Water governance - Unie van Waterschappen governance EN.pdf · Water governance 1.1 Decentralised water management, a global theme Water management is facing enormous challenges both

Water governance

Unie van WaterschappenKoningskade 40

2596 AA The HaguePO Box 93218

2509 AE The HagueTelephone: +3170 351 97 51

E-mail: [email protected] www.uvw.nl



Unie van Waterschappen

Water governance

The Dutch regional water authority model

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Colofon

Edition

© Unie van Waterschappen, 2010PO Box 931282509 AE The HagueThe NetherlandsInternet: www.uvw.nlE-mail: [email protected]

Authors

Herman HavekesMartin KosterWijnand DekkingCathelijn PetersRafaël LazaromsRob UijterlindeRon Walkier (NWB Bank)

Printing

Opmeer drukkerij bv

Edition

1.000 copies

ISBN

9789069041230

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Preface

Society makes demands on the administrative organisation and the performance of water management services. And rightly so. Water authorities, from the municipal to the European level, are endeavouring to respond adequately. In the Netherlands the regional water authorities (waterschappen), are crucial in providing the required water management services, i.e. flood control, irrigation and drainage and municipal waste water purification. This sets requirements on the way in which these tasks are carried out. Moreover, it sets requirements on the way in which society is involved in water governance.

We have produced this booklet for the interested outsider and for those who are direcly or indirectly involved in water management. It provides an understanding of what the Dutch regional water authorities do, with a focus on how they work as independent governmental institutions. Special attention is paid to organisation, management and self financing. These governance issues are frequently raised in contacts with foreign colleagues. The way we organise water management in the Netherlands has received positive attention all over the world. The regional water authority model proves to be an inspiring example for the administrative organisations of other countries whose aims are also to keep people safe from flooding and manage water resources. This is apparent from the growing desire for collaboration inside and outside Europe, from Indonesia to the United States and from France to South Africa.

The booklet ‘Water Governance - the Dutch Regional Water Authority Model’ was drawn up for foreign colleagues in 2004. We are now a few years further on. The merging of regional water authorities has continued and legislation was amended. The new Water Boards Act has had far-reaching consequences for the composition and election of the regional water authority assemblies and for the financing of the tasks carried out by the regional water authorities. The recent Water Act also has a large impact on the legal instruments of regional water authorities. Both these developments, amongst others, have been incorporated in this fourth and fully-revised edition of ‘Water Governance’. I hope that you will find the booklet interesting and informative.

Peter C.G. Glas M.Sc. LL.M.

Chairman of the Dutch Association of Regional Water Authorities (Unie van Waterschappen)

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Table of contents

1 Introduction 7 1.1 Decentralised water management, a global theme 8 1.2 The Dutch regional water authority model 10

2 Regional water authorities and their legal basis 13 2.1 Water governance 14 2.2 The position of the regional water authorities 16 2.3 The Water Boards Act 20 2.4 The integration of water legislation 21 2.5 The administrative organisation of water management 23 2.6 Fine-tuning and coordination 26 2.7 Participation, legal protection and supervision 27

3 Democratic legitimacy 29 3.1 The Dutch polder model 30 3.2 The composition of boards 31 3.3 Elections 35 3.4 Current developments 36

4 Financial independence as a result of their own tax system 37 4.1 Financing Dutch water management 38 4.2 Financing of regional water management by the regional water authorities 40 4.3 The water system charges 44 4.4 The water pollution and the surface water pollution levies 46

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5 A dedicated financial institution: The NWB Bank (Nederlandse Waterschapsbank N.V.) 49 5.1 Combining strengths 50 5.2 Brief history of the Dutch situation 50 5.3 The concept of a bank 51 5.4 Form 53 5.5 Key NWB Bank figures 55 5.6 Socially responsible business practices 56

6 The Dutch Association of Regional Water Authorities (Unie van Waterschappen) 57

7 Final conclusions 61

Literature 67

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1 Introduction

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1.1 Decentralised water management, a global theme

Water management is facing enormous challenges both nationally and internationally. Climate change, a rapidly increasing population and economic developments are placing a great deal of pressure on the water system. This applies in particular to the flat, low-lying areas of the world such as deltas, coastal and river plains where the population growth is concentrated. The government has a duty of care regarding the management of natural water systems and the safety of residents from flooding. These tasks, which in the Netherlands are largely allocated to waterschappen (regional water authorities), not only require adequate funds and knowledge, but also a good institutional water management structure, that is, good water governance.

The 26 regional water authorities form the fourth government institution in the Netherlands, along with the central government, provinces and municipalities. The regional water authorities, are the least known governmental bodies in our urbanised country. The average citizen knows little of the work carried out for him or her by the regional water authorities. He or she does, however, notice the regional water authority’s tax assessment. While, in fact, the regional water authority model is much admired in the international circuit as a system that is well tailored to suit its duties, is financially self-supporting and also, given its history, can be deemed sustainable (regional water authorities have been in existence for about 800 years).

The Dutch regional water authorities are not unique, and there are similar organisations in and outside Europe. The organisation and financing of decentralised water management are, however, recurrent themes in international contacts. The sophisticated regional water authority system commands particular respect as regards these aspects. More than fifty percent of the Netherlands would be under water if the water management was not up to standard, so clean water and dry feet are great achievements in this country. And, indeed, if the regional water authorities failed to do their work for even a single day, the lower-lying areas of the Netherlands would immediately be in trouble.

At international meetings, such as the World Water Forum, the Netherlands actively contributes its experiences with the management of its regional water system, not as blueprint, but as food for thought. It may be possible to use some of the ingredients in other situations. And every little helps in the painstaking management of the global water system. After all, the second UN World Water Development Report (2006) describes the world water crisis in this century primarily as a water management crisis.

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Things are not standing still in the Netherlands, Dutch efforts being focused on anticipating climate change and the correct implementation of European policy, such as the Water Framework Directive and Directive 2007/60/EC on the assessment and management of flood risks. Regional water authorities have a crucial role in this, along with their duties in the fields of safety from flooding, the management of water quantity and quality, and the treatment of urban wastewater. In 2008 the requisite changes were made as a result of the introduction of the new Water Boards Act. These changes include a different composition and method of electing the governing bodies of regional water authorities. Furthermore, the Water Act, which went into force on 22 December 2009, has also had consequences for the set of legal instruments at the disposal of the regional water authorities in the performance of their duties.

This booklet tells the reader all about the Dutch regional water authority system. It gives insight into the organisation, management and funding of the regional water authorities. The English version (Water Governance – the Dutch Regional Water Authority Model) makes this information available to target groups abroad.

After a concise outline of the decentralised water management in the Netherlands in section 1.2, the legal basis of the regional water authority is discussed in detail in Chapter 2. Chapter 3 is devoted to their democratic legitimacy: the relationship with sections of society, such as the residents and interest groups, which deviates from general democracy. ‘Interest-pay-say’ continues to be the creed of the regional water authority governing bodies. Chapter 4 explains the financing system, which involves an exceptional phenomenon: the NWB Bank (Nederlandse Waterschapsbank N.V.), a bank established by regional water authorities that provides access (though it is not the only possibility) to the capital market. The NWB Bank is described in Chapter 5. Chapter 6 throws light on the Dutch Association of Regional Water Authorities (Unie van Waterschappen), as national and international representative of Dutch regional water authorities. Lastly, Chapter 7 contains some final conclusions.

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1.2 The Dutch regional water authority model

A large part of our country is kept dry (or wet) by artificial means. In the past areas that were originally peat and marsh were brought under cultivation. The land was adapted to suit habitation, agriculture, industry and recreation. This was accompanied by an extensive infrastructure that included not only roads and railways, but primarily investments in water management. The Dutch seem to take for granted the efforts required to keep the land dry, to produce water of a high quality and to harmonise water management with social functions in our densely-populated country. The Dutch feel safe, protected as they are by dikes, dunes and dams. However, without the continuous operation and maintenance of the many dikes, locks, pumping stations, flood barriers, canals and ditches, the safety of more than nine million Dutch would be jeopardised. And this is precisely what the regional water authorities do.

Regionalwaterauthorityfigures2010.

Number of regional water authorities 26

Number of employees approx. 10,500

Length of primary dikes managed approx. 3,650 km

Length of other flood defences approx. 14,000 km

Length of water courses managed approx. 55,000 km

Length of roads managed approx. 7,500 km

Number of treatment plants approx. 360

Units of wastewater treated approx. 2 billion m3

Number of pollution units treated approx. 23 million

Regional water authorities are functional, decentralised government institutions, with tasks exclusively in the field of water governance: managing water defences, quantity and quality, and navigable waterways. Some key figures of regional water authorities are shown above. All the existing Dutch regional water authorities are shown in the figure below.

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COEVORDENMEPPEL

LELYSTADEDAM

AMSTERDAM

DELFT

ROTTERDAM

HOUTEN

MIDDELBURG

TERNEUZEN

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LEUSDEN

APELDOORN

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Fryslân

Zuiderzeeland

Velt en Vecht

Reest en Wieden

Groot Salland

Regge en DinkelVeluwe

Vallei & Eem

Rivierenland

De Stichtse Rijnlanden

Amstel, Gooi en Vecht

Hollands Noorderkwartier

Rijnland

SchielandDelf land

Krimpenerwaard

Hollandse Delta

Zeeuws-Vlaanderen*

Brabantse Delta

De Dommel

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Roer en Overmaas

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)*Fusie Zeeuwse waterschappenper 2011: Scheldestromen

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Twentekanaal

Twentekanaal

Kanaal Almelo-Nordhorn

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Overijssels kanaalTw

entekanaal

Regge

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kanaalMark

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Figure 1.1: Map showing the regional water authorities in the Netherlands

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The boundaries of the regional water authorities are not just random lines on the map. These boundaries are primarily determined by hydraulic factors: sub-catchment basins, dike rings, pumping and storage areas, etc. As a result they do not usually correspond with municipal or provincial borders. More than half of the regional water authorities have an interprovincial character. The area managed by the Waterschap Rivierenland, for example, covers parts of no less than four provinces.

The total Dutch government expenditure on water tasks in 2008 amounted to more than 5.4 billion euro. Around 2.5 billion of this was spent by regional water authorities. In 2007 an average household paid about 547 euro for its water conveniences. This amount was partly built up of regional water authority taxes (€ 214), payments for sewerage charges (€ 144) and drinking water (€ 189).(Source: Water in Beeld 2009).

2 Regional water authorities and their legal basis

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2.1 Water governance

This chapter will further explore the constitutional position of regional water authorities and their tasks on the basis of the relevant legal regulations. This is the first building block of the regional water authority model.The regional water authorities are the oldest form of democratic government in the Netherlands. The first regional water authorities date back to the 13th century, which is all to do with the geographic situation of the country. More than half the country would be flooded but for the dunes and dams that protect human beings, livestock and properties against storm floods coming from the sea and torrential rivers. Extreme rain, too, can cause great inconvenience. The many dikes, locks, pumping stations, weirs, canals and ditches keep the Netherlands habitable.

