Deliverable 6.11

Abstract: Cost-effectiveness analysis report for the Dee sub-catchments (Scotland) including analysis of disproportionality

This report presents the results of the cost-effectiveness and disproportionality analyses undertaken in two Scottish sub-catchments (Loch of Skene/Leuchar Burn catchment and Tarland Burn sub-catchments), both located within the River Dee Catchment in North-East Scotland. Nitrogen (N) in Tarland and phosphorus (P) Loch of Skene/Leuchar were identified as the key pressures.

The data for the effectiveness of individual measures were generated via modelling.STREAM-N and INCA-P models were used to simulate the baseline conditions and impacts of various measures or scenarios of changing land management or/and land use. Cost estimates were calculated to reflect farm incomes foregone, capital investments (if applicable to a particular measure) and additional operating costs as a result of implementing management options. Costs were estimated based on the gross margin data from Farm Management Handbooks, Scottish Rural Development Programme (SRDP) payment rates, Agricultural development advisory service (ADAS)- UK recent cost estimates for diffuse pollution mitigation actions in Scotland and a Defra report on the ‘cost curves on nitrate and phosphorus mitigation options’.

The results indicate that:

  1. The identification of key pressure sources and targeted measures are the best way to achieve cost-effective pollution mitigation
  2. Livestock measures are more costly to implement than arable sector measures (in Tarland)
  3. Fertilizer reduction in the arable sector is the most cost-effective measure (in Tarland)
  4. Conversion of arable land to grassland is a costly option
  5. WFD targets in Tarland can be achieved at a relatively low total cost (compared to many other water bodies in Scotland)
  6. Investment in waste water treatment works (WWTWs) appears to be the most effective and economically feasible strategy to deal with phosphorus loading problems
  7. Water quality standards for P can be achieved with modest total costs by implementing the combined measures of fertilizer input reduction and investment in WWTWs in the Loch of Skene catchment.

The disproportionality analysis identified various non-market benefits of the improvement of water quality and the major beneficiaries. Part-II of this report presents detailed analyses of the economic efficiency, distributional and affordability issues. With the help of an extended CBA tool (using the NPV decision criterion), the key finding of Part-II is that implementation of WFD measures in the study area is not disproportionately expensive in terms of comparison of the economic costs and societal benefits. However, readers of this report and relevant decision-makers should be cautious, because economic efficiency analysis of mitigation/adaptation measures may not be the only environmental decision parameter; other non-economic factors and wider benefits may be taken into consideration in the decision making process.

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