OECD Studies on Water. Water Governance in the Netherlands

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1 OECD Studies on Water Water Governance in the Netherlands Fit for the Future?

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3 OECD Studies on Water Water Governance in the Netherlands FIT FOR THE FUTURE?

4 This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2014), Water Governance in the Netherlands: Fit for the Future?, OECD Studies on Water, OECD Publishing. ISBN (print) ISBN (PDF) Series: OECD Studies on Water ISSN (print) ISSN (online) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Photo credits: Cover Taro Yamada/Corbis, digitalimagination/e+/getty Images. Corrigenda to OECD publications may be found on line at: OECD 2014 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of the source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre français d exploitation du droit de copie (CFC) at

5 FOREWORD 3 Foreword The OECD has long been a strong advocate for water management that contributes to economic growth, environmental sustainability and social welfare. Solving today s water problems and coping with those of tomorrow requires adaptive, agile and resilient institutions at different levels coupled with a clear understanding of capacity of governments to manage the inter-related risks of too much water, too little water, too polluted water and risks regarding the resilience of freshwater ecosystems. The Netherlands is a pioneer country in water management. It is widely known for its track record in reclaiming land from the sea, as well as its world-class engineering, strong water industry, and agricultural performance. But are these assets enough to cope with current and future challenges? Or do these challenges call for different organisational settings? It is the purpose of the OECD-Netherlands water policy dialogue to address this question, by applying a lens to the current state of play in Dutch water management and identifying ways in which the governance framework can be adjusted so that it is fit for the future. This report on the outcomes of the policy dialogue focuses on the close interconnection between water governance and water security, both now and in the future. It outlines an agenda for future water policies in the Netherlands, which can improve the country s capacity to cope with future trends driven by climate change, economic growth, demographic patterns or innovation. The report builds on OECD work on water governance that provides policy makers with a range of tools and indicators to diagnose and overcome major governance gaps in water policy design and implementation. This work proposes a set of overarching principles that can support context-dependent and place-based responses to water challenges, rather than onesize-fits-all solutions. Such principles relate to articulating who does what across public authorities and levels of government, considering appropriate spatial and time scales, developing innovative partnerships to engage stakeholders across sectors, monitoring and evaluating progress, fostering integrity and transparency, and allocating human and financial resources in line with responsibilities. The report is also based on recent OECD work on water security and the use of a riskbased approach that helps governments to address the economic and other impacts of waterrelated risks, and to unlock the policy puzzle in order to effectively manage those risks. This approach requires that governments appraise the risks, judge the tolerability and acceptability of risks and weigh risk-risk trade-offs, and then calibrate appropriate responses taking into account short and long-term considerations. This is the second in-depth water policy dialogue that the OECD has undertaken. The first policy dialogue focused on Mexico and was released in OECD water policy dialogues are demand-driven, tailored to policy makers needs, and provide a neutral review of a country s water policies. They draw on lessons from international best practice and rely on extensive multi-stakeholder consultations to build a shared understanding of the water policy challenges and the potential ways forward. The policy dialogues help governments to set priorities for future reforms and facilitate the implementation of water and water-related policies that contribute to better lives.

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7 PREFACE 5 Preface Is Dutch water management fit for the future? This was the principal question discussed by all governing bodies responsible, at their first meeting, shortly after the current government came into office in All agreed on the need for a future-oriented vision on water management a vision focused on the challenges ahead, that would enable us to address potential problems in our water management in a well-reasoned way. Such a vision could help us explore possible solutions, anticipate policy changes and equip our governance structures accordingly. Are we fit for the future? In 2012, my predecessor and Peter Glas, chair of the Association of Regional Water Authorities, commissioned the OECD to conduct an open-minded, independent study, focused on this central question. In commissioning the study, they posed two secondary questions: is Dutch water management sufficiently prepared for the challenges entailed by climate change and socioeconomic trends, and do we need to organise things differently? The Netherlands clearly has an excellent reputation in water management, flood safety and land reclamation, building on eight centuries of knowledge and experience. But rather than leaning on history, we are a nation that looks to the future. Prevention is at the heart of our water policy, and our thorough approach has paid off. Our knowledge is much in demand. At international level, our Delta programme has put us at the forefront of preventive water management. This useful report shares both the unique Dutch relationship with water as well as our broad experience. Its findings fill me with pride. Dutch water policy has contributed significantly to our country s economic development, by creating enabling conditions for the Randstad conurbation, for Rotterdam as Europe s largest seaport, for intensive agriculture and a worldclass water industry. The OECD is surprised, and rightly so, that so few Dutch people are aware of this. At the same time, the report presents us with a number of issues that need to be addressed. And this is where its main value lies: in encouraging to continue working on further improvements. In just one year, the OECD has produced a valuable report containing sound recommendations. The onus is now on me and all my partners in water management to elaborate on these recommendations. Melanie Schultz van Haegen Minister of Infrastructure and the Environment

