The WFD economic aspects as a powerful tool for change: NGO point of - - PowerPoint PPT Presentation

The WFD economic aspects as a powerful tool for change: NGO point of view

Sergiy Moroz WWF European Policy Office

Contents

• Introduction: Economic aspects in the WFD
• Overview of current status of main economic

elements of the WFD – Economic analysis of water uses (art 5 reports) – Cost effectiveness analysis – Disproportionate cost analysis – Pricing and cost recovery

• Cross cutting “challenges”
• Key messages

Economics in the WFD

• WFD sets out to shift paradigm of how we use,

manage, and value our water

• Economics can be a powerful tool for change, needs

to be used well

• WFD economic elements need to be based on good

technical analysis and be transparent

• WFD economic elements fall into 3 broad categories

– Principles (e.g. polluter pays) – Economics as a contribution to decision-making – Economic instruments as measures for meeting the WFD

• bjectives

Economics in the WFD

Article 5 analysis (2004-2005)

• Analysis of pressures and impacts
• Protected areas
• Economic importance of water uses, baseline scenarios, cost

recovery, incentive pricing

Cost effectiveness analysis (2005 - 2009)

• Choosing programmes of measures (including economic

instruments) that are most cost-effective in reaching good water status

Disproportionate cost analysis (2005 - 2009)

• Economic analysis for justifying possible time exemptions and

alternative (less stringent) environmental objectives

River Basin Management Plans (2009)

• Including financing and cost recovery considerations

Economics in the WFD

Article 5 analysis (2004-2005)

• Analysis of pressures and impacts
• Protected areas
• Economic importance of water uses, baseline scenarios, cost

recovery, incentive pricing

Cost effectiveness analysis (2005 - 2009)

• Choosing programmes of measures (including economic

instruments) that are most cost-effective in reaching good water status

Disproportionate cost analysis (2005 - 2009)

• Economic analysis for justifying possible time exemptions and

alternative (less stringent) environmental objectives

River Basin Management Plans (2009)

• Including financing and cost recovery considerations

WWF/EEB survey of article 5 reports: What

Objective of survey

• Does economic analysis in Art 5

reports comply with WFD and follow WATECO?

• Will it encourage use of economic

instruments to achieve WFD

• bjectives?

Scope of survey

• 20 Countries
• 25 River Basin Districts
• Snapshot of situation in March

2006 Methodology

• Questionnaire
• Consistency and verification

IT GR FR-RH DE-DA DE-EL DE-EM DE-MR NL-RD IE-SI SE FI-KY EE-EE PL-VI DE-WE UK-SW FR-SN BE-SC Int-ME Int-UR AT-DA HU-DA SI-DA RO-PR DK-AA PR-TR ES-GA LV-LI

WWF/EEB survey of article 5 reports: Key findings

• Comparability limited, even within RBDs
• Environmental assessment

– Honest, confirms NGOs concerns – Around 50% of water bodies at risk failing to achieve good status (European Commission 2007 assessment is 40%) – 22 of 25 reports identify hydromorphology as crucial environmental problem

• Economic Analysis

– Fails to link with environmental findings

WWF/EEB survey of article 5 reports: Key findings

• Water service

– Mostly very narrow: drinking water and sewerage – 50% identified self services – Services for hydropower, navigation, flood control (explicitly excluded in DE and AT, included only in 6 reports (ES, LV, RO, NL, FR, PT)

• Cost-recovery

– Restricted to drinking water/sewage and financial costs – Only 8 reports include and assessment of environmental costs – Only 2 reports made an effort to assess infrastructure serving hydropower and navigation (FR, LV) – Few assess contribution of uses to the costs of water services

• Low transparency, lacking justifications
• In only 7 cases appropriate public participation reported

2007 European Commission report on WFD implementation

• Confirms the economic assessment is one of the

main shortcomings in WFD implementation

– Low level of information available – When available, analysis of cost recovery levels varies significantly (households: 70-100%; industry: 40-100%; agriculture 1-100%) – Few considerations of environmental and resource costs (only 5 Member States) or baseline scenarios – Shortcomings with transposition of water services definition in at least 12 Member States

