Strengthening the economic assessments for supporting the implementation of the WFD: preparing the second river basin management planning process


Nov 6, 2013 (2 years and 11 months ago)



Strengthening the economic assessments for supporting the
implementation of the WFD: preparing the second river basin
management planning process

Twinning Project BG 07 IB EN 01
Activity 5.1: Guidelines for RBMP, including cost-effectiveness and cost-
benefit analysis

Authors: Hélène Bouscasse, Arnaud Courtecuisse, Thierry Davy, Yannick
Pochon, Pierre Strosser, Stéphane Robichon.


I. Introduction...................................................................................................................3
II. Background: a reminder on the role of economics for supporting water policy decisions4
II.1. Economics in the WFD...........................................................................................4
II.2. Implementing the economic elements of the WFD in Bulgaria: lessons learnt and
state of play.......................................................................................................................8
II.3. Supporting policy decisions: illustrations of use of economical tools in Bulgaria...11
III. A road map for preparing future economic assessments for water policy.................16
III.1. Requirements before implementing economic analysis........................................16
Economic analysis is part of of process which requires collecting data on :......................16
III.2. actions to enhance the knowledge base................................................................17
Effectiveness of measures.............................................................................................17
Develop avalaibility of information on Costs..................................................................18
Assessing environmental benefits..................................................................................21
Cost-effectiveness and cost-benefit analysis..................................................................24
Tariffs and links to financing the water sector...............................................................24
Capacity building...........................................................................................................25
III.3. Organising the implementation of actions: preliminary ideas................................27
IV. Conclusion................................................................................................................29

I. Introduction

The present document is an outcome of the realisation of the Bulgarian-French EU Twinning
Project “Strengthening the administrative capacity of water management authorities in bulgaria
for the implementation of economic instruments for water management according to the water
framework directive 2000/60/EC” implemented by the Bulgarian Ministry of the Environment
and Waters and the French Ministry of Ecology, Energy, Sustainable Development and Sea
represented by International Office for Water.

This twinning has consisted in almost two years of co-operation between Bulgarian and
French experts who are daily facing with WFD implementation in their country, at national,
regional or basin level. The work in common – consisting in exchanges of opinions and
experiences has lead to inputs in the RBMP and PoM’s finalization and reporting, to the
improvement of methodologies and competencies but also on identification of present
difficulties and perspectives for future enhancements. Some tools have been also developped
through the project. Some of these tools are briefly presented in this document.

The Water Framework Directive introduces economic principles and methods for the
management of Europe's waters. Indeed, it is the first piece of EU water legislation to explicitly
integrate economics into its measures.

At present, the River Basin Management Plans have now been finalised for the four River
Basins of Bulgaria, so does the reporting WFD obligations and results (including on economics) to
the European Commission.

This represents an appropriate time for reflecting on what has been done so far in the field of
economics: what are the strengths and weaknesses of the economic methods and tools applied –
and of the main results obtained ? How have the results been used for supporting policy
decision? What are the main data gaps that would need to be tackled for preparing the second
river basin management planning cycle? Which constraints in implementing economics should be
removed – and how?

The chapter 2 presents the main requirements of the Water Framework Directives in terms of
economic tools and methods, summarises the lessons learnt and state of play in implementing
the economic elements of the WFD in Bulgaria and provide illustrations of use of economical
tools in Bulgaria.

The chapter 3 draws recommendations for future improvements in the use of economics for
preparing the second river basin management planning process, presenting potential actions and
a tentative timeframe in order to do so.

II. Background: a reminder on the role of economics for
supporting water policy decisions

Recent years have seen an increasing acceptance in many countries, including Bugaria, of the
potential role of economics in supporting water management and policy. A key driver explaining
this trend has been the WFD that puts specific obligations on Member States to apply economic
principles, methods and tools in supporting the development of river basin management plans
(RBMPs) and Programmes of Measures (PoM).

Economics are clearly also relevant to other connected directives such as the Groundwater
daughter directive, the Floods Directive or the recently approved Marine Strategy Directive. They
can help supporting decisions for tackling water scarcity and drought (in particular in the context
of climate change), or finding the adequate balance between water supply and water demand.

The chapter recalls the main requirements of the Water Framework Directive in terms of use of
economic tools and methods. It then summarises the lessons learnt and state of play in
implementing the economic elements of the WFD in Bulgaria. Then, it provides illustrations of
use of economical tools in Bulgaria, in addition to what has been done specifically for the Water
Framework Directive.

II.1. Economics in the WFD

The WFD provides in its text some explicit requirements mainly through article 5 and article 9 :

Assessment of the economic weight of water uses

This valuation provides information about the economic significance of water in a river basin
district and it identifies what are :
- the key economic drivers influencing pressures on water resources and ecosystems
- the water uses that can benefit from the good ecological status

This assessment requires not only to collect data/information on the current situation but also to
complete analysis by integrating a baseline scenario in order to estimate potential changes on
the main economic drivers.

Assessment of the recovery of the costs of water services

How much do water services cost? Who pays these costs, and what is the cost-recovery level?
Which impact on cost recovery level will be induced by the programme of measures? The
purpose of this activity is first of all to make transparency on the current financial flows of the
main water services and then to assess:

· The sustainability of the water services (i.e. does the incomes of water services ensure
the renewal of the assets )
· The equity of the recovery of costs (i.e. do the price paid by users covers the costs, are
there any cross-subsidies between the users and/or partial financing of the services by

· The implementation of the Polluter Pays Principle : how the environmental costs are
taken into account and how the users contribute (through taxes for example) to cover
these costs

When dealing with cost recovery of water services it is of crucial importance to consider all the
services including collective and individual services, for the three sectors considered in the WFD (
ie household, farmers, industry). For instance the water used for irrigation by one farmer needs
to be considered as a service. The Commission is giving a particular attention to the fact that
individual services are considered as services. Some Member States (NL, DE,…), which didn’t
consider them are facing infringement procedure

It is important to remind that the WFD does not require to achieve full cost recovery by 2015
(neither by 2021 or 2027) but to report on the achieved cost recovery level , the measures taken
to improve this level and implement an incentive pricing policy by 2010. Tariffs and
environmental taxes are also measures that can included in the Programmes of Measures.

