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Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/225-962 Introduction to Benefit.

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Presentation on theme: "Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/225-962 Introduction to Benefit."— Presentation transcript:

1 Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/ Introduction to Benefit Assessments Samuela Bassi - Institute for European Environmental Policy (IEEP) Final Workshop ENPI South – Brussels, June 2001

2 Content of this presentation Benefit Assessment (BA): framework The BA Manual BA methodology Environmental categories Benefits Level of analysis Methodological steps Practical issues Data gathering Case studies Assumptions Conclusions & future of BAs Final Project Event: ENPI-East, Chisinau2

3 Benefit Assessment: framework Final Project Event:: ENPI-East, Chisinau 3

4 What is a benefit assessment (BA)? What environmental BAs do: Examine the potential positive outcomes for society from the adoption of environmental targets and actions – like environmental policies, legislation and investments (e.g. construction of WWT plans, improved management of PAs etc). Why BAs are important: Understand the implications on implementing env measures Make benefits comparable and understandable to wide audience; Provide improved scientific evidence base; Move focus from costs to benefits; Offer arguments to support funding decision / env policy integration Final Project Event: ENPI-East, Chisinau4

5 Examples of BAs A growing interest in assessing the value of the environment Several European Commissions BAs on EU acceding countries, e.g. : Ecotec (2001) The Benefits of Compliance with the Environmental Acquis for the Candidate Countries; Ecolas and IEEP (2005) The benefits for Croatia of Compliance with the Environmental Acquis; c Arcadis-Ecolas, IEEP, Metroeconomica, Enviro-L (2007) Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis IEEP (2008) Benefit Assessment methodology for ENP countries Assessment of environmental funding needs & benefits, e.g.: GHK, IEEP, Ecolas, Cambridge Econometric (2006): Strategic Evaluation on Environment & Risk Prevention under Structural & Cohesion Funds for A report for DG Regio Valuation of benefits of nature & ecosystem services, e.g.: The Economics of Ecosystem & Biodiversity (TEEB) Cost and benefits of EU Natura 2000 – several studies by IEEP et al Etc Final Project Event: ENPI-East, Chisinau5

6 Gross Value Added (GVA) Natural Capital Business as Usual path with overall trade-offs Win (Econ) – Loss (Env) Development Pathways, trade-offs and natural capital Good Practice in Environmental Management Path (still trade-offs, though balance better) Non Declining (over time) Natural Capital Path Over time path to no trade-offs (overall win-wins) – Decouple economic development from natural capital use Trade-offs Specific measures: some win-wins, others win- neutral, win-loss, some loss-loss Overall: win-loss for this path TodayPastPotential Future Source: ten Brink 2011 in Hjerp et al 2011

7 Gross Value Added (GVA) Natural Capital WIN (Economy) LOSS (Environment) e.g. Road that facilitates economic growth via needed connectivity Interventions – win-wins and win losses WIN (Economy) - WIN (Environment) e.g. Investment in natural capital that brings high returns to the economy and improves ecological status e.g. Flood plains that reduce risk at lower cost e.g. Investment in ecosystem for water purification at lower cost than man-made capital. e.g. investment in natural carbon storage LOSS (Economy) LOSS (Environment) e.g. Investment in not needed road e.g. Uncontrolled invasive species that impacts agriculture or forestry e.g. Fisheries subsidies (underperforming natural asset) Win (Economy) - WIN (Environment) e.g. Protected area where some (opportunity) costs, but also some economic gains e.g. Waste water treatment plant WIN (Economy) Loss (Environment) e.g. Factory built after due EIA, compliant with legislation, with proactive risk management strategy and environmental management system (EMS); some unavoidable impacts LOSS (Economy) WIN (Environment) e.g. Restoration of polluted land that poses little risk and offers little return Loss (Economy) WIN (Environment) e.g. Ban on trade of threatened species Win (Economy) LOSS (Environment) e.g. Airport in already well connected area (eg by rail) WIN (Economy) - n/a (Environment) Pure economic gain, no effect on natural capita e.g. Investment with no-net-loss policy, using suitable offsets Source: ten Brink 2011 in Hjerp et al 2011

8 Reference point = the state of environment now. This requires an understanding of the relationship between pollution and impact Baseline: a projection of how the state of the environmental will change to the target year (e.g.2020) based on project developments in the underlying economic and social (population, GDP growth and other relatively straightforward ones) factors that drive these changes. Possible policy targets and target year (e.g. from EU/international standards, such as sewage network connection rate) Environmental improvements: Comparing the baseline with the targets in order to assess the environmental improvements if targets are met Benefits: Look at environmental, social, health and economic effects of environmental improvements (in qualitative, quantitative and monetary terms) BA valuation framework:

9 Benefit Assessment Manual Final Project Event:: ENPI-East, Chisinau 9

10 The BA Manual (BAM) Manual on the Assessment of Social and Economic Benefits of Enhanced Environmental Protection in the ENPI countries Step by step guidance on the methodology for BAs Developed as a working tool for the project Simplified & tailored to policy makers/experts to carry out/update own BAs Final Project Event: ENPI-East, Chisinau10

11 ...The BA Manual (BAM) The Manual will be available from 15 July at: ENPI project website: Final Project Event: ENPI-East, Chisinau11

12 BAM content Method –Environmental categories to analyse (themes, sub-themes, parameters) –Benefits to assess (env, health, social, economics) –The level of the analysis (qualitative, quantitative, monetary) –Approach for each parameter Practical issues: –Data requirements –How to carry out case studies –Assessment Final Project Event:: ENPI-East, Chisinau 12

13 Methodology Final Project Event:: ENPI-East, Chisinau 13

14 Environmental categories The environment comprises a vast range of issues. Clearly not everything can be covered Selection of environmental issues - criteria: sufficiently representative of the environment, common across the countries under study, sufficiently simple to be assessed rigorously. Choice of 5 themes, sub-divided into sub-themes, and these into parameters The BA assesses the benefits of improvements for each of these parameters Final Project Event: ENPI-East, Chisinau14

15 ...Environmental categories 5 THEMES: 1. AIR: How may society benefit from improvements in ambient air quality, espec. health? 2. WATER: Infrastructures – what benefits of extending access to safe drinking water, improved hygiene and sewage connection, additional waste water treatment? Natural resources – What benefits from enhancing the quality of bathing and river waters, and to whom? 3. WASTE - What benefits of reducing waste, improving collection and treatment? 4. NATURE - What benefits of enhancing biodiversity and sustainable use of natural resources? 5. CLIMATE CHANGE - What risks related to global warming and what actions can contribute to the solution? Final Project Event: ENPI-East, Chisinau15

16 ….Environmental categories Final Project Event: ENPI-East, Chisinau16 Themes Sub- Themes Parameters

17 Benefits of environmental improvements Environmental benefits: positive impacts that meeting environmental targets have on the natural environment e.g. environmental improvement: higher share of WW under secondary treatment env benefit: reduced eutrophication Social benefits: benefits to the society at large e.g. improved air quality better conservation of historical heritage, open air recreation Health benefits: Direct benefits to public health (part of social benefits, but assessed separately given magnitude) e.g. improved sanitation reduction of illness/mortality due to water-borne diseases Economic benefits: value added to economy, employment opportunities, cost savings, etc e.g. improved bathing water quality tourism opportunities Final Project Event: ENPI-East, Chisinau17

18 Level of analysis The benefits can be assessed in: Qualitative terms: description of the benefit, including people, areas & sectors affected, spatial distribution - applicable to all parameters Quantitative terms : scale of the benefit (e.g. reduction in the number of cases of respiratory disease from air pollution) - more data intensive, applicable when data available Monetary terms: value of the benefit: multiply quantitative benefits by standard economic value (or range) – applicable only when values representing the monetary value for society of a certain environmental improvement exist (e.g. carbon values, crop prices, WTP etc.). Note: It can be controversial (e.g. VSL) and comparisons can be misinterpreted (e.g. air values higher than waste values, due to data) >> numbers to be interpreted with care Final Project Event: ENPI-East, Chisinau18

19 From: The benefits of compliance with the environmental acquis for the candidate countries (July 2001) led by Ecotec and supported by the Institute for Environmental Policy (IEEP), Metroeconomica, EFTEC and national experts. Scale of monetary benefits: example NMS

20 …Level of analysis Final Project Event: ENPI-East, Chisinau20 Benefits pyramid The 3-stage approach ensures that : the full range of benefits is covered, even if data availability uneven the BA is not constrained by focusing only on elements that can be quantified or monetised.

