Economic data related to the implementation of the WFD and the FD and the financing of measures : final report.
Date: 2021-07-23
Institutions: Directorate-General for Environment
Subjects: EU Member State, adaptation to climate change, application of EU law, cost-benefit analysis, directive (EU), disaster resilience, economic instrument for the environment, financing method, flood, investment cost, report, water management, water policy, water resources

Economic data 
related to the implementation of 
the Water Framework Directive 
and the Floods Directive 
and the financing of measures 

Final study 

November 2021

With the support of Pierre Strosser (ACTeon), Gonzalo Delacamara (IMDEA), Rianne van 
Duinen, Gloria De Paoli (ACTeon), Ilona Kirhensteine (Wood) 

EUROPEAN COMMISSION 

Directorate-General for Environment 
Unit ENV.C.1 — Clean Water 

Contact: Ioannis Kavvadas 

E-mail:  Ioannis.KAVVADAS@ec.europa.eu

European Commission 
B-1049 Brussels

EUROPEAN COMMISSION 

Economic data 
related to the implementation of 
the Water Framework Directive 
and the Floods Directive 
and the financing of measures 

Final study 

November 2021 

Directorate-General for Environment 

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PDF        ISBN 978-92-76-39453-2        doi:10.2779/163850        KH-08-21-183-EN-N

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EXECUTIVE SUMMARY 

The European Commission (EC) has launched a study for strengthening the knowledge 
base on costs and investments (the demand for financial resources) and on financing 
mechanisms (the supply of financial resources) that support the implementation of  EU 
water  policy.  The  objective  of  the  study  is  to  provide  a  comprehensive  overview  of 
publicly  available  economic  data  related  to  the  implementation  and  financing  of  the 
Water Framework Directive (WFD) and the Floods Directive (FD), and thus to identify and 
highlight knowledge gaps that hinder making informed financing and investment decisions 
in  the  water  sector  in  Europe.  The  study  builds  in  particular  on:  Member  States’  (MS) 
reporting; (socio-economic) studies carried out to support the implementation of the two 
directives; available literature (scientific and otherwise); feedback from MS representatives 
and experts/economists (before, during and after a virtual workshop organised in Brussels 
on October 6, 2020).   

The  collected  evidence  indicates  that  the  costs  of  achieving  the  environmental 
objectives of the WFD are significant (i.e. to arrive at good status or potential for 
all  water  bodies  in  Europe).  In  total,  the  capital  investment  costs  of  the  measures 
planned  in  the  2nd  RBMPs  of  the WFD  reach  at  least  EUR  142  billion.  However,  the 
knowledge  base  on  the  costs  of  planned  measures  is  heterogeneous  and 
incomplete.  Cost  estimates  often  tend  to  cover  capital  investment  costs  only,  with  no 
corresponding  estimates  for  the  annual  operational  and  maintenance  costs  in  many 
countries; and they often tend to be only partially available, namely for some measures, 
some  areas  or  some  sectors,  varying  across  countries.  In  general,  the  knowledge  base 
across countries is stronger for the costs of supplementary measures (capital investment 
costs as  well as operational and maintenance costs) in comparison to the costs  of basic 
measures, partly because costs tend to be assessed for measures for which funding needs 
to be sourced. Finally, the majority of countries assess the costs of measures proposed in 
their Programmes of Measures (PoMs), with only a few countries assessing the total 
costs of achieving water policy goals. This incomplete knowledge base limits countries’ 
capacity to support long-term financing strategies in relation to the implementation of the 
WFD.  

In order to arrive at a “cost-effective combination of measures in respect of water uses,” 
the WFD prompts MS to carry out an economic analysis “based on the estimates of [their] 
potential costs” (WFD, Annex III). While the WFD does not explicitly refer to any specific 
economic appraisal methods, most countries employ Cost-Effectiveness Analysis (CEA) 
of  planned  measures,  but  in  many  instances,  the  analysis  is  applied  to  a  sub-set  of 
measures  and  in  combination  with  qualitative  appraisals.  Furthermore,  an  integrated 
assessment of different types of measures is rarely applied, with CEA largely focusing on 
pollution mitigation measures.1 Fully-fledged Cost-Benefit Analysis are rarely carried out 
by countries. 

In the context of flooding, the formulation of flood risk management objectives concerns 
the quantification of flood risk levels, and the definition of time horizon, concerned areas, 
impacts  targeted,  measure  types,  and  coordination  efforts.  This  has  been  taken  up  in 
varying  degree  across  countries.  Generally,  objectives  are  not  quantified  and 
measurable  hindering the  estimation  of  the  required  level  of  effort  and  their linking  to 
measures, as well as the estimation of costs and the cost-effectiveness of measures. The 
national FRMPs set out the measures aiming to reduce the adverse consequences of floods 
for human health, the environment, cultural heritage and economic activity. They require 
substantial capital investment and maintenance costs. Total flood risk mitigation costs 

1 This may be due to art 16(7), which sets the only explicit requirement on cost-effectiveness for the pollution 

control of priority substances emissions into water 

6 

planned in the 1st FRMPs amount to at least EUR 14 billion. However, these figures should 
be interpreted with caution as the reporting and knowledge base on costs are incomplete 
and  also  vary  in  robustness  across  countries,  risk  type  and  measures.  Not  all  countries 
report  costs  in  their  1st  FRMP  and  the  available  cost  estimations  are  often  incomplete  / 
limited,  only  covering  specific  types  of  measures,  areas  or  cost  categories.    Detailed 
information on costs per flood risk component (prevention, protection, preparedness, 
and recovery) or per type of measure (structural/non-structural) is lacking. Few countries 
report  on  future  investment  needs  and,  based  on  the  disparate  information  in  the 
reports, the use of time horizons and scenarios varies considerably across countries. 

