As with many contentious issues, there is credible theory and empirical evidence supporting both sides.

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1 Prof. Paul Jeffrey, Prof. John Fawell, and Dr. Kristell Le Corre, Cranfield Water Science Institute, Cranfield University, UK; Jos Frijns, KWR Water Cycle Research Institute, Nieuwegein, The Netherlands Debates around the role of regulation in shaping innovation and progress are long standing 1 and there is a growing body of well-researched case studies available, highlighting the costs and benefits of regulation for incentivising innovation. 2 As with many contentious issues, there is credible theory and empirical evidence supporting both sides. From one perspective, regulation, when poorly designed or deployed, denies resources and time to entrepreneurs by creating red tape and burdensome administrative demands. It can also impose unnecessary financial burdens on companies who are forced to adopt specified processes, technologies, and strategies in order to comply with legal requirements. Where regulation is inadequately aligned with (e.g. lags behind) innovation, it can delay the progress of new technologies. 10 On the other side of the argument, regulation provides a general framework for finance and funding conditions as well as for intellectual property rights, which set important principles for, and grease the wheels of innovation. Regulation also imparts clarity, stability and certainty on the operating environment experienced by entrepreneurs and investors. Standards deliver a design and performance benchmark for producers and confidence for the consumer, often helping to boost trust in an unfamiliar product or service. Perhaps most importantly, regulation and standards underpin legal obligations and thereby bound liability for all parties. The way in which these tensions play out in the context of water reuse (specifically nonpotable water quality standards) in the European Union (EU) is instructive, particularly for jurisdictions wishing to explore and pursue water reuse as a strategic water management option. Water reuse involves treating wastewater to an appropriate standard so it can be Global Water Forum 1

2 used again as non-potable or potable water rather than being discharged into the sea, a river or other water body. As an increasingly significant component of integrated water resources management strategies, reuse has growth potential in many parts of the world, including Europe. Europe offers a delicate patchwork of customs and behaviours within which consistent and coherent water reuse standards or water quality guidelines must be developed. An important sub-text to the debates has been the question of whether the EU should develop a single set of standards for reuse water quality, for adoption across the continent. The discussion below is motivated by enquiry, rather than a view that one option has necessarily more benefit than another, and rehearses the arguments for and against a unified set of regulations across Europe for water reuse applications. Arguments in favour of a pan-eu regulatory approach The absence of a single set of standards has been identified as a significant barrier to the development of the water reuse sector in the EU. 3 Three persuasive arguments have been put forward for introducing an effective regulatory regime for water reuse schemes at the EU level and we summarise these in the following paragraphs, having collated them from a range of sources. First, the provision of a firm legal basis to protect the health of the public and the environment is vital for any sector involved in the management and anthropogenic use of natural resources. The absence of a robust legal architecture erodes the confidence and conviction needed by potential reuse scheme developers. Similarly, a lack of independently set performance objectives increases uncertainty and makes the design of risk management practices difficult. This link between regulation and risk management is central to the effective operation of engineered systems which deliver utility for citizens on a large scale through the management of natural resources. Global Water Forum 2

3 Second, effective regulation moderates perverse or conflicting incentives, which can lead to undesirable social or economic outcomes 4. Yet, for regulation to be effective, regulators must both understand the impact of regulatory interventions, and anticipate institutional responses. The importance of ensuring that regulation facilitates rather than burdens reuse schemes was starkly illustrated in a recent report commissioned by the EU itself, pointing out that in France, Italy, and Greece overly stringent non-potable reuse quality standards were a major barrier to the further development of reuse projects 7. These cases present examples of the non-trivial challenges for those charged with developing and implementing regulatory regimes. In the case of water reuse, these are made even more difficult by the fact that the activities being regulated are often novel and only have sparse precedent. Under such circumstances domestic governance bodies are perhaps understandably cautious and conservative, reducing their effectiveness as independent regulators. Global Water Forum 3

4 The regulation of water reuse is made more complicated in the EU by the fact that the activities being regulated are often novel and only have sparse precedent. Third, the potential geographical heterogeneity in regulation that could arise from a multiplicity of regimes would have unwelcome consequences for European business and communities. For example, variability in non-potable water quality standards for agricultural use across the continent has the potential to damage the free movement of goods across Europe s internal borders as consumers in one part of Europe may become anxious about perceived lower standards in other parts of the continent. This issue is potentially damaging to the single market principle held by the EU and is perhaps the reason why there has been more interest in developing water quality standards for agricultural water reuse than for the non-potable and potable municipal sectors. Dissenting arguments against a pan-eu regulatory approach There are also number of well-understood disadvantages to a pan-european regulatory approach to water reuse. Challenges related to limits of detection and evidencing the health impacts of pathogens (particularly where exposure routes are indirect) present uncertainties regarding possible health risks from re-use of wastewater. 5 Such a situation creates difficulties in developing regulations with a danger that those with less pressure on water resource availability may seek overly precautious standards compared to those with a greater incentive to adopt widespread reuse as a foil against spiralling demand or increased drought. Many of the arguments against pan-eu regulation centre on the challenges of implementation. In the case of the EU, a number of trans-boundary water bodies and rivers, such as the Danube River, flow through multiple countries potentially complicating negotiations. Further, EU level regulatory changes are often slow to be implemented as they require extensive review, revision, and impact assessments. Global Water Forum 4

