SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE
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SCOPING THE ECONOMIC ANALYSIS OF THE WATER FRAMEWORK DIRECTIVE
CIDACOS RIVER BASINCIDACOS RIVER BASIN
NAVARRA-SPAINNAVARRA-SPAIN
Presentation 3: Cost-effectiveness analysisPresentation 3: Cost-effectiveness analysis
Ministerio de Medio AmbienteMinisterio de Medio Ambiente
Gobierno de NavarraGobierno de Navarra
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Good
Ecological
Quality:
•Stretch I•Stretch II•Stretch III
Baseline
Ecological
Quality:
•Stretch I•Stretch II•Stretch III
The GAP
Water Quantity
Rate of flowWater Quality:
•pH
•Susp.Mat
•Conduct
•DBO5
•Nitre
•Nitrate
•Ammonia
•Sulfate
•Chloride
Quantity:
Rate of flow
Quality:
•pH
•Susp.Mat
•Conduct
•DBO5
•Nitre
•Nitrate
•Ammonia
•Sulfate
•Chloride
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Good Ecological Quality Parameters
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
STRETCH I STRETCH II STRETCH III
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EXAMPLE 1 ANALYSIS OF MEASURES
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Actions to reduce the GAP
WATER QUANTITY
(pressures; rate of flow)
Demand managementIncreased efficiency Increased supply
TreatmentControlRecycling
WATER QUALITY(phys-chem)
River bank restoration
RIVER ECOSYSTEM
SERVICES(Habitat,
biological potential)
Economic Incentives
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Economic costs: Capital Operation and maintenance External environmental costs Resource costs
TECHNICAL EFFECTIVENESS
[Rate of flow, M3, mg Part/L]
COVERAGE[Has; % losses; km of net]
ANNUAL EQUIVALENT COST
[t =30; r =0.02]
COST EFFECTIVENESS INDICATOR[€/m3, €/Lts/sec, €/Km]
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GAPBaseline vs GEQ
Technical Effectiveness Opportunity Cost
Quality Parameters
Cost-Effectiveness Indicator
Catalogue of Actions
Water QuantityWater Quality
River Ecosystem
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MAX. COVE-RAGE
AECMAX.
WATER SAVINGS
MAX. WATER FLOW
INCREASE
(Has) € (m3) (lit/sec) €/m3 €/lts/sec
IRRIGATION ASSISTANCE
More than 10,000 m3/Ha 21 411 16.938 0,54 0,02 766
7,000-10,000 m3/Ha 1 20 586 0,02 0,03 1.077
5.000-7.000 m3/Ha 3 60 1.561 0,05 0,04 1.212
1.000-5,000 m3/Ha 19 384 1620 0,05 0,24 7.475Less than 1,000 m3/Ha 1 20 81. 0,003 0,25 7.755
More than 10,000 m3/Ha 21 1234 16.938 0,54 0,07 2.297
7,000-10,000 m3/Ha 1 60 586 0,02 0,1 3.231
5.000-7.000 m3/Ha 3 180 1.561 0,05 0,12 3.635
1.000-5,000 m3/Ha 19 1152 1620 0.05 0,71 23.266 Less than 1,000 m3/Ha 1 60 81 0,003 0,74 22.425
EFFICIENCY IN CHANNELS 45 7.704 53.189 1,69 0,14 4.568
CHANGE OF DISTRIBUTION 45 10.859 66.062 2,09 0,16 5.184
CHANGE IN IRRIGATIONTECHNOLOGY
26 5.141 66.062 2,09 0,08 2.454
CHANGE OF DISTRIBUTION+IRRIG.TECHN.
