Green and Prosperous Land

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What these considerations illustrate is that housing left to market forces will be an environmental disaster and will replicate some of those disasters now being witnessed in a number of rapidly developing countries. Market forces drive up demand for houses in line with income. If the next decades witness 2 to 3 per cent GDP growth per annum, it is not hard to see that much of the Green Belt, and lots more green fields, will be concreted over by 2050. If each development does not have to pay for the environmental and social costs it imposes on the rest of the population, it will impose them. Imagine how quickly the Green Belt would fill up if the landowners could sell to the highest bidders without worrying about planning permission and paying for the environmental detriments caused. Paying for top lawyers and using consultants, lobbyists and PR companies to influence legislation and planners’ decisions has worked for them in the past, and it could go on doing so. Indeed, it is.

This is why planning is essential to housing and housing development. Britain needs to decide how many houses should be built, what sort of houses should be built, and where they should be built. That was the step taken in the 1947 Planning Act, and with the creation of the National Parks (which were largely planning bodies – more on this later). It has now fallen away.

It is perfectly possible to house the growing population without a net detriment to the natural environment. Indeed, the environment can be enhanced as part of the process. Nor is it necessarily the case that house prices have to rise, provided that the impacts of developments on the rest of the natural environment and us are properly priced, compensation is paid and prudently spent on new and enhanced natural capital, and, overall, houses are not protected from taxation to make them particularly attractive ways of accumulating wealth. But to do this requires much more efficient policies, to which we will return later.

More infrastructure

There are probably not many people who think that Britain’s physical infrastructure is in good shape. Sitting in a traffic jam on the M25, experiencing the delays on the Great Western main line, trying to make a mobile phone call on Exmoor, let alone trying to get a decent broadband connection, are daily reminders that all is not well with Britain’s infrastructure.

Along with these basic service failures there are additional pressures. Water supplies are taken for granted, but the pressure on abstractions and the growth in demand with new housing have considerable implications for the natural environment. The attempts to reduce carbon emissions are leading to the need for new electricity transmission lines, new wind and solar farms, and new nuclear power stations.

It is not hard to argue that Britain’s infrastructures are generally not fit for purpose, even before we add the extra 10 million people and all the houses that are planned. If we do add these, and work out how much transport, energy, water and sewerage, and communications demand they will add on top, the scale of the new infrastructure development requirements that emerge is very large – with potentially massive implications for the natural environment.

Infrastructure comes in lots of shapes and sizes. There are massive projects like HS2, Crossrail, Hinkley nuclear power station, the Thames Tideway and new airport runways. Then there are significant increments to the existing systems: to roads, electricity and gas networks, and to the water and sewerage systems.

On top of all this, there are the connections to all the new houses. Travel around many smaller towns and villages, and you will see 500 houses being added here and there on the outskirts. Semi-rural Oxfordshire is littered with them – from the housing developments at Didcot linking up to the A34, to the housing estates added to villages without many amenities – in effect dormitories. One or two cars per new house on the existing roads is going to have obvious consequences, and yet the developers have only limited liabilities to address these.

Many conservationists take a hostile stance towards new infrastructure and new housing developments. Across Britain there are community initiatives to try to halt the bulldozers. Dismissed by the housing industry and their lobbyists as driven by ‘nimbys’ (‘not in my back yard’), these campaigns are typically about much more than the impacts on their individual properties. To many these look like a repeat of tagging housing on to existing communities in the 1960s, or, worse, the ribbon developments of the 1930s that helped to precipitate the planning legislation of the 1940s. They have much to fear and much to protest about if they want to protect their local communities.

The problem for these objectors is that they will mostly lose. Central government has pushed through a series of planning acts to tip the balance away from local communities, encouraged by the massive lobbying of developers. There are now national plans and national strategies, and local authorities are in effect told to get on with it.

While there are good reasons for particular campaigns and objections, something more is needed if the impacts are not to be seriously damaging to the natural environment. This requires not only a return to planning, but also the urgent application of the ‘net environmental gain’ principle to infrastructure and housing developments, properly and comprehensively measured.

