Critical appraisal of the economic policy instruments for management of water resources in Europe: limitations and opportunities.
12:00 - 13:00
Since the 1992 Earth Summit and its Action plan Agenda 21, European Union has been constantly looking for opportunities for a greater deployment of price signals and economic incentives or disincentives to reduce the environmental costs of the consumption of energy, materials and natural resources. Despite the repeated pledges – see for example the call for adequate water pricing under the Directive 2000/60/EC and the Communication COM(2007) 414 – the implementation of the economic policy instruments (EPIs) for a sustainable, economically efficient and equitable water resources management has not been satisfactory. In the midst of persistent economic and financial crisis, and the gloomy outlooks of human-made climate change, efficient water use is an essential more than any time before.
In this paper we analyse the performance of the 30 economic policy instruments (EPIs), comprising voluntary agreements, charges and taxes, water pricing schemes, subsidies, tradable permits and certificates, reviewed in the context of the FP7 project EPI-WATER (Evaluating Economic Policy Instruments for Sustainable Water Management in Europe). The policy instruments are reviewed against institutional background, environmental outcomes, economic outcomes, transaction costs, distribution effects, uncertainty, and the prospects of policy implementation. The scope of the review was to explore and identify conditions under which the EPIs perform well in practice. Among the 30 reviews, 10 are EU neighbourhood countries and oversees (USA, Australia, Israel, Chile, China).