1. 2nd „Water Science meets Policy“ Event Volkmar Hartje, Malte Grossmann TU Berlin Economic valuation of dike relocation at the German Elbe An ecosystem services perspective Implementation of the WFD: when ecosystem services come into play 29-30 September 2011

2. Topics 1.Decision-making situation and concept 2.Evaluation of ecosystem services of riverine floodplains 2.1. Flood protection services: avoided damages 2.2. Nutrient retention: replacement costs 2.3. Biodiversity: Benefit Transfer 3. Summary

3. Background Presentation is the result of a study funded by the German Federal Agency for Nature Protection (BfN) During the debate about flood protection strategy in Germany dike relocation vs. dike strengthening + creation of controlled storage Study proposed to contribute by assessing two alternative strategies with ecosystem services approach as a means to value multifunctional effects Study was not included in planning for WFD programme of measures for German part of Elbe

4. Status of riverine floodplains and potential measures Map of lowland stretch of Elbe with historical and current floodplains

5. Conceptual approach: Function, Use, Value FUNCTIONS OF RIVERINE LANDSCAPES USES OF RIVERINE LANDSCAPES Goods & Services (hydrological, biogeochemical, biotic) VALUES OF RIVERINE LANDSCAPES StructureProcesses Direct Use values Indirect Use Values Non-Use Values  = Total Economic Value Logic of the value of ecosystem services

6. Coverage of wetlands ecosystem services Ecosystem servicesRelevance for floodplains Covered in study Hydrological services Flood water detentionyesX property damages Groundwater rechargeyes Sediment retentionyes Biochemical services Nutrient retentionyesX replacement costs Trace element storageyes In-situ-carbon retentionyes Ecological services BiodiversityyesX WTP benefit transfer Food web supportyes Recreationyes

7. Cost benefit analysis Valuation of marginal changes in the relationship of diked to active floodplains On the basis of the total economic value of ecosystem services Covered categories of costs and benefits -Investment costs -Changes in rehabilitation costs -Changes in maintenance costs -Changes in agricultural and forestry productive value - Changes in biodiversity benefits - changes in benefits from nutrient retention - changes in flood protection benefits

8. Cost benefit analysis Measures included in analysis OptiondescriptionPolder operation River stretch (Elbe km) Number of sites Polder- area (ha) Relocation area (ha) DR L Dike shifting (large scope) -- 117-536 60034 658 DR S Dike shifting (small) -- 120,5-536 3309 432 P L Polder (controlled retention large) flood117-427 3125 5760 P S Polder (Controlled retention small) flood180 53 2480 P(e) S Polder (small) with ecol. flooding ecological180 53 2480 P+DR Multi-functional flood117-536 174 1433 402 P(e)+DR Multi-functional ecological117-536 174 1433 402

9. Flood protection service

10. Valuation method: avoided flood damages 1.Assessment of flood risk (average annual damage vs. expected value of damage) 2.Benefit of flood protection effect as the difference between average annual damage with and without measures

11. Downstream routing with retention Inundation model Generation of artificial flooding events Dresden Elbe km Höhe (m NN) Maximaler Abfluss (m 3 s -1 ) Beitrag Nebenflüsse 1D-hydraulic model with HEC-6 Überflutungsvolumen in million m3 im Deichhinterland Wasserstand (m NN) Beispiel Geländehöhe (m NN) Überflutungshöhe (m) Flooding modelling for Elbe river

12. Damage assessment on a macro-scale Macro map of land cover + Value density Specific value for land cover types

13. Effect: Number of overtopped dike stretches Annual frequency of flood event Number of overtopped dike stretches

14. Benefits: avoided flood damages Avoided flood damages (Mio.€) options

15. Nutrient retention service

16. Nutrient retention yield Retentions yield per day of flooding: ~ 1,5 kg TN ha/d and 0,8 kg TP ha/d

17. Method: replacement costs Indirect valuation: Does not value the benefit of the service (clean water), but the value of the service based on ecosystem function as replacement of other fmeasures which can be values Prerequisite for application: 1.The valued measure (substitute) yields a comparative services 2.The substitute measures is the most cost efficient 3.The demand for the service exist at the given price (its costs)

18. Sewage treatment plants Urban surfaces Drainage Atmospheric deposition Ground water Surface discharges Erosion Nutrient discharge into the river Nutrient load in the river Nutrient load in coastal waters Floodplains /wetlands Measures Costs of measures Minimization Simulation Indicators: - reduction potential - avoidance costs - cost-effectiveness Model MONERIS

19. Sewage treatment plants Urban surfaces Drainage Atmospheric deposition Ground water Surface discharge Erosion Nutrient discharge into rivers Nutrient load in rivers Nutrient load in coastal waters Floodplains /wetlands Measures in municipal water management Rainwater treatment Technologiy of sewage treatment Decentralized sewagetreatment technology / connection rate Model MONERIS

