- 1 This is a status assigned by the mutual insurance company to people at risk of poverty on the bas (...)
- 2 For individual meters, the granting of this assistance will be automatic for some households from (...)
12022 was a year of change for water prices in the Brussels-Capital Region. On the one hand, tiered pricing – which had led to many problems [May et al.; 2021] – was replaced by linear pricing (the price per m³ of water is identical, regardless of the quantities consumed). On the other hand, a new pricing system was introduced for the period 2022-2026. It foresaw a 15 % increase in water prices from 2022 for a typical two-person household with an average consumption (35 m³/inhabitant/year). At the same time, a social assistance programme was implemented for beneficiaries of higher reimbursement rates1 (BIMs), i.e. approximately one quarter of all households in Brussels. Depending on the quantities of water consumed, in theory, this social assistance will partially offset the increase in the price of water, and even reduce the overall cost for households with average consumption [Vivaqua, 2021a]2.
- 3 This resulted in an actual decrease in the price of water if inflation is taken into account.
2This increase in the price of water is due to the financing needs of the inter-municipal company Vivaqua, which manages the water service in Brussels. Since the early 2000s, Vivaqua has gradually taken over the management of the sewerage system from the 19 municipalities, which have invested little in the infrastructure over the years. The sewerage system is therefore in poor condition and requires significant investment [Brugel, 2019b: 6/14]. This need for investment, coupled with the freeze on the price of water between 2014 and 20193, explains the financial difficulties experienced by Vivaqua, whose debt is increasing every year [Vivaqua, 2021b]. All of the institutional stakeholders (Brugel, Vivaqua, Bruxelles Environnement and the office of the Brussels minister for the environment) felt that an increase in the price of water was the obvious solution to the problem.
- 4 Wastewater is all water in the public sewerage system.
3Vivaqua justifies this increase by arguing that water in Brussels is still the cheapest in Belgium. However, this lower price is the result of different factors, in particular certain objective structural advantages. In terms of supply (production and distribution of drinking water), Vivaqua has two considerable advantages over other distribution companies in Belgium [Cornut, 1999]. Firstly, it operates an exclusively urban network, which is dense and therefore less costly to maintain. Secondly, for quite some time now, Vivaqua has owned water catchments in Wallonia (Modave, Vedrin, Braine-l'Alleud, Tailfer, etc.), which have the advantage of being able to produce large volumes of water at a low cost. The situation is more mixed as regards wastewater collection and treatment4. On the one hand, the density of the collection network and the limited presence of agriculture in Brussels – which is a potential source of water pollution – tend to reduce costs. On the other hand, the imperviousness of a large part of the surface in the region creates higher costs, as it increases the quantity of water to be collected and treated.
4The claim that water is cheaper in Brussels than in the other two regions is therefore not a relevant argument for increasing its price, especially given that 31 % of Brussels residents have an income below the at-risk-of-poverty threshold, which is far more than in Flanders (10 %) and Wallonia (18 %) [Englert et al., 2021].
5Was the increase in water prices in 2022 therefore inevitable? This article aims to review the situation. We begin with a presentation of the institutional framework of the water sector in Brussels. We then describe the water cycle in Brussels, and show that the “polluter pays” principle is not respected, to the extent that water consumers pay in part for costs which they are not responsible for. Finally, we estimate the amounts which consumers are charged for unfairly, and examine how they could be financed in ways other than through water bills.
6Water policy is a regional responsibility. The regional government has delegated its powers in this matter to the Brussels minister for the environment. Its implementation is the responsibility of Bruxelles Environnement, the environmental administration of the Brussels-Capital Region.
- 5 Order of 20 October 2006 establishing a framework for water policy. Art. 5 /43o, 38.
