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SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE

SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE. CIDACOS RIVER BASIN NAVARRA-SPAIN Presentation 3: Cost-effectiveness analysis Ministerio de Medio Ambiente Gobierno de Navarra. Water Quantity Rate of flow. Quantity: Rate of flow. Water Quality: pH Susp.Mat Conduct

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SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE

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  1. SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE CIDACOS RIVER BASIN NAVARRA-SPAIN Presentation 3: Cost-effectiveness analysis Ministerio de Medio Ambiente Gobierno de Navarra

  2. Water Quantity Rate of flow Quantity: Rate of flow • Water Quality: • pH • Susp.Mat • Conduct • DBO5 • Nitre • Nitrate • Ammonia • Sulfate • Chloride • Good • Ecological • Quality: • Stretch I • Stretch II • Stretch III • Baseline • Ecological • Quality: • Stretch I • Stretch II • Stretch III • Quality: • pH • Susp.Mat • Conduct • DBO5 • Nitre • Nitrate • Ammonia • Sulfate • Chloride The GAP

  3. Good Ecological Quality Parameters STRETCH I STRETCH II STRETCH III Baseline Target Baseline Target Baseline Target Flow (lts/s) 250 280 750,00 850 980,00 1100 PH 8,18 5,5-9 8,01 5.5_9 8,08 5.5_9 Susp.Mat. 108 25 37,30 25 32,50 25 Conduct. 619 1000 700,00 1500 1055,00 1500 DBO5 4,7 6 9,40 6 8,50 6 Nitre 0,16 0,03 0,26 0,03 0,79 0,03 Nitrate 45,56 50 43,58 50 42,02 50 Ammonia 1,09 0,2 1,07 0,2 1,37 0,2 Sulfate 61,23 250 88,08 250 140,05 250 Chloride 111,67 250 42,54 250 106,75 250

  4. EXAMPLE 1 ANALYSIS OF MEASURES

  5. Actions to reduce the GAP WATER QUANTITY (pressures; rate of flow) WATER QUALITY (phys-chem) RIVER ECOSYSTEM SERVICES (Habitat, biological potential) • Treatment • Control • Recycling • Demand management • Increased efficiency • Increased supply • River bank restoration Economic Incentives

  6. Economic costs: • Capital • Operation and maintenance • External environmental costs • Resource costs COVERAGE [Has; % losses; km of net] TECHNICAL EFFECTIVENESS [Rate of flow, M3,mg Part/L] ANNUAL EQUIVALENT COST [t =30; r =0.02] COST EFFECTIVENESS INDICATOR [€/m3, €/Lts/sec, €/Km]

  7. GAP Baseline vs GEQ Water Quantity Water Quality River Ecosystem Quality Parameters Catalogue of Actions Technical Effectiveness Opportunity Cost Cost-Effectiveness Indicator

  8. Cost-Effectiveness Indicators of measures in Rural Areas to increase water flow MAX. COST- MAX. MAX. WATER EFFECTIVENESS COVE- AEC WATER FLOW MEASURE RAGE SAVINGS INDICATORS INCREASE 3 €/m €/lts/sec (Has) € (m3) (lit/sec) IRRIGATION ASSISTANCE 0,54 0,02 766 More than 10,000m3/Ha 21 411 16.938 0,02 0,03 1.077 7,000-10,000 m3/Ha 1 20 586 0,05 0,04 1.212 5.000-7.000 m3/Ha 3 60 1.561 0,05 0,24 7.475 1.000-5,000 m3/Ha 19 384 1620 0,003 0,25 7.755 Less than 1,000 m3/Ha 1 20 81. WSP (WATER SAVINGS PROGRAM) 0,54 0,07 2.297 More than 10,000m3/Ha 21 1234 16.938 0,02 0,1 3.231 7,000-10,000 m3/Ha 1 60 586 0,05 0,12 3.635 5.000-7.000 m3/Ha 3 180 1.561 0.05 0,71 23.266 1.000-5,000 m3/Ha 19 1152 1620 0,003 0,74 22.425 Less than 1,000 m3/Ha 1 60 81 1,69 0,14 4.568 EFFICIENCY IN CHANNELS 45 7.704 53.189 0,16 5.184 45 10.859 66.062 2,09 CHANGE OF DISTRIBUTION CHANGE IN IRRIGATION 0,08 2.454 26 5.141 66.062 2,09 TECHNOLOGY CHANGE OF DISTRIBUTION+ 0,1 3.230 26 11.342 110.720 3,51 IRRIG.TECHN.

