Environmental Concerns in Water Pricing Policy:Â Â an Application of Data Envelopment Analysis (DEA)

Water management is subject to conflicting economic and environmental objectives, and policymakers require a clear overview of the different outcomes derived from different water management options. The aim of this paper is to assess the efficiency of several irrigation water pricing policies with a special focus on their environmental implications. Irrigation is chosen here as a crucial sector of water use in large parts of southern Europe, where pressure on the resource is expected to increase due to climate change. A novel methodological approach for performing an ex ante analysis of alternative water pricing policies is proposed here, where environmental and technical performance are simultaneously considered. This approach takes place in two steps: the first is a simulation of alternative water policies through a mathematical programming model, and the second is the analysis of results by using the Data Envelopment Analysis (DEA) technique. A case study is applied in Puglia (southern Italy), where irrigation is the primary factor of strategic relevance for policymakers regarding water management. Our results show that on the one hand alternative pricing policies perform similarly in terms of technical efficiency and environmental efficiency. On the other hand, inefficiency appears to depend mainly on technical rather than environmental concerns. According to the assigned weights, through the DEA technique, the highest improvement for inefficient options may be obtained by better labour use. We conclude that the proposed approach may be a comprehensive and versatile framework for water policy analysis, offering a tool for supporting the decision-making process.Irrigation, Policy assessment, Efficiency, Data Envelopment Analysis, Linear Programming

The Costs of Drought: the Exceptional 2007-2008 Case of Barcelona

The drought affecting Catalonia between 2007 and 2008 was the most severe of the last century and serves as a case study for the assessment of the economic costs of such an event. The main focus is the drought affecting the so-called Ter-Llobregat system which serves the Metropolitan area of Barcelona, where most of the population is concentrated (approximately 5.5 million people). The 2007-2008 drought is a good illustrative case study due to its extreme severity and the availability of economic information both on the impacts (damages) and the measures taken. Moreover, important communication campaigns were put into place and led to significant reduction of the demand and the set up of mechanisms for public participation for future water management. Direct costs of the affected sectors, indirect costs of the Catalan economy and non-market welfare losses due to the worsening of the environmental quality and restrictions on water supply to households due to scarcity conditions are reported here. The total losses are estimated at 1,661,000,000 Euros (for a one year period), almost 1% of Catalonian´s GDP. The results of this study point out the need for further research on the estimation of the costs of drought (especially at European level) that needs to be embedded into the assessment of the costs of adaptation to climate change.drought, direct costs, indirect costs, non-market welfare losses, Barcelona

Classifying Ecosystem Services for Economic Valuation: The case of forest water services

Since the release of the Millennium Ecosystem Approach (MEA), the number of studies valuing ecosystem services has grown. As a consequence of this growing literature, different interpretations exist on the classification of services as derived from MEA, and several studies have argued that this may not be the most appropriate framework when the aim of the analysis is economic valuation. The present paper contributes to this debate by reviewing and comparing these critical views in order firstly to clarify the existing confusion in the terminology and interpretations; and secondly to shed some light on a desirable classification and conceptualization of ecosystem services for valuation. To illustrate this, we present an examination of existing primary valuation studies of water related services provided by tropical forests, which we analyze under the MEA classification framework and compare it with an output-based classification, in which the service is defined in terms of its benefits (outputs) to humans. Our results support the idea that an output-based classification should provide more accurate values and could help avoid certain problems such as double accounting and potential underestimation of services values.ecosystem services, Millennium Ecosystems Approach, water services, tropical forests

The economic value of guaranteed water supply for irrigation under scarcity conditions

Resource /Energy Economics and Policy,

Classifying Ecosystem Services for Economic Valuation: The case of forest water services

30 p.Since the release of the Millennium Ecosystem Approach (MEA), the number of studies valuing ecosystem services has grown. As a consequence of this growing literature, different interpretations exist on the classification of services as derived from MEA, and several studies have argued that this may not be the most appropriate framework when the aim of the analysis is economic valuation. The present paper contributes to this debate by reviewing and comparing these critical views in order firstly to clarify the existing confusion in the terminology and interpretations; and secondly to shed some light on a desirable classification and conceptualization of ecosystem services for valuation. To illustrate this, we present an examination of existing primary valuation studies of water related services provided by tropical forests, which we analyze under the MEA classification framework and compare it with an output-based classification, in which the service is defined in terms of its benefits (outputs) to humans. Our results support the idea that an output-based classification should provide more accurate values and could help avoid certain problems such as double accounting and potential underestimation of services values