Develop cost-effective programme of measures

The programmes of measures integrate basic measures which are the measures deriving from
implementation of past Directives such as the Urban Waste Water Directive or IPPC Directive. In
many cases, the implementation of these basic measures is not sufficient to achieve the Good
Ecological Status and there is a need to add in the programmes of measures supplementary
measures. These supplementary measures might be selected through cost-effective approach
which means the set a of supplementary measures that will enable to achieve the Good
Ecological Status at the lowest cost.

Justification of exemptions for achieving Good Ecological Status (GES)

The WFD leaves the possibility to extend deadline for achieving the GES as long as consistent
justification is provided. This justification can be based on technical, ecological and economical
ground. Regarding economical justification, if the analysis shows that for some waterbodies the
cost for achieving the Good Ecological Status in 2015 is disproportionate (regarding the expected
benefits if this objective is achieved). In that case of disproportionate cost, extended deadline (to
2021 and 2027) can be assigned to water bodies.

II.1.2 Benchmarking Member States

The implementation of the WFD economic requirements has had a first phase with the reporting
on article 5 due by 2005. The first lessons of the reporting demonstrate the added value of
benchmark between Member States due to the heterogeneity of the proposed approaches.
This heterogeneity starts with the number and the size of the water bodies:
In Bulgaria, the 2005 article 5 report was considering 1282 surface water bodies. At the same
time in UK and Germany they are about 9 800 water bodies, in France 4 500, IN Poland 5 600, In
Spain about 2 200.
The differencies relies also in the identification of impacts and pressures to be adressed within
the RBMPs and the PoMs. For instance in Bulgaria point source pollutions seem to be one of the
key issue. In Germany the Focus is also on point source pollution with 76% of the water bodies at
risk due to point souces pollution. In UK 61% of the water bodies at risk are due to diffuse
pollution. In Austria 80% of the water bodies at risk are due to hydromorphological pressures. In

France the type of pressures are very varoius: diffuse and point source pollution, quantitative
constraints, hydromorphological pressures.
The heterogenity of the approaches is also present when speaking about the core economic
analysis . The Countries have different aproches of defining the water services, France and Spain
for instance have a broad approach including individual services, also for agriculture. when the
Netrherlands and Germany have decided only to integrate collective services in the cost recovery

For the cost recovery, the approaches and the cost recovery rates are also fundamentaly
different. Concerning the cost recovery rates they vary largely from one country to another:

Irland 71%, Germany 105 %, France 85%, Spain between 74 and 90%. The methodologies are also
slightly different. In Ireland, a cost recovery rate is given when there is no water pricing which
makes difficult its calculation. In Germany, all subisdies are included in the cost recovery rate
which is not the economic orthodoxy. At the contrary France excludes all the subsidies which is in
line with economic standards. In the Future more transparency in the methods of cost recovery
will be required by the Commission. Today, the cost recovery rate is mainly calculated for
household, the Directive also requires to provide it for agricultural and industrial sector

The costs and benefits of the implementation of the WFD have been much debated within the
Common Implementation Strategy between member states and the Commission. The
Commission committed itself to study these aspects during the implementation process. In 2006,
an exploratory cost-benefit analysis was commissioned to look at the work that had been carried
out on Member State level, the available methodologies and examples, in particular in relation
with agriculture.

The different surveys made by the Commission at this stage demonstrate that:
- Even if more than 150 relevant studies have been compiled at the Member States level.
However, most of them only cover a very particular aspect on either costs or benefits (specific
topic (nitrate pollution, over abstraction, impact of mining industries,…). Today there is no data
base for these studies. In addition, till now only few comprehensive cost benefit studies,
providing a wide overview on water management are available;
- only three Member States (the United Kingdom, the Netherlands and France) have carried out
more comprehensive national work of costs and benefits of the WFD implementation in the
frame of article 5 implementation. For some Member States, there appears to be no information
on cost benefit available at all. Only two Member State (UK and NL) have looked at the
administrative costs associated with the WFD implementation.

In the future there will be a need to collect all the studies dealing cost benefit analysis, the
sectorial and also the global ones. With this collection of studies it could be possible for Bulgaria
to transfer some values coming from CBA analysis done in other countries.

II.1.3 Some Keys for successful economic analysis

The European guidance document on WFD & Economics (so-called “WATECO”) has stressed the
importance of the necessary integration between technical analysis and economic analysis. As
long as the economic analysis is performed in parallel of technical assessment – or even worse at
the end of the process – it is likely that the outputs will remain academic, obscure to non
economists and with very little weight in the decision process.

On the opposite, whenever the economic analysis is conducted from the beginning with regular
exchanges with technical experts (e.g. pressure and impact experts) and/or stakeholders, the
outputs might bring more to the overall assessment and in particular because:

· the economic analysis can be developped on the ground of consistent technical
information discussed and validated by technical experts; the question regarding the
scale of the analysis can be also usefully discussed there;
· economic analysis can be then used also as a tool for investigating also technical aspects
(e.g. which technical solution can be the most cost-effective) and/or raising issues (e.g.
hydropower production vs alternative source of energy with lower hydromorphological
· the water management has to deal with possible water use conflicts, the economic
analysis can help to bring a way to analyse these conflicts and propose solutions to
mitigate. Then again this role of economic analysis can be played when the concerned
stakeholders are involved from the beginning and can understand/share the content of
the economic analysis
. This is detailed in III.1.

More than this, regular meetings with stakeholders can help them to overcome the barrier of the
concepts and idioms of Economics which can lead sometimes to hide the outputs of economic analysis.

II.2. Implementing the economic elements of the WFD in
Bulgaria: lessons learnt and state of play

In Bulgaria, the activities required by the WFD have been undertaken through two main stages :

· for the characterisation report (article 5) in 2005
· for the development of River Basin Management Plans and Programmes of Measures. in

The characterisation report has been done by a consulting group who has fulfilled the
requirements detailed in the article 5 : assessment of the economic importance of water uses,
baseline scenario and cost-recovery level assessment. This has been done for each of the four
River Basins.