A  wide  range  of  flood  risk  reducing  measures  are  applied  across  countries  targeting 
specifically  prevention,  protection,  preparedness,  and  recovery.  There  seems  to  be  a 
specific  emphasis  on  structural  measures.  The  costs  and  effectiveness  of  non-
structural  measures  are  often  difficult  to  quantify  and,  therefore,  these  types  of 
measures  are  often  discarded  in  economic  ranking  procedures.  Few  countries  provide 
detailed information about the application of natural flood management options. Most 
countries  apply  some  form  of  economic appraisal approaches  to  evaluate  measures. 
However, in many cases it is unclear whether the results have been used for the selection 
and prioritisation of measures, and, if so,  how.   When  countries apply  cost-benefit 
analysis, they differ in terms of level of detail and rigour of the exercise. Environmental 
benefits  are  rarely  considered,  even  though  they  can  be  especially  important  for  the 
evaluation  of  non-structural  measures  and  natural  flood  management  options.  In  these 
cases, the combination of cost-benefit analysis with multi-criteria analysis seems 
to  be  promising  because  it  allows  capturing  the  environmental  benefits  that  can  be 
decisive.  

As regards financing the management of water ecosystems/resources and floods, 
data  and  information  are  scattered  and  heterogeneous  across  MS,  in  terms  of  both  the 
amounts available from different funding sources and the time horizons considered (e.g. 
yearly allocations or allocations over the whole planning period). This renders it difficult to 
get  a  good  understanding  of  the  current  situation  as  well  as  of  the  challenges  and 
bottlenecks  in  delivering  the  financial  resources  matching  the  ambition  level  of  both 
directives.  The  most  important  funding  sources  for  water  management  in  Europe  are 
water and sanitation tariffs (reflecting that many MSs still need significant investments 
in  drinking  water  and  wastewater  treatment  infrastructure)  as  well  as  EU  funds  and 
national public funds. Abstraction and pollution charges are in place in several MS 
and  generate  significant  revenues.  The  revenues  from  such  charges  are  not  always 
earmarked to water management,  and thus  as part of government’s “general revenue,” 
they  go  into  the  Central  Government’s  or  regional,  local  or  municipal  budgets.  Private 
investments  to  support  the  implementation  of  the  two  Directives  are  limited  in  size, 
suggesting  the  need  to  investigate  further  if  there  is  an  untapped  potential  of  private 
funding to support WFD and FD measures and investments. Some Member States make 
use of innovative funding arrangements, such as for example Payments for Ecosystem 
Services  (PES)  schemes,  or  financial  assistance  schemes  combining  public  funding  and 
financial participation by recipients (e.g. farmers), or an environmental fund financed by 
hydropower companies. 

Nine Member States have a full financial cost-recovery, as the financial cost-recovery 
levels for the water and sanitation sector (excluding irrigation) are equal to or higher than 
100%. Five MS record cost-recovery rates between 90 and 100% and  six other MS have 
cost recovery levels between 80 and 90%. Finally, cost recovery levels are below 80% for 
four MS. For an additional three MS, there is no information on the extent of cost-recovery. 
This points to the challenges that MS face in applying the cost-recovery principle (and the 
related  polluter-pays  principle),  an  area  that  deserves  better  attention.  The  comparison 
between cost recovery levels and the affordability of water and sanitation expenditures in 
the EU suggests that full cost recovery levels – and also cost-recovery levels between 
90  and  100%  -  do  not  compromise  the  average  affordability  of  water  services  – 

7 

although affordability issues may still be experienced by some households. Only in a very 
few countries may full cost-recovery entail some affordability issues for low-income groups, 
which  will  need  to  be  carefully  assessed  and  addressed  through  specific  accompanying 
measures (e.g. social tariffs).  

When it comes to water supply to irrigation, the assessment suggests that the financial 
aspects of the provision of irrigation water seem to get less attention across the EU. Data 
are  often  spread  across  different  sources  and/or  incomplete,  and  the  implementation  of 
the cost-recovery principle is often weak.  

The assessment illustrates the current application of economic assessment methods 
in the frame of the WFD and WD implementation. Some economic knowledge receives very 
limited attention in the planning process of RBMPs and FRMPs, and water policy making 
in general. These include inter alia the information on: the operational and maintenance 
costs  of  the  majority  of  measures  (apart  for  measures  related  to  water  services);  the 
costs  of  the  FD  measures,  when  these  are  carried  out  at  the  local  levels;  the  non-
financial economic impacts of measures, including their macro-economic impacts; the 
costs of measures proposed for addressing hydro-morphological pressures2; and the 
costs  (and  benefits)  of  multifunctional  measures  (nature-based  solutions)  that  can 
serve different key objectives within the WFD and the FD. Consequently, solid estimates 
of the total costs required for achieving either the WFD or FD objectives or both 
are often lacking. An insufficient accounting for future climate impacts and socio-economic 
impacts (on equity) compounds the problem.  

There is very limited evidence on how the results of economic assessments are used 
for  or  support  the  selection  and  prioritisation  of  measures  as  well  as  their 
financing. In some cases, it is clear that the outcome of economic assessments cannot 
have informed the choice of measures.  In some situations, a set of measures (among the 
basic  measures)  have  to  be  implemented  anyway  in  order  to  meet  the  minimum 
requirements  and  they  would  take  up  the  bulk  of  (readily)  available  (public)  financial 
resources; the economic analysis can  then help to choose the most cost-effective set of 
basic measures. In other cases, economic assessments are carried out ex-post, i.e. after 
the process of selecting of measures, such as to respond to reporting requirements. In the 
majority of cases, the selection of measures to be included in the PoMs (for both RBMPs 
and FRMPs) carried out at the river basin scale, takes account of the financial resources 
seen as readily available. It concerns the amounts reserved in or readily available out of 
public institution budgets or the direct revenues from water-related charges (in both cases 
with  only  a  few  basic  iterations  between  cost  assessment  and  the  search  for  financial 
resources).  Thus,  priorities  in  investments  rarely  affect  directly  the  choice  of  financing 
sources  and  financing  instruments  since  the  changes  in  financing  instruments  mostly 
originate from nationally driven policy / political processes.   