The regional water authorities are responsible for the water management on a regional and local level. The concept of ‘water governance’ can be described as that part of public care that relates to flood protection, the water regime (surface water and groundwater in both the quantitative and qualitative sense) and the waterways. It focuses on the habitability and usability of the land and the protection and improvement of the living environment. From this description it is also apparent that, in the execution of their tasks, the regional water authorities fulfil the provisions of Article 21 of the Dutch Constitution: ‘Government care is aimed at the habitability of the country and the protection and improvement of the environment.’ The importance of good water governance is growing as a result of the rising sea level, climate change, land subsidence and urbanisation. Six regional water authorities are also charged with road management. Although strictly speaking this duty is not related to water management, it falls within the somewhat broader concept of ‘Public Works and Water Management ’.

Water governance is realised by means of infrastructural works: water control works such as rivers, lakes, canals, ditches, dikes, pumping stations, locks, weirs, culverts, bridges and sewerage treatment plants. These works are crucial for keeping the Netherlands habitable. The regional water authorities draw up bye-laws (Keur) to safeguard the correct maintenance and functioning of these structures. For example, it is generally prohibited to carry out activities such as building, excavating or planting greenery, on, in, over or under water control works without the permission of the regional water authority. The crucial importance of these infrastructural works is also clear from the Dutch Criminal Code, which makes deliberately damaging such works punishable.

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As will be described below, several orders in council, bye-laws drawn up by local authorities and the Water Act, in particular, are applicable to water management. Together they form the major source of water management legislation and can be designated as the total of legal rules relating to water management. The legislation and policy originating from the European Union has increasing influence on the way in which regional water authorities perform their core tasks. Good examples of this are the European Water Framework Directive and the Directive on the assessment and management of flood risks (2007). Other examples include earlier European Directives concerning drinking water, bathingwater, groundwater and urban wastewater. Since these directives have to be transposed by the national legislator, they have a great influence on the legal practice within water management.1

Although water management is a separate field of responsibility of the national government, it has much in common with other fields of government policy such as spatial planning, environmental protection and nature conservation. It is therefore vital to gear the decisions in these policy fields to one another. The concept of ‘integrated water management’ is often used in this respect; this not only takes into account the relationships within water management itself (the quantity and quality of surface water and groundwater) but also those within the other policy fields mentioned. This is exemplified by the water assessment laid down by law.2 The act in question stipulates that provincial and municipal plans in the field of spatial planning must indicate the consequences they entail for water management. The objective of this water assessment is to prevent the (ill-considered) building of new urban or industrial areas on locations that are unsuitable from the water management point of view. The fact that, as regards the spatial aspects, the recent Water Act designates the National Water Plan and the regional water plans of the provinces as ‘structural concept’ within the meaning of the Spatial Planning Act must be seen in this context. It forms tangible evidence of the desire to strengthen the link between water management and spatial planning.

1 For a comprehensive list, see the research report commissioned by STOWA and carried out by the University of Utrecht ‘EG-recht en de praktijk van het waterbeheer’, STOWA series number 18, ISBN 90.5773.212.2. A concise summary of this report has been published for managers. A fully-updated version of this report edited by Prof. H. van Rijswick appeared in 2008.

2 See the amendment of the Physical Planning Decree, Bulletin of Acts and Decrees 2003, 294 and 327 that entered into force on November 2003.

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2.2 The position of the regional water authorities

Although regional water authorities have existed for a long time, this does not mean that their position has always been undisputed. In the second half of the last century, in particular, a probing discussion took place on the regional water authorities’ right to exist.

This discussion started at the end of 1968 with the setting up of the ‘Studiecommissie Waterschappen’ (Regional Water Authorities Study Commission) by the Minister of Transport, Public Works and Water Management. The brief of this commission was: ‘to examine the function and structure of the regional water authorities, taking into account the relationship of these institutions with other public bodies, and to make recommendations accordingly’.In its report entitled ‘The regional water authority and its future’ published in 1974, the commission concluded that in the future, too, local and regional water governance should be executed by governmental bodies specialised in that kind of care, that is, regional water authorities. The commission attached great importance to the characteristic that was linked with the functional form of administration, that is, that those who had an interest in the duties performed by the regional water authority should in principle bear the costs and be represented in the governing bodies. This principle is better known as the triplet of interest-pay-say, and implies an own governing body and tax area. The commission saw flood protection and water regime as the primary responsibilities of the regional water authority. The commission also advocated the drawing up of a general Water Boards Act outlining the administrative and financial structure of regional water authorities and the way their tasks should be executed.

In 1977, the Dutch national government responded to the recommendations made by the Regional Water Authorities Study Commission by publishing the memorandum ‘Naar een nieuw waterschapsbestel?’ (‘On the road to a new regional water authority system?’). This memorandum formulated three conditions a good water governance organisation had to meet:• water governance should be executed effectively;• it should be executed locally wherever possible;• water governance should take place after weighing and taking into account all the interests involved.• according to the government, these conditions, with their mutual connection, justified the choice of the

regional water authority as a public body of functional government that could be put in charge of water control care.

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At the same time, the importance of the triplet referred to above was endorsed. In the government’s opinion, too, the main tasks of regional water authorities were flood protection and the water regime. The government also advocated the drawing up of a Water Boards Act.

In 1978 the Dutch House of Representatives approved the Government’s Memorandum. Its members appeared to be highly unanimous about the necessity of the (continued) existence of the regional water authority and its position in the Dutch form of government. They also agreed with the government’s intention to draw up a Water Boards Act. This Water Boards Act had already become a necessity, partly as a result of the 1983 revision of the Dutch Constitution, which clearly bore the marks of the Study Commission’s report, and the Government’s Memorandum. Since then Article 133 of the Dutch Constitution has read as follows:‘1. The discontinuance and setting up of regional water authorities, the regulation of their tasks and

organisation, and the composition of their governing bodies will be made in accordance with the provincial bye-laws prescribed by law, if not otherwise provided for pursuant to the law.

2. The regulatory and other powers of regional water authorities’ governing bodies and the public nature of their meetings are laid down by law.

3. The provincial and other supervision of these governing bodies is laid down by law. Decisions made by these governing bodies can only be set aside in the case of conflict with the law or the general interest.’

The Water Boards Act went into force on 1 January 1992.

A few years ago the position of the regional water authorities was once more questioned in the framework of an interdepartmental policy study into the financing of the regional water management. At the beginning of 2004 the government explicitly reconfirmed its choice of the regional water authorities as regional water management authorities in this framework.3 It still found the choice to be a sensible one. By placing water management under a functional government institution, the weighing process in the general democracy (state, provinces and municipalities) was turned into a more conscious process. ‘In order to be able to carry out regional water tasks efficiently and decisively, the best option is to have an individual cost structure under the responsibility of one’s own administration.’ The House of Representatives agreed with this choice during a general consultation in mid 2004. Incidentally, the European Water Framework Directive, which went into force at the end of 2000, also endorses certain aspects of the regional water authority model.

3 TK (House of Representatives) 2003-2004, 29 428, nr. 1.

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After all, many elements in this Directive, (such as the organisation on the basis of sub-catchment and catchment basins, public participation and cost recovery for water services) actually already take place in the regionalwater authority system4.

The legislative proposal for the modernisation of the regional water authority system was submitted to the House of Representatives in mid 2006. It provided for far-reaching changes in the composition of the regional water authorities’ governing bodies and the way in which they are elected and how the tasks are financed. The legislative proposal was adopted by parliament in 2007 and has since gone into force.5 Chapters 3 and 4 explain the most significant elements of these legislative changes, which were largely based on suggestions put forward by the regional water authorities themselves.

The independent position of the regional water authority is again under discussion. In the context of elections to the Lower House in early June 2010, several political parties are advocating the merging of regional water authorities with provinces. In this model, the regional water authority would lose its autonomy and powers to levy taxes, and become an operational service of the province in question. The main arguments in favour of this standpoint are that it will reduce administrative pressure (the Netherlands is thought to have too many authorities) and reduce costs. Neither of these arguments is particularly convincing. After the far-reaching reorganisation of the regional water authority system in recent decades it can rightly be said that the regional water authorities have already done their bit to reduce administrative pressure. The costs of regional water authority boards amount to slightly more than 20 million euro annually, including election costs. Compared with an annual expenditure of around 2.7 billion euro, this is a relatively modest sum, which is no higher than that of other authorities. We will, nevertheless, have to wait and see what the outcome of the elections and the implications of the coalition agreement of the new cabinet will be. Quite apart from this, because of the aforementioned constitutional basis of the regional water authority, a transformation of this kind will require a change in the Constitution, which may easily take a number of years. Incidentally, it must be emphasised that it is not the manner in which the regional water authorities perform their tasks which is under discussion. This is, generally speaking, very highly regarded.

4 In recommendations to the Dutch Association of Waterschappen in early 2004, Prof. Toonen et al earmarked the waterschap as a ‘golden formula’. For an interview with Prof. Toonen on these recommendations, see ‘Het Waterschap 2004’, p. 18-21. See also thesis by H.J.M. Havekes, ‘Functioneel decentraal waterbestuur: borging, bescherming en beweging. De institutionele omwenteling van het waterschap in de afgelopen vijftig jaar’, SDU The Hague 2009, p. 353-376.

5 Bulletin of Acts and Decrees 2007, 208.

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The (constitutional) position of the regional water authority emerges clearly from the above. The regional water authority is a government body of functional decentralised administration with its own governing body and financing structure, and it is solely concerned with the execution of tasks in the field of water governance. From a hierarchical point of view, the regional water authority has the same status as the municipality. As is apparent from the aforementioned article in the Dutch Constitution, the provinces play an important role with regard to the organisation of the regional water authority. After all, it is their responsibility to set up, discontinue, lay down rules for and supervise the regional water authorities. The position of the regional water authority is, therefore, as follows:

Finally, we should mention the enormous scale increases regional water authorities have undergone in the past 50 years. The number of regional water authorities has decreased from around 2,650 in 1950 to a mere 26 at the moment. There are three main reasons for this merging process. Firstly, the flood of 1 February 1953, during which 1,836 people lost their lives and caused enormous financial damage. This disaster marked the end of many small regional water authorities. Secondly, the handing over of water quality control, including wastewater treatment to the regional water authorities from 1970. After all, the task of building and managing costly sewerage treatment plants and pressure pipelines calls for a firm administrative and financial basis of support. Thirdly, the government’s policy of setting up integrated water management, which means that the various tasks, that is, surface water and groundwater from both the quantitative and qualitative standpoints, should be looked at in their mutual connection and, therefore, preferably be brought together in one

Central government

provinces (12)

municipalities (± 430) regional water authorities (26)

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organisation (the so-called ‘all in-regional water authorities’). This was realised in 2005. There are currently 26 all in-regional water authorities which, with approximately 10,500 employees, take care of the total flood protection and water management, including treatment policy at a regional and local level. This signified the end of the old situation in which various regional water authorities were responsible for different tasks within the same area. These changes have certainly improved the effectiveness and transparency of water governance.

2.3 The Water Boards Act

There is a lot to be said about the Water Boards Act which has such a big influence on the structure and duties of the regional water authorities.