21 Methodological steps 5 key steps to carry out a BA: 1) Describe state of the environment 2) Define future baseline 3) Set targets 4) Assess environmental improvements 5) Assess Benefits Final Project Event: ENPI-East, Chisinau21

22 1) State of environment 1) Define the current state of the environment (reference point): a description of the current environmental conditions (e.g. in 2008). Needed to establish a reference point. Example of key points to describe -State of the parameter (e.g. surface water quality) -Driving forces affecting it (e.g. population increase etc) -Environmental pressures (e.g. waste water pollution etc) -Current value/importance (e.g. bathing, drinking water etc.) -etc Final Project Event: ENPI-East, Chisinau22

23 2)Define the future baseline: baseline projections of state of environment in the future (e.g. 2020) if no action/business as usual (BAU) – e.g. effect of economic and demographic changes. Needed to compare like with like: future improvements with future no action scenarios. Examples: Final Project Event: ENPI-East, Chisinau23 2) Baseline

24 3) Targets 3)Establish the targets: theoretical environmental targets for each parameter (e.g. by 2020). Needed to establish what future action scenarios can be. >> Here: not actual policies in ENPI countries (the work did not aim to assess national policies), but theoretical (yet feasible) targets – e.g. based on EU/international standards (e.g. achieving good ecological status of surface water after EU WFD) Examples: Final Project Event: ENPI-East, Chisinau24

25 What are the improvements and what are useful targets / benchmarks? Level of pollution Current Situation COPI: 100% reduction 50% reduction EU acquis Reference year pollution level = static baseline Baseline pollution levels Policy Target: eg benchmark OECD …targets e.g. IEEP (2011) Manual of European Environmental Policy

26 4) Environmental improvement 4)Compare the targets to the reference point and baseline >> env improvements: compare the proposed target with baseline (BAU e.g. in 2020). Needed to estimate expected environmental improvements. >> If baseline cannot be assessed (e.g. lack of data) compare to reference point (e.g. 2008) Example: ambient air quality Final Project Event: ENPI-East, Chisinau26

27 Basic Valuation Framework Damage Cost / Benefits Savings Business as Usual Reference Full EndTime Year Implementation Year (eg 2005) (eg 2020) (2030) If difficult to define use the reference year... environmental improvement

28 5) Benefits 5)Assess the benefits: estimate benefits (health, environmental, social, economics) if the targets met. Use a combination of qualitative, quantitative and monetary approaches (see 3. Level of analysis) Note: >> not all the benefit categories are applicable (e.g. limited/no health benefits from reduced deforestation) >> avoid double counting (e.g. health benefits of drinking water quality overlap with improved sewage – assess joint benefits) Final Project Event: ENPI-East, Chisinau28

29 Establish/describe link between pollution and benefits/avoided impacts Eg water treatment/improved sanitation/air quality >> reduced cases of morbidity, children mortality etc Eg improved management of natural areas>> tourism benefits, reduced cost of water purification etc Benefits: qualitative

30 Health benefitsAvoided respiratory illnesses and premature deaths Resource benefitsAvoided damage to buildings and crops Ecosystem benefits Avoided global warming from CO2 emissions Avoided damage to lake & forest ecosystems from acidic rains Social benefitsImproved access to cultural heritage (less damage to historic buildings) Lesser social inequality by poor being more exposed to air pollution Wider economic benefits Cultural tourism Attracting investment Employment from environmental goods From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates Qualitative benefits – air (examples)

31 Health benefitsHouseholds benefiting from connection to (improved) quality water Resource benefitsReduction of contaminants in surface water Ecosystem benefitsLikely changes in river and lake water quality Social benefitsConfidence in drinking water Wider economic benefits Employment via tourism related to water recreation From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates Qualitative benefits: Water (examples)

32 Health benefitsLower pollution to groundwater and surface water Reduced health and explosions risks as well as lower impact on global warming as methane emissions from landfills are captured and made to generate energy. Reduced health risks by improved treatment and disposal of hazardous waste Resource benefits Increased efficiency in the use of material and reduced production of primary material as a result of higher levels of recycling. The recovery of energy is increased through the Incineration Directive. Ecosystem benefits Benefits to eco-systems and other environmental resources as emissions from waste activities into air, water and soil are reduced (avoided leachate, methane emissions) – reduced pressure Social benefitsReduced discrimination by fewer low income households living close to unprotected landfills, etc. Wider economic benefits Lower costs for waste collection, treatment and disposal, as less waste will be produced. From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates Qualitative benefits: Waste (examples)