Finally,  as  investment  and  financing  decisions  are  mostly  decided  at  (water  use)  sector 
level or even per individual water management challenge, it is unlikely that the proposed 
measures and investments proposed are cost-effective (either considering each of the two 
directives  individually  or  combined,  thus  taking  account  of  their  interconnections). 
Combined with the absence of a (systematic) prioritisation of cost-effective measures (e.g. 
treating problems at source, soft measures supporting changes of practices instead of high-
cost  infrastructure,  nature-based  solutions…),  this  raises  the  question  of  the  (order  of 
magnitude of the) cost-saving potential that MS could seize upon in order to reduce the 
implementation costs. 

Nevertheless, in various MS, (new) instruments (e.g. environmental charges and taxes, 
funds  financed  by  hydropower 
payment 

for  ecosystem  services,  environmental 

2 These costs are often very dependent on local conditions including access to land. 

8 

operators…) are  emerging, including mechanisms that involve the private finance sector 
(e.g. loans, or private participation schemes such as PES or others). Sharing experience 
among MS on how they are designed and implemented, and on how they perform in terms 
of  their  effectiveness  in  raising  the  additional  financial  resources,  could  help  supporting 
their wider implementation.  

The financial resources that such instruments can provide, combined with more attention 
given to cost-effective measures, could help to reduce the number of water bodies, where 
less stringent environmental objectives are proposed on the basis of expenses considered 
disproportionate  (pursuant  to  Article  4(5)  of  the  WFD),  resulting  in  less  stringent 
environmental objectives in those areas.  This would be an important boost for achieving 
the WFD’s overall objectives.  

9 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY .................................................................................................... 6

TABLE OF CONTENTS ................................................................................................... 10

1.

2.

3.

BACKGROUND ..................................................................................................... 11

THE STUDY IN A NUTSHELL .................................................................................. 13

SETTING THE SCENE ............................................................................................ 15

3.1. State of water resources .............................................................................. 15

3.2. Key pressures on water resources ................................................................. 16

3.3.

Flood risk................................................................................................... 19

4.

FINANCING STRATEGIES TO SUPPORT THE ACHIEVEMENT OF WATER POLICY GOALS:
MAIN ISSUES AND ELEMENTS OF A LOGICAL FRAMEWORK ....................................... 21

4.1. Why  is  a  (more  strategic)  financial  approach  to  water  resources  management 

(WRM) needed? .......................................................................................... 21

4.2. Why is it critical to connect financing to WRM in a more determined way? ......... 22

4.3. Why money is not the only constraint: challenges in fund absorption ................ 23

4.4.

The different dimensions of strategic water financing ...................................... 24

5.

ASSESSING THE EFFORTS (COSTS) REQUIRED FOR ACHIEVING WATER POLICY GOALS
 ......................................................................................................................... 29

5.1. What do we know about costs and future level of efforts? ................................ 29

5.2. Which current practice in applying methods and tools for assessing costs? ......... 46

6. MOBILISING  FINANCIAL  RESOURCES  TO  SUPPORT  THE  ACHIEVEMENT  OF  WATER

POLICY GOALS .................................................................................................... 51

6.1. What do we know about financing? ............................................................... 51

6.2. What are implications on cost-recovery? ........................................................ 65

7.

PUTTING MAIN RESULTS INTO A WIDER PERSPECTIVE ............................................. 75

7.1. Main results: Assessing the costs of the Water Framework Directive ................. 75

7.2. Main results: Assessing the costs of the Floods Directive ................................. 76

7.3. Main results: Financing of Measures .............................................................. 77

7.4.

Putting the assessment results into perspective: discussion ............................. 79

8.

CONCLUSIONS  -  STRENGTHENING  STRATEGIC  FINANCING  IN  MS:  AREAS  FOR
FURTHER WORK .................................................................................................. 84

10 

1.  BACKGROUND 

From its first efforts in regulating the management of water resources in the second half 
of the 1970, in particular with the adoption of Directives addressing the quality of surface, 
bathing  or  drinking  waters,  the  European  Union  has  progressively  established  a 
comprehensive policy framework supporting the integrated and sustainable management 
of  water  resources  and  aquatic  ecosystems.  The  Water  Framework  Directive 
(2000/60/EC)3  and  the  Floods  Directive  (2007/60/EC)4  are  two  pillars  of  this  policy 
framework:  

  Adopted in 2000, the Water Framework Directive (WFD) builds on the integration 
of economic and ecological perspectives with the aim to achieve by 2015 good water 
status  for  all  surface,  groundwater,  estuarial  and  coastal  waters  in  Europe.  The 
Directive has provisions for extending the 2015 deadline to 2027;  

  Adopted 7 years later, the Floods Directive (FD) aims at reducing the risks of flood 
damage within the EU, a goal that has gained political attention in light of recent 
increased flooding across Europe and of climate change.  

While the two Directives have different (complementary) policy objectives, they have much 
in common. They share similar management philosophies: river basin districts as the 
geographical entity to define water and flood risk management action; 6-year management 
cycles that aim at guiding efforts (in terms  of  more  sustainable practices, infrastructure 
investments,  incentives  to  water  transition,  et  cetera);  a  strong  reliance  on  sound 
assessments to monitor progress and to support management decisions; prioritising the 
critical  issues  accounting  for  progress  in  implementation  and  identifying  new,  emerging 
challenges;  the  role  given  to  stakeholder  consultation  as  means  to  support  the 
implementation process; and the consideration given to economic principles, assessments 
and instruments. They also share a high level of ambition requiring significant efforts to 
reach  their  objectives  although  with  different  time  frames  (by  2027  for  the  WFD,  not 
specified for the FD).  

After  more  than  a  decade  (already  two  for  the  WFD)  of  policy  framework  building  and 
implementation,  this  high  ambition  has  not  been  fully  realised,  judging  the  progress 
already  made  towards  achieving  their  objectives.  Despite  significant  efforts  and 
improvements in several water status parameters, the majority of Member states (MS) fail 
to achieve good water status for all waters5. Although there has been progress on many 
indicators, the improvements in the water bodies’ status from the first to the second WFD 
river basin management cycle have been limited, highlighting the many challenges MS 
are facing in implementing this Directive6.  