One of the core provisions of the Water Boards Act is Article 1, which characterises the regional water authorities as public bodies with the objective of water governance in a particular district. This definition contains three elements. Firstly, Article 1 makes clear that regional water authorities are bodies of public administration and, as such, are part of the Dutch government organisation. As a result, regional water authorities can make decisions that are binding for citizens and, for example, draw up regional water authority bye-laws with mandatory and prohibitory provisions, grant or refuse permits and levy taxes. If necessary, regional water authorities can enforce compliance with these regulations by applying administrative coercion, imposing administrative penalties or drawing up an official criminal report. The second element entails the territorial boundaries of regional water authorities. In other words, regional water authorities have a particular district within which they execute their tasks. Consequently, they are part of the so-called territorial decentralised administration, as are provinces and municipalities. The boundaries of regional water authority districts are not drawn arbitrarily, but are determined for reasons relating to water management (sub-catchment basins, drainage areas, dike rings). As a result, they deviate from the provincial and municipal boundaries almost by definition.Thirdly, the definition mentioned above implies that regional water authorities’ tasks lie solely in the field of water governance (or the slightly broader term ‘public works and water management’). These tasks are therefore fixed from the start, unlike, for example, a municipality, whose tasks are only restricted because a higher authority has taken over certain tasks or powers, and is consequently involved with many tasks (education, culture, health care, civil order etc.).

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Article 1 also deals with the tasks entrusted to the regional water authorities. For the purposes of this article, the terms ‘care for the water system’ and ‘treatment of waste water’ are used for the activities of regional water authorities after the legislative changes made in 2007. All previously-mentioned subtasks are included in these tasks. These entail the care of flood protection and water management, including treatment and - possibly - the care of other water control matters, such as the waterways. Regional water authorities are charged with these tasks, by the respective provinces, in their rules and regulations. The fact that this brief is not free of obligation is significant. Article 2, paragraph 2, of the Water Boards Act stipulates that regional water authorities should be put in charge of the aforementioned tasks unless this is incompatible with the interests of good water governance. This powerfully phrased principle of decentralisation thus prevents provinces from, for example, taking the care of flood protection into their own hands, or from passing it on to the municipalities. The Minister of Transport, Public Works and Water Management would undoubtedly withhold the necessary approval (see Article 5 of the Water Boards Act) for any such regional water authority regulations.Other important provisions of the Water Boards Act concern the composition and election of the regional water authorities’ governing bodies and the powers of regional water authorities to levy taxes to finance the execution of their tasks. The next few chapters will be dealing with this in greater detail. Suffice to say here that these very provisions express the triplet interest-pay-say which was mentioned earlier, that is, that those who have an interest in the tasks carried out by regional water authorities are liable to pay tax and are represented in the governing bodies of regional water authorities. At the same time, this indicates another major difference between regional water authorities on the one hand and provinces and municipalities on the other. Unlike provinces and municipalities, whose income is largely dependent on government revenues, regional water authorities are virtually fully self-supporting in the execution of their tasks. The tax revenues of regional water authorities in 2010 will total almost 2.43 billion euro.

2.4 The integration of water legislation

Until recently, Dutch water legislation has, indeed, been fragmented. Over the years a separate law was drawn up for every part of water management. All these laws had their own weighing framework, legal instruments, procedures and systems of appeal. This fragmentation can be explained from a historic point of view: a new law was usually drafted as a result of a ‘disaster’ (for example, prolonged drought, imminent flooding) but it impeded practical manageability and feasibility, and, moreover, ignored the intrinsic cohesion within water management. The Dutch government realised this and, partly at the insistence of the Dutch House of

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Representatives, successfully integrated the various laws on water control. The European Water Framework Directive, which provides for the integration of the many water guidelines at a European level, is also in line with this initiative.

The Water Act was accepted by parliament and went into force on 22 December 2009.6 This act integrated the following:• Pollution of Surface Waters Act;• Marine Pollution Act;• Groundwater Act;• Water Management Act;• Flood Defences Act;• Land Reclamation and Dykes Act;• Public Works (Management of Engineering Structures) Act (the water management provisions contained

in it);• Public Works Act 1900 (the water management provisions contained in it).

The regulation for polluted beds from the Soil Protection Act has also been integrated into the Water Act. The Water Act has been further elaborated in the Water Decree, de Water Regulation and the provincial and regional water authority bye-laws.The most important objective of the Water Act is to facilitate integral water governance. The idea is that this is more likely to succeed with a single law rather than eight different ones. Another reason for the ‘integration’ was to reduce the administrative pressure for the business community. To this end, six different water licences have been merged into a comprehensive water licence and the obligation to have a licence has, where possible, been replaced by general regulations. Another objective of the Water Act is to simplify the implementation of the European water law. It cannot be denied that with the arrival of the Water Act, Dutch water law has become more transparent. The Water Act contains almost all the laws relating to water. The institute of the regional water authority is, however, still regulated in the Water Boards Act, the (municipal) sewerage management in the Environmental Management Act and the drinking water supplies in the Drinking Water Act. Finally, it should be added that although the Water Act is a combination of eight existing laws, it contains a number of explicit new elements to enable the water managers (the central government for the mains system and the regional water authorities for the regional water systems) to better perform their tasks. These tasks include

6 Bulletin of Acts and Decrees 1009, 490. For this act, see the Water Act Guide, edited by H.J.M. Havekes and P.J. de Putter, Kluwer, Alphen aan den Rijn 2009.

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reinforcing the relationship between water governance and spatial planning, the registration obligation for water control structures, standards for flooding, the broad use of the project procedure, the tolerance obligation for water storage, the greater role for the regional water authority in ground water management and the coordination obligation between regional water authority and municipalities.

2.5 The administrative organisation of water management

The above might lead one to think that regional water authorities are the only water management authorities in the Netherlands. However, this is not the case. Water governance is carried out by all levels of government in the Netherlands; that is by the national government, provinces, municipalities and regional water authorities, although the Water Act only designates the national government as ‘manager’. The Dutch administrative organisation and the relevant regulations are tailor-made to suit the various elements of water governance, as is shown below:

• Floodprotection: this task consists of the protection of the Netherlands from flooding by flood defences. Quite rightly - witness the experiences over the past few years - this task is considered to be a ‘core task’ in the Dutch lowlands, which are under threat from both the sea and the big rivers. This task is both literally and figuratively a matter of life and death, besides which big economic interests are also involved: a capital of 2,000 billion euro is invested behind the dikes. Flood protection is the responsibility of the central government and regional water authorities. The central government is entrusted with the care of the Dutch coast (maintenance of the coastline) and the management of the dams that close off the big arms of the sea in the west of the country. The other infrastructural works (dikes, dunes and storage basin embankments) are managed by the regional water authorities. Flood protection is primarily regulated in Chapter 2 of the Water Act, which has been further elaborated in the Water Decree, the Water Regulation and in provincial and regional water authority bye-laws;

• Waterquantity: this task deals with the management of the amount of surface water in a particular area. Water quantity management is aimed at reaching one or more water levels and maintaining them, as well as possible. These water levels are geared to the function(s) of the respective bodies of water (dry feet, agriculture, shipping traffic, the environment and so on). The objective of the proper supply and discharge of surface water is to prevent surpluses and shortages. The central government manages the so-called ‘main water systems’ (the big rivers, the IJsselmeer, the Amsterdam-Rijnkanaal, the

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Noordzeekanaal, the Wadden Sea, the Eems-Dollard estuary, the Delta waters and the territorial part of the North Sea). The management of the quantity of water in the bodies of water that are of regional and local interest is the responsibility of the regional water authorities. The exact management boundaries between the central government and the regional water authorities are indicated in an appendix to the Water Regulation. The management of water quantity is regulated by the Water Act, which includes the following legal instruments: standards for flooding, the basis for the array of displacement for periods of water shortages, water agreement, water-level decision, and system of registration and permits for discharging, withdrawing, supplying and draining away water. Here, too, further elaboration has taken place in the Water Decree, the Water Regulation and provincial and regional water authority bye-laws;

• Waterquality: this task could be described as the protection of surface water from pollution. Water quality management aims at reaching certain water quality targets that are geared to the various functions of the respective bodies of waters (ecology, the extraction of drinking water, agriculture and so on). A major part of this task is the construction and operation of treatment plants where household and industrial wastewater is purified. The central government and the regional water authorities play a primary role in the management of water quality. The government’s task is to manage the aforementioned main water management system, whereas the regional water authorities manage the regional and local waters. To this end, the regional water authorities operate approximately 360 wastewater treatment plants with related pressure pipelines. This task was recently given to regional water authorities by state law (see Article 1 of the Water Boards Act and Article 3.4 of the Water Act). The management of water quality has been laid down primarily in Chapters 6 and 7 of the Water Act, which has several instruments, such as a system of permits and levies, and general rules for certain kinds of discharges of wastewater;

• Groundwater: in contrast to surface water, groundwater has been allocated to various authorities under the recent Water Act. Although the operational groundwater management rests largely with the regional water authorities on the basis of this law, the authorisation of three large extractions (industrial extractions of more than 150,000 m per year, drinking water supplies and what are known as ‘ground energy systems) have nonetheless remained the responsibility of the provinces under Article 6.4 of the Water Act. Moreover, urban groundwater and the rain-water run off have been entrusted to the municipalities (see Articles 3.5 and 3.6 of the Water Act). Care for the groundwater quality is closely related to the many activities that take place in or on the ground. This is why this aspect is part of the soil protection policy and is primarily provided for by the Soil Protection Act, the implementation of which lies with provinces and municipalities;

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• Waterways:this task consists of maintaining the sheet piling and the depth of waterways, and the operation of locks and bridges. The management of waterways is carried out by the central government and the provinces, who, in turn, sometimes delegate this task to regional water authorities. The nautical aspects of waterways management (setting ‘traffic rules’) are laid down in the Shipping Traffic Act;

• Roads: this task deals with the maintenance and serviceability of roads, including the promotion of road safety. The maintenance of roads lies with the central government, provinces, municipalities and six regional water authorities in the west of the country. Care of the roads is laid down in the Roads Act;

• Sewerage:strictly speaking this task does not fall under water governance, but it is closely connected with water (quality) management and treatment. The task of sewerage lies with municipalities and is regulated in the Environmental Protection Act, by which the municipalities are charged with the construction, management and maintenance of sewerage systems. It also obliges the municipalities to lay down sewerage plans. Municipalities can finance this task by means of a sewerage charge;

• Drinkingwatersupplies: this task does not fall under water governance either, but it is linked to it because ground and surface water form the raw ingredients for our drinking water. The supply of drinking water lies in the hands of water companies and is regulated in the Water Supply Act. Although waterworks are private companies, the Drinking Water Act stipulates that the shares of these companies must be owned by the public so that they can be designated semi-public organisations.

The first point to emerge from this publication is the fact that water governance in the Netherlands is a matter of public interest. The execution rests primarily with the government, which, incidentally, often engages partners in the business sector for the actual construction of dikes, treatment plants, etc. and for management and maintenance activities. Another point which emerges is that, unlike many other countries, the water chain (drinking water supplies, sewerage and waste water treatment) in the Netherlands is not looked after by a single agency, governmental or otherwise, but by three parties. These are the waterworks, municipalities and regional water authorities. This organisational structure has grown up over the centuries. The parties coordinate the various elements of the water chain through mutual cooperation. Article 3.8 of the Water Act explicitly obliges regional water authorities and municipalities to coordinate their tasks and powers in water governance with one another, particularly with regard to the relationship between sewerage and the treatment of waste water (the waste water chain). Finally, as mentioned earlier, this publication also shows that the regional water authority has a number of concrete legal powers to enable it to perform its tasks.

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These include the licensing system for certain operations contained in the Water Act and the water authority bye-law, and the tolerance obligation and powers in situations involving imminent danger, a form of emergency powers specifically for public works and water management, in Chapter 5 of the Water Act.

