interconnexions between economics and wfd what room and what role for economics?
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INTERCONNEXIONS BETWEEN INTERCONNEXIONS BETWEEN ECONOMICS AND WFDECONOMICS AND WFD
What room and what role for economics?
INTERCONNEXIONS BETWEEN ECONOMICS AND WFD
Where are economics in WFD process?
What input is expected from the use of economics?
What are the implications in terms of decision-making?
2/18
INTERCONNEXIONS BETWEEN ECONOMICS AND WFD
What input is expected from the use of economics?
What are the implications in terms of decision-making?
Where are economics in WFD process?
3/19
WFD BEARS THE STAMP OF ECONOMICS
debates on the economic impact of previous directives
discussions on cost recovery & tarification
From the origins...
stress on the economic dimension in the preamble
major role for economics in the design of water policies to reach WFD's key goal
prior economic justification of derogations
… to the adoption...
… and to the implementation
intensive use of economics to define measures
tarification as an incentive for an efficient use of water resources
economic and fiscal measures may contribute to the achievement of the goalWhere are
eco?
4/19
ECONOMICS IN WFD PROCESS
12/2003
Art.3
Transposition
12/2015
Art.4
Good status
Art.4
Designation of HMWB
DeadlineGoal
Art.4
Derogations
3/2005
Art.15Reporting
12/2004
Art.6
Register of protected
areasArt.5
Characterisation of the district
Identification of potential gaps
Economic analysis
Description of the district
Baseline scenario
Recovery of costs
Art.15Reporting
3/2010
Art.9
Water pricing policy
Adequate contribution to
recovery of costs
12/2010
12/2012
Art.8
Combined
approach
Art.15Interim
report
12/2012
12/2006
Art.8Monitoring programm
e
Art.14
RBMP working progr.
12/2006
3/2007
Art.15Reporting
Art.14 RBMP
interim
review
12/2007
12/2009
Art.11Programme
of measures
Art.13
RBMP
12/2009Art.1
4RBMPdraft
copies
3/2008
New measures according to
results of monitoring
12/2006
EE
E
E
E
E
E
EDeliverables
Main tasks
"Sub-tasks"
Actions /Measures
EEconomic input
Where are eco?
5/19
THOUGH IMPORTANT,ECONOMICS ARE ONLY ONE INPUT
… in the implementation
Basic measures
- implementation of directives
- controls- licences...
Supplementary measures
- legislation- fiscal instruments- negotiated agreements- codes of good practice- education...
… in the decision-making process
WFD
forward-look'g
monito
ring
participation
hydrology
Where are eco?
6/19
INTERCONNEXIONS BETWEEN ECONOMICS AND WFD
Where are economics in WFD process?
What are the implications in terms of decision-making?
What input is expected from the use of economics?
7/19
What to do?Economic analysis of water uses and services
What economic input? calculations of recovery of costs of water services
taking into account long-term forecasts of supply and demand
estimates of volume, prices and costs associated with water services
estimates of relevant investments judgements on most cost-effective combination of measures
based on estimates of potential cost of such measures
When? December 2004 Update December 2013 and every 6 years
CHARACTERISATIONOF THE DISTRICT
Art. 5 Annex II; III
E
Economic input
8/19
All WFD process is based on the initial characterisation:potential to reach the goal, trends, judgements on cost-effectiveness of measures, etc.
pay special attention to the quality of works, data, etc. take into account the requirements for later stagesBalance adequately two constraints:• information shall be sufficiently detailed to allow
proper implementation of WFD• costs associated with collection of the relevant
data should not be excessive
CHARACTERISATIONOF THE DISTRICT
Art. 5 Annex II; III
Economic input
9/19
What to do?Register all areas designated as requiring special protection under specific Community legislation
bathing waters (Dir. 76/160/EEC - 8/12/1975) nutrient-sensitive areas: sensitive zones (Dir. 991/271/EEC -
21/05/1991); vulnerable zones (Dir. 1991/676/EEC -12/12/1991) Natura 2000 (Dir. 92/43/EEC - 22/07/1992)…
What economic input?Include the areas designated for the protection of economically significant aquatic species
When? December 2004 Kept under review and up to date
REGISTER OF PROTECTED AREAS
E
Art. 6Annex IV
Economic input
10/19
What to do?Identify water bodies unlikely to reach the goal by 2015 and check whether 3 conditions are simultaneously filled:
physical alterations by human activity make it impossible to achieve the good ecological status
and changes needed to achieve the goal would have significant adverse effects on existing uses / the wider environment
and other environmental options to serve the same objectives are technically unfeasible and/or disproportionately costlyWhat economic input?
