water.europa.eu

WFD & Economics

10 years of water economics

Maria Brättemark

WFD Team, DG ENV.D.1, European Commission

water.europa.eu

This presentation• 10 years of WFD

economics

• 2010 – status and

next step

• Key issues and

experience from WFD

(& MSFD)

• Preliminary

conclusions for the

Floods Directives -

WG D 13-14.10.2010

10 years of WFD economicsThe Directive requirements

Article 2(38) : Definitions water servicesArticle 2(39) : Definitions water use Article 4 : Disproportionate costs justifying exemptions. Heavily modified/artificial water bodiesArticle 5 /Annex III : Economic analysis of water use

Article 9/ /Annex III : Cost recovery of water services. Water pricing policies by 2010 ensuring :

• incentive pricing for sustainable water use• recovery of costs, including environmental and resource costs

Article 11 /Annex III : Cost-effectiveness. A ost-effective set of measures.Statement : Commission to issue a report on Cost and benefits

WG D 13-14.10.2010

10 years of WFD economicsCommon Implementation Strategy (etc)

• Guidance document N°1 “Water and economics”• Drafting group documents : further defining article 9• Training material

• Some work on Cost-effectiveness analysis – policy summary

• Guidance N°20 “Environmental objectives and exemptions” – work on disproportionate costs

Other work : • CBA study – Commission• RTD : AQUAMONEY

WG D 13-14.10.2010

10 years of WFD economicsThe Directive requirements

• No mentioning of cost-benefit analysis• Cost-benefit analysis used to put disproportionate

costs in justifying exemptions.• Some Member States attempted to calculate overall

benefits of achieving good status, or overall costs and benefits of proposed programme of measures, with different scenarios

• Some prepared different optional programmes of measures, balancing costs and benefits.

• The different references in the Directive interlinked...

WG D 13-14.10.2010

2010 – status and next step

RBMPs delivered by 16 Member States : Compliance checking

- Assessment will start shortly, includes screening and

in-depth assessments of economic aspects (+ FRM where included)

-1st Feedback from Commission 2011

- 3rd implementation report end 2012- Synthesis of costs will be made

- RBMP available via CIRCAWater services – disagreement on definitionMoment of reflection on the way forward – 2nd RBMP

WG D 13-14.10.2010

WFD CIS ‘ad hoc’ activity on economics issues

As part of the preparation for Oct 2010 WFD CIS workshop a questionnaire and follow up interviews have been

undertaken to gather views regarding implementation experience of economic aspects of WFD Relevant findings :

(i) Most challenging areas – CEA of measures, justification

of disproportionate expenses

(ii) Most work done by multidisciplinary teams – at local level,

non-economists undertook the economic assessments

(iii) Almost 50% of replies stated that lack of integration of

economic analysis into political and technical decision-making was problematic

WG D 13-14.10.2010

Key issues• Cost effectiveness analysis• Extensive experience. • Costs less problematic than effects. • Differences on timing, level of detail, scale, stakeholder

involvement, level of ambition• Often single measure approach instead of combinations due to

the methodological challenges (different scale of measures, synergies between measures)

• Cost Benefit Assessment • Benefit assessment challenging, including benefit transfer • Overall benefit of achieving Good status vs. Benefits specific

measures

• Cost recovery for traditional water services • Water services - definition (Water supply & Waste Water services)• Financial, operational, administrative investment costs – fairly

straight forward• Environment and resource costs – lack of methodology and data• Incentive pricing – pollueor pays principle

WG D 13-14.10.2010

WFD & Economics workshop

19-20.10.2010 - Key outcomes (1/2)Conclusions

• Variety of implementation challenges identified

• Topics for future work, different focus in different MS:

– Related "direct" implementation (Art. 9 etc.)

– "looking ahead" – linking to policy decisions and problem solving/ integration with other polices /

directives

• Research issues identified

• For some topics, both research and non-research –policy work identified (e.g. Ecosystem services; CEA, institutional issues)

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WG D 13-14.10.2010

WFD & Economics workshop

19-20.10.2010 - Key outcomes (2/2)Options identified for EU-level future work

• Some form of experience exchange welcomed by

almost all (series of workshops, setting up a network of experts for exchange etc.)

• "Clarification of implementation issues up to now": definitions etc.

• Answering specific questions (as far as possible) for second cycle: identification of specific question and developing common answer

• Limited support for new guidance

• Points to consider:

– Depending of the question: integrating other policies (and their experts), e.g. floods D.

– integrating non-economists10

WG D 13-14.10.2010

Some reflections from WFD (& MSFD) 1/2

• Need to ensure the relevant lessons learned from WFD

• Start on time and keep it simple; already then it will be difficult enough

• Only do what is really required; no analyses that are only nice to do or scientifically interesting; focus on

decision-makers (e.g. national parliament) needs

• What was good enough for the WFD, will probably also be good enough for (MS)FD. Use what has been reported there as starting point.

• Develop a database with uniform identified data on costs and effects of measures

•

WG D 13-14.10.2010

Some reflections from WFD (& MSFD) 2/2

• Determine as soon as possible which role the cost benefit analysis should play in the policy process and which type of information the cost benefit analysis

should deliver

• Leave decisions on what disproportionate costs are to policy makers, but try to find out what economic information they might need.

• Understand the constraint imposed on the economic analysis by the lack of relevant scientific (or other)

information. Need to adjust ambition for economic analysis accordingly (general)

• the need to integrate the economic analysis into the other work streams and consequently in decision-making.(general)

WG D 13-14.10.2010

“Upcoming issues & challenges”

• Ecosystems services – role for WFD implementation• Water-accounting – role for WFD implementation• Integration – water economics with other related

themes and profession • Upstream-downstream issues (some mentioned)• Refine methodologies CEA, CBA..• Environmental and resource costs• Taking market based instruments further• Towards 2nd RBMP...

• *personal reflections

WG D 13-14.10.2010

Preliminary conclusions for the

Floods Directive

• Link to WFD 2nd RBMPs preparation – including

stakeholder involvement

• Make sure WFD implementation has correct flood related information

• Use data from WFD – where relevant and available

• Maximise synergies with multi-purpose measures with multiple benefits –green infrastructure!

• Make the best of information exchange and good practices from other countries

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