Water Governance Unie Van Waterschappen Water Governance

Unie van Waterschappen Koningskade 40 2596 AA The Hague PO Box 93218 2509 AE The Hague Telephone: +3170 351 97 51 E-mail: [email protected] www.uvw.nl Water governance Unie van Waterschappen Water governance

The Dutch waterschap model Colofon

Edition

Authors

Herman Havekes Fon Koemans Rafaël Lazaroms Rob Uijterlinde

Printing

Opmeer drukkerij bv

Edition

500 copies

ISBN

9789069041230 Water governance Water

2 Preface

Society makes demands on the administrative organisation. And rightly, too. Authorities, from municipal to European level, are endeavouring to respond. The oldest level of government in the Netherlands, that of the waterschappen, is also moving with the times in providing customised service for today’s society. This sets requirements on the tasks and the way in which they are carried out. But above all, 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 roughly familiar with water management. It provides an understanding of what waterschappen are and do, but primarily how waterschappen work as government institutions. Special attention is paid to organisation, management and financing. These aspects are frequently raised in contacts with foreign representatives. The way we arrange matters in the Netherlands commands respect all over the world. The waterschap model is 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 in and outside Europe, from Indonesia to the United States and from Germany to South Africa.

The booklet ‘Water governance - the Dutch waterschap model’ was drawn up for foreign colleagues in 2004. It then appeared that there was a demand for something similar in the Netherlands, too. The first two editions of Water besturen - het Nederlands Waterschapsmodel were published for this reason. We are now a few years further on. The merging of waterschappen has continued and legislation has been amended. The new Waterschappen Act has consequences for the elections and the composition of the assemblies. These developments, amongst others, have been incorporated in this third, revised edition of ‘Water Governance’. I hope that you will find the booklet interesting and informative. dr. S. Schaap

Chairman of the Unie van Waterschappen 3 Table of contents 1 Preface 7 1.1 Decentralised water management, a global theme 8 1.1 The Dutch waterschap model 9

2 Waterschappen and their legal basis 13 2.1 Water governance 14 2.2 The position of the waterschappen 15 2.3 The Waterschappen Act 19 2.4 The administrative organisation of water management 20 2.5 The integration of water legislation 22 2.6 Fine-tuning and coordination 23 2.7 Participation, legal protection and supervision 24

3 Democratic legitimacy 27 3.1 The Dutch polder model 28 3.2 The composition of boards 28 3.3 Elections 32 3.4 Future developments 34

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 waterschappen 40 4.3 The waterschap charges 44 4.4 The water pollution levy 47 4.5 Future developments 49 Water governance Water

4 5 A dedicated financial institution: The Nederlandse Waterschapsbank N.V. (NWB) 51 5.1 Combining strengths 52 5.2 Brief history of the Dutch situation 52 5.3 The concept of a bank 53 5.4 Form 55 5.5 Key NWB figures 57 5.6 Socially responsible business practices 58

6 The Unie van Waterschappen 59 7 Final conclusions 63 Literature 69

5 Water governance Water

6 1 Preface 1.1 Decentralised water management, a global theme

Water management face enormous challenges in the 21st century. Climate changes, 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. In the Netherlands these tasks are, to a large extent, allocated to waterschappen, regional water authorities.

The 26 waterschappen form the fourth government institution in the Netherlands, along with the central government, provinces and municipalities. The waterschappen, 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 waterschappen. He or she does, however, notice the waterschap’s tax assessment. While, in fact, the waterschap model is much admired in the international circuit as a system that is well tailored to suit its duties, is financially self-supporting and, given its history, can be deemed sustainable (waterschappen have been in existence for about 800 years).

The Dutch waterschappen 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 waterschap 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 waterschappen 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.

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. Waterschappen

Water governance Water have a crucial role in this, along with their duties in the fields of safety from flooding, the management of 8 water quality and quantity, and the treatment of urban wastewater. In 2008 there will be the requisite changes as a result of the introduction of the new Waterschappen Act. These changes include a different composition and method of electing the governing bodies of waterschappen.

This booklet tells the reader all about the Dutch waterschap system. It gives insight into the organisation and management of the waterschappen in the light of the current and future composition of the governing bodies.

After a concise outline of the decentralised water management in the Netherlands in section 1.2, the institution of the waterschap is discussed in detail. Chapter 2 explores the legal basis of the waterschappen. 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 waterschap governing bodies. Chapter 4 explains the financing system, which involves an exceptional phenomenon: the Nederlandse Waterschapsbank N.V. (NWB), a bank established by waterschappen that provides access (though it is not the only possibility) to the capital market. The NWB is described in Chapter 5. Chapter 6 throws light on the Dutch Unie van Waterschappen, as national and international representative. Lastly, Chapter 7 contains some final conclusions.

1.2 The Dutch waterschap 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 dunes, dams and dikes. 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 waterschappen do.

9 Waterschap figures, 2007.

Number of all in-waterschappen 26 Number of employees approx. 11.000 Length of primary dikes managed approx. 3.450 km Length of water courses managed approx. 55.000 km Length of roads managed approx. 7.000 km Number of treatment plants approx. 390 Number of pollution units treated approx. 23 million

Waterschappen are government institutions, with tasks in the fields of policy development, granting permits and monitoring and treating urban wastewater. They are also active in the field of environmental development. Interests in the field of spatial planning and the environment are weighed by provinces and municipalities. Some key figures of waterschappen are shown above. Water governance Water

10 Waterschapskaart van Nederland (per 1 januari 2007)

Zie voor actuele adresgegevens de websites van Unie van Waterschappen: www.uvw.nl en www.waterschappen.nl

Blija Buitendijks Noorderzijlvest

Reitdiep aal kan ms Ee anaal GRONINGEN nborghk Starke van

ma kanaal Wins Van Harinx kanaal choterdiep LEEUWARDEN

l VEENDAM a

n a k s Hunze en Aa’s m e l

i H a u

W n A z Margriet e e Fryslân ts Stads- o n f e ord r o O N D o

r rt m l a o a e na a kanaal ka v r er d s g f e n o jo v T o a H a r t

f s r o e e s ind n u r i K e r ng Drentse P Tjo Oranje- Beilerstroom kanaal

Lemsterv Reest en Wieden old A Noordhollands kanaal W veens t oge e l. Ho va

aart aar Ver a V rt art eva Oude ns Zwolse e eve Velt en Vecht vaart MEPPEL oog Hollands Noorderkwartier H COEVORDEN kanaal es Urkervaart Enservaart Stieltj diep

Z Meppeler w

a r echt t e V l w a a a te n r a IJssel k s Zuiderzeeland l e N s oo s rdh ZWOLLE V ij oll LELYSTAD echt r and ve s EDAM O

rt a Groot Salland

Zaan Va

e l O k No vaart g a v

ordz a o e

e Nauernase a n H Overijssels kanaal e n r

i k a a a j s

n a aart k a s

a l l e

s l s Lage V n r k orn o a rdh n -No o a elo ld a l Alm e l anaa p Regg K A rt a e AMSTERDAM Va ALMELO e Tw og