20. Sewage treatment plants Urban surfaces Drainage Atmospheric deposition Ground water Surface discharge Erosion Nutrient discharge into river Nutrient load in the river Nutrient load in coastal waters Floodplain/ wetlands Measures in agriculture Reduction of surplus of N-balance Erosion protection Model MONERIS

21. Sewage treatment plants Urban surfaces Drainage Atmospheric deposition Ground water Surface discharges Erosion Nutrient discharges into river Nutrient load in the river Nutrient load in coastal waters Floodplains/ wetlands Measures in water management Drainage ponds Gewässerrandstreifen Rewetting wetlands River restroration Modell MONERIS

22. Cost minimization Minimize the sum of the individual cost components in relation to the desired reduction of the load

23. Shadow value of floodplains Reduction target load (%) Shadow price as annualized costs (€/ha)

24. Biodiversity benefits

25. Method: Willingness to Pay: Elbe example Source: Meyerhoff, 2002

26. Method: Step 2 Benefit Transfer / Meta-Analyse Meta-Analysis: systematic analysis if available studies Evaluation of existing studies with wtp for the protection of riverine wetlands Problem: Divergent goods under the heading of wetlands Own study: - Only wtp for biodiversity and nature protection(non-use and use values) for wetlands in Europa - 28 studies from Europe, 60-90 observations Estimate with a meta-model: WTP = f (area of measures, covered population, income, method)

27. Result: decreasing marginal WTP with size Grossmann, in press 100 km max distance 1000 km Max distance

28. Costs of measures Cost of newly constructed new dikes Regression equation from different sources as a function of dike heights Costs of dike rehabilitation references in the literature Costs of dike cutting references in the literature Costs of dike maintenance references in the literature Costs of regulation of controlled polder references in the literature Costs of flood damages to agriculture for polder estimate of expected damages to yield, valuation via contribution margin Costs for permanent land use changes 

29. Costs for permanent change of land use Opportunity costs: Loss of agricultural services Land purchase: Verkehrswert => Purchasing price differences (farmland / grassland/ forests Uncultivated land/ forested wetland) Ertragswert  capitalized land rent or lease payments => Correction by income transfer (EU Land payments) necessary

30. Results

31. Results of the cost benefit analysis Total values for Elbe according to cost and benefit categories # Only direct effects of dike relocation no indirect effects # Only direct effects of dike relocation no indirect effects Net present value PCSCADCVNRSum Pro- gram AreaDis- count rate Pro- ject costs Saved mainte nance costs Avoided flood damage # Wtp for biodiv Nutrient reten- tion for flood only Multi- function al ha%Mio. € DR L34.6593-566159177926486-2301.182 1-6292163371.191970-762.085 DR S9.4323-2249620252176-108319 1-25213038324351-84591 P3.2483-42041500373 1-52079200739 P ecol3.2483-7004158727345459 1-79079211254712878 P+DR7.5453-118324279137342469 1-1404481511774719910 Pecol + DR 7.5453-1563242720254304559 1-178448152591076811.048

32. Results of the CBA: distribution along the Elbe Program DR large Only dike relocations (Large scope) Program DR large Only dike relocations (Large scope) NPV: Net present value (3%) PC: Project costs; SC saved maintenance costs FD: avoided flood damage BD: WTP for Biodiversity in floodplain NR: Nutrient retention

33. Results of the CBA: Distribution along the Elbe Program DR small: Only dike relocation (small scope) Program DR small: Only dike relocation (small scope) NPV: Net Present Value (3%) PC: Project costs; SC: saved maintenance costs FD: avoided flood damage BD: WTP for Biodiversity in floodplain N NR: Nutrient retention

34. Results of the CBA: distribution along the Elbe Program P: Only large flood protection polder upstream Program P: Only large flood protection polder upstream NPV: Net present value (3%) PC: project costs; SC saved maintenance costs; FD: avoided flood damage; BD: WTP for Biodiversity in floodplain; NR: nutrient retention.

35. Results of the CBA: Distribution along the Elbe Program: Combination DR + P Program: Combination DR + P NPV: Net Present Value (3%) PC: Project costs; SC: saved maintenance costs FD: avoided flood damage BD: WTP for Biodiversity in floodplain NR: Nutrient retention

36. Summary: Methods Economic valuation allows the integration of multifunctional effects of restoring wetlands as an option to improve the morphological quality of water bodies Ecosystem services are a convincing and a practical concept to structure the multifunctional problem The spatially explicit identification/ analysis of changes within the biophysical realm and on the use side are very important Non-linearities are important Including uncertainties is critical for the estimates of quantities and for values.

37. Summary: Relevance for WFD Economic valuation allows the comparison of alternative strategies for flood protection in a multifunctional manner It enables us to take nature protection objectives into account. Dike relocations are an economic option to improve the morphological quality of riverine water bodies in lowlands Dike relocations can be well assessed with the ecosystem services approach The effects on the carbon budget and on recreation need to be added Core requirement is the availability of a large scale hydrological flooding model

38. Thanks for listening!!

39. Source: Heimlich et al. (1998 modified) Calculation of „optimal“ share of active and diked floodplains Analysis of incremental changes with/ without social benefits