Analysis for ENPI countries of Social and Economic Benefits
of Enhanced Environmental Protection
EuropeAid DCI-ENV/2009/225-962
Introduction to Benefit Assessments
Samuela Bassi - [email protected] for European Environmental Policy (IEEP) www.ieep.eu
Final Workshop ENPI South – Brussels, 28-29 June 2001
Content of this presentation
Benefit Assessment (BA): framework The BA Manual BA methodology
Environmental categories Benefits Level of analysis Methodological steps
Practical issues Data gathering Case studies Assumptions
Conclusions & future of BAs
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Benefit Assessment: framework
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What is a benefit assessment (BA)?
What environmental BAs do:Examine the potential positive outcomes for society from the adoption of environmental targets and actions – like environmental policies, legislation and investments (e.g. construction of WWT plans, improved management of PAs etc).
Why BAs are important:Understand the implications on implementing env measuresMake benefits comparable and understandable to wide audience;Provide improved scientific evidence base;Move focus from costs to benefits; Offer arguments to support funding decision / env policy integration
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Examples of BAs
A growing interest in assessing the value of the environment
Several European Commission’s BAs on EU acceding countries, e.g. :•Ecotec (2001) The Benefits of Compliance with the Environmental Acquis for the Candidate Countries;
•Ecolas and IEEP (2005) The benefits for Croatia of Compliance with the Environmental Acquis; c
•Arcadis-Ecolas, IEEP, Metroeconomica, Enviro-L (2007) Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis
•IEEP (2008) Benefit Assessment methodology for ENP countries
Assessment of environmental funding needs & benefits, e.g.:•GHK, IEEP, Ecolas, Cambridge Econometric (2006): Strategic Evaluation on Environment & Risk Prevention under Structural & Cohesion Funds for 2007-2013 - A report for DG Regio
Valuation of benefits of nature & ecosystem services, e.g.:•The Economics of Ecosystem & Biodiversity (TEEB) www.teebweb.org
•Cost and benefits of EU Natura 2000 – several studies by IEEP et al
Etc. 23-24 .06.2011 Final Project Event: ENPI-East , Chisinau 5
Gross Value Added (GVA)
Natural C
apital
Business as Usual path with overall trade-offs Win (Econ) – Loss (Env)
Development Pathways, trade-offs and natural capital
Good Practice in Environmental Management Path (still trade-offs,
though balance better)
Non Declining (over time) Natural Capital PathOver time path to no trade-offs (overall win-wins) –
Decouple economic development from natural capital use
Trade-offs
Specific measures: some win-wins, others win-neutral, win-loss, some loss-loss
Overall: win-loss for this path
TodayPast Potential Future
Source: ten Brink 2011 in Hjerp et al 2011
Gross Value Added (GVA)
Natural C
apital
WIN (Economy) LOSS (Environment)e.g. Road that facilitates economic growth
via needed connectivity
Interventions – win-wins and win losses
WIN (Economy) - WIN (Environment)e.g. Investment in natural capital that brings high returns to the
economy and improves ecological statuse.g. Flood plains that reduce risk at lower cost
e.g. Investment in ecosystem for water purification at lower cost than man-made capital.
e.g. investment in natural carbon storage
LOSS (Economy) LOSS (Environment)e.g. Investment in not needed roade.g. Uncontrolled invasive species that impacts agriculture or forestry e.g. Fisheries subsidies (underperforming natural asset)
Win (Economy) - WIN (Environment)e.g. Protected area where some (opportunity) costs, but also some economic gainse.g. Waste water treatment plant
WIN (Economy) Loss (Environment)e.g. Factory built after due EIA, compliant with
legislation, with proactive risk management strategy and environmental management
system (EMS); some “unavoidable impacts”
LOSS (Economy) WIN (Environment)e.g. Restoration of polluted land that poses little risk and offers little return
Loss (Economy) WIN (Environment)e.g. Ban on trade of threatened species
Win (Economy) LOSS (Environment)e.g. Airport in already well connected area (eg by rail)
WIN (Economy) - n/a (Environment)Pure economic gain, no effect on natural capita
e.g. Investment with no-net-loss policy, using suitable offsets
Source: ten Brink 2011 in Hjerp et al 2011
Reference point = the state of environment ‘now’. This requires an understanding of the relationship between pollution and impact
Baseline: a projection of how the state of the environmental will change to the target year (e.g.2020) based on project developments in the underlying economic and social (population, GDP growth and other relatively straightforward ones) factors that drive these changes.