33 From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates Ecosystem benefits Increased size of protected areas Increased level/quality of protection Increased connectivity between protected areas: eg reduced fragmentation in FYROM due to infrastructures Reduced threats/risks to species and habitats: eg wetlands destruction, intensive agriculture etc threatening birds in Kosovo; reduced soil erosion from deforestation in Albania Social benefitsAmenity value: improved areas for recreation Opportunities for rural development Wider economic benefits Torism benefits Cost savings eg from water purification Qualitative benefits: Nature (examples)

34 Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine Exposure to pollution leads to a possibility for illness. This is measured as a probability function, aka Dose Response Function Likely number of impacts = number of people exposed * Dose Response Function * ambient air quality (pollution levels). Results given in probable no. of cases of bronchitis, early mortality cases etc Benefits: quantitative

35 Assign a monetary value (eg M, %GDP) to quantified benefits For health impacts - use value of statistical life (VSL) + use of transfer values for early mortality & Cost of Illness (COI) / discomfort estimates (eg for bronchitis), based on WTP. For other benefits – eg benefits from improvements in quality of access to drinking water – used willingness to Pay (WTP) estimates Not all parameters & benefits can be monetised. Values may be more available in some areas than in others – it does not mean one is more valuable than others >> Need to interpret with care Benefits: monetary !

36 Value (Benefit) Transfer Approach Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine When data not available, values can be borrowed from other areas/countries with similar issues (e.g. transfer data on morbidity cases caused by PM10) BUT: Important to take into account income/GDP disparities as countries have different levels of wealth!...Benefits: monetary

37 Practical issues Final Project Event:: ENPI-East, Chisinau 37

38 Data Gathering Data to collect include: General data on the current economic and social state and trends (GDP, GDP/capita, population size and growth rate etc.); Data describing the current state of the environment (and, when possible, trends) for each parameter; Data that measure the relationship between environmental change and socio-economic benefit (where available – e.g. mortality associated to air pollutants); Data on the valuation of benefits (where available – e.g. WTP for safe drinking water) Final Project Event: ENPI-East, Chisinau38

39 AirWaterWasteNature Main pollutants: SO2 NOx Particulates (PM10, PM 2.5) VOCs CO2 CO Heavy metals Dioxins Furans Halogens Ozone CH4 Main pollutants: BOD and COD pH Nitrogen & Phosphorus Heavy metals Dioxins Fluoride E. coli Main data: Connection to water supply and waste water systems and level of waste water treatment. Quality of rivers (classification x km) Number of aquifers polluters (nitrates or pesticides) Main pollutants: CH4 Main data: Tonnes of Domestic, Industrial and Inert waste Population served by the collection system No. of existing and planned facilities (landfills, incineration plants, recycling) and collected material No. of illegal dump sites and quantity of waste Main data: Ha and % of protected areas No. of species and level of risk Ecosystem services Data: What issues are likely to be important

40 …Data gathering Possible sources of data: National reports and databases: e.g. national State of the Environment Reports, statistical reports, Peer-reviewed research studies, Personal contacts with relevant authorities and experts. International reports and databases: e.g. by UNEP, UNDP, World Bank, OECD, EU Commission, Eurostat, FAO etc.; can be country specific or cover several countries or regions. Etc Final Project Event: ENPI-East, Chisinau40

41 ...Data gathering A checklist was developed to guide data collection Extract: Final Project Event: ENPI-East, Chisinau41 WATERUnitSourceComments SUB-THEME: Water Infrastructures PARAMETER: Connection to safe drinking water 1 Population with improved water supply (population with access) %WHO/UNICEF JMPTotal, Urban & Rural aPiped water supply %WHO/UNICEF JMPTotal, Urban & Rural b Other improved water sources % WHO/UNICEF JMP Total, Urban & Rural c Population with pre-treated piped water (municipal treatment) with good quality at tap % Total, & Urban 2Population with unimproved water supply % WHO/UNICEF JMP 3Water supply interruptions Only if it is an issue, and if information easily available 4Household appropriately treating drinking water %DHS, MICS

42 Case studies Analysis complemented by case studies: Each to focus on a single parameter Apply same methodology as above Main objectives of case studies: Provide a practical application of environmental valuation Complement and/or fill a gap in the country BA and/or highlight important cases that demonstrates the value of environmental improvements Final Project Event: ENPI-East, Chisinau42