3  Directive  2000/60/EC  of  the  European  Parliament  and  of  the  Council  of  23  October  2000  establishing  a 
framework 
field  of  water  policy.  https://eur-lex.europa.eu/legal-
in 
content/EN/TXT/?uri=CELEX:32000L0060  

for  Community  action 

the 

4 Directive 2007/60/EC of the European Parliament and of the Council of 23 October 2007 on the assessment and 
management of flood risks. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32007L0060  

5 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95.  

The value includes the UK. Note that the very limited improvements in good water status overall may to some 
extent be explained by the application of the “one-out-all-out” principle which requires all parameters defining 
water status, in accordance with the WFD Annex V, to be in good status for the whole water body to be classified 
as in “good water status”. The overall classification may therefore in some cases “conceal” progress  that may 
have been achieved for many, yet not all parameters, in a certain water body, unless thoroughly justified on the 
basis of disproportionate costs/technical feasibility, all parameters must meet the objectives/threshold/standard. 

6 For an analysis of the challenges relevant to the WFD implementation, see for instance: “Integrated Assessment 
of the 2nd River Basin Management Plans: EU-wide storyline report,” 2018, report by Wood, ACTeon at alia on 
behalf the European Commission.  

11 

 
                                                 
One  of  these  challenges  relates  to  the  insufficient  resolution  given  to  economic  and 
financial issues and solutions in the implementation process.  

  Although many MS carry out economic assessments of measures proposed for 
both Directives, the soundness of these assessments and the use of their results 
for supporting the prioritisation and selection of actions is unclear. The 2019 WFD 
& FD implementation report7 stresses that: “Significant gaps remain in translating… 
economic  analysis  into  concrete  measures.  Further  progress  in  the  economic 
underpinning of the Programme of Measures (PoM) would greatly facilitate water-
related decisions and investments.” The integrated assessment of the WFD8 reaches 
the same conclusion, stating that: “It is also unclear how economic assessments… 
play a role in the selection and design of measures.” 

  The insufficient mobilisation of financial resources and the bottlenecks faced by the 
administrations  in  charge  of  implementing  the  two  Directives,  in  securing 
adequate  financial  resources  for  supporting  measures  and  investments  have 
also  been  highlighted.  While  the  management  plans  of  both  Directives  often 
identify,  albeit  sometimes  rather  elementarily,  the  funding  sources  that  can  be 
mobilised for supporting implementation, the effective financial resources allocation 
from these sources remains unclear. As stated by the integrated assessment of the 
WFD9: “Financing and the availability of sufficient financial resources is seen as a 
key factor impacting the implementation of measures, in particular (but not only) 
in  MS  when  there  are  no  financing  mechanisms  dedicated  to  water  or  to  the 
environment….  New sources  of financing will need to be identified to  supplement 
existing (sometimes limited) funding.” 

The limited attention to economic and financing issues may contribute to, and at the same 
time, may partly owe its existence to a limited economic and financial knowledge base 
(in  terms  of  both  “quantity”  and  “quality”),  with  difficulties  in  accessing  the  relevant 
economic and financial data. This is reflected in the formal reporting mechanisms of both 
Directives  as  they  have  produced  rather  scant  economic  and  financial  datasets  lacking 
homogeneity.  Thus,  while  many  recognise  the  significant  financial  efforts  necessary  to 
achieve the overall  objectives of both Directives, the  evidence demonstrating  the short-
term and long-term costs, and thus the magnitude of the required efforts to the decision 
makers at national and European level, is not readily available.  

The MS WFD reports do not complement their information on current cost-recovery levels 
with  information  on  the  financial  revenues  from  water-dedicated  economic  instruments, 
and how these revenues are used (or not) to support measures that significantly contribute 
to  the  achievement  of  the  defined  environmental  objectives.  In  addition,  the  financial 
resources  effectively  secured  or  potentially  available  to  support  water  and  flood 
management are unknown, in particular when coming from other sectors financing (e.g. 
agriculture,  energy,  biodiversity,  et  cetera).  Without  sufficient  sound  economic  and 
financial  knowledge,  the  strategic  long-term  planning  and  priority  setting  that  need  to 
underpin  the  progress  towards  achieving  the  two  Directives’  overall  objectives,  cannot 
materialise.  

7 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95.  

8 See the reference in footnote 6. 

9 See the reference in footnote 6. 

12 

 
 
 
                                                 
2.  THE STUDY IN A NUTSHELL 

The European Commission (EC) has launched a study for strengthening the knowledge 
base on costs and investments (the demand for financial resources) and on financing 
mechanisms (the supply of financial resources) that support the implementation of  EU 
water  policy.  The  objective  of  the  study  is  to  provide  a  comprehensive  overview  of 
publicly  available  economic  data  related  to  the  implementation  and  financing  of  the 
Water Framework Directive (WFD) and the Floods Directive (FD), highlighting in particular 
the knowledge gaps that need to be filled for supporting informed financing and investment 
decisions in the water sector in Europe10.   

This  study  builds  on  previous  efforts  to  develop  and  structure  the  water  economic 
knowledge  base  in  Europe,  specifically  MS  reporting  in  the  WISE  database  and  the  EC-
funded Blue 2 study; WFD/FD compliance assessments; integrated assessment of the 2nd 
RBMPs; and the Fitness Check of the WFD and FD. It feeds into the cooperation between 
the EC and the OECD to assess solutions for closing sustainably the financing gaps that the 
European  water  sector  experiences.  In  particular,  the  study  (a)  mobilises  the  results 
obtained during the first stage of this EC – OECD cooperation on the financing of the water 
(service) sector; and (b) contributes to further efforts to identify financing solutions that 
can support the WFD and FD implementation.  