26 11.342 110.720 3,51 0,1 3.230
MEASURE
COST-EFFECTIVENESS
INDICATORS
WSP (WATER SAVINGS PROGRAM)
Cost-Effectiveness Indicators of measures in Rural Areas to increase water flow
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Example of Measure AppraisalWater Body: Stretch I
Measure: Efficiency in Urban Distribution Networks
Actual Efficiency: 70%Maximum Attainable Efficiency 85%Maximum Water Saved (m3) 695.258Cost Eff. Indicator 1: €/m3 0,26Maximum Flow Increase (l/s) 11,1Cost Eff. Indicator 2: €/l.p.s. 5.232
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Measure Maximum Water Saving
AEC € AEC/M3
MaximumFlow
Increase lt/sec
AEC/Lt/s
1. New abstractions 1.000.000 100.000 0,100 31,7
6.307
2. Water imports 0,224 Unlimited 7.560
3. Efficiency in distrib. network 695.258 58.072 0,260 11,1 5.232
4. Instalation of meters 88.989 25.376 0,280 2,8 8.993
5. Saving campaign consumers 103.820 17.744 0,170 3,3 5.390
7. Saving program households 136.330 20.805 0,150 4,3
4.813
8. Saving program firms 48.589 5.201 0,110 1,5
3.376
9. Saving program institutions 27.822 5.300 0,190 0,9 5.896
10. Water recycling 350.000 92.855 0,260 11,1 8.367
Cost-Effectiveness Indicators of measures in Urban Areas to increase water flow
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Example 2: Cost-effectiveness analysis in linked water bodies
“improving quality in one stretch reduces total compliance costs”
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Q
MgC
QGEQ
Desired Standard
AA
MgC GEQ
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€
Stretch I
Optimal Program with three
independent water bodies
Δ l/s
€
Δ l/s
€
Δ l/s
A
20 80 100
B C
Stretch II Stretch III
Overall cost: A+B+C
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€
Δ l/s
€
Δ l/s
A
20 80 100
B* C*
Stretch II Stretch III
Δ l/sOverall Cost: A+B*+C*
20 20 80
Stretch I
Avoided cost
Optimal Programme with strict compliance of minimum standards
€
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€
Δ l/s
€
Δ l/s
A
20 80 100
Stretch II Stretch III
Δ l/s
Overall Cost: A+Addit.Cost 1+B+Addit. Cost 2 +C
20 20
80
Stretch I
Avoided cost
40
Additional
Cost 1
€ Standard
40 90
Standard
Additional
Cost 2
90
Standard
Avoided cost
B C
Least Cost Programme
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EXAMPLE 3 INTERACTIONS QUALITY
AND QUANTITY “Quantity measures reduce the
quality target reaching cost”
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Incremental Cost of Reducing Nitrates Strecht III
0
10000
20000
30000
40000
50000
60000
0 2 4 6 8 10 12
Nitrate reductions [mg/l]
Marg
inal C
ost
[€
/Year]
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GEQ-River Basin Management Plan
Quantity and Ecology MeasuresStrech I Strech II Strech III
Measures Cost Measures Cost Measures Cost
Irrigation Assistance Irrigation Assistance River Bank Restoration 138868
>10.000 m3/Ha 411 >10.000 m3/Ha 1660 7.000-10.000 m3/Ha 20 5.000-10.000 m3/Ha 740 5.000-7.000 m3/Ha 60 1.600-5.000 m3/Ha 420 1.000-5.000 m3/Ha 384 1.200-1.600 m3/Ha 24340 < 1.000 m3/Ha 20 1.000-1.200 m3/Ha 2320
WSP (Water Saving Program) WSP
>10.000 m3/Ha 1234 >10.000 m3/Ha 4980 7.000-10.000 m3/Ha 60 5.000-10.000 m3/Ha 2220
5.000-7.000 m3/Ha 180 Irrigation Technology 72809
Channel Substitution+ Irrigation Technology 11342 River Bank Restoration 111094
12-13. Técnica de Riego 0
New abstractions 100000
Water Imports 78400
Efficiency in distribution networks 58072
Instalation of meters 25376
Saving campaign consumers 17744
Saving Program households 20806
Saving Program firms 5201
Saving Program Instituion 5201
River Bank Restoration 64805
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MgC before increasing flow
mg of NH4 /l
MgC after increasing flow
01.371.2
2
MgC
‘Good Ecological Status’ Objective
0.2 mg/l
An
nu
al
eq
uiv
ale
nt
cost
[€]
Avoided costs
1.08