Disproportion of costs of the required measures is the ultimate factor to designate a water body as HMWB
When? No precise agenda Between 2004 (characterisation) and 2006 (RBMP working
programme)
DESIGNATION OF HMWB Art. 4; 4.3 Annex II; V
E
Economic input
11/19
What to do?Seek specific solutions for water bodies unlikely to reach the goal by 2015Assess whether the cost of the required measures are disproportionate and/or the measures are technically not feasible
where phased achievement of the measures allows to reach the goal under acceptable conditions (no more disproportionate costs nor technical unfeasibility): seek time derogation until 2021 or 2027
where phased achievement doesn't suffice: seek derogation on the objective and achieve less stringent objective
DEROGATIONS Art. 4.4; 4.5 Annex II
When? No precise agenda Between 2004 (characterisation) and 2006 (RBMP working
programme)
What economic input?Disproportion of costs of the required measures is the ultimate and key factor to designate a water body as HMWB
E
Economic input
12/19
DISPROPORTIONATE COSTS
Disproportion of costs is a key indicator for the designation of HMWB the justification of derogations on deadline or on
goal
Ultimately, disproportionality
is a local judgement informed
by economic information
Disproportionality is considered on a case-by-case basis: it changes from place to place and (often) from time to time
Disproportionality is determined with regards:
to the ability to pay of parties involved to the benefits expected, including
environmental ones
Art. 4.3; 4.4; 4.5 - Annexes II; V
Economic input
13/19
What to do?Construct a programme of measures allowing to reach the goal combining basic measures and supplementary measures
What economic input? define economic measures
basic ones : incentive water pricing policies; adequate contribution of the 3 main sectors to the recovery of the costs of water services
supplementary ones: economic and fiscal instruments (fines, abstraction/discharge taxes…)
help constructing the programme of measures select the most cost-effective measures allowing to reach
the goal make the most cost-effective combination of individual
measuresWhen?
December 2009 Update December 2015 and every 6 years
PROGRAMME OF MEASURES Art. 11 Annexes VI; III
E
Economic input
14/19
What economic input? Economic measures on their own Have regards to users' affordability and to the elasticity of the
demandWhen? December 2010
INCENTIVE PRICING POLICIES
AND RECOVERY OF COSTS
Art. 5; 9 Annex III
E
What to do? Use such economic instruments as contributions to the
environmental objectives of WFD by: ensuring that water pricing policies provide adequate
incentive for efficient use of water ensuring an adequate contribution of the different uses to
the recovery of costs Implement those measures having regards to:
social, environmental, economic effects local conditions
Economic input
15/19
INTERCONNEXIONS BETWEEN ECONOMICS AND WFD
Where are economics in WFD process?
What input is expected from the use of economics?
What are the implications in terms of decision-making?
16/19
NOVELTY IN TERMS OF METHODS
An open process involvement of professionals, experts and stakeholders all aspects of water management at hydrological
scales unusual issues to be debated: disproportion of costs,
recovery of costs, cost-effectiveness and cost-benefit ratios...
Clear justification of important decisions HMWB, derogations... based on "objective" arguments: efficiency, benefits,
ability to pay of citizens...
A structured process global process: long-term and cyclic approach connections with other European policies: CAP,
regional, etc. stringent step by step methodology
Implications
17/19
NOVELTY IN TERMS OF INSTRUMENTS
Economic tools cost-benefit and cost-efficiency analyses understanding of specificities and of outputs
Unusual use of prices pricing policies as a tool aiming at a specific
goal assessment of environmental costs: damages,
resource cost...
