1. A study prepared by VITO, ECOLOGIC and TME
Cost-benefit study of the Water Framework Directive Thomas Dworak & Benjamin Görlach
A study prepared by VITO, ECOLOGIC and TME
SSG on Agriculture and the WFD, Brussels, 20 April 2007

2. Background
Statement by the Commission at the time of adoption of the WFD that it would include a cost-benefit study with the WFD implementation report, compiled with the help of the Member States.
Study started mid-2006
Starting point: inventory of studies on costs and or benefits from Member States, literature review
Currently review draft final report – to be published before summer
SSG on Agriculture and the WFD, Brussels, 20 April 2007

3. Role of Cost Benefit analysis
Directive requires cost-effectiveness, estimations of disproportionality & environmental and resource cost recovery
Benefit assessments important, but not necessarily in focus in MS
CEA assesses sets of specific measures, value in also assessing aggregated benefits to make sure right mix is chosen
SSG on Agriculture and the WFD, Brussels, 20 April 2007

4. Nature of the CB study Explorative Cost Benefit Analysis
General assessments of costs & benefits
Special case studies, : administrative costs, wetlands, fish migration – agriculture (irrigation – P release)
Recommendations
Some data is available, but only UK, FR, NL have made attempts at estimating overall costs & benefits
Starting point of a process to learn more about cost-benefit analysis in the Member States and to share knowledge
Report is a valuable resource on current state of play on methodological issues and data availability
SSG on Agriculture and the WFD, Brussels, 20 April 2007

5. Inventory Review Three groups of MS
MS with a long tradition of using economic analysis for the (water) sector (FR, NL, UK)
MS starting / in-the-pipeline studies concerning methodology, data collection and economic analysis (BE, FR, DE, MT, NL, SK, SI, ES, SE, UK, HU)
MS that we have no information on (BG, CZ, EE, IT, LI, LU, PL)
Studies usually focus on tools and instruments for cost-effectiveness and cost and benefit analysis
Most studies on specific measures and/or specific regions – few at the national level
SSG on Agriculture and the WFD, Brussels, 20 April 2007

6. Results of Survey
12 MS and one länder (from Germany) answered questionnaire
170 studies and reports identified
25 studies ongoing and planned
SSG on Agriculture and the WFD, Brussels, 20 April 2007

7. Costs and benefits of agricultural irrigation water use
SSG on Agriculture and the WFD, Brussels, 20 April 2007

8. Problem Context and Focus
Irrigation as one main water consumers mostly in Southern Europe, irrigated area and abstraction volumes increasing
Scarcity expected to grow through climate change (less precipitation, higher demand)
Several options available to improve water quantitative status: focus of this section only on measures related to agricultural irrigation
SSG on Agriculture and the WFD, Brussels, 20 April 2007

9. What do the “studies” tell us?
Allocation (within agri., between agri and other sectors)is an issue when calculation of benefits
Highest scarcity and highest productivity go together - limits effectiveness of pricing
Environmental benefits:
evidence is patchy, results inconclusive
studies not related to WFD implementation
not all aspects covered (e.g. saline intrusion)
Infrastructure investment is costly - speed / predictability of change will determine costs
SSG on Agriculture and the WFD, Brussels, 20 April 2007

10. What the “studies” don‘t tell us
Influence of payments on crop choice and water consumption (e.g. olives)
Tipping points - irreversible damage, e.g. from saline intrusion
Climate change - lowering supply and increasing demand?
Increased pressure for scarce resources - higher resource benefits
The later the adaptation, the higher the cost
SSG on Agriculture and the WFD, Brussels, 20 April 2007

11. Costs and benefits of reducing agricultural phosphorus losses
SSG on Agriculture and the WFD, Brussels, 20 April 2007

12. Background
Agricultural phosphorus (P) losses contribute to eutrophication of water bodies
Where sewage treatment is implemented, agricultural P losses are a major reason for failure to reach WFD water quality objectives
Risk of P losses is site specific (P loading, proximity to water bodies, slope...), and so are effectiveness, costs and benefits
SSG on Agriculture and the WFD, Brussels, 20 April 2007

13. Countrywide cost estimates
Netherlands
Manure NP quick scan: million Euro p.a. ( % more than current manure policy)
Aquarein: worst-case scenario. Low ambition level - 2/3 of all agricultural land taken out of production; high level - end of agriculture
UK: cost of million Euro per year
DK: about 50 million Euro p.a.
Baltic Sea basin: 350 million p.a. (but mostly through waste water treatment)
SSG on Agriculture and the WFD, Brussels, 20 April 2007

14. Benefits of reducing P emissions
Benefits as reduced eutrophication - not possible to separate between N and P load
Several studies on eutrophication benefits:
SSG on Agriculture and the WFD, Brussels, 20 April 2007

15. What do the “studies” tell us?
Some potential for cost-effective P emission reductions in agriculture exists
Total costs for agriculture are substantial, but differ widely across EU
Benefits of reduced eutrophication risk are substantial (mostly Euro / capita)
Benefits and costs are at the same magnitude?
SSG on Agriculture and the WFD, Brussels, 20 April 2007

16. What the “studies” don’t tell us
Nationwide cost estimates subject to much uncertainty, often crude estimates
Average figures: some hit harder, some less
Payments complicate assessment: distort prices as well as incentives
Cost of measures often covered through agri-environmental schemes - reduces agri burden, but increases administrative costs
Benefits to be had - but how much of them will the WFD actually deliver?
SSG on Agriculture and the WFD, Brussels, 20 April 2007

17. What are drivers of costs & benefits?
Ambition level drives up costs
Marginal costs first low, increase sharply later
Last resort - extensive grassland etc. - can be very expensive
Assumptions about possible improvements in farm management important for costs
Benefits: mostly “classical” WTP, less avoided treatment cost
SSG on Agriculture and the WFD, Brussels, 20 April 2007

18. Overall “Conclusions” of the study
With current knowledge, methodologies and approaches Large uncertainties both costs & benefits
Costs depends on
ambition level
cost-effectiveness of measures
Starting Point
Benefits more patchy picture
Baseline - difficult, but possible to distinguish WFD specific costs
Costs of WFD implementation – significantly lower than the costs of other water legislation
Same order of magnitude of costs and benefits found in specific case studies – no specific numbers
SSG on Agriculture and the WFD, Brussels, 20 April 2007

19. Thank you for your attention.
Thomas Dworak & Benjamin Görlach
Ecologic, Pfalzburger Str , D Berlin  , 
SSG on Agriculture and the WFD, Brussels, 20 April 2007