H entekanaal Regge en Dinkel Veluwe

Amstel, Gooi en Vecht IJssel

Twentekanaal

s t

Rijnland e

rd APELDOORN

R Eem

j n A p

k el

a d n o Twentekanaal a o V B r LEIDEN a ar e ne n l ve c lds s

h e Beek t LEUSDENH k

a e

n i

l a

jn i i n

Oude R a g

l e Vallei & Eem

O r ude Rijn b e

r Rijn-Schie kanaal K g r e o r

m b

De Stichtse Rijnlanden m e G e e

k o R Rijn en IJssel u i HOUTEN jn w e IJ Va e ds s ll an s A e IJssel DELFT oll e m ik H l ste a Delfland Schieland rd n am a l - a se R l Schi l ij Nieuwe IJs Vlist a Le n Nederrijn Nederrijn e a k DOETINCHEM en de ds n e e n ka ka W Rott lla e na aterweg o d al H e ROTTERDAM Krimpenerwaard rw Linge Lek e M Linge Waal Linge Nieuwe Maas N TIEL o Rivierenland o r d Beneden aal Merwede W Hollandse Delta Afg eda Maas md e M a DORDRECHT a s

Bergs e Maas ’s-HERTOGENBOSCH Maas

Aa en Maas Z uid k - W ar il Di Mark M le nt m el al s a va kan Wilhe a lm BOXTEL rt R i BREDA na o ka o na s a e l n

a Brabantse Delta

s e r o r o n o d d vliet

MIDDELBURG re o n Z a u e d l l

h i l Zeeuwse Eilanden e c Wilh d a elminakanaal a l v a - a a e n W W B a an i - l K K . le

d m Z

s De Dommel v a Peel en Maasvallei a rt VENLO

TERNEUZEN Maas vaart

Zeeuws-Vlaanderen n K

e a

z n n u a a e

a Noorder v n l l r

a e

T a W n r a a e K a s n s t e n m llemsvaart - e N G e d Zuid-Wi e r w e e rt Ro er

kanaa

Juliana SITTARD Legenda vestigingsplaats waterschap Roer en Overmaas

Maas grens waterschap provinciegrens

Uitgave: Unie van Waterschappen, Den Haag, 2007

Figure 1.1: Map showing the waterschappen in the Netherlands, 2007

11 The boundaries of the waterschappen 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. The area managed by the Waterschap Rivierenland, for example, covers parts of four provinces.

The total Dutch government expenditure on water tasks in 2006 amounted to 5.1 billion euro. Two billion of this was spent by waterschappen. In 2005 an average household paid about 500 euro for its water conveniences. This amount was partly built up of waterschap levies (d 202). Water governance Water

12 2 Waterschappen and their legal basis 2.1 Water governance

This chapter will further explore the constitutional position of waterschappen and their tasks on the basis of the relevant legal regulations. This is the first building block of the waterschap model. In Chapter 1 it was already noted that waterschappen are the oldest form of democratic government. The first waterschappen date back to the 13th century, which is all to do with the geographic situation of the Netherlands. 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 waterschappen are responsible for this absolutely essential 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 watercourses. 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 waterschappen 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.

Water governance is realised by means of infrastructural works: water control works such as canals, ditches, dikes, pumping stations, locks, weirs, culverts, bridges, lakes and sewerage treatment plants. A small number of waterschappen also manage rural roads. These works are crucial for keeping the Netherlands habitable. The waterschappen 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 waterschap. The crucial importance of these infrastructural works is also clear from the Dutch Criminal Code, which makes deliberately damaging such works punishable.

As will be described below, many laws, orders in council and bye-laws drawn up by local authorities are applicable to water management. Together they form the major source of water management legislation and

Water governance Water can be designated as the total of legal rules relating to water management. Brussels (the European Union) is 14 also playing an increasing role in water management legislation. A good example of this is the European Water Framework Directive, which came into effect late in 2000, and the Directive on the assessments 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. 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.1 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.

2.2 The position of the waterschappen

Although waterschappen 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 waterschappen’ right to exist.

This discussion started at the end of 1968 with the setting up of the ‘Studiecommissie Waterschappen’ (Waterschappen 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 waterschappen, taking into account the relationship of these institutions with other public bodies, and to make recommendations accordingly’. In its report entitled ‘The waterschap 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, waterschappen. The commission attached great importance to the characteristic 1 See the amendment of the Physical Planning Decree, Bulletin of Acts and Decrees 2003, 294 and 327 that entered into force on November 2003 15 that was linked with the functional form of administration, that is, that those who had an interest in the duties performed by the waterschap 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 waterschap. The commission also advocated the drawing up of a general Waterschappen Act outlining the administrative and financial structure of waterschappen and the way their tasks should be executed.

In 1977, the Dutch national government responded to the recommendations made by the Waterschappen Study Commission by publishing the memorandum ‘Naar een nieuw waterschapsbestel?’ (‘On the road to a new waterschap 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 waterschap as a public body of functional government that could be put in charge of water control care. At the same time, the importance of the triplet referred to above was endorsed. In the government’s opinion, too, the main tasks of waterschappen were flood protection and the water regime. The government also advocated the drawing up of a Waterschappen 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 waterschap and its position in the Dutch form of government. They also agreed with the government’s intention to draw up a Waterschappen Act. This Waterschappen 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 waterschappen, 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 waterschappen’ 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

Water governance Water these governing bodies can only be set aside in the case of conflict with the law or the general interest.’ 16 Finally, the Waterschappen Act went into force on 1 January 1992. A few years ago the position of the waterschappen 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 waterschappen as regional water management authorities in this framework.2 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 at the end of June 2004. Incidentally, the European Water Framework Directive, which went into force at the end of 2000, also endorses certain aspects of the waterschap model. After all, many elements in this Directive (organisation on the basis of river basins, public participation and cost recovery for water services) actually already take place in the waterschap system3.

The legislative proposal for the modernisation of the waterschap system was submitted to the House of Representatives in mid 2006.4 It provided for far-reaching changes in the composition of the waterschappen’ governing bodies and the way in which they are elected and how the tasks are financed. The House of Representatives agreed with this proposal in the autumn of 2006 and the Upper House adopted it in May 2007.5 Chapters 3 and 4 explain the proposals in question in brief. These proposals were largely based on suggestions put forward by the waterschappen themselves. The new regulations will probably go into force in 2008; the new financial structure will apply from 2009.

The (constitutional) position of the waterschap emerges clearly from the above. The waterschap 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 waterschap 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 waterschap. After all, it is their responsibility to set up, discontinue, lay down rules for and supervise the waterschappen. The position of the waterschap is, therefore, as follows:

2 TK (House of Representatives) 2003-2004, 29 428, nr. 1. 3 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. 4 TK (House of Representatives) 2005-2006, 30601, nos. 1-4. 5 Act of 21 May 2007, Bulletin of Acts and Decrees 208. 17 Central government

provinces (12)

municipalities (443) waterschappen (26)

Finally, we should mention the enormous scale increases waterschappen have undergone in the past 50 years. The number of waterschappen has decreased from around 2,600 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 waterschappen. Secondly, the handing over of water quality control, including wastewater treatment to the waterschappen 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 organisation (the so-called ‘all in-waterschappen’). This was realised in 2005. There are currently 26 all in-waterschappen which, with approximately 11,000 employees, take care of flood protection and the water regime at a regional and local level. This signified the end of the old situation in which various waterschappen were responsible for different tasks within the same area. Water governance Water

18 2.3 The Waterschappen Act

There is a lot to be said about the Waterschappen Act which has such a big influence on the structure and duties of the waterschappen.