The second stage performed during the development of the River Basin Management Plans and
Programmes of measures has been again provided by one consultant through a public
procurement handled by the Ministry of Environment and Waters. This stage of the economic
analysis has been focusing on an updating of the data collected in 2005.

It should be noted that this important work has been provided to the Basin Directorates at the
very end of the finalization of the River Basin Management Plans and Programmes of Measures.
More involvement of the experts of the Basin Directorates during the process would have
ensured a better appropriation of the results as well as possible complements (in particular on
the use of economic analysis to support exemptions).

Overall, assessments performed in the second stage have focused on:

· The economic importance of water uses. Statistics have been collated and combined for
individual sectors at the river basin scale ;

· Cost-recovery. Costs and revenues have been assessed and confronted for public water
services (drinking water and sewage). It is not always possible to separate both types of
services. It is unclear whether some ssessment has been made for other water services
such as irrigation. In France the cost recovery for irrigation depends on the type of access
to water. When farmers a creating their own borehole or reservoir the cost recovery is
about 100%. When they are connected to a collective system ( channel, dam,…) the cost
recovery could often be considered between 30% and 70% depend on the subsidies rate.

· The development of prognosis for the population and for the global economy. Changes
in population and economic growth (GDP) have been investigated for Bulgaria and for
individual river basins. Such changes have not been integrated so far into changes in
prognoses on pressures on, and state of, water ecosystems, the assumption being a
relative stability of the population and economic activities. As a result, proposed
measures in particular investments in water services (e.g. wastewater treatment plants
proposed for complying with the obligations of the Urban Wastewater Treatment
Directive) have been dimensioned for today’s population witout accounting for the
future changes.

· Prognosis for water tariffs, accounting for 1) the new investments proposed as part of
the Programme of Measures (PoM) of the WFD, 2) the availability of existing public
funds/subsidies, and 3) affordability issues.

· Assessment of the costs of measures. Important attention has been given to investment
costs, Operation & Maintenance (O&M) costs being assessed in a rough manner for
proposed measures. Overall, mainly basic measures have been proposed in all river
basins, with only a limited number of supplementary measures (e.g. fish passes) being

· Costs & benefit assessments. A cost-benefit analysis has been performed for each
individual measure proposed in the PoM. There is uncertainty with regards to the way
the effectiveness of individual measures has been assessed (impacting directly on
expected benefits), and also on the economic values applied to translate expected
environmental improvements in monetary values. Cost-benefit assessments are made
here to justify that measures proposed are “worth doing”, and not to support
exemptions as specified in the WFD that are indeed justified mainly on technical grounds
in Bulgaria.

In the first PoM, no attention was given to cost-effectiveness analysis. This result from: (1) the
importance of basic measures in the PoM for which cost-effectiveness does not apply; (2) the
absence of pollution problems resulting from very different pollution sources (e.g. agriculture
and households in the same sub-basin or water body) that makes the cost-effectiveness analysis
less relevant (the highest benefits from cost-effectiveness arise from inter-sectoral comparisons);
(3) the absence of real alternatives for the few measures dealing with river continuity that have
been considered in the programme of measures (fish passes is the only measures identified) but
also (4) the difficulties to assess effectiveness of measures because of the lack of ecological
status assessment standards and methods.

Also, no attention was given to the incentive character of existing water tariffs and charges. No
specific assessment has been made in the context of the WFD implementation and reporting to
the EC, although steps are taken today at the political level to complement the existing water
abstraction charges with pollution charges.

Overall, there has been positive steps in applying economics in the water sector in this first RBMP
cycle. However, economics have not played fully their role yet in supporting policy decisions on,
e.g. :

· The selection of measures and projects (which measures for achieving a given ecological
outcome at the lowest costs – i.e. cost-effectiveness analysis). With supplementary
measures becoming the rule rather than the exception in the second RBMP cycle, it is
expected that cost-effectiveness analysis will be more relevant than in the first planning

· The definition of the level of ambition (ecological status) that would be acceptable for
specific sites accounting for economic development (i.e. cost-benefit assessments as
support to justifying lower environmental objectives because of the need to ensure new
economic development). In the first planning cycle, exemptions have been justified
entirely on technical grounds. This might change in the second planning cycle;

· The assessment of the economic impact of new discharge/abstraction permits when
stricter permits than those requested by economic operators are required based on
ecological grounds. Such economic assessments might help supporting the design of
accompanying measures that would help economic operators in complying with these
stricter permits;

· The assessment of the economic impact of new water storage facilities that might be
proposed for increasing water supply or responding to the challenges of climate change
by increasing the production of hydro-electricity. Of importance will be to ensure
negative environmental impacts expected to arise from the construction of such storage
facilities would be adequately considered and integrated into cost-benefit analysis.

· The adaptation (or design of new) economic instruments, in particular to specify an
adequate level of such instruments (e.g. what would be the optimum level for a new
pollution charge accounting for social, environmental and economic aspects?)

II.3. Supporting policy decisions: illustrations of use of
economical tools in Bulgaria.

Cases where economics have effectively helped taking a decision are still rather rare in Europe.
However, there is an increasing number of applied case studies (partly coming from the
implementation of the WFD) illustrating how economic methods such as cost-effectiveness and
cost-benefit analysis are applied and could be used to support decisions. The following
paragraphs provide some illustrations of economic methods applied for tackling different water
management issues in Bulgaria.

Illustration 1  Valuing Algal Bloom in the Black S ea Cost of Bulgaria

The citation for the published version is: Taylor, T., Longo, A., 2009. Valuation of Marine
Ecosystem Threshold Effects: Application of Choice Experiments to Value Algal Bloom in the Black
Sea Coast of Bulgaria. Working Paper. Bath, UK: Department of Economics, University of Bath,
(7/09). More information on:
The context
Algal bloom arises frequently in Varna Bay (Bulgaria). This large port city is also very touristic.
Algal bloom is partly due to anthropogenic emissions of nutrients (waste water treatment,
agriculture and industry) into the coastal zone. Even if algal bloom in Varna is not toxic, it has
significant impacts on fisheries, biodiversity and water clarity. It clearly impacts recreational
The Water Framework Directive, as well as the Marine Strategy Directive lead to increased
interest in water quality in coastal and marine areas and rise important questions in terms of
policies to address nutrients loadings.
The economic method applied
The choice experiment method was chosen to estimate the value placed on algal blooms by
residents in the Varna area. Only residents (850 in total) were interviewed because of the
difficulty to find an adequate payment vehicle for tourists.