8 6 ACKNOWLEDGEMENTS Acknowledgements This report is an output of the OECD Public Governance and Territorial Development Directorate, directed by Rolf Alter. The co-ordinator and lead author of the report is Aziza Akhmouch, Head of the OECD Water Governance Programme, within the Regional Development Policy Division led by Joaquim Oliveira-Martins. The OECD core team was comprised of Aziza Akhmouch, Claire Charbit, Delphine Clavreul, Anthony Cox, Kathleen Dominique and Xavier Leflaive. The report was a joint endeavour with the OECD Environment Directorate, the contribution of which was co-ordinated by Xavier Leflaive, Head of the Water Unit. The OECD Secretariat is thankful to the Dutch core team for their high availability and involvement, in particular Lucia Luijten, Niels Vlaanderen, Laura Vrueh and Marjolein van Zuilekom from the Ministry of Infrastructure and the Environment, as well as Rob Uijterlinde, Paul Langeveld and Herman Havekes from the Dutch Association of Regional Water Authorities. Special thanks are herein conveyed to former Ambassador H.E. Edmond Welleinsten and current Ambassador H.E. Noé van Hulst of the Kingdom of the Netherlands to the OECD, for their active support throughout the process, as well as to their collaborators Carla Boonstra and Jennyfer Imperator. The help of Jeroen Nijland, former OECD staff member, was also instrumental in the early stages of the project. The OECD Secretariat is equally grateful to the peer reviewers who contributed actively on the basis of their expertise and country experience: Ian Barker, Head of Water, Land and Biodiversity, Environment Agency, United Kingdom; Sasha Koo-Oshima, Senior International Water Advisor in the Office of Water, Environmental Protection Agency, United States; Mike Muller, Commissioner, National Planning Commission, South Africa; and Francisco Nunes Correia, Minister of Environment, Spatial Planning and Regional Development, Portugal ( ) and currently Professor and Researcher at IST, University of Lisbon. Bernard Barraqué (CNRS, France) was also part of the OECD delegation in his quality of expert on water policies in Europe. This report is the result of a one-year multi-stakeholder policy dialogue, spearheaded by Aziza Akhmouch, which involved interviews and policy discussions with more than 150 Dutch stakeholders (see Annex A) from public, private and not-for-profit institutions, which are gratefully acknowledged. The OECD delegation carried out two fact-finding missions to The Hague to collect information (25 February-1 March 2013 and 5-6 June 2013), which also involved field trip visits to the Delfland Regional Water Authority (boulevard enforcement Scheveningen, Schipluiden), the municipality of Dordrecht (urban flood protection of Drechtsteden), the National Water Authority Lelystad (Helpdesk Water, Deltaprogram IJsselmeer area), and the Regional Water Authority Regge and Dinkel (multifunctional project, including Kristalbad). A policy seminar opened by Melanie Schultz-van Haegen-Maas Geesteranus, Minister of Infrastructure and the Environment, was held in The Hague on September 2013 to discuss key

