National Water Management Authority Assessing Environmental and Resource Costs in the Water Framework Directive: the Case of Poland National Water Management Authority krzysztof.berbeka@uek.krakow.pl 2014

Basic assumptions Separate calculations of resource and environmental cost, Calculations were conducted for the whole country, the Vistula and the Odra basins as well as for individual Regional Water Management Authorities.

Terminology, disaggregation Realized internalization: Fees, Charges, Taxes, Penalties, Non-compliance fees. International comparison: €/m3 unit vs average % of: unit production cost, net price, gross price, Resource costs Externalities;

Resource costs - implementation Internalized Total amount of collected fees for water intake: 58 m €/y (of this 80% - municipal sector) Fee for water intake: weighted average, per 1m3 of invoiced water – 1,75 c€/m3 (2006); 1,98 c€/m3 (2010); 2006/2010: 13%, however in national currency 16% (above CPI). As a share of unit costs of water provision: 2,8% (2006) 2,5% (2010).

Non internalized resource costs in Poland Calculation in 2006 →0, 2010 - 46 000 € 99,99% of needs related to the use of water as a resource are currently met; this takes place at the cost of the quality of surface waters (bringing down the flow below the instream flow level), or at the cost of future generations (permanent reduction of the groundwater resources); proper procedures of data gathering (concerning hypothetical water deficits in industry sector) are lacking in Poland

Disadvantages related to the lowering of flows below the instream flow level have been estimated and incorporated in the environmental costs; Disadvantages of future generations are currently equal to 0 (which is not a correct state and partly due to the lack of theoretical solutions); Alternative uses of water for other purposes (e.g. for recreation) have been incorporated in the estimation of the environmental costs Meeting all the current needs leads to the marginal value of opportunity costs related to the use of water treated as a resource;

Investigation of the water shortage Questionnaire investigation of the conflicts related to the rights for water intake (1/2 of Poland) Extrapolation for the whole Poland: 46 000 € Alternative possible approach: top-down: Identification Quantification Monetary valuation No of cases m3 €/national currency 11 8 6

Incremental results of unit resource costs assessment

Terminology, disaggregation Realized internalization: Fees, Charges, Taxes, Penalties, Non-compliance fees. International comparison: €/m3 never unit! Average wastewater % of: unit production cost, net price, gross price. Environmental costs Externalities;

Environmental costs- implementation Internalized Total amount of collected fees for pollutants discharge: 63 m €/y (of this 45% - municipal sector), previous calculation -2006 – 57 m € ( + 9%) Fee for pollutants discharge (in wastewater): weighted average, per 1m3 of waste water – 3,1 c€/m3 (2010); in municipal sector 2,1 c€/m3 As a share of unit costs of waste water collection and treatment: 2,9% (2006) 2,3% (2010).

Non internalized environmental costs - why WTP? 1. Environmental cost ≠ cost of environmental protection (cost of measures) Costs, benefits MAC MEC Environmental costs - represent the costs of damage that water uses impose on the environment and ecosystems and those who use the environment X Pollution Environmental costs - represent the costs of damage that water uses impose on the environment and ecosystems and those who use the environment

Non internalized environmental costs Estimation technique: contingent valuation method (CVM) Representative research - 2003 Update of the results should be considered:

Increase in the household income (has influence on the growth of the WTP unit value), Progressing implementation of investment programmes bringing up an improvement of the surface water quality (reduces the value of WTP).

Unit WTP per capita: 30-53 €/per person*year depends on the region (Water Authority) Supplement: 53 €/per person*year valuation of the benefits related to the Baltic Sea status improvement,

The key to the division of responsibility for environmental costs, estimated on the basis of the discharge structure of major pollutants - the total net load - the load that enters the receivers for individual sectors

Allocation of environmental costs between sectors and basins

Allocation of environmental costs between sectors and basins - inland waters

The value of environmental costs (Poland, 2010) 856 m €, for the inland waters, The structure of these costs broken down by sectors is: 67% - 9% - 24 %, for the municipal sector/industry/agriculture respectively

The high share of the municipal sector is a result of several factors: the municipal sector in fact encompasses also a significant part of industrial activity (all enterprises connected to municipal sewage treatment plants), the industrial sector (more precisely its part responsible for direct discharges) is somewhat handicapped in calculations because some industrial pollutants, which deteriorate water quality, are missed in calculations because of the lack of relevant statistical data, impact of the agricultural sector is based on a very generalised algorithms for the transition from the produced load (gross) to the load discharged to a receiver (net). This estimation bears the highest margin of error among the three sectors.

Financial rate of return 104% Economic rate of return 85% and ??? Is there any light at the end of this way? Where we are going?