Payments for Water Ecosystem Services in Latin America: Evidence from Reported Experience

27 p.Payments for Ecosystem Services (PES) schemes are attracting increasing interest as policy mechanisms to improve conservation and sustainable development outcomes. PES initiatives aim to reach mutually beneficial agreements between providers and users of ecosystem services. In Latin America, with Costa Rica as the frontrunner, there are now more than two decades of experience in the implementation of PES schemes, which potentially represent a valuable source of knowledge for the improvement of the efficacy of conservation programs. Reviews and special issues dedicated to the study of PES exist, but they remain to most of their extent descriptive and qualitative. This paper presents the first study that systematically analyses the PES experience on the basis of a descriptive analysis of existing programs. The objective is twofold: (i) understanding the key features of existing PES mechanisms based on reported evidence; and (ii) identifying information needs for evidence-based policy design and implementation. We focus on water-related services since this type of service is involved in the majority of schemes. A database was constructed with 287 observations from 39 studies, from 1984 to 2011 in 10 Latin American countries. We find evidence confirming some known facts, such as deforestation and forest management as the main drivers of PES establishment, and revealing new ones, such as that average income for sellers is 60% larger than average buyers’ payment for the service

Economic Valuation of Ecosystem Services: Conflicts in Classification

4 p.Since the release of the Millennium Ecosystem Approach (MA), studies valuing ecosystem services have grown in the literature. As a consequence, different interpretations exist on the classification of services, and several studies have argued that the classification of services MEA proposes may not be the most appropriate when the aim of the analysis is economic valuation. To illustrate this, we conducted an examination of existing primary valuation studies of water related services provided by tropical forests, that we analyzed under the MA classification and compared with an output-based classification. Our results support the idea that an output-based classification should provide with more accurate values and could contribute to avoid certain problems such as double counting and potential underestimation of services values

Water Economics and Policy

Economics plays a double role in the field of water management, firstly as a powerful analytical tool supporting water allocation and policy decisions, and secondly in the form of policy instruments (water pricing, markets, etc.). This Special Issue presents a platform for sharing results connecting excellent interdisciplinary research applied to different regional and sectoral problems around the world. The 22 peer-reviewed papers collected in this Special Issue have been grouped into five broad categories: Water valuation and accounting; Economic instruments; Cost effectiveness and cost-benefit analysis; and Water productivity and Governance. They are briefly presented

Análisis multicriterio de preferencias sociales en gestión hídrica bajo la Directiva Marco del Agua

Este trabajo pretende contribuir a la aplicación de la DMA en relación con la selección de medidas para el uso sostenible y socialmente aceptado del agua. Nuestro análisis está orientado a la obtención, mediante el proceso analítico jerárquico (AHP), de la valoración social de los criterios de gestión del agua en el Guadalquivir, analizando para ello la legitimidad de la ampliación del embalse de la Breña (Córdoba), además de la evaluación de otras posibles medidas de gestión del agua. Los resultados sugieren que el AHP constituye una herramienta adecuada para la implementación de la DMA, así como un complemento útil del análisis coste-eficacia.Directiva Marco del Agua, gestión hídrica, método de Jerarquías Analíticas, multicriterio., Agricultural and Food Policy, Q25,

Medida de la compensación del daño ambiental en la Directiva de Responsabilidad Ambiental: lecciones aprendidas del caso Aznalcóllar-Doñana

El daño ambiental producido por el vertido tóxico de 1998 en las inmediaciones del Parque de Doñana es analizado bajo la óptica de la nueva Directiva de Responsabilidad Ambiental (DRA), que obliga al operador de la actividad contaminadora a compensar por las pérdidas provisionales. El objetivo es analizar el papel de la valoración económica en la medida de la compensación en el marco de la DRA y extraer algunas lecciones para futuras aplicaciones. Los resultados apuntan a que los servicios proporcionados por el Corredor Verde realizado tras el accidente no han compensado el daño. Se pone de manifiesto la necesidad de profundizar en el análisis de valores de no uso, el control de las respuestas protesta y el planteamiento de escenarios de valoración específicos para las pérdidas provisionales.Directiva de Responsabilidad Ambiental, compensación del daño, valoración contingente, Aznalcóllar-Doñana, Agribusiness, Q3, Q5.,