Abstract: Cost-effectiveness analysis report for the Lake Pyhäjärvi including analysis of disproportionality
This report presents a study of the cost-effectiveness of water protection measures in the agriculture sector and possible benefits that can be gained from improved water quality. Water protection problems in Lake Pyhäjärvi are caused by agriculture in the River Yläneenjoki catchment, while the benefits of water protection are experienced at Lake Pyhäjärvi where the river discharges. We studied costs, effects and benefits for two different time horizons: until 2015 and until 2027.
The lake is presently exhibits 'Good' water status, but is very close to the threshold between 'Good' and 'Moderate'. Moderate status applies periodically, and problems occur related to eutrophication. The protection objective in this study is to ensure the lake remains in the 'Good' status. In this study the measures are applied by farmers in the catchment area where, in a sense, the costs of protection are thus borne. The farmers are compensated for conducting mitigation measures, which makes the state and the tax payers the actual cost-bearer. The research reported here is based on a transdisciplinary approach, in which economic analysis for costs and benefits and catchment modelling to study effectiveness of protection measures are supplemented by input received from local stakeholders. The potential mitigation measures and benefits of water protection were discussed at two stakeholder workshops . The study utilises also various previous studies on water protection in agriculture and on benefits of water protection pertaining to fresh water in Finland.
We estimate cost-effectiveness of several combinations of mitigation measures, since none of the individual measures alone can achieve the set target. Three different types of farming practices to increase winter time vegetation coverage were considered in the case study. The actual CEA focused on costs and effects of different combinations of these:
The analysis of costs and effects of mitigation measures showed that there are cost-effective combinations of measures to reduce nutrient load. Some of the combinations could even reduce the costs of farming. In comparison with the economic performance of the farms the combinations would lead to modest decreases or modest increases at the farm level. Only the most costly combinations of measures would result in a significant increase of costs. It can be concluded that, on the one hand, affordability should not form an obstacle for applying the methods, but on the other, the possible, modest reduction of costs of farming is not a strong incentive for adopting them. Choices that farmers make are strongly influenced by the agri-environmental scheme of the EU’s Common Agriculture Policy. Future agri-environmental schemes should targeted the creation of incentives for farmers to adopt more effective measures, but especially those that do not lead to unnecessary increase of costs, since there are cost-effective alternatives.
The benefits are experienced in the lake, into which the river discharges. There are approximately 27 500 people (permanent and leisure time dwellers) in vicinity of the lake who can potentially benefit from the lake. A stakeholder workshop was organised to identify the types of benefits that can be gained by use of water and water areas of Lake Pyhäjärvi. Five groups of main uses were identified: i) water as a resource, ii) recreational use by the local people, iii) professional fishing, iv) tourism and v) significance of good water quality for the reputation and living conditions in the area.
A benefit transfer method was used to quantify the potential benefits that can be gained from reaching the set protection target.
The study shows that the lake’s Good water status is precarious and increased water protection measures are needed to ensure that the status remains. The lake is unique in its size and high water quality in South West Finland, which gives the lake a high value for inhabitants and recreational users. The analysis of potential benefits suggests that considerable benefits can be gained from meeting the protection goal. There is thus a social need to continue protection of the lake and high benefits to be gained. Comparison of costs of protection and potential benefits to be gained indicates that benefits are clearly higher than the costs.
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