Economic Analysis for MSFD: the ESA guidance review. Marilena Pollicino, Economic advisor Defra, UK WG ESA meeting 26th/27th October 2015

Glass half full Economics is embodied in MSFD. ESA guidance used by Member States. Anything missing?

Key Economic messages contained in the ESA guidance Socio-economic analysis is specified as part of the process to inform policy from the start Economic efficiency considerations (are actions cost-effective, do benefits justify costs) are allowed to modify environmental objectives Economic instruments (e.g. pricing and other voluntary mechanisms) are envisaged to achieve environmental objectives

MSFD main drivers Process: Other legal drivers are already delivering GES (but quantum unknown): National legislations CFP; WFD; Habitats Directive; etc.

MSFD approach Objective: to achieve GES Exemptions can apply: Not technically feasible Natural conditions do not allow Disproportionate: Benefits do not justify costs Disproportionate: Not affordable Uncertainty and lack of scientific evidence important 1 1 1 1 2 2 2 3 3 New measures to get GES 5 4 4

ESA guidance: key successes Widely adopted by Member states to assess costs and (when available) benefits to justify the adoption of new measures More flexible than other Directives on how you want to achieve the MSFD objectives Share information with experts on case studies and economic data Disproportionate approaches were discouraged Any other example?

ESA guidance: some limitations Ecosystem services approach (ARCADIS report provided examples but still more to do) Few “market benefits” considered (saved treatment) Stated preference methodology for non-market benefits (WTP survey results) Check results compatible with recent research and surveys (spatial and temporal limitations) Describe qualitative/scientific information to make the case where benefits are higher (stakeholders’ process) Decision-makers still have discretion

Process GES established in Phase 1 Phase 2 Monitoring Phase 3 Assessment. Different countries might follow different approaches. New measures expected For which countries? Additional Costs to businesses Has the guidance been useful? Additional Benefits Is the guidance fit for purpose? If not why not? Scientific information How do you treat uncertainties and results from monitoring? Risks/pressures and difficulties in translating this into an economic language

An example from the UK Economic and scientific driven Pricing? GES Litter indicators to be improved? Invasive species to be improved? Planned measures Existing measures Noise to be improved? Voluntary mechanisms?

Main UK reaction Economics built at different stages but centralized Exemptions for disproportionate costs MSFD economic process less demanding and complex than other Directives Economic analysis heavily relying on uncertain science which enables to postpone decisions Member States take a different view of economics Definitions and application of disproportionate analysis and uncertainties remain unresolved Stakeholders and industry involvement important but mainly at local level by making comparison with data from different countries difficult Consistency across economic data required.

Glass half empty What next?

Action title Step Milestone Who associate? How ? deliverables 1 2 3 MS Leader : MS participants : Main objectives : How action serves the MSFD 2nd cycle implementation Links to art.8, to art. 9, to art.10 or others : Main steps/packages and associated milestones and intermediary deliverableas Step Milestone Who associate? How ? deliverables 1 2 3 . Lead/volunteers . Deliverables/products .By when . April – discussion on WP May – Mandate from MSCG confirm in june by marine directors Oct – Esa WG – doc on WP 13th ESA WG meeting 26-27 Oct 2015