Lessons from art 5 reports

• Economic analysis does not integrate environmental concerns,

fails to address key sectors that cause environmental degradation

• Often fails to consider environmental and resource costs and

shed light on financial flows

• WATECO guidance document largely not followed Wide

diversity in definitions, content and focus, largely influenced by past practices, organisational set-up, absence of experience and limited expertise in water economics

• “Water Services” definition too narrow in many cases – has

serious implications

• Participatory approach rather an exception
• In current state, article 5 reports are often unfit to support

WFD implementation and will hamper both informed choice and sound financing mechanisms

Economics in the WFD

Article 5 analysis (2004-2005)

• Analysis of pressures and impacts
• Protected areas
• Economic importance of water uses, baseline scenarios, cost

recovery, incentive pricing

Cost effectiveness analysis (2005 - 2009)

• Choosing programmes of measures (including economic

instruments) that are most cost-effective in reaching good water status

Disproportionate cost analysis (2005 - 2009)

• Economic analysis for justifying possible time exemptions and

alternative (less stringent) environmental objectives

River Basin Management Plans (2009)

• Including financing and cost recovery considerations

Overview of current situation

• As expected after art 5 reports, very “econo” diverse
• Only cost effectiveness, cost-benefit, both
• Different scales of analysis from water body to sub

catchment to basin district

• Different tools: expert knowledge, statistical analysis,

modelling

• Cost effectiveness versus polluter pays

Economics in the WFD

Article 5 analysis (2004-2005)

• Analysis of pressures and impacts
• Protected areas
• Economic importance of water uses, baseline scenarios, cost

recovery, incentive pricing

Cost effectiveness analysis (2005 - 2009)

• Choosing programmes of measures (including economic

instruments) that are most cost-effective in reaching good water status

Disproportionate cost analysis (2005 - 2009)

• Economic analysis for justifying possible time exemptions and

alternative (less stringent) environmental objectives

River Basin Management Plans (2009)

• Including financing and cost recovery considerations

Overview of current situation

• Loose definition of disproportionality
• The value of benefits underestimated and narrow cost-

benefit analysis

• Affordability and time derogation
• Affordability of public budgets and alternative financing

mechanisms

• Affordability versus polluter pays

Economics in the WFD

Article 5 analysis (2004-2005)

• Analysis of pressures and impacts
• Protected areas
• Economic importance of water uses, baseline scenarios, cost

recovery, incentive pricing

Cost effectiveness analysis (2005 - 2009)

• Choosing programmes of measures (including economic

instruments) that are most cost-effective in reaching good water status

Disproportionate cost analysis (2005 - 2009)

• Economic analysis for justifying possible time exemptions and

alternative (less stringent) environmental objectives

River Basin Management Plans (2009)

• Including financing and cost recovery considerations

Main economic elements of the WFD

• Economic instruments as measures: Cost recovery

and water pricing (article 9)

– adequate recovery of the costs of water services (including environmental and resource costs – adequate contribution of water uses to the recovery of the costs in accordance with polluter pays principle – Pricing policy that provides incentives to efficient water use (both quantity and quality/pollution aspects)

Overview of current situation

• Water pricing, though central in WFD negotiations, has

received limited attention so far

• Economic instruments as measures are rather weak in

the current debate on measures

• Cost recovery is limited
• Wide approach needed, direct sector subsidies
• More work needed on environmental and resource costs

Cross cutting challenges

• Complexity of analysis While important,

economic methods and tools are only envisaged as making a contribution to decision making, rather than dictating any decision.

• Transparency on (i) who uses and pollutes, (ii)

which services are put in place, (iii) what are their costs, (IV) who pays these costs, combined with required consultation/participation, such transparency, should stimulate changes in current policies towards more sustainable/environmentally friendly practices

Key messages

• Economics is given an important role in the WFD and needs

to be used well to promote sustainable water management. If abused, it will undermine the WFD objectives

• WFD economic elements implemetation is going ahead with

some positive examples – it is possible to implement the WFD well and in time!

• Many significant shortcomings –

Member States must do better!

• Now is the crucial time – 2009 River Basin Management

Plans!

• Use time now to prepare for 2nd cycle

You can find WWF/EEB report on the survey of art 5 analysis at

http://assets.panda.org/downloads/eu_water_policy___may_2006.pdf

Thank you for your attention smoroz@wwfepo.org www.panda.org/epo