date/event: eea eionet freshwater workshop 27-28th sept 2010, copenhagen author: dr manuel lago...

Date/event: EEA Date/event: EEA EIONET Freshwater Workshop 27-28th Sept 2010EIONET Freshwater Workshop 27-28th Sept 2010, Copenhagen, CopenhagenAuthor: Dr Manuel Lago (Ecologic Institute, Berlin)Author: Dr Manuel Lago (Ecologic Institute, Berlin)

ETC/Water 2010 ETC/Water 2010

Overview of EEA/ETC water Overview of EEA/ETC water and economics workand economics work

Manuel LagoManuel Lago

Ecologic Institute, BerlinEcologic Institute, Berlin


Outline of presentationOutline of presentation

• Introducing the role of economics in Introducing the role of economics in the WFD the WFD

• Overview of the EEA current work on Overview of the EEA current work on water economics. water economics.

• Applications Applications


Economic aspects of the Economic aspects of the WFDWFD• Article 4 - Environmental objectives : Article 4 - Environmental objectives : • Applying Applying exemptionsexemptions from achieving the from achieving the

objectives justified by disproportionate costsobjectives justified by disproportionate costs• Article 5 / Annex II&III - Economic analysis: Article 5 / Annex II&III - Economic analysis:

– Economic assessment of water useEconomic assessment of water use• Article 9 - Water Pricing policies: Article 9 - Water Pricing policies:

– Economic Economic instruments for sustainable water useinstruments for sustainable water use• Article 11 / Annex III / Annex VI Part B - Article 11 / Annex III / Annex VI Part B -

Programme of measuresProgramme of measures– Article 9 & Article 9 & Cost-effectivenessCost-effectiveness of the programme of of the programme of

measuresmeasures– Supplementary measures – Supplementary measures – financial incentivesfinancial incentives

• Article 13 / Annex VII - River Basin Management Article 13 / Annex VII - River Basin Management PlansPlans


The WFD: The WFD: Economics thinkingEconomics thinking is most relevant…is most relevant…• for the selection of the most for the selection of the most cost-effectivecost-effective

POMs for the River Basin Management Plans; POMs for the River Basin Management Plans; • for the use of specific for the use of specific economic instrumentseconomic instruments to to

support application of support application of cost recovery of water cost recovery of water servicesservices, such as water pricing or taxes; , such as water pricing or taxes; – including resource and environmental costs of including resource and environmental costs of

water services provisionwater services provision• for the considerations relating to the impact of for the considerations relating to the impact of

water policies on the water using and water water policies on the water using and water polluting sectors; and polluting sectors; and

• for the assessment of for the assessment of disproportionate costsdisproportionate costs in order to justify exemptions to achieve ‘good in order to justify exemptions to achieve ‘good status’ at particular water bodies. status’ at particular water bodies.


WFD implementation: integrating WFD implementation: integrating a wide range of economic issuesa wide range of economic issues

•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 - 2004Characterisation - 2004

Programme of measures Programme of measures (RBMP) - 2008 & 2009(RBMP) - 2008 & 2009

Implementing WFD pricing Implementing WFD pricing Provisions - 2010Provisions - 2010


EEA current work on EEA current work on water economicswater economics• Framework contract on environmental Framework contract on environmental

economicseconomics– Water Economics and Ecosystem AccountsWater Economics and Ecosystem Accounts - -

A project under the Framework contract Ref. A project under the Framework contract Ref. No. EEA/IEA/09/002-Lot3 No. EEA/IEA/09/002-Lot3

• European Topic Centre-waterEuropean Topic Centre-water– Task 1.4.2.6: Water and economicsTask 1.4.2.6: Water and economics– Task 2.4.2.4: MSFD: understanding of Task 2.4.2.4: MSFD: understanding of

economic elements economic elements


Objectives of the Objectives of the Framework contract Framework contract studystudy• Clarification of terminologyClarification of terminology

• Data mining and Assessment of Data mining and Assessment of economics Informationeconomics Information

• Incorporation of economics Incorporation of economics information into SEEAW and information into SEEAW and ecosystem accountsecosystem accounts


Clarification of Clarification of terminologyterminology• Clarification of the water economics terminologyClarification of the water economics terminology

widely used in the main policy streams (WFD; EEA fast widely used in the main policy streams (WFD; EEA fast track ecosystem accounts; UN SEEAW; MSFD). track ecosystem accounts; UN SEEAW; MSFD).

