1. Costs and Benefits associated with the implementation of the Water Framework Directive, with a special focus on agriculture Summary & recommendations Study for: European Commission, DG ENV Carried out by: Vito (Lead), TME, Ecologic and IVM under Framework Contract: Economic Analysis

2. Overview Objectives and approach Current status of information
Factors determining costs and benefits
Costs and benefits of specific measures
Recommendations
Further information

3. 1a. Objectives
Overview of current information on costs and benefits of WFD implementation
Describe types and factors underlying costs and benefits associated with WFD measures
Provide ranges of feasible costs and benefits based on case studies
Provide a perspective of where a CBA of the WFD should be heading

4. 1b. Approach
Literature review and questionnaire survey to Member States to identify major studies and data:
at aggregated level (national)
for specific measures, including water use and phosphorous use in agriculture
Review of factors determining costs and benefits
Review of published costs and benefits
Two consultative Workshops with MS and stakeholders to discuss approach and Final Report

5. 2. Overview of information available
Information from 24 MS indicates they have started process of assessing both costs and benefits.
No information received from IT, BU, LT
So far, only a few Member States (NL, UK, FR) published first national estimates, as part of ongoing process of economic analysis
More information available at river basin level or for individual measures, but mostly from studies outside context of WFD.

6. 3. Factors determining costs and benefits
Size of GAP (between reference situation and additional measures to reach GES or GEP). Depends on:
current status and measures in pipeline (state of implementation of “old” legislation)
ambition level WFD implementation
choice of measures and instruments
different ways to build scenarios and describe GAP
Costs depend on: cost-efficiency of measures and efficiency of implementation
Benefits depend on: type of water body and how it is used, number of people affected and their preferences, scope to avoid costs in other sectors
Other factors include: time horizon and discount rates

7. 3a. Review of costs
Implementation of WFD most likely to involve substantial costs
Large variations and uncertainties identified:
still important increases in costs due to pre-WFD measures
level of amibition: can increase costs by a factor of up to 6
differences in starting points complicate matters
Additional WFD costs likely to be smaller compared to current and pre-WFD costs
e.g. NL indicate additional costs to range between 5 to 30% of current costs.
Large cost savings are possible, if the WFD is implemented in cost effectively

8. 3b. Adminstrative costs & benefits
WFD introduces additional adminisrative tasks (public participation, economic aspects, cooperation)
Little information available on adminstrative costs & benefits
Administrative costs likely to follow general cost developments
Potential for large administrative cost savings related to:
Integration of policies
Cost effective approach
Involvement of stakeholders

9. 3c. Review of Benefits
Mostly non-market benefits, for a wide range of citizens
Types of benefit and size depend on context:
Avoided costs (for cleaning drinking water, dredging, water scarcity, flooding)
Benefits for recreation in and around water bodies
Improved health and living environments
Improved protection of nature and biodiversity

10. 3c. Review of Benefits (cont.)
Assessment and monetisation
is possible, although mostly incomplete and with inherent uncertainties
challenging in context WFD (aggregation, double counting with benefits of measures in the pipeline, resource benefits, etc..)
So far only estimates for a few Member States

11. 3d. Comparing costs and benefits
needs to account for uncertainties and incompleteness
is a stepwise process
multiple uses of information on costs and benefits within WFD process

12. stepwise approach

13. 4. Specific measures
Review of typical additonal WFD measures, not addressed in previous water legislation, with special focus on:
fish migration
wetlands
Review of agriculture and the WFD, with special focus on:
phosphorous use
irrigation

14. 5a. General recommendations
Develop a longer term strategy for economic analysis in water sector to serve different purposes & policy questions at different levels and time intervals
Develop a coherent framework economic analysis
Four building blocks for economic analysis identified
Costs of measures
Administrative costs
Effectiveness
Benefits

15. 5b. General recommendations
Combine local knowledge with nationwide multi-disciplinary experts
Define a wide set of competing measures
Cost-effectiveness analysis is essential but difficult, develop appropriate tools, combine expertise
Benefit assessment: use EIA expertise, identify users, aim for completeness, be pragmatic, use guidelines and indicator data
Capacity building: for development, improvement and intelligent use of results

16. 6. Further info Consultation completed
Draft Reports available from CIRCA and includes list of studies from inventory
Expected date of publication for Final Report: Mid July 2007
Commission is discussing possible follow up

17. Possible next steps
Commission is keen to continue work on these subjects
Three areas of work discussed
Handbook for assessment methods for pan-European assessments (supplementing EU Impact Assessment guidelines)
Assessment and scenarios of water policy choices – macroeconomic consequences – economic consequences from competition of water
Support to national and RBD implementation of economic elements
Consultation with MS through Exemptions/ Economics Group and dedicated workshops