2.6 Fine-tuning and coordination

It has already been stated that all national and local authorities are involved in water management in the Netherlands. The regional water authority does not carry out its tasks in isolation and there are a number of instruments for coordination and the necessary fine-tuning. Roughly speaking, these instruments can be divided into two categories: the ‘normal’ methods of supervision in the government column and the specific regulations contained in the Water Act in particular. The first category deals primarily with the repressive supervision carried out by higher authorities over lower authorities. The regulations concerning preventive and repressive supervision from the Water Boards Act must also be included here. The most important elements of the provincial regional water authority regulations, for example, require the official approval of the Minister and the province can nullify decisions taken by the regional water authorities (see Articles 5 and 156 of the Water Boards Act). In the case of the second category, the regional water authorities’ management and project plans must be approved by the province pursuant to the Water Act. The relatively far-reaching supervisory powers of province and central government pursuant to Chapter 3 paragraph 3 of the Water Act must also be mentioned in this context. The background of these regulations is formed by the desired promotion of coherent and effective policy for, and management of, the water regime in the Netherlands. The obligation of municipalities to involve regional water authorities in the preparation of the municipal sewerage plan can also be seen as belonging to this category. The same obligation applies to municipal zoning plans. Even without these legal provisions, there should be good mutual consultation between the various levels of decision making. At a national level this takes place in the Nationaal Water Overleg (NWO, national water consultation), in which the national government, provinces, municipalities and regional water authorities are represented. The State Secretary of Transport, Public Works and Water Management chairs the NWO.

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2.7 Participation, legal protection and supervision

A final remark deals with legal protection against decisions made by regional water authorities. This chapter has shown that regional water authorities are government institutions, and can therefore lay down regulations and make decisions that are binding for citizens (for example, bye-laws in the field of levying taxes). Generally speaking, these decisions are not made without active participation. The regional water authorities have laid this down in a regulation on participation (see Article 79 of the Water Boards Act). It is possible to appeal to the Administrative Court against decisions, for example, a tax assessment, on the basis of these bye-laws. Moreover as part of their supervisory tasks, it is the responsibility of provinces to approve a number of regional water authority decisions, particularly the management and project plans referred to in Chapter 5 of the Water Act and the cost allocation bye-laws. The province can also annul regional water authority decisions if they conflict with the law or general interest (Article 156 of the Water Boards Act). Complaints may also be lodged with the Dutch National Ombudsman concerning the behaviour of the regional water authorities’ governing bodies. This form of additional legal protection was set up some twenty years ago at the instigation of the Dutch Association of Regional Water Authorities, which resulted in the regional water authorities being the first decentralised authority falling under the competence of the National Ombudsman. On an annual basis the ombudsman receives approximately a hundred and forty complaints about regional water authorities, which mainly concern exemptions from paying regional water authority taxes.

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3 Democratic legitimacy

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3.1 The Dutch polder model

The Netherlands has been fighting water for centuries. The quantitative water problems could not be solved individually. As a result, the building of dikes was carried out jointly. The Dutch polder model - characterised by consultation, consensus and compromise - largely has its origins here. Regional water authorities can be regarded as one of the first forms of public decision-making based on consensus. Nowadays the functional regional water authority organisation still holds an independent position within the general democracy in the Netherlands. Since water-related tasks are allocated to regional water authorities, they are not subject to a general political weighing of interests. The importance of dry feet and sufficient (clean) water resources is of vital importance for the Netherlands and is thus kept separate from the political context. The budget for water governance in the Netherlands is, therefore, not weighed up against that of education, the health care system, defence and so on.

The role and position of regional water authorities has changed considerably during the last few years. Their existence is enshrined in the Dutch Constitution as shown in Chapter 2. Nevertheless, regional water authorities are confronted with the problem of having to prove the use and necessity of their autonomy again and again. This is related to the functional character of the regional water authorities which calls for a sound democratic legitimacy.

This chapter discusses another building block in more detail: the democratic legitimacy of regional water authorities. Democratic legitimacy is found in the representation of various categories of stakeholders in the regional water authorities’ governing bodies.The composition and election of the regional water authority board changed radically in 2008 on the introduction of the Regional Water Authority (Modernization) Act (Wet modernisering waterschapsbestel) of mid 2007. The most important changes were the disappearance of the categories ‘buildings’ and ‘lessees’ and the introduction of the category of ‘natural area managers’ in regional water authority boards, the fact that the category of ‘residents’ always forms the majority in regional water authority boards, the replacement of the individual candidate system by the list system in the regional water authority board elections and the introduction of national, written regional water authority elections. These changes, which are briefly explained below, were largely based on proposals made in the past by the Dutch Association of Regional Water Authorities.

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3.2 The composition of boards

The governing bodies of regional water authorities consist of a governing board, an executive committee and a chairperson. These governing bodies are comparable to those of municipalities (municipal council, municipal executive and mayor) and provinces (Provincial Council, Provincial Executive and Queen’s Commissioner). The governing bodies of regional water authorities sometimes have lovely historic names. The executive committee of some regional water authorities is known as the ‘college van dijkgraaf en heemraden’ and the chairman as a ‘dijkgraaf ’ or ‘watergraaf ’.

ThegoverningboardThe governing board consists of representatives of categories of stakeholders who have an interest in the tasks executed by the regional water authorities. The idea behind this is that those who are considered to have an interest in the tasks executed by the regional water authorities bear the costs for this proportionally and have a say in the regional water authorities’ assemblies. A distinction can be made between general task interests and specific task interests. General task interests reflect the representation of the interests of everyone living or residing (living, working and recreating) in the regional water authority district. Residents represent these general task interests. Specific task interests indicate the specific interests of certain stakeholder categories in the tasks executed by regional water authorities. Farmers, businesses and managers of natural areas represent these specific task interests.

The stakeholder categories that must be represented in regional water authority boards are listed in, but are not limited to, Article 12 of the Dutch Water Boards Act. They are:• residents;• the owners of real estate consisting of open land which does not constitute a natural area (farmers);• owners of natural areas;• businesses.

The various interests have to be safeguarded in the regional water authorities’ management. The province lays down the number of seats by which the various categories are represented in the governing board in the regulations for each regional water authority. Here the nature and size of the interest of a particular category in the tasks carried out by the regional water authority are taken into account. If a regional water authority is located in a densely populated urban area with a lot of industrial activity, the ‘residents’ and ‘businesses’ categories have a larger share in the governing board than in a regional water authority in a sparsely populated

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area with a lot of agricultural activity. The regional water authority board has a minimum of 18 and a maximum of 30 members. The majority of the seats are always reserved for residents since this category also pays the greater part of the costs incurred by the regional water authority. The minimum number of seats for the specific interest categories is seven and the maximum, nine, provided that this number is eight if the board consists of 18 members. This again reflects the legislator’s desire to give residents a majority in the board.

On the basis of the aforementioned changes, which were introduced in 2009, the new composition of regional water authority assemblies in the Netherlands is as follows:

RegionalWaterAuthority Total Residents

Specificinterestgroups

FarmersManagersofnatural

areasBusinesses

Aa en Maas 30 21 9 4 1 4Amstel, Gooi en Vecht 30 23 7 3 1 3Brabantse Delta 30 21 9 4 1 4Delfland 30 21 9 4 1 4Dommel 30 22 8 3 2 3Fryslân 25 18 7 3 2 2Groot Salland 25 17 8 4 1 3Hollands Noorderkwartier 30 23 7 3 1 3Hollandse Delta 30 21 9 4 1 4Hunze en Aa’s 23 16 7 4* 1 2Noorderzijlvest 23 16 7 4* 1 2Peel en Maasvallei 25 16 9 4 2 3Reest en Wieden 23 15 8 4 1 3Regge en Dinkel 27 18 9 4 1 4Rijn en IJssel 30 22 8 3 2 3Rijnland 30 21 9 4 1 4

* One of these seats is appointed in conjunction with an organisation for agrarian natural management.

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RegionalWaterAuthority Total Residents

Specificinterestgroups

FarmersManagersofnatural

areasBusinesses

Rivierenland 30 22 8 4 1 3Roer en Overmaas 25 16 9 4 2 3Schieland en de Krimpenerwaard 30 21 9 3 1 5

Stichtse Rijnlanden 30 23 7 3 2 2Vallei & Eem 26 19 7 3 1 3Velt en Vecht 21 14 7 3 1 3Veluwe 26 19 7 3 1 3Zeeuwse Eilanden 30 21 9 4 1 4Zeeuws-Vlaanderen 25 18 7 3 1 3Zuiderzeeland 25 18 7 3 1 3

709 502 207 92 32 83

Tasksofthegoverningboard

The governing bodies of regional water authorities have the authority of regulation and management in the promotion of the tasks assigned to the regional water authorities in the regional water authority regulations. The regional water authority can be promoted to regulation and management by law, order in council or by provincial bye-law. This task primarily rests with the governing board, who can delegate it to the executive committee if and when desired. Article 83 of the Water Boards Act mentions a number of subjects which, in any case, have to be taken care of by the governing board, such as the adoption of the budget, annual accounts, water-level decisions, registers and other bye-laws, and levying taxes.

TheexecutivecommitteeThe executive committee of a regional water authority consists of the chairperson and a number of other members to be determined by the governing board. The executive committee is responsible for managing the regional water authority’s daily business. The numbers of members of executive assemblies vary. On average executive assemblies consist of five members. In principle the composition of the assembly is free although Article 40 of the Water Boards Act stipulates that at least one member must come from the specific interests

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category. In principle, the members of the executive committee come from the governing board, although somebody from outside the governing board may be appointed, regulations permitting. The governing board appoints the members of the executive committee, with the exception of the chairperson. The executive committee members are appointed by all members of the governing board and not solely by the board members of the category they represent. Each member of the executive committee should have the support of the entire governing board (Article 41, Water Boards Act).

ResponsibilitiesoftheexecutivecommitteeA major responsibility of the executive committee lies in policy preparation. All that is put forward for decision making by the governing board has been prepared by the executive committee. As a result, a significant part of the policy-making is carried out by the executive committee. The executive committee is also charged with the execution of the policy laid down, such as the implementation and enforcement of laws and bye-laws. A major part of this consists of granting permits and/or exemptions and applying administrative coercion. The executive committee has a joint decision-making process, which means that the executive committee, as a whole, is responsible for the decisions taken.

ThechairpersonThe chairperson of a regional water authority is not a member of the governing board, and, consequently, has no vote. By contrast, the chairperson is a member of the executive committee, in which he or she does have the right to vote. The chairperson is appointed by the Crown for a period of six years. The governing board makes a recommendation that is sent to the Minister of Transport, Public Works and Water Management via the Provincial Council (Article 46, Water Boards Act).

ThetasksofthechairpersonThe chairperson is responsible for the proper promotion of the regional water authority’s tasks and chairs the meetings of the governing board and the executive committee. The chairperson also represents the regional water authority at law and otherwise (Article 95 of the Water Boards Act). In addition, the chairperson signs the documents sent by the governing board or executive committee, along with the highest official of the regional water authority. If in the case of urgent or imminent risk, circumstances prevent the governing board or executive committee from being convened, the chairperson has the authority to take all the measures which these two assemblies are authorised to take. The chairperson is accountable to the governing board.

