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Tools for water management

Module 3. Tools for water management

Since water is an indispensable good but already a widely scarce commodity, management
rules must be established. This ensures that no exclusive uses are created, and the available
resources are used as well as possible.

To achieve sustainable water management, it is necessary to use a complete set of tools,

using legislative and economic approaches. These management tools and regulations, their
targets and their implementation are good starting points for audits of all kinds. In this module,
the most important water management tools are discussed.

After completing the module, one should have a good systematic overview about the main
governance tools that can be used for water management.

Video 3 - Tools for water management

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Video 3. Tools for water management

3.1. Integrated water resources management

Meeting the increasing demand for water while avoiding excessive stress on water resources
and water ecosystems is not an easy task. An all-encompassing approach to water
management – integrated water resources management (IWRM) – has therefore become to
be an internationally accepted concept to guide governments and private sector actors in
making sustainable decisions on the use of water. The general idea is to manage different
water-related aspects at the same time – political, economic, environmental and social.

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Figure 9. Aspects of IWRM contributing to the sustainable use of water

Source: http://www.thewaterchannel.tv/gender/content/chapter1/1_1.html

The IWRM was for example at the centre of agenda at the Johannesburg World Summit on
Sustainable Development (2002) and was stated as the necessary approach to be taken to
achieve the safe drinking water Millennium Development Goal. Integrated river basin and
watershed management strategies and water efficiency and plans were to be developed by
2005 for all major water bodies. See further at http://www.un.org/ga/search/view_doc.asp?
symbol=A/CONF.199/L.1&Lang=E

In this module, the River Basin Management Plan (RBMP) approach used in the European
Union will be introduced. It must be noted that while the RBMP is in line with several
principles of IWRM, it is distinct in being primarily oriented towards achieving environmental
goals.

3.2. River basin management approach

This chapter is based on The Water Framework Directive (WFD) 2000/60/EC [Ref 39]. A river
basin (or 'catchment') is the entire area drained by a river, including its tributaries. Any activity
that takes place in a river basin (e.g. disposal of wastewater, cutting of forests) has impacts
downstream.

Therefore, the best model for a single system of water management is management by river
basin - the natural geographical and hydrological unit - instead of administrative or political
boundaries. River or lake water catchment areas (basins) tend to cross administrative
borders. Therefore, their management should be agreed among different administrative units,
or even countries. Figure 10 below presents an example of Pärnu river basin, which is a river
basin in Estonia.

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Figure 10. River basin of Pärnu river [Ref 45]

In real life every single stream or lake has a water catchment area, which should be managed
according to the river basin management approach, which is enforced in the European Union.
In reality, the Member States have decided themselves how big the areas considered to be
river basin districts are. For each river basin district - some of which will traverse national
frontiers - a river basin management plan (RBMP) will need to be established and regularly
updated.

RBMPs are a requirement of the WFD and a means of achieving the protection, improvement
and sustainable use of the water environment across Europe. This includes surface
freshwaters (including lakes, streams and rivers), groundwater, ecosystems such as some
wetlands that depend on groundwater, estuaries and coastal waters out to one nautical mile.

The WFD requires Member States to aim to achieve at least good status in each water body
within their river basin districts. Good status of water includes both the ecological and
chemical status of water, which are measured by different scales.

Each Member State must ensure the establishment of a programme of measures for each
river basin district or for the part of an international river basin district within its territory.

Elaboration of a RBMP involves a large number of actors:

Administration
Economic players
The general public

River basin management plans must include the following elements in particular:

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A summary of significant pressures and impact of human activity on the status of

surface water and groundwater.
A list of the environmental objectives established for surface waters, groundwaters and
protected areas.
A summary of the programmes of measures including the ways in which the objectives
established are to be achieved.
A summary of the public information and consultation measures taken, their results and
the changes to the plan made as a consequence.