The study has carried out the following activities: 

  A  compilation  and  presentation  of  an  overview  of  the  current  situation  and 
challenges  faced  by  water  and  flood  management  in  MS  –  combining 
information  on  the  state  of  waters,  key  pressures  imposed  by  human  activities, 
socio-economic development, as well as the level of efforts (current expenditure) 
for addressing these challenges; 

  Using  a  common  template11,  the  gathering  and  structuring  of  data  on  the 
economic  and  financial  aspects  of  water  and  flood  management  (in  particular  in 
relation to costs, economic assessments, benefits, financial sources and revenues, 
cost-recovery,  et cetera). This has helped  to develop an overview of  the existing 
economic  and  financial  knowledge  and  of  the  major  knowledge  gaps.  It  has  also 
contributed  to  the  identification  of  barriers  faced  by  MS  in  the  use  of  economic 
methods and in  taking steps to address  the financing needs, thus supporting the 
cost-effective achievement of both Directives’ overall objectives; 

  The (peer) review of the economic knowledge collated through: (1) a survey 
among MS representatives and experts/economists;12 and (2) presenting (partial) 
results  at  a  (virtual)  workshop  organised  in  Brussels  on  October  6,  202013.  The 
workshop has helped to consolidate the knowledge base through a collation of the 
received feedback and additional information sources. It has also helped to identify 
and  discuss  mechanisms  and  solutions  that  could  help  strengthen  strategic 
approaches to financing the  WFD and FD  implementation.  The received  feedback 

10 The study focuses in particular on the economic aspects of the WFD and FD implementation, and it does not 
intend to explicitly tackle the financial aspects of water scarcity and droughts and of flood damages. 

11 This has led to the compilation of country fiches conceived as internal background documents, pre-filled 
with publicly available information. The study has not intended to further elaborate them into public documents, 
in view of the additional efforts. 

12 Via the Ad-hoc Task Group (ATG) on “Water Economics” under the Common Implementation Strategy (CIS) 

13  https://circabc.europa.eu/ui/group/9ab5926d-bed4-4322-9aa7-9964bbe8312d/library/36226ee2-d311-401f-
8b7c-35b3b4d21990?p=1&n=10&sort=modified_DESC 

13 

 
                                                 
has helped to revise and consolidate the information on the economic and financial 
dimensions of the WFD and FD;  

  The development of a study (the present study) that synthesises the gathered 
information  throughout  the  project  and  that  highlights,  in  particular,  the  key 
knowledge  gaps  that  need  to  be  bridged  for  supporting  sounder  investment  and 
financial decisions.  

Launched in January 2020 and ending in January 2021, the study has been implemented 
by a consortium led by Wood, with ACTeon as technical lead and IMDEA Water, the Baltic 
Environmental Forum, Denkstatt, the Institute for European Environmental Policy, Oikos, 
the National Technical University of Athens and VITO as partners.   

14 

 
 
 
 
 
 
3.  SETTING THE SCENE 

3.1.  State of water resources 

The  WFD  aimed  to  achieve  good  status  or  potential  of  surface  and  groundwater  bodies 
across the EU by 2015 (except for exemptions). 

In  the  2nd  river  basin  management  planning  (RBMP)  cycle,  40%  of  surface  waters 
(rivers,  lakes  and  transitional  and  coastal  waters)  are  in  good  ecological  status  or 
potential (up from 39% in the 1st RBMPs) as presented below in Figure 3-1.  

Figure 3-1 Ecological status of surface water bodies in EU27 

Surface waterbodies: ecological (2nd RBMPs)

Surface waterbodies: ecological (1st RBMPs)

40%

39%

54%

44%

5%

17%

0%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Good or high

Failing to achieve good

Unknown

Source: SWBs (ecological); to be accessed here;  
Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “unpopulated”. Number of 
WBs has decreased between 1st and 2nd RBMPs. 

At the same time, only 33%14 of surface waters are in good chemical status (down 
from  37%  in  the  1st  RBMPs,  largely  due  to  improved  monitoring)  as  illustrated  below  in 
Figure 3-2. 

Figure 3-2 Chemical status of surface water bodies in EU27 

Surface waterbodies: chemical (2nd RBMPs)

Surface waterbodies: chemical (1st RBMPs)

33%

37%

47%

20%

25%

38%

0%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Good

Failing to achieve good

Unknown

Source: SWBs (chemical): to be accessed here; 

Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “unpopulated”. Number of 
WBs has decreased between 1st and 2nd RBMPs. 

In most MS, a few priority substances account for  the prevalent poor chemical status of 
water bodies, the most common being mercury. If mercury and other ubiquitous priority 
substances  were  omitted,  only  3%  of  surface  water  bodies  would  fail  to  achieve  good 
chemical  status.  Improvements  as  regards  the  concentration  levels  for  individual 
substances  show  that  MS  are  making  progress  in  tackling  sources  of  contamination. 
Improvements are usually visible at the level of individual quality elements or pollutants 
but often they do not translate into improved status overall.15 

14

 The EEA report “European waters – assessment of status and pressures 2018,” reports that 38% are in good 

chemical status as the numbers are inclusive of the UK. 

15 EEA, 2018, “European waters. Assessment of status and pressures 2018” 

15 

 
 
 
 
                                                 
The proportion of water bodies with unknown status has decreased and the confidence in 
status assessment has grown as regards both ecological and chemical status/potential of 
surface water bodies, reflecting the monitoring and assessments efforts made by MS while 
implementing the first RBMP.  

At  the  same  time,  92%  of  groundwater  bodies  are  estimated  to  be  in  good 
quantitative status (up from 87% in the 1st RBMPs) and 82% in good chemical status 
(up from 81% in the 1st RBMPs) (see Figure below) 

Figure 3-3 

Quantitative and chemical status of groundwater bodies in EU27 

Groundwater bodies: quantitative status (2nd RBMPs)

Groundwater bodies: quantitative status (1st RBMPs)

Groundwater bodies: chemical status (2nd RBMPs)

Groundwater bodies: chemical status (1st RBMPs)

92%

87%

82%

81%

5%

3%

6%

6%

14%

4%

15%

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Good

Poor

Unknown

Source: GWBs (quantitative by number): to be accessed here; GWBs (chemical by number): to be accessed here  

Notes:  EEA  WISE  reporting  on  EU27  countries  (NUTS0),  excluding  UK  and  Norway,  excluding  unpopulated, 
number of WBs increased between 1st and 2nd RBMPs) 

For most of the groundwater bodies, the expected achievement of good status or potential 
is  anticipated  by  2027  or  beyond,  demonstrating  the  long  time  lag  between  the 
implementation of measures and their effectiveness in groundwater quality16. 

