European Union Water Initiative Plus for Eastern Partnership cOUNTRIES (ENI/2016/372-403) THE DANUBE, PRUT AND BLACK SEA RIVER BASIN MANAGEMENT PLAN IN REPUBLIC OF MOLDOVA for the future planning cycle (2022-2027) TECHNICAL REPORT N°6 ON ECONOMIC ANALYSIS OF WATER USE December – 2019 Technical Report N°6 Economical analysis of water use Beneficiaries IWRM department of the MARDE (legislation and supervision), Agency “Apele Moldovei” (Planning coordination and follow up of implementation) Produced by OIKUMENA Public Association Authors Petru Bacal, Iurie Bejan, Vitalie Dilan, Lucia Căpățînă, Nicolae Boboc, Boris Iurciuc, Natalia Zgîrcu Produced for: International Office for Water (France), as contracting authority responsible for RBM planning in EUWI+East member state consortium Supervision Radu Cazacu and Dumitru Proca from Apele Moldovei supported by Pierre Henry de Villeneuve (IOWater) and Victor Bujac (National EUWI+ Project Representative in Moldova) Date December 2019 Version Final Acknowledgements: Apele Romane for offering its support including the direct contribution of Irina Tutunaru from Water Administration Prut – Barlad River Basin, Romania Financed by: European Union Co-financed by: Austrian Development Agency and the Artois-Picardie Water Agency (France) for the implementing Member States Disclaimer: The EU-funded program European Union Water Initiative Plus for Eastern Partnership Countries (EUWI+ 4 EaP) is implemented by the UNECE, OECD, responsible for the implementation of Result 1 and an EU member state consortium of Austria, managed by the lead coordinator Umweltbundesamt, and of France, managed by the International Office for Water, responsible for the implementation of Result 2 and 3. This document, the “TECHNICAL REPORT N°6 ON ECONOMIC ANALYSIS OF WATER USE”, was produced by the EU member state consortium with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union or the Governments of the Eastern Partnership Countries. This document and any map included herein are without prejudice to the status of, or sovereignty over, any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area. Imprint Owner and Editor: EU Member State Consortium Umweltbundesamt GmbH International Office for Water (IOW) Spittelauer Lände 5 21/23 rue de Madrid 1090 Vienna, AUSTRIA 75008 Paris, FRANCE Responsible IOW Communication officers: Yunona Videnina, [email protected] Chloé Dechelette, [email protected] Page | 2 Technical Report N°6 Economical analysis of water use 4. Economic analysis of water use .......................................................................................................... 4 4.1 The legal framework for the use and protection of water resources. .................................... 4 4.2 Peculiarities and trends of water use ..................................................................................... 9 4.2.1 Abstracted water by sources of origin. .................................................................................. 9 4.2.2 Water use by main usage categories ................................................................................... 11 4.2.3 The activity of public water supply and sewerage services ................................................. 16 4.2.4 The non-centralized water supply sources ........................................................................... 22 4.3 The costs recovery mechanism of water use. ....................................................................... 26 4.3.1 Tariffs for public water supply and sewerage services ........................................................ 27 4.3.2 Tax for water use ................................................................................................................. 40 4.3.3 Charges for water pollution. ................................................................................................ 42 4.3.4 Administrative penalties for law infringement of use and protection of water resources .. 45 4.3.5 Evaluation and compensation of damage caused to water resources. ............................... 46 4.4 Financing the sector. Subsidies for rational use and protection of water resources ........... 47 4.5 Methodological reference and bibliography ........................................................................ 54 4.5.1 Methodological reference .................................................................................................... 54 4.5.2 Bibliography ......................................................................................................................... 57 Annexes ................................................................................................................................................. 60 Page | 3 Technical Report N°6 Economical analysis of water use 4. Economic analysis of water use The „Economic Analysis of Water Use” Chapter is elaborated in accordance with the WATECO Guideline on the Methodology of Economic Assessment of Water Use1 for the Implementation the Water Framework Directive 2000/60/EC, the River Basin Management Plans implemented in the neighbouring countries2,3 and in the Republic of Moldova with the provisions of sectoral national strategies, which aims the sustainable use of water resources and adaptation to the climate change. This chapter includes: 1) the national legal regulation regarding the water use and protection; 2) the peculiarities and trends of water use; 3) the economic mechanism for costs recovering of water use and protection; 4) financing of measures for sustainable use and protection of water resources. 4.1 The legal framework for the use and protection of water resources. Regulatory and legislative framework for the use and management of water resources, regulating the provision of services of water supply and sewerage is stipulated in Water Law no. 272 of 23.12.2011, Law no. 1515 of 16.06.1993 on the protection of the environment, Law no. 1102 of 06.02.1997 on Natural Resources, Law no. 272 of 10.02.1999 on Drinking Water, Law no. 1440 of 27.04.1995 on the River and Water-Basin Water Protection Areas and Strips, Law no. 1402 of 24.10.02 on Public Utility Services, Law no. 303 of 12.13.2013 on Public Services of Water Supply and Sewerage, Decision of the National Agency for Energy Regulation (NAER) no. 164 of 29.11.20044 on Methodology for Determination, Approval and Application of Tariffs for Public Water Supply Services, Sewerage Systems and Waste Water Treatment, Title VIII of the Tax Code on the tax for use of natural resources, Offenses Code (Articles 109-113, 143-146, 156, 170-176); Law no. 86 of 29.05.2014 on Environmental Impact Assessment; methodologies for assessing damage to surface water5 and groundwater6 souses capitalization and management of water resources. Water Low is elaborated in accordance with EU Directives on the use and management of water resources, particularly the Water Framework Directive (2000/60/EC), Urban Waste Water Treatment Directive (91/271/EEC), the Directive on the Assessment and Management of Flood Risks (2007/60/EC), Directive on the protection of waters against pollution caused by nitrates from agricultural sources (91/676 CEE), Directive on the management of bathing water quality (2006/7 / EC). According to Articles 6 and 54 of this law, water resources management is based on the principles 1 Guidance document no. 1. Economics and the Environment. – The Implementation Challenge of the Water Framework Directive. Luxembourg: Office for Official Publications of the European Communities, 2003. 2 The Management Plan of the Prut-Barlad River Basin. Cycle II. 3 Danube River Basin Management Plan. In: icpdr.org/main/publications/danube-river-basin-management-plan. 4 Decision of NAER of 18.12.2014. In: Official Monitor n0. 33-38 from 13.02.2015 5 Decision no. 163 of 07.07.2003 of the Ministry of Ecology, Construction and Territorial Development on approval of "Methodology for Assessing the Environmental Damage Caused as a Result of Water Law Infringement 6 Decision no. 1808 of 18.08.1999 of the Ministry of Environment on approval of "Provisional Methodology for Estimating the Environmental Damage Caused by Groundwater Page | 4 Technical Report N°6 Economical analysis of water use of "polluter pays" and the economic value of water that involves the cost recovery of water use and water management, as well as the principle of sustainable water use. In this context, the economic analysis should establish trends in water demand and supply in river basins, estimating the volume and cost of using water as a component of the environment and natural resource. According to Article 17 of the Water Law, national water policy documents must contain provisions on: a) the quantity and quality of existing water resources and water bodies for their use in the branches of the economy; b) protection of drinking water sources; c) the volume of unused water flow, taking into account the environmental needs; d) short, medium and long-term water demand for the main branches of the economy; e) investment priorities for efficient water supply for the population; f) priority measures to promote adaptation to the effects of climate change; g) programs of measures to achieve the environmental objectives of the ecological status of the water and the rehabilitation of protection areas of the aquatic objects. The main competencies