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Preliminary Cost Effectiveness Analysis - Affordability and Economic Instruments - WT0758WFD

As part of the ongoing implementation strategy of the Water Framework Directive (WFD), the Department of Environment, Food and Rural Affairs (Defra) has proposed a research project to take forward the economic analysis of the preliminary Cost Effectiveness Analysis of the WFD.

The project will review the options for funding the programmes of measures identified in the preliminary Cost-Effectiveness Analysis undertaken for the Water Framework Directive, building on the work already commissioned regarding the review of the Mogden formula for charging for trade effluent and other work on economic instruments.

The project will involve:
1. Reviewing the funding implications of the Options (packages of measures) set out in the revised WFD Impact Assessment prepared in autumn 2007
2. Identifying the final incidence of costs under the two IA Options at the sector level
3. Identifying whether there are any alternative financing approaches or alternative funding mechanisms which would address distributional concerns without reducing the effectiveness of the measure
4. Preparing a draft outline justification for extended deadlines on the basis of the distributional concerns and the absence of alternative funding approaches.
In addition to those already mentioned, the project will give consideration to the following issues:

• Funding mechanisms and instruments being implemented in other Member States. Particular attention will be given to the different approaches to metering and abstraction charging.
• Links with Article 9 of the Directive and Defra’s interpretation of this including possible questions raised about the definition of Water Services.
• Existing work by Defra on water charging and affordability and work by Ofwat on water charging
• Previously completed work on reviewing Mogden
• Work completed in terms of funding of Sustainable Urban Drainage Systems and the consultations on SUDS, Surface Water Management and Section 106.
• Work completed by the Environment Agency and others on the costs of environmental infrastructure in the South East/Growth areas
• The screening of water pricing policies, cost recovery mechanisms and economic instruments for inclusion in Programmes of Measures and in relation to Article 9 of the Water Framework Directive was undertaken by Nera in 2006 and the conclusions of the pCEA regarding possible economic instruments worth further investigation and further work on economic instruments completed during the pCEA.
• Defra work on the consequences of regulation on farming (Partners for Success).
• Defra work extending the pCEA analysis to Transitional and coastal waters
Time-Scale and Cost
From: 2008

To: 2008

Cost: £42,450
Contractor / Funded Organisations
Jensen and Blanc-Brude Ltd
Environmental Protection              
Water Framework Directive              
Water Quality              
Fields of Study
Water Quality