Economic instruments help water policy
Economic policy instruments (EPIs) have been used in the past to realise environmental policy objectives. A European-funded consortium made up of experts in the field of water economics was established to determine if EPIs can be applied to water management. The 'Evaluating economic policy instruments for sustainable water management in Europe' (EPI-WATER) project studied whether EPIs can complement or improve upon alternative policy instruments. The aim was to produce recommendations for better exploitation of the instruments' potential for achieving EU environmental objectives. Project partners also explored how the use of national accounts could support EPI design, implementation and evaluation in the field. A policy assessment framework was specifically designed for EPI-WATER. This enabled environmental and economic outcomes, transaction costs, distribution effects and the prospects of policy implementation to be assessed. The assessment framework was used together with a toolbox offering analytical, qualitative and other methods to produce a series of reports. Some 30 EPIs in Europe and 10 overseas were reviewed, together with a range of instruments. These economic instruments included charges and taxes, water pricing schemes, voluntary agreements, subsidies and certificates. EPI-WATER also held a conference titled 'Understanding the application of economic policy instruments – EPIs – in water management: Review of empirical evidence, experience and lessons learned from Europe and elsewhere'. The event provided a forum for European and international research institutions and governments to present their projects and their potential for meeting goals for efficient water use. By responding to various related EU directives and initiatives, EPI-WATER has contributed to more effective use of economic instruments to sustainably manage European water resources. Furthermore, at a time when financial crises are influencing the allocation and use of national and regional resources, EPI-WATER outcomes have the potential to moderate the impact of economic cuts. The project also supported implementation of the Water Framework Directive (WFD), the EU's flagship legislation for protecting surface and groundwater. Its results will also inform the Marine Strategy Framework Directive (MFSD), the EU Floods Directive and the EU Drought Policy.
Keywords
Clean water, economic policy instruments, water management, Water Framework Directive