7Water policy is governed by the Order of 20 October 2006 establishing a framework for water policy5 (hereinafter referred to as the “water framework order”), which implements Directive 2000/60/EC of the European Parliament and the Council of 23 October 2000 establishing a framework for community action in the area of water policy, and which has imposed the principle of the true cost of water, in keeping with the “polluter pays” principle. The water framework order sets out the procedures for establishing and recovering the cost of water services. The true cost of water includes the protection of water catchments and the production, collection and treatment of wastewater, which initially included rainwater. Since the entry into force of the Order of 16 May 2019 amending the water framework order, rainwater has (logically) been excluded from the definition of domestic wastewater. As a result, the order no longer requires the true cost of water to include rainwater treatment. Furthermore, it establishes that the different economic sectors – broken down into at least the domestic sector and those discharging non-domestic wastewater – contribute to the recovery of the costs of services related to water use, in keeping with the “polluter pays” principle.
8The two main water operators in the Brussels-Capital Region, Vivaqua and Hydria (formerly Société Bruxelloise de Gestion de l'Eau), are public stakeholders. Vivaqua produces and distributes drinking water, and manages part of the infrastructure for the collection and buffer storage of urban wastewater (30 stormwater basins), while Hydria manages the other part of the collection and buffer storage infrastructure (five of the main stormwater basins in Brussels), as well as the two water treatment plants in the region. Unlike Vivaqua, Hydria manages a network of collectors in good condition, as the investments were made only recently.
9Brugel has been the regulatory authority in Brussels for the water sector since 2017. This body has four missions: monitoring water prices; auditing and advising on sector operations; approving Vivaqua's general terms of sale; and providing a water sector mediation service.
10In 2022, each household connected to the water distribution network paid an annual fee of € 29, and water was billed at € 3,86 per m³. For non-domestic consumers, a multiplier was applied to the € 29 annual fee according to the size of the meter, and water was billed at € 4,70/m³. These amounts are collected in full by Vivaqua, and part of them are then paid to Hydria. These prices cover the production and distribution of drinking water, urban wastewater collection and treatment, and flood control.
11As Brussels has a combined sewer system, sewers and collectors convey clear water in addition to most of the domestic and non-domestic wastewater. This includes the vast majority of run-off water (rainwater), as well as some drainage water and water from streams, ponds, springs and seepage (referred to as extraneous clear water). Clear water and wastewater are mixed in sewers and are sent to water treatment plants.
- 6 35,5 million m³ are consumed by the domestic sector, 21 million m³ by the non-domestic sector and (...)
- 7 Extraneous clear water represents 24 % of the volume treated each year in the Brussels-North wate (...)
- 8 The volume of 33 million m³ is obtained by deduction: 140 million m³ are collected by the sewers (...)
- 9 According to a 2013 estimate, the proportion of wastewater from Flanders is approximately 12 % fo (...)
12Figure 1 presents a diagram of water flows in sewers based on the information we have gathered. The flows collected by the sewers are made up of volumes sold by Vivaqua (60 million m³)6, extraneous clear water (± 29 million m³)7, rainwater (± 33 million m³)8 and wastewater from Flanders due to the configuration of the hydrographic network (± 18 million m³)9. All of these figures are simply rough estimates, and vary from year to year depending on rainfall.
- 10 This estimate of overflows is carried out by Bruxelles Environnement. In the event of rain, in or (...)
13Each year, approximately 130 million m³ end up in the two wastewater treatment plants in Brussels [Brugel, 2018: 11], and 10 million m³ of untreated water is discharged into the Senne and the canal during heavy rainfall10. The volumes which are discharged directly into the river system are mainly composed of rainwater, but are also mixed with wastewater and extraneous clear water.
Figure 1. Diagram illustrating the type of water collected by sewers in the Brussels-Capital Region (annual volumes)
14Therefore, if we exclude wastewater from Flanders, for which the Brussels Region is compensated, just over half of the water in the sewerage system is clear water.
- 11 As we shall see below, the Brussels-Capital Region allocated a grant of 36,4 million euros to Hyd (...)
15In reality, with the exception of a grant allocated by the Region to Hydria11, water consumers finance the collection and treatment of all wastewater in Brussels (including rainwater and extraneous clear water), as well as flood control, through their water bills. Is this method of financing in keeping with the notion of the true cost of water and the “polluter pays” principle?
