The socio-economic costs and benefits of environmental groundwater threshold values in the Scheldt basin in the Netherlands

The main objective of Work Package 5 (Socio-economic analysis) in the EU funded project BRIDGE is to develop, apply and test economic methods for the identification of economically efficient groundwater threshold values. The objective is not to derive threshold values for specific groundwater pollutants for which no threshold values are available yet, but to demonstrate the use and usefulness of the applied economic methods in sustainable groundwater policy and management. This paper presents the results for nitrate contamination from agriculture in the Dutch Scheldt basin as one of the case studies elaborated in WP5. The same methodology can be used for the economic underpinning of other relevant pollutants for which threshold values have to be established in the near future following the adoption and implementation of the European Groundwater Directive. The work in WP5 differs from the other BRIDGE work packages in that it focuses explicitly on practical and feasible groundwater management to reach possible groundwater threshold values. Corresponding with the way environmental objectives are set in the European Water Framework Directive (WFD), i.e. based on some ecological reference situation, the BRIDGE methodology to establish groundwater threshold values excludes any a priori economic considerations or criteria. Economic criteria start playing a role after the threshold values have been set, namely in the design of practical groundwater management measures. For example, measures have to be cost-effective according to the WFD, meaning that the environmental threshold values have to be reached at their lowest cost. The socio-economic welfare implications of establishing different groundwater threshold values, including natural background levels, are addressed in this case study through (1) costeffectiveness analysis using an integrated groundwater-surface water model, (2) contingent valuation of the non-market benefits of groundwater protection, and (3) cost-benefit analysis of different groundwater threshold values. Assessing the environmental impact of programs of measures on water quality with some degree of confidence is one of the most important problems in the implementation of the WFD, and will also be one of the most important challenges in the implementation of the new European Groundwater Directive. Given the fact that the groundwater threshold values are fixed in terms of pollutant concentration levels, the effect of policy measures has to be evaluated in terms of their impact on water quality basin-wide. This is currently the weakest link: the relationship between socio-economic activities (pressures) and the actual impact of these activities or changes in these activities on groundwater quality. In the case study presented here, an integrated groundwater-surface water model is used to better understand these relationships in time and space. For this purpose an existing groundwater model was adapted and modified to reflect the specific hydrological, geological and chemical groundwater processes and conditions in the case study area. The model application does not solve all the problems surrounding the environmental impact assessment. The results are still surrounded by many uncertainties, but the modeling approach provides a more structured and systematic approach to deal with these uncertainties. Existing expert knowledge is captured and made explicit in formal linear and non-linear relationships. Presenting these relationships in a transparent and systematic way and formalizing them in a model opens up the opportunity to discuss and debate them in a more structured way than currently is the case, and modify these relationships based on scientific progress. In the contingent valuation survey local residents in the case study area are asked for their knowledge, awareness, perception, attitudes, preferences and valuation of different groundwater threshold values. For this purpose a ‘groundwater quality ladder’ is developed and tested, reflecting different use and non-use related economic values. The economic value of the non-market benefits of different groundwater threshold values is measured in terms of public willingness to pay. This was done in such a way that the estimated costs related to different groundwater threshold values are comparable with the estimated economic values for the same groundwater threshold values in a cost-benefit analysis. Although economic use values dominate the economic values found for different groundwater threshold values, we also find a substantial non-use or existence value for groundwater protection. Taxpayers are willing to pay a substantial amount of money extra for groundwater quality that is close to its natural background level, providing support for the receptor based approach advocated in BRIDGE. The economic impact assessment provides the basis for the evaluation of possible disproportionate costs, and consequently possible objective or time derogation as in the WFD, i.e. lowering groundwater threshold values or delaying them in time. The economic analysis is merely one criterion in the decision-making procedure about disproportionate costs. The question whether a higher threshold value of 25 milligrams nitrate per litre for the whole basin compared to the current threshold value of 50 milligrams results in disproportional costs depends on policy maker assessment of the presented economic information. Different policymakers may hold different views depending on the available policy alternatives and their perceived viability, that is, the political support they expect to receive for the implementation of these measures from the sector involved. Asking taxpayers as one of the sectors expected to be affected by future groundwater policy to inform policy makers about the importance and value they attach to groundwater protection, the cost of a more stringent groundwater threshold value up to 25 milligrams per litre for the whole basin should not exceed 30 euro per household per year over and above what they currently pay for water. In this way the taxpayer’s maximum willingness to pay is used as one of the possible economic threshold values for disproportional costs, accounting for the taxpayer’s ability to pay.