There is a misconception that water is everywhere in the UK, but it is fast becoming a scarce resource with an uncertain future.

With an increasing population comes more mouths to feed, so to ensure food security by producing enough of our own food, farmers will need adequate amounts of water – particularly irrigators in the potato and veg sectors.

This has prompted Defra’s reform of a dated water abstraction licence system.

See also: Defra water reforms ‘not yet set in stone’

We look at these proposed changes, the impact for farmers and what you need to do now to prepare your buisness to ensure a smooth transition to a new permit system.

Antiquated system

The current abstraction licensing system that regulates the quantity and timing of water abstraction from ground and surface water is over 50 years old.

The current  system contains inconsistencies and inequities and is more favourable to some than others, with agriculture being at a disadvantage, according to Professor Ian Barker, managing director at global consultancy, Water Policy International.

Defra’s proposal outlining what the new permit system will look like was published in January after a lengthy public consultation.

Defra’s water abstraction manager, Henry Leveson-Gower, says they are aiming for a more flexible system that is fair to all users.

Farm impact

Agriculture accounted for just 2% of the 8bn cu m of fresh water abstracted in England and Wales in 2013, but holds 64% of the abstraction licences, so will be significantly affected by the changes.

Mr Leveson-Gower says the reforms will help farmers manage risks from water scarcity and ensure that food production is competitive on a global scale as climate change bites.

During the transition to the new system, some farmers holding licensed volumes that pose risk to the health of rivers or groundwater aquifers may have changes on their new permits to reduce environmental risk.

“These farmers are likely to have relatively underused licences without any flow-based restrictions and they will be in parts of the country where irrigation is, or has been used,” says Mr Leveson-Gower.

The need for this is highlighted by the stat that between 2002 and 2013, just 45% of the annual total of water licensed for abstraction was actually abstracted.

Winners

The NFU accepts that changes need to be made, and once the dust has settled on the new system, some will have won and others lost.

Winners include those that have already invested in reservoirs and will see seasonality removed from all new permits.

Under the new rules there should be no more bans and less discrimination against farmers Prof Ian Barker, managing director, Water Policy International

This will enable them to abstract water during high flows all year round and not just in winter, giving flexibility and security of supply.

Also, in a drought year the Environment Agency (EA) – which manages all abstraction licensing – previously had the power to introduce an abstraction ban known as “Section 57”, which only applied to agricultural abstractors.

Rather than being a straight on-off switch, there will be “low flow conditions” for everyone with an abstraction permit.

This will mean restrictions can be imposed by the EA on a catchment basis, but there will be a more transparent process whereby growers will receive a request to adopt voluntary conditions ahead of being stopped.

“Under the new rules there should be no more bans and less discrimination against farmers,” says Prof Barker.

On top of this, time limited licences will be scrapped. These are licences that are typically granted for a 12-year period and currently make up about one-third of agricultural licences.

Instead, these would move to a timeless permit like the other two-thirds, and all permits would be subject to reviews that would take place with plenty of notice from the EA.

“This would give abstractors much more confidence in their permit and there will be fewer shocks,” adds Prof Barker.

Trading

At present, there is a bureaucratic and cumbersome water trading system in place that will continue in “ordinary” catchments.

However, in “enhanced” catchments, a new and improved trading system will be introduced.

“Enhanced” status enables authorities to use extra measures to manage abstraction in a water-stressed catchment, giving local solutions to local problems.

In these catchments, annual and daily limits will be linked to proportional “shares”, which can be traded upstream or downstream, with the rules set outlined by the EA in the short term.

Paul Hammett, NFU national water resource specialist, says that he remains open-minded to the new trading rules, but remains unconvinced that the admin cost of introducing the system will provide a cost-benefit.

“Parts of it could be useful, but farmers will have to pay more for their water in order to set it up.

“Despite that, I’m pleased there is the opportunity, and the idea that a network of farmers on the same river can organise trading between each other helps add to business certainty,” explains Mr Hammett.

There is a concern that water companies and other large abstractors could dominate trading and have an advantage over farmers, but Prof Barker disagrees.

“When trading you need a willing buyer and willing seller and the water companies won’t necessarily be able to buy.

“At present, farmers and water companies don’t speak each other’s language, so there needs to be improved dialogue about potential water trading and more collaborative working to improve farmers’ water security,” he explains.

