Brexit: A Watershed for the EU?

Since the 1970s the European Union has agreed to over 200 pieces of environmental regulation. With the UK’s decision to leave the EU, known as a Brexit, what impact will this have on the UK market, businesses exporting their technologies and wider Europe?

By Jeremy Josephs.

Brexit - the new word on the tip of everyone’s tongue - and not a very pretty word at that. But the prospect of the United Kingdom’s impending departure from the European Union (EU) has created such uncertainty and turmoil that it has been described as the greatest political and economic upheaval since the end of the Second World War.

Since the British public is regularly being told by its new and no-nonsense Prime Minister Theresa May that ‘Brexit means Brexit’ we can rest assured that the four fundamental freedoms of the EU - the free movement of goods, services, people and capital - are all going to be radically realigned and reassessed.

Since no one knows precisely what this will mean in terms of the very biggest issues of the day - those relating to net migration, border security and sovereignty - it should surely come as no surprise that there is next to no information or clarity as to what the likely impact is going to be on the water sector in general or what will happen, for example, to the extremely detailed requirements and deadlines of the European Water Framework Directive (WFD) in particular.

Mixed experiences

With the markets taking a turn for the worse after the referendum, with sterling promptly falling to a 31 year low, investors pondered this not unreasonable question: had British voters realised the implications of their vote?

Mark Goodger, regional technical manager at Hydro International UK’s Stormwater Division admits to having had “mixed experiences of the European model”. Why?

“Because having been involved with EU projects, I know how drawn-out and bureaucratic European processes can be.”

His view, however, is that with such a large amount of European legislation already transposed into UK law, a number of policies and regulations are likely to remain unchanged.

This could well include not just aspects of the WFD but the Drinking Water Directive, Bathing Water Directive, the Floods Directive, the Urban Waste Water Directive and the Nitrates Directive - to name but a few. He considers that the devolved governments might well take the opportunity to further develop their own distinct approaches to policy.

Even if it is indeed to be goodbye to certain aspects of the WFD and reporting directly to the European Commission, the UK could nevertheless well remain subject to scrutiny by the European Free Trade Association (EFTA) Surveillance Authority. “All that is certain is uncertainty”, he laments.

Since the 1970s the EU has agreed no less than 200 separate pieces of legislation designed to protect the environment. Going through each and every directive is clearly going to be a gargantuan task, cherry picking what to keep and what to dispense with. Such a task has be repeated in virtually each and every very aspect of public life - from energy to telecoms, from finance to health and safety. David Davis - Her Majesty’s Principal Secretary of State for Exiting the European Union will certainly have his work cut out.

Speaking to WWi magazine, Dr David Lloyd Owen, managing director of consultancy Envisager, says that he would be unlikely to be wringing out a tear-laden handkerchief at the demise of the WFD.

“In 2013, the Environment Agency (EA) calculated that partial compliance over 37 years would cost £7.05 billion (including £2.19 billion from the utilities), while compliance ‘where technically feasible’ would cost £25.18 billion, including £13.35 billion from the utilities. The EA anticipates about 75% of inland waters meeting the WFD by 2027. This highlights the challenge of compliance in certain waters.”

He adds: “Its greatest failing is the ‘one out, all out’ rule, whereby good ecological status can only be achieved if all the chemical water quality criteria are met. There is no incentive for making a bad waterway into a reasonable one, even when this has a greater impact at a lower cost. The long timetable makes compliance also more vulnerable to the combined effects of population growth and climate change. Was it possible that the final target date of 2027 was intended to put the matter far back enough for to ensure it was a challenge for another generation of Eurocrats and MEPs to meet?”

Sharpening the legal knives

Riki Therivel, visiting professor and research associate at Oxford Brookes University agrees that Brexit is unlikely to mean that much of the UK’s environmental and planning legislation will be jettisoned.