It would be going too far off the subject to discuss the Act in detail here, but in order to properly understand the concept of waterschappen, a little more attention should be paid to some of the core provisions. One of these core provisions is Article 1, which characterises the waterschappen as public bodies with the objective of water governance in a particular district. This definition contains three elements. Firstly, Article 1 makes clear that waterschappen are bodies of public administration and, as such, are part of the Dutch government organisation. As a result, waterschappen can make decisions that are binding for citizens and, for example, draw up waterschap bye-laws with mandatory and prohibitory provisions, grant or refuse permits and levy taxes. If necessary, waterschappen 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 waterschappen. In other words, waterschappen 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 waterschap districts are not drawn arbitrarily, but are determined for reasons relating to water management (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 waterschappen’ tasks lie solely in the field of water governance. These tasks are 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.).

Article 1 also deals with the tasks entrusted to the waterschappen. These entail the care of flood protection and the water regime and - possibly - the care of other water control matters, such as the waterways. Waterschappen 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 Waterschappen Act stipulates that waterschappen should be put in charge of the task of flood protection and the water regime, 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 19 and Water Management would undoubtedly withhold the necessary approval (see Article 5 of the Waterschappen Act) for any such waterschap regulations. Other important provisions of the Waterschappen Act concern the composition and election of the waterschappen’ governing bodies and the powers of waterschappen 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 waterschappen are liable to pay tax and are represented in the governing bodies of waterschappen. At the same time, this indicates another major difference between waterschappen on the one hand and provinces and municipalities on the other. Unlike provinces and municipalities, whose income is largely dependent on (usually scarce) government revenues, waterschappen are virtually fully self-supporting in the execution of their tasks. The tax revenues of waterschappen in 2007 will amount to more than two billion euro.

2.4 The administrative organisation of water management

The above might lead one to think that waterschappen 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 waterschappen. The Dutch administrative organisation and the relevant regulations are tailor-made to suit the various elements of water governance, as is shown below:

• flood protection: 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. Flood protection is the responsibility of the central government and waterschappen. 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 waterschappen. Flood protection is regulated in the Flood Defences Act, which is further elaborated in provincial and waterschap bye-laws; Water governance Water

20 • water quantity: 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 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 generally the responsibility of the waterschappen. The management of water quantity is regulated by the Water Management Act, which - besides the planning system in the field of the water regime - includes the following legal instruments: a system of registration and permits for discharging, withdrawing, supplying and draining away water, a water-level decision and a water agreement. Here, too, further elaboration takes place in provincial and waterschap bye-laws;

• water quality: 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 waterschappen 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 waterschappen manage the regional and local waters. To this end, the waterschappen operate approximately 390 wastewater treatment plants with related pressure pipelines. This task was recently given to waterschappen by state law. The management of water quality has been laid down in the Pollution of Surface Waters Act, which has several instruments, such as a system of permits and levies, and general rules for certain kinds of discharges of wastewater;

• ground water: in contrast to surface water, no specific governmental body is responsible for the maintenance of a particular groundwater level, although the provinces, of course, deal with the implementation of the Groundwater Act. This is, however, more of a ‘distribution act’ aimed at distributing the limited amount of groundwater over the various purposes (the extraction of drinking water, industrial and agricultural purposes) by means of a system of permits and general rules. Incidentally, pursuant to the future Dutch Water Act, the operational groundwater rests largely with the waterschappen. Urban groundwater and the rain-water run off are entrusted to the municipalities.6 6 Act of 28 June 2007, Bulletin of Acts and Decrees 276. 21 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;

• 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 waterschappen. 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 waterschappen 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;

• drinking water supplies: 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.

2.5 The integration of water legislation

The overview in Section 4 shows that there are quite a number of different laws on water control. Dutch water legislation is, indeed, fragmented. Over the years a separate law has been drawn up for every part of water management. All these laws have 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 impedes practical manageability and feasibility, and, moreover, ignores the intrinsic cohesion within water

Water governance Water management. The Dutch government realised this and, at the insistence of the Dutch House of 22 Representatives, undertook to integrate the various laws on water control. A draft bill for the Water Act was published mid 2005 and was well received. The proposal for an (integrated) Water Act was submitted to the House of Representatives in the autumn of 2006.7 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. Incidentally, the integration will remain limited until the aforementioned water control laws go into force. This means that the Waterschappen Act and the legal regulations pertaining to the management of the sewerage system and the drinking water supplies are not included in this framework.

This overview makes clear that in contrast to many other countries, the Dutch water chain (the supply of drinking water, the sewerage system and the treatment of wastewater) is not looked after by one (government) institution, but by three parties, that is, water companies, municipalities and waterschappen. This organisational structure is the result of a historical process. The various parties connect the different elements of the water chain by mutual cooperation.

Finally, this overview again shows that waterschappen have a number of concrete legal powers for the execution of their responsibilities. These include the permit system incorporated in the waterschap bye-law and the powers pursuant to the Pollution of Surface Waters Act and the Water Management Act regarding the discharge, withdrawal, drainage and supply of water. The laying down of a so-called ‘register’ stating the parties that pay for the maintenance of the waterways must also be included amongst these powers. In combination, these instruments provide the waterschappen with adequate powers to prevent undesirable developments and activities.

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 waterschap 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 a number of management laws in this field. 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 Waterschappen Act must also be included here. The most important elements of the 7 TK (House of Representatives) 2006-2007. 30818, nos. 1-4. 23 provincial waterschap regulations, for example, require the official approval of the Minister. Another example is Article 148 of the Waterschappen Act, which shows that decisions made by waterschappen concerning the arrangement of water control (water-level decisions) and the construction and improvement of water control works, such as dikes, are subject to the approval of the Provincial Executive, insofar as this is specified in the regulations. The second category deals with the hierarchical structure of the planning system of the Water Management Act, in particular. This means that, for example, when determining the plan for provincial water control, the Dutch government’s National Policy Document on Water Management should be taken into account and that ministers can advise the Provincial Council concerning this plan. Similarly, the management plans of the waterschappen should take into account the provincial water regime plan and they must, furthermore, be approved by the provinces. 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 waterschappen 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 National Platform on Water (the Dutch ‘LBO-W’), in which the national government, provinces, municipalities and waterschappen are represented. The State Secretary of Transport, Public Works and Water Management chairs this LBO-W. At the regional level, Regional Platforms on Water (RBO-W) have been appointed for the Dutch part of the river basins of the Rhine, Maas, Eems and Schelde rivers. In view of its size, the Rhine basin has been divided into four areas. There are therefore a total of seven RBOs for regional fine-tuning in the field of water management.

2.7 Participation, legal protection and supervision

A final remark deals with legal protection against decisions made by waterschappen. This chapter has shown that waterschappen are government institutions, and can therefore make decisions that are binding for citizens (for example, granting of permits, levying taxes). Generally speaking, these decisions are not made without active participation. The waterschappen have laid this down in a regulation on participation (see Article 79 of the Waterschappen Act). It is also possible to appeal to the Administrative Court against decisions made by the waterschap. Finally, as part of the supervision, it is the responsibility of provinces to approve a number of waterschap decisions. The province can also annul waterschap decisions if they conflict with the law or general interest (Article 156 of the Waterschappen Act). Complaints may also be lodged with the Dutch

Water governance Water National Ombudsman concerning the behaviour of the waterschappen’ governing bodies. This form of 24 additional legal protection was set up some fifteen years ago at the instigation of the Unie van Waterschappen, which resulted in the waterschappen 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 waterschappen, which mainly concern exemptions from paying waterschap taxes.