You can access the national River Basin Management Plans at the website of the European
Commission: http://ec.europa.eu/environment/water/participation/map_mc/map.htm

Ways to audit RBMPs

The weaknesses highlighted by the European Commission following the review of the RBMPs
and the programmes of measures are a good starting point for identifying promising audit
themes for SAIs. We can identify the following six points of attention:

1. Assessment of pressures: does the monitoring system allow for good knowledge of the
water bodies’ status, which is necessary to design effective and efficient programmes of
measures?
2. Extension of the deadline: Are these extensions specifically set out and explained in the
river basin management plan?
3. Programmes of measures: Do the programmes of measures target all types of water
pollution and specifically agriculture?
4. Programmes of measures: Are additional measures established when deadlines are
extended?
5. Funding: Are the programmes of measures and monitoring programmes adequately
funded?
6. Objectives: Will the objectives of ‘good status’ be reached by 2027 due to the
implementation of the programmes of measures?

THINKING EXERCISE
How many river basins are in your country? Does your country share a river basin
with a neighbouring country?

3.3. Regulative instruments in legal acts

Legal acts provide instruments to regulate the relationships between the state, companies
and citizens, and the exploitation of natural resources. Below is the selection of common
regulative instruments used in water management.

Environmental assessments. Two EU directives require that an environmental assessment

must be carried out when plans, programmes or projects are likely to have significant effects
on the environment. [Ref 46] [Ref 47] The aim of the environmental assessment is to give the
decision maker enough information to decide whether the planned activity may cause harm to
the environment and to identify the measures for mitigating any hazard. Proper execution of
the environmental assessment procedure ensures that all relevant effects are identified and
that public and interested parties have the ability to participate in decision-making.

Legal obligations, prohibitions and delimitations. The aim of these instruments is to

assure that the good quality of the water body can be maintained or achieved. Any
obligations, prohibitions or delimitations in legal acts should be clear and the targeted groups
must be identified (e.g. whether obligations should be followed by everyone or only permit
holders).

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Quality standards and emission limit values. A quality standard indicates the general
status of the water body and acts as a basis for determining emission standards. Emission
limit values are numeric values that must be followed by persons releasing harmful
substances into water bodies. Those undertaking activities which are likely to release
discharge above a certain threshold are usually required to obtain a permit. Breach of a
legally set emission value is a basis for the application of administrative or criminal sanctions.

Environmental permits. The aim of a water-related permit is to regulate how much discharge
the emitter is allowed to discharge into the water and under what conditions such activity may
be carried out. The aim of the permit is to regulate activities in such a way that the qualitative
aims of water bodies can be achieved. In more complicated cases, the issuing of a water
permit may be preceded by an environmental assessment. If environmental permits are not
clear enough or do not set adequate limitations, it may be difficult for the environmental
surveillance organisation to identify the breach of law, or a water body might be contaminated
despite the fact that the permit holder has acted according to what was allowed by the permit.
In some countries, water permits are issued for individuals to be entitled to the use of
groundwater. Such permits define the maximum permissible abstraction volume and allowed
uses for these quantities of water. Furthermore, procedures may be in place for the approval
of the distribution of irrigation water, to ensure that proper use is made of scarce water
resources.

Administrative and criminal sanctions. Any legal obligation, prohibition or delimitation

should have a corresponding sanction in case it is breached. Otherwise, the enforcement of
such a norm is jeopardized. Sanctions must be clear, targeted and adequate in their deterrent
effect. If sanctions are too lenient, they will not prevent a breach. It is important for an auditor
to check not only if the sanctions are adequately set down in legal acts but also to see if they
are adequately applied by the responsible authorities.

Environmental liability laws can fulfil a reinforcing complementary function. Environmental

liability laws have the function of internalizing and recovering the costs of environmental
damage through legal action. By establishing that polluters must pay for the damage they
cause, environmental liability provides an incentive to control and prevent pollution. In the
case of damage caused, it allows for the compensation of victims. Environmental liability is
only applicable when one or a few responsible actors can be identified and is thus not suitable
for addressing diffuse pollution from multiple sources.

