New IEEP report on assessing costs and benefits of EU water policy

Authors: Daniela Russi, Andrew Farmer

The BLUE 2 study

The EU Commission has just published a new report produced by IEEP on assessing the costs and benefits of EU water policy, which was financed by DG Environment. The report was prepared in the context of BLUE 2, a study on the socio-economic assessment of policies aiming to improve the quality of freshwater and the marine environment.

The methodology developed by IEEP for BLUE 2

IEEP led BLUE 2’s Task 2.3, and developed an innovative methodology to assess costs and benefits of EU water policy, based on a bottom-up, multicriteria approach. The methodology is structured in four steps:

Selection of the most relevant measures to include in the analysis
Analysis of their costs
Analysis of the outcomes they are expected to produce (i.e. the change in the state of water bodies)
Analysis of the benefits to humans and other species arising from those outcomes.

These steps were carried out for two levels of effort: 1) Business as usual, which includes the implementation of the measures set out in the 2^nd River Basin Management Plans (RBMPs), as well as measures planned to implement other EU water law; 2) High level of effort, which includes the implementation of key measures necessary to achieve the objectives of the WFD by 2027 (i.e. the good status), regardless of their cost.

For this work, IEEP adopted a multicriteria approach that integrates a range of quantitative, qualitative and monetary indicators without translating them into monetary units. Information on the benefits of the selected measures was collected in an impact matrix in different units of measurement and discussed against costs. This approach avoids the assumptions and loss of information that are inevitable when trying to express all benefits in only one unit of measurement (typically money), as it is done in standard Cost-Benefit Analysis (CBA). The resulting transparency can support policy dialogue and engagement of stakeholders better than CBA.

Data were collected in a bottom-up way, using information at the local level, without extrapolating data obtained in other contexts, and thereby providing more robust and reliable information. By assessing a variety of measures in a catchment together, this approach allows for interactions to be assessed and a bigger picture to be built up. It encourages and supports the engagement of local actors in the process of gathering information and structuring the analysis, favouring the buy-in of relevant institutions and stakeholders.

The application of the methodology in eight river basins across Europe.

The IEEP methodology was tested in eight river basin districts (RBDs) across Europe by the BLUE 2 project partners (Ramboll – the project coordinator, Ecorys, Intecsa-Inarsa and WEARE). The project partners selected the most interesting measures in their RBDs, collected data on their costs, outcomes and benefits, and used this information to discuss water policies and make recommendations as to how to increase their level of ambition. This allowed them to explore data availability and examine the benefits and challenges of the application of a bottom-up, multicriteria approach.

The testing of the methodology demonstrated that the key challenge in analysing water measures is data availability. The methodology is reliant on significant amounts of information, and in many cases, the necessary data were not available, especially for the assessment of benefits and when examining potential measures addressing agriculture, which is responsible for significant pressures on water bodies in the EU.

The importance of analysing costs and benefits to progress on the implementation of the Water Framework Directive

The Commission has just published a report on the implementation of the WFD and the Floods Directive (see the Commission report here and the IEEP briefing here). The report summarises the results of the European Environment Agency’s Status of Water report and also analyses the implementation of the second RBMPs under the WFD and the first Flood Risk Management Plans under the Flood Directive, which both cover the period between 2015 and 2021.

The report shows that there has been only a slow progress in implementation with respect to the previous programming cycle (2009-2015), and that the path towards full compliance with the WFD’s objectives by 2027 looks very challenging. And in fact, the EEA Status of Water report shows that only a limited number of water bodies have improved in status with respect to the first cycle of the WFD. While 74% of the EU groundwater bodies have already achieved good chemical status and 89% achieved good quantitative status, only 38% of surface water bodies are in good chemical status and 40% in good ecological status or potential. In addition, the Commission’s report states that monitoring and reporting from Member States is improving, but there are still important information gaps that need to be filled.

In order to progress towards the WFD’s objectives, it is important to measure not only the costs and outcomes of the measures that are needed for the water bodies to reach good status, but also their benefits, both to humans and to other species. This will allow authorities to choose the most cost-effective measures, to discuss synergies and trade-offs with stakeholders and also to increase acceptance at the RBD level. A structured and consistent methodology, such as the one developed by IEEP in the context of BLUE 2, will help with this task and support the delivery of the WFD objectives.

The project deliverables are available here:

Reports of the BLUE 2 project: http://ec.europa.eu/environment/blue2_en.htm

Report on the methodology developed by IEEP: http://ec.europa.eu/environment/blue2_study/pdf/Task%20A3%20Final%20report_CLEAN.pdf

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