Overall, despite significant efforts by many MS and despite the reversal of a decades-long 
decline, the improvements in water status between the first and second RBMPs have been 
marginal relative to the gap towards achieving the WFD objectives.   

3.2.  Key pressures on water resources 

European waters remain under significant pressure from diffuse pollution (e.g. generated 
by agriculture, transport infrastructure and atmospheric deposition), point-source pollution 
(e.g. generated by industry or remaining wastewater discharges that  have not yet been 
adequately treated), over-abstraction and hydro-morphological changes stemming from a 
range of human activities.17 

The 2nd river basin management planning cycle indicates the relative importance of these 
different  pressures,  with  hydro-morphology  changes,  atmospheric  deposition  and 
diffuse sources of pollution being by far the main pressures on surface water bodies in 
terms of percentage of surface water bodies affected.  

16  European  Commission,  2019,  “Fitness  Check  Evaluation  of  the  Water  Framework  Directive  and  the  Floods 
Directive,” report by Trinomics on behalf the European Commission. 

17 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on 
the Implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,”  COM(2019) 95. 

16 

 
 
 
 
 
                                                 
Figure 3-4 Significant pressures on surface water bodies in EU27 

Surface water bodies

P4 – Hydromorphology

P2-7 - Diffuse sources-Atmospheric deposition

P2 - Diffuse sources

P1 - Point sources

17%

39%

39%

38%

P8 - Anthropogenic pressure – Unknown

P3 – Abstraction

P7 - Anthropogenic pressure – Other

P5 - Introduced species and litter

8%

7%

P9 - Anthropogenic pressure - Historical pollution

P6 - Groundwater recharge and or water level

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Source: 
assessments/pressures-and-impacts-of-water-bodies    

https://www.eea.europa.eu/themes/water/european-waters/water-quality-and-water-assessment/water-

Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “no significant anthropogenic pressure” and 
“unpopulated18”. Number of WBs has decreased between 1st and 2nd RBMPs 

The  main  impacts  on  surface  water  bodies  are  chemical  pollution  (50%),  altered 
habitats  due  to  morphological  changes  (37%)  and  nutrient  pollution  (27%)  (See 
below in Figure 3-5). 

Figure 3-5 Significant impacts on surface water bodies in EU27 

Surface water bodies

50%

37%

27%

18%

14%

7%

Chemical pollution
Altered habitats (morphological changes)
Nutrient pollution
Organic pollution
Altered habitats (hydrological changes)
Unknown
Acidification
Other
Microbiological pollution
Elevated temperatures
Saline or other intrusion
Dependent terrestrial ecosystems
Associated surface waters
Litter

0%

10%

20%

30%

40%

50%

60%

Source: 
assessments/pressures-and-impacts-of-water-bodies  
Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “none” and “unpopulated 19”. Number of 
WBs has decreased between 1st and 2nd RBMPs 

https://www.eea.europa.eu/themes/water/european-waters/water-quality-and-water-assessment/water-

18 Pressure type - all except Unpopulated/Category - all except Unpopulated /Type - all except Unpopulated/ 
Ecological status - all except Unpopulated / Chemical status - all except Unpopulated/ EU27 (total excluding 
UK) 

19 Impact type - all except Unpopulated /Category - all except Unpopulated /Type - all except Unpopulated 
/Ecological status - all except Unpopulated /Chemical status - all except Unpopulated /EU27 (total excluding 
UK) 

17 

 
 
 
 
 
                                                 
At the same time 25% of groundwater bodies were affected by diffuse sources, 12% by 
point sources and 10% by abstraction pressures20 (see Figure below).  

Figure 3-6 Significant pressures on groundwater bodies in EU27 

Groundwater bodies

P2 - Diffuse sources

P1 - Point sources

P3 – Abstraction

12%

10%

25%

P8 - Anthropogenic pressure – Unknown

P7 - Anthropogenic pressure – Other

P6 - Groundwater recharge and or water level

P2-7 Diffuse sources-Atmospheric deposition

P9 - Anthropogenic pressure - Historical pollution

P4 – Hydromorphology

P5 - Introduced species and litter

0%

5%

10%

15%

20%

25%

30%

Source: EEA, to be accessed here.  
Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “no significant anthropogenic pressure” 
and “unpopulated21”. Number of WBs has decreased between 1st and 2nd RBMPs 

Specifically, agricultural activity is the main cause of the failure to achieve good chemical 
status for groundwater bodies, as it leads to diffuse pollution from nitrates and pesticides. 
Other significant sources are wastewater discharges that are not connected to a sewerage 
treatment system, and contaminated soil sites or abandoned industrial sites.22 

The main impacts on groundwater bodies are chemical pollution (13%) and nutrient 
pollution  (9%)  (See  below  in  Figure  3-7).  However,  still  a  very  high  number  of 
groundwater bodies (28%) are affected by unknown impacts. 

20 The values are different to those reported in the EEA report “European waters. Assessment of status and 
pressures 2018,” 2018, as the latter include the UK. 

21 Pressure type - all except Unpopulated/Category - all except Unpopulated /Type - all except Unpopulated/ 
Ecological status - all except Unpopulated / Chemical status - all except Unpopulated/ EU27 (total excluding 
UK). 

22 European Commission, 2019, “Fitness Check Evaluation of the Water Framework Directive and the Floods 
Directive,” report by Trinomics on behalf the European Commission. 

