Green and Prosperous Land

These problems are among the simplest and cheapest to fix in a catchment. The sheep densities can be reduced, the drains blocked up, and the ploughing of the uplands limited. Digging peat can be stopped, and peat bogs restored. All of these measures have economic costs, notably to sheep and, to a lesser extent, cattle farmers, and to maize and other crops lost. But the economic equation is heavily tilted in favour of these measures. Upland sheep farming (more on this later) is at or below the margin of economic viability in any event and heavily dependent on subsidies. Without the subsidies it would be very different, and since the subsidies are public money, redirecting them in the uplands to better water management practices would be a net economic gain.

Indeed, so great are the economic benefits to the water industry just in the narrow terms of managing water quality that water companies have been taking direct action, including through the management of land owned by the companies in the headwaters and by payments to farmers to change their practices. United Utilities helped on its land in the Forest of Bowland Area of Outstanding Natural Beauty (AONB) to rewet and restore blanket bog and add woodlands, and South West Water has been helping the Exmoor Mires Project to conserve and enhance peat bogs at the top of the Exe and Barle river catchments – in both cases out of self-interest. To give an indication of the economics, the Exmoor project has been estimated to have benefits that exceed the costs by a very high eight times.1

In ploughing up some of the steeper slopes, and in particular planting maize on them in the Somerset Levels catchment, soils can be left very exposed, and indeed maize farming has directly contributed to the silting-up of the River Parrot and River Tone, which in turn helped to worsen the great flood of the Somerset Levels in 2014. The farmers then demanded that the Environment Agency dredge the rivers to remove the silt that they had contributed.2

These costs, and the value of the lost soil to the farmers themselves, easily outweigh any possible profits from the crops.3 The Somerset Levels – the ‘summer lands’ – are mostly below sea level and the sea level is rising with climate change. It is an integrated catchment system, not a series of discrete bits to be addressed separately by farming policy, flood defences and dredging, and conservation measures. Natural capital approaches are integrated and offer much better economic returns. Cultivating maize on exposed slopes should be banned on both economic and environmental grounds.

Stopping farm pollution

Once the trickle becomes a stream and then a proper river, it becomes vulnerable to direct pollution. Few upper river catchments have a lot of industry, so the main pollution comes from farming. Upper river valleys are typically given over to grazing and pasture, rather than cereals, and hence it is livestock farming practices that pose a threat.

Perhaps the worst is the release of slurry into rivers, depleting their oxygen and destroying their biodiversity.4 There are two principal ways this can happen. First and most reported is the failure of slurry-holding pits and tanks, usually as a result of poor maintenance. Such incidents are surprisingly common and often devastating. But there is also the spreading of slurry: while the intention is to retain the liquid manure on the fields to promote grass growth, it can nevertheless run off into streams and rivers. This is particularly problematic if the slurry is applied in winter to frozen fields. The frost makes it possible to get tractors and machinery onto the land, but it also forms a barrier to absorption. The lethal (for the fish) combination is slurry-spreading on frozen ground, quickly followed by heavy rain.

Slurry, badly managed, is a serious threat to the natural environment, but it is not the only way in which animal husbandry can adversely impact on rivers. Sheep-dipping to tackle a range of parasites, worms and foot rot is another detrimental element of (non-organic) farming practices, and it involves water. The residual liquids, after the dipping, have to go somewhere, although their disposal is regulated. Too often this has been out of sight in the watercourses, with sometimes devastating results.5

All these activities can be mitigated, often at minimal cost. The release of slurry and maintenance of slurry tanks are already subject to regulation. Spills are illegal and the problem arises not from the regulation but rather the inadequate penalties and enforcement. As budgets have been squeezed, the Environment Agency, Natural Resources Wales, and the Scottish Environment Protection Agency (SEPA) have retreated from the effective policing of the rivers. Catchment system management requires catchment system regulation and enforcement. A large number of incidents go unreported, or when they are investigated it is often too late to identify the source. The fines are clearly not a serious deterrent to farmers. Properly resourced policing and significant fines could all but eliminate these sources of river pollution. The use of drones and new advances in digital technologies to detect diffuse pollution will help to transform detection. There would be costs to the Environment Agency and the other bodies, but the balance of the damage versus these costs points towards more enforcement. The polluters may be fairly diffuse, but the pollutees are diffuse too, all down the river. Slurry in rivers can and should be stopped. Diffuse pollution should be limited. Both make good economic sense. The fact that the costs of the damage may well exceed the value of the total economic output of the farm tells us a lot about the perverse economics of much farming practice. Pollution is under-priced; agricultural output is therefore also under-priced.

