Ben Brading 4 min read

Water abstraction licences for British businesses

Water abstraction licences regulate how businesses in Britain can take water from rivers, lakes and underground sources. They are a key part of how the Environment Agency protects water resources while still allowing industry, agriculture and infrastructure to operate.

If your business plans to extract more than small volumes of water from a natural source, you are likely to need a licence. The rules vary depending on where the water comes from, how much is taken and how sensitive the local catchment is.

This guide explains when a water abstraction licence is required, the main licence types, the conditions that may apply and the steps businesses must follow to apply.

What is water abstraction?

Water abstraction is the process of taking water from natural sources such as rivers, lakes, reservoirs, estuaries or underground aquifers.

It usually involves pumping, diverting or otherwise removing water for specific business activities such as agriculture, industrial processes, equipment cooling or supplying water for the water industry.

Because abstraction affects the quantity and timing of water available to ecosystems and other users, it is regulated across Britain to ensure withdrawals remain controlled and environmentally sustainable.

What are water abstraction licenses?

Environmental regulators in Britain protect rivers, streams and aquifers by controlling how local water companies and other commercial activities extract water.

In England, licences are provided by the Environment Agency (EA).
In Wales, they are issued by Natural Resources Wales (NRW).
In Scotland, abstraction is regulated under the Controlled Activities Regulations (CAR), and licences are issued by the Scottish Environment Protection Agency (SEPA).

If your business plans to extract more than 20 cubic metres a day from a local water source, you typically need an abstraction licence.

Companies with large borehole water supplies or farms that abstract river water for irrigation are common examples of licence holders.

Environmental regulators carefully limit the number of water abstraction licences in areas of high water scarcity to protect local catchments.

Commercial water abstraction licenses can last up to 24 years, providing businesses with a long-term water resource.

When do you need a water abstraction licence?

The following section explains the situations where businesses are required to obtain water abstraction licenses in England, Scotland and Wales:

England and Wales

A business must obtain a water abstraction licence if it takes more than 20 cubic metres (20,000 litres) of water per day from any natural source, including rivers, streams, lakes, canals, reservoirs, springs or groundwater.

Water abstraction licences are required regardless of the type of commercial activity and must be obtained even if the activity is temporary.

An exemption exists for man-made ponds or lakes that are fully sealed and filled only by rainfall or imported mains water, as these are not considered part of the natural water environment.

Scotland

In Scotland, water abstraction is regulated under the Water Environment (Controlled Activities) (Scotland) Regulations, which use a tiered system rather than a single daily threshold.

A business needs a licence when the abstraction is large or poses a higher environmental risk. The system works as follows:

General Binding Rules: Very small abstractions (less than 10 m³/day) require no licence but must follow standard rules.
Registrations: Medium-scale abstractions require formal registration with SEPA.
CAR Licences: Larger or higher-impact abstraction, like commercial agriculture, industrial processes, or significant groundwater use, requires a full licence.

SEPA assesses applications based on potential environmental impact, local water availability, and catchment pressures.

Types of water abstraction licences

The following section explains the four most common water abstraction licences used by businesses in Britain.

Full abstraction licence

A licence for ongoing, long-term water abstraction that provides abstraction rights for between 6 and 24 years.

License conditions include:

Maximum volumes
Maximum rates of abstraction
Hands-off flow requirements (limits on abstraction when water levels fall below a minimum)

Full abstraction licences are commonly held in agriculture, fish farms and public water companies.

Temporary abstraction licence

A temporary water abstraction licence allows water to be taken for short-term activities lasting up to six months. Because abstraction is limited by both time and scale, environmental regulators usually apply a more streamlined assessment process.

These licences are commonly used for construction activities such as dust suppression and pipeline testing, as well as for events or other seasonal or one-off business needs.

Water transfer licence

A water transfer licence is required when water is moved from one source to another for use in any commercial or operational process. Unlike a standard abstraction licence, which covers taking water for consumption or operational use, a transfer licence applies only when water is pumped or diverted between water bodies.

A common commercial example is transferring water from a river into a canal or navigation system to maintain water levels.

Water impoundment licence

A water impoundment licence is required when a business or landowner builds or alters a structure that holds back or controls the flow of water, such as a weir or hydroelectric dam.

Unlike abstraction licences, impoundment licences regulate the physical manipulation of a waterbody, ensuring that changes to water levels, flow patterns, fish migration, or sediment movement do not harm the environment or other users.

Borehole abstraction licences

Borehole abstraction licences fall within the general framework of water abstraction licensing, with a licence required for:

England and Wales – Over 20 cubic meters per day.
Scotland – Between 10 and 50 cubic meters requires registration. Over 50 cubic meters requires a full abstraction licence.

Licences for boreholes typically include specific conditions, such as limits on daily and annual volumes, controls on pumping rates, and requirements for water level monitoring in the borehole or nearby observation wells.

Applicants may need to provide hydrogeological assessments, test pumping data, or evidence that the abstraction will not interfere with other licensed users.

The water abstraction licensing process

Applying for a water abstraction licence is a structured process that assesses water availability and environmental impact before abstraction is permitted.

While the exact requirements depend on the type of licence and the water source, most applications follow the same core stages.

The following outlines the process for a licence application with the Environment Agency in England; applications in Scotland and Wales generally follow the same steps.

Step 1: Check if you need a licence

Before applying, check whether your activity requires a water abstraction licence using the official guidance.

Step 2: Review local abstraction availability

Before completing an application, businesses should review the Environment Agency’s Catchment Abstraction Management Strategies to understand water availability in your area, current abstraction pressures and whether new licences are likely to be granted.