16Based on the case law of the European Court of Justice, it is established that the “polluter pays” principle implies that polluters are only responsible for the pollution which they contribute to [Lindhout et al., 2014]. They do not have to pay for the elimination and prevention of pollution which they have no part in. Consequently, in keeping with the above-mentioned principle, while it is legitimate for water consumers to pay for the collection and treatment of wastewater resulting from their water consumption, it is not justifiable to charge them for flood control or the collection and treatment of rainwater and extraneous clear water. In other words, the “polluter pays” principle is misused here: the stakeholders whose financial participation is easiest to obtain are designated as polluters, with no real link between them and the pollution. In fact, it is a hidden tax, which is included in the price of water and is used to finance its management.
17This tax mechanism is inherently unfair, as it makes consumers contribute according to their water consumption rather than their ability to pay. As water consumption is proportional to the number of people in a household [May et al., 2021], larger households will pay more than smaller households for the treatment of rainwater and extraneous clear water as well as for flood control. Similarly, business activities which consume a lot of water are arbitrarily charged a higher amount.
18The water framework order, as amended by the order of 16 May 2019, is in keeping with our interpretation, as it stipulates that the costs of services linked to the use of water include the collection and treatment of wastewater in the strict sense, excluding rainwater.
19In conclusion, the current price of water in the Brussels-Capital Region does not comply with the “polluter pays” principle or the water framework order. In the next section, we present an estimation of the amounts which consumers are charged for unfairly.
- 12 The sewerage system in Brussels is not only gravity-fed. At certain areas in the system, wastewat (...)
20Rainwater treatment represents a major cost in Brussels. In a combined sewer system, rainwater has a financial impact at several levels. It influences the size of sewers and wastewater treatment plants, and leads to the construction of flood control infrastructures (stormwater basins). Furthermore, precipitation can overload the network, leading to accelerated deterioration of the pipes and increased energy consumption12. Finally, it significantly increases the volume of water to be treated and dilutes the pollution in the water to be purified. It is cheaper and more efficient to treat small volumes of water with higher concentrations of pollutants.
21Extraneous clear water has a more mixed impact on the total cost of wastewater treatment. On the one hand, the presence of extraneous clear water in sewers increases the operating costs of treatment plants, but on the other hand, a reduced influx of clear water would lead to a lower flow rate in low-gradient pipes (especially along the Senne valley and to the west of it), thus reducing the quantities of solids transported and increasing sedimentation in the collectors. Savings on water treatment plant operation would be at least partially offset by higher sewer maintenance costs [de Ville et al., 2017].
- 13 Direct regulated activities include all activities undertaken by the sector operator to carry out (...)
22How can we estimate the cost of rainwater and extraneous clear water treatment? We do not have the necessary information to do so with precision. Brugel has announced that it should be able to isolate the costs of managing rainwater in the network [Brugel, 2019a: 5]. In the meantime, it is possible to make an initial estimate based on the table below, which provides a budget projection for Vivaqua's direct regulated activities for 202213.
Table 1. Revenue and expenditure estimates for Vivaqua's direct regulated activities for 2022
|
Expenses
|
Revenue
|
TOTAL (net expenses)
|
Production and catchment
|
61 878 637
|
1 636 847
|
-60 241 791
|
Transportation and storage
|
19 865 009
|
942 612
|
-18 922 397
|
Division
|
7 486 387
|
346 099
|
-7 140 287
|
|
|
|
|
Distribution
|
55 536 367
|
2 393 176
|
-53 143 192
|
Customer fees to be allocated to supply
|
|
123 157 593
|
123 157 593
|
Proportion of supply fee covering AGI*
|
|
-1 463 437
|
-1 463 437
|
|
|
|
|
Total supply
|
144 766 400
|
127 012 890
|
-17 753 510
|
|
|
|
|
Sewers, collectors and treatment
|
114 857 476
|
4 364 924
|
-110 492 552
|
Buffer storage and flow regulation / flood control
|
12 186 963
|
495 736
|
-11 691 227
|
Customer fees to be allocated to sanitation
|
|
130 989 290
|
130 989 290
|
Proportion of sanitation fee covering AGI*
|
|
-688 043
|
-688 043
|
|
|
|
|
Total sanitation
|
127 044 439
|
135 161 907
|
8 117 468
|
|
|
|
|
Projects
|
2 965 763
|
|
-2 965 763
|
|
|
|
|
Total for direct regulated activities for Brussels
|
274 776 602
|
262 174 797
|
-12 601 805
|
Source: Brugel [2021a]
*Activities of General Interest (Social Fund, International Solidarity Fund, inspection of storm water basins)
23Expenses relating to wastewater production, distribution and treatment amount to 274,8 million euros for the Brussels-Capital Region. Supply represents 144,8 million euros (53 %) and treatment, 127 million euros (46 %).
