Environmental Audit Committee – Biodiversity and Ecosystems


Water is essential for a healthy environment, yet population growth and climate change are putting increased pressure on our water resources. The areas which Thames Water supplies, London and the Thames Valley, has been classed as seriously water stressed by the Environment Agency. This recognises that our region is facing potentially greater pressures and more challenges than most other water company supply areas, the forecasted shortfall in our supply area is 387Ml/d by 2045. This represents 14% of the water that we currently supply each day.


A deficit in the water that we supply not only impacts our ability to provide clean drinking water but also our ability to protect and enhance the environment. Water is essential to biodiversity and without sufficient quality and quantity, stresses on species would increase and further contribute to global biodiversity loss. 


We recognise the importance of protecting and enhancing the environment, and the critical role that we play within this. Demonstrating long-term care for the environment is central to our strategic objectives, and we monitor the impact of our operational activities and contribute to biodiversity net gain wherever possible. Therefore, we have committed to enhancing biodiversity by 5% at 253 of our most important sites for nature over the next 5 years. This sector-leading commitment will be achieved by improving the condition of existing habitats, for example changing the management regimes of grassland, or creating new habitats with improved connectivity. 


In addition to making improvements to biodiversity, we have committed to assessing the Natural Capital stocks (stock of natural resources) across our landholdings by 2025. We are trialling a holistic approach to catchment management in three river catchments, the Evenlode, Chess and Crane, working with a range of stakeholders to deliver multiple environmental and community benefits[1]. Finally, we have various commitments with the Environment Agency, as part of the Water Industry National Environment Programme[2], to deliver various habitat improvements and improve ecological standards in the rivers across our region. 

The state of biodiversity

         How effectively is the Government monitoring the impact of UK activities on biodiversity, at home and abroad? 


Thames Water is the UK’s largest water company, serving 15 million customers in London and the Thames Valley. As such, we are only able to comment on our experience in our operational regions.


Historically, we have monitored biodiversity on our sites and SSSI compliance, publishing this in our annual results; these are not directly reported to the government but are publicly available. We do voluntarily report statistics on protected species, such as great crested newts, to the government, but there are no obligations to provide any further reports on biodiversity. We would have no difficulty with reporting additional data if the government felt that this was necessary to improve biodiversity.


         How has the Government performed against the Aichi Biodiversity Targets and what further progress is needed? 


We do not use these targets at Thames Water so are unable to comment.


         Where should the four nations prioritise resources to tackle biodiversity loss?

We do not feel that it is appropriate to comment on this question. 

Evaluating measures to conserve and enhance biodiversity:

         How should the Environmental Land Management scheme maintain and improve biodiversity? What role might alternative land use play in delivering improvements to biodiversity under the ELM scheme?

The Environmental Land Management Scheme (ELM) will replace the Basic Payment Scheme and Countryside Stewardship funding, paying farmers for delivering public goods, which includes increased biodiversity. We would like to see ELM schemes designed to enhance river water quality, for example by reducing pesticide and nutrient run-off, and assist with natural flood management. If areas of land are being specifically set aside for biodiversity measures, if they can be positioned in areas that provide additional protection for water quality and/or replace higher risk activities currently close to water, that would be beneficial. There is a missed opportunity to make it a requirement of the ELM Scheme to deliver an element of net gain - this could be up to 10% to match what developers are being asked to deliver under the Environment Bill. 

There is also the potential to provide offsetting opportunities through the ELM. There are already various existing examples of companies creating habitat banks, through companies like the Environment Bank, which sell biodiversity units to developers. As a

company with sites across London and the Thames Valley, we would welcome the opportunity to develop biodiversity units on our land, which could be sold to help developers to meet their obligations and provide significant benefits for the environment. It would also provide additional funding for the ELM to deliver biodiversity improvements. 


         How effective are the new measures to enhance biodiversity within the Environment Bill, particularly biodiversity net gain and Nature Recovery Networks? Do these measures complement existing regulatory frameworks and address issues surrounding how to value nature


We welcome the Environment Bill and its aims to enhance biodiversity. One of the ways it seeks to do this is by setting environmental targets.  In the water environment these include: reducing pollution from agriculture, reducing pollution from wastewater and reducing personal and non-household water consumption. We would welcome the Environment Bill going further to introduce targets that aim to reduce the impact of chemicals and reduce the impact of physical modifications on river environments. This would improve water quality and help improve river flows, respectively, this is something that as a company we are already focused on.  