18 

 
 
 
 
 
 
                                                 
Figure 3-7 Significant impacts on groundwater bodies in EU27 

Groundwater bodies

Unknown

28%

Chemical pollution

13%

Nutrient pollution

9%

Water balance/ lowering water table

5%

Organic pollution

Saline or other intrusion

Associated surface waters

Dependent terrestrial ecosystems

Acidification

Other

Microbiological pollution

0%

5%

10%

15%

20%

25%

30%

Source: 
assessments/pressures-and-impacts-of-water-bodies  

https://www.eea.europa.eu/themes/water/european-waters/water-quality-and-water-assessment/water-

Notes: EEA WISE reporting on EU27 countries (NUTS0), excluding UK and excluding “none” and “unpopulated23”. Number of 
WBs has decreased between 1st and 2nd RBMPs 

3.3.  Flood risk 

In recognition of the significant impacts from flooding, the Floods Directive (FD) entered 
into force in 2007 aiming to establish a framework for the assessment and management 
of  flood  risks  and  to  reduce  the  adverse  consequences  of  floods  for  human  health,  the 
environment,  cultural  heritage  and  economic  activity.  The  Directive  requires  for  the  2nd 
planning cycle (2021-2027) that MS: 

  Undertake  preliminary  flood  risk  assessments  (PFRA)  leading  to  the 
identification  of  areas  that  are  at  significant  risk  of  flooding  -  areas  of  potential 
significant flood risk (APSFR) (by 2018);  

  Prepare flood hazard and risk maps (FHRM) showing how far floods may extend, 
the  depth  or  level  of  water  and  the  potential  impacts  on  human  health,  the 
economy, environment and cultural heritage (by 2019); and 

  Prepare Flood Risk Management Plans (FRMP) (by 2021). 

In the process of developing the 1st cycle PFRAs and FRMPs, MS have identified 7,906 
areas  of  potential  significant  flood  risk  (APSFRs)  falling  within  209  Units  of 
Management24 or UoMs25.  

23  Impact  type  -  all  except  Unpopulated  /Category  -  all  except  Unpopulated  /Type  -  all  except  Unpopulated 
/Ecological status - all except Unpopulated /Chemical status - all except Unpopulated /EU27 (total excluding UK) 

24 MS should prepare one FRMP for each RBD or UoM that contain APSFRs, or a set of FRMPs coordinated at the 
level of the RBD (Article 8.1). 

25 European Commission, 2019, –“European Overview - Flood Risk Management Plans,” SWD(2019) 31  

19 

 
 
                                                 
The risks of flood damages are expected to increase in the future as a result of increased 
magnitude and frequency of floods due to climate change (higher intensity of rainfall and 
rising sea levels) as well as increasing numbers of people and assets in flood risk zones.26 

Under the no-adaptation scenario (i.e. assuming a continuation of the current protection 
against river floods up to a current 100-year event), the EU damages from the combined 
effect of climate and socioeconomic changes are projected to rise from EUR 6.9 billion/year 
to EUR 20.4 billion/year by the 2020s, EUR 45.9 billion/year by the 2050s, and EUR 97.9 
billion/year by the 2080s.27 

26 European Commission, 2019, “Fitness Check Evaluation of the Water Framework Directive and the Floods 
Directive,” report by Trinomics on behalf the European Commission. 

27 European Commission, 2019, “European Overview - Flood Risk Management Plans,” SWD(2019)31  

20 

 
 
 
 
 
                                                 
4.  FINANCING STRATEGIES TO SUPPORT THE ACHIEVEMENT 
OF  WATER  POLICY  GOALS:  MAIN  ISSUES  AND  ELEMENTS 
OF A LOGICAL FRAMEWORK 

In July 2020, the EU leaders reached a deal on a EUR 750bn plan (titled “Next Generation 
EU”)  to  reconstruct  the  EU’s  pandemic-stricken  economies.  The  so-called  Recovery  and 
Resilience  Facility  comes  on  top  of  the  EU’s  upcoming  EUR  1.074  tn  7-year  budget 
(Multiannual  Financial  Framework,  MFF),  and  thus  it  can  lead  to  less  stringent  financial 
constraints on water resource management in the EU. MS are currently working on their 
own national Recovery and Resilience Plans pledging to reform their economies in order to 
unlock  their  allocated  share  of  this  funding,  to  be  disbursed  in  the  period  2021-
2023.   Undisputedly,  this  unprecedented,  coordinated  fiscal  stimulus  will  have  sizeable 
impacts. However, it is evident that the liquidity or the availability of financial resources 
overall is a necessary condition to support the green recovery and transition, but it is by 
no  means  a  sufficient  one.  In  the  absence  of  sound  financing  strategies  in  particular, 
financial resources may not deliver the expected results.  

implementation.  Strategic 

“Strategy” refers to how financial resources are to be deployed through a combination of 
measures aimed at ensuring an efficient utilisation of funds and the timely achievement of 
goals.  Financing  is  thus  a  critical  link  between  strategic  plans  (such  as  River  Basin 
Management  Plans  under  the  WFD  or  Flood  Risk  Management  Plans  under  the  FD)  and 
their  actual 
financial  planning  addresses  roles  and 
responsibilities of government agencies (including multi-level governance across levels of 
government and the coordination of financing decisions and mechanisms), policy priorities 
and  the  related  legislative  and  regulatory  reforms  in  order  to  ensure  that  the  proposed 
PoMs (Programme of Measures) are underpinned by a realistic financing (OECD, 201128). 
When translated to water resources management, strategic financial planning, conceived 
as an iterative process, can help anticipate the financial needs in the medium and longer 
term,  in  terms  of  both  the  upfront  capital  investment  costs  and  the  operational  and 
maintenance costs. Often, water policy tends to be driven by crisis management (droughts, 
floods, pollution incidents, et cetera) as much as by planning itself, and takes the form of 
a  reactive  (hence  ex  post)  attempt  to  remediate  impacts.  Thus,  strategic  financing  is  a 
binding requirement to move from that ad-hoc approach towards an ex-ante, pre-emptive 
and proactive one, largely aimed at managing risks and opportunities while also being able 
to respond to unintended and unplanned outcomes of extreme events. Strategic financing 
matches policy ambitions with financial resources (OECD, 201229). 

4.1.  Why  is  a  (more  strategic)  financial  approach  to  water 

resources management (WRM) needed?  