Four different attributes were considered for describing the effects of different policy options
aiming at reducing algal bloom. These attributes are:
· Visibility : the depth to which it would be possible to see into the water during the
bloom event
· Duration (in weeks) of the algal bloom event
· Congestion at the beach : distance to the nearest person
· Charge for the policy option, i.e. the one time tax that each household in Varna will
have to pay the year after the survey
For each attribute, levels were defined (see figure) and combined to propose options. A series of
four choice sets was presented to each respondent. In total, there were 28 choice sets used (in 7
different sets).


Around this choice set, a questionnaire was built and revised after focus groups and pretesting.
These tests were in particular used to know whether the duration and visibility attributes are
seen as independent by respondents.
Selected results
The first part of the questionnaire asked the respondent about their use of beaches. It revealed
that interviewed residents spend an average of 2.5 weeks pro year at the beach. For 70% of
them, their decision to go to the beach is influenced by the water quality and the cleanliness of
the beach.
In a second part, the questionnaire informed the respondent about the algal bloom issue in
Varnay bay and asked some related questions. One result is that almost 90% of the respondents
have seen algal blooms at the beach, but only 40% judged that it impacted their recreational
In a third part, the different choice sets are presented to the interviewed persons as well as the
vehicle payment. Coupled with socio-economic characteristics of the respondents, it enabled the
authors to draw conclusions on the impact of algal blooms on welfare losses. They summary
there key findings as follow:
· amount of bloom is important: as compared to the status quo (low visibility and usual
duration of 6 weeks) respondents are willing to pay for a program that entails 1 week of algal
bloom about 33 Leva, when there is high visibility; 21 Leva , with medium visibility and 9
Leva, with low visibility;
· duration is important: respondents are willing to pay more for programs that offer shorter
duration of algal bloom; and
· congestion of the beach may be significant in the preferences of respondents: The marginal
price for one meter of extra space between the respondent and the nearest person is equal
to 0.38 Leva.
This research article shows it is possible to apply an environmental valuation method in Bulgaria
and that it provides interesting results to be mobilized in operational decision. In particular, the

values placed on blooms may help to evaluate the extent to which investments should be
targeted in reducing bloom events, compared to others issues in the coastal area (e.g. beach
cleaning or measures to improve accessibility to the coast).


Illustration 2  Public/Private Project for Water T reatment and Delivery to the Haskovo
Municipality and Surrounding Municipalities
More information at:
The context

This study is on water supply and wastewater services in the municipality of Haskovo and the
eight other municipalities (Haskovo, Harmanli, Svilengrad, Simeonovgrad, Ljubimets, Ivailovgrad,
Madjarovo, Mineralni Bani, and Stambolovo ).

Concerning water supply:
· Water quality is poor, mainly due to elevated levels of manganese in addition to a lack of
treatment facilities. Chlorination is the primary means of treating water.
· Old pumping units contribute to high energy costs.
· Quantity is also a problem: 45% of water is lost because water pipelines are deteriorated or
obsolete and that thirty-five percent of the settlements in the region included in this study
experience annual or seasonal water shortages.
· Water supply is insufficiently managed; and water service charges are inappropriately high
given local income averages and service quality.
Concerning wastewater treatment:
· Wastewater is frequently discharged directly into the Maritza River or its tributaries since
there are no wastewater treatment facilities in the region.
· Several initiatives to build municipal sewage systems have not been carried out to
To address these problems, the main activities of this project include:
· a Willingness-To-Pay Study ;
· An assessment of the current management system for water, sewage and wastewater ;
· A review of the legal and formal institutional framework for managing water, sewage, and
wastewater ;
· Organization of meetings with relevant industries, municipalities, and other governmental
bodies on possibilities for a combined water and wastewater treatment system for the
The economic method applied
To address the water problems of the region, a Willingness-To-Pay Study and three focus groups
were conducted. Questionnaires and survey materials were thus developed to identify main
water supply problems from a community perspective, parameters and conditions for improving
water supply, perspectives on water charges, and the communities’ willingness to pay higher
charges. A survey method involving face-to-face structured interviews was used. A group of 60
interviewers were trained to conduct interviews and record responses. A total of 1,847 people
were interviewed.
Some financial calculations were also made within the project to demonstrate how much money
could be saved with an efficient water management system. These are avoided costs.

Selected results
The Willingness-To-Pay Study revealed that most people in the region are unhappy with the
current state of water quality, water supply and management, and water prices. It further
revealed that they would support efforts to improve water supply and treatment facilities
(construction and maintenance). Thus municipalities discovered that people are willing to pay
more for better quality water services.

But the Willingness-to-Pay study gave also results in terms of management: the project built ties
with the surrounding communities and established an empirical knowledge base about water
problems allowing the municipalities to better address community-based water problems.

The calculation made within the project also proved if the water management system proposed
in the project is implemented, then
· infrastructure costs are reduced : building one large-capacity water treatment plant (300 l/s)
for the entire region versus seven small-capacity plants (50 l/s) produces noteworthy savings.
Infrastructure costs of a regional water management approach are reduced by $520,000.
· energy can be saved thanks to an efficiently operating system : energy savings amount is up
to $511,752 per year
· water consumption can also be more efficient, with a 50% reduction in water consumption
and a 50% reduction in leakages achieving a savings of $39,772.
The project highlighted the importance of a community-based, integrative approach to
addressing water management problems. In particular, conducting a Willingness-To-Pay Study
provided important information about the surrounding communities’ perspectives on water
supply issues.

