Free no more: A price tag on groundwater

Despite constant warnings by hydrologists on the depletion of Malta’s increasingly salinised groundwater resources, abstraction has been left unregulated and unbilled for the past decades.

The only two major steps taken by the state being two registration schemes carried out in 1997 and 2008, which gave owners of around 8,000 boreholes a once in a lifetime chance to regularise their position.

But a green paper issued for public consultation last week, proposes an unprecedented tariff system based on the volumes abstracted from the water table. The tariff still must be quantified, and it remains unclear whether the new permitting system will be strictly limited to those boreholes registered in 2008 to avoid another amnesty.

It remains an open secret that unregistered boreholes have continued to proliferate since 2008. What is clear so far is the intent to use the new tariff as a stick while offering incentives in the forms of rebates and quotas as carrots, to help shift farmers and commercial operators to a more sustainable use of water sources.

1. Filling your swimming pool with ground water will cost more than filling it with tap water

The green paper proposes a tariff for domestic users who use their own boreholes to abstract groundwater to use it to water their garden lawns or fill their swimming pools.

The green paper does not tell us how much they will be paying but makes it clear that the tariff will be set at a higher level than the tariff applied by the Water Services Corporation for domestic consumers.

The aim of this measure is to disincentivise the use of groundwater for domestic purposes while promoting the provision of water from WSC which is a more sustainable alternative. In short ground water abstraction will no longer remain a cheaper alternative to tap water.

But the green paper does not specifically refer to the regulation of water carriers or bowsers which provide households with a cheap supply of water to fill up their pools.  One presumes that water abstracted by bowsers will also be charged at a commercial rate, thus ensuring that tap water is cheaper than water supplied by commercial operators.

2. Farmers will only pay if they surpass an allocated quota of ground water they can use for free

Each farming operation will be allocated a quota based on factors such as land-area, the crops cultivated, and farm-size as well as environmental factors. Livestock farmers will be provided with an annual quota depending on the livestock units on the farm.

Farmers will be able to source the water volume allocated under the quota either through groundwater or through New Water i.e. treated wastewater derived from sewage purification plants, in those places where it is available.

No volumetric tariffs will be applied to water use within this quota. But groundwater and New Water use in exceedance of this quota will be charged at a volumetric rate “close to the real cost of groundwater”.

Since the abstraction of groundwater is estimated to already carry an operational cost of around €0.25/ m³, the water pricing policy will also incentivize the use of New Water over groundwater, given that New Water below the established quota will be provided at no charge to consumers in the agricultural sector. And since there are no operational costs involved in using New Water, it will remain more advantageous for farmers to use it instead of ground water.

Still only  1.6 million cubic meters of New Water was available for farmers in  2022. According to the green paper this capacity “only addresses a fraction of the current total water demand of the agricultural sector”.

Agriculture accounts for 76% of the total amount of ground water used in Malta. While on average agricultural boreholes in 2019 abstracted an annual 1,043cb.m of water, commercial boreholes abstracted 3,414cb.m of water.  But In 2019 four boreholes - three of which were registered as agricultural boreholes - were abstracting over 60,000 cubic meters of water each.

3. Concrete plants and water bottlers will be charged in full but businesses implementing a water management plan will be eligible for a 25% rebate.

A volumetric tariff for water use will be established for operators of groundwater abstraction activities in the Commercial Sector, with the tariff set at the real cost of groundwater.

Unlike farmers operators in this sector will not be eligible for a quota of free water but will benefit from a 25% rebate on the annual cost of groundwater abstraction if they fully implement water management measures identified in an audit.  Only businesses whose 3-year water management plan is certified by the Energy and Water Agency will be eligible for the rebate.

Small and Medium sized enterprises will also benefit from free water consumption audits provided by the Energy and Water Agency.  The audits will be aimed at optimizing water use and limiting dependence on groundwater resources. Non-SMEs will be granted  unspecified financial support for the the undertaking of these audits.

Overall, 245 boreholes are registered for commercial activities in Malta.

Statistics presented in parliament reveal that the equivalent of 108 million two-litre bottles of water were extracted for free from the ground and sold as water or carbonated soft drinks by beverage producers between 2016 and 2021. Not all producers in the sector rely on ground water for their needs. For example, Farsons relies on the government’s water supply for its operations.

Another parliamentary question disclosed that construction companies extracted the equivalent of 200 million bottles of water between 2014 and 2021.

4. WSC will not pay more for its ground water

The new tariffs will not be applicable to groundwater sources operated by the Water Services Corporation, given that the Corporation is moving towards the achievement of a net-zero impact on the groundwater environment through its operations.  But annual groundwater abstraction levels by the Water Services Corporation will be capped at a maximum level of 14 Mm³ up to 2030.  The volume of groundwater extracted by the Water Services Corporation has progressively decreased from 43% of the water blend supplied by the Corporation to 36%. This was done to ensure better management of existing groundwater sources. But the green paper also attributes this decrease to  “the general degradation in the quality of the aquifer systems”. Moreover, this also comes at an added cost because the cost of abstracting groundwater is significantly lower than that of producing water from alternative sources such as seawater desalination. The white paper points out that in terms of energy consumption, producing 1 cubic meter of desalinated water requires around 4 times the energy required to abstract the same volume of groundwater.

5. Licence plate to be exhibited

Malta currently has 8,058 registered boreholes, with roughly half of them registered with the authorities in 1997 and the rest under a different registration scheme introduced in 2008. Subsequently, a metering system was implemented to measure groundwater abstraction.

One major problem which could limit the effectiveness of the new regulation is posed by unlicensed boreholes.

It is not clear from the green paper whether borehole owners who had not registered their activity in 1997 and 2008 will be given another chance to come clean or whether the new regime will be strictly limited to already registered boreholes.

But the green paper refers to the creation of a new permitting system led by the Environment and Resources Authority (ERA) which will be issuing permits with conditions for fixed periods of time and to the publication of a  “publicly available register of groundwater abstractors”.

Moreover, owners of boreholes will be required to maintain a licence plate “in a highly visible position” close to the abstraction point to facilitate enforcement.