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OECD – EC DG Environment Initiative on the Economic Aspects of Implementing the EU Water Framework and Floods Directives

 

This page documents the output of a joint initiative by the OECD and the European Commission’s Directorate-General for Environment (DG ENV) to support the economic aspects of implementing the EU Water Framework Directive (WFD) and Floods Directive (FD). The initiative aims at improving investment decisions for the implementation of the WFD and the FD in European Member States. Further it aims at strengthening Member States’ capacity to deliver in an efficient manner on the Directives’ environmental objectives, making the best use of economic analysis and instruments.

 

 

OVERVIEW

The initiative has taken the form of a sequence of four online thematic workshops, followed by a fifth concluding workshop, co-convened by the OECD and DG ENV. The four thematic workshops covered the following themes:

  • Water investment planning and financing

  • The implementation of the Polluter Pays Principle 

  • The economics of water scarcity 

  • Cost recovery

The workshops have allowed decision-makers and practitioners from both the water sector and water user sectors (such as agriculture, energy, industry and climate) to freely share experience and bounce ideas under the “Chatham House” rules. In each thematic workshop, participants from across the EU as well as neighbourhood countries identified and discussed major existing challenges for the theme at hand, exchanged good practices, and identified options to move ahead on the topic. Each workshop covered:

  • The state of play, building on the latest available information from EU countries
  • Experiences and best practices across Member States
  • Next steps to facilitate the implementation of the economics of the Water Framework Directive

Dedicated background notes for each thematic workshop, prepared by the OECD, helped build a common knowledge and inform the discussions. Discussion highlight notes, prepared by the OECD, summarise each workshop and distil the key messages.

The fifth concluding workshop drew the threads together. It discussed the commonalities and tensions between the four themes. It aimed at identifying the key economic issues that merit further explorations and at formulating recommendations for concrete actions to move forward.

Further information on the Water Framework Directive and the Floods Directive and the state of their implementation can be found on the European Commission’s dedicated webpage.  

Workshop 1: Water investment planning and financing (15-16 February 2022)

Key topics included:

  • Investment planning for uncertainty, particularly related to climate change: resilience thinking, scenarios and strategic planning approaches
  • From investing in projects to ‘investment pathways’: the strategic sequencing of water-related investments and the use of analytical frameworks
  • Harnessing multiple sources of commercial finance

Workshop material:

Workshop 2: The implementation of the Polluter Pays Principle (29-30 March 2022)

Key topics included:

  • Setting an adequate scope and identifying appropriate economic instruments: general considerations and the case of diffuse pollution from agricultural production 
  • Fairness considerations in  the implementing the Polluter Pays Principle
  • The limits of the Polluter Pays Principle application in view of disproportionate costs
  • The potential role of the Polluter Pays Principle in the EU Zero Pollution Strategy: the case of water

Workshop material:

Workshop 3: The economics of water scarcity (26-27 April 2022)

Key topics include:

  • Water allocation regimes
  • Scaling-up the demand for reclaimed water
  • Nature-based solutions for water retention
  • Water scarcity risks in broader policy agendas

Workshop material:

Workshop 4: Cost recovery (31 May-1 June 2022)

Key topics include:

  • Water pricing mechanisms: adequate incentive pricing and addressing affordability
  • Spreading the capital costs over time (depreciation methods)
  • Untapped sources of revenues (environmental charges and land value capture)
  • The implications of the zero pollution strategy on cost recovery

Workshop material:

Workshop 5: Concluding workshop (23 June 2022)

Key topics include:

  • Cross-cutting challenges faced by Member States and lessons learnt from thematic workshops
  • Ways forward: Initiatives that could support cross-sectoral methodological and economic assessment
  • Ways forward: Initiatives that could support knowledge exchange and capacity building

Workshop material:

CONTACT

For more information, please contact:

Delia Sanchez Trancon, Junior Environmental Economist, Water Team, OECD Evironment Directorate

Aude Farnault, Junior Policy Analyst, Water Team, OECD Evironment Directorate

Xavier Leflaive, Team Lead, Water Team, OECD Evironment Directorate

 

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