This methodology can be used throughout Bulgaria to achieve similar benefits (capacity buliding,
environmental benefits and financial benefits). The Willingness-To-Pay Study can be easily
replicated in the water sector in other regions in Bulgaria.

III. A road map for preparing future economic assessments for
water policy

To ensure economics can play its due role in supporting future water management and policy
making, and building on the recent experience of the Ministry of Environment and waters and
River Basin Directorates, a series of actions has been identified. It is expected that their
implementation would enhance the knowledge base on economics. And it will help supporting
the implementation of the WFD and the second RBMP cycle. It will also provide information and
knowledge for supporting the use of economics in the context of the implementation other
directives such as the Floods Directive or the Marine Strategy Framework Directive.
III.1. Requirements before implementing economic analysis
Economic analysis is part of of process which requires collecting data on :

- water quality
- pressures on water ressources and ecosystems
- measures that can be implemented

These stages appeal to technical knowledges, and most of the time, they are performed solely
from a technical point of view, the economic analysis being performed at a later stage. This leads
to minize the quality of the outputs of the economic analysis and the role that it should play if
the process was more integrated.

Integration between technical and economic approach can bring much added value which can be
obtained through the process described below :

Identification of
main pressures
Selection of

Programme of

Techical approach

Economic ap

delimiation of the area of
•description of the situation
regarding pressures

of main pressures

economic data on uses
source of pressures
• baseline scenario regarding

identification of potential
measures (with technical
alternative) and effectivness
• size of equipment and
other meas

cost assessment of
potential measures and

assessment of efforts
required to economic sectors

• Cost assessment and
valuation of expected benefits

Time implementation of the

delimiation of the area of
• collection of
demographic/economic data


Data from


J’ai fait
quelques modifs de mise en forme
dans le chéma

The regular dialogue between technical and economical side should not only help to provide a
better economic analysis (i.e. which weight in the decision making process). It should also help to
improve the selection of appropriate measures, challenge different technical alternatives
considering costs and economic impact on users.

It should be note also that stakeholders (in particular representatives of users ) could be included
in the process in order to:

· share with them the diagnosis in particular regarding the pressures and efforts that
should be made by the economic sectors making these pressures
· take part of the identification/analysis of the technical solution and its costs
· understand and take part to the process of assessment of expected benefits and/or
avoided costs

III.2. actions to enhance the knowledge base

The proposed actions are related to six major themes, as summarised in the following

Effectiveness of
Actions: 1, 2, 3, 4
Tariffs and
financing the
water sector
Actions: 13, 14
and cost-benefit
Actions: 11, 12
Information on
Actions: 5, 6, 7
Actions: 8, 9, 10
Capacity building
Action: 15

Effectiveness of measures

The experience in the first preparation of the RBMP has shown the difficulty to assess the
effectiveness of potential measures and projects in achieving environmental objectives, i.e. what
would be the expected impact of potential measures on water status or on water quality? This is
clearly not an economic topic, but information on effectiveness is essential for: 1) designing a
programme of measures that effectively help reaching good water status and 2) selecting among

(supplementary) measures the ones that are the most cost-effective, i.e. measures that deliver
the largest environmental benefit per Leva invested.

The assesment of effectiveness is a technical issue which covers different fields :
- effectiveness regarding the technical performance : for example, the number of m3 which
can be saved with new irrigation practices, pollution which can be reduced with a waste
water basic traitment
- effectiveness regarding the impact on water bodies quality : how the measures selected will
contribute to the water body good status
- effectiveness regarding time issues : effectivenness on short term or on long term ? if
effectiveness is considered in a sustainable way, and not with short term goals, it ‘s
necessary to take into account the lifetime of equipments.

To tackle the information gap on assesment of effectiveness on this different fields, several
actions could be proposed :

· Action 1 : to develop a data base on the technical effectiveness of the measures
Most of the time, informations on technical performances of the equipments exist, but
they have to be reggrouped to allow sharing the technical knowledge.
This data base could be divided in differents parts ( for example : waste water treatment,
drinking water, morphology and ecologic problems, water storage, water quality
problem due to agriculture pollution, industrial pollution).

This data base could include different fields : effectiveness of the equipement , lifetime
of equipment , and it could be linked to the cost data base proposed in the action 5.

· Action 2 – To develop specific pilot studies for assessing the effectiveness of individual
measures. Most attention should be given to measures aimed at improving water quality
and measures aimed at restoring river ecology (e.g. river renaturation). Specific
protocoles could be applied in water bodies where some of these measures will be
implemented in the first river basin management plan.

· Action 3 – To analyse (past, on-going, new) monitoring data for assessing the impact of
implementation of some measures. The idea would be to compare monitoring data
before and after a measure (e.g. a wastewater treatment plant) has been constructed. It
would help assessing the real environmental impact (effectiveness) of the measure.

· Action 4 - To develop technical tools & models – Thanks to previously acquired data
from monitoring but also from the efforts undertaken for reporting under electronic
forms, one could consider developing simulation tools and.or models in the River Basin
Directorates. That would allow developping scenarii of selection of measures and their
potential effects for water qulity status.

Develop avalaibility of information on Costs

The development of the first PoM has stressed the difficulty to obtain good cost data on a wide
range of measures. It is important then to develop benchmark cost data for infrastructure
development, wetland restoration, changes in farm practices, fish passes, etc. That can then be
used for doing further cost analysis. Different actions are proposed for tackling cost data:


· Action 5 – To develop of a database of benchmark costs. The objective is to review all
projects documents (appraisal, evaluation reports) and develop unitary cost estimates
(investment mainly) for measures that are already implemented in Bulgaria (wastewater
treatment plans, storage, wetland restoration, etc). Moreover, the database could
include the following fields: qualitative description of the measure; investment costs
(values, method used for their assessment); time life of equipment; operation &
maintenance costs (values, method used for their assessment); other costs
(administrative costs, indirect costs); information about measure implementation (key
constraints in implementation, pre-conditions for implementation, responsible body);

Follow-up of the programmes of measures and development of
national database of measures

A tool has been developpped through the Twinning project that wil
l integrate a database which
purposes are to:

· Centralise the four Programmes of Measures
· Harmonise the label of the measures (et thus constitute the national catalogue of measures
which have not been provided through public procurement)
· Make the follow up of the implementation of Programmes of Measures

This database provides the following functionalities:

· Follow up of the PoM implementation for the Basin Directorates: possibility to indicate –
through secured internet access – that a measure has been performed and feed information
about this measure (costs, who has implemented,…)
· Allow each Basin Directorate to use this database for (i) assessing the progress of
implementation of the PoM (% of number of measure implemented, total amount of money
engaged,….) (ii) make statistic analysis per type of measures
· Allow the Water Directorate of the Ministry of Environment and Waters to make assessment at
national level of the progress of implementation for the whole four River basins; statistical
analysis should be also performed in order to set mean unit cost per type of measures.