It also requires an intelligent approach to technologies. Electricity transmission lines no longer need to be a blot on the landscape. They can go underground. Roads and railways can be fully digital. The need to travel to work can be tempered by video links and ever more efficient communications. The comprehensive roll-out of broadband and fibre could reduce the demands for other physical infrastructure. Better measurement and management of energy supplies and water can reduce demand too. It is possible (and in the above examples it is necessary) to improve infrastructure and at the same time protect and enhance the natural environment, but only with an integrated and planned approach. The unconstrained application of market forces will not deliver this.

More consumption

The pressures of population growth, housing and infrastructure are multiplied through the rising levels of consumption. As GDP goes up, so does consumption. Indeed, most of the increases in economic growth in Britain are driven by spending ever more. Britain has a very high propensity to spend all of its income – and indeed more than its income – by increasing debt levels. In 2018, this was reflected in the average household spending £900 more than their income.

Some numbers help to bring a perspective to this challenge. If GDP grows at 3 per cent per annum, it will double in less than 25 years. It is just the power of compound interest. Britain probably won’t quite make 3 per cent, but, as a rough guide, by 2050 a doubling is a plausible assumption to make.

Imagine what this would look like in 2050. Although the extra income would be spread over more people, think what would you spend twice your current income on. The better-off might buy bigger homes or even more second homes. The bulk of the population will buy more holidays, more clothes and more services. Most of this stuff has the potential to further damage the natural environment and create even more waste.

It is this that leads more radical greens to question whether we should be allowed to keep on spending so much or whether a more frugal lifestyle is required to ‘save the planet’. It is not hard to empathise with this sentiment. Looking beyond Britain, growth rates in China, India and increasingly in Africa are more like 5 to 7 per cent per annum. China has spent nearly 30 years growing at around 10 per cent per annum, which is a doubling of the size of its economy every seven years, and this is reflected in the new affluence of the emerging Chinese middle classes who now turn up in Britain in significant numbers as tourists. Whatever the benefits of all that extra consumption to the Chinese people, from a global environmental perspective, the spectacular GDP growth of China since 1980 has been a disaster for climate change, water resources, the state of the seas and for biodiversity. And it is one that continues to gather pace.

There are two dimensions to this extra consumption that impact on the natural environment: how much is spent; and what it is spent on. How much is spent should not be based on the 2 to 3 per cent GDP growth number, and there is a lot to be put right before economic growth can be accommodated, including the impacts of all the fiscal deficits, trade deficits and quantitative easing that pumped consumption up artificially high since the financial crisis of 2007/08. Current growth and spending levels are not sustainable: we are living beyond our means. It is not that these numbers cannot rise without damage to the environment. They can. Rather, it is that the numbers need first to be adjusted so that they are in fact sustainable.

The amount of consumption growth after these corrections depends on technical progress, and there is lots more of this to come. Rebased, what will the resultant incomes be spent on? This depends on prices and planning. Current spending does not properly take account of all the external negative impacts on the environment – the externalities – and it should. What this requires is that these externality costs are reflected in the prices we pay online and in the shops. Food is artificially cheap because farmers do not pay for the pollution they cause. New houses are artificially cheap to build because the builders do not pay for all their wider impacts and the infrastructures they require. Packaged goods are artificially cheap because we don’t pay for all the cardboard and plastic. Once all these externalities are included – if the polluter-pays principle is properly applied – what we spend our money on may turn out to be rather different than business-as-usual suggests.

An even quieter spring?

Business-as-usual is not a stable equilibrium, a world where we just live with the damage done in the twentieth century and allow it to worsen in this century. The damage is dynamic and, if allowed to run on, it will not bode well for the natural environment. More people, more houses, more physical infrastructure and more consumption is a world in which the chances that nature will hold its own are slim without action now. There will be some successes, but this is a world of instant gratification in almost all human activities.

The housing lobbyists argue that there is lots of land, and that building on more of it leaves lots left. Similarly they argue that the Green Belt is large, and a few more houses make little difference. Tracks up hillsides for wind farms, trucks to fish farms, cutting down a few ancient woodlands for HS2, and bisecting the Gwent Levels with a new motorway are collateral damage for a claimed greater economic good.

