1. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) ETC/Water 2010 Overview of EEA/ETC water and economics work Manuel Lago Ecologic Institute, Berlin

2. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Outline of presentation Introducing the role of economics in the WFD Introducing the role of economics in the WFD Overview of the EEA current work on water economics. Overview of the EEA current work on water economics. Applications Applications

3. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Economic aspects of the WFD Article 4 - Environmental objectives : Article 4 - Environmental objectives : Applying exemptions from achieving the objectives justified by disproportionate costs Applying exemptions from achieving the objectives justified by disproportionate costs Article 5 / Annex II&III - Economic analysis: Article 5 / Annex II&III - Economic analysis: –Economic assessment of water use Article 9 - Water Pricing policies: Article 9 - Water Pricing policies: –Economic instruments for sustainable water use Article 11 / Annex III / Annex VI Part B - Programme of measures Article 11 / Annex III / Annex VI Part B - Programme of measures –Article 9 & Cost-effectiveness of the programme of measures –Supplementary measures – financial incentives Article 13 / Annex VII - River Basin Management Plans Article 13 / Annex VII - River Basin Management Plans

4. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) The WFD: Economics thinking is most relevant… for the selection of the most cost-effective POMs for the River Basin Management Plans; for the selection of the most cost-effective POMs for the River Basin Management Plans; for the use of specific economic instruments to support application of cost recovery of water services, such as water pricing or taxes; for the use of specific economic instruments to support application of cost recovery of water services, such as water pricing or taxes; –including resource and environmental costs of water services provision for the considerations relating to the impact of water policies on the water using and water polluting sectors; and for the considerations relating to the impact of water policies on the water using and water polluting sectors; and for the assessment of disproportionate costs in order to justify exemptions to achieve ‘good status’ at particular water bodies. for the assessment of disproportionate costs in order to justify exemptions to achieve ‘good status’ at particular water bodies.

5. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) WFD implementation: integrating a wide range of economic issues Environmentalobjectives Identifying programme of measures Analysing water uses, pressures, impacts Identifying potential measures Justifying potential derogations Implementing programme of measures Evaluating impacts of programme Defining penalties Economics importance of water uses Assessment of cost recovery Trends in supply and demand Assessment of unitary costs, effectiveness and cost- effectiveness of measures Costs & benefits of measures Designation of HMWB Defining less stringent objectives & time derogation Justification of cost-recovery levels Identification of a cost- effective programme of measures Assessing the role of pricing as measure (incentive) Characterisation - 2004 Programme of measures (RBMP) - 2008 & 2009 Implementing WFD pricing Provisions - 2010

6. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) EEA current work on water economics Framework contract on environmental economics Framework contract on environmental economics –Water Economics and Ecosystem Accounts - A project under the Framework contract Ref. No. EEA/IEA/09/002-Lot3 European Topic Centre-water European Topic Centre-water –Task 1.4.2.6: Water and economics –Task 2.4.2.4: MSFD: understanding of economic elements

7. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Objectives of the Framework contract study Clarification of terminology Clarification of terminology Data mining and Assessment of economics Information Data mining and Assessment of economics Information Incorporation of economics information into SEEAW and ecosystem accounts Incorporation of economics information into SEEAW and ecosystem accounts

8. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Clarification of terminology Clarification of the water economics terminology widely used in the main policy streams (WFD; EEA fast track ecosystem accounts; UN SEEAW; MSFD). Clarification of the water economics terminology widely used in the main policy streams (WFD; EEA fast track ecosystem accounts; UN SEEAW; MSFD). Identification of potential discrepancies and incoherence between concepts (units, geographical scale) and terms used, including possible misinterpretation that might arise as a result of different definitions. Identification of potential discrepancies and incoherence between concepts (units, geographical scale) and terms used, including possible misinterpretation that might arise as a result of different definitions. Key terms in this terminology include among others: costs of measures, restoration and maintenance costs, cost- recovery & full cost recovery, environmental & resource costs, values (costs to) of ecosystem goods and services, disproportionate costs, incentive pricing.... Key terms in this terminology include among others: costs of measures, restoration and maintenance costs, cost- recovery & full cost recovery, environmental & resource costs, values (costs to) of ecosystem goods and services, disproportionate costs, incentive pricing....

9. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Data mining and Assessment of economics Information Assess the breadth of economic information contained in the RBMPs and related documentation. Collate relevant material Assess the breadth of economic information contained in the RBMPs and related documentation. Collate relevant material Review the role water economics has played in the implementation process of the WFD Review the role water economics has played in the implementation process of the WFD Assess conclusions and further applicability of the information Assess conclusions and further applicability of the information –Is new guidance needed for MS to collect WFD related socio-economic info Lessons learnt for the implementation process of the MSFD Lessons learnt for the implementation process of the MSFD Review other information sources e.g. EU projects etc Review other information sources e.g. EU projects etc

10. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Incorporation of economics information into EU SEEAW and ecosystem accounts Incorporation of economics information into EU SEEAW and ecosystem accounts Populate the SEEAW water accounts with economic information. The SEEAW is a satellite system to the System of National Accounts (SNA)  The SEEAW is a satellite system to the System of National Accounts (SNA)  It follows the SNA Standard: Uses of standard definitions, concepts, classifications common to economic accounts It follows the SNA Standard: Uses of standard definitions, concepts, classifications common to economic accounts Ideal for cross-sectoral analysis as it is rooted in the 1993 SNA Ideal for cross-sectoral analysis as it is rooted in the 1993 SNA Development of Indicators Development of Indicators

11. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Economic aspects in the SEEAW accounting framework Chapter 3 - Physical water supply and use tables: Provide physical information by industries and households on water abstraction, use and supply within the economy and returns in the environment. Chapter 3 - Physical water supply and use tables: Provide physical information by industries and households on water abstraction, use and supply within the economy and returns in the environment. Chapter 4 - Emission accounts: Provide physical information by industries and households on emissions of substances into water resources through wastewater discharges. Chapter 4 - Emission accounts: Provide physical information by industries and households on emissions of substances into water resources through wastewater discharges. Chapter 5 - Hybrid and economic accounts: Provide information on the cost associated with water use and supply and on users fees paid. Links between physical flows of water with the economic accounts, financing. Chapter 5 - Hybrid and economic accounts: Provide information on the cost associated with water use and supply and on users fees paid. Links between physical flows of water with the economic accounts, financing. Chapter 6 - Asset accounts: Provide information on the stock of water resources in the environment and the changes that occur during the accounting period (abstraction, returns, precipitation, evapotranspitration, etc.). Chapter 6 - Asset accounts: Provide information on the stock of water resources in the environment and the changes that occur during the accounting period (abstraction, returns, precipitation, evapotranspitration, etc.). Chapter 7 - Quality accounts: Provide information on the quality of water in the environment Chapter 7 - Quality accounts: Provide information on the quality of water in the environment Chapter 8 - Valuation of water resources: Provides a review of valuation techniques and their consistency with the 1993 SNA valuation. No recommendations Chapter 8 - Valuation of water resources: Provides a review of valuation techniques and their consistency with the 1993 SNA valuation. No recommendations

12. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Integration with ecosystem accounts. Ecosystem accounts start from physical accounts targeted primarily at measuring ecosystem degradation, and relating this to their capacity to continue delivering services in a sustainable way today and in the future. Ecosystem accounts start from physical accounts targeted primarily at measuring ecosystem degradation, and relating this to their capacity to continue delivering services in a sustainable way today and in the future. Distance to established targets can be computed: achieving GES under the WFD Distance to established targets can be computed: achieving GES under the WFD Link to expenditure accounts: the remediation costs of degradation are the overall measure of monetary depreciation. Link to expenditure accounts: the remediation costs of degradation are the overall measure of monetary depreciation. Appraise the suitability of the information contained in the WFD RBMPs to fit into the water ecosystem accounts Appraise the suitability of the information contained in the WFD RBMPs to fit into the water ecosystem accounts Application single RBD’s case studies. Application single RBD’s case studies.

13. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) ETC-Water: Policy links WFD: WFD: –Review of RBMPs reporting exercise: templates on objectives and exemptions, pricing, programme of measures and agriculture –Support the development of ecosystem capital accounts in water MSFD MSFD –Understanding of the economic elements of the Directive –Follow progress of the WG ESA –Development of maritime socio-economic indicators –Marine/maritime ecosystem assessments - Eureca

14. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Applications of the water economics work Analysis of possible trade-offs between alternative water policies and economic strategies. Analysis of possible trade-offs between alternative water policies and economic strategies. Support policy decisions on economic instruments (design, monitoring and evaluation) and their possible impact on the selection of Programme of Measures as dictated by the WFD. Support policy decisions on economic instruments (design, monitoring and evaluation) and their possible impact on the selection of Programme of Measures as dictated by the WFD. –application of other measures (i.e. cooperation agreements) and economic instruments (i.e. pollution trading permits) and incentives (i.e. the role of subsidies) Inform decisions on water allocation, pricing and infrastructure development. Inform decisions on water allocation, pricing and infrastructure development. Provide Information on water use and demand and from there we could establish some concept of value if linked with economic data per sector. Thus, potential use of sectoral water accounts to inform disproportionate costs analysis. Provide Information on water use and demand and from there we could establish some concept of value if linked with economic data per sector. Thus, potential use of sectoral water accounts to inform disproportionate costs analysis.

15. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) EEA water economics work is also leading to the fulfilment of other specific objectives: EEA 2012 water report EEA 2012 water report –A water economics output as part of key “water ” messages for 2012 (sub-assessment), EEA indicator development work (ETC-water) EEA indicator development work (ETC-water) –New indicators on resource efficiency incorporating economic information Improved assessment of state of the water environment in Europe Improved assessment of state of the water environment in Europe –WFD and economic analysis of water use –Links with other policy areas (agriculture) –Incorporation of economics into existing indicators

16. Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen Author: Dr Manuel Lago (Ecologic Institute, Berlin) Thank you for your attention! Manuel Lago Ecologic Institute, Pfalzburger Strasse 43/44,10717, Berlin   +49 30 86880-110 Manuel.lago@ecologic.eu | www.ecologic.eu