Once the river gets to its middle stage, the ratio of grassland to arable land usually shifts towards arable. Conventional arable farming adds several layers of pollution and stress to rivers. It uses intensive fertilisers, pesticides and herbicides, and as with maize and the Somerset Levels example, it leaves the soils exposed to run-off and the depositing of silt in the rivers. It may also take water from the river for irrigation.

Farmers operating in these middle river areas are themselves vulnerable to the flooding that their activities can help give rise to, and hence they want to get the water quickly off their land and into the river, so the rate of run-off is artificially increased by ditches that take the chemical cocktails directly to the river much faster and hence in more concentrated forms. This raises flooding risk downstream, exporting the dangers to others. This was a process once managed through water meadows and vegetation cover along the rivers, in part because this made economic sense in a predominantly mixed farm system, but also because ploughing up riverside meadows required heavier and more powerful tractors and machinery. That can now be done. Once flooding was a resource for farmers to exploit in order to enrich their land. Now it is a menace to get rid of as quickly as possible.

The results are economically very inefficient and the economy would be much better off if many of these practices were curtailed or even stopped altogether. The central issue from an economic efficiency perspective, which we keep coming back to, is that some farmers are polluters who do not pay for the damage they cause others. Instead, they are polluters who expect to be paid not to pollute.

As discussed in greater detail in the next chapter, this should be reversed. If farmers paid for the pollution they caused, they would use chemicals in smaller quantities and target them more accurately. In the case of flooding, if farmers paid for the services that the river provides in taking excess water away, the ditches might not be so deep. They could also store more water. Finally, in a polluter-pays model, silt exported to rivers from riverside ploughing and cropped fields would come with a bill, and fewer of these fields would be ploughed.

With a polluter-pays policy, and hence the right relative prices, the rivers would be in a much better state. Biodiversity would go up, abstraction would go down, more ponds and reservoirs would be created, and the land would be wetter, especially in winter. It is all just good economics, and leads to a much more sustainable farming industry.

Dealing with the industrial legacy

Coal mining has wreaked havoc with rivers for a couple of centuries, and whole river systems have effectively been killed off by the spillages and run-off from mines. Mining tends to attract industrial processing to locate nearby, which adds to the pollution.

When it comes to mining and heavy industry, it is only relatively recently that polluters have been expected to pay. It is a surprisingly new idea. Mining has historically taken the same approach as that taken by the farming industry: the rivers are there as free waste-disposal systems.

As with farming, the economically efficient answer is to make the polluters pay. But it would still leave a horrible legacy. The toxic chemicals remain evident in the silts and muds of the rivers, and will do so for a long time to come. There have been many measures to deal with the legacy of asbestos in buildings, yet in the case of mercury, lead, radium and other nasty chemicals and substances in river muds, few such measures have been applied. Instead they just lie there in the sediment, largely out of sight, and off the agendas of the regulatory bodies. Roughly 2,000 miles of over 400 of our rivers may be affected by substances like cadmium, zinc, lead and arsenic. All have their unique pollution fingerprints – from examples like Bleaklow in the Peak District and the efforts to save the peat moorland from acidification, to the coal and industrial wastes affecting the coasts of the northeast.

In many, perhaps most, cases, there is little that can be done to make the polluters pay for legacy pollution, since the companies are typically long gone. The burden falls to the state to sort it out. In the case of coal mining, there is the Coal Authority, still grappling with the coal industry legacy, the flooded and polluted waters in old pits, and the groundwater problems.6

The economics of cleaning up these past legacies is often finely balanced. It very much depends on the precise pollutant, how stable the deposits are, and how fast the rivers can ‘cure’ themselves by washing the heavy metals out to sea – and then pollute some other marine environment.

Most of the mining has now gone. The ordinary economics of the markets has done for coal and most other mining, although open-cast mining still poses a threat and the use of water for fracking requires regulation. There are still the clay pits, and tin mining and even cobalt and lithium extraction may return in Cornwall. These aside, the main problem is no longer so much about the mining, but dealing with its legacy.

