French financing system for water management : 6 Water Agencies, from taxes to subsidies

The 3 levels French model for water management  Law and control are ensured by the state -The Parliament votes global expenditure and tax rate ceilings and priorities for water agencies action (Law for water and aquatic environments, 2006)  Integrated management at the river basin level Governance : Basin Committee (stakeholder), management plans over five years Economic tools : Water agency (tax and subsidies)  Water supply and sanitation are managed at a local level These services are paid, possibility of delegation, autonomy of the water budget, local decision on the water price. Governance : local authority, Economic tools : water and sewage investments & operating covered by the invoice => Price signal

water taxes from users subsidies and loans to projects Water Agencies principle : water pays for water 6 year action plan management “one protects water resource one gets subsidies” Fees collected by the water agency are used to finance water protection investments and operating costs Annual budget of the 6 Water Agencies for subsidies and loans : ± 2,22 billions € ( ) “one pollutes one pays”

The water agency finances, but does not perform the works What can she do ? Grant financial aids according to priorities that lead to certain actions -A budget of 712 millions €/year (AESN 2013) - Terms for levies and subsidies included in a multi-year 6 year program (adjustable midterm) Collect fees aiming an effect on user behavior What is the agency's role ?

 Moderation of tax revenue (each year will be collected the same amount as in 2012)  Simplification of the aids  Simplified zoning for fees  Search for a rebalancing of contributors  Expenditure scenario amplifying actions on the "great water cycle”  Primary objective : WFD General principles for our 10th action program ( )

Who pays fore what ? The fees system

Pollution Point source pollution Diffuse pollution Networks modernization Ressource : Water abstraction for irrigation, drinking water, industrial water use ( process water & water cooling), hydroelectricity River course morphology : Tax on river obstacle Protection of aquatic environments Fees addressing different types of water pressures

Global expenditure and tax rate ceilings  Decided by the Parliament (Finance Law)  6 year Plans  : 13,8 billions € (for 6 Water Agencies)  2,3 billions € / year

On the SN basin : Contribution depends on environmental quality Based on the WFD ecological status real data 3 zones Example : domestic pollution ECOLOGICAL TAXATION arearate 10,22 €/m 3 20,39 €/m 3 30,425 €/m 3 -> same principle for water scarcity

Fees on the SN catchment (10th Program) : abstraction and pollution Rates in 2018Base rateAverageEnhancedCeiling Domestic pollution €/m 3 0,220,390,4250,5 Modernization (domestic) €/m 3 0,3 Non domestic pollution Kg DBO 0,180,270,380,4 Modernization (non domestic) €/m 3 0,24 0,3 Abstraction (drinking water) ct €/m 3 3,8 / 66,7 / 8,27,2 / 14,4 Abstraction industrial water cooling) ct €/m 3 0,28 / 0,350,45 / 0,520,5 / 1 Total fees 2013 : 729,8 millions €

Other fees on the SN catchment (10th Program) Rates Rate Hydroelectricity (€/m 3 /m) 0,3 Obstacles (€/m 3 ) 150 Fishing (€/fisherman/year) 8,8 Low water storage (€/m 3 during the low water) 0,01 Diffuse pollution (€/l or €/Kg on pesticides sold) Total fees 2013 : 729,8 millions €

Who pays what : for 100 € of water taxes… 725 M€ collected in 2013

Who is helped for what ? The subsidies system

4,7 billions € for 6 years corresponding to 6.3 billion euros of work Achieve good ecological status for 2/3 of rivers in 2021 (RBMP) AESN 10th Program subsidies « help more, choose more »

How does it work ? the Project Owner requests funding BEFORE starting its work ( design stage ) Water Agency can bring technical help technical and financial file Water Agency checks complian ce with the program Decison and 1st payment Water Agency Funding Commission Last payment Water Agency follows the work

Who gets what : for 100 € collected … ± 654 M€ spent in 2013 local authorities industry agriculture Beneficiaries

10th action plan ( ) : More subsidies for water cycle

How do we build the program ?

1. Parliament votes Ceiling charges for the 6 water agencies 2. The department provides a framework Priorities and rebalancing contributions (households, industry, agriculture) 3. The C3P (emanation of BC) works more than 1 year = > 15 meetings, exchanges with the agency's services (scenarios) How was the 10th program designed ? 4. The Basin Commitee votes the Program (October 2012)

1)Technical goals - Identify works needed for achieving good status - Identify works with high-impact on the environments - Focus on preventive - Adjust the rate of aid ( incentive ) Elaboration of the budget

2) Financial goals ensure balance between users (fees) search for suitable financing issue charges pay the aids to project owners 0 finances Principle Application Elaboration of the budget

1) Identify needs = fees and aids 2) Quantify the impact of the previous program 3) assess the amounts that the agency needs to carry out its program Elaboration of the budget

Building the 10th program Incomes, which condition the aid to be granted AESN-DIST-caulliez

Building the 10th program Work to take into account AESN-DIST-caulliez

Building the 10th program Aids to be granted

The water Agency system = consistent governance and economic tools on an adequate area Governance : river basin committee Determines objective and action plan Determines tax rate Follow the results  May induce tax reflecting local debates not perfectly local environmental pressures  willingness to pay Economic instruments :  Part of a global tool range (regulatory, license)  Water price signal for water and sewage services  Environmental taxes : based on a proxy for dammage on the environment (transaction cost)  Subsidies : financial solidarity for action 50 years it works now !! Tradeoff building

New challenges Financial difficulties for local authorities At the moment, the taxes on « large » water cycle are not sufficient enough … and there is a lack of project owners  Which new financial / organizational mechanisms could we put into place? Reduction of water consumption (households & industries) for the last 10 years -> How can we maintain our level of tax incomes? New incentive subsidies to reduce diffuse pollution, but it’s difficult ->Our aids not competitive with the CAP How to translate Good status into visible impacts ?