9 ACKNOWLEDGEMENTS 7 findings and recommendations with the wide range of stakeholders involved in the policy dialogue. The draft report was peer reviewed (8 November 2013, Paris) in a joint session of the OECD Water Governance Initiative and the OECD Working Party on Biodiversity, Water and Ecosystems, whose delegates are acknowledged for their comments, together with delegates from the OECD Territorial Development Policy Committee. This report was written by Aziza Akhmouch (Chapters 1, 4, 7), Kathleen Dominique (Chapters 2, 5, 6) and Xavier Leflaive (Chapter 3). In addition to desk research, Delphine Clavreul provided support on institutional mappings and figures. She also provided references to international comparisons, together with Oriana Romano and Ignacio Deregibus, OECD Secretariat. The report includes inputs from the following experts: Bernard Barraqué (CNRS, France); Stijn Brouwer, Roos Den Uyl and Wouter Botzen under the supervision of Professor Dave Huitema (Institute for Environmental Studies, VU University of Amsterdam); Professor Marleen van Rijswick with the support of Professor Remco Nehmelman, Anoeska Buijze, Herman Kasper Gilissen, Wouter Ernst and Nina Bontje (Utrecht Centre for Water Oceans and Sustainability Law); and Mike Young (University of Adelaide, Australia). The report benefited from valuable comments provided by Claire Charbit, Anthony Cox, Julien Hardelin, Céline Kauffmann, OECD Secretariat, and Sylvia Elisabeth Beyer, International Energy Agency. It was submitted twice for consultation to Dutch stakeholders. In this framework, written comments were provided by the National Water Authority, the Ministry of Infrastructure and the Environment, the Ministry of Economic Affairs, the Ministry of Security and Justice, the Association of Regional Water Authorities (Unie van Waterschappen),Vewin, the European Environmental Bureau, the VEMW, the Zuiderzeeland Regional Water Authority, the Brabantse Delta Regional Water Authority, the Meuse International Commission, the Association of Dutch Municipalities, Butterfly Effect, LTO Nederland, Natuurmonumenten, the KWR Watercycle Research Institute, UNESCO-IHE and the Utrecht Centre for Water Oceans and Sustainability Law. The report was edited by Hilary Delage. Jennifer Allain and Erin Byrne prepared the manuscript for publication.

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11 TABLE OF CONTENTS 9 Table of contents Acronyms and abbreviations Executive summary Assessment and recommendations Chapter 1 Interlocking water management functions in the Netherlands Introduction Water management: A multi-level public responsibility Water management functions: Who does what and recent shifts Linkages across water management functions and beyond Ways forward for better interconnectedness Notes Annex 1A.1 Water-related acts and legislation Annex 1A.2 Dutch institutional water landscape Bibliography Chapter 2 Knowing water risks in the Netherlands Introduction Risk of floods and excess Risk of shortage Risk of inadequate water quality Risks to freshwater ecosystems in the Anthropocene Ways forward for improving knowledge of water risks and raising awareness Notes Bibliography Chapter 3 Key future trends for Dutch water governance Introduction Climate change Economic and demographic trends Socio-political trends Technological drivers Notes Bibliography Chapter 4 Multi-level water governance in the Netherlands Introduction Principles for assessing the performance of Dutch water governance Addressing multi-level governance gaps in water policy Conclusions and ways forward Notes

12 10 TABLE OF CONTENTS Annex 4.A1 Examples of inter-institutional projects for integrated water management in the Netherlands Annex 4.A2 Co-ordination mechanisms for water management Annex 4.A3 Water functions in the Netherlands: Threats, responsible authorities and co-ordination mechanisms Bibliography Chapter 5 Managing water risks in the Netherlands at the least cost to society Introduction Determining an acceptable level of risk: Targeting water risks Managing water risks at the least cost to society: Economic principles and instruments Managing risks of too much water Managing risks of too little water Managing risks of too polluted water Managing the risks to freshwater ecosystems Notes Annex 5.A1 The snowball effect in Westergouwe Annex 5.A2 Developing an effective water-sharing regime Bibliography Chapter 6 Achieving financial sustainability for Dutch water management Introduction An overview of current expenditure and financial flows Sources of financing, beneficiaries and transfers Future cost projections Analysis based on the OECD Framework for Financing Water Resources Management Notes Bibliography Chapter 7 Water governance in the Netherlands as a driver for better accountability Introduction An important awareness gap to bridge Economic regulation Building on the Polder Model for effective stakeholder engagement Notes Bibliography Annex A List of Dutch stakeholders consulted during the policy dialogue Tables Table 2.1. Perceived flood probability Table 5.1. Safety standards for the primary flood defence structures Table 5.2. Sequence of priorities for water shortage Table 5.3. Examples of water policy instruments to address water risks Table 5.4. Overview of costs and benefits of alternatives for the Volkerak-Zoommeer Table 6.1. Cost recovery of water service budgets Table 6.2. Distribution of total expenditures for water management in the Netherlands Table 6.3. Distribution of total expenditures for water management across institutions and functions

