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Water Companies: Finance

Question for Department for Environment, Food and Rural Affairs

UIN 119512, tabled on 7 February 2022

To ask the Secretary of State for Environment, Food and Rural Affairs, if he will take steps to identify potential funding opportunities for water companies to maximise co-funding and green finance opportunities in order to operate in partnerships across catchments.

Answered on

17 February 2022

Water companies, as private companies, are best placed to identify co-funding and green finance opportunities to operate in catchment partnerships. However, we have set ourselves a target to raise at least £500 million a year in private finance for nature’s recovery in England by 2027, and more than £1 billion by 2030. Nature and catchment-based solutions in the water sector are expected to make a significant contribution to this target.

We have therefore been working with industry leaders from business, finance, land management and environment sectors to understand how to scale up private finance into ecosystem service markets, including through the Financing UK Nature Recovery Coalition. This includes taking action to ensure that any investment is robust and credible, as well as delivering additionality. We will be setting out more on our plans on financing nature later this year, including through the upcoming Nature Recovery Green Paper and the update to the government’s Green Finance Strategy.

Defra is already working to encourage water companies to maximise co-funding and green finance opportunities, such as through the review of the Water Industry National Environmental Programme. The review, jointly led by Defra, the Environment Agency and Ofwat, aims to further enable water companies to work with interested organisations in a catchment to jointly design and fund schemes to improve the water environment. This includes boosting investment in nature-based solutions wherever possible. Defra also encourages the use of market-based mechanisms, such as nutrient trading, and has fully supported the piloting of these approaches.