25 Water governance Water

26 3 Democratic legitimacy 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, drainage and the building of dikes were carried out jointly. The Dutch polder model - characterised by consultation, consensus and compromise - largely has its origins here. Waterschappen can be regarded as one of the first forms of public decision-making based on consensus. Nowadays the functional waterschap organisation still holds an independent position within the general democracy in the Netherlands. Since water-related tasks are allocated to waterschappen, 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 role and position of waterschappen has changed considerably during the last few years. Waterschappen’ functional terms of reference are enshrined in the Dutch Constitution as shown in Chapter 2. Nevertheless, waterschappen 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 waterschappen and calls for a sound democratic legitimacy.

This chapter discusses another building block in more detail: the democratic legitimacy of waterschappen. Democratic legitimacy is found in the representation of various categories of stakeholders in the waterschappen’ governing bodies.

3.2 The composition of boards

The governing bodies of waterschappen 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 waterschappen sometimes have lovely historic names. The executive committee of some waterschappen is known as the ‘college van dijkgraaf en heemraden’ and the chairman as a ‘dijkgraaf ’ or ‘watergraaf ’. Water governance Water

28 The governing board The governing board consists of representatives of categories of stakeholders who have an interest in the tasks executed by the waterschappen. The idea behind this is that those who are considered to have an interest in the tasks executed by the waterschappen bear the costs for this proportionally and have a say in the waterschappen’ 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 waterschap district. Specific task interests indicate the specific interests of certain stakeholder categories in the tasks executed by waterschappen.

The stakeholder categories that can be distinguished are listed in, but are not limited to, Article 11 of the Dutch Waterschappen Act. They are: • the owners of real estate consisting of open land (‘open land’ category); • the owners of real estate consisting of buildings (‘buildings’ category); • the users of business buildings, as representatives of those discharging industrial wastewater (‘business buildings’ category); • the representatives of the general task interests and the specific task interests of those discharging wastewater from households (‘residents’ category); • ‘lessees’.

The various interests have to be safeguarded in the waterschappen’ 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 waterschap. Here the nature and size of the interest of a particular category in the tasks carried out by the waterschap are taken into account, as well as the contribution to the costs to be paid by this category. If a waterschap is located in a densely populated urban area with a lot of industrial activity, the ‘residents’ and ‘business buildings’ categories have a larger share in the governing board than in a waterschap in a sparsely populated area with a lot of agricultural activity. The average governing board consists of thirty members. In addition to the limitative listing of stakeholder categories mentioned in the Waterschappen Act, this Act stipulates that, under the regulations, the Provincial Council can assign to certain stakeholders the authority of bringing one or more representatives of their categories into the governing board - without the need for elections. These are referred to as ‘quality seats’. A number of provinces have made use of this possibility, albeit sporadically, particularly with regard to organisations that manage nature reserves.

29 In the year 2007 the composition of waterschap assemblies in the Netherlands was as follows: Waterschap Categories represented in waterschap assemblies Open land Buildings Residents Companies Lessees Total Aa and Maas 8 11 17 9 0 45 Amstel, Gooi and Vecht 5 7 14 4 0 30 Brabantse Delta 6 14 18 8 0 46 Delfland 4 9 18 5 0 36 De Dommel 7 9 20 9 0 45 Friesland 7 7 13 4 0 31 Groot Salland 7 5 10 3 0 25 Hollands Noorderkwartier 6 10 20 4 0 40 Hollandse Delta 7 9 15 5 0 36 Hunze and Aas 7 7 14 3 0 31 Noorderzijlvest 7 7 14 3 0 31 Peel and Maas valley 6 9 12 4 0 31 Reest and Wieden 8 4 10 3 0 25 Regge and Dinkel 5 7 13 5 0 30 Rijn and IJssel 7 6 12 5 0 30 Rijnland 6 8 18 4 0 36 Rivierenland 6 10 16 4 0 36 Roer and Overmaas 3 10 14 4 0 31 Schieland and the Krimpenerwaard 6 9 16 5 0 36 Stichtse Rijnlanden 7 7 12 4 0 30 Vallei & Eem 9 9 13 9 0 40 Velt and Vecht 7 3 8 3 0 21 Veluwe 6 7 12 5 0 30 Zeeuwse Eilanden 6 9 14 6 0 35

Water governance Water Zeeuws-Vlaanderen 6 7 12 5 0 30 30 Waterschap Categories represented in waterschap assemblies Open land Buildings Residents Companies Lessees Total Zuiderzeeland 6 4 11 3 1 25

Total (absolute) 166 204 367 126 2 865 Total (in percent) 19.2 23.6 42.4 14.6 0.2 100.0 Average (absolute) 6.4 7.8 14.1 4.8 0.1 33.3

Tasks of the governing board The governing bodies of waterschappen have the authority of regulation and management in the promotion of the tasks assigned to the waterschappen in the waterschap regulations. The waterschap 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 Waterschappen Act mentions a number of subjects which, in any case, have to be taken care of by the governing board, such as determining of the budget, the annual accounts, the assessment and levy bye-laws, the rates of assessments and levies, registers and other bye-laws.

The executive committee The executive committee of a waterschap 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 waterschap’s daily business. The numbers of members of executive assemblies vary. On average executive assemblies consist of five members. As far as their composition is concerned, executive assemblies should reflect the governing board as much as possible. This means that all categories represented in the governing board also have one or more seats in the executive committee (Article 40 of the Waterschappen Act). 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.

31 Responsibilities of the executive committee A 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.

The chairperson The chairperson of a waterschap 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.

The tasks of the chairperson The chairperson is responsible for the proper promotion of the waterschap’s tasks and chairs the meetings of the governing board and the executive committee. The chairperson also represents the waterschap at law and otherwise (Article 95 of the Waterschappen Act). In addition, the chairperson signs the documents sent by the governing board or executive committee, along with the highest official of the waterschap. 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.

3.3 Elections

Waterschappen have elections for the governing boards just like municipalities and provinces. However, waterschap 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 waterschappen’ functional terms of reference and the resulting adage of interest-pay-say.

Water governance Water The major difference between waterschap elections and, for example, municipal council elections lies in the 32 significance of the elections. In a municipal council election, a fixed number of seats are divided amongst the various political parties, on the basis of the number of votes the parties and their candidates receive. The balance of political power within the municipal council therefore changes after every election. The question of which people will ultimately be elected onto the municipal council for a specific party is of secondary importance. Municipal council elections are held by means of what is known as the ‘list system’. In the election of waterschappen’ governing bodies, the balance of power between the various categories of stakeholders within the bodies has, on the other hand, already been predetermined. After all, the division of seats is laid down in the regulations by the Provincial Council. Therefore, the election of the members of the governing body of a waterschap is not a question of how many seats in the governing board will be assigned to a particular category of stakeholders, but of which people are going to have the predetermined number of seats for the various categories. Waterschap elections are held by means of the so-called ‘individual candidate system’ and the turnout has averaged between 25 and 30% during the last few years. In principle, waterschap elections take place by letter. Voting by telephone has also been tried in the past. Furthermore, two waterschappen carried out a successful experiment with Internet voting in 2004. At the moment, waterschap elections do not take place simultaneously. This will change from 2008. At the end of 2008 all the waterschappen will organise elections at the same time and the results will be announced on a date that will be laid down for the whole country. Joint elections will enable publicity campaigns and thus attract more attention for the waterschap elections.

