Freshwater Habitats Trust statement on Ofwat Final Determinations for PR24
19th December 2024
Today, Ofwat has announced its Final Determinations for PR24, which includes an unprecedented £24 billion of environmental investment by the water industry during Asset Management Period 8 (AMP8: 2025-2030).
Delivered effectively, investment on this scale could transform the state of our freshwaters. However, we are concerned that most of the investment planned for AMP8 will be misdirected, and will therefore deliver only modest improvements to a relatively small portion of the river network. With company plans now locked in, there is limited flexibility in redirecting investment over the next five years.
There is an ongoing crisis of public trust in the water sector. Ultimately, environmental investment is funded by the billpayer, and if it is seen to be unsuccessful, public trust will be further jeopardised, dangerously undermining support for future environmental investment. The water sector must urgently investigate alternative approaches to ensure that environmental investment is better targeted in PR29.
We suggest that targeting greater investment towards headwater catchments would deliver an easy win. Because headwaters have small catchments, pollution sources can be identified and addressed in totality. This would restore truly clean water to the landscape, needed by many freshwater species but at present near-absent from English and Welsh rivers. By concurrently creating ponds and small wetlands across-catchment, the water sector could add clean water and boost the integrity, connectivity and resilience of the entire freshwater system.
This programme of work could be delivered in parallel with existing downstream investment, at a fraction of the cost. For the sake of comparison, we estimate that it would cost about £1.5 billion to double the number of ponds across England. Although we’re not suggesting that this should be attempted during a single Asset Management Period, this equates to less than 7% of planned AMP8 environmental investment – and would deliver substantially greater benefits for freshwater nature, more quickly.
At present, the Independent Water Commission is investigating water sector regulation, preparing the stage for ‘fundamental’ reform, including new legislation. The existing regulatory framework binds the water sector to a programme of environmental investment which does not work for the water environment. The Independent Water Commission must investigate how water sector investment can be unlocked for the improvement of the whole water environment.
As first steps, we suggest that the Commission should investigate:
- How the Water Framework Directive could be reformed to fully incorporate headwater streams and small standing waters into statutory monitoring and management, providing a framework against which future water company investment could be targeted.
- How pollution mitigation targets could be amended to focus on the ecological impacts of pollution, rather than the gross volume of emissions.
- How catchment-based approaches (e.g. Catchment Nutrient Balancing) could be extended to permit the creation of new clean water habitats (ponds, small wetlands) by water companies, rather than solely focusing on reducing pollution in the main river.