This summarised in the following diagram:

· Action 6 – to develop a specific study for assessing the Operation & Maintenance costs
of different types of measures (e.g. dam operation, management of drinking water and
sewage services, management of irrigation services, etc.). This might help to revise the
proxies that have been used for the development of programmes of measures (operating
costs are % of investment costs).

Black Sea Basin
Danube Basin
East Aegean
Basin Directorate
Ouest Aegean
Basin Directorate
Ministry of Environment
and Water
Information input
% of implementation
Black Sea Basin
Danube Basin
East Aegean
Basin Directorate
Ouest Aegean
Basin Directorate
Ministry of Environment
and Water
Information input
% of implementation

· Action 7 – to develop a specific study for assessing costs of water improvements for the
agriculture sector. If it is felt that more attention to agriculture will be required in the
next planning cycle, a specific study on the costs of water improvements for the
agriculture sector could also be proposed. This study could investigate the expected
costs of changes in farm practices for reducing diffuse pollution, or expected costs of
river renaturation that would lead to eliminating dykes/protection and lead to temporary
flooding of agriculture land.

Assessing environmental benefits

Assessing environmental benefits (or environmental costs) is also a clear challenge. And it is
important that the knowledge base of economic valuation studies for environmental issues in
Bulgaria is progressively strengthened (note: a limited number of studies already exists).
Assessing environmental benefits can require specific studies that can be expensive and that can
take a long time.

Further more, as, these kind of approach are quite new in the water managment field, they can
bring on hesitations, fears from the stakeholders.

Thus it is very usefull to have some local studies and to communicate with stakeholders, making
efforts to clarify the concepts and the assumptions of the analysis (to avoid them feeling that the
values are popping out from a black box). This might help to share these analysis and make them
part of the decision.

It is proposed to use the concepts of “ecosystem goods and services” for identifying the types of
goods and services that are provided by aquatic ecosystems (including wetlands) in Bulgaria, the
main beneficiaires of these goods and services and ultimately the economic value one can attach
to these goods and services

To enable a better sharing of this concept, it is usefull to develop a 3 steps approach which goes
from benefits that are easy to understand to benefits that are more hidden:

1. an assesment of the gains that can be obtained by some water users if the water quality is
improving ( for example,the increase of tourism attendance). In some cases, it won’t be possible
to evaluate precisely the gains for the water users. In this case, it’s interesting to provide some
information about the economic weight of water uses which can give a good view of the stakes.
2. An assesment of the avoided cost ( for example : traitment costs avoided for water drinking if
the water quality of water body is improved)
3. An assesment of the ecological value of the ecosystem , which will include the willingness to
pay analysis or other economic methods

Different actions could be proposed in this field:

· Action 8 – To develop of a database of benefits. Following the lines of existing databases
(EVRI, EauFrance, etc.), the database could include the following fields: title of the study;
general description of the site; environmental goods and services considerd;
characteristics of the users of these goods and services; valuation method applied and
information mobilised (if any); results obtaied (monetary values, factors affecting these
values and econometric models - if available); constraints met when undertaking the
study…. When new studies would be undertaken, they would need to provide basic

information on each field so the results of the study can be used in other water bodies
and sites.

Data transfers should be made cautiously to make sure that they reflect differences in
context. It is very usefull to make assesment with ranges of values, which take into account
uncertainties. According to the experience gathered in frenchriver basins, it’s easier to share
the results of the valuation with stakeholders, when ranges of values are proposed, and
when the origin of the gaps between the different values are well explained. There is a bigger
risk that decision makers do not accept the results, if the benefit valuation is proposed
without showing the uncertainties.

The question of who would develop and manage such a database needs to be furtherly
decided. It might be part of the mandate of the new coordination and control unit at the
Ministry of Environment and Waters. Access of the database should be made possible via
internet with restricted access (passwords given to experts from the Ministry and River Basin
Directorates in charge of the implementation of the WFD and of its economic aspects).

Promoting and storing environmental goods assessment studies in Bulgaria

The twinning project has develop in collaboration with the Bulgarian Institute of Economics a
website which purpose is to promote the development of environmental goods economic

This website will provide background information on main concepts and techniques for valuating
environmental goods (Contingent valuation, hedonic price survey, transport costs method,…). It
will store also synthesis of studies undertaken in Bulgaria highlighting the main characteristics of
the method selected, the results obtained and how these results can be used for decision making
at local scale or more generally for water management policy.

The long term perspective of this website development is to store a sufficient amount of studies
that will enable to provide guidance values – based on bulgarian studies – that could be used for
assessment that might done without the necessity to undertake a new and whole study (e.g.
contingent valuation can be a long and costly process).

Regarding the French experience, a user friendly tool has been developped by the Economic
Direction of the Ministry of Environment on such database. It provides the possibility to users to
introduce the main characteristics of the environmental good to be valuated (size, status, types
of uses,…) and then to obtain guidance value (e.g. mean willingness to pay from anglers for
restoring the quality of a river).

The long-term success of this project will relies on the capacity to promote the development of
studies, which depends to a large extent to the implementation of partnership between
Bulgarian Institute of Economics, Universities, Ministry of Environment and Waters, River Basin
Directorates in order to start programmes of studies.