The election of the members of the governing boards Governing board members are elected for a period of four years. Waterschappen have two types of elections: direct and indirect elections. The representatives of the categories ‘open land’ and ‘lessees’ are always elected directly. Representatives for the category ‘business buildings’ are always elected indirectly. The members of the Chamber(s) of Commerce in the waterschap district are entitled to vote. For the ‘buildings’ and ‘residents’ categories the province can choose to have direct or indirect elections. This option was included in the Waterschap Act to anticipate the (expected) low turnout during waterschap elections. As a matter of fact, for these categories there is a tendency to hold direct elections, usually by letter.

Who can stand as a candidate for running a waterschap? The election of governing board members is preceded by the nomination of candidates. This selection takes place for each stakeholder category. The only people eligible for nomination (and hence for joining the governing board as a member) are those who belong to the stakeholder category in question and, as such, pay taxes to the waterschap. People that live in the waterschap district and are at least 18 years 33 of age may be nominated as candidates for the ‘residents’ category. If the vacancies outnumber the candidates, the governing board adds extra nominees. Should the number of candidates for a particular stakeholder category equal the number of vacancies, all candidates are considered to have been elected and actual elections are not held. If there are more candidates for a particular category than vacancies, elections will be held.

Who is allowed to vote at waterschap elections? With direct elections, the right to vote is linked to the membership of the stakeholder category in question. The right to vote for the ‘open land’ and ‘buildings’ and as a ‘lessee’ may be defined by the regulations as being dependent on a required minimum amount of tax to be paid to the waterschap. For ‘open land’ real estate, provinces may stipulate in the election rules that a minimum surface area is required. Provinces can, in this way, create an electoral threshold. For the ‘residents’ category, however, residents do not have to be a taxpayer or have a minimum surface area in order to vote. All residents of a waterschap district - who are at least 18 years of age and not excluded from the right to vote - are entitled to vote for the ‘residents’ category. In principle, someone who is entitled to vote has one vote per category. So in actual fact people often receive two or three ballot papers for waterschap elections: one because they are a resident of the waterschap district, one because they have a house of their own (buildings category) and one because they own agricultural land (open land category).

3.4 Future developments The administrative structure of waterschappen, as described above, does not really excel in terms of simplicity and is therefore hard to explain to citizens in general. Because of this complexity, in 2001 the Unie van Waterschappen submitted concrete proposals to the national government to modernise the structure, in order to simplify the system and increase transparency. These proposals can be summarised as follows.

The composition of governing boards For citizens at large, the distinction between the ‘buildings’ category and the ‘residents’ category is not always very clear. And very different interests may be represented within a single category. For example, the ‘open land’ category has an agricultural and environmental interest. However, for the positioning of waterschappen as independent functional authorities, the essence of the interest-pay-say triplet is still important for the composition of boards. Direct involvement of the stakeholder categories reinforces the

Water governance Water effectiveness of the execution. The proposals put forward by the Unie distinguish between two kinds of 34 interests in the duties executed: general task interests (being able to live, work and recreate in the waterschap district) and specific task interests (interests with a higher than average and manifest interest in the tasks executed). The residents represent the general task interests. The categories of stakeholders representing the specific task interests are farmers, companies and managers in the field of forestry and nature. The ‘buildings’ category and ‘lessees’ category are, therefore, disappearing from the governing bodies of waterschappen. Provinces will determine the distribution of seats between the residents and the specific stakeholders in future, as is now the case. In addition, provinces will also determine the division of seats between the specific stakeholder categories distinguished.

Elections The elections for waterschappen are now held on the basis of the ‘individual candidate system’. This voting system, which worked well in the small waterschappen in the past, is no longer adequate for the waterschappen of the current scale. The main objections to it are the lack of recognisability and profiling of the candidates. With regard to the voting system, in the Unie’s proposals the ‘individual candidate system’ for the ‘residents’ category is replaced by the ‘list system’, which largely cancels out the objections mentioned above. Groups with an interest in and vision on water management, such as political parties, may submit a list for the representation of residents. The representatives of the specific task interests should not be elected, but be nominated or appointed by representative organisations such as the Chambers of Commerce and the Forestry Board.

The central government has largely followed the advice of the Unie van Waterschappen in the proposal to modernise the waterschap system mentioned in Chapter 2, and the House of Representatives and the Upper House have now approved it. As has already been stated, this will lead to a considerable simplification of the composition and election of the waterschappen’ governing bodies. The new-style waterschap governing board will consist of 18 to 30 members, 7 to 9 of whom are from the specific task interest groups. Residents always have a majority in this body. In the national waterschap elections planned for the end of 2008, which are only for the residents category, votes may be cast by letter as well as by Internet.

35 Water governance Water

36 4 Financial independence as a result of their own tax system 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 waterschappen (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 Water Supply Act). The total government expenditure on water tasks amounted to 5.1 billion euro in 2006. Figure 4.1 shows how this sum was divided amongst the various governmental institutions.

Ministry of Transport Public Works and Water management Provinces Municipalities Waterschappen

FigureSource: 4.1: CBS Total Statline, governmental UvW, VenW expenditure, 2007 for water tasks

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), waterschappen are, to a large extent, financially independent. This independence is a result of the fact that they have their own tax area. Their tasks can be financed independently thanks to the revenues from the waterschap taxes. In fact, the central government only makes a substantial contribution to the flood protection task. Along with their institutional/legal basis (Chapter 2) and their democratic legitimacy (Chapter 3), the financially independent position of the waterschappen that results from their own tax system forms an important building block in the Dutch waterschap model. To a certain extent the organisational and financial structure of Dutch water management has been

Water governance Water determined historically, but it has also been based on the notion that water management must be counted as 38 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 certain activities under the management and responsibility of waterschappen is quite common.

A political discussion was held on the independent administrative and financial position of the waterschap 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 Waterschappen Act in which the elections, the composition of the assemblies and the tax system of the waterschappen were radically modernised (see Chapter 2). The purpose of this modernising operation was to better equip the waterschappen to take up 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 (for an explanation of the revision of the tax system, see Section 4.5).

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

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

Task Organisation Financing Water quantity (main system) Central government General funds Groundwater Province Regional tax, Provinces fund Water quantity (regional system) Waterschap (public) Regional tax Water quality and wastewater Waterschap (public) Regional tax treatment Drinking water supplies Water companies (semi-public) Price Sewerage Municipalities Local tax

4.2 Financing of regional water management by the waterschappen

Revenues and expenditures of the waterschappen Waterschappen finance their activities on an individual basis almost entirely from the revenues from their own taxes. These are the waterschap charges and the water pollution levy. Waterschap charges cover the costs of the flood protection and water quantity management, whereas the costs of quality management and wastewater treatment are financed from the water pollution levy. The revenues from these taxes provided a budget of D 2.1 billion in 2007. The total costs in the same year were estimated at around D 2.3 billion. On average around 95% of all annual investment costs and management and maintenance costs are covered by the waterschappen’ own tax revenues. Water governance Water

40 Table: Income of the waterschappen in 2007

Revenues yielded by the waterschappen’ charges (in million d) Households 276 Buildings 383 Open land 149

The incomes given are related to the following tasks Flood protection 140 Water quantity 613 Roads 52 Waterways 4

Revenues yielded by the water pollution levy (in million d) Water quality 1,258 (80% of which is used for wastewater treatment) Source: CBS (the Dutch Central Statistical Office)

41 3000 Costs flood protection 2500 Costs water quantity 2000 , price level 2005 Costs water quality 1500 1000 500

in million � /Y 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Figure 4.2 Cost allocation for each waterschap task, for the years 2000 to 2009

Self-financing The system of regional waterschap taxes means that waterschappen 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 4 on the NWB).

