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EPIWATER - ex-ante valuation

EPIWATER aimed at assessing the efficiency of Economic Policy Instruments (EPI) for
sustainable water cycle achievement. The assessment included an ex-ante valuation of potential EPIs that could be implemented in Europe. The geographical and political situation of selected basins was analysed, and the effect of different suitable EPIs was assessed through simulations and cost calculations in every proposed scenarios. Ex-ante studies involved several European basins:

Tisza River basin has been streamlined to prevent floods and create croplands on existing wetlands and marshes, a change that makes the zone affected by both floods and droughts. Apart from typical economic measures, a Hungarian fund to compensate farmers towards agricultural damages and a State insurance regarding high flood risk areas are applied. The selected potential EPIs provided innovative payments to enable the farmers to store floods and excess water, financial incentives for changing land uses, and a runoff charge for the organisations that release excess surface water during floods was also selected.

Water from the Tagus river basin (Spain) is annually transferred to Segura river basin, which is smaller and suffers significant periods of water scarcity. This transfer is insufficient and lead to overexploited groundwater sources. Bilateral trades are common in the Segura river basin at several scales. Proposed EPIs included voluntary exchange frameworks (for regional and national scales), or a spot market for water use rights and a right auction system for local scenarios. A drought insurance system was also proposed to share collective risks due to the droughts.

The Seine-Normandy river basin is one of the largest in France. It exhibits a lot of aquatic environments, which are affected by different water users and pressures. Some the economic assessments of the Water Framework Directive have been thoroughly applied therein, and is often referred to as a best practice example. Tariffs for water services, environmental charges of the Seine‐Normandy water agency, specific subsidies and voluntary agreements are common applied EPIs. Potential EPIs comprised financial compensation to farmers that protect ecosystems or encouragement of hydropower energy.

Pinios river basin is located in Thessaly, the most intensively exploited agricultural area of Greece. This zone has been suffering increasing drought episodes, and decreasing rainfall periods. Irrigation water pricing (the main applied EPI) doesn’t foster water conservation, and is loosely enforced. No preferred EPI was identified ex ante.

Odense river basin includes the fjord and river of the same name, and some lakes. It is one of the best studied water bodies in Denmark. Overexploitation and water pollution (mainly nitrates and phosphorus), are common issues. Applied EPIs are taxes (i.e. Phosphorus Tax, Water Supply Tax and Wastewater Tax). No preferred EPIS was selected a priori.

 

Source:
Evaluating Economic Policy Instruments for Sustainable Water Management in Europe. Deliverable 4.1 Case studies’ inception report.