Water Abstraction Reform: Government proposes a new strategy for sustainable water use

Introduction

Essential for public water supply, agriculture, and industry, water abstraction also underpins energy generation, food production, and private drinking water supplies. Water abstraction is primarily regulated by the Water Resources Act 1991. The Abstraction Reform Report published by DEFRA in 2019 found that one in five surface waters in England and Wales are over-abstracted. The effects of climate change on weather and temperatures suggests that droughts are likely to be more frequent and severe in the next 25 years. Coupled with the prediction that the English population will grow by 10 billion in that same timeframe, it is evident that the current regime risks the UK water supply becoming unsecure and unsustainable.

On 24 November 2025 the government published a public consultation on proposed changes to water abstraction guidelines, as well as updated competing proposal guidance. Following a myriad of guidance updates over the last decade, the consultation could result in meaningful change to the water abstraction policies. The consultation will close on 16 February 2026.

Licensing

Subject to exemptions, it is illegal to abstract 20 cubic metres of water from surface waters or groundwater without a licence.

Licences are issued by the Environment Agency (EA) on what is, essentially, a first-come first-served basis; the EA cannot issue a new licence that will derogate the quantity of water an existing licence-holder is entitled to. Priority is therefore given to earlier licensees, making obtaining a new abstraction license increasingly difficult. This is reflected in government data, showing that the number of licences issued annually is declining.

The revised guidance on competing proposals aims to solve this problem. Where the new proposals are in the same river catchment or groundwater body, or there is not enough water available to meet the requirements of all the proposals, the EA will decide whether to share or split the resource between proposals.

Share

If the EA determines the water may be shared, the applicants will combine to form a joint application, agreeing on investment, abstraction volumes, and responsibility. The EA will then evaluate the applicants as a cohesive undertaking.

Split

The resource will be divided in proportion to need, with conditions on enforceability and environmental impacts. Each applicant must not exceed the maximum available abstraction as set by the EA.

Current requirements

Whilst the updates to the licensing process are welcome, there are other issues with the current system:

• Environmental Stress: Some older licences legally allow volumes that, if fully used, can harm rivers or aquifers, yet reducing or revoking these rights has been difficult and slow.
• Inflexibility: Conditions on abstraction are often inflexible, for example there are fixed seasonal windows or fixed maximum rates which don’t easily allow for taking advantage of wet periods or curtailing in response to short-term ecological needs. This has meant that the impacts of climate change have been negatively impacting the system, as abstracting and sharing water dynamically, as weather changes, is not factored in.
• Administrative Burden: The licensing service has been largely paper-based and siloed from other environmental permitting, leading to slower processing and separate compliance tracks.

Proposed guidelines

Having published an update to policy on 16 October 2025 about managing water abstraction, the water abstraction restrictions consultation proposes several reforms to create a more flexible and strategic framework.

The key reforms proposed are:

1. Integration into Environmental Permitting Regime: Water abstraction and impounding would be brought under the Environmental Permitting Regime (EPR), which already covers other environmental consents like pollution and waste permits. The EPR 2016 would be amended to introduce “water abstraction permits” and updating the Water Resources Act to remove overlapping provisions. For water users, the change would standardise processes, using the same digital systems and terminology as other permits, creating a more streamlined and consolidated regulatory framework. EPR’s risk-based approach means requirements would be proportionate, with lighter registration for low-risk abstractions instead of full applications.
2. Ending Time-Limited Licences – Ongoing Permits with Reviews: The proposal removes fixed-term water licences and replaces them with open-ended permits, consistent with the EPR approach. This change reduces uncertainty for businesses and farmers who rely on long-term water access for investment planning. Oversight would continue through regular reviews by the Environment Agency, which would allow permit conditions to be amended when necessary to protect the environment or reflect updated usage needs.
3. Universal Conditions to Protect the Environment: The reforms would introduce “dynamic water management,” meaning permits would include conditions that adjust based on real-time water availability and ecological health. Instead of relying solely on emergency bans or fixed limits, rules like flow-based triggers would automatically reduce or halt abstraction when river levels fall below set thresholds. These conditions applied across all sectors would help to ensure fairness and transparency, so everyone knows in advance how restrictions will work during droughts or low-flow periods. The system would also provide for increased flexibility, enabling extra abstraction during high winter flows to encourage water storage for later use.
4. Water allocation planning: A clearer policy hierarchy would guide decisions when competing demands for water arise, prioritising uses like public water supply, energy infrastructure, and food production. This aims to resolve conflicts and ensure strategic projects receive fair consideration, whilst ensuring that automatic approval is not the norm. A major innovation would be to allow the “reservation” of water for future projects, enabling long-lead developments such as reservoirs or industrial facilities to secure water rights years before use. This would aim to prevent smaller interim abstractions from consuming resources needed for critical schemes and to align water licensing with long-term planning processes.
5. Water resource planning integrated into applications: These reforms would reshape the planning industry by embedding water resource management into core planning decisions and timelines. Applicants for planning permission would need to evidence water availability much earlier, showing that schemes align with regional water resources. For NSIPs and other larger developments, applicants would need to demonstrate that they already have permission for the allocation or reservation of water before consent.

Effects of the proposal

Integration into the Environmental Permitting Regime would streamline processes and terminology, enabling closer coordination between planning authorities and the Environment Agency. This should ultimately provide developers and operators with a stronger understanding of what is expected of them from both a strategic and environmental standpoint. A more interconnected regulatory framework would also align licensing with infrastructure planning, enabling a more collaborative and flexible regime.

Environmental protections such as sustainable water use, reduction of ecological risk, and long-term resource security are also encompassed in the proposed requirements, and the adoption of a more dynamic regime should mean that developers would need to consider and factor in operational flexibility and drought contingencies into planning documentation, such as Environmental Impact Assessments.

By spreading restrictions proportionately across sectors, the system also aims to ensure fair water distribution while safeguarding stressed catchments. Flexibility to allow extra abstraction during high flows will increase water storage, supporting resilience during droughts without harming ecosystems. As change to the climate alters water availability, regular reviews will ensure environmental safeguards remain relevant.

In short, early engagement with these proposals is required. The nature of these proposed guidelines will hopefully allow for greater transparency, and a clearer understanding of where development or business operations might sit in the water abstraction hierarchy. However, robust evidence will also be needed to support abstraction in water stressed areas, and adaptable designs will be required of those submitting planning or NSIP applications in future. There will also be the expectation of increased collaboration to enable the sharing or splitting of water volumes to work effectively.

Nicola Power, an environmental lawyer at CMS commented:

“Reform of the water abstraction management system is long overdue and the attempts to build a strategic system that is both sustainable and fairer in terms of allocation is welcomed. However, as ever, the devil will be in the detail and I would urge all stakeholders to consider the consultation carefully and make representations on these potentially far-reaching proposals, so that a robust framework is created that properly balances the full spectrum of interests.”

We would therefore recommend that anyone affected submits a response to the consultation. To do so, please follow the link here, or submit a response form and send it to conland@environment-agency.gov.uk.

Should you wish to discuss the potential impact of these proposals on your business, please contact Rebecca Roffe or your usual CMS contact.

This article was co-authored by Alice Robson, Trainee Solicitor at CMS.