Tax principles The functioning of waterschappen 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 waterschap. The form and content of waterschap taxes are determined by a number of tax principles, including: a. the direct benefit principle; b. ‘the polluter pays’; c. the cost-recovery principle; d. the solidarity principle; and

Water governance Water e. the legality principle. 42 Re a. Waterschap charges are based on the Dutch Waterschappen Act. The underlying philosophy of these charges is that those who benefit from waterschap 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 water management infrastructure, too).

Re b. Furthermore, pursuant to the Pollution of Surface Waters Act, everybody that discharges wastewater pays a water pollution levy. This applies to every household and every industrial polluter. The size of the levy depends on the pollution value of the wastewater that is discharged directly or indirectly via the sewerage system into the surface water. Households have a fixed rate; with industrial companies 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 levying system of both the water pollution levy and the waterschap charges is in keeping with the cost-recovery principle laid down in the European Union Water Framework Directive (EC 2000/60). This principle represents the obligation to recover those costs related to ‘water services’ from the users, such as households, companies and the agricultural sector. Generally speaking, it can be said that most of the waterschappen’ tasks fall under the notion of water services and that the borders of the Dutch waterschappen largely correspond with the borders of Dutch (sub) catchment basins.

Re d. Both waterschap charges and water pollution levies are taxes, which implies that waterschappen do not deliver an individual service in return for this payment. The water control provisions realised within a particular district by waterschappen 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.

Re e. The waterschap charges and water pollution levy have their legal basis in the Waterschappen Act and in the Pollution of Surface Waters Act (legality principle). These laws prescribe the way in which waterschappen are supposed to draw up their tax regulations. Besides other essential tax elements, 43 these tax regulations stipulate precisely who is required to pay tax and how high the tax assessment should be. Moreover, the formal laws established for the levying and collection of state taxes have also been declared applicable to waterschap taxes (regulations of levying and collection, procedures of objections and appeals, legal protection, and so on).

The character of waterschap taxes Waterschap 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, waterschap charges however, as well as the water pollution levy, should be regarded as real taxes, substantively speaking. As explained above, waterschappen do not do anything individually in return for the payment of waterschap tax. 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 waterschappen (the direct benefit principle). This relationship is particularly apparent in the open land waterschap charge.

Purpose levies In contrast to most general state, provincial and municipal taxes, waterschap 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 (flood protection and the management of water quantity and treatment). The costs for the separate tasks are divided amongst the various categories according to the interest that they have in these tasks.

4.3 The waterschap charges

History The institution of the Dutch waterschap 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

Water governance Water kind, for example, maintenance of dikes, embankments and waterways. Later on this system was replaced 44 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 waterschap organisation became more integrated in public law. In spite of this integration, the functional and decentralised character of waterschappen has remained intact through the ages. This has had a permanent influence on the character of waterschap charges. These charges are based on the interest that people have in the tasks carried out by the waterschap. 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 waterschappen 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 waterschap district. In view of this, residents (that is, people residing in the waterschap district) were included in the apportionment levy. Since 1995 a separate charge for residents has been levied and this category has been represented in the governing board.

The objective of waterschap charges Waterschap charges are mainly levied for expenses relating to the flood protection task and water quantity management. Waterschappen have a limited number of tax categories, which are laid down in Article 116 of the Waterschappen Act: • ‘residents’ (related to residential space); • owners of the real rights of land (‘open land’); • owners of the real rights of buildings (‘buildings’).

Every household is taxed for a fixed amount related to the location of their residential space; land owners pay according to the surface area of their land and owners of buildings pay a charge based on the economic value (the municipal value or the value for the purposes of the Valuation of Immovable Property Act). 45 Justification and tax base The justification for the levying of waterschap charges lies in the interest that people have in the tasks carried out by the waterschappen. 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 and the inconvenience caused by water. This protection 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 waterschap district. In the allocation of costs, this general interest is partly determined by the density of the population and varies within the bandwidths of 15 and 35% of the total costs. The other costs are divided amongst the specific stakeholders, the owners of (the real rights of ) buildings and land.

The interest of the various stakeholder categories is linked to the tase bases applied: • ‘Residents’ charge: fixed amount per living space (household); • ‘Open land’ charge: the surface area of land; • ‘Buildings’ charge: the economic value of the building.

Table The average charges for a household (with an own home), 2007:

Residents charge: d 46 per household Buildings charge: d 45 per household Open land charge: d 59 per hectare Source: COELO (Centre for Reseach on local Government Economics)

The extent of the interest in water quantity management, which depends on the nature and state of the immovable property, may vary somewhat between the various land owners (and sometimes between owners of buildings, too). It is possible to set up categories of charges within a waterschap district on the basis of differences in type of ground, ground use, altitude, and so on (also known as classification). This results in a differentiation in the amount charged per hectare. The charge per hectare for polders is, for example, high while the charge per hectare for nature reserves is low. Water governance Water

46 4.4 The water pollution levy

History In 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 waterschappen (which used to be solely responsible for flood protection and water quantity management). The waterschappen’ 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 waterschappen with the instrument of the water pollution levy to finance their activities.

The revenues from the water pollution levy cover all the costs of measures taken against the pollution of regional surface waters. These measures include the treatment of urban wastewater, monitoring, planning and the granting of discharge permits. The treatment of urban wastewater is currently the exclusive task of waterschappen and, as such, is legally enshrined.

The objective of the levy The water pollution levy is a purpose levy that is used solely for the benefit of water quality management. The levy has a solid basis in the Surface Waters Pollution Act and in the tax regulations of the individual waterschappen. It meets all the aspects of the tax notion (see Section 4.2.). Although no individual service is provided (in the sense of wastewater treatment), it goes without saying that there is a close relationship between the individual charge and the pollution caused by the individual taxpayer.

The guiding principle of the water pollution levy is ‘the polluter pays’. The individual charge is determined annually on an individual basis and depends on the amount and composition of the discharge. The triplet of interest-pay-say also applies to water quality management. Both households and companies are represented in the waterschap governing bodies.

Calculation of pollution units 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 for the water pollution levy is the so-called ‘pollution unit’. The oxygen consumption of the pollution unit equals that of the average amount of household wastewater discharged per year per resident.

47 Small businesses are taxed on the basis of the fixed sum for business accommodation of 1 or 3 pollution units. Medium-sized companies 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 companies to households averages at around 30:70% (see Figure 4.3).

1200 Industry 1000 Households 800 , price level 2005 600 400 200

in million � /Y 0 2000 2001 2002 2003 2004 2005 Figure 4.3: Ratio of pollution levy of households vs. companies.