We are equally supportive of the introduction of a statutory requirement for planning authorities to only approve developments where there will be a minimum biodiversity net gain of 10%. Placing this duty on public bodies will help to ensure that biodiversity is enhanced and is properly considered at every stage of the planning application process. However, it is also important that the impact on water is considered in any biodiversity net gain assessment, given the importance of water in providing habitats and the pressures that supplies are under due to population growth and climate change. There is also a risk that whilst in theory the 10% biodiversity net gain requirement will bring about vast improvements to biodiversity, it will only be achieved if local government is resourced appropriately for ongoing enforcement.


         How should Nature Recovery Networks be planned, funded and delivered?

In our experience, the most effective way to deliver large scale improvements across multiple river catchments or regions is through the formation of collaborative working groups which all relevant stakeholders can attend and participate in. We would like to see the Nature Recovery Networks planned, funded and delivered through or in partnership with Catchment-Based Approach partnerships. This has been effective in our Smarter Water Catchments initiative which trials the success of a more holistic approach to catchment management, working with a variety of local stakeholders to deliver catchment scale improvements that provide multiple benefits. 

We would support using a similar model for nature recovery networks where local stakeholders (e.g. water companies, landowners, developers, local authorities, regulators and voluntary groups) would come together to plan, fund, deliver and maintain these networks. This could be monitored by a regulator, e.g. Natural England. We are aware that Natural England and local Wildlife Trusts are currently mapping out these networks and creating a plan for how they might be delivered. In addition to visibility of where these networks will be located, we would like the framework surrounding them to detail what recovery is required in which location. 

Co-ordination of UK environmental policy

         How can policy be better integrated to address biodiversity, climate change and sustainable development?

Policy is too often developed in isolation to tackle individual issues without giving due consideration to subsidiary effects. In the current circumstances, many polices are being translated from EU legislation into UK law; this presents a rare opportunity to change the way in which policy is developed. It is welcome that policy developments should are subject to an impact assessment which investigates their likely effectiveness at achieving the policy goal and their impact on other policy goals, but this needs to be conducted in enough detail to understand impacts on the ground. For example, the current way the water industry is regulated does not favour the promotion of nature-based solutions which would give additional biodiversity benefits. 

         How can biodiversity and ecosystems help achieve the air, soil and water quality objectives in the 25 Year Environment Plan?


Nature has an enormous capacity to regenerate if we give it the time and space to do so. Left to its own devices, nature will determine the most appropriate habitats and ecosystems for a location which in turn is likely to make the biggest contribution to air, soil and water quality objectives. For this to be effective we must make sufficient space for nature in our planning. The planning, establishment and protection of nature recovery networks will be critical in this regard, as is the evolution of the current regulatory framework to enable the promotion of nature-based solutions. This will give the wider societal benefits associated with these objectives unlike conventional solutions to water industry business needs.


         What outcomes and protections should the UK Government be pushing for at the forthcoming UN negotiations on the post-2020 global biodiversity framework at the Convention on Biological Diversity COP 15?

We do not feel that it is appropriate to comment on this question. 


Economics and biodiversity:

         What are the possible approaches to balancing economic growth and conservation of nature and its contributions? Is there evidence these approaches work and can be implemented?

Economic growth is likely to increase demand for drinking water and place higher demands on sewage treatment works. Therefore, a water and wastewater strategy should be considered at early stages when planning infrastructure. 

We welcome the government’s aim that was set out in the 25 Year Environment Plan to use a natural capital approach to protect and enhance the environment by recognising tangible and non-tangible economic benefits. However, economic growth is currently given a primacy that is out of kilter with nature conservation. There should be greater emphasis on wider societal benefits for example access to green spaces and improved mental health. Furthermore, conserving nature makes places more attractive to people and businesses and therefore can promote local economic growth. 

Therefore, we should rewire our systems to understand what growth is possible while resolving the current biodiversity crisis rather than seeking to maximise the level of conservation while still seeking to pursue economic growth as a primary goal.

         What does the UK Government need to do to maximise human prosperity – in terms of health, economic, and social wellbeing—within the ecological and resource constraints of a finite planet? What alternative models and measures of economic welfare can feasibly help achieve this?


