Economic Assessment of Environment and Resource Costs in the Water Framework Directive (AquaMoney)
The concept of environmental and resource costs plays a central role in the economic analysis of the European Water Framework Directive (WFD). However, so far there are no methodological guidelines regarding their practical assessment and inclusion in the economic analyses of the WFD. The AquaMoney will bridge this gap by developing hands-on guidance for assessing environmental and resource costs and testing them in ten European case studies.
The concept of environmental and resource costs plays a central role in the economic analysis of the WFD. It is particularly relevant for the cost recovery of water services according to Article 9 WFD, which has to include environmental and resource costs, and for the decision on exemptions on the grounds of disproportionate costs (Article 4 WFD). At the European level, some documents contain some information on the concept of environmental and resource costs, e.g. the Guidance Document on the Economic Analysis prepared in 2002 by the European CIS Working Group on Water and Economics (WATECO), which advises how the various elements of the economic analysis should be integrated in the policy and management cycle of the WFD. More recently, the CIS working group ECO2 has looked at the issue of ERCB in greater detail. However, its approach was primarily conceptual, and therefore did not provide practical, hands-on guidance.
As a consequence, while the conceptual background to environmental and recource costs has been established, there are so far no clear and practical guidelines for their assessment. The research project AquaMoney was established in the course of the 6th Framework Programme to address this gap. It brings together 16 institutions from all parts of Europe, covering environmental economics as well as water management. The consortium is supported by an Advisory Committee of 24 stakeholders and decision makers. Over a three-year period from April 2006 to March 2009, the AquaMoney consortium will:
- assess policy maker demand for information on ERCB, related to the implementation of the WFD;
- develop practice-oriented guidelines on how to assess ERCB in a quick and reliable way, with particular focus on the transfer of values between different sites;
- test these guidelines by carrying out economic valuation case studies in 10 different European river basins;
- analyse the experiences made and provide recommendations for decision makers.
The experiences gained in the case studies will thus be used to refine the guidelines. The common design of the case studies will also permit investigation of techniques for transferring economic values of environmental and resource costs and benefits from water body level to national and international river basin level and vice versa. Part of this exercise will be to investigate the potential for using geographical information systems (GIS) to synthesise data from the case studies with available physical environment and census data so as to generate maps of expected benefits of improved water quality due to WFD implementation.