A move towards an outcomes-based approach to environmental regulation has been endorsed in a House of Lords report into water regulation, which said there was a clear space for more nature-based solutions.
The report examined the merits of the Water Industry National Environment Programme (WINEP), which currently uses a prescriptive outputs approach to the work companies must to do to meet environmental targets set by the Environment Agency (EA).
Following evidence given over nine months as part of the inquiry into the work and power of Ofwat, the Industry and Regulators Committee found the investment programme for environmental improvements could be an opportunity for innovation.
The Affluent and the Effluent report, published earlier this week, recommended government and regulators should ensure the net WINEP iteration is focused on the outcomes to be achieved, rather than how they must do it.
The committee said this move would give responsible companies leeway to use nature-based and catchment-based solutions where appropriate. This, the report suggested, would give water companies greater opportunity to design cost-effective and environmentally friendly, innovative solutions to sector challenges.
The report noted there clearly is a space to use nature-based solutions and catchment management approaches rather than traditional grey infrastructure, despite regulators and companies who “may be more comfortable” with traditional approaches to tackle pollution.
The report advised that policy should be examined for any areas where prescriptive regulatory requirements are the result of retained EU law. It suggested government explores if changes can be made to enable an outcomes-based framework ahead of the next price review.
During the evidence sessions, the inquiry heard from former Ofwat chair Jonson Cox who said the EA had a distrust of water companies having greater leeway to determine outputs.
This was reinforced by James Bevan, chief executive of the EA who stated some water companies were more serious than others about environmental commitments. Bevan told the committee there was a great difference in performance and attitude between companies.
The evidence sessions also heard from water company bosses who supported a move towards an outcomes-based approach.
Sarah Bentley, chief executive at Thames, recognised the difficult situation of companies playing a bigger role in the WINEP given low levels of trust in the sector.
She argued the next WINEP should be broken down into local, relevant plans that allow companies to work collaboratively with local authorities, environmental NGOs and agriculture owners, allowing water firms to build trust on the ground.
Ofwat indicated nature-based solutions would be encouraged at PR24. The methodology included a move towards outcomes-based approaches however some warned the move to level the playing field would not achieve that.