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3.3 Elections

Regional water authorities have elections for the governing boards just like municipalities and provinces. However, regional water authority elections differ considerably from, for example, the elections held for the House of Representatives or municipal councils on a number of points. This is largely to do with the regional water authorities’ functional terms of reference and the resulting adage of interest-pay-say. In the election of regional water authorities’ governing bodies, the balance of power between the various categories of stakeholders within the bodies has already been predetermined. After all, the division of seats between the general and specific interest categories is laid down in the regulations by the Provincial Council. According to the new structure, elections only take place for the ‘residents’ category. Representatives of the three specific interest categories (farmers, businesses and managers of natural areas) are no longer elected, but appointed by the respective ‘class’ organisations (Agricultural organisations, the Forestry Board and Chambers of Commerce). Since the individual candidate system has been replaced by the list system, in which registered interest groups may nominate candidates, political parties can now also participate in the regional water authority elections. This actually took place in the elections held at the end of 2008. Groups such as ‘Water Natuurlijk’, the ‘Landelijke Waterschapspartij’ and a number of local groups also took part in these elections.Therefore, the election of the members of the governing body of a regional water authority is not a question of how many seats in the governing board will be assigned to a particular category of stakeholders, but of which lists are going to be appointed to the predetermined number of seats for the various categories.

TheelectionofthemembersofthegoverningboardsGoverning board members are elected or appointed for a period of four years. The election of governing board members is preceded by the nomination of candidates. The only parties eligible for nomination (and hence for joining the governing board as a member) are the stakeholder categories (that is, interest groups) registered with the electoral committee. The chairman of the regional water authority is chairman of this electoral committee. The interest groups have to be a foundation or an association with full legal capacity. To be elected as member of the regional water authority board, a candidate must be a resident, eighteen or older and entitled to vote. These requirements also apply to those who wish to vote in the regional water authority elections. Voting takes place by letter. Although the Water Boards Act provides for voting by Internet, the Secretary of State for Transport, Public Works and Water Management withheld consent for the use of this method in 2008 because of doubts about its security. The Water Boards Decree (Waterschapsbesluit), an order in council, lays down further regulations concerning the regional water authority elections. Finally, membership of a regional water authority board is incompatible with

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certain other posts (Article 31, Water Boards Act). Ministers, secretaries of state, Queen’s Commissioners, members of Provincial Executive and Provincial Council, mayors and aldermen may, therefore, not be members of a regional water authority board.

3.4 Current developments

National, written regional water authority elections for the ‘residents’ category took place in accordance with the new model for the first time at the end of 2008. The turnout was around 24%, with a relatively large number of invalid votes (9%). This outcome led to a renewed discussion on the most appropriate form of regional water authority elections. The possibilities of indirect elections by the municipal councils or combined elections with the municipal council elections have been raised. At the end of 2009, the Standing Committee on Transport, Public Works and Water Management in the Lower House stated that the elections will, in any case, have to be organised differently, that is, better, and that the requisite changes will have to be made before the next regional water authority elections in 2012. The State Secretary for Transport, Public Works and Water Management will make concrete proposals to this end in 2010.

4 Financial independence as a result of their own tax system

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4.1 Financing Dutch water management

Water management in the Netherlands is almost entirely in the hands of the government. All kinds of water-related tasks come under public law and are executed by the central government, provinces, municipalities and regional water authorities (see Chapter 2). They are financed from the central government’s general funds or from the revenues from various decentralised taxes. Drinking water supplies are the only exception to this. Drinking water supplies are taken care of by the water companies and the costs are recovered from the citizens by means of invoices under private law. In practice, however, drinking water supplies are largely controlled by the national government. This regulatory positioning is laid down explicitly in the Drinking Water Act. The total government expenditure on water tasks amounted to 5.4 billion euro in 2008. Figure 4.1 shows how this sum was divided amongst the various governmental institutions.

Figure 4.1: Total governmental expenditure for water tasks

Ministry of Transport MunicipalitiesPublic Works and Water management

Provinces Regional water authorities

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Unlike provinces and municipalities, who are largely financially dependent on support from the central government (via grants from the Provinces fund and the Municipalities fund), regional water authorities are, to a large extent, financially independent. This independence is a result of the fact that they have their own broad tax area. Their tasks can be financed independently thanks to the revenues from the regional water authority taxes. In fact, the central government only makes a substantial contribution to the flood protection task.Along with their institutional and constitutional basis (Chapter 2) and their democratic legitimacy (Chapter 3), the financially independent position of the regional water authorities that results from their own tax system forms an important building block in the Dutch regional water authority model.

To a certain extent the organisational and financial structure of Dutch water management has been determined historically, but it has also been based on the notion that water management must be counted as belonging to the public domain. This is also due to the geographic position of this country and the special interest of its inhabitants in a good and sustainable water management organisation. In a sense, water management in the Netherlands has the characteristics of a semi-collective commodity. It is therefore difficult to conceive of it as some form of commercial service. It is worth mentioning, though, that outsourcing of the actual execution of activities under the management and responsibility of regional water authorities is quite common.

A political discussion was held on the independent administrative and financial position of the regional water authority some years ago. In 2004 the government explicitly concluded that this independent position must be maintained. This was ratified in 2007 by an amendment to the Water Boards Act in which the elections, the composition of the assemblies and the tax system of the regional water authorities were radically modernised (see Chapter 2). The result of this modernising operation is that the regional water authorities are better equipped to face the enormous challenges of water management in the future. These include the necessary investments to be made in the regional water system in connection with the climate change, the rising sea level, the subsidence of Dutch soil and the increasing paved surface area.

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A number of tasks, organisations and financial instruments can be distinguished in Dutch water management; they are outlined schematically in the overview below.

Table: Responsible organisations and financing of the various water management tasks

Task Organisation FinancingWater quantity (main system) Central government General fundsGroundwater Province Regional taxWater quantity (regional system) Regional water authority (public) Regional taxWater quality and wastewater treatment Regional water authority (public) Regional taxDrinking water supplies Water companies (semi-public) PriceSewerage Municipalities Local tax

4.2 Financing of regional water management by the regional water authorities

RevenuesandexpendituresoftheregionalwaterauthoritiesRegional water authorities finance their activities on an individual basis almost entirely from the revenues from their own taxes. Care of the water system (water defences, quantity and quality) is financed with the revenues from the water system levies and – to a relatively modest degree - the surface water pollution levy. The revenues from the pollution levy are used by the regional water authorities to finance the treatment of waste water. The revenues from these taxes will provide a budget of almost € 2.3 billion in 2010. The total costs in the same year will amount to almost € 2.7 billion.

In2010,regionalwaterauthorities’taxrevenuesarerelatedtothefollowingmaintasks: (in€million)

Water system and road management 1.128Waste water treatment 1.134

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Thetaxesforthewatersystemandroadmanagementaredistributedamongsttaxpayersasfollows:Households 38%Owners of buildings 50%Owners of woods and natural areas 0,1%Owners of other land that is not built up 12%

Thetaxforwastewatertreatmentisdistributedasfollows:

Households 73%Businesses 27%

Source: CBS

Self-financingThe system of regional water authority taxes means that regional water authorities are largely financially independent of national politics and economic fluctuations. The necessary investments in water control provisions therefore do not have to compete with other governmental expenditure. This financial basis may well be the best possible guarantee of sustainable water management. In addition, this independence provides an excellent starting position for attracting long-term loans for financing big investments (see Chapter 5 on the NWB).

TaxprinciplesThe functioning of regional water authorities is based on ‘stakeholder participation’ and the direct benefit principle. As has been mentioned earlier, those who benefit pay taxes, but they also have a say in the management of the regional water authority. The form and content of regional water authority taxes are determined by a number of tax principles, particularly:a. the direct benefit principle;b. ‘the polluter pays’; c. the cost-recovery principle;d. the solidarity principle; and e. the legality principle.

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Re a. The water system levy is based on the Dutch Water Boards Act (see Article 116 et seq.). The underlying philosophy of this levy is that those who benefit from regional water authority activities also contribute financially to them. The interest is related to the extent to which the existing water management provisions are used and the costs connected with this. No link is made with harvest revenues or other forms of agricultural produce, because this would make the tax revenues highly unreliable (and, in turn, the maintenance of the water management infrastructure and care for the water quality, too).

Re b. Everyone who discharges waste water through the municipal sewerage system, pays a pollution levy pursuant to the Water Boards Act (see Article 122c et seq.). If the waste water is discharged directly into a surface water body, a surface water pollution levy is payable pursuant to the Water Act (see Article 7.2 et seq.). This applies to every household and every business. The size of the levy depends on the pollution value of the wastewater. Households have a fixed rate, although the Water Boards Act has a provision for basing the pollution levy for households on the amount of drinking water delivered. In the case of businesses, the pollution is determined individually and more exactly, depending on the amount of pollution. The polluter is thus made financially responsible for the costs of water management. In this way, the principle of ‘the polluter pays’ is put into practice.

Re c. The system used to determine the water system levy, the surface water pollution levy and the pollution levy is in keeping with the cost-recovery principle laid down in the European Union Water Framework Directive. This principle represents the obligation to recover those costs related to ‘water services’ from the users, such as households, businesses and the agricultural sector. Generally speaking, it can be said that most of the regional water authorities’ tasks fall under the notion of water services.

Re d. Both the water system and surface water pollution levies are taxes. This implies that regional water authorities do not deliver an individual service in return for these payments. The water control provisions realised within a particular district by regional water authorities are based on a democratic decision-making process, in which all the interests involved have been carefully weighed (stakeholder democracy). Therefore, by definition, these provisions never correspond exactly with the subjective wishes of individual taxpayers. This situation is expressed in the structure of the tax system and can be seen as a manifestation of the solidarity principle. The pollution levy, however, does have an individual consideration by the regional water authority, that is, the transport and treatment of the waste water removed. This gives the pollution levy the character of a charge.

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Re e. The water system and pollution levies have their legal basis in the Water Boards Act and the surface water pollution levy has its legal basis in the Water Act. The most important elements of the levies in question are laid down in these laws. The regional water authorities take over these instructions in their tax bye-laws and supplement them with provisions regarding rates, terms of payment, etc. Moreover, the formal laws established for the levying and collection of state taxes have also been declared applicable to regional water authority taxes (regulations of levying and collection, procedures of objections and appeals, legal protection, and so on).

ThecharacterofregionalwaterauthoritytaxesRegional water authority charges have a special position within the Dutch tax system. Roughly speaking, governmental levies can be divided into taxes and charges. Both levies are imposed by (virtue of ) law (legality principle) and both can be enforced. The distinction between them is whether a specific individual service is rendered by the government in return for the levy. This is often the case with charges; in the case of taxes there is no question of an individual service being performed in return.

Within the tax law system, water system charges however, as well as the surface water pollution levy, should be regarded as real taxes, substantively speaking. As explained above, regional water authorities do not do anything individually in return for the payment of regional water authority taxes. This does not alter the fact that there is a certain relationship between the individual assessment and the interest which individual tax payers have in the activities carried out by regional water authorities (the direct benefit principle). This relationship is particularly apparent in the water system levy for open land and natural areas. The pollution levy can, however, be considered as a charge.

PurposeleviesIn contrast to most general state, provincial and municipal taxes, regional water authority taxes are linked to certain tasks. These taxes are often termed ‘purpose levies’ because the revenues from them are fully utilised for the costs of the tasks in question. The costs in question involve costs for the care of the water system (flood protection and the management of water quantity and quality), and the treatment of waste water. The costs for the individual tasks in the water system are divided proportionally amongst the various administrative categories according to the interest the category has in each task.

