ETC/Water 2010
Overview of EEA/ETC water
and economics work
Manuel Lago
Ecologic Institute, Berlin
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Outline of presentation
• Introducing the role of economics in the
WFD
• Overview and progress of the EEA current
work on water economics.
• Applications
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
The WFD: Economics thinking is
most relevant…
• for the selection of the most cost-effective POMs
for the River Basin Management Plans;
• for the use of specific economic instruments to
support application of cost recovery of water
services, such as water pricing or taxes;
– including resource and environmental costs of water
services provision
• for the considerations relating to the impact of
•
water policies on the water using and water
polluting sectors; and
for the assessment of disproportionate costs in
order to justify exemptions to achieve ‘good
status’ at particular water bodies.
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
WFD implementation: integrating a
wide range of economic issues
•Defining penalties
Identifying
programme of
measures
Analysing
water
uses,
pressures,
impacts
Evaluating
impacts of
programme
Characterisation - 2004
Environmental
objectives
Implementing WFD pricing
Provisions - 2010
•Identification of a costeffective programme of
measures
•Assessing the role of pricing
as measure (incentive)
•Economics importance
of water uses
•Assessment of cost
recovery
•Trends in supply and
demand
Implementing
programme of
measures
Identifying
potential
measures
Justifying
potential
derogations
Programme of measures
(RBMP) - 2008 & 2009
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
•Assessment of unitary
costs, effectiveness and costeffectiveness of measures
•Costs & benefits of measures
•Designation of HMWB
•Defining less stringent objectives &
time derogation
•Justification of cost-recovery levels
EEA current work on water
economics
• European Topic Centre-water
– Task 1.4.2.6: Water and economics
– Task 2.4.2.4: MSFD: understanding of
economic elements
• Framework contract on environmental
economics
– Water Economics and Ecosystem Accounts - A
project under the Framework contract Ref.
No. EEA/IEA/09/002-Lot3
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
ETC-Water: Policy links
• WFD:
– Review of RBMPs reporting exercise: templates on
objectives and exemptions, pricing, programme of
measures and agriculture
– Support the development of ecosystem capital accounts in
water
• MSFD
–
–
–
–
Understanding of the economic elements of the Directive
Follow progress of the WG ESA
Development of maritime socio-economic indicators
Marine/maritime ecosystem assessments - Eureca
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Objectives of the
Framework contract study
• Clarification of terminology
• Data mining and Assessment of economics
Information - Review RBMPs and other
documents
• Incorporation of economics information
into SEEAW and EEA fast track ecosystem
accounts
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Potential applications of the
water economics work
• Analysis of possible trade-offs between alternative water
•
policies and economic strategies.
Support policy decisions on economic instruments (design,
monitoring and evaluation) and their possible impact on the
selection of Programme of Measures as dictated by the WFD.
– application of other measures (i.e. cooperation agreements) and
economic instruments (i.e. pollution trading permits) and
incentives (i.e. the role of subsidies)
• Inform decisions on water allocation, pricing and
•
infrastructure development.
Provide Information on water use and demand and from there
we could establish some concept of value if linked with
economic data per sector. Thus, potential use of sectoral
water accounts to inform disproportionate costs analysis.
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
EEA water economics work is also leading to
the fulfilment of other specific objectives:
• EEA 2012 water report
– A water economics output as part of key “water ”
messages for 2012 (sub-assessment),
• EEA indicator development work (ETC-water)
– New indicators on resource efficiency incorporating
economic information
• Improved assessment of state of the water
environment in Europe
– WFD and economic analysis of water use
– Links with other policy areas (agriculture)
– Incorporation of economics into existing indicators
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Progress in task1
Clarification of terminology
• Clarification of the water economics
•
•
terminology widely used in the main policy
streams (WFD; EEA fast track ecosystem
accounts; UN SEEAW; MSFD).
Identification of potential discrepancies and
incoherence between concepts (units,
geographical scale) and terms used, including
possible misinterpretation that might arise as a
result of different definitions.
38 reviewed definitions
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Linking FTEA and water accounts
to WFD implementation
WFD
Economic information
and data
Cost recovery:
Full supply cost
Environmental and
resource cost
WFD
Economic information
and data
Costs of measures:
Capital, operating and
maintenance,
administration costs
Transf ers
FTEA
Water protection and
management
expenditures
SEEAW
Supply and use of
water
Purchase of water
Costs of purchasing
water and sewerage
services
Taxes and subsidies
FTEA
Water protection and
management
expenditures
Investments:
maintenance and
restoration costs due to
ecosystem capital
degradation
SEEAW
National expenditure
and financing for waterrelated activities
Environmental
protection expenditures
Cost savings
Non-water
environmental costs
Wider economic costs
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Points for discussion
• With respect to ‘purchase of water’, WFD information and data on the ‘full
•
•
•
supply cost’ is required for the FTEA.
The WFD concept of full cost recovery implies that careful interpretation of
information on the costs of supply will be required to determine if components
of environmental and resource costs are accounted for. Taking the SEEAW
definition of the ‘costs of purchasing water and sewerage services’ these should
note be included in the FTEA ‘purchases of water’.
With respect to ‘taxes and subsidies’, WFD information and data on cost
recovery should also detail aspects related to taxes and subsidies levied on
water users by sector.
With respect to ‘maintenance and restoration costs due to ecosystem capital
degradation’, WFD information on the ‘costs of measures’ is required for the
FTEA. However the WFD presents a wider scope of maintenance and restoration
costs by including aspects such non-water environmental costs and wider
economic costs. These additional elements are not consistent with the SEEAW
definition of environmental protection expenditures that informs the FTEA.
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)
Thank you for your attention!
Manuel Lago
Ecologic Institute, Pfalzburger Strasse 43/44,10717, Berlin
  +49 30 86880-110
[email protected] | www.ecologic.eu
Date/event: Water accounts and economics workshop, 7-8/10/2010, Copenhagen
Author: Dr Manuel Lago (Ecologic Institute, Berlin)