Allocation of Costs and Benefits in the Water Framework Directive: A Dutch Exploration - Water and Agriculture: Sustainability, Markets and Policies - page 33

Because of the issues at stake, there is large public and political concern for the
implementation of the WFD. As is made clear, various parties are involved and at many
different levels specific parts of the WFD have to be resolved and managers have to take
decisions. To create the necessary public support, communication about process and
contents is very important, in spite of the complexity of the material. This does have
implications for the feasibility of the parts of the economic analysis. Clear arrangements
have to be made in the decision-making process. At the same time, information has to be
delivered on time to be able to make decisions and establish a clear focus. A difficulty is
the fact that in many fields the information is still missing. Therefore the process is an
iterative process where all actors try to fill the puzzle back and forth. In practice
communication leaves much to be desired on all kinds of aspects.
2.3 Economic analysis and WFD
To achieve its environmental objectives in the most effective manner, promote
integrated river basin management and stimulate the sustainable use of water, the WFD
calls for the application of economic principles (e.g. the polluter/user pays principle),
approaches and tools (e.g., cost-effectiveness analysis) and for the consideration of
economic instruments (e.g., water pricing) (Wateco, 2003). The process of an economic
analysis provides valuable information to support decision-making in order to be able to
develop river basin management plans by 2009, in which a selection of measures is made.
The economic analysis does not make the decisions! (Wateco, 2003). Within the
economic analysis, current levels of cost recovery have to be assessed as well as the
potential role of pricing of the programmes of measures, including the implications for
cost recovery.
2.4 Cost effective analysis (CEA)
After going through the various steps in the process of the economic analysis, the idea
is ultimately to use cost-effective programmes of measures to achieve the given
objectives. In the Netherlands cost-effectiveness analyses (CEAs) are carried out at
regional level, as measures often have to be taken at regional level (as well as some at
national level). Cost-effectiveness is expressed in terms of the effect of a measure per
Euro, and on this basis can be used as a prioritising principle so that the measure with the
greatest effect per euro will be deployed first. If the most cost-effective programme of
measures is chosen, there is an opportunity to determine whether a particular sector is
disproportionately disadvantaged within that programme to achieve the given objective.
The costs can then be distributed over the various players and/or sectors.
3. The social cost benefit analysis (SCBA)
For the Netherlands a pragmatic implementation is very important, considering the
expected costs that have to be made. Box 1 explains about the start of the process how the
Netherlands became aware of the fact that more clarity about the social impact of the
introduction of the WFD was needed. The government therefore opted, in addition to the
CEA that is being executed for the WFD, to carry out a Social Cost-Benefit Analysis
(SCBA) at national level as a way to achieve a pragmatic implementation. It reveals the
relationship between the benefits and costs associated with the implementation of the
WFD and the ultimate effect on societal welfare. A broad welfare concept is handled, in
which social aspects as well as environmental aspects are included. The SCBA