Methods to Estimate Costs of Environmental Prevention, Protection and Remediation Erkki Ikäheimo

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Many Coastal Zone Management Activities can be used to reduce degradation. The most important ones are underlined below  waste water treatment,  drinking water production and treatment,  waste management,  beach cleaning,  beach protection,  cleaner production investments  air emission control and reduction,  green space development,  environmental monitoring,  licensing and setting emission limits,  environmental studies,  enforcement of land use planning,  environmental management systems.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Significant sums for Coastal Zone Management are allocated only for very few sectors In the studied areas significant sums for environmental prevention, protection and remediation have been used on:  waste water collection and treatment and  solid waste management. Other important costs are in:  drinking water supply and treatment,  shore and beach protection and cleaning.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Availability of data defines how the costs of Coastal Zone Management activities are calculated  Investment cost calculations (Case 1)  Unit cost calculations (Case 2)  Annual budget or financial accounts (Case 3)  Unit costs from another location (Case 4) Independently of how the costs are available they should include all costs of the activity.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS If investment cost are available, the annual costs can be calculated Case 1; Costs are available separately for investments and operations/maintenance  annual volume of operation or annual capacity,  annual operation and maintenance costs,  total investment costs for infrastructure,  lifetime of investment,  interest rate.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Example: Cost of waste water treatment can be calculated based on capacity, investment cost and operation and maintenance costs Available data: The capacity of a waste water treatment plan is 30.5 million m3. The investment cost of the plant is WWTP is 48 MTDN, annual operation and maintenance costs are 0.9 MTDN/year. Annualized cost of investment is 4.6 MTDN (15 years with 5% interest rate). Calculations: The total cost for waste water treatment is 0.9 MTDN+4.6 MTDN = 5.5 MTDN.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Unit costs per production can be aggregated to one figure or presented separately as investment and operation & maintenance costs Case 2; Costs are available in form of unit based costs  annual volume of operation,  unit cost per unit of production, either aggregated O/M and investment costs together or presented separately. Available data: 30.5 million m3 waste water treated annually with cost of operation and maintenance 0.03 TND/m3 and cost of investments 0.15 TND/m3. Calculations: annual waster water treatment costs are 30.5 * ( ) = 5.5 MTND

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS If a management activity is handled by one organisation, then the management costs of the activity are total costs of the organisation Case 3; Costs are available as one aggregate cost figure  total annual costs including all costs  annual volume of operation (not always available). Example: In Alexandria waste collection, transportation, treatment and disposal have been contracted out to a private company. Annual solid waste costs for Alexandria are about 58 million LE.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Costs of activities can be estimated based on costs of operations elsewhere Case 4; Costs are not available from the studied installations or administrative units Investment costs, unit costs or annual costs of operation and maintenance can be estimated based on other similar type and size of operations elsewhere.

Waste water network, water supply network or waste management may cover also other areas than the area, which is studied. In these cases it is necessary to estimate the share of the costs that should be allocated to the study area. Many times ratio between population in the whole service area and the study area can be used to determine the allocation. Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Costs of Coastal Zone Management are not always specific for the studied area

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Needed financing for Coastal Zone Management is usually much higher than realized costs The level of needed financing can be estimated based on:  present state of environment;  level of present environmental prevention, protection and remediation activities;  level of present financing for environmental prevention, protection and remediation activities;  achieved results with the present environmental prevention, protection and remediation activities;  state of environment that is considered to be “desired” and should be reached with additional environmental prevention, protection and remediation activities;  additional activities that should be done in order to reached the “desired” state of environment.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Costs of coastal zone management activities are easier to estimate than COED Still there are several complicating factors:  Cost categories (investments, operation/maintenance costs) are not always well understood.  Time factor is not well understood (discounting and annualizing).  Annual costs v.s. total costs are not always understood to be different concepts.  Inflation complicates calculations.  Exchange rate changes may complicate calculations.  Overhead costs are difficult to allocate.  Cost follow up does not follow different activities separately.  Several organizations are managing the environmental activities. Received cost data is usually partial and attention should be paid to identify all the relevant cost.

Mediterranean Environmental Technical Assistance Program (METAP) STRENGTHENING OF THE CAPACITY IN SELECTED METAP COUNTRIES TO ASSESS THE COST OF ENVIRONMENTAL DEGRADATION IN COASTAL AREAS Costs of coastal zone management activities are calculated by multiplying number of units with unit cost