1. Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/225-962 WATER Bjorn Larsen Environmental Economist Freelance Consultant Norway and Lao PDR e-mail: BJRNLRSN@AOL.COM

2. Outline of presentation Scope of benefit assessment (what parameters are included?) Rationale for parameters (why important?) Methodologies used for benefit assessment Benefit assessment challenges (what were the difficulties?) Methodologies for future benefit assessments Main results from the benefit assessment Conclusions and recommendations Some questions 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels2

3. Scope: environmental parameters INFRASTRUCTURE AND PRACTICES Household connection to safe and reliable piped drinking water supply Household connection to sewage network Improved domestic and personal hygiene practices, whenever such practices are inadequate for health protection Wastewater treatment NATURAL RESOURCES Surface water quality Water scarcity 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels3

4. Parameter linkages 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 4 Drinking water sources Drinking water treatment practices Sanitation facilities Hygiene practices Delivery; Treatment Surface water Groundwater Water quality Water quantity (scarcity) Households External environment Service providers Potable water Sewage and wastewater

5. Methodologies used for the benefit assessment ParameterQualitative description of benefits* Quantitative and monetary assessment of benefits Drinking water, sewage, and hygiene YesHealth Wastewater treatmentYesIndirectly (through surface water quality) Surface water qualityYesWelfare* Water scarcityYesNone 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 5 * Health, environmental, economic, and social benefits

6. Methodological steps 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 6 Steps 1.State of the environment (in reference year) 2. BAU baseline to 2020 (or other target year) 3. Target in 2020 (or other target year) 4. Environmental improvements (difference between target and BAU) 5. Benefit assessment (qualitative and quantitative)

7. Household drinking water, sewage and hygiene 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 7

8. Definition of terms Piped drinking water supply that is safe and reliable at household tap Drinking water that does not contain biological, chemical or other agents at concentrations or levels considered detrimental to health according to WHO guidelines for drinking water quality. Continuous and plentiful water supply delivered at appropriate and constant pressure to household premises (yard/dwelling) 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 8

9. Definition of terms…continued Sewage connection Connection to a closed, piped system for safe removal of excreta and wastewater from the household and community environment Hygiene A procedure or system of procedures or activities used to reduce microbial contamination on environmental sites and surfaces and the external body in order to prevent the transmission of infectious disease (IFH, 2001), e.g., hand washing with soap; food preparation; other domestic and personal hygiene practices) 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 9

10. Rationale for parameters INFRASTRUCTURE AND PRACTICES 88% of diarrheal disease is caused by unsafe water, sanitation and hygiene (WHO). Polluted drinking water also causes many other diseases (e.g., hepatitis A, typhoid, and, in some situations, cancer and other serious health effects) Diarrheal disease in young children contribute to poor nutritional status, which in turn has many health and cognitive development impacts 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 10

11. Rationale…continued Piped water supply to premises (yard/dwelling) and connection to a sewage network are seen in most countries as the best opportunity to provide households with reliable and safe drinking water and ensure safe and hygienic removal of human excreta and other wastewater pollutants from the household and community environment. Piped water supply from a central water intake and distribution outlet allows for treatment of water and monitoring of water quality. Connection to sewage network allows for centralized treatment of wastewater before discharging into the environment 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 11

12. Rationale….continued Most households in the ENPI countries – ranging from 80-100% of households - have what is classified as access to an improved water source. However, a much smaller percentage of households – ranging from 50-90% - have piped water supply on premises (WHO/UNICEF, 2010). Likewise, 80-95% of households have what is classified as improved sanitation facilities (WHO/UNICEF, 2010), while 30-70% of households are connected to a sewage network. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 12

13. Rationale….continued Good hygiene practices such as hand washing with soap at critical junctures (after defecation/going to toilet or cleaning a child feces, before cooking and eating, and before feeding a child) is found in many countries to reduce incidence of diarrhea by as much as 45 percent (Curtis and Cairncross 2003; Fewtrell et al 2005). Good hand washing practices are also found to reduce transmission of respiratory infections (Rabie and Curtis 2006; Luby et al 2005). 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 13

14. Targets for 2020 Drinking water: Achieving 100% population connection (except in isolated rural areas) to reliable and safe piped water supply at household premises. Ensuring that the population currently having piped water supply continuously receives reliable and safe water at household premises. Providing plentiful and equally safe drinking water from other improved water sources in isolated rural areas. Sewage connection: Achieving 100% population connection (except in isolated rural areas) to a sewage network system. Upgrading to flush toilet (with sewage connection) for households with dry toilet or no toilet). Providing improved sanitation to households currently without such facilities in isolated rural areas. Hygiene: Improving hygiene practices especially ensuring good hand-washing with soap at critical junctures wherever such practices are currently inadequate for protection of health. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 14

15. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 15 Piped water supply and sewage connection Piped water supply but not sewage connection Not piped water supply but has sewage connection Not piped water supply and not sewage connection Armenia64%23%1%12% Azerbaijan30%20%3%47% Belarus67%22%1%10% Georgia42%31%1%26% Moldova25%15%3%57% Russia63%15%2%20% Ukraine47%20%1%32% Population coverage of piped water supply and sewage connection, 2008

