Date post: | 19-Jan-2016 |
Category: |
Documents |
Upload: | felix-golden |
View: | 214 times |
Download: | 0 times |
WHAT IS THE ROLE OF WHAT IS THE ROLE OF ECONOMICS ECONOMICS
IN THE WFD PROCESS?IN THE WFD PROCESS?
A selection of key economic inputs
THE KEY ECONOMIC INPUTS
1- Recovery of costs
2- Cost-effectiveness analysis
3- Cost-benefit analysis
4- Water pricing policies
2/12
THE RECOVERY OF COSTS
What is "recovery of costs"? The extent to which the costs associated to water uses
are borne by those who generate them
Why do we care about recovery of costs? it brings transparency on financial flows associated to
water uses and services: who bears / will bear costs and damages
associated to water uses? who pays for these costs? who bears the difference between prices and
costs?...How to implement recovery of costs?
Under WFD, it refers to "water services" and "water uses"
identification at the characterisation stage (2004)
3/12
ACTIVITIESActivities with no
significant impact on water status
EXAMPLESE.g. navigation
E.g. diffuse pollution
E.g. fishing...
THE RECOVERY OF COSTS IN PRACTICE1- IDENTIFY WATER USES AND SERVICES
WATER USES Activities with
significant impacton water status
EXAMPLESE.g. navigation
E.g. diffuse pollution
E.g. fishing...
scale
high
low
EXAMPLESE.g. drinking water
supplyE.g. wastewater
treatmentE.g. irrigation...
WATER SERVICESMainly water uses for the purpose of which water is diverted from its natural
cycle by a work or an equipment
4/12
2004
5/12
Task for 2004:
description of
the situation
THE RECOVERY OF COSTS IN PRACTICE2- ASSESS THE LEVEL OF RECOVERY
WATER USES
Industry
Households
Agriculture
Identification of financial flows in the district through
prices, subsidies, transfers...
WATER SERVICES
Financial costs
Environmental costs
Resource costs
2004
Not necessarily
full cost
recovery
WATER USES
Industry
Households
Agriculture
Adequate contribution to the recovery of the costs
of water services
WATER SERVICES
Financial costs
Environmental costs
Resource costs
Take account of social, environmental
and economic effects
Funding of preventive or remedial
measures in order to achieve WFD
objectives is possible.
6/12
THE RECOVERY OF COSTS IN PRACTICE3- COMBINE THE LEVEL OF RECOVERY
WITH WFD'S GOALS
2010
When do we implement CEA? when potential measures are identified based on the
outcomes of the characterisation (2004)
COST-EFFECTIVENESS ANALYSIS (CEA)
Why do we care about cost-effectiveness? To identify the (sets of) measure(s) that will best
achieve the compliance with the goal at the lowest cost
To rank (sets of) measures that allow to reach the goal
7/12In some cases, it may be useful to take
account of benefits, at least to identify them
Ensure fruitful co-operation between water
professionals (effectiveness) and economists
(costs)
...2008
Assess the cost-effectiveness of individual measures
direct / indirect costs and benefits
economic and non-economic impacts…
Compare (sets of) measures targeting the same goal
Combine the selected best measures to construct the programme of measures
COST-EFFECTIVENESS IN PRACTICEE.g. goal:
improve the quality of water
M1- Restoration of wetlands 1ha treats 21,7kg BOD5/day restoration/maintenance
costs?M2- Wastewater treatment plant
depollution cost of 1kg BOD5~0,45€
M3-...
Set 1- Improve water flow by reducing water demand, importing water...
Set 2- Restore wetlands, promote individual treatment systems… benefits generated by wetlands vs. wastewater treatment plant: 9700€/ha
Set 3- ...
basic measur
e
basic measur
e
basic measur
e
basic measur
e
supplement.
measure
supplement.
measure
supplement.
measure
supplement.
measure
8/12
...2008
Why do we use CBA to compare variations of quantifiable costs and
benefits, caused by the activities, for people affected by the policy under consideration
COST-BENEFIT ANALYSIS (CBA)
When do we use CBA? when potential measures to reach the objective have
disproportionate costs: need to identify the least costly measures
9/12
...2008
Includes all types of costs and benefits: qualitative and quantitative financial and environmental direct and indirect; present and future...
COST-BENEFIT ANALYSIS IN PRACTICE
Take account of uncertainty due to methods implemented: (dis)aggregation, use
of proxies… due to lack of data: unavailable, unreliable…
Decision makers will have to cope with
these constraints
clear information on these aspects is
needed from experts
10/12
...2008
Why do we care about pricing? the level of price has a direct impact on water
demand and water uses pricing policies may play as a measure contributing
to the achievement of the environmental objective by enhancing efficient use of water resources
the more external costs are internalised, the more prices show the real cost of water uses and services
WATER PRICING POLICIES
11/12
...2010
Take account of elasticity and affordabilitye.g. very limited for domestic uses (~0,2-0,3)e.g. in industrialised countries, water is considered
"expensive" when it weights more than 1,5% of households' income
Keep the objective in minde.g. to ensure sustainability, progressive tariffs are
more efficient, although marginal cost decreases
Specific aspects with WFDtake account of established practicestake account of social, environmental… aspects
WATER PRICING POLICIES IN PRACTICE
Water pricing policy is one type of
measure
potential impact to be assessed in
combination with other planned
measures'
12/12
...2010