Construction and use of baseline scenario horizontal approach: impacts of other policies
on water water policy as a driver for evolutions: choices
regarding water with impacts on other policies
Implications
18/19
ECONOMIC ANALYSIS IS NOT AN ISOLATED EXERCICE
Integrated into technical issues: water utilities, quality of water, etc..
Integrated into interdisciplinary
exercise:IRBM
Decision-making oriented:
concrete, operational, "ready-to-apply"
Included into public participation process:
clear, understandable...
Opened to external
skills
"Integration", the motto for
economics under WFD
Opened to non experts
Implications
19/19
GO FURTHER
WFD and economics room functions
Economic input in selected cases HMWB recovery of costs of water services
WHAT ROOM FOR ECONOMICS IN WFD?
The general approach
"Water is not a commercial product like any other but, rather, a heritage which must be protected, defended and treated as such" (Preamble 1)
The text
art.4 - designation of HMWB / derogations
art.5 - characterisation of the district art.6 - register of protected areas art.9 - recovery of costs art.11 - programme of measures art.13 - management plan art.16 - priority substances art.23 - penalties
The annexes Annex III: economic analysis Annex VI: basic/supplementary
measures
ECONOMIC ANALYSIS: EXPLICIT AND IMPLICIT FUNCTIONS
The implicit function other references to
economic issues that will require economic analysis
various stages : designation of HMWB, choice of measures, justification of derogations…
The explicit function economic components
specifically outlined: art.5 and Annex III
main focus on recovery of costs and pricing
WATECO Guidance document is thus essential
FLOW CHART OF THE HMWB DESIGNATION PROCEDURE
Heavily Modified Water Body
Are alternatives significantly better environmental options?
Can we identify technically feasible alternatives?
Are costs of alternatives disproportionate?
Step 2Comparison with alternatives no
Natural water body
no
no
yes
yes
yes
no
Do the measures required for achieving good status have significant impact on the specific use(s) / the wider
environment?
Step 1Significantadverse effect
yes
Natural water body
ACTORS INVOLVEDTASKS OF HMWBDESIGNATION PROCEDURE WP ECO DM SH
COMMENTS
Step 1 Do measures requiredfor achieving GES havesignificant impact?
X X
“Significance” assessed both fromenvironmental and from economicpoint of views
Step 2 Are there technicallyfeasible alternatives? X
Done by several types of experts fromthe water sector: hydrologists,biologists, civil engineers, etc.
Are alternativessignificantly betterenvironmental options?
X X X X
Environmental dimension assessedfrom a global point of view“Significance” determined on an openbasis with all actors
Are costs ofalternativesdisproportionate?
X X X X
Assessment of costs by economists“Disproportion” determined on anopen basis with all actors
Actors involvedWP: water professionalsECO: economistsDM: decision makersSH: stakeholders
WHO DOES WHAT IN THE HMWB DESIGNATION PROCEDURE?
RECOVERY OF COSTS
The scope of implementation
What costs?
What uses of water?
What level?
Two levels By water service By sector: domestic,
industrial, agriculture
Covers all costs Financial costs Environmental costs Resource costs
Applies to "water services"
Definition: art. 2#38 Detailed comments:
WATECO Guidance document
Art. 9 Annex III
WATER SERVICESart.2 #38; art.9
All services which provide, for households, public institutions or any economic activity:
a) abstraction, impoundment, storage, treatment and distribution of surface water or groundwater
b) wastewater collection and treatment facilities which subsequently discharge into surface water
Examples drinking water supply, wastewater
treatment hydropower production individual or collective irrigation etc...
WATER USESart.2 #39; art.5
Water services together with any other activity identified under Article 5 and Annex II having a significant impact on the status of water.
No impacton water status
is not water use is an activity
Significant impact on the ecology of a riverand on the water status
is a water use
ExampleSeveral activities may be considered as water uses depending on their scale