Government to trade in water abstraction licences

The Department of the Environment, Food and Rural Affairs (DEFRA) has announced that trading in water abstraction licences in England and Wales will begin, probably in 2002.

DEFRA has published an outline of its plans Tuning Water Taking following consultation, which will allow trading in any catchment, limited only by “the need to protect the environment through consideration both of the abstractions and also of the return of the water to the environment”.

The decision aims to boost competition in the water industry, and the government says that it has taken into consideration anxieties surrounding the possible reactivation of currently unused licences. The Environment Agency’s involvement will encourage voluntary modification of quantity or other licence conditions, the Government says. Concerns about the possibility of companies acquiring licences and using them in an uncompetitive way should be addressed by the powers of the Director General of Water Services under 1998’s Competition Act.

The vast majority of licences should not be auctioned, the Government says. Instead they will be allocated according to the Environment Agency’s decision on the applicant’s need, combined with information on water resources availability.

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