Due process and public participation. These rules help to limit corruption, conflict of
interest, the fair and equal treatment of all relevant parties and to guarantee transparency.
The public participation rules guarantee that as much relevant information as possible is
gathered before taking decisions and that all parties having an interest in the case will be
informed and can participate and that the decisions of public administrations are explained
and well founded. Due process and public participation are regulated internationally by the
Aarhus Convention on Access to Information, Public Participation in Decision-Making and
Access to Justice in Environmental Matters.

SAI Austria used water quality standards to establish the audit criteria.

AUDIT CASE: Safeguarding water supply

SAI Austria’s audit focused on the supply of drinking water in the northern part of Burgenland
including projects to safeguard the future water supply which concerned quality and quantity.

Audit questions Source of criteria

Is the water quality sufficient for public supply? European and national quality standards

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How is the state and quality of the groundwater,

Legal requirements, technical standards
including the systems of monitoring?

Where do the pollutants originate from? Do they National environmental reports, reporting
originate mostly from agriculture? systems of local authorities

How is the water supply organized in the region? Good practice

Are the projects and investments managed National procurement regulations, good
correctly? practice, calculation standards

The Water Services Association Burgenland North fulfilled its tasks concerning the supply of
water.

The drinking water fulfilled the quality requirements laid down in the drinking water regulation.
In order to guarantee compliance with this standard, it was necessary to prepare the water
and mix nitrate-contaminated groundwater with less contaminated or uncontaminated water
from other water sources. The limit value for drinking water of 50 mg/l was exceeded in six
wells; these wells included those in the municipality of Neufeld, which encompassed more
than 10% of the water demand.

The association failed to correctly estimate the value of order in the course of a procurement
procedure. As a result, the value was estimated below the threshold value for direct awards.
Additionally, the association did not provide for efficient means to monitor the settlement.

3.4. Economic instruments

This paragraph is based on the INTOSAI WGEA research paper ‘Market Based Instruments
for Environmental Protection and Management’. [Ref 48] Economic instruments have gained
particular attention in recent years as an important tool in environmental policy making, as
they are capable of integrating environmental concerns in economic decision-making
processes. Their advantages include the creation of incentives for behavioural change, the
generation of revenue for financing further environmental investments, the promotion of
technological innovation and additional effects such as the strengthening of institutional
capacity and information availability.

Water prices and sewerage charges are common instruments. The adoption of adequate
water pricing acts as an incentive for the sustainable use of water resources and is also a
main requirement of the WFD. Member States are required to ensure that the price charged
to water consumers - such as for the abstraction and distribution of freshwater and the
collection and treatment of wastewater - reflects true costs. Whereas this principle has a long
tradition in some countries, it is currently not the case in others. However, derogations are
possible, e.g. in less-favoured areas or to provide basic services at an affordable price.

The systems of economic instruments differ in their main (political) objective: some effluent
charges focus on incentives while others emphasize revenue-generating functions. The
systems also differ in the calculation methods used and the substances included in the
charge.

Taxes

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Water withdrawal or abstraction taxes are levied on the direct abstraction of water from
natural sources. This instrument can be used to address water scarcity problems and to
internalize environmental and resource costs into the (economic) decisions of water users. It
can combine revenue-raising purposes with an incentive function. The calculation of the tax
can be either volumetric and based on metered abstraction or linked to abstraction permits.

Water and wastewater charges and prices

Depending on the system of water supply and wastewater disposal, either by
communal/municipal or by private systems and facilities, charges or prices are set. The main
function of charging/pricing is to finance infrastructure. Ideally, the prices may also aim at
internalizing external environmental costs and providing an incentive to use water rationally.
They are often composed of fixed (depending on the technical infrastructure) and volumetric
(consumption-dependent) components. Generally, water pricing policies address three distinct
sectors, namely households, industry and agriculture.

In general, all these systems should try to achieve full cost recovery in water services,
although there is some debate as to whether or not subsidies should be integrated into these
systems. Charges for water supply are predominantly based on metered water
consumption. Excessive water use can be discouraged by the use of progressive charges
(raising the charge rate as volume increases).

Sewerage charges are (mostly) levied on indirect discharges of used water to the sewer and
mainly fulfil a financing function. They can be seen as an implementation of the polluter pays
principle if they incorporate sewage treatment costs. The charge may be based on metered
water consumption, although there are alternative systems (e.g. in Austria).

