1. Cost recovery study for the Seine Normandie RBMP

2. Asked by WFD 9 th art. To ensure that the « PPP » (Polluter Pays Principle) is - more or less – applied. To ensure that water services are managed in a sustainable way (renewal…) Helps thinking about how to finance the PoM Link with water pricing (the hypothesis is that when costs are fully recovered, the price is incitative and incitative tarification is supposed to be an efficient tool to help reaching the WFD objectives It brings transparency on financial flows associated to water uses and services. The extent to which the costs associated to water uses are borne by those who generate them Why do we care about recovery of costs? What is "recovery of costs"?

3. To what point the users pay for the services they get ? Do the bill they pay cover the real costs ? → → each water district must: - assess costs for each service - assess how much is paid by the users - show the costs which are not paid by the users 2 questions to be answered

4. Asset for 4 kind of user : household, industry, agriculture… and small economic activities  What do users pay for ?  which water services  water bills  Services costs  Operation  Maintenance  CFC  Transfers  Environmental costs The French approach to cost recovery

5. Water activities, uses and services  Costs recovery for services only

6. Which water services have we studied ? Households Business Agriculture Small economic activities (e.g. households) Industry Drinking water abstraction, treatment and distribution Public services for drinking water Self-supply Irrigation Livestock watering Sewage collection and wastewater treatment Public services for collective sewerage Non-collective sewerage Public services for collective sewerage Self- sewerage devices Sewerage for livestosk (manure) Not studied flood protection navigation Which costs have we estimated ? Financial costs : operating, maintenance, capital costs  Yes Environmental costs  Partially Opportunity costs  No

7. household water bill : 2.912 billions € drinking water (production and distribution) 1034 millions € Collective sanitation (collection and treatment) 967 millions € non-collective sewerage 247 millions € Water Agency fees 519 millions € Other taxes (VNF, VAT) 145 millions € Case study : CR for households on the SN basin 1) The water bill Today in France, water bill=1% of income

8. A national study to complete the analysis for households Operating costs : 54% of the services spending  1,16 billions € per year Consumption of fixed capital  1,27 billions € per year Case study : CR for households on the SN basin 2) Services costs Value (millions €) CFC (millions €/year) Plants7802869 to 365696 to 183 Networks 138 400 km 21920274 to 439 Reservoirs2,436 billions m3536 to 7315 to 9 TOTAL28051 to 30851466 to 858 Drinking water depreciation: ~ 17% to 30% of total water bill

9. From tax payers towards users via public grants : ~ 5% of the water bill From users towards tax payers via V.A.T. ~ 5% of the water bill Between users via Water Agencies Households are contributors (fees > subsidies) for 2% of the water bill Between users via land application of sewage sludges ~ 0,2% of the water bill Case study : CR for households on the SN river catchment 3) Transfers

10. Case study : CR for households on the SN river catchment 3) Reporting  Households pay 93% of the costs Operating costs for water and sanitation services : 1160 millions € Renewal costs for water infrastructure and sanitation : 1270 millions € Costs of providing water-related services Household s Water Agency Fees : 519 M€ Subsidies : 459 M€ spreading of sludge : 6.9 M€ Agriculture Industry Environment 7.7 10.9 32.5 Transfers between households and other users via agency system State and tax payers Grants from general and regional councils to water and sanitation services : 130 M€ VNF fee : 3.7 M€ + VAT: 141Mb€ + Transfers between municipal budgets (not estimated here ) Transferts entre ménages et contribuables

11. Additional costs paid by household due to low quality of groundwater ~ 7% of the water bill Additional costs due to households (and paid by others) ~ 670 M€/y (actions to reduce point source pollution in the PoM) Case study : CR for households on the SN river catchment 4) Environmental costs

12. Cost-recovery in Seine-Normandy river catchment in 2013 CR 93% Contribute: 60 M€, 2 % of their invoice Environmental costs paid : 197 M€, 2 % of their invoice Environmental costs generated : 670 M€ / year CR 93% Contribute: 1,6 M€, 0,2 % of their invoice Environmental costs generated : 160 M €/year, 25% of their spending CR 102% Receive : 11,2 M€, 1 % of their invoice Environmental costs generated : 95 ( classical pollution only )  H.holds Sm. ec. Act. IndustryAgriculture CR 102% Receive : 8 M€, 20 % of their spendings ( diffuse pollutions not included ! ) Environmental costs generated : 1,6 billions € / year

13. WFD request: transparency on financial transfers (including taxes), sustainability, incitativity (price as a tool) Even if investments are nowaday highly subsidised, include their depreciation in the price for future renewal & to incite water economies if there are quantitative problems Aiming a perfect cost recovery can lead to a price explosion and to a fall in consumption that may unbalance water services financially (fixed costs) Social tarification may limit the effects on water price Incitativity can also be found through subsidies systems, specific taxes, other economic systems (funds…), through regulation… It can be necessary to degrade the level of cost recovery to implement the WFD The WFD does not demand a full CR

14. Link between CR and affordability The good status non reaching risk was first assessed On this basis an « idealistic » programme of measures was built (without taking into account ability to pay & social acceptability) Its cost was assessed The costs concerning households (sanitation…) was used to roughly assess a possible impact on water price Over a threshold definied locally the measures were considered not affordable Then other economic analysis (cost benefit analysis…) were done to justify the exemptions

15. Good status for 100% of water bodies? Link between CR and affordability Good status everywhere ~20 billion € 2010-2015 Too expensive, and difficult to apply Programme of measures 2/3 surface WB good status 1/3 groundwater good status ~10 billion € 2010-2015