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A review on cost-effectiveness analysis of agri-environmental measures related to the EU WFD: Key issues, methods, and applications

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  • Balana, Bedru Babulo
  • Vinten, Andy
  • Slee, Bill

Abstract

The European Water Framework Directive (WFD) explicitly integrates economics into water management and water policy in Europe. Specifically, Article 11 and Annex III of the Directive call for a cost-effectiveness analysis (CEA) of alternative mitigation measures as a requirement in formulating Programme of Measures (PoMs) to achieve 'good ecological status' for all waters in Europe. As agriculture is supposed to be the major contributor to diffuse water pollution, CEA of agri-environmental measures has been given paramount importance in establishing the PoMs. This paper summarises the status, significance, and methodological limitations of WFD-related CEA studies in Europe. Cases from the United Kingdom, countries surrounding the Baltic Sea and central and southern Europe were included in the review. Review results indicate that most WFD-related CEA studies: (1) were based on models of 'representative' farms without capturing the variability among real-world farms; (2) concentrate on a single ecological effect of measures or are based on cost estimates of the sectors directly involved in the pollutant-reduction programme (i.e., co-benefits, trade-offs, and external costs were not examined); and (3) did not incorporate uncertainties in both cost and effectiveness estimates. Based on the review results, the paper suggests policy implications and recommendations for future research in the field.

Suggested Citation

  • Balana, Bedru Babulo & Vinten, Andy & Slee, Bill, 2011. "A review on cost-effectiveness analysis of agri-environmental measures related to the EU WFD: Key issues, methods, and applications," Ecological Economics, Elsevier, vol. 70(6), pages 1021-1031, April.
  • Handle: RePEc:eee:ecolec:v:70:y:2011:i:6:p:1021-1031
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    2. Doole, Graeme J., 2012. "Cost-effective policies for improving water quality by reducing nitrate emissions from diverse dairy farms: An abatement–cost perspective," Agricultural Water Management, Elsevier, vol. 104(C), pages 10-20.
    3. repec:spr:waterr:v:31:y:2017:i:9:d:10.1007_s11269-017-1663-0 is not listed on IDEAS
    4. Cyril Bourgeois & Pierre-Alain Jayet & Florence Habets & Pascal Viennot, 2018. "Estimating the Marginal Social Value of Agriculturally Driven Nitrate Concentrations in an Aquifer: A Combined Theoretical-Applied Approach," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-30, January.
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    6. Liu, M. & Huang, G.H. & Liao, R.F. & Li, Y.P. & Xie, Y.L., 2013. "Fuzzy two-stage non-point source pollution management model for agricultural systems—A case study for the Lake Tai Basin, China," Agricultural Water Management, Elsevier, vol. 121(C), pages 27-41.
    7. Aftab, Ashar & Hanley, Nick & Baiocchi, Giovanni, 2017. "Transferability of Policies to Control Agricultural Nonpoint Pollution in Relatively Similar Catchments," Ecological Economics, Elsevier, vol. 134(C), pages 11-21.
    8. Halkos, George, 2013. "Cost-effectiveness analysis in reducing nutrient loading in Baltic and Black Seas: A review," MPRA Paper 52296, University Library of Munich, Germany.
    9. F. Zagonari, 2015. "Coherence, efficiency, and independence of the EU environmental policy system: results of complementary statistical and econometric analyses," Working Papers wp992, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Corentin Girard & Jean-Daniel Rinaudo & Manuel Pulido-Velazquez, 2015. "Index-Based Cost-Effectiveness Analysis vs. Least-Cost River Basin Optimization Model: Comparison in the Selection of a Programme of Measures at the River Basin Scale," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(11), pages 4129-4155, September.
    11. Doole, Graeme J. & Vigiak, Olga & Pannell, David J. & Roberts, Anna M., 2013. "Cost-effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3), September.
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    13. Whittaker, Gerald & Färe, Rolf & Grosskopf, Shawna & Barnhart, Bradley & Bostian, Moriah & Mueller-Warrant, George & Griffith, Stephen, 2017. "Spatial targeting of agri-environmental policy using bilevel evolutionary optimization," Omega, Elsevier, vol. 66(PA), pages 15-27.
    14. Cyril Bourgeois & Nosra Ben-Fradj & Mélissa Clodic & Pierre-Alain Jayet, 2011. "How cost-effective is a mixed policy targeting the management of three pollutants from N-fertilizers," Working Papers 2011/03, INRA, Economie Publique.

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