CIS – Workshop on WFD Economics: taking stock and looking ahead National Administration "Apele Române" 6, Edgar Quinet Street, District 1, code 0100180, Bucharest, Romania Tel: 0213151301; 0213110146; Fax: 0213122174; 0213103526 http://www.rowater.ro CIS – Workshop on WFD Economics: taking stock and looking ahead Session 2: Implementation experience – Article 9 Cristian Rusu Liege 19-20 October 2010

CONTENT Approach (Following up the….) Main challenges, difficulties Experience of transboundary cooperation Future work needs

Approach based on application of key principles (eg effectiveness, transparency..) in order to have a proper decision making related to water prices policy and implicitly to its effect on water status Mostly follows the line of WATECO Guidance, and some recommendations from CIS Information Sheet (eg Assessment on cost recovery for water services, Assessment on environmental and resource costs). WATECO information's, like, defining water services, identifying actors (providers , users, polluters), identifying financial costs, identifying cost recovery mechanism , identifying the allocation of costs to users and pollution was taking into account

Approach Objectives related to implementation of Art 9 Starting (since 2004 Report and developing during public consultation process for developing the RBMP) to raise awareness for the WFD’s specific interpretation of cost-recovery; emphasize the relevance of stakeholder Interaction in collecting data on cost recovery; emphasize the implications of cost recovery analysis for pricing policies.

Main steps/questions followed Approach Main steps/questions followed Description of actors in water sector and related financial flows (incomes, expenditures, taxes, subsidies). Capital property (state or private) plays an important role in cost recovery analysis Eg 2 main actors identified in water sector from Art.9 point of view: Water Companies – related to water supply and water discharge services National Administration “Romanian Waters” – related to public services for water resource management Is there any cross-subsidies between economic sectors. Is the Polluter Pays Principle implemented? No cross subs/Yes. PPP – Improving was necessary due to identifying the real costs and implicitly due to reallocated the costs Till what level the water price/tariffs of water services could rise to cover the investment in water infrastructure. Are the water services sustainable? Affordability analysis performed by water services providers . Different regional situation/Yes for medium and long therm

Main challenges, difficulties The relevance of stakeholder relationships in data collection: only a minor part of data required for cost-recovery analysis can be retrieved from readily available statistical records. A large amount of data needs to be collected from (different) water service providers, such as for example drinking water and sanitation companies…. The meaning of cost-recovery in terms of the WFD: Cost recovery in WFD terms goes beyond an assessment of the simple financial status of water service providers (subsidies, capital costs has to be included) The WFD moreover goes significantly beyond the request to consider all financial costs of water services as well for external environmental and resource costs (costs of depletion) of water use. These cost data have to be estimated by means of time and resource intensive specialized techniques

Main challenges, difficulties The pragmatic emphasis of the WFD requirement for cost-recovery and efficient prices Affordability in general are likely to forbid an increase in prices that will bring close to full cost recovery. However, this is also not required by the WFD. In the wording of the WFD, challenges was the need to provide for “adequate incentives” and an “adequate contribution of water uses” ( Member States decide on their own targets) RO elements of incentives: penalties, bonifications RO prioritization of cost allocation: energy, industry, agriculture, population

Experience of transboundary cooperation In the frame of DRBMP A common list of indicators was developed in relation with article 9/water services (revenues, subsidies, operational and maintenance cost, investment. administrative, environment cost, cost recovery rate) In the frame of Transboundary River Basin Management of the Körös/Crisuri River, a Tisza/Tisa sub-Basin Results - Assessment of data needs - Support for the setting up of Database for economical analysis - Recommendations for regional methodologies for refining and specifying cost-recovery level for market water services and reporting at river basin district scale

Future work needs With respect to the challenging environmental objectives of the WFD and the necessary financial resources or affordability (which may in the short term exceed the capabilities of some countries in the DRB), it seems essential to establish a pragmatic, targeted and integrated view of the Art 9 as part of economic analysis that is applicable within the first implementation cycle of the WFD (case studies /indicators/additional input data regarding external environmental cost/resource cost). A question that we have not yet responded What is the total economic value of environmental and resource cost associated with water services in reaching the WFD Objective of good chemical and ecological status (Art 9 par1)