & Cost recovery : which demand from the WFD, which use for water management policy • Investigating links between programme of measures and tariffs : illustration on the Black Sea River Basin

3. The twinning Project BG 07 IB EN 01 Start : March 2009 End : September 2010 • 1. The main objectives of the project • 1. Strengthening the administrative capacity and support the implementation of the WFD through economic approaches and instruments • i.e. implement economic methods and approaches wherever it helps in the WFD’s implementation process (tools for selecting measures, to assess and justify exemptions requirements, to implement incentive pricing policy).

4. The twinning Project BG 07 IB EN 01 Start : March 2009 End : September 2010 • 1.The main objectives of the project • 2. Development of a Water Information System • - to strenghten the data collection and process • regarding fees • - to integrate more economic information • - to develop dashboards for monitoring both at • basin and National level • - to ensure a good reporting at national level

5. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy • Take account of the principle of recovery of the costs of water services, • including environmental and resource costs, in accordance with the polluter pays principle.  Article 9 of the WFD: Calculate a Cost Recovery rate, Provide transparency about the financial transfersbetween water services and with other institutions.

6. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy

7. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy • To what point the users pay for the services they get? Do the bill they pay cover the real costs ? • Capital, functioning, maintenance costs • But also: damages costs to resources & to the environment =>each water district must: -assess these costs for each service -assess how much is paid by the users & show the costs which are not paid by the users (because of subsidies, transfers or damages «paid» by the resource or by the environment)

8. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy • that water-pricing policies provide adequate incentives for users to use water resources efficiently, and thereby contribute to the environmental objectives • an adequate contribution of the different water uses, disaggregated into at least industry, households and agriculture, to the recovery of the costs of water services, taking account of the polluter pays principle. • Regard to the social, environmental and economic effects of the recovery as well as the geographic and climatic conditions of the region No easy to assess environmental & resource damages Member States shall ensure by 2010:

9. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy • To ensure that the « PPP » (Polluter Pays Principle) is more or less applyed • To ensure that water services are managed in a sustainable way (renewing…) • Helps thinking about how to finance the PoM • Link with water pricing: the hypothesis is that when costs are fully recovered, the price is incitative • Incitative tarification is supposed to be an efficient tool to help reaching the WFD objectives

10. 2. WFD & Cost recovery : which demand from the WFD, which use for water management policy

11. Programme of measures % Total cost linked with WWTP and Sewage network Total Cost in € Hypothesis of financing ? Price Lv/m3 2015 3. Illustration & Hypothesis on the Black Sea River Basin

12. 3. Illustration & Hypothesis on the Black Sea River Basin Mean water price in 2009 for BSBD

13. + 7,6 leva /m3

14. the rough estimation lead to an important increase (around 7 leva/m3) but with : • - more than half of it due to renewal of drinking water supply • - setting as environmental objectives the GES in 2015 • - amortization of the assets • The real increase might be lower….but anyway quiet important ! • in any case, the follow up (through survey) of the water and sanitation prices should be done in the coming years

15. WFD request: transparency on financial transfers (including taxes), sustainability, incitativity (price as a tool) Even if investments are nowaday highly subsidised, include their depreciation in the price for future renewal & to incite water savings if there are quantitative problems Aiming a full cost recovery can lead to a price explosion and to a drop in consumption that may unbalance water services financially (fixed costs) Social tarification may limit the effects on water price Incitativity can also be found through subsidies systems, specific taxes, other economic systems (funds…), through regulation… It can be necessary to degrade the level of cost recovery to implement the WFD

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