13 TABLE OF CONTENTS 11 Table 6.4. Overview of sources of financing for water management tasks in the Netherlands Table 6.5. Sources of financing for provincial water management tasks Table 6.6. Overview of sources of financing for water management tasks by the regional water authorities Table 6.7. Average household water bill in Table 6.8. Indicative comparison of assessment of water resource management costs between 1998 and Table 6.9. Comparison of costs incurred by regional water authorities between 1998 and 2012 across water management functions Table Estimated future costs of implementing the Delta Programme Table Summary of estimates of increases in future water resources management costs Table 7.1. Regulatory instruments for water management in the Netherlands Table 7.2. Figures Benchmarking water services in the Netherlands: Key indicators, functions and institutions Figure 1.1. Institutional layers of water management in the Netherlands Figure 1.2. Regional water authorities in the Netherlands Figure 1.3. Mutual dependency across the three public components of the sub-national triangle Figure 1.4. Institutional mapping for flood defence Figure 1.5. Institutional mapping for water quantity management Figure 1.6. Institutional mapping for drainage Figure 1.7. Institutional mapping for water quality management Figure 1.8. Institutional mapping for sewerage and wastewater treatment Figure 1.9. Institutional mapping for drinking water supply Figure 2.1. Perception in droughts and water overconsumption Figure 2.2. Status of ecological quality of surface water in the Netherlands, Figure 2.3. Status of physical-chemical quality of surface water in the Netherlands, Figure 2.4. Nitrogen levels in surface water in the Netherlands, Figure 2.5. Phosphorus levels in surface water in the Netherlands, Figure 2.6. Nitrogen balance per hectare of agricultural land, OECD countries, Figure 2.7. Farmland bird index, OECD countries, Figure 2.8. National agri-environmental performance compared to the OECD average Figure 4.1. Key characteristics of Dutch water governance Figure 4.2. The OECD Multi-Level Governance Framework Figure 4.3. Dutch water planning system Figure 4.4. Sub-basins in the Netherlands Figure 5.1. Safety standards of dyke-ring areas in the Netherlands Figure 6.1. Variation in levies for wastewater treatment for households with two or more people among regional water authority districts Figure 6.2. Municipal levies for sewage management for multiple person households Figure 7.1. Allocation of regulatory functions for water services across levels of government Figure 7.2. Importance of networking with external partners

14 12 TABLE OF CONTENTS Figure 7.3. Networking with bureaucrats Figure 7.4. Perceived importance of networking with non-governmental actors and interest groups Figure 7.5. Simplified overview of the Netherlands WFD-implementation structure