Possible policy targets and target year (e.g. from EU/international standards, such as sewage network connection rate)
Environmental improvements: Comparing the baseline with the targets in order to assess the environmental improvements if targets are met
Benefits: Look at environmental, social, health and economic effects of environmental improvements (in qualitative, quantitative and monetary terms)
BA valuation framework:
Benefit AssessmentManual
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The BA Manual (BAM)
‘Manual on the Assessment of Social and Economic Benefits of Enhanced Environmental Protection in the ENPI countries’
Step by step guidance on the methodology for BAs Developed as a working tool for the project Simplified & tailored to policy makers/experts to carry
out/update own BAs
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...The BA Manual (BAM)
‘The Manual will be available from 15 July at:
ENPI project website: www.environment-benefits.eu
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BAM content
Method– Environmental categories to analyse (themes, sub-themes,
parameters)– Benefits to assess (env, health, social, economics)– The level of the analysis (qualitative, quantitative, monetary)– Approach for each parameter
Practical issues:– Data requirements– How to carry out case studies– Assessment
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Methodology
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Environmental categories
• ‘The environment’ comprises a vast range of issues.
• Clearly not everything can be covered
• Selection of environmental issues - criteria:• sufficiently representative of the environment,
• common across the countries under study,
• sufficiently simple to be assessed rigorously.
• Choice of 5 themes, sub-divided into sub-themes, and these into parameters
The BA assesses the benefits of improvements for each of these parameters.
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...Environmental categories
5 THEMES:
1. AIR: How may society benefit from improvements in ambient air quality, espec. health?
2. WATER: Infrastructures – what benefits of extending access to safe drinking water, improved hygiene
and sewage connection, additional waste water treatment? Natural resources – What benefits from enhancing the quality of bathing and river waters,
and to whom?
3. WASTE - What benefits of reducing waste, improving collection and treatment?
4. NATURE - What benefits of enhancing biodiversity and sustainable use of natural resources?
5. CLIMATE CHANGE - What risks related to global warming and what actions can contribute to the solution?
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….Environmental categories
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Themes
Sub- Themes
Parameters
Benefits of environmental improvements
Environmental benefits: positive impacts that meeting environmental targets have on the natural environment
e.g. environmental improvement: higher share of WW under secondary treatment env benefit: reduced eutrophication
Social benefits: benefits to the society at largee.g. improved air quality better conservation of historical heritage, open air recreation
Health benefits: Direct benefits to public health (part of social benefits, but assessed separately given magnitude)
e.g. improved sanitation reduction of illness/mortality due to water-borne diseases
Economic benefits: value added to economy, employment opportunities, cost savings, etc
e.g. improved bathing water quality tourism opportunities
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Level of analysis
The benefits can be assessed in:
Qualitative terms: description of the benefit, including people, areas & sectors affected, spatial distribution - applicable to all parameters
Quantitative terms : scale of the benefit (e.g. reduction in the number of cases of respiratory disease from air pollution) - more data intensive, applicable when data available
Monetary terms: value of the benefit: multiply quantitative benefits by standard economic value (or range) – applicable only when values representing the monetary value for society of a certain environmental improvement exist (e.g. carbon values, crop prices, WTP etc.). •Note: It can be controversial (e.g. VSL) and comparisons can be misinterpreted (e.g. air values higher than waste values, due to data) >> numbers to be interpreted with care
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Annual Value of Benefits for Full Compliance: Lower Estimate
0
500
1000
1500
2000
2500
3000
3500
4000
4500
PL TU CR RO HU SK BU LI SL LV EE CY MA
ME
UR
Waste
Water
Air
From: The benefits of compliance with the environmental acquis for the candidate countries (July 2001) led by Ecotec and supported by the Institute for Environmental Policy (IEEP), Metroeconomica, EFTEC and national experts.
Scale of monetary benefits: example NMS
…Level of analysis
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Benefits pyramid The 3-stage approach ensures that :
•the full range of benefits is covered, even if data availability uneven
•the BA is not constrained by focusing only on elements that can be quantified or monetised.
Methodological steps
5 key steps to carry out a BA:
1) Describe state of the environment
2) Define future baseline
3) Set targets
4) Assess environmental improvements
5) Assess Benefits
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1) State of environment
1) Define the current state of the environment (reference point): a description of the current environmental conditions (e.g. in 2008). Needed to establish a reference point.
