Spanish water reforms in pipeline
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Planned changes will tax agriculture and industry while regulating water reuse. Are they just a dumbed-down copy of the failed “eco-tax” proposals?
Draft proposals to reform Spain’s basic water law, published at the end of March, include taxing the use of water by agriculture and industry with the aim of recouping infrastructure costs, at least in part, in line with the
Water Framework Directive’s “user pays” principle.
Irrigation, which according to official estimates accounts for 63% of Spanish water consumption and has traditionally benefited from very low prices, will be charged at the rate of €0.02/100m3. Large-scale hydroelectric generation will pay €0.02/100kWh while industry will pay €0.01/100m3 for the use of water in refrigeration.
Major water users and dam operators will also have to pay a series of fixed charges related to the costs of infrastructure building, maintenance and safety. Water pricing bands to discourage excessive domestic consumption, which exist in some regions and had been mooted as a possible statutory requirement by the Environment Ministry, have not been included in the legislation.
Irrigators estimate that the new taxes will cost the sector at least €30 million a year. The Spanish national federation of irrigation organisations FENACORE argues that the tax proposals are not required to ensure correct transposition of the directive.
According to FENACORE president Andrés del Campo, “the price of water to agriculture will result in loss of competitiveness for Spanish agriculture compared to other countries which have less or no need to irrigate”.
He described the proposals as “a euphemism” for the so-called eco-tax on water which the Environment Ministry tried to introduce in 2005. Pressure from the Agriculture Ministry resulted in the eco-tax proposal being withdrawn.
The proposals also deal with major regulatory issues such as the clarification of the legal framework for administering major new water resources deriving from desalination and reuse. Under the proposals, desalinated water will be included in the public water domain, giving the state more control over desalinated water and water concessions.
Reuse concessions are regulated, and the legislation promises the introduction of a framework of quality standards and prices to permit the creation of an effective market in water reuse which the Environment Ministry estimates could provide 1,000,000m3 of new water resources.
Both desalination and reuse concession holders will be able to participate in public water banks, which will be set up to ensure public control over the transfer of water resources between users, and between river basin authorities.