This marginal argument, a marginal difference for each project and each marginal development, when set against a much larger whole plays out in business-as-usual. At each point along the way, one more housing estate is too small to make much difference to the whole. But it is a deadly argument. The trouble with this marginal argument is easy to see, but almost entirely ignored. Each time the marginal card is played there is a bit less left of the ecosystem and habitat of which it is a part. And so it goes on, until there is nothing left. In the words of the song by Joni Mitchell, ‘you don’t know what you’ve got ’til it’s gone’.

You will hear developers say that the Green Belt is not really very green anymore anyway because it has been intensively farmed. But why has it been intensively farmed? Because each new marginal addition to the chemical arsenal has been added on a case-by-case basis.

The tyranny of the marginal is the route to an increasingly silent spring. It is what business-as-usual means. Lots and lots of marginal losses end up with a catastrophe for insect life and for farmland birds. To seriously head off the damage that business-as-usual will bring – through more people, more houses and more hard infrastructures – the starting point needs to be the public goods, and not the marginal changes. It is these public goods that are being eroded in a death by a thousand cuts. Make no mistake, business-as-usual is likely to tip many ecosystems over the edge. By 2050 there could be very little left, and in a world with perhaps 500 or more parts per million of carbon in the atmosphere. The intensification of farming, industry, towns and cities could result in a silence of nature – of the birds, of the remaining insects and most of our mammals, reptiles, fish and invertebrates. It doesn’t have to be like this, but it will unless we act, and act now.

PART TWO (#ulink_fe1fbed9-9e38-5e78-8db5-e829f96ba3fa)

3 (#ulink_31bfa501-f1d3-5732-bbe8-bacadd74e75d)

RESTORING RIVERS (#ulink_31bfa501-f1d3-5732-bbe8-bacadd74e75d)

What could rivers, nature’s plotlines, be like in 2050? How might they be enhanced? The water quality could be good and free from pollutants. They could follow more natural paths, with meanders and oxbow lakes, rapids and gentle floodplains. They could flood from time to time, creating and sustaining the floodplains. The wildlife could be plentiful, with otters and dippers and kingfishers and grey wagtails. Salmon and other migratory fish could be better able to breed. There would be abundant aquatic plants and invertebrate life. The rivers would be accessible for boats and children and recreation. There could be river paths for walkers, stretches for canoes and for anglers and birdwatchers.

How could we achieve a much better outcome by 2050, and why would it enhance prosperity? The main steps are obvious: protect and enhance the peat bogs and upper river catchments; go for natural capital solutions in the upper valleys; keep farm pollution and soil from entering the rivers; reduce phosphorus, pharmaceutical and other emissions from water-treatment works and, better still, stop them getting into the sewerage system in the first place; stop storm overflows pouring raw sewage into the rivers; manage abstractions more effectively, and address leakage; stop industrial pollution entering the rivers and limit surface run-off; and, finally, open up access so we can all enjoy greener and more prosperous rivers.

Do all this and our rivers will thrive, and we will all be better off as a result. Each and every one of these steps is practical and can be implemented now. They all fit together. What is needed to get from here to there is to treat the catchment as a system, and to take a whole-system approach.

Protecting the upper rivers

Rivers start with a trickle from springs on hills and moorlands and mountainsides, and become streams. It is here that the rain tends to be most persistent and floods start. What matters is the ability of the headwaters to hold onto the rainfall and to turn a downpour into a trickle. Damage to river catchments at the source is mapped onto the rest of the catchment.

Run-off is a big problem for many of our rivers, and it has been exaggerated by farming practices. Moorlands drainage and overgrazing has done much damage. Farmers seeking to improve their upland grazing have added drainage. Overgrazing exposes peat and fragile soils, and once the vegetation is stripped off, the waters run much faster. On lower elevations, river catchment sources have sometimes been ploughed up for crops, further increasing soil exposure.

These problems are among the simplest and cheapest to fix in a catchment. The sheep densities can be reduced, the drains blocked up, and the ploughing of the uplands limited. Digging peat can be stopped, and peat bogs restored. All of these measures have economic costs, notably to sheep and, to a lesser extent, cattle farmers, and to maize and other crops lost. But the economic equation is heavily tilted in favour of these measures. Upland sheep farming (more on this later) is at or below the margin of economic viability in any event and heavily dependent on subsidies. Without the subsidies it would be very different, and since the subsidies are public money, redirecting them in the uplands to better water management practices would be a net economic gain.

