Economic Analysis under the Water Framework Directive: The State of the Art and Way forward

Abstract

Linking the improvement of water ecosystems to the use of economic concepts and instruments is one of the main innovations introduced by the EU Water Framework Directive (WFD). This should be achieved by Member States through an approach clearly linking measures and interventions to improve water ecosystems to the identified pressures on water bodies (i.e., the gap analysis) and a set of economic provisions. However, modest progress in the implementation of these provisions has been recorded over time. Therefore, this paper aims to shed new light on the current limits in the implementation of the economic analysis of the WFD, in particular in relation to the gap analysis, through a comprehensive review of grey and scientific literature on the topics of gap analysis, economic valuation of ecosystem goods and services, water pricing, and disproportionate costs of measures. General conclusions and recommendations of this analysis are that enhancing data quality, promoting consistency and interaction in economic analysis components, and embedding them pragmatically in decision-making procedures are crucial. The gap analysis plays a pivotal role in directing economic research towards relevant issues within the river basin and in guiding decision makers more effectively in the application of the economic analyses required by the WFD.