As mining and heavy industry have declined (often to be replaced by imports and production doing its environmental damage elsewhere), the various pharmaceutical and chemical concoctions that make up our daily lives and end up being washed down the sink and flushed down the toilet, are among the new challenges. Contraceptive pills lead to oestrogens impacting on fish life. Antibiotics can be toxic for the bacteria and algae that form the basis of aquatic ecosystems. Anti-depressants can change bird behaviour. Shampoo, soap and washing powders increase phosphorus content in water courses.

The pharmaceutical industry is a major threat when it comes to our rivers and water supplies. As with earlier industrial pollution, the rivers are treated as waste-disposal systems, especially when the companies can pass on what ought to be a producer responsibility to the consumer. They supply the drugs and products, we use them, the rivers then collect them, and water companies try to remove them from our drinking water and wonder what to do about them in our sewage.

A radically different approach is needed before we end up leaving the next generation with major new damage and another industrial pollution legacy. The catchment-based approach starts by trying to limit what goes into our environment. Drugs are tested for their effects on human health, but less so for their waste disposal. Producer responsibility, and therefore polluter liability, could change the game. Imagine if GlaxoSmithKline were liable for the environmental damage caused by its products. Imagine if Unilever were responsible for the disposal of all its beauty and personal hygiene products. The result would be a radical shake-up of the chemical composition of their products. They would have a direct incentive to minimise the risks.

But what about us, the consumers? The problem with a pure producer responsibility approach is that it leaves us free to dump our waste, without any thought as to how we do this. We should learn the lesson from municipal waste disposal and recycling, making the householder responsible for the safe disposal of their rubbish. We have separate bins, and there are regulations about the safe disposal of white goods and batteries. These may be imperfect processes, but they go in the right direction. Sewage is just another form of rubbish. To secure a better environment, household waste needs to be considered holistically. All of it needs to be regulated. In the case of sewage, consideration should be given to using pricing too. As technology advances, it will be increasingly possible to monitor the content of our wastewater and sewage. We can meter water coming in. In due course we may be able to analyse what is going out with real-time information. Might you change your behaviours if you really knew what was in your waste and the damage it might do? And if you paid for the consequences?

The water companies

Water companies are obviously key players in the river catchments. Water is for the companies a ‘crop’, to be harvested as a renewable that nature will keep giving them for free from rivers (and groundwater sources). The companies want ‘clean’ water and hence want to limit pollution from others. Cleanness in drinking water is a chemical concept: it does not necessary mean that it is biodiversity-rich, and indeed there are many organisms that water companies would rather not have in their water supplies. We want to drink clean water, pure H2O, not a host of other things that live in the river environments. Solving jointly for clean water and for biodiversity is not the same thing as just wanting the former.

In providing us with clean drinking water, water companies abstract water, which reduces flows, and they discharge our sewage and the waterborne waste of industry, suitably treated. The management of river flows and the consequences for river biodiversity is a complex business, further complicated by the building of dams and other water-storage facilities. Reservoirs on the middle rivers (and sometimes the upper rivers too) have economic and environmental costs and benefits, all dependent on the catchment system as a whole. Water abstraction is rarely marginal: it has a system impact.

The abstraction problem arises partly because there is no price for water.7 Once water becomes a valuable resource, it pays to address the 30 per cent leakage rates from water company pipes, and the companies have a stronger incentive to encourage water efficiency. Universal metering plus abstraction charges transform the incentives. Water may be freely provided by nature, but it has alternative uses. It should be priced at both the abstraction and the consumption points, and in the process capture the leakage costs in between. Otherwise it will be inefficiently used. Indeed, it is.

Water pipes leak treated water. With a marginal cost of water of mostly zero, it does not make economic sense to have a zero leakage policy. Yet the incentives to fix the leaks are distorted by the low cost of abstraction. Because there is no price, the choice between fixing the leaks on the one hand, and taking more water from rivers, groundwater and lakes on the other, is skewed towards the latter, and as a result in times of shortage, it is the rivers that suffer because of the leakage levels. It is not the water companies’ fault: it is the incentives they face. The water regulator can tell the companies to cut leaks, but this is a crude approximation of what is needed, which is a proper balance, reflecting all the environmental costs, of the alternatives, and the locations too.