24These treatment expenses include the amounts paid by Vivaqua to Hydria to carry out its mission, but do not include the regional grant of 36,4 million euros (in 2022) received directly by Hydria for water treatment. The actual value of the “sewers, collectors and treatment” item in Table 1 is therefore 114,9 + 36,4 = 151,3 million euros. Given that almost half of the water in the sewers in Brussels comes from rainwater and extraneous clear water, and that rainwater costs significantly more than wastewater, we have made the conservative assumption that clear water accounts for half of this item of expenditure, i.e. 75,6 million euros. A further 12,2 million euros are earmarked for “buffer storage and flow regulation/flood control”. We therefore estimate that approximately 87,8 million euros are spent on rainwater and extraneous clear water treatment every year.
25As the Brussels Region provides a grant of 36,4 million euros (to Hydria), this means that 87,8 – 36,4 = 51,4 million euros are paid directly by water consumers. In accordance with the “polluter pays” principle, 51,4 million euros should not be included in the water bills of consumers, and should be financed in other ways. Out of the total revenue generated by the sale of water in Brussels, which is estimated at 254 million euros for 2022 [Brugel, 2021a: 8], this amount represents 20 % of the price of water (annual fee and price per m³ of water combined).
26It seems logical that water consumers should not have to pay the 51,4 million euros needed for flood control and the treatment of rainwater and extraneous clear water. Nevertheless, the question remains as to how this amount should be financed. It is certain that Vivaqua needs this revenue, given the investments required to renovate the sewers in Brussels. As a result, we shall look at two alternatives to consumer payment: the taxation of impervious surfaces and regional grants.
27Bruxelles Environnement and Brugel, which are aware of the issue of financing rainwater treatment, have initiated discussions on the subject. In a briefing note on flood control, Brugel [2019] foresaw two financing possibilities apart from regional grants:
-
A fee system which considers that rainwater is managed at plot level, and that the volumes which end up in the sewer are linked to run-off water on the ground. According to Brugel, it makes sense to calculate the amount of this fee based on the size of the impervious surface, or at least the building footprint on the plot, in line with the “polluter pays” principle.
-
The introduction of an environmental tax, aimed at targeting a group in order to achieve a positive effect on the environment, or a financial tax aimed at financing a targeted service (with no guarantee that the money will be used in full for this service).
28In its note, Brugel favours a fee system calculated on the basis of impervious surfaces. The latter could be corrected in line with compensatory rainwater management measures (green roofs, cisterns, etc.) implemented at plot level. According to the regulator, this type of fee system would be in line with the “polluter pays” principle and would encourage stakeholders to reduce their impact on flooding.
29In our opinion, this fee raises doubts for at least two reasons. Contrary to the claims made by Brugel, it would violate the “polluter pays” principle, and there are practical obstacles to its implementation.
30The percentage of impervious surfaces in the Brussels-Capital Region rose from 27 % in 1955 to 47 % in 2006 [Vanhuysse et al., 2006], and these figures are likely to have continued to rise with the population growth in the region over the last 15 years. Given that approximately 15 % of the surface area in the city is made up of roads and pavements, at least one quarter of all impervious surfaces are public infrastructures which benefit everyone. It seems inconsistent to make the region or the municipalities which manage these roads pay (as envisaged by [Brugel, 2019]) for an essential public service which they offer free of charge to all users. This is especially true as it would probably force the municipalities or the Region to pass on this new burden to their residents, who are far from being the only users of the roads.
31Another possibility would be to adapt the idea of the fee system for impervious surfaces so that it excludes municipal and regional roads. But this type of solution would undermine the principle of impervious surfaces having to pay, as a substantial proportion of them would be exempt.