• Identification of Identification of potential discrepancies and potential discrepancies and incoherenceincoherence between concepts (units, geographical between concepts (units, geographical scale) and terms used, including possible scale) and terms used, including possible misinterpretation that might arise as a result of different misinterpretation that might arise as a result of different definitions. definitions.

• Key terms in this terminology include among others: Key terms in this terminology include among others: costscosts of measures, of measures, restorationrestoration and and maintenance maintenance costscosts, , cost-recoverycost-recovery & full cost recovery, & full cost recovery, environmental & resource costsenvironmental & resource costs, values (costs to) of , values (costs to) of ecosystem goods and servicesecosystem goods and services, , disproportionatedisproportionate costs, costs, incentive pricingincentive pricing .... ....


Data mining and Data mining and Assessment of economics Assessment of economics InformationInformation• Assess the breadth of economic information Assess the breadth of economic information

contained in the RBMPs and related contained in the RBMPs and related documentation. Collate relevant materialdocumentation. Collate relevant material

• Review the role water economics has played in Review the role water economics has played in the implementation process of the WFDthe implementation process of the WFD

• Assess conclusions and further applicability of Assess conclusions and further applicability of the informationthe information– Is new guidance needed for MS to collect WFD Is new guidance needed for MS to collect WFD

related socio-economic info related socio-economic info • Lessons learnt for the implementation process of Lessons learnt for the implementation process of

the MSFDthe MSFD• Review other information sources e.g. EU Review other information sources e.g. EU

projects etcprojects etc


Incorporation of economics information Incorporation of economics information

into EU SEEAW and ecosystem accountsinto EU SEEAW and ecosystem accounts Populate the SEEAW water accounts with Populate the SEEAW water accounts with

economic information. economic information. • The SEEAW is a satellite system to the The SEEAW is a satellite system to the

System of National Accounts (SNA) System of National Accounts (SNA) • It follows the SNA Standard: Uses of It follows the SNA Standard: Uses of

standard definitions, concepts, standard definitions, concepts, classifications common to economic classifications common to economic accountsaccounts

• Ideal for cross-sectoral analysis as it is Ideal for cross-sectoral analysis as it is rooted in the 1993 SNArooted in the 1993 SNA

• Development of IndicatorsDevelopment of Indicators


Economic aspects in the SEEAW Economic aspects in the SEEAW accounting frameworkaccounting framework

• Chapter 3 - Physical water supply and use tables: Provide physical Chapter 3 - Physical water supply and use tables: Provide physical information by industries and households on water abstraction, use and information by industries and households on water abstraction, use and supply within the economy and returns in the environment.supply within the economy and returns in the environment.

• Chapter 4 - Emission accounts: Provide physical information by industries Chapter 4 - Emission accounts: Provide physical information by industries and households on emissions of substances into water resources through and households on emissions of substances into water resources through wastewater discharges.wastewater discharges.

• Chapter 5Chapter 5 - - Hybrid and economic accountsHybrid and economic accounts: Provide information on the : Provide information on the cost associated with water use and supply and on users fees paidcost associated with water use and supply and on users fees paid . . Links between physical flows of water with the economic accounts, financing.Links between physical flows of water with the economic accounts, financing.

• Chapter 6 - Asset accounts: Provide information on the stock of water Chapter 6 - Asset accounts: Provide information on the stock of water resources in the environment and the changes that occur during the resources in the environment and the changes that occur during the accounting period (abstraction, returns, precipitation, evapotranspitration, accounting period (abstraction, returns, precipitation, evapotranspitration, etc.).etc.).

• Chapter 7 - Quality accounts: Provide information on the quality of water in Chapter 7 - Quality accounts: Provide information on the quality of water in the environmentthe environment

• Chapter 8Chapter 8 - - Valuation of water resourcesValuation of water resources: Provides a review of valuation : Provides a review of valuation techniques and their consistency with the 1993 SNA valuation. No techniques and their consistency with the 1993 SNA valuation. No recommendations recommendations


Integration with ecosystem accounts.Integration with ecosystem accounts.