He adds this is common in other countries around the world, where water companies invest in the infrastructure, such as reservoirs, and share a proportion of the water.

“Water companies could talk to farmers and work out their needs and see if they can build those into planning of public supply reservoirs.”

Losers

With any wholesale change, it is difficult to please all parties, and Mr Hammett says losers could be abstractors with licensed “headroom” removed, which is the limit of water they can abstract over a given period.

“You plan your business’ cropping so you don’t need to use the whole limit each year and the headroom is a buffer in an emergency,” he explains.

This buffer could be removed from some licences if the EA deems the limit to be unnecessary, and the risk is heightened by the fact that decisions will be based on a 10-year average.

However, abstraction is erratic year to year and the last decade has included some very wet summers where abstraction has been low.

“We don’t want given volumes based on wet summer use as irrigators wouldn’t have access to enough to water their crop in a dry summer,” says Mr Hammett.

Trickle regulations

Another big loser looks set to be trickle irrigators, who for some time have been exploiting a loop hole that means they don’t require an abstraction licence.

This has put them at an advantage to other agricultural users and they will now require a permit like everyone else.

It is estimated there are about 1,000 trickle irrigators in the UK, and the EA wants to have them under regulation by the end of 2016 and on new permits by 2021.

“The NFU have worked hard to ensure that these abstractors are seen as being engaged in lawful activity.

“It isn’t their fault they haven’t been able to get a licence and Defra has recognised that and should ensure a light touch, risk-based approach. Many will get permits, but not necessarily all,” warns Mr Hammett.

Getting ready

The January Defra response to the consultation sets out clear objectives of the reforms, but much of the devil will be in the detail post-2020, according to Prof Barker.

He says it will be disruptive for farmers, but in the long term it will put abstractors on a level playing field with a fairer basis to trade resource.

“The new system will also require farmers to manage their abstraction much more, be aware of flows and when restrictions might be implemented.

“I would encourage farmers to work hard to understand the changes and through the NFU help the government deliver a system that is good for everyone,” he says.

Mr Leveson-Gower agrees farmers need to better understand the water scarcity risks, and Defra expects the EA to help with this, providing catchment-based information on threats to water supply.

“Farmers have the potential to increase their efficiency, invest in reservoirs and work with water companies to increase their resilience, as many are already beginning to do,” he adds.

This long-term thinking is something that Mr Hammett says is crucial, and he advises growers to look at their current licences and consider what business changes need to be made in preparation for the reforms.

“Don’t think that because abstraction reform is 5-10 years away you don’t need to worry.

“There will be upheaval and you need to think about how you can minimise that upheaval on each individual farm.”

Gearing up for abstraction reform

Although new low-flow conditions, rather that Section 57 bans, will provide a more transparent and fair means of restricting abstraction, it could create problems with current equipment used on farm.

Norfolk-based grower, contractor and chief executive of the Broadland Agricultural Water Abstractors Group (Bawag) Andrew Alston says many pumps currently on farm can only pump at a fixed capacity.

“Many farms would have put irrigation systems in to suit their licence, but many won’t be capable of a variable flow and that won’t be acceptable to the EA in the long term.

“It may mean that farmers have to change their pumps to get a variable flow – the rules are flexible, so abstractors need to be flexible too,” he explains.

In addition to reviewing pumping equipment, Mr Alston also urges abstractors to consider installing smart IT systems to accurately monitor and record irrigation water use.

This will help build a case for permitted quantities on new permits by 2020 and also helps to ensure abstractors are pumping within the conditions of current licence or future permit.

“Without it, you not only risk problems with your permit, you also risk a £20,000 fine and 5% of your basic payment, so it is a good idea to be able to prove what you have pumped.

“It will also enable you to look at energy use to ensure you are using the water in a way that your business can afford,” explains Mr Alston.

Abstraction licences will become permits

Permits that replace the abstraction licenses will be based on three key areas:

• Water account conditions – these are the conditions that relate specifically to an individual abstraction, such as annual and daily volume limits and abstraction returns.
• Site-specific conditions – these include specific requirements around the point of abstraction, such as a fish pass. These should transfer directly without any change.
• Standard catchment rules – documents outlining the rules will be available online and will include common hands off flows, trading rules and low flow controls.

If your licensed volume poses an environmental risk it could be cut

An abstractor’s permitted volume would only be decreased if the previous licensed volume would create a risk to the environment and applies to both surface and groundwater licences.