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4.3 The water system charges

HistoryThe institution of the Dutch regional water authority arose in the Middle Ages when farmers began to organise themselves at a local level in order to improve the management of the dikes and polders (see Chapter 1). This form of self-organisation was financed with local means. Initially these means consisted of payments in kind, for example, maintenance of dikes, embankments and waterways. Later on this system was replaced by financial contributions. Originally the costs were divided on the basis of private law amongst land owners with an interest in this care, and it was possible to derive certain rights from this. The drawback of payment in kind was the fact that it did not guarantee that the requisite maintenance would be carried out in time or adequately. Since the interest of the entire community was at stake here, the need arose for a management organisation that was enshrined in public law. The land owners exchanged their duty of maintenance for a duty of payment for the costs concerned. These costs were divided according to the amount of land they possessed and were then apportioned to all the land owners.

Through the assignment of administrative and legal powers (and for a long time even the power to administer justice), the financial aspects of the regional water authority organisation became more integrated in public law. In spite of this integration, the functional and decentralised character of regional water authorities has remained intact through the ages. This has had a permanent influence on the character of water system charges. These charges are based on the interest that people have in the tasks carried out by the regional water authority.

From the 1920s onwards, the number of home owners in urban areas that had an increasing interest in reliable flood protection and good drainage grew. The activities of regional water authorities focused more and more on the protection of this immovable property (buildings). The ‘buildings’ charge was introduced, as a result of which these buildings also fell under the apportionment levy.Recently more significance has been assigned to the general task interests (interest of living, working and recreation) within the regional water authority district. In view of this, residents (that is, people residing in the regional water authority district) were included in the apportionment levy. Since 1995 ‘residents’ have been involved in the levy as a separate category and this category has been represented in the governing board.

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TheobjectiveofwatersystemchargesWater system charges are mainly levied for expenses relating to the flood protection task, and water quantity and quality management tasks. Regional water authorities have a limited number of tax categories, which are laid down in Article 117 of the Water Boards Act:• ‘residents’ (related to residential space);• owners of open land which is not a natural area (farmers);• owners of natural areas;• owners of buildings (businesses).Every household is taxed for an equal amount: owners of open land and of natural areas pay on the basis of the surface area of their property and owners of buildings pay on the basis of the economic value (the municipal value or the value for the purposes of the Valuation of Immovable Property Act).

JustificationandtaxbaseThe justification for the levying of water system charges lies in the interest that people have in the tasks carried out by the regional water authorities. As regards the owners of the real rights, this can be seen from the point of view of the specific interest of the protection of the immovable property from flooding, the inconvenience caused by water and the importance of good quality surface water. These interests can be looked upon both from the point of view of maintenance of (the value of ) these properties and the use made of them.

Residents (households, in fact) have a more general interest in terms of living, working and recreating within the regional water authority district. In the allocation of costs, this general interest is determined by the density of the population and varies within the bandwidths of 20 and 50% of the total costs. Under certain conditions, the regional water authority can raise the share in the costs laid down in this way by 10% The other costs are divided amongst the specific stakeholders, the owners of (the real rights of ) buildings and land on the basis of its economic value.

The interest of the various stakeholder categories is linked to the tax bases applied:• water system charge for open land and natural areas the surface area of the land• water system charge for buildings the economic value of the building• water system charge for residents fixed amount per living space

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The extent of the interest in the water system, which depends on the nature and location of the immovable property, may vary somewhat between the various land owners (and sometimes between owners of buildings, too). In view of these differences, it is possible for regional water authorities to set up rate differentiation. It can, for example, raise the rates for owners of surfaced public roads, glass coverings and ownerships in drained areas by a maximum of 100%. The rates for owners of immovable property located outside dikes and owners of immovable property in water storage areas can be reduced by a maximum of 75%.

The average amount a household (with its own home valued at € 200,000) pays in 2010 is:

Residents tax: € 63

Buildings charge: € 52

The average amount paid for a hectare of land which is not build on for water system management in 2010 is € 53

Source: COELO (Centre for Research on local Government Economics)

If rate differentiation is applied, rates may vary greatly within the same regional water authority.

4.4 The pollution and the surface water pollution levies

HistoryIn the 1950s the increasing pollution of surface water rose to alarming levels. Since then provinces have gradually assigned the care of surface water and treatment of urban wastewater to the regional water authorities (which used to be solely responsible for flood protection and water quantity management). The regional water authorities’ need for a solid financial basis increased as the need for large investments in wastewater treatment plants grew. This basis was provided in 1970 by the Pollution of Surface Waters Act. This Act provided the regional water authorities with the instrument of the water pollution levy to finance their activities.

The revenues from the surface water pollution levy covered all the costs of measures taken against the pollution of regional surface waters. These measures included the treatment of urban wastewater, monitoring, planning and the granting of discharge permits. The treatment of urban wastewater is currently the exclusive task of regional water authorities and, as such, is legally enshrined (see Article 3.4 of the Water Act).

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The surface water pollution levy in its then form was abolished when the Regional Water Authority (Modernization) Act went into force. The transport and treatment of waste water was defined as a separate task of the regional water authority. The pollution levy was incorporated in the Water Boards Act to finance it.The other tasks in the framework of water quality management were brought under the care of the water system together with care for the water defences and water quantity. As explained earlier, the costs for this care are covered by the revenues from the water system levy. The surface water pollution levy was retained for direct discharges into surface water bodies. The revenues from this levy are used for the care of the water system. The number of direct discharges is small in comparison with indirect discharges, and the revenues from the surface water pollution levy are therefore limited. The surface water pollution levy is regulated in the Water Act. When this went into force at the end of 2009, the Pollution of Surface Waters Act was repealed.

The guiding principle of both the pollution and the surface water pollution levies is ‘the polluter pays’. The individual charge is determined annually on an individual basis and depends on the amount and composition of the waste water discharged.

CalculationofpollutionunitsThe pollution and the surface water pollution levies are practically identical. The levy due is determined by the way in which the polluter disposes of the waste water: discharge through the municipal sewerage or directly into a surface water body. The same method of calculation is used for both taxes. The pollution value of industrial discharge is determined on the basis of the oxygen demand and on the levels of heavy metals and salts (if any) in the water discharged. The levying standard is the so-called ‘pollution unit’. The oxygen consumption of the pollution unit equals that of the average amount of waste substances discharged per year per resident by means of the water used.

Businesses with a pollution value of less than five units are taxed on the basis of the fixed sum for business accommodation of one or three pollution units. Medium-sized businesses with an annual discharge of up to 1,000 pollution units are assessed on the basis of their water consumption (and average concentrations of pollutants), whereas big industries of more than 1,000 pollution units are assessed on the basis of measurements, samples and analyses. The ratio of tax revenues of businesses to households averages at around 27:73%.

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In 2010 the rate of the pollution levy averaged € 51 per pollution unit. The rate per pollution unit varies between regional water authorities from just under € 39 to € 72. On average a household of two or more people pays the fixed charge for residential accommodation of 3 pollution units, which amounts to € 154 per year (source: COELO). Someone who lives alone pays for 1 pollution unit. The pollution levy can also be based on the amount of drinking water delivered rather than the fixed charge for residential accommodation.

EffectsFrom the 1970s the quality of surface water has gradually improved as a result of large-scale investments in wastewater treatment plants. In the Netherlands, the treatment of urban wastewater is a task that is currently executed solely by regional water authorities. It should be emphasised, however, that the existing communal treatment plants were set up without any government subsidies whatsoever. The guaranteed revenues from the water pollution levy have made it possible to finance them. In addition, the water pollution levy has had a demonstrable regulatory effect on the discharge of industrial wastewater. The largest effect became evident in the first fifteen years after the introduction of the levy. A further decrease in discharges was only subsequently achieved at much higher cost (and, logically, higher tax rates). The following table illustrates the success of regional water authorities in combating the pollution of surface water.

Table: The total production of pollution by businesses and households and the total discharge of pollution units into surface water in the Netherlands ( in million pollution units).

Year 1970 1980 1990 1995 2000 2004Businesses 33,0 13,7 9,6 7,4 7,3 6,8Households 12,5 14,3 14,9 15,5 15,9 16,3Treatment at water treatment plants 5,5 12,6 15,8 18,2 19,2 19,6Discharge to the surface water 40,0 15,4 8,7 4,7 4,0 3,5

Source: CBS (Dutch Central Statistical Office)

Most point discharges in the Netherlands were almost entirely cleaned up within a period of around 25 years. This can be attributed to the levies and system of granting permits by regional water authorities (and the central government). Today policy is primarily aimed at the so-called diffuse sources that jeopardise water quality. These sources are primarily due to pollution from agriculture, traffic and urban areas (building materials).

5 A dedicated financial institution: NWB Bank (Nederlandse Waterschapsbank N.V.)

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5.1 Combining strengths

Finances are a recurrent problem in the execution of local water management projects. Often the best way to resolve a recurring problem that affects more than one party is to join forces to find a solution under the motto: ‘Strength in numbers’. Joining forces in this way may also provide a solution to financial problems. Depending on the particular circumstances, the solution may be found at a local, regional or national level.

The example given below illustrates how forces can be combined to achieve a joint goal and fulfil an important role. It also shows how successful working together in local water management can be.

5.2 Brief history of the Dutch situation

As the water management system became more extensive, more and more regional water authorities were established. Some of these boards were extremely small, as shown by the fact that in the 1950s there were still some 2,600 regional water authorities in the very small area making up the Netherlands.

After the end of World War II, these sometimes tiny organisations were faced with the enormous task of reconstructing water control works that had been destroyed and poorly maintained during the preceding years. A significant obstacle was the finding of the requisite financial means to do so. These big investments could simply not be made from current tax revenues. There was a huge demand for capital. And money was exceptionally scarce in the reconstruction period. The regional water authorities appealed to the general banks in vain all too often. The main reason for this was that these banks were also experiencing a post-war capital shortage. But another important factor was that the loans granted by the general banks were generally short-term, while long-term loans of as much as 20 years or more were needed in this case.On top of that, many of the small regional water authorities, in particular, lacked the financial expertise to find the correct approach or an alternative solution to the problem.

At the time, most regional water authorities were organised in regional unions that were represented at a national level by the Unie van Waterschapsbonden (Association of Provincial Waterschap Unions) which has now become the Dutch Association of Regional Water Authorities. One of the purposes of this Association was to discuss common problems. The alarming financial situation the regional water authorities found themselves in was just such a problem. There was no point in appealing to the central government.

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Unlike the Provinces and Municipalities Funds there was, and still is, no Regional water authorities Fund. Throughout the centuries, the regional water authorities had largely provided their own funds through the levying of taxes.The Dutch Association of Regional Water Authorities assumed the role of intermediary between the regional water authorities and investors to obtain the funds required and save the high costs connected with taking out a lot of small loans. Under the guarantee of the regional water authorities, the Association issued two debenture loans and several private loans. A number of things rapidly became clear.• The Dutch Association of Regional Water Authorities could not safeguard the continuity of these actions.• This was not the Association’s field of activity.• The Dutch Association of Regional Water Authorities did not have the knowledge or experience to

establish a more systematic set-up for the longer term.• The regional water authorities’ capital requirements were expected to rise.