Step 3: Decide what you are applying for

Identify whether you need a new abstraction licence, a transfer licence, a temporary abstraction licence, or an impoundment licence.

Step 4: Additional checks for groundwater abstraction

If you plan to abstract groundwater, such as from a borehole or well, you may need consent to investigate the source before applying. Groundwater applications typically require a hydrogeological impact assessment, and competing proposals may lead to licence restrictions or refusal.

Step 5: Prepare the supporting information

Gather the key details the Environment Agency will assess, such as where the abstraction point is, how much water you need, when you will abstract it, and how impacts will be managed.

Step 6: Complete the correct application form

Businesses must complete the correct Environment Agency application form for a water resources licence, based on the type of abstraction being applied for.

Step 7: Submit the application and pay the charge

Send the form and supporting information to the Environment Agency and pay the application fee.

Step 8: Assessment and decision

The Environment Agency reviews the application, may consult interested parties where required, and then grants the licence, grants it with conditions, or refuses it.

Step 9: Ongoing compliance once approved

If granted, you must follow the licence conditions, which can include abstraction limits, hands-off flow conditions, and monitoring or metering requirements.

Costs of a water abstraction licence

Applicants pay a one-off application fee when they submit their licence request. If the licence is granted, they pay an annual charge to cover the regulator’s ongoing costs of managing the licence and monitoring compliance.

Application fee

All new water abstraction licence applications require a payment of an abstraction fee that depends on location, as follows:

Country	Fee structure	Amount
England	Calculated using the Environment Agency’s charging scheme. Fees depends on licence type, volume, complexity and catchment.	Variable
Scotland	Set under SEPA’s charging scheme. Varies by abstraction scale and environmental risk category	Variable
Wales	Fixed	£6,713

Annual charge

Annual charges, also known as subsistence charges, are ongoing fees that abstraction licence holders pay each year to cover the regulator’s costs of managing and monitoring the licence.

These charges are separate from the one-off application fee. They are calculated based on factors such as the authorised volume, the type of water source, the sensitivity of the catchment and the level of regulatory oversight required.

Annual charges ensure that the long-term environmental impacts of licensed abstractions are properly managed and that the costs of regulating water resources are shared fairly among those who use them.

Conditions and restrictions on abstraction licences

Water abstraction licences are issued with conditions that control when, where and how water can be taken. These restrictions are designed to protect rivers, groundwater and other water users, particularly during periods of low flow or drought.

The table below outlines the most common conditions applied to abstraction licences and explains how they can affect day-to-day business operations.

Condition / Restriction	What It Means	Why It’s Used
Maximum Daily Volume	A cap on how much water can be taken per day (e.g., m³/day).	To limit total extraction and protect water availability.
Maximum Take Rate	Limits on the rate of abstraction (e.g., litres/second).	To prevent sudden drops in flow that could harm ecology.
Hands-Off Flow / Trigger Levels	Abstraction must stop or reduce when river flow or water level falls below a set threshold.	To protect aquatic ecosystems during low flows.
Seasonal Restrictions	Abstraction permitted only in certain months or seasons.	To protect fish spawning, breeding seasons, and low-flow periods.
Source or Point of Take	Specifies the exact source (river, borehole) and location where water can be taken.	To ensure accuracy and avoid unauthorised extraction elsewhere.
Monitoring & Metering	Requirement to install and maintain flow meters or telemetry equipment.	For accurate reporting and compliance oversight.
Annual Reporting	Licence holders must submit usage returns each year.	To help regulators track actual use vs authorised volumes.
Ecological Protection Measures	Conditions to protect wildlife (e.g., screens to prevent fish entrainment).	To reduce environmental harm from abstraction infrastructure.
Pump/Equipment Controls	Specifications on the type of equipment or how it must operate.	To limit environmental disturbance or inefficiencies.
Temporal Limits	Licence expiry date and any review or renewal requirements.	To allow periodic reassessment of sustainability.
Linkage to Other Permits	Requirement to hold/comply with associated permits (e.g., discharge or impoundment).	Because abstraction interacts with other regulated activities.

Commercial water abstraction and the water industry

Ofwat’s innovation fund has funded an exploration into allowing private water supplies into the British water infrastructure.

The potential of using commercial abstraction rights is being pursued to help the water industry tackle the growing issue of water scarcity in the South East of England.

Utilising water abstraction rights near urban areas in regions of high water scarcity has two key advantages that reduce the environmental impact of the water industry.

Firstly water has less distance to travel, meaning that less electricity is consumed in pumping water to end users. This reduces the carbon footprint associated with the water supply.

Travelling a shorter distance also avoids notoriously leaky British water infrastructure, reducing the overall water footprint associated with the industry.

Didcot Power Station: First example of selling water to the grid

The first example of a company pursuing selling water to the grid is the global energy company RWE. RWE holds an abstraction right to draw water from the River Thames at their Didcot Power Station, up to 20 Ml (around 8 Olympic swimming pools) per day.

Originally, the water abstraction was used by Didcot A and B gas-fired power stations.

💡Power generation is one of the industries that consumes the most water, with large quantities used to drive the turbines that generate electricity.

Following the demolition of Didcot A Power Station, RWE has been seeking ways to utilise its valuable water abstraction licence. One plan involves building a data centre at the site, since AI data centres consume vast quantities of water.

RWE is working with Bristol Water on an innovative scheme to build a private water treatment plant nearby to produce drinkable water.

Business water supplier Castle Water has applied to Ofwat for a licence to purchase the water from RWE and sell it to their customers in the Thames region.

RWE’s water will utilise the existing Thames water pipe network to deliver it to the business customers of Castle Water.

In 2024, Castle Water was granted a wholesale water licence by the water regulator Ofwat to purchase the water from RWE.