Integrating economic activity and water quality: Consequences of the EU Water Framework Directive for the Netherlands using a dynamic AGE approach

There is a need to gain more insight into the consequences of the implementation of the Water Framework Directive (WFD) on the national economy. To fulfill this need, an integrated model framework has been developed which provides insight in the consequences of implementation of the WFD on the national economy as well as on water quality. The integrated framework consists of a link between the economic model DEAN-W and the national substance flow model WFD Explorer. With DEAN-W the direct and indirect economic consequences of several policy alternatives are evaluated. Then, using WFD Explorer the effects of the sectoral emission reductions on water quality in the main water bodies in the Netherlands are calculated. The simulations show that a 20% of emission reductions can be achieved through adjustments in the economy that are virtually costless from a macro-economic perspective. Unfortunately, when such a policy is implemented unilaterally, i.e. when foreign inflow of water pollution at the border is not decreased, the policy does not affect water quality in a significantly positive way either: for many waterbodies, concentrations remain at an unacceptably high level. To reach a substantial improvement in water quality, it is necessary to reduce domestic emissions by at least 50%. This however results in a decline of the national income for 2015 with roughly ¾ percent. It should be noted that for certain substances the inflow from abroad (especially via the Rhine) will need to be reduced as well to be able to reach the water quality goals: for some substances, even a zero-emission unilateral policy will not improve water quality sufficiently in all waterbodies. While further improvements of the integrated framework are certainly possible and desirable, the current analysis provides a good insight in the effects of the WFD on both the economy as well as water quality, and highlights the international dependence of Dutch water quality on foreign policies.