Effluent charges are based on the pollution load or on the volume of wastewater discharged
into natural water bodies. The calculation of the charge rates requires adequate measurement
of the quantity and quality of the discharged water. Effluent charges are a means of
implementing the polluter pays principle. Revenues can be earmarked to finance measures to
improve water quality or the restoration of polluted water bodies. The charge may be
designed to provide incentives for pollution abatement.

AUDIT CASE: Quality of drinking water

Among other things, SAI of Turkey analysed water tariffs in the audit of drinking water.

SAI Turkey’s audit focused on activities related to

supply of water,
the water distribution network,
controlling the compliance with water sanitary conditions and
protecting water resources.

Audit questions Criteria

Are the drinking water management a) Activities related to drinking water management
activities planned in a healthy should be planned countrywide with the contribution
manner? of all relevant institutions.

The plans of municipalities related to drinking

water should be compatible with the national
water policy and plans.

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Water information systems should include

integrated and complete data in order to
establish proper policies and take the right
decisions and should be interoperable and
accessible.

Are the drinking water management a) Duties and responsibilities in drinking water
activities being conducted in a cost- management should be:
effective way and with the proper
authorization? determined clearly to prevent conflict of
authority; and
in conformity with the EU standards and targets.

b) In drinking water management:

Resources should be allocated in accordance

with the priorities specified in the national plans
and policies;
Funds that will finance the investments in this
field should be collected effectively;
Water losses in the distribution system should
be reduced and the necessary measures for
saving water should be taken.

Has an effective control mechanism a) To ensure the conformity of drinking water with
been established to maintain the health and quality conditions:
quality of drinking water and protect
the water resources? Water resources should be controlled regularly
at every stage and measures should be taken
on time;
The consumers should be informed about the
quality of the water they drink and the measures
taken by the authorities.

b) In the protection of drinking water resources:

Wastewater should be collected and treated in

accordance with standards;
The factors that cause pollution in water bodies
should be determined, protection measures
should be taken, and sanctions should be
implemented on polluters.

The audit concluded that the current national water supply plan had not been prepared with
the contribution of all relevant institutions. The information about the financing of water supply
investments did not take place in the plan. The plan was not an obligatory document for the
municipalities, which are of the most important actors in drinking water management.

The countrywide data such as that about water demand, water consumption and water
pollution could not be regularly acquired. It is extremely difficult to make plans with the
existing data.

Many institutions had duties and responsibilities in drinking water management, leading to
mismanagement in issues like water supply to residential areas, usage of groundwater and
protection of water resources.

Neither drinking water nor wastewater tariffs covered all the costs of water production
processes (collection of water, treatment of raw water and distribution of treated water
via the network of water pipelines) and the collection and treatment of wastewater.
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The water loss rate in the drinking water distribution network reached 54% because of poor
quality water pipelines. This significant loss in treated water increases both the pressure on
water resources and the costs to acquire treated water.

Subsidies
Subsidies in water management come in a variety of shapes and forms. Subsidies are
government interventions that can be direct, through monetary payments to certain user
groups, or indirect in the form of tax concessions, discounts or preferential procurement
policies. They may introduce distorted signals by favouring environmentally unfriendly choices
over environmentally friendly ones.

Subsidies are also often directly related to water management, such as:

financial support for the building and upgrading of water plants, and
water price discounts.

Subsidies for building infrastructure may only include construction, not maintenance, which
must be financed through upcoming charges to the consumer and establishment of prices.
The upgrading of facilities either due to escalating demand (e.g. increasing population) or to a
newly defined state-of-the-art or legal standards can also be supported.

Subsidies may also create incentives for users to behave in a more environmentally friendly
way or to induce investment in environmentally friendly techniques. If subsidies are given in
return for environmental benefits, they can be regarded as an internalization of external costs.
There is also a distinction between subsidies for measures that are required by law and
subsidies that promote measures which are not mandatory.