Indeed, so great are the economic benefits to the water industry just in the narrow terms of managing water quality that water companies have been taking direct action, including through the management of land owned by the companies in the headwaters and by payments to farmers to change their practices. United Utilities helped on its land in the Forest of Bowland Area of Outstanding Natural Beauty (AONB) to rewet and restore blanket bog and add woodlands, and South West Water has been helping the Exmoor Mires Project to conserve and enhance peat bogs at the top of the Exe and Barle river catchments – in both cases out of self-interest. To give an indication of the economics, the Exmoor project has been estimated to have benefits that exceed the costs by a very high eight times.

In ploughing up some of the steeper slopes, and in particular planting maize on them in the Somerset Levels catchment, soils can be left very exposed, and indeed maize farming has directly contributed to the silting-up of the River Parrot and River Tone, which in turn helped to worsen the great flood of the Somerset Levels in 2014. The farmers then demanded that the Environment Agency dredge the rivers to remove the silt that they had contributed.

These costs, and the value of the lost soil to the farmers themselves, easily outweigh any possible profits from the crops.

The Somerset Levels – the ‘summer lands’ – are mostly below sea level and the sea level is rising with climate change. It is an integrated catchment system, not a series of discrete bits to be addressed separately by farming policy, flood defences and dredging, and conservation measures. Natural capital approaches are integrated and offer much better economic returns. Cultivating maize on exposed slopes should be banned on both economic and environmental grounds.

Stopping farm pollution

Once the trickle becomes a stream and then a proper river, it becomes vulnerable to direct pollution. Few upper river catchments have a lot of industry, so the main pollution comes from farming. Upper river valleys are typically given over to grazing and pasture, rather than cereals, and hence it is livestock farming practices that pose a threat.

Perhaps the worst is the release of slurry into rivers, depleting their oxygen and destroying their biodiversity.

There are two principal ways this can happen. First and most reported is the failure of slurry-holding pits and tanks, usually as a result of poor maintenance. Such incidents are surprisingly common and often devastating. But there is also the spreading of slurry: while the intention is to retain the liquid manure on the fields to promote grass growth, it can nevertheless run off into streams and rivers. This is particularly problematic if the slurry is applied in winter to frozen fields. The frost makes it possible to get tractors and machinery onto the land, but it also forms a barrier to absorption. The lethal (for the fish) combination is slurry-spreading on frozen ground, quickly followed by heavy rain.

Slurry, badly managed, is a serious threat to the natural environment, but it is not the only way in which animal husbandry can adversely impact on rivers. Sheep-dipping to tackle a range of parasites, worms and foot rot is another detrimental element of (non-organic) farming practices, and it involves water. The residual liquids, after the dipping, have to go somewhere, although their disposal is regulated. Too often this has been out of sight in the watercourses, with sometimes devastating results.

All these activities can be mitigated, often at minimal cost. The release of slurry and maintenance of slurry tanks are already subject to regulation. Spills are illegal and the problem arises not from the regulation but rather the inadequate penalties and enforcement. As budgets have been squeezed, the Environment Agency, Natural Resources Wales, and the Scottish Environment Protection Agency (SEPA) have retreated from the effective policing of the rivers. Catchment system management requires catchment system regulation and enforcement. A large number of incidents go unreported, or when they are investigated it is often too late to identify the source. The fines are clearly not a serious deterrent to farmers. Properly resourced policing and significant fines could all but eliminate these sources of river pollution. The use of drones and new advances in digital technologies to detect diffuse pollution will help to transform detection. There would be costs to the Environment Agency and the other bodies, but the balance of the damage versus these costs points towards more enforcement. The polluters may be fairly diffuse, but the pollutees are diffuse too, all down the river. Slurry in rivers can and should be stopped. Diffuse pollution should be limited. Both make good economic sense. The fact that the costs of the damage may well exceed the value of the total economic output of the farm tells us a lot about the perverse economics of much farming practice. Pollution is under-priced; agricultural output is therefore also under-priced.