Example of key points to describe
-State of the parameter (e.g. surface water quality)
-Driving forces affecting it (e.g. population increase etc)
-Environmental pressures (e.g. waste water pollution etc)
-Current value/importance (e.g. bathing, drinking water etc.)
-etc
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2) Define the future baseline: baseline projections of state of environment in the future (e.g. 2020) if no action/business as usual (BAU) – e.g. effect of economic and demographic changes. Needed to compare ‘like with like’: future improvements with future ‘no action’ scenarios.
Examples:
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2) Baseline
3) Targets
3) Establish the targets: theoretical environmental targets for each parameter (e.g. by 2020). Needed to establish what future ‘action’ scenarios can be.
>> Here: not actual policies in ENPI countries (the work did not aim to assess national policies), but theoretical (yet feasible) targets – e.g. based on EU/international standards (e.g. achieving ‘good ecological status’ of surface water after EU WFD)
Examples:
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What are the improvements and what are useful targets / benchmarks?
Level of pollution
Current Situation
COPI: 100% reduction
50% reduction EU acquis
Reference year pollution level = static
baseline
Baseline pollution levels
Policy Target: eg benchmark OECD
…targets
e.g. IEEP (2011) Manual of European Environmental Policy http://www.ieeplondon.org.uk/publications/manual.php
4) Environmental improvement
4) Compare the targets to the reference point and baseline >> env improvements: compare the proposed target with baseline (BAU e.g. in 2020). Needed to estimate expected environmental improvements.
>> If baseline cannot be assessed (e.g. lack of data) compare to reference point (e.g. 2008)
Example: ambient air quality
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Basic Valuation Framework
Damage Cost / Benefits Savings
Business as Usual
Reference Full End TimeYear Implementation Year(eg 2005)
(eg 2020) (2030)
If difficult to define use the reference year
... environmental improvement
5) Benefits
5) Assess the benefits: estimate benefits (health, environmental, social, economics) if the targets met. Use a combination of qualitative, quantitative and monetary approaches (see 3. Level of analysis)
Note:>> not all the benefit categories are applicable (e.g. limited/no health benefits
from reduced deforestation)
>> avoid double counting (e.g. health benefits of drinking water quality overlap with improved sewage – assess joint benefits)
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Establish/describe link between pollution and benefits/avoided impacts
•Eg water treatment/improved sanitation/air quality >> reduced cases of morbidity, children mortality etc
•Eg improved management of natural areas>> tourism benefits, reduced cost of water purification etc
Benefits: qualitative
Health benefits Avoided respiratory illnesses and premature deaths
Resource benefits
Avoided damage to buildings and crops
Ecosystem benefits
Avoided global warming from CO2 emissionsAvoided damage to lake & forest ecosystems from acidic rains
Social benefits Improved access to cultural heritage (less damage to historic buildings)Lesser social inequality by poor being more exposed to air pollution
Wider economic benefits
Cultural tourismAttracting investmentEmployment from environmental goods
From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates
Qualitative benefits – air (examples)
Health benefits Households benefiting from connection to (improved) quality water
Resource benefits
Reduction of contaminants in surface water
Ecosystem benefits
Likely changes in river and lake water quality
Social benefits Confidence in drinking water
Wider economic benefits
Employment via tourism related to water recreation
From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates
Qualitative benefits: Water (examples)
Health benefits
Lower pollution to groundwater and surface water Reduced health and explosions risks as well as lower impact on global warming as methane emissions from landfills are captured and made to generate energy. Reduced health risks by improved treatment and disposal of hazardous waste
Resource benefits
Increased efficiency in the use of material and reduced production of primary material as a result of higher levels of recycling. The recovery of energy is increased through the Incineration Directive.
Ecosystem benefits
Benefits to eco-systems and other environmental resources as emissions from waste activities into air, water and soil are reduced (avoided leachate, methane emissions) – reduced pressure
Social benefits Reduced discrimination by fewer low income households living close to unprotected landfills, etc.
Wider economic benefits
Lower costs for waste collection, treatment and disposal, as less waste will be produced.