When assessing the economic constraints of maximising human prosperity, the wider benefits to society should be considered. In a speech to mark the publication of the Environment Agency’s report ‘The state of the environment: health, people and the environment’, Sir James Bevan noted the physical and mental health benefits a good quality environment can have, and estimates that the NHS could save £2.1bn every year if everyone in England had access to good quality green space.[3] For example, this could be through initiatives to improve wellbeing such as social prescribing, which we offer at our Thames Water site, Walthamstow Wetlands. This encourages individuals to visit green space and can have a marked improvement on mental and physical health thus reducing NHS spending. This would also help society to level up, as it is those who live in poor environments who have the worst health and lowest incomes therefore, they have the most to gain.[4] 


Pairing nature-based solutions to climate change with biodiversity:

         Which nature-based solutions are most effective in achieving both climate and biodiversity goals?

As with traditional, engineered solutions, nature-based solutions must be assessed as to whether they deliver value for money and achieve their environmental objectives. Traditionally the water industry has implemented engineered infrastructure solutions to tackle challenges associated with water quality and security; but an increase in cost, the desire to secure better value for customers’ money and deliver greater environmental benefits has meant that the sector has increasingly looked towards trialling nature-based solutions. As an example, we are currently trialling nature-based solutions to deliver phosphorous reductions in the river Evenlode catchment. We are still understanding the full extent of the outcomes of the trial on water quality, but we have conducted a Natural capital assessment to understand wider benefits (including biodiversity) and have noticed that wetlands, swales and woody dams have been most effective at contributing to biodiversity gain.

However, if we are to successfully understand and use nature-based solutions more widely  within the water sector, this will require the system of regulation to adapt. A system of regulation that has been developed to regulate end-of-pipe discharges is unlikely to be appropriate for nature-based solutions, and ultimately will require a different sort of regulation. 

         What would constitute clear indicators of progress and cost-effectiveness of naturebased solutions and how should trade-offs and co-benefits associated with naturebased solutions, biodiversity and socioeconomic outcomes be considered?

As with all infrastructure, results need to be judged by outcomes; for example, value for money, a river’s chemical and ecological status, natural capital baseline assessments etc. As suggested in the answer to the previous question, this will require a different approach to regulation that is more appropriate for natural solutions. 

To evidence cost-effectiveness and allow for comparison with engineered solutions, there needs to be a clearer indication of upfront cost, continued operational costs and life expectancy. To do this effectively, there needs to be a common methodology used across sectors which is established and backed by government. There needs to be flexibility within the regulatory framework to allow for complexity when multiple environmental measures are used, particularly when a trial and test approach is being taken. 

There are many things that can be focused on in relation to nature-based solutions, so it is important that the aims are properly established. We would also advocate that the government sets an overall strategy for the delivery of nature-based solutions to ensure that the desired outcomes are being achieved. This approach makes the benefits clearer as well as any trade-offs. For example, the installation of reed beds at the end of the wastewater treatment process, improves water quality and offers environmental benefits. However, the trade-off is that they can only cope with a certain range in flows so alternative arrangements for excess flows are needed. 

         How can funding be mobilised to support effective nature-based solutions to climate change? How can the private sector be encouraged to contribute to funding? 


Nature based solutions are less certain in their outcome delivery than engineering solutions but can deliver overall wider benefits to society, for example through recreational opportunities, green spaces, improved biodiversity etc. Although English water companies operate under private ownership, spend within the sector is highly regulated. Ofwat requires us to identify the most cost-effective solution for customers whilst the Water Framework Directive requires schemes to be cost beneficial. As the wider benefits of nature-based solutions are difficult to monetise they will often not appear to be the most cost-effective solution for customers nor will they pass a cost benefit test under the Water Framework Directive because not all benefits can be monetised. Lots of evidence suggests nature-based solutions are cheaper than traditional ‘grey’ solutions such as building bigger sewers. However, there are very few examples of nature-based solutions in the water industry in comparison to ‘grey’ solutions so gaining business ‘buy-in’ can be challenging. Therefore, the water industry needs the flexibility to trial and test nature-based solutions, to gather more evidence to prove that this approach has greater benefits and to identify the applications in which these benefits can be realised and those where conventional solutions are still required. 

September 2020





[4] State_of_the_environment_health_people_and_the_environment.pdf