Once the river gets to its middle stage, the ratio of grassland to arable land usually shifts towards arable. Conventional arable farming adds several layers of pollution and stress to rivers. It uses intensive fertilisers, pesticides and herbicides, and as with maize and the Somerset Levels example, it leaves the soils exposed to run-off and the depositing of silt in the rivers. It may also take water from the river for irrigation.

Farmers operating in these middle river areas are themselves vulnerable to the flooding that their activities can help give rise to, and hence they want to get the water quickly off their land and into the river, so the rate of run-off is artificially increased by ditches that take the chemical cocktails directly to the river much faster and hence in more concentrated forms. This raises flooding risk downstream, exporting the dangers to others. This was a process once managed through water meadows and vegetation cover along the rivers, in part because this made economic sense in a predominantly mixed farm system, but also because ploughing up riverside meadows required heavier and more powerful tractors and machinery. That can now be done. Once flooding was a resource for farmers to exploit in order to enrich their land. Now it is a menace to get rid of as quickly as possible.

The results are economically very inefficient and the economy would be much better off if many of these practices were curtailed or even stopped altogether. The central issue from an economic efficiency perspective, which we keep coming back to, is that some farmers are polluters who do not pay for the damage they cause others. Instead, they are polluters who expect to be paid not to pollute.

As discussed in greater detail in the next chapter, this should be reversed. If farmers paid for the pollution they caused, they would use chemicals in smaller quantities and target them more accurately. In the case of flooding, if farmers paid for the services that the river provides in taking excess water away, the ditches might not be so deep. They could also store more water. Finally, in a polluter-pays model, silt exported to rivers from riverside ploughing and cropped fields would come with a bill, and fewer of these fields would be ploughed.

With a polluter-pays policy, and hence the right relative prices, the rivers would be in a much better state. Biodiversity would go up, abstraction would go down, more ponds and reservoirs would be created, and the land would be wetter, especially in winter. It is all just good economics, and leads to a much more sustainable farming industry.

Dealing with the industrial legacy

Coal mining has wreaked havoc with rivers for a couple of centuries, and whole river systems have effectively been killed off by the spillages and run-off from mines. Mining tends to attract industrial processing to locate nearby, which adds to the pollution.

When it comes to mining and heavy industry, it is only relatively recently that polluters have been expected to pay. It is a surprisingly new idea. Mining has historically taken the same approach as that taken by the farming industry: the rivers are there as free waste-disposal systems.

As with farming, the economically efficient answer is to make the polluters pay. But it would still leave a horrible legacy. The toxic chemicals remain evident in the silts and muds of the rivers, and will do so for a long time to come. There have been many measures to deal with the legacy of asbestos in buildings, yet in the case of mercury, lead, radium and other nasty chemicals and substances in river muds, few such measures have been applied. Instead they just lie there in the sediment, largely out of sight, and off the agendas of the regulatory bodies. Roughly 2,000 miles of over 400 of our rivers may be affected by substances like cadmium, zinc, lead and arsenic. All have their unique pollution fingerprints – from examples like Bleaklow in the Peak District and the efforts to save the peat moorland from acidification, to the coal and industrial wastes affecting the coasts of the northeast.

In many, perhaps most, cases, there is little that can be done to make the polluters pay for legacy pollution, since the companies are typically long gone. The burden falls to the state to sort it out. In the case of coal mining, there is the Coal Authority, still grappling with the coal industry legacy, the flooded and polluted waters in old pits, and the groundwater problems.

The economics of cleaning up these past legacies is often finely balanced. It very much depends on the precise pollutant, how stable the deposits are, and how fast the rivers can ‘cure’ themselves by washing the heavy metals out to sea – and then pollute some other marine environment.

Most of the mining has now gone. The ordinary economics of the markets has done for coal and most other mining, although open-cast mining still poses a threat and the use of water for fracking requires regulation. There are still the clay pits, and tin mining and even cobalt and lithium extraction may return in Cornwall. These aside, the main problem is no longer so much about the mining, but dealing with its legacy.