The situation was exacerbated by the disastrous floods of February 1953 that took the lives of many and caused terrible damage. Even more capital was needed to repair this damage. In short, the situation was critical. In consultation with the Ministries of Finance and of Transport, Public Works and Water Management and the boards of a number of commercial banks, the Dutch Association of Regional Water Authorities decided to transfer the financial interests of the regional water authorities to a separate legal entity.

5.3 The concept of a bank

Meetings with the regional unions and individual regional water authorities were organised throughout the country to convince them of the importance and major advantages of having their own financial institution. Not all the regional water authorities were enthusiastic from the start. Several believed that participation would entail risks they did not want to take. Others saw participation purely as an investment, which they did not consider to be part of their duties. And many were cautious and preferred to wait and see which way the wind would blow and maybe participate at a later stage. If such an organisation is to be launched successfully, it must have strong and widespread backing. This is essential not only for attracting enough initial capital, but also to ensure sufficient business in the future to warrant its existence. Accordingly, a certain degree of consensus is required. And despite the fact that it is a Dutch national characteristic to want to reach consensus, achieving it in practice was not as easy as it might seem. Finally there was sufficient support to start.

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Collaboration can, of course, take many forms, for example, a ‘mutual fund’, a partnership, a cooperative or a public limited liability company. In this case, the latter possibility was opted for. The regional water authorities, which are organisations governed by public law, decided to incorporate a company under private law. A lot of effort was put into obtaining the support of individual regional water authorities by persuading them to become shareholders. The response was not uniform. Some large regional water authorities took only a small share, while several small regional water authorities provided their support by participating with a considerable number of shares. Various provinces also wished to participate.

The problem of a possible shortage of venture capital was resolved by creating two types of shares:• A shares: these were fully paid up and carried one vote in the shareholders’ meeting;• B shares: only 25% was paid up on these, subject to the obligation (and therefore the risk) to pay the

remaining 75% at the company’s request. Significant security was thus created with little capital.

The Bank in formation was afforded so much trust from the beginning that major transactions could be conducted on behalf of the regional water authorities. Short-term financing was provided by the commercial banks.Because of their legal framework and sound financial basis (resulting from their own tax system), the regional water authorities were, and are still, regarded as risk-free with regard to credit risk, as are other local authorities and the State of the Netherlands itself. The Bank did not, therefore, need to set up an organisation to assess the credit risks of local authorities and was able to devote its full attention to providing financial services. At a later stage, the State of the Netherlands participated in the share capital, thus clearly accepting its responsibility for an orderly financing of the local authorities.

Ultimately, the Bank was successfully launched. However, things could have turned out differently. Consider, for example, the situation in Hungary in the period 1992 to 1996, following the reopening of its borders. The demand for, and shortage of, capital resulted in a situation reminiscent of that in the Netherlands around 1950.At the time, the NWB was asked to advise the Hungarian Union of Regional water authority Associations on how to set up its own financial institution along the lines of the Dutch model. In the end this project never got off the ground, primarily because the Union’s member organisations were too dissimilar in nature. As a result, no consensus could be reached on the form and substance of the collaboration. Another key reason for the failure of the project was that the regional water authorities’ tax regime was not yet properly structured.

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ResultI:SecurityThe intended and realised result was to guarantee the provision of the following essential services to the participants, partners and shareholders:• long-term loans;• up-to-date financial services;• a central treasury function;• financial expertise centralised in one place;• low interest charges.

ResultII:CostsavingsCombining forces in this way led to major cost savings:After all, it was no longer necessary for each individual regional water authority to build up its own specialised financial expertise. Economies of scale also meant lower financing costs.Finally, any profit remaining at the end of the year belonged to the collaborating parties and could be distributed or reinvested in new activities.

ResultIII:LearningfactorThe Bank’s financial expertise and resulting advisory services contributed to the continually updated financial management of the regional water authorities.

5.4 Form

At the time, NWB Bank opted for the form of shareholders in a public limited liability company. A collaborative organisation can take any kind of legal form. The key criterion for selecting a particular form is that it is the one best suited to the local situation. Costs must be kept as low as possible. To this end, the organisation must be small, flexible and transparent. If necessary, external advisers can be engaged or the organisation can work together with other parties.The Bank’s Articles of Association explicitly state that the Bank may only grant loans to the public sector. In the Dutch situation this means that the credit risk is minimal.

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Start-upproblems1. Finding a sufficiently large group of like-minded parties.2. Complying with the requirements laid down by national legislation.3. Seeking and finding support from existing banks in the initial stage.4. After getting underway, increasing the number of participants.5. Building up financial capacity.6. Finding qualified people.7. Becoming a trusted bank.

Upandrunning• Once the organisation starts to operate properly, it may have a self-perpetuating effect. This may even lead

to the bank acting as financier for other sectors of the local authorities. This can, in turn lead to extra advantages for the original participants.

• From the outset, the financial institution must build up an image of respectability and reliability which at least matches that of its founders and clients and, if possible, is even better.

• In the development of a financial institution, there comes a time when a healthy detachment forms as regards its involvement with its shareholders/participants, and vice versa. In this case, that means that the institution must have an in-depth knowledge of its shareholders’ sector but that it should otherwise focus entirely on developing and providing financial expertise. That is its core task.

• It is generally thought that there are now more than enough banks in the world. However, there is still room for more specialised banks and financial institutions as long as their objectives do not encroach, or at least do not encroach too much, on the field of the general banks. Their activities should be limited to just a few products, for example, in the case of NWB the long-term financing of infrastructural works.

• If in due course the organisation succeeds in meeting international standards, this further increases the opportunities for working together with the supranational development banks and attracting funds on the international capital market.

TheNWBBankinanutshellThe Dutch government sector is regarded internationally as extremely creditworthy, with a credit risk weighting of 0% and an AAA credit rating. It is therefore essential that the NWB Bank has the same status to enable it to act as financier to its clients, shareholders, etc. The NWB Bank has been awarded AAA ratings by the credit rating agencies Standard & Poor’s and Moody’s.

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5.5 Key NWB Bank figures

Additional proof of how successful the concept of a highly specialised bank can be is furnished by the following selection of key figures.

A few core figures relating to the NWB Bank as of 31 December 2008:Balance sheet total: € 48.4 billionEquity capital: € 1.0 billionBIS (Bank of International Settlements) ratio: 56,0%Ratio of equity capital / balance sheet: 2,1%Net profit: € 9.0 millionCost/interest ratio: 7,8%Credit ratings: AAA/AaaNew lending operations per year: € 5.1 billionNumber of employees: 35

The success of the NWB Bank is largely attributable to its low cost base. This is due to the small size of the organisation. And this, in turn, is possible because the regional water authorities have a credit risk rating of 0 as a result of their legal structure, their own tax regime and the requirement of having to maintain a balanced budget. There is, therefore, no need for the NWB Bank to employ credit analysts or project assessors.

Apart from being important to the public at large, this low cost base also benefits the competitive position of the Bank. Local authorities are free to choose the source of their borrowed funds. Accordingly, when taking out a loan, they always ask for several quotes from lending institutions (including private parties) with the purpose of selecting the cheapest offer.

The Bank’s success has ultimately meant that it is now able to provide all the other sectors of local government with funding, too.

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5.6 Socially responsible business practices

The NWB Bank deems socially responsible business practices to be very important. They are therefore an integral part of the general policy.

One example is the NWB Bank’s initiative to support water management projects in developing countries. In close conjunction with its shareholders and in cooperation with the Dutch Association of Regional Water Authorities, on 22 December 2006, the NWB Bank established a foundation by the name of NWB Fund (Stichting NWB Fonds).

The objective of the fund is to finance projects set up by the regional water authorities in the framework of international cooperation. The revenues from this fund facilitate the individual regional water authorities in deploying their knowledge to realise partnership by cooperation in projects with foreign organisations. The regional water authorities have already been active in other countries for many years. They work together with partner organisations in the fields of water management, flood protection or wastewater treatment.

The fund was valued at € 18 million early in 2009. In a few years’ time, the fund will amount to € 25 million. The initial projects were realised in 2007, in Hungary, Nicaragua, South Africa and Indonesia.

The establishment of this fund also enables the raising of other forms of funding. This co-financing will enlarge the scope and size of the projects that can be realised.

The fund supports the shared responsibility of organisations to manage the water resources in a sustainable way. It will also make a small contribution to managing the water needs of the global society. These needs have been tackled by the United Nations in the Millennium Development Goals, especially MDG7 focusing on drinking water and sanitation.

6 The Dutch Association of Regional Water Authorities

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Unions, of which the regional water authorities were members, were set up in each province as early as the 1920’s. These were the so-called provincial regional water authority unions. The main goal of these unions was to promote the interests of the regional water authorities at a provincial level. To that end they acted as counterparts of the provincial authorities with regard to issues that jointly affected the regional water authorities in the province in question. Because of the increasing number of mergers within the regional water authority system and the catchment basin approach, as a result of which many interprovincial regional water authorities have arisen, many provinces no longer have a regional water authority union.

The more the central government’s involvement with regional water governance increased, the more the need arose for an organisation to promote the regional water authorities’ interests at a national level. Hence the setting up of the Unie van Provinciale Waterschapsbonden (Association of Provincial Regional Water Authority Unions) in 1927. All the provincial regional water authority unions were members. In 1968 the regional water authority unions ceased to be members of this Association, but the individual regional water authorities have been members since then. The name of the Association was changed into the Dutch Association of Regional Water Authorities at this time. Currently all 26 regional water authorities are members of this Dutch Association of Regional Water Authorities.The Dutch Association of Regional Water Authorities aims to promote the interests of regional water authorities at a national and international level. The important thing is to safeguard their interests with regard to third parties, in particular, the national government and parliament. This function becomes apparent, for example, in consultations with the ministers, state secretaries and members of Parliament, in advising on bills and policy documents, in participation in advisory and consultative bodies such as the NWO, and so on.

These days, the legislation and policy laid down by the European Union have a big influence on the core tasks carried out by regional water authorities. The interests of the latter therefore have to be promoted in Europe to ensure that European policy does not entail any unfeasible obligations for them. The Dutch Association of Regional Water Authorities and Vewin are jointly represented at European institutes by ‘Bureau Brussel’. The Association is also an active member of three European umbrella organisations: EUREAU, EUWMA and EWA. EUREAU, the European union of national associations of water suppliers and wastewater services, is the coordinating organisation of water utilities. EUWMA, the European Union of Water Management Associations, unites decentralised managers of water resources. EWA, the European Water Association, represents water professionals and institutes generally speaking.

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The Dutch Association of Regional Water Authorities participates in European policy consultations on behalf of these organisations. In addition to the external promotion of interests, the Dutch Association of Regional Water Authorities also advises the member regional water authorities. The Dutch Association of Regional Water Authorities draws up guidelines, model bye-laws (for example in the fiscal field) and model plans, and supports regional water authorities with the implementation of European regulations. The Dutch Association of Regional Water Authorities also participates in studies and research within the framework of special commissions and working parties on issues that are important for the regional water authorities at large. The Dutch Association of Regional Water Authorities facilitates international projects through the regional water authorities. Finally, the Dutch Association of Regional Water Authorities is an employers’ organisation. It negotiates with central government personnel organisations and makes agreements on employment terms for regional water authority personnel that are binding for the regional water authorities.