· Action 9 – Develop a qualitative assessment of the goods and services provided by
different types of aquatic ecosystems in Bulgaria (e.g. natural river, river in urban areas,
coastal wetland, wetlands in mountainous areas, etc), along with the identification of the
beneficiaries of these goods and services (who benefits, what is the size of population
benefiting from these goods and services). This activity will require a combination of
water/ecological skills and socio-economic skills.

· Action 10 – Undertake specific valuation studies of ecosystems goods and services in
representative pilot sites. Depending on the goods and services that exist in each site,
different methods will be used/applied (e.g. assessing the water treatment costs saved
because of the auto-epuration capacity of wetlands, applying contingent valuation for
calculating non-use and total economic values). Indeed, in this first learning curve, it is
important that a range of methods are effectviely applied and tested.

Developping a research-policy partnership

In France, the Ministry in charge of Environement has set a national body ( ONEMA) which is in
charge to organize how the different uinversities and the research organisms can be used to help
the water agencies and the environmental ministery to implement the water policy.

One year ago a group was created on economic issues. This group is in charge to define priority in
research according to the needs of the water agencies and the environment ministery.
After one year and a half, it’s too early to make a synthesis about research results, but this new
organisation gives a good opportunity to make some improvments in research : for the first time
all the people who are involved in economic studies on water can speak all together. It is now
easier to have a global view of the needs, and to organize an adapted response from the research
In order to improve the knowledges and the skills that are necessary to implement the WFD, it
seems very important to manage exchanges between :
- local level ( water agencies) that can express operational needs
- national level ( environment ministery) that can define a national strategy
- research level that can focus research programs on operational issues.

Regarding the financial difficulties that are expected to implement the program of measures in
Bulgaria, it is suggested to organize a research program that may provide ideas to do some cost
effectiveness measures, and some ideas to find some new financial sources.
From this point of view, the following subjects may be interested :
- implementation of cost effectiveness analysis on the main issues that are responsable of the
water bodies bad quality
- review of experiences where economic tools are used to incite water users to reduce their
pollution ; what works ,in which conditions ? What is possible to use in Bulgaria ?
- how to take into account social stakes in the implementation of the program of measures. How
to find a fair repartition between the different water uses. How to défine a social price of water,
or some mecanims which can provide social tarification or social subsidies
- defining innovating financing
- assesment of environmental dammages resulting from a bad water quality and defining
financial mecanims to implement the Polluter Pays Principle .

further more, it seems very important to have some prospective studies :

- assesment of the impacts of global change ( ex :climate, demography, energy changes) on the
water management in Bulgaria
- assesment of the impacts of the evolution of agricutural policy, energetical policy on the water

The application of stated preference techniques (contingent valuation or choice experiment) in
some of the pilot sites will also help understanding the connection of inhabitants and citizens to
water and their perception with regards to current water status and proposed water status
improvements. This might help guiding information and communication activities of the water
basin directorates.

Cost-effectiveness and cost-benefit analysis

Combining information on effectiveness, costs and benefits will provide sufficient basis to testing
cost-effectiveness and cost-benefit analysis. It is proposed to develop two pilot projects for
testing these methods, one pilot study focusing on water quality issues and the second pilot
study focusing on ecology and morphological issues.

· Action 11 – To test cost-effectiveness and cost-benefit analysis in one pilot site with
water quality problems. Best would be to find a site where water quality is really
problematic and caused by different economic sectors (e.g. domestic, agriculture via
diffuse or point source pollution, industry). Specific models (e.g. mass-balance model or
more complex ones existing in the market) could be tested and applied for supporting
the assessment of the effectiveness of measures and stregthen the cost-effectiveness
analysis. Values of expected environmental benefits could come from studies developed
in other sites under Action 8. It would also be possible to select jointly sites between
Action 8 and Action 9 so a valuation study for the Action 9 site is made available.

· Action 12 - To test cost-benefit analysis in one pilot site with river morphology and
ecology problems. It could be relevant to find a site where hydropower is at stake, as the
potential costs imposted on the hydropower sector as a result of reaching good
ecological status would be interested to assess. Values of expected environmental
benefits could come from studies developed in other sites under Action 8. It would also
be possible to select jointly sites between Action 8 and Action 10 so a valuation study for
the Action 10 site is made available.

Tariffs and links to financing the water sector

On other economic topics, studies and research could also be peformed, in particularly on
economic instruments, their efficiency and effectiveness (i.e. which economic and environmental
impact can we expect from changes in water abstraction and polllution charges?), mobilising for
example integrated (economic and environment) micro or macro modelling.

· Action 13 – To undertake the creation of a Water Prices Observatory

Using Water price as a key indicator

The twinning project has developped a user-friendly tool for assessing the impact of package of
measures on the water price paid by households (price for water and sanitation services).


This tool (wich is more detailed in the guidance document on Cost-Recovery) is not only meant to
make rough assessment of the water price after implementation of new investments (waste
water treatment plant, sewage network,..) but also to investigate the sensibility of water price to
various hypothesis regarding:

- the financial scheme of the investments
- the evolution of consumption (there might a drop in consumption if the price increases)
- the way to take into account the amortization of the investments

Experts from MoEW and River Basin Directorates can use this tool to make assessment at
national, basin or sub-basin level. But it can be used also by Municipalities (a user notice is
provided with this tool).

One of the input of this tool is the current water and sanitation price billed to households (or
mean water price for basin or national level). Thus regular surveys might be performed by the
MoEW and/or RBD to collect water and sanitation price billed by ViK.

· Action 14 - To assess the economic impact and effectiveness of changes in the current
water tariff and environmental charge systems. Using micro-economic modelling for
different water users/sectors (agriculture, households, industry…), the impact of
different levels of environmental taxes (abstraction, pollution) could be analysed.
Specific attention could be given to the question of affordability.

Capacity building

The river basin directorates have gained first experiences with working on the economic
elements of the WFD, preparing reporting and participating in specific projects (e.g. the Dutch
project on the economics of the WFD for the West Aegean Water Directorate). However, it is
essential to continue strengthening capacity with:

· Action 15 – Develop and organise Specific training courses. The organisation of specific
training courses on economics for the persones involved in the implementation of the
economic aspects of the WFD. Partnerships with the Institute of Economics or the
University of Sofia, for example, could be established for organising such courses on a
regular basis to respond to the demands of the water directorates2. It is important
however to ensure that these courses are not academic but with a clear practical and
operational focus.