As mining and heavy industry have declined (often to be replaced by imports and production doing its environmental damage elsewhere), the various pharmaceutical and chemical concoctions that make up our daily lives and end up being washed down the sink and flushed down the toilet, are among the new challenges. Contraceptive pills lead to oestrogens impacting on fish life. Antibiotics can be toxic for the bacteria and algae that form the basis of aquatic ecosystems. Anti-depressants can change bird behaviour. Shampoo, soap and washing powders increase phosphorus content in water courses.

The pharmaceutical industry is a major threat when it comes to our rivers and water supplies. As with earlier industrial pollution, the rivers are treated as waste-disposal systems, especially when the companies can pass on what ought to be a producer responsibility to the consumer. They supply the drugs and products, we use them, the rivers then collect them, and water companies try to remove them from our drinking water and wonder what to do about them in our sewage.

A radically different approach is needed before we end up leaving the next generation with major new damage and another industrial pollution legacy. The catchment-based approach starts by trying to limit what goes into our environment. Drugs are tested for their effects on human health, but less so for their waste disposal. Producer responsibility, and therefore polluter liability, could change the game. Imagine if GlaxoSmithKline were liable for the environmental damage caused by its products. Imagine if Unilever were responsible for the disposal of all its beauty and personal hygiene products. The result would be a radical shake-up of the chemical composition of their products. They would have a direct incentive to minimise the risks.

But what about us, the consumers? The problem with a pure producer responsibility approach is that it leaves us free to dump our waste, without any thought as to how we do this. We should learn the lesson from municipal waste disposal and recycling, making the householder responsible for the safe disposal of their rubbish. We have separate bins, and there are regulations about the safe disposal of white goods and batteries. These may be imperfect processes, but they go in the right direction. Sewage is just another form of rubbish. To secure a better environment, household waste needs to be considered holistically. All of it needs to be regulated. In the case of sewage, consideration should be given to using pricing too. As technology advances, it will be increasingly possible to monitor the content of our wastewater and sewage. We can meter water coming in. In due course we may be able to analyse what is going out with real-time information. Might you change your behaviours if you really knew what was in your waste and the damage it might do? And if you paid for the consequences?

The water companies

Water companies are obviously key players in the river catchments. Water is for the companies a ‘crop’, to be harvested as a renewable that nature will keep giving them for free from rivers (and groundwater sources). The companies want ‘clean’ water and hence want to limit pollution from others. Cleanness in drinking water is a chemical concept: it does not necessary mean that it is biodiversity-rich, and indeed there are many organisms that water companies would rather not have in their water supplies. We want to drink clean water, pure H2O, not a host of other things that live in the river environments. Solving jointly for clean water and for biodiversity is not the same thing as just wanting the former.

In providing us with clean drinking water, water companies abstract water, which reduces flows, and they discharge our sewage and the waterborne waste of industry, suitably treated. The management of river flows and the consequences for river biodiversity is a complex business, further complicated by the building of dams and other water-storage facilities. Reservoirs on the middle rivers (and sometimes the upper rivers too) have economic and environmental costs and benefits, all dependent on the catchment system as a whole. Water abstraction is rarely marginal: it has a system impact.

The abstraction problem arises partly because there is no price for water.

Once water becomes a valuable resource, it pays to address the 30 per cent leakage rates from water company pipes, and the companies have a stronger incentive to encourage water efficiency. Universal metering plus abstraction charges transform the incentives. Water may be freely provided by nature, but it has alternative uses. It should be priced at both the abstraction and the consumption points, and in the process capture the leakage costs in between. Otherwise it will be inefficiently used. Indeed, it is.

Water pipes leak treated water. With a marginal cost of water of mostly zero, it does not make economic sense to have a zero leakage policy. Yet the incentives to fix the leaks are distorted by the low cost of abstraction. Because there is no price, the choice between fixing the leaks on the one hand, and taking more water from rivers, groundwater and lakes on the other, is skewed towards the latter, and as a result in times of shortage, it is the rivers that suffer because of the leakage levels. It is not the water companies’ fault: it is the incentives they face. The water regulator can tell the companies to cut leaks, but this is a crude approximation of what is needed, which is a proper balance, reflecting all the environmental costs, of the alternatives, and the locations too.

