Understanding the economics of the water framework directive

Abstract

Good water quality is increasingly scarce throughout Europe, and in southern parts water quantities are limited and often insufficient for demand. In addition to being essential for life and for numerous human activities and industries, water provides a range of ecological life-support systems that are often difficult to value. The economics of water involves understanding its scarcity and its value, as well as human needs, and ensuring that the costs and benefits of choices are clear and that the impacts of alternative pricing schedules are determined. As the Water Framework Directive requires the integration of economic analysis for its implementation, this paper outlines key areas where such application is called for. Analysing cost-effectiveness, determining benefits, setting exemptions and calculating cost recovery are considered, followed by country case studies. The paper concludes with some consideration of the opportunities and challenges for Ireland. © Royal Irish Academy.