Deliverable 6.10

Abstract: Pan-European review of cost-effectiveness analysis studies relating to water quality and Directive compliance challenges

REFRESH seeks to develop a framework to help design cost-effective restoration programmes for freshwater ecosystems.In a number of REFRESH case study catchments cost-effectiveness analysis (CEA) of competing remediating strategies will be undertaken utilizing best practice models of CEA undertaken in Europe in relation to water quality and WFD compliance challenges. This Deliverable comprises a review of existing European CEA studies relating to water quality and WFD compliance. First, conceptual and    measurements issues related to CEA are highlighted and methodological approaches to CEA and their applications are explored. Subsequently, climate change and uncertainty issues associated with CEA are reviewed and key applications and experiences in CEA studies in the five WP6’s case study countries (UK, Norway, Finland, Greece and the Czech Republic) and also in several other European countries are presented.

Analysis presented here shows that within the economic analysis required for the delivery of WFD objectives, the role of CEA has been particularly highlighted as a   prerequisite for the development of river basin management plans. Regarding the measurement of costs of environmental measures, an important issue is associated with data availability which would enable research efforts to account for not only private financial compliance costs but also for economic/social costs that are usually very difficult to monetize. Key issues, which have to be addressed in measuring effectiveness, include the basis on which effectiveness is assessed (e.g. ‘pressures’ or ‘impacts’) and the assignment of proper  weights to individual pressures in cases of multi-pressure effects of different measures.

Various methodological approaches have been proposed in applying CEA to evaluate environmental measures and policies. The most commonly used approach involves linear optimization models based on mathematical programming framework. In general, the choice of a particular methodological framework in the CEA highly depends on the specific environmental problem to be dealt with, the availability and credibility of data, and the degree of uncertainty inherent in cost and effectiveness information.

In CEA, uncertainty can be inherent in the estimates of costs, effectiveness and time-lagged effects of measures and thus, can considerably affect the ranking of measures under consideration. To deal with this issue, the use of intervals of costs and effectiveness estimates as well as sensitivity and scenario analysis is advocated. Also, stochastic programming and Bayesian Belief Networks (BBN) can be applied to investigate water management decision-making under uncertainty. Climate change can create new and/or affect existing pressures on water bodies, and directly and indirectly affect the effectiveness of long-term water management measures. Importantly, the above-    mentioned issues justify the “climate-proofing” investigation of proposed water management measures.

Finally, this review has shown that several studies have been carried out in Europe dealing with CEA applications related to WFD. In the case of the five countries specific to  REFRESH demonstration catchments, one can observe a rich research tradition in the UK (including Scotland), Norway and Finland. This tradition seems much weaker in the case   of the Czech Republic where such studies have been introduced in the context of the implementation of the WFD, and especially of Greece, where CEA applications are fragmented  and progress in the implementation of the WFD has shown a considerable lag. In the case of other European countries the review has shown a notable number of CEA studies  dealing with agricultural abatement measures in Sweden, Germany and France and an impressive CEA study of reducing nitrogen emissions from agriculture in the Danube (i.e. specific to Austria, Bulgaria, Hungary and Romania). In Spain CEA efforts seem to focus more on water-­saving measures and deal with both urban and rural activities.

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