16. Diarrheal disease and mortality reductions from reaching the targets 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 16 Current water supply and sanitation coverageWater and sanitation improvement Reduction in diarrheal disease and mortality Has piped water supply and sewage connection Improvement in reliability and quality of piped water (so as to ensure plentiful and safe water supply) for those of this population currently having water reliability and quality problems15% Has piped water supply but no sewage connection a) Improvement in reliability and quality of piped water (so as to ensure plentiful and safe water supply) for those of this population currently having water reliability and quality problems. b) Sewage connection (and flush toilet for those with dry toilet or no toilet) for all of this population.35% Not piped water supply but has sewage connection Reliable and safe piped water supply to premises for all of this population25% Not piped water supply and no sewage connection Reliable and safe piped water supply and sewage connection (and flush toilet for those with dry toilet or no toilet) for all of this population45%

17. Nationwide diarrheal disease and mortality reductions 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 17 Nationwide diarrheal disease and mortality reduction Already good hygiene Substantial scope for hygiene improvement Armenia 25%57% Azerbaijan 36%67% Belarus 24%56% Georgia 31%63% Moldova 38%69% Russia 27%59% Ukraine 31%63%

18. Main results Magnitude of health benefits depends on: Current water, sanitation and hygiene situation Baseline health status (child mortality, incidence of morbidity) 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 18

19. Annual benefits, 2020 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 19 Annual cases avoidedAnnual benefits (Million Euros, PPP) Diarrhoea (million)DeathsTotalTotal (% GDP) HighLowHighLowHighLowHighLow Armenia1.20.5341584370.43%0.19% Azerbaijan4.62.58294399394981.08%0.57% Belarus2.71.21463131360.27%0.12% Georgia1.60.87738101500.51%0.25% Moldova1.20.6311740220.39%0.21% Russia40.918.55772629,6394,3700.32%0.14% Ukraine14.06.9112559994940.31%0.16% TOTAL66.131.01,64783212,1155,607--

20. Wastewater treatment 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 20

21. Definition of terms Wastewater treatment Any process that reduces the amount of suspended solids, and dissolved compounds and micro-organisms harmful to the environment and/or the human health in wastewater. Only treatment in facilities operating with the approval of environmental and/or health authorities should be considered. (WHO 2002) Primary, secondary and tertiary wastewater treatments are methods that progressively reduce pollution before wastewater enters the environment 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 21

22. Rationale for parameter The level of waste water treatment if often rather poor and there is substantial room for improvement in many of the countries under study, or in parts of them. Poor waste water treatment leads to damage to the natural environment and can substantially affect water quality. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 22

23. Surface water quality 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 23

24. Definition of terms Surface water quality The parameter measures the level of the quality status of inland surface water and coastal waters (up to three nautical miles). Water quality status is divided into five categories depending on the biological elements present in the water. These categories build on the EU Water Framework Directive (WFD) (EC, 2000) quality status categories: bad, poor, moderate, good and high. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 24

25. Rationale for parameter Surface water quality is important for aquatic ecosystems, economic sectors sensitive to water quality, and for recreation and tourism. Improving bathing water quality protects those engaged in swimming from contaminants in the waters. Those that may be at higher risk of disease include the young, the elderly and tourists who do not have immunity against locally occurring endemic diseases (WHO, 2003). In many ENP countries surface/coastal waters are very important for the national economy, especially in those countries where tourism activities in coastal areas are a key asset. 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 25

26. Target for 2020 Improvement in surface water quality from current conditions to Good Ecological Status (GES), which is the overarching environmental objective of the EU Water Framework Directive (WFD). 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 26

27. Assessing monetary benefits Benefits of improved surface water quality can be quantified in monetary terms by population willingness- to-pay (WTP) for improved water quality If WTP studies in subject countries are not available, a benefit transfer approach can be applied from countries in which such studies do exist The benefit transfer involves adjusting WTP for income and other characteristics that determine WTP The benefit for ENP countries relies on a benefit transfer of population WTP from the UK 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 27

28. Annual benefits, 2020 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 28 WTP results in 2020, PPP per HH year Aggregated benefits WTP in 2020, PPP million Benefits relative to GDP in 2020 % COUNTRYLowerupperlowerupperlowerupper Armenia 45.9180.4381500,20%0,79% Azerbaijan 30.7143.3924300.11%0.49% Belarus 58.8207.12047180.18%0.62% Georgia 44.5174.6491900.25%0.97% Moldova 37,8147,1451770,44%1,73% Russia 67.1229.83,51012,1000.11%0.38% Ukraine 50.5184.68703,1800.27%1.00% TOTAL 4,80816,945

29. Water scarcity 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 29

30. Definition of terms Water scarcity The parameter measures the total freshwater abstracted (withdrawal) and compares this to the total actual renewable water resource. According to the European Environment Agency (2009), one relatively straightforward indicator of the pressure or stress on freshwater resources is the Water Exploitation Index (WEI) (also known as the Water Stress Index and Relative Water Stress Index). This is calculated annually as the ratio of total freshwater abstracted (withdrawal) to the Total Actual Renewable Water Resource (TARWR). A WEI above 20 per cent implies that a water resource is under stress and values above 40 per cent indicate severe water stress (Raskin et al., 1997). Water Exploitation Index = Total withdrawal per year / TARWR 02-03-2011EuropeAid - ENPI-East projects meeting, Brussels 30