Water Rights Trading
Water to Trade?
Background
In the late 1990s, following pressure from the EU the Government decided it needed to improve its water management policy. This led to the passing of the Water Act 2003 which made changes to the Water Abstracting Licensing system in England and Wales. One of the goals of the Act was to simplify the process by which licenses can be transferred from one holder to another.
Under the existing system most licenses indicate the land on which the water is to be used. Under the new system the requirement to use the water on a specific piece of land will be removed. The mechanism for proving you have access rights to the abstraction point will also be simplified.
The Environment Agency have divided England and Wales into different catchments and groundwater units. Catchments being areas of land through which streams and rivers run. Groundwater units being water bearing rock from which water can be abstracted via boreholes. Within each of these the Environment Agency will decide how much water they wish to allow to be abstracted. As a result some catchments or groundwater units are now considered closed and any new application for an Abstraction License would be turned down. However, in these areas there may be a number of licenses which are not used or only partially used. Therefore, it may be possible for Water Abstraction Rights to be traded between two parties. In effect, you end up with a seller and a buyer.
Under the existing system if an Abstraction License holder did not use their water for 7 years, the license could be revoked by the Environment Agency. Under the Water Act 2003 this period has been reduced to 4 years. Also under the Water Act 2003, after 2012 if the Environment Agency consider the abstraction is causing serious environmental damage they can revoke the license without paying compensation.
Hydrological link
There must be a hydrological link between the seller's abstraction point and that of the buyers. In other words, a water rights trade can only take place between two parties when they are located in the same catchment or groundwater unit. Where the abstraction is from a surface water source there is even the suggestion that the trade can take place in the downstream direction but not in an upstream direction.
The Environment Agency role
The Environment Agency will be the regulatory body who will oversee trades. They will consider the proposed trade and decide if it can take place and whether or not conditions should be attached to the said trade. In making this decision the Agency will consider the environmental impact of the proposed trade.
Trading process
It will be possible to make trades on a short term or permanent basis.
After a buyer and seller have been matched there will be a process of liaison with the Environment Agency followed by applications to set up new licenses or vary existing licenses. The whole process is expected to take in the order of 3 months.
When can trading start?
The Water Act 2005 received Royal Assent in November 2003. However, different parts of the Act are implemented at different times by commencement orders. The commencement order allowing Water Rights Trading to start is expected to come into force later this year (2005).
JHWalter's role
JHWalter will act as brokers. They will have a database containing names, addresses and license details of people who wish to sell their water rights. JHWalter will have a similar database for people who wish to buy water rights. The database will then be used to match up sellers and buyers. JHWalter will then act as an intermediary between the seller, the buyer and the Environment Agency to guide the trade to a successful conclusion. To pay for this service JHWalter will take a commission from the trade.