In 2007 the rate of the water pollution levy averaged D 54 per pollution unit. The rate per pollution unit varies between waterschappen from just under D 42 to D 72. On average a household pays the fixed charge for residential accommodation of 3 pollution units, which amounts to D 162 per year (source: Unie van Waterschappen). Someone who lives alone pays for 1 pollution unit.

Effects From 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 waterschappen. It should be emphasised, however, that the existing communal wastewater 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

Water governance Water pollution levy has had a demonstrable regulatory effect on the discharge of industrial wastewater. 48 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 waterschappen in combating the pollution of surface water. Table: The total production of pollution by companies 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 2004 Companies 33.0 13.7 9.6 7.4 7.3 6.8 Households 12.5 14.3 14.9 15.5 15.9 16.3 Treatment at water treatment plants 5.5 12.6 15.8 18.2 19.2 19.6 Discharge to the surface water 40.0 15.4 8.7 4.7 4.0 3.5 Source: CBS (Dutch Central Statistical Office)

The figures above show that 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 waterschappen (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).

4.5 Future developments

The waterschap tax system is comparatively complex. For that reason, in 2001 the Unie van Waterschappen submitted a proposal to the national government to simplify the structure of the tax system and to better gear it to contemporary integrated water management. These proposals were largely incorporated in the Modernisation of the Waterschappen Act, which was adopted in May 2007 by the Upper House. This Act provides for a revised tax system that is geared to the reorganisation of the waterschap tasks, that is, the management of the water system and the treatment of urban wastewater, as of 1 January 2009.

49 The current care of flood protection, the water regime and water quality are no longer distinguished as separate aspects, but make up part of an integrated water system task. A single water system levy will be introduced to finance this water system task. This will replace the current waterschap charges for flood protection and water quantity. The statutory classification scheme will be abolished and replaced by several limitative possibilities for rate differentiation. Nature reserves will be recognised as a separate category that will pay less. The existing Pollution of Surface Waters Act levy will be split into a treatment levy for indirect discharges (via the municipal sewerage) and a pollution levy for direct discharge. As a result, the costs of wastewater treatment will be split off from the other costs of water quality management (monitoring, granting of permits, etc.).

The guiding principles of the current tax system, that is, the triplet interest-pay-say, the solidarity principle, the benefit principle and the principle that the polluter pays will largely retain their application within the revised tax system. Because of the generalisation of the waterschap governing bodies, the solidarity principle will gain somewhat in significance and the triplet will be applied slightly more loosely.

The general expectation is that, with the modification of these purpose taxes, the waterschappen will be able to face with confidence the financial challenges of water management in the coming years. Water governance Water

50 5 A dedicated financial institution: The Nederlandse Waterschapsbank N.V. (NWB) 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 waterschappen were established. Some of these boards were extremely small, as shown by the fact that in the 1950s there were still some 2,500 waterschappen 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 waterschappen 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 waterschappen, in particular, lacked the financial expertise to find the correct approach or an alternative solution to the problem.

At the time, most waterschappen 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 Unie van Waterschappen. One of the purposes of this Association was to discuss common problems. The alarming financial situation the waterschappen found themselves in was just such a problem. There was

Water governance Water no point in appealing to the central government. Unlike the Provinces and Municipalities Funds there was, 52 and still is, no Waterschappen Fund. Throughout the centuries, the waterschappen had largely provided their own funds through the levying of taxes. The Unie van Waterschappen assumed the role of intermediary between the waterschappen 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 waterschappen, the Association issued two debenture loans and several private loans. A number of things rapidly became clear. • The Unie van Waterschappen could not safeguard the continuity of these actions. • This was not the Association’s field of activity. • The Unie van Waterschappen did not have the knowledge or experience to establish a more systematic set-up for the longer term. • The waterschappen’ 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 Unie van Waterschappen decided to transfer the financial interests of the waterschappen to a separate legal entity.

5.3 The concept of a bank

Meetings with the regional unions and individual waterschappen were organised throughout the country to convince them of the importance and major advantages of having their own financial institution. Not all the waterschappen 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. 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 waterschappen, 53 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 waterschappen by persuading them to become shareholders. The response was not uniform. Some large waterschappen took only a small share, while several small waterschappen 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 waterschappen. 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 waterschappen 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 Waterschap 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 waterschappen’ tax regime was not yet properly structured. Water governance Water

54 Result I: Security The 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.

Result II: Cost savings Combining forces in this way led to major cost savings: After all, it was no longer necessary for each individual waterschap 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.

Result III: Learning factor The Bank’s financial expertise and resulting advisory services contributed to the continually updated financial management of the waterschappen.

5.4 Form

At the time, NWB 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.

Start-up problems 1. Finding a sufficiently large group of like-minded parties. 2. Complying with the requirements laid down by national legislation. 55 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.

Up and running • 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.

The Nederlandse Waterschapsbank N.V. (NWB) in a nutshell The 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 NWB has the same status to enable it to act as financier to its clients, shareholders, etc. The NWB has been awarded AAA ratings by the credit rating agencies Standard & Poor’s and Moody’s. That the NWB is considered a highly reliable bank is also apparent from the fact that for three consecutive years it has been commended by Global Finance ‘for being one of the top ten safest banks in the world’. Water governance Water

56 5.5 Key NWB 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 as of 31 December 2006: Balance sheet total: d 35.2 billion Equity capital: d 1.3 million BIS (Bank of International Settlements) ratio: 115% Ratio of equity capital / balance sheet total: 3.6% Net profit: d 97.7 million Cost/income ratio: 9.7% Credit ratings: AAA/Aaa New lending operations per year: d 5.1 billion Number of employees: 35

The success of the NWB 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 waterschappen 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 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.

57 5.6 Socially responsible business practices

The NWB deems socially responsible business practices to be very important. They are therefore an integral part of the general policy. One example is the NWB’s initiative to support water management projects in developing countries. In close conjunction with its shareholders and in cooperation with the Unie van Waterschappen, on 22 December 2006, the NWB 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 waterschappen in the framework of international cooperation. The revenues from this fund facilitate the individual waterschappen in deploying their knowledge to realise partnership by cooperation in projects with foreign organisations. The waterschappen 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 D 10 million early in 2007. In a few years’ time, the fund will amount to d 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. More information is available on the website of the NWB fund: www.nwbfonds.nl. Water governance Water

58 6 The Unie van Waterschappen Unions, of which the waterschappen were members, were set up in each province as early as the 1920’s. These were the so-called provincial waterschap unions. The main goal of these unions was to promote the interests of the waterschappen at a provincial level. To that end they acted as counterparts of the provincial authorities with regard to issues that jointly affected the waterschappen in the province in question. Because of the increasing number of mergers within the waterschap system and the catchment basin approach, as a result of which many interprovincial waterschappen have arisen, many provinces no longer have a waterschap union.

The more the central government’s involvement with regional water governance increased, the more the need arose for an organisation to promote the waterschappen’ interests at a national level. Hence the setting up of the Unie van Provinciale Waterschapsbonden (Association of Provincial Waterschap Unions) in 1927. All the provincial waterschap unions were members. In 1968 the waterschap unions ceased to be members of this Association, but the individual waterschappen have been members since then. The name of the Association was changed into the Unie van Waterschappen at this time. Currently all 26 waterschappen are members of this Unie van Waterschappen. The Unie van Waterschappen aims to promote the interests of waterschappen 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, and so on.

