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Practical Application of Cost-Benefit Analysis in Water Management

Learn from a case study on applying cost-benefit analysis at a river basin scale to address water pollution from mining activities in an aquifer. Discover various measures, their effectiveness, and impacts on reaching environmental goals.

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Practical Application of Cost-Benefit Analysis in Water Management

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  1. COST BENEFIT ANALYSIS IN PRACTICE Thierry Davy Representative of the French water agencies to the EU Inspired from

  2. COST BENEFIT IN PRACTICEAT RIVER BASIN SCALE Source: Ministry of the environment,Québec, Canada 2/10

  3. Aquifer • Description of the site • aquifer intensely polluted by mining activity: huge waste deposits of salt • efficient measures already implemented: geo-membrane on some dumps, artificial dissolution of waste with high concentration of salt ... limit of the aquifer • Prospective • model shows that the impact of the measures is not sufficient to reach the goal by 2015 (after 2027) • supplementary measures are needed polluted zone salt <250mg/l in all the aquifer salt tips Source: BRGM & Agence de l'eau Rhin-Meuse DESCRIPTION OF THE SITUATION 10-15% of the salt withdrawn every year 3/10

  4. in 2015 Ineffective Maybe further investigated if necessary SUPPLEMENTARY MEASURES AND THEIR EFFECTIVENESS Effectiveness? 4/10

  5. Who will be affected? To what extent? Directly or not?... Define scale of assessment Quantitative, qualitative or monetary? Present and/or future? Which appear significant?... Identify types of costs and benefits Is it necessary to apply different methods? What resources are available for original research?... Choose methodology Do we need first hand data? Can we rely on other resources?... Collect data Are impacts important and properly weighted? How can different types of impacts can be presented in a way that facilitates decision-making?... Assess costs and benefits CBA LOGICAL STEPS 5/10

  6. WHICH ELEMENTS MAY INFLUENCE CBA • The number of contributors/scale of analysis • the effectiveness of the measures • The time frame • The way of calculating the costs • The discount rate • The integration or not of the environmental benefits • The comparison with ability to pay

  7. Types of benefits CBAIDENTIFICATION OF COSTS AND BENEFITS • Types of costs TD OD 7/10

  8. CBA:environmental and health benefits • With a CBA you can calculate and integrate environmental and health benefits (where and when they exist) • Monetarisation of environmental benefits (contingent valuation, transportation costs, hedonic prices,…) • Monetarisation of health benefits or costs avoided (costs of lost working days, costs of deaths,….)

  9. Estimated potential benefits equal costs COST BENEFIT ANALYSIS A9/10

  10. Not disproportionate Goal reached in 2015 but with some uncertainity CROSSING CBA AND ABILITY TO PAY AT LARGE SCALE 34 000 households directly concerned by the aquifer To compare with 1995 estimates of the ability to pay: 36€/year/household 817 interviews - Contingent valuation A10/10

  11. TARGET:reach the goal in 2015 COST BENEFIT ANALYSIS B9/12

  12. DISPROPORTIONATE  goal can't be reached in 2015  consider time derogation… ARE THE COSTS DISPROPORTIONATE in 2015? 34 000 households concerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household B10/12

  13. Simulation for2021 COST BENEFIT ANALYSIS B11/12

  14. NOT DISPROPORTIONATE ANYMORE measure 2 with time derogation allows to reach the goal in 2021 but the benefits are lower because they are postponed ARE THE COSTS DISPROPORTIONATE IN 2021? 34 000 households directlyconcerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household B12/12

  15. TARGET reach the goal in 2027 COST BENEFIT ANALYSIS C9/12

  16. DISPROPORTIONATE  goal can't be reached in 2015  In 2027 the costs are not far from being acceptable ARE THE COSTS DISPROPORTIONATE in 2027 ? 34 000 households directlyconcerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household C10/12

  17. Simulations 2021-2027 And after CBA some lessons from this exampleon measures 1 • Type 1 measures are not costly • They are not efficient to reach the environmental objective: the good ecological status • The benefits are quite zero for the current users (household and farmers) • The benefits will not increase in the future: no improvement of the water quality • These measures 1 could have been eliminated on the basis of the cost efficiency analysis: no need of CBA to see that they are not appropriate C11/12

  18. CBA some lessons from this exampleon measures 2 Simulations 2021-2027 And after • The CBA of measures 2 is balanced in 2015 • The ability to pay shows that users can afford to pay for them even in 2015 • If we postpone measures 2, CBA becomes negative in 2021 due to the decrease of benefits • The ability to pay shows that it is still possible to pay for them in 2021 • There is still some uncertainity (even low) to evaluate if measures 2 allow to reach GES

  19. CBA some lessons from this exampleon measures 3 • Measures have a negative CBA for each date • The efficiency of the measures 3 is proved to achieve the good status • The ability to pay shows that even in 2027 the affordabilty is low • Crossing CBA with ability to pay allows to see that around 2030 we will be able to reach good status at an « acceptable price » for local actors

  20. Thanks for your attention

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