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Environmental and resource
costs assessment
Definitions and Methodology
Princing of the water resource, a tool for
implementing the WFD
Why ?
 The polluter pays principle
 Transparency
 Incentive pricing to change behavior
What ?
 Financial costs
 Environmental costs
 Resource costs
What is the cost
of an environmental good ?
Environmental externalities
Operation and maintenance
costs
Production
costs
Costs of capital
Full costs
Opportunity costs
Economic costs
Economic externalities
Cost-based methods
Assess costs that would appear if a good /
service disappeared or was altered
• Avoided costs
• Substitution costs
• Replacement costs
Revealed preference methods
Behaviors reflect the value assigned to the
environment.
• Market
• Hedonic prices
• Transportation costs
Declared preference methods
Behaviors reflect the value assigned to the
environment.
• Contingent valuation
• Joint analysis
Implementation by the French
Water Agencies
Cost-Benefit Analysis (CBA)
Why did we use CBA ?
To compare costs and benefits of the PoM for
people affected by the measures
When did we use CBA?
When the cost of measures was
disproportionate compared to the willingness to
pay
 Joint choice of actions and goals
Benefits included in our CBA
Direct Benefits
Good status
Indirect Benefits
Market benefits :
 reduction in
water treatment
costs
 reduction in
health costs
 reduction of
costs associated
with erosion and
flooding
 improving soil
quality
 biodiversity
Non-market
benefits :
 increased user
satisfaction
Derived Benefits
 no litigation
 increase in the
tourism- related
business
Assessing benefits
> Avoided costs
> Which water uses allowed by good status?
Use
Today
If/When
good status
Value
Benefits
Bathing
Bathing
forbidden
10.000
« days »
30€/day/capita
300.000€
Boat
5000 days /yr
3000/days/yr
30€/yr per boat
- 60 000€
www.lesagencesdeleau.fr/
www.eaufrance.fr
www.evri.ca
Market benefits : treatment costs avoided
% of surface water treated against pesticides
120
100
If nothing is done
If status improving
%
80
Si rien n'est fait
60
Si scénario idéal
40
20
0
1990
2000
2010
2020
2030
2040
2050
2060
Années
offsetting costs paid by households : 197
M € /y
Treatment
cost : 0,050,48 €/m3
Non-market benefits : user satisfaction
x
Population du bassin versant
Usagers
Non usagers
Baigneurs Kayakistes Pêcheurs
Promeneurs
Population au dessus des
nappes
Usagers
Personnes
alimentées en eau
potable par les
nappes
&
Non usagers
Personnes non
alimentées en eau
potable par les
nappes
x
SN Basin : economic interest of achieving
good status
Indirect and induced benefits
• Plus
•
140% to 500% of actualized costs.
14
Sèvre nantaise :
an exemple of sub-basin CBA
Is going " beyond the law" a justified expense ?
2 scenarios :
1. Catching up on delayed implementation
guidelines
2. Comply with regulations + Improve the
quality of drinking water + Improve the
tourism potential
15
“Only the law” scenario
Costs > Benefits
140
improved low flows
120
M € (VAN)
100
Aplication of
regulations
Sewage
Cost of water transfers or
additional costs due to a less
full tanks
Urban Waste Water
Drinking water catchment protection
80
60
Improved collection
and storage of
manure
National action program
for Vulnerable Areas (NO3)
Willingness to pay of
residents of the
municipalities affected by an
40
20
Non-use
Fishing
0
Coûts
Bénéfices
More spending for
more pike fishing
('10 to 20%)
Ambitious scenario
Costs < Benefits
600
Benefits for
scenario 1
Costs for scenario 1
Non-usage
500
M€, VAN
300
Upstream actions
200
tourist numbers +
20%
Advertising and
400
tourism
restore promotion
rivers
grass strips
resource protection
Sur tous les linéaires
concernés du bassin
improved low flows
Urban Waste Water
Directive
sewage
100
National action program
Pike fishing + 100%
(sum of their
expenses)
Tourism
no disappearance
Recreational Sports
Fishing
drinking water
0
Coûts
Bénéfices
savings (nontreatment of
CBA Practical issues
•
Benefits are very difficult to quantify and to assess in
monetary terms
•
Above all for non market benefits :
• value transfer
• choices (cf population)
• long–time ecological process
•
•
Local stakeholders got rarely interested in CBA…
… or tried to divert its goal in order to not implement
restoration measures
Limitations and difficulties
encountered
•
Example of Languedoc-Roussillon
Water body
Vidourle
Lez-Mosson
Number of inhabitants
42 000
414 000 (Montpellier)
Similar
Ecological interest
Costs
27,6 M euros
27,4 M euros
Benefits
13,4 M euros
(Tourism and canoe)
125 M euros
(only due to the
presence of Montpellier)
Source: agences de l'eau
Costs are
disproportionate
Costs are not
disproportionate
Food for thoughts
•
•
•
•
•
In the framework of PoM, ability to pay seems more
appropriate
CBA, used in a more qualitative way (to show the
diversity of benefits) could be used at a river basin
scale (for big political choices) or for very specific
projects where good status is at stake (cf MEFM)
Multi-criteria analysis
Look at indirect and induced benefits
Use other indicators (increase in health, wellbeing...)
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