The greater the influence of European regulations, the more international the character of this promotion of interests becomes. This is particularly the case with European legislation. The Association is 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. The Unie van Waterschappen participates in European policy consultations on behalf of these organisations. If necessary, the Unie van Waterschappen itself maintains contacts with the European institutions (Commission, Council and Parliament). In addition to the external promotion of interests, the Unie van Waterschappen also advises the member waterschappen. The Unie van Waterschappen draws up guidelines,

Water governance Water model bye-laws (for example in the fiscal field) and model plans, and supports waterschappen with the 60 implementation of European regulations. The Unie van Waterschappen also participates in studies and research within the framework of special commissions and working parties on issues that are important for the waterschappen at large. The Unie van Waterschappen facilitates international cooperation through the waterschappen. Finally, the Unie van Waterschappen is an employers’ organisation. It negotiates with central government personnel organisations and makes agreements on employment terms for waterschap personnel that are binding for the waterschappen.

The highest level of the Unie is the members’ meeting (governing board), which convenes four times a year and in which all member waterschappen 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 Unie has a number of fixed, predominantly administrative committees, in which the member waterschappen are represented. Below these committees are a number of official working parties. As a result of the structure of this organisation, the Unie is generally very well aware of the feelings and motivations of its member waterschappen, so that it is in a position to optimally promote its members’ interests in The Hague and Brussels. The costs of this Unie - which are primarily personnel costs - are borne by the member waterschappen via financial contributions. The Unie van Waterschappen employs around sixty employees, including a representation in Brussels. The general manager of the Unie is also secretary of the members’ meeting and the governing board. The Unie bureau acts as secretariat and is also the executive body of the association. Furthermore, the Unie publishes a monthly magazine for its contacts entitled ‘Het Waterschap’. More information about the Unie bureau can be found on the Association’s website (http://www.uvw.nl).

61 Water governance Water

62 7 Final conclusions In the previous chapters the main elements - the building blocks - of the Dutch waterschap system were described in the following order: the constitutional position of waterschappen, 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 Nederlandse Waterschapsbank N.V. in attracting outside capital was discussed briefly, as well as the role the Unie van Waterschappen plays as national promoter of the waterschappen. 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. Waterschappen play a key-role in this as functional co-authority. ‘Functional’ because, legally speaking, waterschappen’ tasks are limited to the care of flood protection and the water regime (including water treatment). ‘Co-authority’ because waterschappen, formally speaking, are ‘clad with authoritative power’, and have their own governing bodies, tax area and legal powers, which are derived from the Waterschappen Act and the various laws on water management.

As a functional co-authority, waterschappen 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, waterschappen will have to be open to these relationships and provide a framework for them. Waterschappen 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, companies, 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. Waterschappen will also have to open their eyes to society’s ever changing wishes concerning water management. This, too, is something waterschappen 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 waterschappen to improve drainage. The ecological importance of such stream systems has now been recognised, and the waterschappen are currently executing various projects involving the restoration of the former, meandering courses of these streams. Some of these projects have already been completed. Water governance Water

64 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 waterschappen do have the required powers and are indeed able to enforce compliance with the various rules and regulations.

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

The second building block, elaborated in Chapter 3, deals with the democratic legitimacy resulting from waterschappen’ own governing bodies, which are composed of water management stakeholder categories. In that sense, the waterschap can quite rightly be characterised as a ‘stakeholder democracy’. This representation is crucial for the democratic legitimacy of waterschappen. And ultimately, it results in democratically elected stakeholders in waterschap 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 waterschap 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, companies and managers of forests and nature reserves. After all, they bear a substantial part of the costs made by waterschappen and they must have a say in the board in accordance with the interest-pay-say triplet. The Waterschappen Act 2007 will lead to considerable changes in the representation of stakeholders in the assemblies. The essence will, however, remain unchanged.

The third and final building block in the waterschap model concerns the financial independence of waterschappen that results from their own tax area. This was discussed in Chapter 4. The core message is that waterschappen are largely self-supporting and are in a position to bear the costs of their tasks by levying their own taxes - the so-called waterschap charges and the 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 (education, health care, defence, and so on). In this respect, everyday practice shows that waterschappen 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 waterschap an annual average of D 220 for waterschap taxes. It is not surprising to hear that the stakeholder categories, that have to pay these taxes, 65 are represented in waterschap 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 waterschappen 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 waterschappen’ control. Moreover, the dikes are relatively safe - in this respect the Netherlands’ water defences are never really ‘complete’ - and the waterschappen 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 waterschappen 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 waterschappen 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 the value of these building blocks. 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.

The sound status and special characteristics of the NWB are considered necessary for it to operate effectively within the Dutch setting. The description of the NWB 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 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’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

Water governance Water situation in which the problems are substantial and the required structures have yet to be developed. 66 Anticipating and being prepared for climate change and social developments will continue to be significant challenges in the future. To this end, waterschappen operate with a broad outlook, in cooperation with the central government, provinces and municipalities. 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 waterschappen themselves and for the Unie van Waterschappen.

67 Water governance Water

68 Literature Berg, J.T. van den, Hall, A. van, Rijswick, H.F.M.W. van: Waterstaats- en waterschapsrecht (Water control and waterschap legislation in the Netherlands.) Third, fully revised edition. Studiepockets staats- en bestuursrecht nr. 26 (Pocketbook on constitutional and administrative law no. 26) Kluwer, Deventer, 2003. ISBN 902684092 6.

Centrum voor onderzoek van de Economie van de lagere Overheden (COELO); Atlas van de lokale lasten 2007. www.coelo.nl

Havekes, H.J.M., Heemst, W.R. van, Heldens, W.G.M., Strijen, A. van: Het waterschap in kort bestek 2002-2003 (Brief description of the Dutch waterschap 2002-2003). Elsevier, ‘s-Gravenhage, 2002. ISBN 90-5749-888-x.

Havekes, H., Koemans, F., Lazaroms, R., Poos, D., Uijterlinde, R.: Water Governance, The Dutch waterschap model. GBS prepress, Rijswijk, 2004.

Kramer, T. de, Rijswick, H.F.M.W. van, Minderhoud, F., Berns, J.: Europagids, Handleiding Europees recht voor waterschappen (European guide, Handbook to European law for waterschappen). STOWA, 2004.

Ministerie van Verkeer en Waterstaat (Ministry of Transport, Public Works and Water Management): Water in Beeld, Voortgangsrapportage over het waterbeheer in Nederland 2007 (Water in the Picture, Progress report on water management in the Netherlands 2007). www.waterinbeeld.nl

Rijswick, H.F.M.W van, Freriks, A.A., Backes, C.W., Widdershoven, R.J.G.M.: EG-recht en de praktijk van het waterbeheer (EU law and the practice of water management). STOWA series no. 18. STOWA, 2003.

Uijterlinde, R., Janssen, A., Figueres, C. (red.): Success factors in self financing local water management. Kluwer, Deventer, 2003. ISBN 90 6904 1146

Ven, G.P. van de (red.): Leefbaar laagland (Habitable lowlands). Fifth fully revised edition. Kluwer, Deventer, 2003. ISBN 90 05345190 Water governance Water

70 71 Water governance Water

72 Unie van Waterschappen Koningskade 40 2596 AA The Hague PO Box 93218 2509 AE The Hague Telephone: +3170 351 97 51 E-mail: [email protected] www.uvw.nl Water governance