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2nd „ Water Science meets Policy“ Event. Economic valuation of dike relocation at the German Elbe An ecosystem services perspective Implementation of the WFD: when ecosystem services come into play 29-30 September 2011. Volkmar Hartje, Malte Grossmann TU Berlin. Topics.

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2nd „ Water Science meets Policy“ Event

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2nd water science meets policy event

2nd „Water Science meets Policy“ Event

Economic valuation of dike relocation at the German Elbe

An ecosystem services perspective

Implementation of the WFD: when ecosystem services come into play

29-30 September 2011

Volkmar Hartje, Malte Grossmann

TU Berlin


Topics

Topics

  • Decision-making situation and concept

  • Evaluation of ecosystem services of riverine floodplains

  • 2.1. Flood protection services: avoided damages

  • 2.2. Nutrient retention: replacement costs

  • 2.3. Biodiversity: Benefit Transfer

  • 3. Summary


Background

Background

  • Presentation is the result of a study funded by the German Federal Agency for Nature Protection (BfN)

  • During the debate about flood protection strategy in Germany dike relocation vs. dike strengthening + creation of controlled storage

  • Study proposed to contribute by assessing two alternative strategies with ecosystem services approach as a means to value multifunctional effects

  • Study was not included in planning for WFD programme of measures for German part of Elbe


Status of riverine floodplains and potential measures

Status of riverine floodplains and potential measures

Map of lowland stretch of Elbe with historical and current floodplains


Conceptual approach function use value

Conceptual approach: Function, Use, Value

Logic of the value of ecosystem services

FUNCTIONS OF RIVERINE LANDSCAPES

Structure

Processes

USES OF RIVERINE LANDSCAPES

Goods & Services

(hydrological, biogeochemical, biotic)

VALUES OF RIVERINE LANDSCAPES

Direct Use values

Indirect Use Values

Non-Use Values

 = Total Economic Value


Coverage of wetlands ecosystem services

Coverage of wetlands ecosystem services


Cost benefit analysis

Cost benefit analysis

  • Valuation of marginal changes in the relationship of diked to active floodplains

  • On the basis of the total economic value of ecosystem services

  • Covered categories of costs and benefits

  • Investment costs

  • Changes in rehabilitation costs

  • Changes in maintenance costs

  • Changes in agricultural and forestry productive value

  • Changes in biodiversity benefits

  • changes in benefits from nutrient retention

  • changes in flood protection benefits


Cost benefit analysis1

Cost benefit analysis

  • Measures included in analysis


Flood protection service

Flood protection service


Valuation method avoided flood damages

Valuation method: avoided flood damages

  • Assessment of flood risk (average annual damage vs. expected value of damage)

  • Benefit of flood protection effect as the difference between average annual damage with and without measures


Flooding modelling for elbe river

Flooding modelling for Elbe river

Downstream routing with retention

Generation of artificial flooding events Dresden

Maximaler Abfluss (m3s-1)

Beitrag Nebenflüsse

Wasserstand (m NN)

Höhe (m NN)

Überflutungshöhe (m)

Beispiel Geländehöhe (m NN)

Überflutungsvolumen in million m3 im Deichhinterland

Elbe km

1D-hydraulic model with HEC-6

Inundation model


Damage assessment on a macro scale

Damage assessment on a macro-scale

Macro map of land cover

+ Value density

Specific value for land cover types


Effect number of overtopped dike stretches

Effect: Number of overtopped dike stretches

Number of overtopped dike stretches

Annual frequency of flood event


Benefits avoided flood damages

Benefits: avoided flood damages

Avoided flood damages (Mio.€)

options


Nutrient retention service

Nutrient retention service


Nutrient retention yield

Nutrient retention yield

Retentions yield per day of flooding:

~ 1,5 kg TN ha/d and 0,8 kg TP ha/d


Method replacement costs

Method: replacement costs

  • Indirect valuation: Does not value the benefit of the service (clean water), but the value of the service based on ecosystem function as replacement of other fmeasures which can be values

  • Prerequisite for application:

  • The valued measure (substitute) yields a comparative services

  • The substitute measures is the most cost efficient

  • The demand for the service exist at the given price (its costs)


2nd water science meets policy event

Erosion

Surface discharges

Ground water

Drainage

Floodplains /wetlands

Atmospheric deposition

Urban surfaces

Sewage treatment plants

Nutrient discharge into the river

Nutrient load in the river

Nutrient load in coastal waters

Model MONERIS

Measures

Costs of measures

Minimization

Simulation

Indicators:

- reduction potential

- avoidance costs

- cost-effectiveness


2nd water science meets policy event

Erosion

Surface discharge

Ground water

Drainage

Floodplains /wetlands

Atmospheric deposition

Urban surfaces

Sewage treatment plants

Nutrient discharge into rivers

Nutrient load in rivers

Nutrient load in coastal waters

Model MONERIS

Measures in municipal water management

Rainwater treatment

Decentralized sewagetreatment technology / connection rate

Technologiy of sewage treatment


2nd water science meets policy event

Erosion

Surface discharge

Ground water

Drainage

Floodplain/ wetlands

Atmospheric deposition

Urban surfaces

Sewage treatment plants

Nutrient discharge into river

Nutrient load in the river

Nutrient load in coastal waters

Model MONERIS

Measures in agriculture

Reduction of surplus of N-balance

Erosion protection


2nd water science meets policy event

Erosion

Surface discharges

Ground water

Drainage

Atmospheric deposition

Urban surfaces

Sewage treatment plants

Floodplains/ wetlands

Nutrient discharges into river

Nutrient load in the river

Nutrient load in coastal waters

Modell MONERIS

Measures in water management

Drainage ponds

Gewässerrandstreifen

Rewetting wetlands

River restroration


Cost minimization

Cost minimization

Minimize the sum of the individual cost components

in relation to the desired reduction of the load


Shadow value of floodplains

Shadow value of floodplains

Shadow price as annualized costs (€/ha)

Reduction target load (%)


Biodiversity benefits

Biodiversity benefits


Method willingness to pay elbe example

Method: Willingness to Pay: Elbe example

Source: Meyerhoff, 2002


Method step 2 benefit transfer meta analyse

Method: Step 2 Benefit Transfer / Meta-Analyse

  • Meta-Analysis: systematic analysis if available studies

  • Evaluation of existing studies with wtp for the protection of riverine wetlands

  • Problem: Divergent goods under the heading of wetlands

  • Own study:

  • - Only wtp for biodiversity and nature protection(non-use and use values) for wetlands in Europa

  • - 28 studies from Europe, 60-90 observations

  • Estimate with a meta-model:

  • WTP = f (area of measures, covered population, income, method)


Result decreasing marginal wtp with size

Result: decreasing marginal WTP with size

100 km

max distance

1000 km

Max distance

Grossmann, in press


Costs of measures

Costs of measures

  • Cost of newly constructed new dikes

  • Regression equation from different sources as a function of dike heights

  • Costs of dike rehabilitation

  • references in the literature

  • Costs of dike cutting

  • references in the literature

  • Costs of dike maintenance

  • references in the literature

  • Costs of regulation of controlled polder

  • references in the literature

  • Costs of flood damages to agriculture for polder

  • estimate of expected damages to yield, valuation via contribution margin

  • Costs for permanent land use changes


Costs for permanent change of land use

Costs for permanent change of land use

  • Opportunity costs: Loss of agricultural services

  • Land purchase:

  • Verkehrswert

  • => Purchasing price differences (farmland / grassland/ forests

  • Uncultivated land/ forested wetland)

  • Ertragswert

  • capitalized land rent or lease payments

    => Correction by income transfer (EU Land payments) necessary


Results

Results


Results of the cost benefit analysis

Results of the cost benefit analysis

Total values for Elbe according to cost and benefit categories

# Only direct effects

of dike relocation

no indirect effects


Results of the cba distribution along the elbe

Results of the CBA: distribution along the Elbe

Program DR large

Only dike relocations (Large scope)

NPV: Net present value (3%)

PC: Project costs;

SC saved maintenance costs

FD: avoided flood damage

BD: WTP for Biodiversity in floodplain

NR: Nutrient retention


Results of the cba distribution along the elbe1

Results of the CBA: Distribution along the Elbe

  • NPV: Net Present Value (3%)

  • PC: Project costs;

  • SC: saved maintenance costs

  • FD: avoided flood damage

  • BD: WTP for Biodiversity in floodplain

  • N NR: Nutrient retention

Program DR small:

Only dike relocation

(small scope)


Results of the cba distribution along the elbe2

Results of the CBA: distribution along the Elbe

  • NPV: Net present value (3%)

  • PC: project costs;

  • SC saved maintenance costs;

  • FD: avoided flood damage;

  • BD: WTP for Biodiversity in floodplain;

  • NR: nutrient retention.

Program P:

Only large flood protection polder upstream


Results of the cba distribution along the elbe3

Results of the CBA: Distribution along the Elbe

Program:

Combination DR + P

NPV: Net Present Value (3%)

PC: Project costs;

SC: saved maintenance costs

FD: avoided flood damage

BD: WTP for Biodiversity in floodplain

NR: Nutrient retention


Summary methods

Summary: Methods

  • Economic valuation allows the integration of multifunctional effects of restoring wetlands as an option to improve the morphological quality of water bodies

  • Ecosystem services are a convincing and a practical concept to structure the multifunctional problem

  • The spatially explicit identification/ analysis of changes within the biophysical realm and on the use side are very important

  • Non-linearities are important

  • Including uncertainties is critical for the estimates of quantities and for values.


Summary relevance for wfd

Summary: Relevance for WFD

  • Economic valuation allows the comparison of alternative strategies for flood protection in a multifunctional manner

  • It enables us to take nature protection objectives into account.

  • Dike relocations are an economic option to improve the morphological quality of riverine water bodies in lowlands

  • Dike relocations can be well assessed with the ecosystem services approach

  • The effects on the carbon budget and on recreation need to be added

  • Core requirement is the availability of a large scale hydrological flooding model


2nd water science meets policy event

  • Thanks for listening!!


Calculation of optimal share of active and diked floodplains

Analysis of incremental changes with/ without social benefits

Calculation of „optimal“ share of active and diked floodplains

Source: Heimlich et al. (1998 modified)


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