15 ACRONYMS AND ABBREVIATIONS 13 Acronyms and abbreviations CBS COELO CPB CPI CTGB EC EU EUR FUA FRC IES IKSR ILT IMC IPO ISC KNMI KWR LCW LOTV Statistics Netherlands (Centraal Bureau voor de Statistiek) Centre for Research on Local Government Economics (Centrum voor Onderzoek van de Economie van de Lagere Overheden) Netherlands Bureau for Economic Policy Analysis (Centraal Planbureau) Consumer Price Index Board for the Authorisation of Plant Protection Products and Biocides (College voor de Toelating van Gewasbeschermingsmiddelen en Biociden) European Commission European Union Euro Functional urban area Financial Relations Council (Raad voor de financiële verhoudingen) Institute for Environmental Sustainability International Commission for the Protection of the Rhine against Pollution (Internationale Kommission zum Schutze des Rheins) Inspectorate for Transport, Public Works and Water Management (Inspectie Leefomgeving en Transport) International Meuse Commission Association of the Provinces of the Netherlands (Interprovinciaal Overleg) International Scheldt Commission Royal Netherlands Meteorological Institute (Koninklijk Nederlands Meteorologisch Instituut) Water Cycle Research Institute National Co-ordination Committee for Water Distribution (Landelijke Coördinatiecommissie Waterverdeling) Discharge Open Cultivation and Livestock Farming Decree (Lozingenbesluit Open Teelt en Veehouderij)

16 14 ACRONYMS AND ABBREVIATIONS LTO MAO MIE MINAS MKB MNP NAO NBW NGO NRC OECD PBL RBD RBMP RIONED RIZA RWA RWS STOWA TAW TME USEPA UvW Dutch Federation of Agriculture and Horticulture (Land- en Tuinbouw Organisatie) Manure transfer contracts (Mest Afzet Overeenkomsten) Ministry of Infrastructure and the Environment (Ministerie van Infrastructuur en Milieu) System of minerals accounting (Mineralen Aangiftesysteem) Organisation of Entrepreneurs (Midden en Klein bedrijf) Netherlands Environment Assessment Agency (Milieu en Natuur Planbureau) National Audit Office National Administrative Agreement on Water (Nationaal Bestuursakkord Water) Non-governmental organisation New Rotterdam Paper (Nieuwe Rotterdamsche Courant) Organisation for Economic Co-operation and Development Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving) River basin district River basin management plan National Centre of Expertise in Sewer Management and Urban Drainage (Stichting RIONED) Institute for Inland Water Management and Wastewater Treatment (Rijksinstituut voor Integraal Zoetwaterbeheer en Afvalwaterbehandeling) Regional water authority National Water Authority (Rijkswaterstaat) Foundation for Applied Water Research (Stichting Toegepast Onderzoek Waterbeheer) Technical Advisory Committee for Flood (Technische Adviescommissie voor de Waterkeringen) Institute for Applied Environmental Economics (Instituut voor Toegepaste Milieu-Economie) United States Environmental Protection Agency Association of Regional Water Authorities (Unie van Waterschappen)

17 ACRONYMS AND ABBREVIATIONS 15 Vewin VNG VNO- NCW VROM WFD WMCN WTS Association of Dutch Water Companies (Vereniging van Waterbedrijven in Nederland) Association of Netherlands Municipalities (Vereniging van Nederlandse Gemeenten) Confederation of Netherlands Industry and Employers (Verbond van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond) (former) Ministry of Housing, Spatial Planning and the Environment (Ministerie van Volkshuisvesting, Ruimtelijke Ordening en Milieubeheer) Water Framework Directive Water Management Centre of the Netherlands Damage Compensation Act (Wet tegemoetkoming schade bij rampen)

