A practical CBA-based screening procedure for identification of river basins where the costs of fulfilling the WFD requirements may be disproportionate – applied to the case of Denmark

Abstract

The European Union's (EU) Water Framework Directive (WFD) is implemented as an instrument to obtain good ecological status in waterbodies of Europe. The directive recognises the need to accommodate social and economic considerations to obtain cost-effective implementation of the directive. In particular, EU member states can apply for various exemptions from the objectives if costs are considered disproportionate, e.g. compared to potential benefits. This paper addresses the costs and benefits of achieving good ecological status and demonstrates a methodology designed to investigate disproportionate costs at the national level. Specifically, we propose to use a screening procedure based on a relatively conservative cost-benefit analysis (CBA) as a first step towards identifying areas where costs could be disproportionate. We provide an empirical example by applying the proposed screening procedure to a total of 23 river basin areas in Denmark where costs and benefits are estimated for each of the areas. The results suggest that costs could be disproportionate in several Danish river basins. The sensitivity analysis further helps to pinpoint two or three basins where we suggest that much more detailed and elaborate CBAs should be targeted in order to properly ascertain whether costs are indeed disproportionate.

An Assessment of Disproportionate Costs in WFD: The Experience of Emilia-Romagna

“…In order to contain the economic effort required to assess benefits, scholars offer two alternative strategies: (a) limiting the application of CBA to those water bodies where CEA do not meet the requirements of acceptability set by local stakeholders; (b) exploiting the estimation of benefits from other studies with similar aims and in similar contexts. The first strategy was suggested by Postel et al (2004) [9] in England and by Interviews et al (2005) [18] in Scotland, while the second strategy, known as the Benefit Transfer Method [6], was used by Laurans (2006) [11] and by Jensen et al (2013) [8], respectively, for disproportionate cost assessment in Normandy and Denmark.…”

“…Analyses of cost disproportionality have been carried out in various countries, such as Spain [17], Scotland [18], Germany [12], France [10,11], England [9], Denmark [8], and The Netherlands [6]. and Most of the studies only address qualitative pressures (Martin-Ortega, 2012) [16] and focus on surface water rather than groundwater.…”

“…In this regard, Stemplewsky et al (2008) [7] suggest aggregating water bodies in sub-basins in order to include relevant interactions. However, cost disproportionality has been assessed at different levels of aggregation, including both geographical [3,8,10,11,17] and administrative boundaries [12]. The first option is driven by the need to emphasize the interaction between water bodies and the last option by the need to estimate the financial burden that local authorities should bear in order to reach water status objectives.…”

“…Postle et al (2004) [9] try to solve such regulatory ambiguities. Other contributions are provided by Courtequisse (2005) [10], Laurans (2006) [11], Klauer (2007) [12], Brower (2010) [13], Berbel et al (2012) [14] and Jensen et al (2013) [8]. These studies define a number of rules and criteria upon which derogation decisions can be based and the application of which would reduce the inherent subjectivity of derogation decisions.…”

“…The assessment process is designed to support policy in the decision making process and to ensure transparency [6,7]. However, the generic nature of the European guidelines fails to suggest a practical procedure whereby a country can carry out a disproportionate cost analysis [8]. Postle et al (2004) [9] try to solve such regulatory ambiguities.…”