The second transnational conference of the WaterCost project as part of the Intereg North Sea Region focused on the issue of cost-effectiveness analysis and how it to apply it to groundwater and water supply issues. Benjamin Görlach gave a presentation on the role of cost-benefit considerations in the implementation process of the Water Framework Directive. He concluded that since there is only patchy data on costs and benefits, and elaborated on the role of the AquaMoney project in addressing this gap.

The Water Framework Directive (WFD) is the first major environmental Directive in Europe that gives a prominent role to economic approaches in its implementation. Three basic economic elements of the WFD are cost-effectiveness analysis, cost-benefit analysis and measures for the internalisation of external costs.

• Through cost-effectiveness analysis, measures are being identified that can reach the WFD objectives at lowest costs. 
• Cost-benefits analyses can contribute to an assessment of whether costs of measures may be considered disproportional and hence objectives of the Directive may need to be modified. Monetary estimates of the benefits of improved water quality can be used in this context as an indicator for disproportionality. However, also abilities to pay of those bearing the costs, the available budget and the costs of comparable measures at different sites may serve as indicators for such assessments.
• Finally, according to Article 9 of the WFD, Member States have to ensure that cost recovery for water services is achieved, including the environmental and resource costs of water services. This internalisation of external effects also serves to provide incentives for an efficient water use.

To date, some studies on the costs and/or the benefits of the WFD have been carried out in Europe. Yet, available data remains insufficient and suffers uncertainties. In this context, the EU-funded research project AquaMoney aims at the development of practical guidelines for the valuation of environmental and resource costs. This should help to simplify and promote monetary valuation. A particular focus rests on the transferability of valuation results between different water basins and catchment areas.

The WaterCost Seminar: Cost Effectiveness Analysis in the Context of Groundwater / Water Supply was organised by the Environmental Agency for England and Wales as part of the WaterCost-Project. It took place at the University of Newcastle upon Tyne from 23 to 24 November 2006. The two-day seminar was an encounter of environmental economists and policy consultants with practitioners from policy-making and administration. They came together to discuss practical problems of cost-effectiveness analysis for groundwater protection measures.

The presentation [pdf, 371 KB, English] of Benjamin Görlach is available for download.