MgC after implementing water treatment measures in upper strectches
Avoided costs in water treatment due to flow increasesAvoided costs in water treatment, due to the implementation of water treatment measures in upper strectches
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Control 4380
New Treatment Plants 20813
Advanced Water Treatment 205167
Control of livestock effluents 24040Control of composition on the sites of livestock effluents 6010
Treatment of livestock effluents 16826
Increase in Water Use Price-Agriculture (€/m3) 0,04
Increase in Water Use Price-Urban (€/m3) 0,28
Effluent Treatment Price-Livestock (€/m3) 0,48
Effluent Treatment Price-Households (€/m3) 0,17
Effluent Treatment Price-Firms (€/m3) 0,01
Canon de saneamiento Agrícola (euros/m3) 0,00
Cost Recovery Index-WUP Agriculture (€/m3) 99%
Cost Recovery Index-WUP Urban (€/m3) 100%
Cost Recovery Index-ETP Livestocks (€/m3) 100%
Cost Recovery Index-WUP Urban(€/m3) 100%
Cost Recovery Index-WUP Firms (€/m3) 99%
QUALITY MEASURES
ECONOMIC INSTRUMENTS
GEQ-RIVER BASIN MANAGEMENT PLAN (cont..)
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EXAMPLE 4: SENSITIVITY ANALYSIS-
INCORPORATION OF ENVIRONMENTAL COSTS
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Three hypothetical policy options to save water[Long term marginal “financial” costs]
Water savings [m3]0.03
0.30
Water savings [m3] Water savings [m3]
€ € €
Leak reductions Water importsWater recycling
(a) (b) (c)
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Water savings [m3]
Leak reduction Water imports
Marginal CostMarginal Cost
0.23 0.23
40.000
Least cost plan when resource and environmental costs are not considered
RBMP to increase flow by saving 200,000 m3
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0.23
Hypothetical least cost planwhen environmental and resource costs are
considered
Water savings [m3]
Recycling
Water imports
Marginal CostMarginal Cost
0.23
60,000 140,000 200,000
Leak reductions
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Deciding with limited informationDeciding with limited information regarding external regarding external environmental costs of some policy measuresenvironmental costs of some policy measures
Cost Effectiveness Appraisal
Least Cost Policy Package
Estimate threshold values
Sensitivity Analysis
Information from secondary sources
Benefit transfer
Avoided Costs
Full cost of water services
May the cost value change the RBMP?May the cost value change the RBMP?
RBMP
Is the potential cost saved in the RBMP Is the potential cost saved in the RBMP high enough?high enough?
Conduct a Conduct a valuationvaluation studystudy
RBMP
[Not]
[Not]
If there is no reliable monetary information:describe the environmental impact and temporarily ignore the environmental cost
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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.
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Type Relevant for Valuation best at
AAExternal costs or benefits External costs or benefits associated to the ecological associated to the ecological statusstatus of the river basin of the river basin..
Consultation and agreement on RBMP.
- CBA
- Derogation analysis
- Stakeholder analysis
BBExternal costs or benefits External costs or benefits associated to implementedassociated to implemented measures measures to achieve the to achieve the ecological status of the river ecological status of the river basin.basin.
Measure appraisal - Estimation of cost effectiveness indicators [CEI];
- Order different measures according to CEI.
CCEnvironmental costs and Environmental costs and benefits benefits internalised within internalised within the river management planthe river management plan..
Evaluating costs of alternative RBMP.
- CEA decisions at the basin level
Key Concepts:Environmental Impacts and
their relevance in the decision-making process