The European Union’s (EU) Water Framework Directive (WFD) is implemented as an instrument to obtain good ecological status in waterbodies of Europe. The directive recognises the need to accommodate social and economic considerations to obtain cost-effective implementation of the directive. In particular, EU member states can apply for various exemptions from the objectives if costs are considered disproportionate, e.g. compared to potential benefits. This paper addresses the costs and benefits of achieving good ecological status and demonstrates a methodology designed to investigate disproportionate costs at the national level. Specifically, we propose to use a screening procedure based on a relatively conservative cost–benefit analysis (CBA) as a first step towards identifying areas where costs could be disproportionate. We provide an empirical example by applying the proposed screening procedure to a total of 23 river basin areas in Denmark where costs and benefits are estimated for each of the areas. The results suggest that costs could be disproportionate in several Danish river basins. The sensitivity analysis further helps to pinpoint two or three basins where we suggest that much more detailed and elaborate CBAs should be targeted in order to properly ascertain whether costs are indeed disproportionate.
Journal of Environmental Economics and Policy, 2013, Vol 2, Issue 2, p. 164-200