32These observations lead us to question the true relevance of a fee based on impervious surfaces. In order to respect the “polluter pays” principle, (owners of) impervious surfaces would have to be responsible for clear water treatment and flood control. This reasoning is only partially correct. The impervious surfaces in the city naturally have a major impact on the quantity of water collected by the combined sewer system and on the risk of flooding in certain valleys. However, the imperviousness of surfaces is not the only cause of flooding or the need to collect and treat clear water. Texts dating back to the 12th century already bear witness to regular flooding in Brussels [Deligne, 2003: 67, 207-214], at a time when the city had very few impervious surfaces. Furthermore, as we have already pointed out, more than 20 % of the water which ends up in water treatment plants is extraneous clear water [de Ville and Verbanck, 2017: 7]. It would be short-sighted to attribute the presence of extraneous clear water in sewers to impervious surfaces.
33In reality, a number of factors unrelated to the imperviousness of surfaces play a part in the cost of clear water treatment and flood control. Firstly, the mains drainage policy results in all water being sent to a combined sewer system, which must cope with and treat a large quantity of clear water. Secondly, the Brussels river system has undergone major changes in recent history. Many watercourses have been buried and their clear water sent to the sewerage system. Ponds have been drained or filled in, thus eliminating buffer zones for flooding. Finally, as a result of climate change, it is likely that in future, Brussels will experience fewer but more intense summer thunderstorms and an increase in the duration of winter precipitation [Bruxelles Environnement, 2018: 3]. If these trends continue, the risk of flooding will increase.
34Consequently, making the owners of impervious surfaces entirely responsible for water treatment and flood control and for their costs is not in line with the “polluter pays” principle: at most, they could be charged only for the rainwater which runs off private impervious surfaces. Financing is still needed for the treatment of extraneous clear water and rainwater running off the roads.
35There are several practical obstacles to the introduction of a fee which would be proportional to the amount of impervious surfaces and used to finance clear water treatment:
-
In order to tax impervious surfaces, they must first be estimated. In addition, the database for these surfaces would have to be updated regularly. URBIS – a set of geographical databases for the Brussels-Capital Region – includes an estimate of built-up areas. This tool provides an initial approximation of impervious surfaces. Brugel [2019] considers that impervious surfaces could be corrected by compensatory rainwater management measures at plot level (green roofs, cisterns, percolation, etc.). The collection and updating of this data and the management of complaints and disputes would require considerable human and financial resources, due to the amounts involved.
-
Once the impervious surfaces have been determined and corrected for each plot, a connection would have to be established with the land registry in order to determine who would have to pay the tax. In the case of a single-family house, the owner could be designated as the person liable for payment. On the other hand, when the building (whether residential or not) is divided between several owners, a proportion of the building would be allocated to each owner in order to determine the amount he or she would have to pay.
-
A denser space would mean a greater number of storeys per building, smaller dwelling sizes, a smaller impervious surface per dwelling and a lower tax per dwelling. In this type of environment, buildings often have multiple owners. Consequently, the lower the tax, the higher the cost of collection (as there would be many owners) and the lower the tax yield.
-
The fee would have to be a new tax which would not be included in the water bill, as the recipient of the water bill is often not the owner of the property. A new tax infrastructure would therefore have to be put in place to collect this tax, which would also have a cost.
36In conclusion, a fee in proportion to the amount of impervious surface would only respect the “polluter pays” principle for the part relating to rainwater running off private impervious surfaces, would be expensive and complicated to set up, and its collection would incur very high costs, particularly in the densest environments. Given the difficulty in applying the “polluter pays” principle, we recommend abandoning the idea of a tax on impervious surfaces. In the following section, we explore the possibility of the regional budget covering the treatment of clear water.
- 14 Access to water and sanitation was recognised as a human right by consensus by the United Nations (...)
37As it seems complicated to apply the “polluter pays” principle to the financing of clear water treatment and flood control, it seems reasonable to leave this logic behind and instead include this cost in the regional budget. This type of mechanism would have the advantage of being more equitable than the current system of a hidden tax on a basic necessity14. The French Court of Auditors takes the same approach, stating that rainwater management comes under the general budget of the local authority, while wastewater treatment costs must be covered by users [Cour des Comptes française, 2003: 27].