If a licence does pose a risk to the environment, Defra will calculate a permitted volume based on peak actual annual abstraction volumes of an historic period of at least 10 years.

Seasonality conditions would be removed

No permits will have seasonal conditions under the new system, and where abstractors have a “winter only” licence, they would be given a “hands off flow condition”, which allows access to high flows when they occur, subject to annual or daily limits.

Time limits would be removed

Some current licences are time limited, typically to 12 years. This would be removed and your new permit would not expire. Instead, it would be subject to a risk-based review by the Environment Agency, who can then make changes to your permit.

Hands-off conditions would be retained and standardised

Hands off conditions – or the point at which abstractions need to stop when a river level drops below a certain point – will be kept on new permits. However, due to standardisation across catchments, they could change when converted from licence to permit. It is thought this will help regulation and water trading within a particular catchment.

Abstractors with no hands-off flow conditions might have new ones introduced to allow control at low flows

Surface water abstractors with no hands-off conditions, or ground water abstractors that impact on surface water, could both be subject to new controls on abstraction during low flows.

Irrigators would not be subject to these controls under current reform, but catchment-specific regulation may occur, taking into account cost and benefit and essential users.

This would be controlled by the Environment Agency, contacting abstractors when flows are low to encourage more efficient use or make voluntary reductions in use.

Non-consumptive abstractors will shift from licence to permit

Low or non-consumptive abstractors – approximately 8% of licence stock – will still have to move from permit to licence. However, there is an ongoing consultation as to how the new framework will function for them. It will not affect agricultural use.

Abstractors of 20cu m or less will not need a permit

Users of 20cu m or less do not have a significant impact on the environment and therefore remain exempt from a permit. However, they can voluntarily register an abstraction.

Permits won’t expire but abstraction conditions can be changed

A review by the Environment Agency can be triggered where there is evidence a risk to the environment in a particular catchment occurs. The EA would make changes to permits and they may apply to all permits.

In a fully transparent process abstractors would:

• Be notified when reviews start
• Be able to see availability of water in their catchment
• Be consulted on any changes to rules
• Be asked to make voluntary changes before any are enforced
• Be given three years notice of major changes unless required to address “serious damage”

Abstraction charges will remain based on cost recovery

Defra has yet to clarify the exact nature of how abstractors will be charged for their water to cover the cost of regulation, but indicate that it will be based on cost recovery and similar to the current system.

It promises that the Enviroment Agency will settle on a system that is simple and understandable, as well as predictable for customers.

Additional reforms in “Enhanced” catchments

So called “enhanced” catchments are estimated to make up about one third of catchments initially. As no catchment is the same, some will be subject to EA control that may include:

• Bonus water that doesn’t count towards permitted volumes when flows are high
• Hands-off flows for those that already have them and a gradual on and off of these measures to help businesses respond
• The annual permitted amount each abstractor can take will be accounted for in “shares”, which can be traded
• Pre-approved trading rules to make trading quicker and easier

Source: Defra, 2016

One Norfolk farm manager reckons investment in reservoir storage to meet water security challenges and prepare for abstraction will provide irrigators with big benefits.

Paul Wortley, farm manager at OW Wortley & Sons, says the business has invested heavily in land with reservoir storage and in new reservoirs over the last 17 years.

It now has access to water in six reservoirs, capable of storing 130m gallons of winter water for use across its 1,400ha of light and free-draining land around Methwold, Norfolk.

“I think it would be good advice for a farm business to invest [in storage], both for the security of your crops, but also for land values.

“You land is your asset and especially in our light land area, to be able to offer irrigation and the chance to grow crops such as potatoes, onions and parsnips adds to land value considerably,” says Mr Wortley.

He uses a ball park figure of £1,000/ac added to land value for every acre inch irrigation capacity, which could provide a considerable contribution to the cost of reservoir investment.

“In the past we have also spoken to landlords locally and worked with them and paid towards securing water supplies on their land in return for clean potato growing land for 20 years,” he adds.

The foresight to invest in such a comprehensive irrigation network has ensured that the business will mostly benefit reforms, with proposals designed to make better use of high flows.

If the investment had not already been made, Mr Wortley says it would be difficult to raise the funds and believes there should be more incentives for growers to invest in water storage.

“I can’t work out why there isn’t some sort of tax relief to help and encourage growers to build them,” he adds.