5 This can be a disincentive for undertaking pan-eu regulations. In addition, the fact that the EU is such a large trading block has consequences for other non-eu member countries in the region. Indeed, the absence of universally sanctioned standards for non-potable water quality could also, for example, compromise the free trade of agricultural products irrigated with treated wastewater from countries applying less stringent standards than those applied in the countries importing the products. 6 There would also be difficulties for member states who already have bespoke standards for water reuse because these would normally be superseded by EU regulation. Those reuse scheme operators who have invested in treatment and monitoring to meet quality or performance thresholds that are stricter than any retrospectively imposed EU-wide standards, are exposed to the threat of squandered investment. For others, the contrary may be true and they may have to add further investment on treatment and irrigation systems that might render existing investment redundant. In addition, some users who are able to operate satisfactorily in their own country and are content with the local market may find that they have increased monitoring and verification requirements that will simply add cost to their operations. Finally, the introduction of EU-wide regulation could be potentially costly in terms of administration and monitoring and could also be unhelpful in the development of other water conserving options by diverting attention and resources. Although other interventions remain viable and capable of making significant contributions to the supply-demand balance, when none of the component trends of that balance are moving in a useful direction it suggests an urgent need for mature regulatory arrangements in preparation for other interventions. Conclusions The need for progress on developing a firmer framework of standards to support reuse in the European Union has been recognised by both the academic community 8 and the European Global Water Forum 5

6 Commission itself 9, with consultations on water quality standards for agricultural reuse and aquifer recharge well advanced at the time of writing. A broader historical perspective on these developments would point out that those countries with hallmark water reuse operations (e.g. USA, Australia, Cyprus) have long established (going back to the 1960s in the USA for example) non-potable quality criteria and mature governance arrangements. International experience with the WHO and Australian guidelines, has shown positive results with a risk based approach that finds a balance between protecting public health and the environment, and setting a realistic standard for the reuse sector in order to help promote its growth and viability. 11 In that context, we may conclude that water reuse sectors which make positive contributions to sustainable resource management do not operate in a governance vacuum but rather require the direction and confidence that can only be offered by a progressive and enabling regulatory regime. References: 1. Blind, K. (2012) The influence of regulations on innovation: A quantitative assessment for OECD countries. Research Policy, 41(2): Wacker, M.G., Proykovab, A., and Santos, G.M.L. (2016) Dealing with nanosafety around the globe Regulation vs. innovation. International Journal of Pharmaceutics. 509 (1 2) Technopolis Group Screening of regulatory framework, Final Report November Developed for the European Commission (DG-RTD C1). Accessible at: _edited-copy.pdf. 4. Bakker, K. (2003). Good Governance in Restructuring Water Supply: A Handbook. Federation of Canadian Municipalities & Program on Water Issues. 5. Ong, C.N. (2016) Water reuse, emerging contaminants and public health: state-of-theart analysis. International Journal Of Water Resources Development 32(4): European Commission (2014). Background document to the public consultation on Global Water Forum 6

7 policy options to optimise water reuse in the EU. DG ENV, European Commission. Retrieved from: BIO by Deloitte (2015). Optimising water reuse in the EU Public consultation analysis report prepared for the European Commission (DG ENV). Paranychianakis, N.V., Salgot, M., Snyder, S.A., Angelakis, A.N. (2015). Water reuse in EU states: Necessity for uniform criteria to mitigate human and environmental risks. Critical Reviews in Environmental Science and Technology, 45(13), Alcalde Sanz, L. and Gawlik B Water Reuse in Europe Relevant guidelines, needs for and barriers to innovation. Report of the Joint Research Centre (N o JRC92582) JRC. Retrieved from: Köhler, A. R. and Som, C. (2014) Risk preventative innovation strategies for emerging technologies the cases of nano-textiles and smart textiles. Technovation. 34: Huxedurp, L.M., Pálsdóttir, G. and Altavilla, N. (2014) Risk-based planning for water recycling in an Australian context. Water Science & Technology: Water Supply 14 (6): Paul Jeffrey is Professor of Water Management at Cranfield University and Director of the Water Theme there. John Fawell is a visiting professor at Cranfield and has worked in the fields of drinking water and environmental contamination for twenty-five years, advising government, industry and NGOs. Kristell Le Corre is a Research Fellow in Water Reuse at Cranfield with extensive experience in Europe and Australia. Jos Frijns is the Resilience Management & Governance team leader at KWR Water Cycle Research with interests in organisational process, citizen participation and strategy and knowledge development. The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here. Global Water Forum 7