Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2016:16: The economics of the European Water Framework Directive – A retrospective remark focusing on Sweden

Kristina Ek and Lars Persson ()
Additional contact information
Kristina Ek: Economics Unit, Luleå University of Technology, Postal: Economics Unit, Luleå University of Technology, Sweden
Lars Persson: CERE and the Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden

Abstract: The Water Framework Directive (WFD) explicitly acknowledges the role of economics in the process of reaching the environmental quality objectives. The purpose of this paper is to discuss the implementation of the WFD in Sweden based on standard economic theory regarding instruments for cost efficient- and effective solutions to environmental problems. A lesson is that although incentive based instruments are beneficial from a cost-efficiency perspective, the complexities associated with environmental water management may somewhat challenge their implementation. Flexibility is a key issue for cost-effectiveness and, since Swedish water management mainly consists of command-and control instruments, the cost effectiveness is likely to be limited. Furthermore, the paper also points at how policy instruments relate to the economic burden aspect and the PPP – both highlighted in the Directive.

Keywords: The economics of the Water Framework Directive; cost efficiency and effectiveness; environmental water management; Polluter Pays Principle

JEL-codes: H23; Q53

30 pages, September 19, 2016

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