“But it does mean that in time this will all be reconsidered. The Local Plans Expert Group has already recommended a substantial weakening of England’s requirements for strategic environmental assessment. The Air Quality Directive’s standards are not being met in many areas, nor are those of the WFD in over half of water bodies in England and Wales: so one can well imagine the legal knives sharpening against all of the implementing legislation.”

Vicky West from the Chartered Institution of Water and Environmental Management (CIWEM) endorses the prevailing notion that it is next to impossible to say anything specific about the future of the WFD on the grounds that “we are at such an early stage”.

CIWEM did issue a statement, however, in which the words ‘uncertainty’, ‘instability’ and ‘unclear’ loomed large and which seems to sum up the approach of most professionals working in the water sector.

This spills over, understandably enough, into the world of academia and research. Hervé Levite, who is based in the southern French city of Marseille where he works for the The World Bank Center for Mediterranean Integration, admits that: “We are very sad at this whole Brexit story. My biggest concern is that UK researchers and scientists will have more difficulty in obtaining EU funding, and that the entire industry will come to suffer as a result. These are unsettling times and no one knows precisely what the outcome is going to be.”

A slippery slope?

It’s not just politicians and policy makers, it should be noted, who have been pronouncing and pontificating about the likely impact of Brexit. The leading UK law firm Shepherd and Wedderburn issued an analysis bullet on water and wastewater in which, worryingly but perhaps not unjustifiably, they shifted the theme from one of uncertainty to instability.

“Exiting the EU will have a profound impact on the strategic direction of the UK water sector”, the firm concluded, “with the absence of EU Directives meaning that the UK will come to diverge from a path which has driven consistency and common standards across European Member States for over 25 years.”

In respect of the WFD the firm muses if this could be the beginning of a looser and more flexible slippery slope: “It is entirely foreseeable that environmental quality standards could be lessened, particularly under the justification of economic development, growth and jobs. Certainly some of the more contentious areas of the WFD, such as the ‘one-in-all-out’ principle for river water quality, could be revised.

“Additionally, certain principles such as full cost recovery could receive more flexible treatment in the future, depending on the political direction of a future UK administration. On the other hand a different regulatory framework could potentially mean some projects, which may have previously been in doubt, getting the consenting green light. The question of the environmental cost versus overall benefits would of course be a tough question for any future policymakers.”

Lila Thompson, international director at British Water considers that the WFD requirements will continue to be implemented - unless and until instructed by the government to do otherwise. She then adds three key words to WWi which seem to sum up the prevailing atmosphere: “but who knows?”

Nevertheless British Water remains upbeat: “The UK water sector will continue to be regulated and world trade will continue. The English language will continue to be the global business language and many of the emerging and exciting markets sit outside the EU. The UK is likely to continue to follow much of the EU directive guidance.

“There are some areas of the Water Framework Directive, for example, which we can possibly decouple from, which will drive further innovation in TOTEX thinking - fully considering both operational and capital investments in decision-making.”

Contagion, Frexit and Brexit

Perhaps the greatest impact of Brexit is not related to the detailed provisions of the WFD at all. Or any other environmental directive for that matter. For in Brussels greater fears are looming and they are far larger than issues relating to water quality or the good ecological status of Europe’s rivers and lakes. For there are far more pressing concerns about what is referred to as the risk of contagion. France’s Front National leader Marine Le Pen has pledged to hold a French referendum if she emerges victorious in next year’s presidential elections - Frexit.

Since Dutch voters overwhelmingly rejected a Ukraine-European Union treaty there is now much talk of Nexit.

The European Commission’s troubled president, Jean-Claude Juncker, is adamant that this does not for one minute spell the end of the European Union on the grounds that the bloc has “decades of experience in overcoming crises”.

We shall see if these sanguine words don’t come back to bite him. After all, as virtually each and every expert is telling us, we are living in uncertain times.

Germany’s equally troubled Chancellor Angela Merkel put it more succinctly still. “There is no point in beating about the bush: today is a watershed for Europe”. Brexit - a watershed indeed.

Jeremy Josephs is a freelance correspondent for WWi magazine.