Applying Cost-Effectiveness Analysis to Select Measures for Groundwater Protection

1. Applying Cost-Effectiveness Analysis to Select Measures for Groundwater Protection Andrew Lovett School of Environmental Sciences, University of East Anglia, Norwich, NR4 7TJ, UK a.lovett@uea.ac.uk

2. Introduction: The WaterCost Project • The EU Water Framework Directive requires that economic costs and benefits are taken into account when identifying combinations of measures to achieve ‘good status’ objectives. • WaterCost investigated the practicalities of implementing cost-effectiveness analysis for groundwater protection. • The results are now available as a handbook from http://www.watercost.org.

3. Define the problem (gap between baseline and WFD target). Identify measures. Consider effectiveness of measures Consider cost of measures Combine measures (to address gap) Compare cost effectiveness of combinations Assess whether non-market benefits would change ranking of combinations. Main Steps in Cost-Effectiveness Analysis

4. UK Study Area: Slea Catchment

5. UK Study Area: Slea Catchment 27 2 km grid cells = 10,800 ha

6. Baseline Characteristics

7. Baseline Assumptions • All the land is in a Nitrate Vulnerable Zone (NVZ) • Existing setaside is assumed to remain • 5 % of arable land has 6 m grass buffer strips • 25 % of spring crops have a cover crop • 10 % of relevant crops under minimal cultivation • These assumptions reduce the baseline loading to 364,206 kg N, (105.80 mg/l NO3 in soil zone). • A target of 50 mg/l NO3 equates to 172,112 kg N (47% of revised baseline).

8. Soil and Groundwater Nitrate Levels Modelling results from the Water4all project made it possible to estimate soil N loadings associated with 2027 groundwater NO3 concentrations of 42 and 50 mg/l.

9. Measures Examined • Based primarily on measures in a UK government inventory of diffuse pollution controls for agriculture. • Establish cover crops in autumn • Adopt minimal cultivation systems • Reduce fertiliser application rates by 20 % • Establish 6 m grass buffer strips on arable land • Convert arable land to extensive grassland • Convert arable land to farm woodland • Convert arable land to energy crops (Miscanthus)

10. Scenarios Examined * Only these four measures were included in Version 1 of the Optimistic scenario.

11. Cost-Effectiveness of Measures

12. Scenario Results These results suggest that the Optimistic scenarios could meet a 50 mg/l NO3 groundwater target and the Utopian combination a 42 mg/l NO3 objective.

13. Non-Market Benefits • A review of the literature suggested these were unlikely to be significant for the land management measures. • The most substantial visual amenity, recreation and greenhouse gas benefits were associated with woodland planting. These were estimated at €1,700 per hectare (for a small woodland) and in a break-even analysis appear sufficient to favour the Realistic scenario over the Optimistic version with just management measures. • For other scenario comparisons the non-market benefits did not appear sufficient to overturn the cost differences. • The merits of woodland planting are also much less clear-cut if compensation costs are increased to reflect recent increases in the profitability of arable crops.

14. Conclusions • All four partner countries found it feasible to implement a CEA in their case study area. • Consideration of non-market benefits resulted in relatively few changes to the rankings of measures. • Data requirements can be considerable and much depends on how targets are defined, costs calculated and effectiveness evaluated. • There is certainly scope for improving CEA, but it does provide a viable approach for groundwater protection and management.

15. Acknowledgements • Other contributors to the UK case study (Kevin Hiscock, Ian Bateman, Gilla Sünnenberg, Paddy Johnson, Helen Johns and Sean Burke). • Representatives from other partners in the WaterCost project. • Funding from the Interreg IIIB North Sea Programme, with additional support for the UK case study from the Environment Agency.