This feeds through into the storage question and the crazy idea that we need high-quality water fit for drinking for use in watering the garden, cleaning the car, and a host of other non-consumption activities. So-called grey water is not only perfectly adequate for these other purposes, it is also of much lower cost. In some cases, such as using rainwater from water butts in the garden, it is better for the plants. The more expensive the purified water, the greater the incentive to do the right thing and store water.

What is missing is a grey water system and comprehensive metering. The former is probably not economic, except at the household level, although there is potential. Hence it is all about decentralising water, as part of a decentralised utility system. Future houses should be able to generate their own electricity, provide a place for work instead of commuting, and store quite a lot of water. They can have smart energy and smart water.

Sewerage is where the historical damage from water companies’ activities has been most apparent. In the past, rivers were sewage-disposal systems, and most of it was simply dumped in the rivers and out to sea. Over time this has been somewhat refined, but it is still the case that the capacity of sewerage networks cannot always cope in the event of storms. When it rains a lot, the sewerage systems overflow into the river. The argument is that it will consequently be very diluted (because of the storm flows). Yet this is far from convincing, and little consolation for those whose houses are flooded with it.

Fixing the sewage problem is not only about having big enough sewerage works. It is also about how the effluent is treated, and what happens to the resulting sludge. As with the deployment of natural capital approaches to the supply of water through the management of uplands, so sewage lends itself to natural methods too. It is just a form of muck and, like muck, it can be broken down and taken up by plants. It can be an asset. Reed beds are one method of doing this, once natural processes have begun degrading it. The methane, a by-product of decomposition, can be used for energy supplies. The insect life is a bonus, especially for birds.

As with abstraction, this is a problem of incentives. Water companies are not charged for disposals, and they have skewed incentives to prefer hard concrete infrastructure solutions rather than natural approaches. This is because of the way the economic regulation of their physical asset base works. It is much easier to solve once a whole-catchment approach is taken, but much harder when the water companies are regulated in a silo and neither benefit from the impacts on biodiversity of natural capital approaches, nor face the costs of their activities on the catchment as a whole. In order to get a better environmental and economic system, the water companies need to be brought directly into the catchment system economics. Below I explain how this can be done.8

Towns, housing, roads and sustainable drainage systems

Housing, concreted urban centres and roads bring further pollution and flooding problems to rivers, and they are as much a part of the catchment and its management as the farmers and the water companies. Run-off from roads is often nasty and fast, and housing and factories displace water that would otherwise have soaked into the ground, to be gradually absorbed. Towns and villages were traditionally built to have access to water, and they are often built right up to the riverbanks, which are in turn concreted over and reinforced. The houses and infrastructure reduce the ability of their land areas to absorb rainfall, and increase the speed and rate of run-off.

The solution here is better planning, regulation and pricing. Planning needs to steer development away from floodplains and to require porous roads and driveways to reduce run-off. Better still, unpaved and unconcreted driveways can be planted to encourage biodiversity. Plants absorb water too. The costs of the run-off need to be incorporated into the economics of new developments, thereby creating an incentive to build houses in the right places, and with the right porous green footprints.

Like the mining and the abstraction along rivers, the economic incentives on house-building produce perverse environmental outcomes. Flood insurance should reflect the risk of flooding, but it doesn’t. Instead the flood risk is socialised, so that house prices do not fully capitalise this risk. If others pay some of the costs for locating near a river that floods, more houses will be built in the wrong places. Even worse, the Environment Agency prioritises reducing the risk of flooding to those most at risk. You buy a house in the wrong place, you get your flood risk insurance subsidised (through schemes like Flood Re), and then public money is spent on protecting you.9

Town populations have other great economic interests in the state of the rivers. Rivers are an immediate source of leisure for them, and they need access to the clean water. Green banks and riversides bring wider physical and mental benefits too. Many benefit from the tourism that rivers bring. Towns like Ross-on-Wye, Hay-on-Wye, Lechlade, Eynsham and Carlisle all have significant leisure industries and the associated services. The tourism is often more economically important than agriculture, and hence the economics points to an enhanced river environment.

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