Charges in the Industrial Water Sector: Comparison Between Ireland and Spain

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Environ Resource Econ (2010) 45:113–132 DOI 10.1007/s10640-009-9308-2

  According to the Treaty, under theDirective 2000/60/CE establishing a framework for Community action in the field of water policy (the Water Framework Directive), all Member States are committed to ensuring thattheir water-pricing policies provide effective incentives for water consumers to use water resources efficiently, and is so doing to contribute to the environmental objectives of theDirective. Europe has a common environmental objective of achieving good water status, but the ad hoc application of water tariffs and charges, with many water services subsidised by gov-ernments, gives no incentive to rational use and makes improvement difficult and costly, especially now in the current climate of fiscal rectitude.

1 Introduction

  According to the Treaty, under theDirective 2000/60/CE establishing a framework for Community action in the field of water policy (the Water Framework Directive), all Member States are committed to ensuring thattheir water-pricing policies provide effective incentives for water consumers to use water resources efficiently, and is so doing to contribute to the environmental objectives of theDirective. Europe has a common environmental objective of achieving good water status, but the ad hoc application of water tariffs and charges, with many water services subsidised by gov-ernments, gives no incentive to rational use and makes improvement difficult and costly, especially now in the current climate of fiscal rectitude.

3 The Case of Two European Regions

  1 Employment in manufacturing industries in the South West region of Ireland and Navarre in Spain in2002 However, there is a lack of transparency with regard to how local authorities set water charges to industry and it is currently not possible to determine if the water charges are fully cost-reflective. There is a difference between the price of wateras a non-marketed resource (industrial water consumers set their own price by assuming the costs of direct abstraction and discharge) and the price of water as a market resource (indus-trial water consumers take the price which is established by water suppliers and sewerage treatment plants).

3.3.2 Wastewater Disposal

  It is the legal responsibility of the discharger to apply for a licence and a prescribed fee must be paid (this fee does not varyaccording to the amount of effluent that each industry produces). The City and County Councils are the licensing authorities, and charges for non-compliance/illegal discharges can be pursued via the courts in the form of fines and/orliability for repaying the Local Authority for damages caused.

3.4.1 Water Supply from Public Services

  The estimated watersupplied for industry in the South West region of Ireland by these public supply networks was 12.4 cubic hectometres in 2002 ( EPA 2004 ), the approximate cost of supplying waterwas e25,270,662 in 2002 ( EPA 2004 ); finally, the revenue obtained directly from charges to industry was e13,813,088 in 2002 ( EPA 2004 ). The esti- mated water supplied for industry in Navarre by these public supply networks was close to5.3 cubic hectometres in 2002 ( INE 2005 ), the approximate cost of supplying water was e14,181,117 in 2002 ( INE 2005 ); finally, the revenue obtained from charges to industry was e2,760,094 in 2002 ( INE 2005 ).

5 Navarre was close to 20% in 2002

3.4.2 Sewerage Services

  Consequently, this assumption wouldsuggest that the only way to reduce the cost of discharges is by decreasing water consumption, which does not always result in less pollution (the concentration of polluting agents couldbe greater and have more negative environmental impacts). Navarre levies a tax, and the revenue from this tax is spent on wastewater treatment but not in the form of a specific service to the individual consumer.

4 Analysis of Data

  Finally, the charge doesnot depend on the location of the factory, in fact, the price is the same in the Capital city, the Industrial area and the Rural area, hence the apparently single line in the graph in Fig. Wastewater services are subject toa regional tax (canon de saneamiento), the volume of discharge is multiplied by a coefficient of e0.38 per cubic metre in 2006, for this kind of industry this coefficient is also modifiedby a correction index that depends on the characteristics of the pollution potential of the wastewater.

6 CI: Correction Index; COD: tonnes of Chemical Oxygen Demand per annum; BOD: tonnes of Biological Oxygen Demand per annum; SS: tonnes of Suspension Solids per annum; NKT: tonnes of Nitrates per annum

  5 Scenario 4—average price with water supply and sewerage services in the South West region of Irelandand Navarre region of Spain (e/m 3) Figure 5 shows the average charge in euros per cubic metre estimated for this hypothetical cotton fabric-finishing factory in the South West region of Ireland under Scenario 4. At first glance, one might be inclined to arrive at the firm conclusion that Ireland charges more to small firms (some may attribute this to the fixed charge cost), however, we needto be cautious when arriving at such a conclusion given that admittedly, using the data pre- sented in this study from the South West region of Ireland one could conclude that smallfirms incur higher charges than larger firms however, this conclusion could not be drawn for all firms in Ireland.

5 Conclusion

  One of the interesting con- tributions of this paper is that the data and price tables illustrate a good way of presenting thecharges and point to the manner in which each River Basin District might consider presenting its charging regime. There are differences in the basis of the water charges, as well as the rates, and there are also differences in the types of consumers charged in each region.

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