• Ecosystem accounts start from physical accounts Ecosystem accounts start from physical accounts targeted primarily at measuring ecosystem targeted primarily at measuring ecosystem degradation, and relating this to their capacity to degradation, and relating this to their capacity to continue delivering services in a sustainable way continue delivering services in a sustainable way today and in the future. today and in the future.

• Distance to established targets can be computed: Distance to established targets can be computed: achieving GES under the WFDachieving GES under the WFD

• Link to expenditure accounts: the remediation costs of Link to expenditure accounts: the remediation costs of degradation are the overall measure of monetary degradation are the overall measure of monetary depreciation.depreciation.

• Appraise the suitability of the information contained in Appraise the suitability of the information contained in the WFD RBMPs to fit into the water ecosystem the WFD RBMPs to fit into the water ecosystem accountsaccounts

• Application single RBD’s case studies.Application single RBD’s case studies.


ETC-Water: Policy linksETC-Water: Policy links

• WFD:WFD:– Review of RBMPs reporting exercise: templates on Review of RBMPs reporting exercise: templates on

objectives and exemptions, pricing, programme of objectives and exemptions, pricing, programme of measures and agriculturemeasures and agriculture

– Support the development of ecosystem capital Support the development of ecosystem capital accounts in wateraccounts in water

• MSFDMSFD– Understanding of the economic elements of the Understanding of the economic elements of the

DirectiveDirective– Follow progress of the WG ESAFollow progress of the WG ESA– Development of maritime socio-economic Development of maritime socio-economic

indicators indicators – Marine/maritime ecosystem assessments - Eureca Marine/maritime ecosystem assessments - Eureca


Applications of the water Applications of the water economics workeconomics work• Analysis of possible trade-offs between alternative water Analysis of possible trade-offs between alternative water

policies and economic strategies.policies and economic strategies.• Support policy decisions on economic instruments (design, Support policy decisions on economic instruments (design,

monitoring and evaluation) and their possible impact on monitoring and evaluation) and their possible impact on the selection of Programme of Measures as dictated by the the selection of Programme of Measures as dictated by the WFD. WFD. – application of other measures (i.e. cooperation agreements) application of other measures (i.e. cooperation agreements)

and economic instruments (i.e. pollution trading permits) and and economic instruments (i.e. pollution trading permits) and incentives (i.e. the role of subsidies)incentives (i.e. the role of subsidies)

• Inform decisions on water allocation, pricing and Inform decisions on water allocation, pricing and infrastructure development. infrastructure development.

• Provide Information on water use and demand and from Provide Information on water use and demand and from there we could establish some concept of value if linked there we could establish some concept of value if linked with economic data per sector. Thus, potential use of with economic data per sector. Thus, potential use of sectoral water accounts to inform disproportionate costs sectoral water accounts to inform disproportionate costs analysis. analysis.


EEA water economics work is also leading EEA water economics work is also leading to the fulfilment of to the fulfilment of otherother specific specific objectives:objectives:

• EEA 2012 water report EEA 2012 water report – A water economics output as part of key “water A water economics output as part of key “water

” messages for 2012 (sub-assessment),” messages for 2012 (sub-assessment),• EEA indicator development work (ETC-water)EEA indicator development work (ETC-water)

– New indicators on resource efficiency New indicators on resource efficiency incorporating economic informationincorporating economic information

• Improved assessment of state of the water Improved assessment of state of the water environment in Europeenvironment in Europe– WFD and economic analysis of water useWFD and economic analysis of water use– Links with other policy areas (agriculture)Links with other policy areas (agriculture)– Incorporation of economics into existing Incorporation of economics into existing

indicatorsindicators


Thank you for your Thank you for your attention!attention!

Manuel LagoManuel Lago

Ecologic Institute, Pfalzburger Strasse 43/44,10717, Ecologic Institute, Pfalzburger Strasse 43/44,10717, BerlinBerlin

+49 30 86880-110+49 30 86880-110

[email protected] | [email protected] | www.ecologic.eu

date/event: eea eionet freshwater workshop 27-28th sept 2010, copenhagen author: dr manuel lago...

Documents

water economics terminology

water pricing policies

sustainable water usearticle

overview of eeaetc water

impact of water policies

particular water bodies

water polluting sectors

role of economics