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19 EXECUTIVE SUMMARY 17 Executive summary This report assesses the extent to which Dutch water governance is fit for future challenges and outlines an agenda for the reform of water policies in the Netherlands. It builds on a year-long policy dialogue with over 100 Dutch stakeholders, supported by robust analytical work and drawing on international best practice. The Netherlands has an excellent track record on water management in several areas: the system has managed to keep Dutch feet dry and to develop a strong economy and robust water industry, in a country where 55% of the territory is below sea level or flood prone. A sophisticated natural infrastructure has been built and operated through a specific system of water governance, which combines functional democracies (the regional water authorities, established in the 13th century) with central, provincial and local authorities. Stakeholders are engaged in a distinctive polder approach, which values concerted, consensus-based decision making. The Dutch system has evolved over time. In particular, national authorities have been reorganised to improve their strategic capacities; regional water authorities have been consolidated into a smaller number of larger entities, and have gained new functions; and water supply companies have been aggregated at the regional level. Legislation was combined into a National Water Act in In 2012, the Delta Act was passed, to respond to the country s current and future water challenges regarding water safety and freshwater supply. However, excellence should not lead to complacency. Water management in the Netherlands is faced with persistent and emerging challenges. Water quality and the resilience of freshwater ecosystems recently gained traction in the country, but continue to be pressing issues. Water governance relies on a system of many checks and balances, which presents some limitations, such as the absence of independent monitoring and information on financial performance that can shed light on embedded, dispersed and accepted costs, and disclose it to the general public. Economic incentives to efficiently manage water are sometimes weak. For instance, water management and spatial development are closely connected, but the actors who benefit from spatial development, such as municipalities and property developers, do not necessarily bear the additional costs related to water management; as a consequence, ongoing spatial development at times increases exposure to flood risk, leading to the escalation of the costs of water management, today and in the future. This raises equity issues. In addition, future projections generate uncertainty about water management. They can be clustered around four sets of issues: climate change, economic and demographic trends, socio-political trends illustrated by European water policies, and innovation and technologies. These trends concern water demand and availability, water governance and financing in the Netherlands. They call into question current policies and governance arrangements, and point to the need in particular to minimise path dependency and enhance resilience.

20 18 EXECUTIVE SUMMARY There is momentum to develop an agenda for future water policies in the Netherlands. In particular, the Environmental Planning Act is under preparation, with a view to foster policy integration between spatial planning, nature conservation and water. It provides an opportunity to streamline further policies and institutions in these areas. An agenda for water reform in the Netherlands calls for new approaches in terms of policy, investment, infrastructure and governance to manage too much, too little or too polluted water at the least cost for society and in an inclusive way. A preliminary step is to address the awareness gap : Dutch citizens take current levels of water security for granted. As a consequence, they tend to be less involved in water policy debates, to ignore water risks and functions when they develop property, and to be little concerned with water pollution. Their willingness to pay for a service they take for granted may erode in the future. Another important step is to strengthen independent accountability mechanisms for more transparent information and performance monitoring, at arm s length from water institutions. Benchmarking can ensure that a particular investment is managed in an efficient way; it does not investigate whether that particular investment was required. International best practices show different ways to organise regulatory functions. There are ways to deliver key regulatory functions while preserving the distinctive benefits of the Dutch polder approach, including a national observatory, a regulator, a role for the legislator and contribution of non-governmental organisations (NGOs) and academia, be it only to reflect the interest of the unheard voices (such as the environment). An independent review, commissioned by and reporting to ministers, could also help shed better light on relative and absolute efficiency, accountability and the regulatory framework of the full breadth of water services. Economic incentives could be strengthened and made more consistent with water policy objectives. In particular, they can ensure that those who generate liabilities with regards to water management (e.g. water users who abstract surface or groundwater or who discharge pollutants into water resources; property developers who build in flood-prone areas) also bear the costs. The allocation of costs across water users can be made transparent and subjected to informed public debate. Abstraction charges could be put in place to provide incentives for efficient use of the resource. A robust water allocation regime that allows for consistently controlling and monitoring abstractions would be a basic step towards managing the risk of shortage effectively. A comprehensive study of the economic costs of water pollution would contribute to policy coherence between water, agriculture and nature. The water chain could be organised in a way that guarantees optimal co-ordination across water supply, wastewater collection and treatment and related functions. Municipalities could sustain their responsibilities regarding wastewater collection if they effectively combine them with urban planning. Regional water authorities can remain the operators of wastewater treatment facilities if they adopt distinctive governance and financing schemes for this function: the functional democracy set up to mitigate flood risks may not be appropriate to manage wastewater treatment plants; and financing schemes should equitably reflect the costs generated by water users. The Environmental Planning Act, expected to be adopted by 2018, will set the water agenda in a wider perspective and reach out of the water box. It provides an opportunity to renew the emphasis on freshwater systems, sets a framework to strengthen coherence between water, land use and spatial planning, and can decisively ensure that water governance in the Netherlands is fit for future challenges.

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