Many European countries also have subsidy programs that are related to environmentally
friendly farming, e.g. payments made to farmers who are subject to restrictions in fertilizer use
in water protection zones.

THINKING EXERCISE
What economic instruments are applied for water management in your country?

3.5. Division of tasks between different institutions, e.g.

municipalities, inspectorates (examples of different
states)
Water management can be organised in different ways. There is no uniform system for
dividing tasks between institutions. The setup of the system depends for example on the size
of the country (e.g. whether there are separate regions), on natural conditions (one or more
river basins, availability of groundwater) and on the types of main industries using water (e.g.
are there excavations where groundwater has to be bumped out).

This section will present examples of the distribution of tasks from Austria and Cyprus.

Division of tasks in Austria

In Austria, there is a single federal water law, which has to be executed by all provinces and
communities. This law includes all requirements and implementations of the EU Water
Framework Directive. It regulates ownership and the use of water, protection of water and
water bodies, water-related planning, hydrography, permissions, and the standards for

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establishing and running associations dealing with water and wastewater. It contains a water
governing system (proceedings) and a supervision system, which is in force all over Austria.

Giving permission to build facilities is in the competence of the provinces, while

special competencies fall under the Federal Ministry for Sustainability and Tourism’s
authority (e.g. border waters, large facilities like dams, management measures for two or
more provinces, the Danube River).

Communities and municipalities are responsible for water supply and sewerage
services but are free to choose between self-provision (direct management) and delegation
to enterprises. If enterprises are involved, they are owned by communities, as water
management is considered to be a public task in Austria. The communities can also form
associations, which are self-financing institutions, for the construction and financing of water
infrastructure. These associations can be established by the unanimous decision of all
interested parties and subsequent approval by the supervisory authority or be enforced by the
Federal Ministry for Sustainability and Tourism.

Usually the transport systems for water and sewage are owned by the communities, but they
can also be transferred to the associations.

The legal framework for charging for services is based on federal laws, which are executed in
detail through the laws of the provinces. The charging is done by the communities as far
as it concerns water supply and wastewater disposal. The authorities are required to apply the
principle of cost recovery (including the costs of financing) and to make no profit except to
save for maintenance and restoration investments. Charges are dependent upon the
metered consumption (partly with progressive charges) of water. For wastewater the
charges are usually based on the use of water, although there are provinces which also
include the size of the site and the buildings. Big dispensers (e.g. industrial plants) must build
facilities of their own to meet the standards of communal wastewater or pay for the required
enhancement of the communal facility.

Ecological measures (e.g. meeting the standards laid down in the WFD) must be planned and
taken by the provinces, following the given requirements of the water law.

Subsidies for infrastructure are allocated at the federal level and supported by the provinces.
There are entrusted enterprises and institutions that distribute money coming from the EU
(e.g. for the agricultural sector as well as to build facilities). As regards infrastructure, a co-
financing system including EU funds, federal money and the contributions of the provinces
and communities is in place.

Division of tasks in Cyprus

In Cyprus, the Integrated Water Management Law is the primary relevant legal instrument
regulating issues such as ownership, management structure, permit issues and use of water.
It is complemented by the Water Protection and Management Law, which transposes the
requirements of the WFD into national law, and other related legal acts. The main
responsibilities related to strategic water planning and central distribution are attributed to the
Water Development Department (WDD) of the Ministry of Agriculture, Rural Development and
the Environment, while certain tasks relating to the monitoring of groundwater have been
assigned to the Geological Survey Department of the same ministry. Actions related to the
implementation of the WFD are also under the coordination of the WDD, albeit involving a
number of other departments.

The construction and operation of central infrastructure works is centrally managed by the
WDD, while local authorities and water councils are responsible for water distribution
networks and reservoirs in their jurisdiction. Communities, municipalities and urban water
councils and sewerage councils are responsible for water supply and sewerage services in
their jurisdiction and operate under separate laws as regards water pricing to their consumers.
Nevertheless, pricing guidelines are included in the water pricing regulations applicable to all
water supply authorities. Water charges are based on metered consumption and include a
fixed and a variable element, while sewerage charges are also based on water consumption.

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