waterexchange: abstraction licences




		what are abstraction licences? As a valuable resource, water is an important commodity. Whilst currently there are sufficient water resources to meet demand, these resources are not always in the right place at the right time. In England and Wales, the Environment Agency (EA) is responsible for ensuring that water resources are managed effectively. This role is principally fulfilled through a system of abstraction licensing administered by the Environment Agency. As a requirement under the Water Resources Act of 1991, almost everyone who wants to take water from a surface (e.g. river, stream or canal) or underground source must obtain a licence to do so from the Agency. In Scotland, there are no abstraction licences in existence. The Scottish Environment Protection Agency (SEPA) have recently called for the introduction of a licencing system similar to that employed by the EA. An abstraction licence gives the holder a right to take water from the stated source every year, until the licence expires or until the holder wishes to give up that right by cancelling the licence. A licence guarantees that no one else who would require a licence can lawfully take the share of water allocated to the holder. An abstraction licence will generally state: how much water can be taken; what the water can be used for; the land where the water can be used; the name and address of the licenced abstractor; the duration of the licence; the source of supply, e.g. name of underground strata or river the means of abstraction, e.g. borehole or river intake; conditions to protect other interests and the water environment; the means by which abstraction is measured and records kept. Further restrictions could be placed on licences depending on specific local conditions. Click here for the waterexchange trading floor can abstraction licences be traded? According to the paper recently published by the DETR - "Economic Investment in Relation to Water Abstraction: A Consultation Paper" (April 2000), water licence trading will be actively encouraged. "...in principle, abstraction licence trading should be promoted as an effective means of achieveing the optimal distribution of water resources within and between different sectors of use and thus contributing to sustainable development." The paper also suggests that brokering of licences would benefit the market. "It may be that no more than this is necessary to promote licence trading to the point where a healthy market is established. However, there may be a case for a more specific vehicle for promoting licence trading, such as some form of brokering arrangement. The RPA research suggest quiet strongly that brokering will be necessary, making the point that in any market, well-informed participation require information on: What prices have been bid, offered and transacted; What volumes have been traded; and What buyers and sellers are currently in the market place and on what terms they would be likely to trade." According to a recent Ofwat occasional paper, "Charging for Water Abstraction: The Customers' Interest in Encouraging Competition", there has been trading of licences under the present system ('around a dozen'). Numbers have been limited because in general abstraction licences for ground water requires occupation of land, although inland water may be licenced to someone with right of access. The paper also states that the government is keen to limit the length of abstraction licences to 15 years and make right of access to the point of abstraction the only precondition for abstraction, not ownership of land. It is likely that many owners of unused or part-used abstraction licences are unaware of the trading options available to them. According to this paper, trading of licences will enhance competition in the water industry and should 'reduce tap prices, since access to supply would be liberalised, and licences would presumably only be purchased by those who thought they could do better than the existing suppliers at the current prices.' In other countries, abstraction licences are already being traded. In Australia, USA and Chile, for example, the abstraction licences and water rights have been traded for some years in the form of permanent, temporary and capacity permits. For further detailed information on abstraction licences, visit the Environment Agency website. Click here for the waterexchange trading floor how to get an abstraction licence There are approximately 50,000 licences for the impoundment and abstraction of water at present. Over 10,000 hydrometric 'stations' exist to measure various parameters, including surface water flow and groundwater levels. To acquire an abstraction licence, the applicant must be the occupier or prospective occupier of the land on which the abstraction point is located. In some circumstances, a right of access may be adequate. The first step towards obtaining a licence is to contact the licensing staff at the Environment Agency, who can provide the necessary application forms. Provided the correct information is provided, a decision on whether to grant a licence and the conditions to which it may be subject is usually made within 3 months. All applications will need to be advertised in the local press and London Gazette before being submitted. A new occupier on land for which there is an existing licence to abstract water may continue to exercise that right by 'succeeding' to the licence. The Environment Agency must be notified of this intent within 15 months of taking occupation. If notice is not received in time, the licence is expires. Click here for the waterexchange trading floor what are the charges for an abstraction licence? A fixed application processing fee is charged for the Environment Agency's work. In addition, most licence holders pay an annual charge based on the amount of water licenced for extraction, the source of the water, the time of the year the water is used and the purpose the water is used for. The actual charges vary considerably, but typically range from £7 to £18 per megalitre abstracted per annum. The charge is for the licenced volume not the actual extracted volume, so there is currently no incentive to take less water than is allowed by the licence. The Environment Agency regularly publishes the charging scheme, which is available on request from the Agency. There are special charging rules for certain applications. how can waterexchange help? According to Ofwat, the economic regulator for the water industry in England and Wales, in recent years only 53% of the water volumes authorised for abstraction are actually extracted. Many abstraction licences are unused or partially used. waterexchange will aim to help licence holders to maximise utilisation of their water abstraction allowances. Existing holders of unused or partially used abstraction licences could sell or rent/lease their abstraction allowances for a fee by trading them on the waterexchange trading floor. The owner of the abstraction licence would also have to negotiate right of access to the abstraction point to allow the customer to physically extract water.
		Some changes to abstraction licences (e.g. 'change of use') can have a considerable effect on the water source and would have to be assessed as thoroughly as a new licence application. However, variations such as changing the name on the licence or reductions in the amount of water authorised for abstraction can usually be made without charge or the need for advertising/public notices.
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