From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates
Qualitative benefits: Waste (examples)
From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates
Ecosystem benefits
Increased size of protected areasIncreased level/quality of protectionIncreased connectivity between protected areas: eg reduced fragmentation in FYROM due to infrastructuresReduced threats/risks to species and habitats: eg wetlands destruction, intensive agriculture etc threatening birds in Kosovo; reduced soil erosion from deforestation in Albania
Social benefits Amenity value: improved areas for recreationOpportunities for rural development
Wider economic benefits
Torism benefitsCost savings eg from water purification
Qualitative benefits: Nature (examples)
Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine
Exposure to pollution leads to a possibility for illness. This is measured as a “probability function”, aka ‘Dose Response Function’
Likely number of impacts = number of people exposed * Dose Response
Function * ambient air quality (pollution levels).Results given in probable no. of cases of bronchitis, early mortality cases etc
Benefits: quantitative
Assign a monetary value (eg M€, %GDP) to quantified benefits
For health impacts - use value of statistical life (VSL) + use of transfer values for early mortality & Cost of Illness (COI) / discomfort estimates (eg for bronchitis), based on WTP.
For other benefits – eg benefits from improvements in quality of access to drinking water – used willingness to Pay (WTP) estimates
Not all parameters & benefits can be monetised. Values may be more available in some areas than in others – it does not mean one is more valuable than others
>> Need to interpret with care
Benefits: monetary
!
Value (Benefit) Transfer Approach
Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine
When data not available, values can be ‘borrowed’ from other areas/countries with similar issues (e.g. transfer data on morbidity cases caused by PM10)
BUT: Important to take into account income/GDP disparities as countries have different levels of wealth!
...Benefits: monetary
Practical issues
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Data Gathering
Data to collect include:
General data on the current economic and social state and trends (GDP, GDP/capita, population size and growth rate etc.); Data describing the current state of the environment (and, when possible, trends) for each parameter;Data that measure the relationship between environmental change and socio-economic benefit (where available – e.g. mortality associated to air pollutants);Data on the valuation of benefits (where available – e.g. WTP for safe drinking water).
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Air Water Waste Nature
Main pollutants:SO2 NOx Particulates (PM10, PM 2.5)VOCsCO2COHeavy metalsDioxinsFuransHalogensOzoneCH4
Main pollutants:BOD and CODpHNitrogen & PhosphorusHeavy metalsDioxinsFluorideE. coli
Main data:
Connection to water supply and waste water systems and level of waste water treatment.
Quality of rivers (classification x km)
Number of aquifers polluters (nitrates or pesticides)
Main pollutants:CH4
Main data: Tonnes of Domestic, Industrial and Inert wastePopulation served by the collection systemNo. of existing and planned facilities (landfills, incineration plants, recycling) and collected materialNo. of illegal dump sites and quantity of waste
Main data: Ha and % of protected areasNo. of species and level of risk Ecosystem services
Data: What issues are likely to be important
…Data gathering
Possible sources of data:
National reports and databases: e.g. national State of the Environment Reports, statistical reports,Peer-reviewed research studies,Personal contacts with relevant authorities and experts.International reports and databases: e.g. by UNEP, UNDP, World Bank, OECD, EU Commission, Eurostat, FAO etc.; can be country specific or cover several countries or regions.Etc
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...Data gathering
A checklist was developed to guide data collection
Extract:
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WATER Unit Source Comments SUB-THEME: Water Infrastructures PARAMETER: Connection to safe drinking water
1 Population with improved water supply (population with access)
% WHO/UNICEF JMP Total, Urban & Rural
a Piped water supply % WHO/UNICEF JMP Total, Urban & Ruralb Other improved water sources % WHO/UNICEF JMP Total, Urban & Ruralc Population with pre-treated piped water
(municipal treatment) with good quality at tap%
Total, & Urban
2 Population with unimproved water supply % WHO/UNICEF JMP
3 Water supply interruptions
Only if it is an issue, and if information easily available
4 Household appropriately treating drinking water % DHS, MICS
Case studies
Analysis complemented by case studies:Each to focus on a single parameter
Apply same methodology as above
Main objectives of case studies:• Provide a practical application of environmental valuation
• Complement and/or fill a gap in the country BA
• and/or highlight important cases that demonstrates the value of environmental improvements.
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Assumptions
Several assumptions had to be made to make the BA practical & allow for (some) comparability across countries
Overview:
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Issue AssumptionsTimescale 2020Reference year 2008 if and where data available, and note year if other than 2008. Targets Usually a single common target for year 2020 used across the
countries for each parameter under analysis.Baseline Usually a set of essential factors are included in the baseline
projection, such as GDP, population and their growth rates. These are kept to a minimum to keep the analysis reasonably simple.