The highest level of the Dutch Association of Regional Water Authorities is the members’ meeting (governing board), which convenes four times a year and in which all member regional water authorities have a seat. The direct leadership is in the hands of the managing committee, which comprises six members who are appointed by and from the members’ meeting. As a rule, the board meets once a month. In addition, the association has a number of fixed, predominantly administrative committees, in which the member regional water authorities are represented. Below these committees are a number of official working parties. As a result of the structure of this organisation, the Dutch Association of Regional Water Authorities is generally very well aware of the feelings and motivations of its member regional water authorities, so that it is in a position to optimally promote its members’ interests in The Hague and Brussels. The costs of the association - which are primarily personnel costs - are borne by the member regional water authorities via financial contributions.The Dutch Association of Regional Water Authorities employs around fifty-five employees. The general manager of the association is also secretary of the members’ meeting and the governing board. The Dutch Association of Regional Water Authorities bureau, which is located in The Hague, acts as secretariat and is also the executive body of the association. Furthermore, the association publishes a monthly magazine for its contacts entitled ‘Het Waterschap (The Regional Water Authority)’, and regular newsletters that keep the regional water authorities up to date with developments taking place in the field of water management in The Hague and Brussels.

More information about the Dutch Association of Regional Water Authorities bureau can be found on the Association’s website (http://www.uvw.nl).

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7 Final conclusions

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In the previous chapters the main elements - the building blocks - of the Dutch regional water authority system were described in the following order: the constitutional position of regional water authorities, including their legal basis, the democratic legitimacy resulting from their own governing board and the financial independence resulting from their own tax area. Subsequently, the role played by the NWB Bank in attracting outside capital was discussed briefly, as well as the role the Dutch Association of Regional Water Authorities plays as national promoter of the regional water authorities. This final chapter summarises the building blocks once more.

Firstly we can conclude that regional and local water management in the Netherlands is largely decentralised, functionally speaking. Regional water authorities play a key-role in this as functional co-authority. ‘Functional’ because, legally speaking, regional water authorities’ tasks are limited to the care of the water system and management of treatment. ‘Co-authority’ because regional water authorities, formally speaking, are ‘invested with authoritative power’, and have their own governing bodies, tax area and legal powers, which are derived from the Water Boards Act, the Water Act and the authorities’ own bye-laws.

As a functional co-authority, regional water authorities can focus entirely on water governance, which is therefore safeguarded from political whims. This functional character, by the way, does entail a certain risk. Since water management is closely linked with other fields of government care, particularly spatial planning, environmental and nature management, regional water authorities will have to be open to these relationships and provide a framework for them. Regional water authorities may not, therefore, carry out their tasks in isolation, but must focus on integrated water management and explicitly look for contact and cooperation with other authorities (provinces and municipalities) and non-governmental organisations (farmers, businesses, managers of nature reserves, water companies and so on).The planning systems in the policy areas mentioned, in particular, offer the required starting points for this and in practice this potential risk is not really an imminent threat. Regional water authorities will also have to open their eyes to society’s ever changing wishes concerning water management. This, too, is something regional water authorities seem to understand, as is shown by the following concrete example. After WWII the government’s policy was primarily focused on increasing food production. In order to fully exploit the agricultural land, a number of stream systems were channelled and straightened by the regional water authorities to improve drainage. The ecological importance of such stream systems has now been recognised, and the regional water authorities have, in recent years, been executing various projects involving the restoration of the former, meandering courses of these streams. Some of these projects have already been completed.

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It goes without saying that an adequate system of legal instruments is of paramount importance if the desired modern integrated water management is to be achieved. For example, water quality cannot be improved and protected until detrimental discharges are prevented or regulated via a permit system. Chapter 2 made clear that regional water authorities do have adequate powers and are indeed able to enforce compliance with the various rules and regulations if necessary.

This clear-cut constitutional position as a functional co-authority with an adequate set of legal instruments forms the first building block in the regional water authority model.

The second building block, elaborated in Chapter 3, deals with the democratic legitimacy resulting from regional water authorities’ own governing bodies, which are composed of water management stakeholder categories. In that sense, the regional water authority can quite rightly be characterised as a ‘stakeholder democracy’. After all, it is stakeholder categories (interest groups) that submit lists of candidates for the regional water authorities’ elections. This representation is crucial for the democratic legitimacy of regional water authorities. And ultimately, it results in stakeholders in regional water authority districts deciding how and at what cost water management actually takes place, thus also creating support for the measures that will have to be taken. It is equally vital that regional water authority assemblies do not exclusively consist of representatives of the so-called general task interests - in this case the residents - but also of representatives of the so-called specific task interests - in this case farmers, businesses and managers of natural areas. After all, they bear a substantial part of the costs made by regional water authorities and they must have a say in the board in accordance with the interest-pay-say triplet. As Chapter 3 has shown, the new Water Boards Act of 2007 has led to considerable changes in the representation of stakeholders in the assemblies. The essence has, however, remained unchanged.

The third and final building block in the regional water authority model concerns the financial independence of regional water authorities that results from their own tax area. This was discussed in Chapter 4. The core message is that regional water authorities are largely self-supporting and are in a position to bear the costs of their tasks by levying their own taxes - the water system levy, the pollution levy and the surface water pollution levy. This financial independence is highly valued and is the best guarantee of sufficient financial means for today’s modern water management. It is not a very tempting thought to be (fully) dependent on the state’s ever scarce financial means, which, moreover, are earmarked for a wide range of policy areas

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(education, health care, defence, and so on). In this respect, everyday practice shows that regional water authorities are aware that they have to work at the lowest possible social cost, so that tax rates can be kept reasonable. This is illustrated by the fact that a family living in a low-lying area in the Netherlands pays the regional water authority an annual average of € 290 for regional water authority taxes. It is not surprising to hear that the stakeholder categories, that have to pay these taxes, are represented in regional water authority assemblies and thus determine how high the tax rates should be. This, too, may serve as an illustration of the interest-pay-say triplet.

With these three building blocks, that is, the clear constitutional position as functional co-authority with adequate legal powers, the democratic legitimacy resulting from their own governing bodies and the financial independence resulting from their own tax area, today’s Dutch regional water authorities are adequately positioned to face the future. It is at least as important to ascertain that this ‘formula’ works. For example, the water quality in the Netherlands has improved considerably over the last few decades and further improvement is currently hampered mainly by diffuse sources of water pollution (building materials, traffic, agriculture, and the like), which lie beyond the regional water authorities’ direct control. Moreover, the dikes are relatively safe - in this respect the Netherlands’ water defences are never really ‘complete’ - and the regional water authorities reacted adequately to the near-flood in 1995. Within two years roughly 100 km of river dikes had been reinforced and about 150 km of embankments had been constructed along the river Maas. The regional water authorities are currently working hard to implement concrete measures in the search for space for water in order to prevent flooding as a result of (extreme) rainfall. They are also taking the measures necessary for ecological recovery. The regional water authorities have a ‘broad outlook’ with regard to the above and constantly seek the cooperation of other authorities and non-governmental organisations. There is, therefore, absolutely no danger of them working in isolation.

Since the essence of the water management situation in the Netherlands is similar to that of other countries - even though all areas have their own, special circumstances - it is quite conceivable that the ‘building blocks’ described in this publication could be exploited outside Dutch borders. The developments currently taking place in countries such as Egypt, Indonesia and South Africa show their value. They are not intended as blueprints, but they might well be seen as data built on experience, from which others may also wish to benefit.

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These building blocks underline the importance of a good institutional structure in water management, that is, of good Water Governance. The recent initiative taken by the Dutch Association of Regional Water Authorities in setting up a Water Governance Centre (WGC) should be viewed in this light. The purpose of the Dutch WGC is to build up and safeguard knowledge, promote practically-oriented scientific research and provide for the international exchange of knowledge in this field. The concept of ‘Water Governance’ must be interpreted in the broader sense of the term. It should be understood to include: the administrative organisation and task distribution in water management including the legal, and other, instruments available, financing structure, administrative decision making and accountability, public participation, administrative supervision, legal protection, inter-government cooperation, the relationship of water system management with adjoining policy areas (in particular, spatial planning) and, moreover, with communication, perception and appreciation.

The NWB Bank considers its sound status and special characteristics necessary for it to operate effectively within the Dutch setting. The description of the NWB Bank is not intended as a blueprint for situations in other countries, any more than the building blocks are. What is important is that the form of collaboration opted for and the status of the financial institution is well geared to the setting in which it operates. The NWB Bank was not such a solid bank from the start. Neither was the government sector as professional and well-developed then as it is today. In this respect, the NWB Bank’s development has really kept pace with that of the government over the years. Or, to put it differently: starting up one’s own financial institution is highly appropriate for a situation in which the problems are substantial and the required structures have yet to be developed.Anticipating and being prepared for climate change and social developments will continue to be significant challenges in the future. To this end, regional water authorities operate with a broad outlook, in cooperation with the central government, provinces and municipalities. They take concrete steps. For example, the Dutch Association of Regional Water Authorities has recently concluded a climate agreement with the central government, and the various regional water authorities are cooperating within the ‘The Energy Factory’ project to achieve sustainable energy consumption. But also with a broad outlook in the geographic sense: including the cross-border catchment basins, in Europe and globally. Climate, water systems, knowledge, legislation and socio-economic processes now have an international dimension, by definition. Here lies an important task for the regional water authorities themselves and for the Dutch Association of Regional Water Authorities.

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Literature

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Uijterlinde, R., Janssen, A., Figueres, C. (red.): Success factors in self financing local water management, GBS prepress, Rijswijk, 2003, ISBN 90 6904 114 6.

Ven, G.P. van de (red.): Leefbaar laagland, vijfde geheel herziene druk, Uitgeverij Matrijs, Utrecht 2003, ISBN 90 5345 190 0.

Kramer, T. de, Rijswick, H.F.M.W. van, Minderhoud, F., Berns, J.: Europagids, Handleiding Europees recht voor waterschappen, STOWA, Utrecht 2004.

Havekes, H.J.M., Koemans, A.M.H.Th., Lazaroms, R.J., Uijterlinde, R.: Water Governance. The Dutch water board model, GBS prepress, Rijswijk 2004.

Rijswick, H.F.M.W.(red), Freriks, A.A., Backes, CH.W., Groothuijse, F.A.G., Keessen, A.M., Kempen, J.J.H. van, Widdershoven, R.J.G.M.: EG-recht en de praktijk van het waterbeheer, STOWA-rapportnummer 2008-02, ISBN 978 90 5773 377 2.

Havekes, H.J.M., Jongmans, H.C., Knoops, J.J.M., Strijen, A.van: Het waterschap in kort bestek 2008-2009, Reed Business/Unie van Waterschappen, Den Haag 2008, ISBN 978 90 352 4240 1.

Havekes, H.J.M.: Functioneel decentraal waterbestuur : borging, bescherming en beweging. De institutionele omwenteling van het waterschap in de afgelopen vijftig jaar (diss.), SDU Den Haag 2009.

Ministerie van Verkeer en Waterstaat : Water in Beeld 2009. Voortgangsrapportage over het waterbeheer in Nederland, Den Haag 2009, www.waterinbeeld.nl.

Havekes, H.J.M., Putter, P.J. de (red): Wegwijzer Waterwet. Kluwer, Alphen aan den Rijn 2009, ISBN 978 90 13 07127 6.

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