J. E. Purkyne University in Usti nad Labem1
The growing demand for clean water has led to the adoption of the EU Water Framework Directive (Directive 2000/60 EC). The new legislation has had a major impact on water management and national economies and instituted numerous requirements, including "good status" of all water bodies. The Framework Directive also implies the need for an economic analysis of the optimal process to achieve good status by using cost-effectiveness analysis (CEA) because achieving "good status" is associated with large investments, often beyond the capabilities of polluters.
The Directive requires Member States to achieve good ecological potential and a good surface water chemical status for bodies of water until the year 2015. If the states cannot achieve these objectives within this period, then there may be grounds for exemptions from the requirement to prevent further deterioration of the ability to achieve good status under specific conditions. One of those conditions could be that the completing of the improvements within the timescale is connected to the disproportionate costs. From an economic point of view, it is necessary to assess the social costs and benefits.
The concept of proportionality was introduced in the EU Water Framework Directive. This concept introduces an innovative principle in the regulatory structure: the legislative intervention not only has to initiate a change in society or the behaviour of individuals or to reach a specific goal, but the intervention has to fulfil the requirements of proportionality - an optimal or rational relation of costs and benefits of specific regulation or intervention. The directives do not provide any guidance on establishing disproportionality. Therefore, EU Member States have chosen to assess the disproportionate costs using their own procedures. The proportionality concept attracts growing attention in environmental policy. There is a growing body of economic literature on the proportionality concept, e.g., Postle et al. (2004), Laurans (2006) and Martin-Ortega et al. (2013).
The paper is based on an extensive analysis of the proportionality concept from the economic perspective within the Water Framework Directive and focuses on the following research question: How is the economic concept of proportional costs implemented in current environmental policy? Other specific research questions will focus on issues such as: In proportion to what are the costs considered as disproportionate, what are the criteria for disproportionality (Postle et al., 2004)? Which costs can still be considered proportionate and which cannot? The target of this paper is to propose a suitable approach for Czech Republic.
The relatively large number of methodologies and procedures for cost proportionality was established across the Member States in the last few years. Increased interest in methodological support to managers of water bodies is an obvious consequence of the necessity of the relevant reasons, which can be included in river basin management plans and will not lead to other possible sanctions from the EU.
Most of the approaches are based on the application of cost-benefit analysis (CBA) as a relevant tool for the calculation of benefits and costs of measures. In many countries, some sub-criteria of disproportionality are proposed which are used before implementing a comprehensive CBA.
In Scotland, proportionality of measures was assessed initially at the micro level of individual rivers and in the second step at the macro level (Hanley et Black, 2005). Other proposals from France are based on a comparison of pas expenditures associated with the implementation of measures (benchmarking) (Laurans, 2006). The comprehensive CBA is involved in the second step, when the current expenditure exceeds current spending by 20%. An often mentioned possibility of assessing the proportionality at the macro level is a reflection of the cost of measures to prices of water (Courtecuisse, 2005). This concept considers the proportionate cost of water in 2% of household incomes. The most comprehensive approach is designed in Germany (Klauer et al., 2007), which brings a progressive assessment in several steps and at different levels into being. Based on the results of the analysis, the concept for the Czech Republic is proposed of an assessment not only from the macroeconomic point of view, but also from a microeconomic aspect, such as the impact on individual producers of pollution and other groups of stakeholders.
1. European Parliament. 2000. Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy. European Parliament, Council of the European Union, 2000.
2. COURTECUISSE, A. 2005. Water Prices and HouseholdsÂ’ Available Income: Key Indicators for the Assessment of Potential Disproportionate Costs ‐ Illustration from the Artois‐Picardie Basin (France). Vortrag auf der International Work Session on Water Statistics, Wien
3. HANLEY, N.; BLACK, R. A. 2006. Cost-Benefit Analysis and the Water Framework Directive in Scotland. Integrated Environmental Assessment and Management. Vol 2, Issue 2, pp 156-165.
4. KLAUER, B. et al. 2007. VerhÀltnismÀßigkeit der Maßnahmenkosten im Sinne der EG-Wasserrahmenrichtlinie – komplementÀre Kriterien zur Kosten-Nutzen-Analyse. Leipzig: Helmholtz Zentrum fÌr Umweltforschung. 2007, 99 pp.
5. LAURANS, Y. 2006. Implementing cost-effectiveness analysis: Perspectives based on recent French pilot studies. Berlin: Messe Wasser - International Conference, 5. April 2006. 6. MARTIN-ORTEGA, J. et al. 2013. Deliverable
6.12: Cost-effectiveness analysis report for the Thame sub-catchment including analysis of disproportionality. Refresh, 2013, Available on-line: http://www.refresh.ucl.ac.uk/webfm_send/2146.
7. POSTLE, M. et al. 2004. CEA and Developing a Methodology for Assessing Disproportionate Costs. Final Report for DEFRA. Loddon: Risk & Policy Analysts Limited, 2004.