Mortality and morbidity Valuation of mortality follows a benefit transfer approach of willingness to pay (WTP) for mortality risk reduction that translates to a value of statistical life (VSL) which varies across countries in proportion to GDP/capita (PPP terms). The same WTP and benefit transfer approach is used for valuing an avoided case of illness, unless otherwise stated.
Time development of willingness to Pay (WTP)
Assumes a proportional relationship – e.g., if GDP/capita goes up by a factor of 2, the WTP goes up by a factor of two.
…Assumptions
Specific economic and demographic assumptions had to be made when estimating the BAU & target scenarios in 2020:
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Country cluster Data
Annual growth factor
ENP South
population 1.68%GDP 3.75%GDP/capita 2.03%
ENP East
population 0.02%GDP 3.35%GDP/capita 3.33%
Russia
population -0.55%GDP 3.75%GDP/capita 4.32%
E.g. GDP and population future annual growth rates
…Assumptions
• Estimated values of statistical life (VSL)
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VSL (PPP Euros), 2008
VSL (LCU), 2008 VSL (PPP Euros), 2020
VSL (LCU), 2020
Algeria 419,008 23,886,257 533,281 30,400,641
Armenia 316,529 90,389,617 468,954 133,916,996
Azerbaijan 460,803 336,782 682,704 498,961
Belarus 650,350 1,031,931,969 963,527 1,528,861,765
Egypt 281,987 833,061 358,892 1,060,258
Georgia 253,889 331,426 376,150 491,025
Israel 1,491,002 7,760,987 1,897,636 9,877,603
Jordan 289,420 197,357 368,352 251,182
Lebanon 628,743 822,193,776 800,217 1,046,426,730
Libya 861,764 1,409,812 1,096,788 1,794,303
Moldova 153,774 1,329,991 227,824 1,970,451
Morocco 220,577 1,625,356 280,735 2,068,631
Russia 1,090,701 29,437,594 1,811,827 48,900,494
Syria 237,485 9,462,892 302,253 12,043,661
Tunisia 417,937 369,846 531,919 470,712
Ukraine 381,041 1,574,310 564,532 2,332,423West Bank and Gaza 152,202 399,746 193,712 508,767
Can be controversial!
•Not the ‘value of life’ but rather people’s WTP for reductions in risk.
•Depends on GDP (PPP) hence differ across countries.
… Assumptions
Carbon value:- Used for methane capture, deforestation & RES- Based on range of values from European studies (consistent with
several international studies)- Same values across countries (assuming the value of carbon &
climate change risk the same value worldwide)
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GHG Range 2010 2020Carbon dioxide (CO2) or
CO2 equivalentLow 17.2 39
High 32 56
Conclusions/way forward
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Improving environmental policies/measures can help improve the health and quality of life for citizens within a country and in neighbours countries
Co-operation across countries is crucial to maximise the transboundary benefits (e.g. From air & water pollutions)
Benefits are likely to be of the same order of magnitude (if not larger) than the costs
Benefits can help communicate the importance of the environmental issues at political level.
Quantification of the health and environmental benefits is crucial
Valuable economic message from the monetisation aspect – reaching some new audiences (e.g. economists, finance dept, media etc)
Overall conclusions
In some countries (e.g. EU MS) benefits have to be assessed within Impact
Assessments for major policies/legislation, programmes etc.
BA for new candidates/neighbours is arguably becoming ‘good practice’ – it
was done for Croatia, also for FYROM and other SEE countries, and now for
ENP. It is increasingly recognised as a tool that can help the Commission, and
Ministries of Environment in the countries themselves.
Benefits assessments are being done in an increasingly wide range of areas
– eg eco-system services (TEEB in National & International Policy Making);
socio-economic benefits of natural areas (e.g. Natura 2000 in EU); international
processes (e.g. COP of CBD) etc
Being complemented by cost of policy inaction (COPI) studies (EC) and
cost of degradation (WB) to help present the scale of the need for action.
The future of BAs
Thank you for your attention ENPI project website:
www.environment-benefits.eu
Project Analysis for ENPI countries of social an economic benefits of
enhanced environment protection (DCI-ENV/2009/225-962)
Samuela Bassi – [email protected] for European Environmental
Policy (IEEP)