Water neutrality planning takes farm offsetting out of market
© Adobe Stock Relatively few farmers and landowners have yet had to grapple with the concept of water neutrality, but in parts of Sussex it has been a component of planning applications for several years.
Water neutrality requirements were introduced in five local planning authorities in Sussex in 2021, following concern by Natural England (NE) that a protected site on the river Arun was being damaged by water abstraction.
This effectively meant that development of any kind could only be granted planning permission if the applicant could show that it did not increase the rate of abstraction for water supplies above existing levels, from rivers and wetlands in the Arun Valley.
See also: How water action groups can help secure farm supplies
As well as building greater water efficiency into developments, a system for providing water credits emerged, and along with this, a market for these credits.
This led to opportunities for some farmers and landowners to provide water offsetting to developers – for example, by giving up abstraction licences or reducing licence use, installing boreholes, roofing silage pits and yards for rainwater collection.
Along with substantial payments from developers, which in some cases also funded the works involved, there were often water-saving benefits for the farms in terms of reduced reliance on mains water and a saving in water costs, also pollution risk reduction.
Farmers’ own developments also had to demonstrate water neutrality.
Water neutrality – the background
In 2021 a position statement from Natural England introduced the concept of water neutrality in five local planning authorities in the south of England.
Any planning application in Southern Water’s Sussex North Water Resource Zone requiring mains water had to offset that demand for permission to be granted.
This followed information gathered by NE showing that abstraction for drinking water supply was having a negative impact on wildlife sites in the county’s Arun Valley.
These form part of the Arun Valley Special Protection Area, Arun Valley Special Area of Conservation and the Arun Valley Ramsar site, all of which are protected by the Conservation of Habitats and Species Regulations 2017.
The water neutrality requirement included all developments in the areas covered by Horsham District Council, Crawley Borough Council, part of Chichester District Council’s area, parts of the South Downs National Park and West Sussex County Council.
As with nutrient neutrality requirements, which deal with the adverse impact of nitrogen and phosphate on sensitive habitats, water neutrality requires action to be taken to mitigate the impact of a development’s demand for mains water.
Some of these measures can be taken by developers, for example incorporating rainwater harvesting, water recycling and water efficient white goods into the design of houses and other buildings.
Mitigation can also be provided by offsetting, where measures put in elsewhere can offset increased demand from development.
In either case, conditions are attached to a planning permission setting out water neutrality actions.
For almost four years, farmers and landowners have been providing the mitigation required by a range of measures including giving up abstraction rights, rainwater harvesting, roofing over silage clamps and yards.
Government announcement
However, late last week a joint announcement by Defra and the Ministry of Housing, Communities and Local Government (MHCLG) said that the requirement for water neutrality for the area would be lifted and that development could go ahead without the requirement from 1 November.
Very little detail was given in the announcement and a formal statement by NE is yet to emerge, leaving those involved in the dark about existing agreements and awaiting guidance.
A whole sector of activity has developed in the four years since the water neutrality requirements were introduced, providing many jobs including for consultants, offset brokers, installers of mitigation equipment, private water specialists, groundworkers and hydrogeological consultants.
An adviser involved in organising water offsetting said: “There are some amazing schemes that have delivered so many benefits.
“A lot of good has been done by rural businesses to put in water-saving measures and a huge number of businesses will be affected by this announcement which changes things overnight.”
One issue is that of partially installed mitigation schemes which developers may now not want to pay for, leaving farmers and landowners with costs they had not expected.
“Some of the sums involved run into hundreds of thousands of pounds and while the farmer may have received a deposit from the developer they will be waiting for full payment,” says the adviser.
The adviser points out that farmers have to sign a legally binding Section 106 planning agreement which obliges them to carry out the mitigation measures.
Evidence needed
He, like others, would like to see the evidence that reduction in abstraction by Southern Water will be enough and questioned how water could be used on developments before it is known that the saving the water company has committed to has been made.
Planning lawyer Nicola Gooch, a partner with Birketts, says the position of farmers providing mitigation or in the planning stages of doing so will depend on their contract arrangements and agreements.
Dr Chris Lyons, head of UK planning at SLR Consulting, says it will be a complicated process to examine what happens now to the long term agreements that have been made to comply with the water neutrality requirements.
“It may be case of resubmitting planning applications and varying them,” he says.
Some farmers have received up front payments for the mitigation, others are expecting annual payments over a number of years.
At Thrings, lawyer Fred Quartermain whose specialist areas are planning, environmental issues and compulsory purchase, expects that developers who have already made offset commitments are unlikely to be in a rush to undo them, preferring to have the comfort that these are in place.
“Developers could seek variations but it’s not an easy route,” he says.
Decision to lift neutrality requirement
The decision to lift the water neutrality requirement was based on information from Southern Water regarding its abstraction levels and plans for water saving.
A statement from the company’s managing director for water Tim McMahon said:
“Our tests, and those of other agencies over the last 18 months, have proved that abstraction of water has not caused harm to these precious wetlands.
“Nevertheless, in the face of population growth and climate change, we must continue to work together to achieve a resilient water future for the South East, that protects nature.
“That means reducing consumption by building more water efficient homes, cutting leaks, and investing in new water resources.”
Councils like Horsham have spent significant sums on developing Sussex North Water Certification Scheme (SNWCS) to address the water neutrality issue.
This was close to launch when the government announcement on lifting the requirement was made.
Failed High Court challenge to water neutrality
Only in August developer Crest Nicholson lost a High Court challenge to the requirement for water neutrality in a 280-home development at Faygate near Horsham.
The company argued that both the secretary of state for Housing, Communities and Local Government and Horsham District Council had been wrong to impose a planning condition on the development that prevented them being occupied until water neutrality was demonstrated.
Water supply outlook
With most of England officially water-stressed to some degree, water neutrality is likely to become an issue elsewhere, whether for environmental and/or supply reasons, with mitigation markets likely to develop as a result.
These could provide opportunities for farmers who are considering changes to their business or who want to invest in water saving or collection.
The government’s push for housing and other development adds to the pressure, with data centres huge users and likely to be prioritised by planning policy.
Work by MHCLG is ongoing to develop a water credits scheme in Cambridge, a particularly water-stressed area.
Domestic water efficiency consultation
The government is consulting on proposed changes to water efficiency standards for new homes, taking it from the current 125 litres per person per day to 105 litres a person a day by 2038.
This would be achieved by installing water-saving measures such as water-saving aerated taps and showerheads and dual flush toilets in new homes.
There is a national target is to reduce water usage in England to use 110 litres a head of the population by 2050.
The consultation, which closes on 16 December, also seeks views on the potential for water reuse systems in new developments.
Is your farm business affected by this change in policy? Get in touch suzie.horne@markallengroup.com