In 2000, the Water Framework Directive provided a new space for economic thinking, methods and tools in EU water policy making. Over the last two decades, much experience has been gained in applying them at different decision-making (metropolitan, catchment, river basin…) scales, with limited understanding of how it has supported decisions. In parallel, much has changed in our societal and policy context in particular with: climate change high on the agenda; the adoption and implementation of the MSFD with specific attention to social and economic issues; the EU Green Deal aiming at societal transformation accounting for inclusiveness; the 2030 Sustainability Agenda connecting ecological and socio-economic perspectives in goals of direct or indirect relevance to fresh and marine waters. This brings new perspectives on how socio-economics can support the transition that blue policy requires to respond to present and future challenges.
Refreshing H2O policy aimed at contributing to these new perspectives, identifying relevant disruptive breakthroughs in social and economic thinking. We did so by:
Learning from experiences, failures and successes
in applying socio-economic thinking, methods and tools to support management and policy decisions in Europe.
Capturing the socio-economic importance of freshwater and marine ecosystems
As economists supporting the WFD or MSFD implementation, or accompanying management and planning decisions at different scales, you might have faced many challenges in characterizing the socio-economic importance of freshwater and marine ecosystems, assessing the societal importance of the services they provide, or estimating costs imposed on different groups as a result of ecosystem degradation. We delved on approaches that have been developed and used so far, considered novel approaches, and identified challenges and solutions for transforming data crunching exercises into assessments for decision making.
Decrypting the future of our socio-ecological systems
When developing scenarios beyond business-as-usual, freshwater and marine planning processes have faced several methodological challenges (e.g. related to the choice of the adequate temporal scale, factors and policies that need priority attention, consideration of direct and indirect impacts). How these scenarios have informed decision-making, beyond contributing to assessments, has however not been well documented.
We shared methodological difficulties faced so far. We evaluated the relevance and usefulness of approaches and results obtained for getting attention, guiding debates and supporting policy and planning choices, with an aim of enhancing the added value of these exercises.
Cost recovery and financing
The cost-recovery principle has been well debated so far, and quite some challenges have been faced with respect to definitions, assessment methodologies and practical application. Limited attention has been given to the role incentive pricing can play in driving sustainable resource use. Beyond tariffs, there has been increasing interest in other mechanisms (e.g. Payment for Ecosystem Services, Extended Producer Responsibility) that can bring additional financial resources and incentives for a more efficient water use.
We explored the challenges, added value and benefits of the WFD cost-recovery obligations, and investigate prospects for water tariffs and other instruments to deliver better incentives.
Supporting choices and decisions on priority actions
Cost-benefit analysis, cost-effectiveness and multi-criteria analysis have been applied to guide the selection of projects, actions and measure or to justify exemptions to the achievement of set policy objectives. However, these can have limited added value when carried out in isolation from technical and ecological assessments or disconnected from stakeholder processes. It is also unclear if assessment results have effectively been used, and if yes with which implications for decision making.
The questions we discussed are whether we are doing it right, and whether results have been effectively used within planning processes. We aimed at identifying how, when and under which conditions they can bring added value in informing decisions.
Investigating emerging topics
That can bring social and economic thinking to what blue transition in Europe requires.
Uncertainty, shocks and resilience
Climate change, COVID, the war in Ukraine: we are surrounded by uncertainty and shock events. These have always been important for public policy, but they are not central to current water planning and decision making. In the same way, economic assessment methods such as CBA, CEA or MCA have faced challenges in internalizing uncertainty and resilience.
There is a need to “shake” our forward-looking practice! We did so by sharing existing and emerging approaches, methods and tools that can better account for uncertainty and shocks. How to ensure resilience and water security become decision criteria guiding planning and decision making have also been discussed.
Change of behaviour
Incentive pricing is the only reference to supporting changes in practices and behaviours within the WFD. On the marine side, in contrast, much attention is given to ocean literacy as a key factor that could support behaviour change, although the link between ocean literacy initiatives and (MSFD) policy implementation is tenuous.
We explored instruments and mechanisms that can support behavioural change, and how these can be connected to freshwater, marine and climate change adaptation strategies and policies. The role of economic instruments have been discussed as compared to, and in combination with, other drivers to behaviour change such as communication and awareness-raising.
Social acceptability, impacts on vulnerable social groups, inclusion, equity and fairness, social values and perception: all these are relevant to different steps of management and policy processes, and are central to the European Green Deal ambition. Still, despite social issues being specifically referred to in the MSFD, they receive limited attention. The same applies to the WFD, and to some extent to climate change adaptation.
We explored how the political and policy profile of social issues can be raised in blue decision-making processes and debates. We discussed approaches that bring social issues into management and policy making and implementation.
The development and implementation of EU water policy gives limited attention to the political and economic system, power relations, forms of social exclusion and processes that maintain these or governance and mechanisms for aligning private to public interests. At the same time, countries are facing challenges in making fresh and marine waters a sizeable component of strategic investments.
We looked at existing experiences in considering political economy challenges into fresh and marine waters decision-making to deliver strategic thinking, contingent responses, coordination or cooperative responses. We discussed how, and under which conditions, the political economy sphere could support transition.