  9. Example of Measure Appraisal

  10. Maximum Flow Maximum Measure AEC € AEC/M3 AEC/Lt/s Increase WaterSaving lt/sec 0,100 6.307 1.000.000 100.000 1. New abstractions 31,7 Unlimited 0,224 7.560 2. Water imports 0,260 5.232 695.258 58.072 11,1 3. Efficiency in distrib. network 0,280 8.993 88.989 25.376 4. Instalation of meters 2,8 0,170 5.390 103.820 17.744 5. Saving campaign consumers 3,3 0,150 4.813 136.330 20.805 7. Saving program households 4,3 0,110 3.376 48.589 5.201 8. Saving program firms 1,5 0,190 5. 896 27.822 5.300 9. Saving program institutions 0,9 0,260 8.367 350.000 92.855 11,1 10. Water recycling Cost-Effectiveness Indicators of measures in Urban Areas to increase water flow

  11. Example 2: Cost-effectiveness analysis in linked water bodies“improving quality in one stretch reduces total compliance costs”

  12. MgC Desired Standard MgC GEQ A QGEQ Q

  13. € € Δ l/s Δ l/s Optimal Program with three independent water bodies Stretch I Stretch II Stretch III € C B A 20 100 Δ l/s 80 Overall cost:A+B+C

  14. Δ l/s Overall Cost:A+B*+C* Optimal Programme withstrict complianceof minimum standards Stretch I Stretch II Stretch III € € € Avoided cost B* A C* 20 20 80 20 80 100 Δ l/s Δ l/s

  15. Least Cost Programme Stretch I Stretch II Stretch III € Standard € € Standard Standard Avoided cost Avoided cost Additional Cost 1 Additional Cost 2 A B C 20 40 20 40 80 90 20 100 80 90 Δ l/s Δ l/s Δ l/s Overall Cost: A+Addit.Cost 1+B+Addit. Cost 2 +C

  16. EXAMPLE 3 INTERACTIONS QUALITY AND QUANTITY “Quantity measures reduce the quality target reaching cost”

  17. Incremental Cost of Reducing Nitrates Strecht III 60000 50000 40000 30000 Marginal Cost [€/Year] 20000 10000 0 0 2 4 6 8 10 12 Nitrate reductions[mg/l]

  18. GEQ-River Basin Management Plan Quantity and Ecology Measures

  19. ‘Good Ecological Status’ Objective MgC MgCbefore increasing flow Annual equivalent cost [€] MgCafter increasing flow MgCafter implementing water treatment measures in upper strectches Avoided costs 0 mg of NH4 /l 0.2 mg/l 1.08 1.22 1.37 Avoided costs in water treatment due to flow increases Avoided costs in water treatment, due to the implementation of water treatment measures in upper strectches

  20. GEQ-RIVER BASIN MANAGEMENT PLAN (cont..)

  21. EXAMPLE 4: SENSITIVITY ANALYSIS- INCORPORATION OF ENVIRONMENTAL COSTS

  22. € € € 0.30 0.03 Water savings [m3] Water savings [m3] (c) (a) (b) Water recycling Water imports Leak reductions Three hypothetical policy options to save water [Long term marginal “financial” costs] Water savings [m3]

  23. Least cost plan when resource and environmental costs are not considered Marginal Cost Marginal Cost 0.23 0.23 Water savings [m3] 40.000 Leak reduction Water imports  RBMP to increase flow by saving 200,000 m3

  24. Hypothetical least cost plan when environmental and resource costs are considered Marginal Cost Marginal Cost 0.23 Water imports Recycling Water savings [m3] 60,000 140,000 200,000 Leak reductions 0.23

  25. RBMP RBMP Deciding with limited informationregarding external environmental costs of some policy measures If there is no reliable monetary information: describe the environmental impact and temporarily ignore the environmental cost Cost Effectiveness Appraisal Least Cost Policy Package Sensitivity Analysis Estimate thresholdvalues Benefit transfer Avoided Costs Full cost of water services Information from secondary sources May the cost value change the RBMP? [Not] Is the potential cost saved in the RBMP high enough? [Not] Conduct a valuationstudy

  26. The Role of Sensityvity Analysis and Feedback: • Both are useful tools to improve the RBMP by: • Determine the potential value of missing information. • Identify Critical Assumptions. • Updating Parameters and Assumptions. • Updating the RBMP after the effects • of Economic Incentives is taking into account.

  27. Key Concepts: Environmental Impacts and their relevance in the decision-making process

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