The organisation of such courses could take place within the context of framework contracts between the
Institute and the Ministry of Environment & Water.

Disseminating economic concepts and tools by playing : ECOWHAT?

Economic analysis is something too serious for being performed by economists ! That joke might
be a little provocative but it is true that there is more chance to give economic approach and
tools more weight in the decision process if non-economists can “feel” its usefulness.

This is the purpose of the Role playing game “ECOWHAT?” that have been already successfully
used in several countries. The game introduces a virtual River Basin (“La Strossère”) with
problems regarding water resources. The players are dispatched in teams with a package of
background information on the river basin and a budget that wiill be used to buy proposed
information (on the status of the ecosystem and links with pressures, on economic activities,…).
The purpose for each team is then (i) to finalize a programme of measures to achieve
environmental objectives. (ii) to make the cost-benefit assessment of this programme and
propose economic arguments to ensure its implementation.

This game “ECOWHAT?” has been adapted and translated in Bulgarian. “EKOKAKBO?” is available
in each River Basin Directorate. It can be used to train new experts from the MoEW and River
Basin Directorate but also be used with a Stakeholders audience.

III.3. Organising the implementation of actions: preliminary ideas

Action 3: Analysis of
Monitoring data
Action 2: Pilot studies
Action 4: Technical tools and
Effectiveness of measures
Action 6: Study operation
and maintenance costs
Action 5: Database of
benchmark costs
Action 7: Specific study
Information on costs
Action 9: Qualitative
assessment, goods and
services of ecosystems
Action 8: Database on
Action 10: Specific valuation
Environmental benefits
Action 12: Pilot tests on
hydromorphology problems
Action 11: Pilot tests on water
quality problems
Cost-effectiveness and
cost-benefit analysis
Action 14: Impact and
effectiveness of changes
Action 13: Water Prices
Tariffs and financing
Action 15: Trainings
Capacity building
Action 1: Database on

Summary scheme of proposed actions

Pursuing the goal of improving the use of economics for the elaboration of next River Basin
Management Plans, (thanks to implementation of the proposed actions) will undoubtly require
an efficient steering at national level.

This falls naturally under the responsibility of MoEW together with an high involvement of River
Basin Directorates. The recent creation of the Coordination and Control Unit within the Water
Department, will certainly help in establishing such a steering process.

The different actions and studies could be monitored and supervised by steering groups (experts
and professionals from the Ministry of Environment and the River basin directorates) for
individual studies. To ensure common learning by all and the regular sharing of experiences, an
“national economics working group” could be considered. This group could meet once every 3-4
months. It would define priorities for new studies, monitor progress in existing studies and
ensure integration and coherence between studies, discuss implementation problems and
reporting, etc.

The second point to be underlined is the development of of a science-policy interface. As learnt
from the first cycle of RBMPs elaboration, many national reference values, local data but also
some methodological gaps exist. In order to bridge those gaps it will be important to develop
some research activities, the are not likely to be realised by “water managers”. It will then be
necessary to develop parnerships between Universities, the Ministry and the River Basin
Directorates. The framework contract between the Ministry of Environment and the Institute of
Economics would be one instrument for ensuring research is made on possible topics.

The possibility to have students doing their M.Sc. thesis on some of the issues identified above
should be investigated. It could be jointly supervised by the lecturers/researchers of the
University/Institute and by experts from the river basin directorates. In the medium term, It
would contribute to the development of a small pool of Bulgarian young professionals on water
& economics.

Finally, it is also clear that the use of economical analysis as per WFD requirements is inducing a
need in terms of data and knowledge that is not only “water related”, thus making it necessary to
involve a wide range of stakeholders.

Economic analysis will be better shared and will be more usefull for stakeholders if they get
involved in the process from the begining or almost at the key stages ( for example, to define the
appropriate area of the analysis, the main working hypothesis and detaikles objectives)

According to the french experience in the Adour-Garonne basin, it is better to organize an
economic study with a pilot group where the stakeholders are represented. Indeed, it allows to :
- make the study in a pedagological and pragmatic way
- have a shared diagnostic on the water body stakes and on the possible ways to improve the
water quality of the water body
- have some balanced results between economic stakes and environmental stakes

Further more, some training sessions for the stakeholders can be a good way to have a better
support from the stakeholders when the next studies would be implemented. Indeed, these
sessions are a good way to build a common langage between economists and stakeholders.

IV. Conclusion

· The Bulgarian water authorities have made efforts to meet the requirements of the WFD
regarding economic analysis. Like most of the Members States, they had to face
difficulties regarding the collection of economic data, the availability of staff to analyse
these data and to ensure the appropriate integration of outputs in the River Basin
Management Plan and, more generally, in the decision making process.
· The economic data and information collected during the process of development of River
Basin Management Plans and Programmes of measures are providing a background that
should be worked out and extended in the coming years. As yet significant
improvements are required; on methodologies, integration between economical and
technical approaches, availability of reference values for costs, effectiveness of measures
but also their benefits…
· Even if consultants can be of added value for undertaking some tasks of the economic
analysis, the finalisation of the “end products” to be reported to the Commission should
be carried out by MoEW and RBDs. By this way, in order to ensure a better fullfiling of
the WFD requirements, the economic activities would need an important involvment of
the staff of the MoEW and the River Basin Directorates.
· The guideline document has proposed 15 actions that could be implemented in order to
improve the situation until the second cycle of RBMP preparation.
· In order to support the implementation of those actions it will be necessary to ensure
steering of actions at national level, involvement of stakeholders representing economic
sectors but also promoting a better science-policy interface, thanks to partnerships
between universities, researchers and MoeW and RBDs.
· This commitment should help to upgrade the elements that have not been really carried
out (cost-effectivness analysis, justification of exemptions due to disproportionate costs,
cost-recovery analysis regarding industry and Agriculture,…).