- 15 The Brussels-Capital Region has a higher GDP per capita than the other two regions in the country (...)
- 16 The Region also collects various regional taxes related to the presence of economic activity with (...)
38Some stakeholders in the water sector object, stating that using the regional budget to finance rainwater and extraneous clear water treatment would be inappropriate – and even socially unjust – as such a mechanism would not involve a contribution to the costs of the water service by international employees (numerous in Brussels) and businesses, whose ability to pay is higher than that of many Brussels residents15. International employees (numerous in Brussels) and business activities do not contribute directly to the budget of the Brussels Region. The Region receives an inflation-indexed grant from the federal authorities for the presence of numerous international employees in the city, but these employees are not subject to personal income tax (part of which goes to the regional budget). Similarly, corporate income tax (ISOC) and VAT are collected by the federal authority (to its benefit).16
39In response to this objection, we can point to at least one way of increasing regional revenue by making these two categories of stakeholders contribute through an increase in the property tax surcharges paid to the urban area of Brussels (and transferred to the Region). This mechanism would apply to all owners of property in the Brussels-Capital Region, regardless of their place of residence; international employees and economic stakeholders would also be affected. In addition, the Brussels-Capital Region would be compensated by the federal authorities for certain types of government property which are exempt from property tax (certain federal government buildings, embassies, European institutions, etc.).
40Admittedly, property tax is not devoid of problems, to the extent that the last general revaluation of property values took place in 1975. As a result, the estimated value of property no longer always reflects its true value. However, an increase in property tax surcharges would have the advantage of being based on an existing tax infrastructure, and the additional costs of increasing revenue would be limited.
41It could be argued that an increase in the property tax surcharges paid to the urban area of Brussels would benefit the regional budget and would not be allocated directly to wastewater treatment, but what we would like to emphasise here is that it is possible for the Brussels-Capital Region to generate revenue in ways which also involve international employees and business activities.
42The purpose of this article is not to take a stance regarding the “polluter pays” principle, which has been criticised for raising questions in terms of equity and identification of the stakeholders responsible for pollution [Cornut, 2003; Cavagnac and Gouguet, 2008]. Instead, we show that in Brussels, as in many European regions and countries [Cour des Comptes Européenne, 2021; Cour des Comptes, 2020], the principle is misused in the context of water billing.
43Water consumers in Brussels are the main source of financing for flood control and the collection and treatment of water in the Brussels sewerage system. If we exclude wastewater from Flanders, for which the Brussels Region is compensated, approximately half of the water in the Brussels sewerage system is rainwater and extraneous clear water (drainage water and water from streams, ponds, springs and seepage). Water consumers are not responsible for the presence of this clear water in the sewerage system, nor for the need to control flooding, and should therefore not be required to pay for the costs incurred in accordance with the “polluter pays” principle.
44An initial analysis of the amounts which consumers are charged for unfairly, taking into account the grant received by Hydria, reveals an annual amount in excess of 50 million euros, i.e. approximately 20 % of the revenue linked to the sale of water in the Brussels-Capital Region. This estimate needs to be refined, but it indicates that the price of water in Brussels is too high. It was therefore unfounded to increase the price of water by 15 % in 2022. The “polluter pays” principle meant that part of the water service had to be financed in other ways.
45We also asked ourselves what the best way would be to finance these 50 million euros each year. One idea often mentioned by various water stakeholders is the introduction of a tax on impervious surfaces. We feel that this is the wrong solution: it complies with the “polluter pays” principle for only part of the volume of clear water in the sewerage system, would be costly to implement and difficult to apply.
46Given the difficulty of applying the “polluter pays” principle to the financing of flood control and the collection and treatment of clear water, it seems logical to cover these costs by passing them on to the Region's budget rather than to consumers' water bills.
47We therefore hope that the next time the regulator looks into the price of water in Brussels, avenues other than price increases for consumers will be considered to finance the water service in Brussels.