This feeds through into the storage question and the crazy idea that we need high-quality water fit for drinking for use in watering the garden, cleaning the car, and a host of other non-consumption activities. So-called grey water is not only perfectly adequate for these other purposes, it is also of much lower cost. In some cases, such as using rainwater from water butts in the garden, it is better for the plants. The more expensive the purified water, the greater the incentive to do the right thing and store water.

What is missing is a grey water system and comprehensive metering. The former is probably not economic, except at the household level, although there is potential. Hence it is all about decentralising water, as part of a decentralised utility system. Future houses should be able to generate their own electricity, provide a place for work instead of commuting, and store quite a lot of water. They can have smart energy and smart water.

Sewerage is where the historical damage from water companies’ activities has been most apparent. In the past, rivers were sewage-disposal systems, and most of it was simply dumped in the rivers and out to sea. Over time this has been somewhat refined, but it is still the case that the capacity of sewerage networks cannot always cope in the event of storms. When it rains a lot, the sewerage systems overflow into the river. The argument is that it will consequently be very diluted (because of the storm flows). Yet this is far from convincing, and little consolation for those whose houses are flooded with it.

Fixing the sewage problem is not only about having big enough sewerage works. It is also about how the effluent is treated, and what happens to the resulting sludge. As with the deployment of natural capital approaches to the supply of water through the management of uplands, so sewage lends itself to natural methods too. It is just a form of muck and, like muck, it can be broken down and taken up by plants. It can be an asset. Reed beds are one method of doing this, once natural processes have begun degrading it. The methane, a by-product of decomposition, can be used for energy supplies. The insect life is a bonus, especially for birds.

As with abstraction, this is a problem of incentives. Water companies are not charged for disposals, and they have skewed incentives to prefer hard concrete infrastructure solutions rather than natural approaches. This is because of the way the economic regulation of their physical asset base works. It is much easier to solve once a whole-catchment approach is taken, but much harder when the water companies are regulated in a silo and neither benefit from the impacts on biodiversity of natural capital approaches, nor face the costs of their activities on the catchment as a whole. In order to get a better environmental and economic system, the water companies need to be brought directly into the catchment system economics. Below I explain how this can be done.

Towns, housing, roads and sustainable drainage systems

Housing, concreted urban centres and roads bring further pollution and flooding problems to rivers, and they are as much a part of the catchment and its management as the farmers and the water companies. Run-off from roads is often nasty and fast, and housing and factories displace water that would otherwise have soaked into the ground, to be gradually absorbed. Towns and villages were traditionally built to have access to water, and they are often built right up to the riverbanks, which are in turn concreted over and reinforced. The houses and infrastructure reduce the ability of their land areas to absorb rainfall, and increase the speed and rate of run-off.

The solution here is better planning, regulation and pricing. Planning needs to steer development away from floodplains and to require porous roads and driveways to reduce run-off. Better still, unpaved and unconcreted driveways can be planted to encourage biodiversity. Plants absorb water too. The costs of the run-off need to be incorporated into the economics of new developments, thereby creating an incentive to build houses in the right places, and with the right porous green footprints.

Like the mining and the abstraction along rivers, the economic incentives on house-building produce perverse environmental outcomes. Flood insurance should reflect the risk of flooding, but it doesn’t. Instead the flood risk is socialised, so that house prices do not fully capitalise this risk. If others pay some of the costs for locating near a river that floods, more houses will be built in the wrong places. Even worse, the Environment Agency prioritises reducing the risk of flooding to those most at risk. You buy a house in the wrong place, you get your flood risk insurance subsidised (through schemes like Flood Re), and then public money is spent on protecting you.

Town populations have other great economic interests in the state of the rivers. Rivers are an immediate source of leisure for them, and they need access to the clean water. Green banks and riversides bring wider physical and mental benefits too. Many benefit from the tourism that rivers bring. Towns like Ross-on-Wye, Hay-on-Wye, Lechlade, Eynsham and Carlisle all have significant leisure industries and the associated services. The tourism is often more economically important than agriculture, and hence the economics points to an enhanced river environment.