Evaluating Economic Policy Instruments for Sustainable Water Management in Europe – EPI-WATER

EPI-Water aims to assess the effectiveness and the efficiency of Economic Policy Instruments in achieving water policy goals, and to identify the preconditions under which they complement or perform better than alternative (e.g. regulatory or voluntary) policy instruments.
Using a common multi-dimensional assessment framework, the project compares the performance of single economic instruments or their apposite combinations with the performance otherwise achievable with regulatory (command & control) interventions (such as water restriction/rationing, licensing or permitting), persuasive instruments or voluntary commitments.
Furthermore the project identifies remaining research and methodological issues that need to be addressed, in particular with regards to the further development and use of national accounting, for supporting the design, implementation and evaluation of EPI in the field of water management.

The main aims of the EPI-Water project are

• to assess the effectiveness and the efficiency of Economic Policy Instruments in achieving water policy goals, and
• to identify the preconditions under which they complement or perform better than other (e.g. regulatory) policy instruments.

The specific objectives of the project include:

• Using a common multi-dimensional assessment framework, compare the performance of single economic instruments or their apposite combinations with the performance otherwise achievable with regulatory (command & control) interventions (such as water restriction/rationing, licensing or permitting), persuasive instruments or voluntary commitments.
  In particular: a) Analyse the extent to which economic instruments contribute to achieving water policy goals (e.g. good ecological status of water bodies, flood protection, reducing risk & uncertainty in water availability), either directly (via changing use/consumption behaviour) or indirectly (via raising financial resources for implementing water policy protection measures); and b) analyse the efficiency implications of economic instruments, that is to what extent they contribute to an optimal allocation and use of water resources (or goods and services provided by aquatic ecosystems) also in situation in which not all use- and non-use values are known or fully accounted for.
• Identifying the preconditions for economic instruments (or group of instruments) to be implementable, effective and/or efficient in given socio-economic, hydrological, cultural and institutional conditions of Europe, be it in isolation or in combination with command and control mechanisms.
• Identifying remaining research and methodological issues that need to be addressed, in particular with regards to the further development and use of national accounting, for supporting the design, implementation and evaluation of EPI in the field of water management.

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The project is funded by the European Commission, Seventh Framework Programme, Theme [ENV.2010.2.1.2-1: Evaluation of effectiveness of economic instruments in integrated water policy].