The Role of Economics in the Designation of Heavily Modified Water Bodies (HMWB)

1. The Role of Economics in the Designation of Heavily Modified Water Bodies (HMWB) Lille III 18 & 19 March 2002: From Economic enigma to operational reality;Implementing the economic elements of the WFD Wenke Hansen, Ecologic, Berlin

2. Contents • HMWB in the implementation of the WFD • Definition of HMWB in the Directive • CIS Working Group on HMWB • Designation of HMWB & Economics • Preliminary case study results • Main Problems and Comments

3. HMWB in the implementation of the WFD • River Basin Management Plans (RBMPs) including the Programme of Measures to be established by 2009 (draft plans for consultation by 2006) • Designated HMWB needed for RBMPs • HMWB need to be identified and designated in advance • Economic assessments play a role in the designation process

4. Definition of HMWB in the Directive Art. 2.9 defines a „Heavily Modified Water Body“ as: “A body of surface water which as a result of physical alteration by human activity is substantially changed in character, as designated by the Member State in accordance with the provisions in Annex 2.”

5. CIS Working Group on HMWB • WG established in spring 2000 • 12 Member States, plus Norway and EC (lead: UK and D) • Testing HMWB designation: 32 case studies in 11 countries • Time table • 3 WG Meetings in Brussels (April 00, October 00, Sept 01) • Links to WATECO: meetings in June 2001 and October 2001 • Workshop on 30 and 31 May 2002 in Berlin • WG Meeting on 18 and 19 June 2002 in Brussels

6. Designation of HMWB & Economics • Very large number of water bodies will have to be assessed for possible designation • Complexity of methods must proportionate to the circumstances • Note: Different levels of detail will be possible for the case studies: How much detail is necessary (ranging from descriptive to full quantitative economic assessment)?

7. Designation of HMWB & Economics • Identification process (until 2004): • Identification of water bodies, which are substantially changed in character as a result of physical alterations by human activity (no economics) • Designation process (includes 2 steps) Article 4(3)) (economics!): • Step1: Is there a significant adverse effects upon uses or the wider environment (Article 4(3)(a))? • Step2: Are there any better environmental options (technically feasible? disproportionate costs?) (Article 4(3)(b))?

8. Step1: Significant adverse effects: 4(3)(a) • Would changes to hydromorphological characteristics of that water body necessary to achieve good ecological status have significant adverse effectson the specified uses? • Simple descriptive methods are appropriate where effects on uses are clearly significant / clearly not significant. • Where quantitative assessment is required, 2 approaches: • assessment of change in use and function • economic effects (in Euro) of the change in use • When quantitative methods used, relative values are preferred

9. Step1: Significant adverse effects: 4(3)(a) • Would changes to hydromorphological characteristics of that water body necessary to achieve good ecological status have significant adverse effectson the wider environment? • Including upstream and downstream environmental impacts • Important e.g. where physical alterations have resulted in creation of valuable habitat (other Directives might apply) • Difficult to quantify or even monetarise qualitative assessment

10. Step2: Alternative options: 4(3)(b) • Are there any better environmental options (alternative options) for providing the specified use? • Are these alternative options technically feasible? • Are these alternative options disproportionately costly?

11. Step2: Alternative options: 4(3)(b) • Are the better environmental options disproportionately costly? • Involves the comparison of costs of existing activity relative to costs of alternative options. • In some situations a descriptive (qualitative) approach sufficient. • Quantitative Assessment Methods: • comparison of costs of alternatives • comparison of overall costs and benefits of alternatives • costs versus ability to pay

12. Designation of HMWB

13. Preliminary Case Studies Results • 16 of 33 case studies finished the designation process • 10 case studies: economic assessment in step 2 of designation test „alternative options“ (Art. 4.3(b)) • Main reasons found for HMWB designation: „no better environmental option“ and „disproportionate costs“ • in 2 case studies water bodies were identified but notdesignated as HMWB, since alternatives were not disproportionate costly“

14. Preliminary Case Studies Results

15. Main problems • Evaluation of costs of the existing modification, especially in cases of mixed uses • Prediction and evaluation of benefits gained from higher ecological status in monetary terms • Consideration of relative or absolute values, is a negative net-benefit always disproportional? • Criteria for decision about „significant“ or „disproportionate“ still unclear • Time and resources necessary for economical analysis

16. Comments • Not all case studies considered economics in the designation process (6 of 16 did not) • In many case studies no clear distinction between necessary mitigation measures and alternative options is made • Some studies considered the absolute costs of the mitigation measures itself as disproportionate (Step 1) • Rare and incomplete use of methods for evaluating disproportionate costs

17. The Role of Economics in the Designation of Heavily Modified Water Bodies (HMWB) Lille III 18 & 19 March 2002: From Economic enigma to operational reality;Implementing the economic elements of the WFD Wenke Hansen, Ecologic, Berlin