43 Assumptions Several assumptions had to be made to make the BA practical & allow for (some) comparability across countries Overview: Final Project Event: ENPI-East, Chisinau43 IssueAssumptions Timescale2020 Reference year2008 if and where data available, and note year if other than Targets Usually a single common target for year 2020 used across the countries for each parameter under analysis. Baseline Usually a set of essential factors are included in the baseline projection, such as GDP, population and their growth rates. These are kept to a minimum to keep the analysis reasonably simple. Mortality and morbidity Valuation of mortality follows a benefit transfer approach of willingness to pay (WTP) for mortality risk reduction that translates to a value of statistical life (VSL) which varies across countries in proportion to GDP/capita (PPP terms). The same WTP and benefit transfer approach is used for valuing an avoided case of illness, unless otherwise stated. Time development of willingness to Pay (WTP) Assumes a proportional relationship – e.g., if GDP/capita goes up by a factor of 2, the WTP goes up by a factor of two.

44 …Assumptions Specific economic and demographic assumptions had to be made when estimating the BAU & target scenarios in 2020: Final Project Event: ENPI-East, Chisinau44 Country clusterData Annual growth factor ENP South population1.68% GDP3.75% GDP/capita2.03% ENP East population0.02% GDP3.35% GDP/capita3.33% Russia population-0.55% GDP3.75% GDP/capita4.32% E.g. GDP and population future annual growth rates

45 …Assumptions Estimated values of statistical life (VSL) Final Project Event: ENPI-East, Chisinau45 VSL (PPP Euros), 2008 VSL (LCU), 2008 VSL (PPP Euros), 2020 VSL (LCU), 2020 Algeria419,00823,886,257533,28130,400,641 Armenia316,52990,389,617468,954133,916,996 Azerbaijan460,803336,782682,704498,961 Belarus650,3501,031,931,969963,5271,528,861,765 Egypt281,987833,061358,8921,060,258 Georgia253,889331,426376,150491,025 Israel1,491,0027,760,9871,897,6369,877,603 Jordan289,420197,357368,352251,182 Lebanon628,743822,193,776800,2171,046,426,730 Libya861,7641,409,8121,096,7881,794,303 Moldova153,7741,329,991227,8241,970,451 Morocco220,5771,625,356280,7352,068,631 Russia1,090,70129,437,5941,811,82748,900,494 Syria237,4859,462,892302,25312,043,661 Tunisia417,937369,846531,919470,712 Ukraine381,0411,574,310564,5322,332,423 West Bank and Gaza152,202399,746193,712508,767 Can be controversial! Not the value of life but rather peoples WTP for reductions in risk. Depends on GDP (PPP) hence differ across countries.

46 … Assumptions Carbon value: -Used for methane capture, deforestation & RES -Based on range of values from European studies (consistent with several international studies) -Same values across countries (assuming the value of carbon & climate change risk the same value worldwide) Final Project Event: ENPI-East, Chisinau46 GHGRange Carbon dioxide (CO 2 ) or CO 2 equivalent Low High3256

47 Conclusions/way forward Final Project Event:: ENPI-East, Chisinau 47

48 Improving environmental policies/measures can help improve the health and quality of life for citizens within a country and in neighbours countries Co-operation across countries is crucial to maximise the transboundary benefits (e.g. From air & water pollutions) Benefits are likely to be of the same order of magnitude (if not larger) than the costs Benefits can help communicate the importance of the environmental issues at political level. Quantification of the health and environmental benefits is crucial Valuable economic message from the monetisation aspect – reaching some new audiences (e.g. economists, finance dept, media etc) Overall conclusions

49 In some countries (e.g. EU MS) benefits have to be assessed within Impact Assessments for major policies/legislation, programmes etc. BA for new candidates/neighbours is arguably becoming good practice – it was done for Croatia, also for FYROM and other SEE countries, and now for ENP. It is increasingly recognised as a tool that can help the Commission, and Ministries of Environment in the countries themselves. Benefits assessments are being done in an increasingly wide range of areas – eg eco-system services (TEEB in National & International Policy Making); socio-economic benefits of natural areas (e.g. Natura 2000 in EU); international processes (e.g. COP of CBD) etc Being complemented by cost of policy inaction (COPI) studies (EC) and cost of degradation (WB) to help present the scale of the need for action. The future of BAs

50 Thank you for your attention ENPI project website: Project Analysis for ENPI countries of social an economic benefits of enhanced environment protection (DCI-ENV/2009/ ) Samuela Bassi – Institute for European Environmental Policy (IEEP)

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