The need for governments to strengthen the financial dimension of WRM and water 
services delivery is pervasive worldwide and hence, it is not limited to the EU and its MSs. 
Financial constraints are sometimes the result of the lack of money, especially in countries 
in the EU under severe fiscal consolidation efforts or facing drawbacks to leveraging private 
funding. However, they are also the outcome of a lack of effective and efficient financing 
mechanisms able to properly address equity concerns. Financing should not be an add-on 
but rather a critical element for a sounder WRM, clearly connected with the water policy 
goals  and  the  wider  social  and  economic  development  objectives.  Strategic  financial 
planning can contribute to match policy goals with the available financial resources, as well 

28 OECD, 2011, “Meeting the Challenge of Financing Water and Sanitation. Tools and Approaches.” 

29 OECD, 2012, “A Framework for Financing Water Resources Management.” 

21 

 
 
                                                 
as  to  shed  light  on  how  much  money  is  needed  and  how  much  is  actually  available  (or 
could be made available). 

Strategic financing should be designed in such a way that it provides a systematic way of 
thinking about a number of issues:  

  Necessary investments to achieve Good Ecological Status (GES) and Good 
Ecological Potential (GEP) for water bodies (preventing or alleviating pollution, 
tackling  hydro-morphological  alterations,  conserving  biodiversity  and  the 
provision of aquatic ecosystem services), and to manage floods and flood risks, 
but also droughts and drought risk while anticipating and adapting to climate 
change; 

  The potential compensation for welfare losses that may occur as a result 
of implementation gaps in the WFD and FD (such as downstream users being 
affected by pollution or over abstraction);  

  Delivering  adequate  burden  (and  risk)  sharing  across  public  and  private 

actors;  

  Factoring in affordability concerns (for individual water users and for society 
overall in light of the costs of the PoMs developed for achieving the objectives 
of the WFD and FD) and sectoral (or nationwide economic) competitiveness; 

  Mobilising additional resources also serves to deliver effective opportunities to 
coordinate  sectoral  policies,  vertically  and  horizontally.  These  efforts  are 
meaningful at both MS and EU level, and as part of a more determined effort 
to strengthen the link in practice between, on the one hand, the WFD, and, on 
the other hand agricultural policy (CAP) and the chemicals regulation REACH. 
The latter can improve the protection of human health and the environment 
from the risks stemming from chemicals, or between biodiversity conservation 
and natural flood management, et cetera. 

4.2.  Why  is  it  critical  to  connect  financing  to  WRM  in  a  more 

determined way?  

Making the economic case for investments that contribute to the long-term water policy 
objectives including water security (i.e. via increased water use efficiency, diversification 
of water supply sources, aquatic ecosystem restoration, et cetera) is of critical importance, 
particularly in the context of water scarcity and climate change. Climate change adaptation 
is today a general concern touching upon all water policy initiatives, even when still weak 
as  regards  its  evidence  base.  The  “water  transition”  to  a  sustainable  water  use  (e.g. 
equivalent to that of the “energy transition” that will deliver decarbonisation) will require 
significant additional financial resources.  

Government budgets seem more likely to pay for traditional public infrastructure (i.e. water 
supply and sewage collection networks as well as wastewater treatment plants, all of them 
able to generate income flows once in operation), with other investments being side-lined 
including those by private investors, given the preference of commercial financiers for a 
sub-set  of  water  projects  (See  Fig.  4.1).  The  availability  of  commercial  finance  largely 
depends on asset class, investment size and risk profile.  

One would expect investment finance to grow proportionately with the sector’s prominence 
and  needs.  However,  this  may  not  always  be  the  case.  Lately,  international  finance  for 
climate-related  purposes  has  grown  significantly,  but  over  80%  of  disbursements  are 
geared to mitigation programmes in the energy and transport sectors (UNEP, 2016), with 
limited financial resources allocated to climate adaptation ends, including the investments 
in supporting resilience in water management.  

22 

 
 
Even  when  capital  and  operational  expenditures  are  ensured,  significant  weaknesses 
emerge  in  the  area  of  capital  (asset)  replacement,  a  critical  issue  in  relation  to 
infrastructure development at different levels (urban water management, major irrigation 
infrastructures, et cetera). (Physical) asset management tends to be a common challenge 
in many, if not all MS, although to a different extent.  

Figure 4-1 Investment appetite for commercial finance in the water sector 

Source:  Alaerts,  2019,  “Financing  for  Water—Water  for  Financing:  A  Global  Review  of  Policy  and 
Practice.”  

4.3.  Why money is not the only constraint: challenges in fund 

absorption  

The public sector  exhibits a limited absorption capacity (i.e. administrative capacity and 
human resources) to effectively translate allocated budgets into physical infrastructure and 
other  types  of  investments.  A  number  of  reports30  indicate  the  following  causes:  design 
problems; a lack in the capacity to provide the required co-financing out of the national 
budget; the incompatibility, inconsistency and instability of national regulations, especially 
on sectoral policy; land acquisition and environmental safeguards; weaknesses and lack of 
readiness  of  the  implementing  organisations  and  related  institutions.  Over  all  MS,  the 
absorption of grants exceeded 90% rates after a delay of up to 5 years. In some cases, it 
was less than 50%  (European Court  of  Auditors, 2018). This puts the effectiveness and 
purposefulness of some of the investments in doubt, especially in cases when there is an 
urgency to comply (with set policy objectives) or to use available financial resources. The 
pressure to use funds often leads to ad-hoc projects that have not been assessed against 
a sound set of prioritisation criteria. 

30 See for instance: European Parliament, 2011, “Report on absorption of Structural and Cohesion Funds: lessons 
learnt for the future cohesion policy of the EU” (2010/2305(INI)); to be accessed here.  

This source does not focus specifically on the water sector, but highlights an overall absorption challenge in the 
EU. 

23 

 
 
 
 
                                                 
 
4.4.  The different dimensions of strategic water financing  

A  strategic  financing  framework  will  need  to  consider  a  number  of  dimensions  that  are 
summarised  in  Figure  4.2  below.  The  following  chapters  will  investigate  them  in  more 
detail, assessing the availability and quality of information available for the different blocks.  

Figure 4-2 Strategic financing framework for water resources management 

Source: Own elaboration.  

Assessing the level of application of this framework will require looking in particular at four 
transversal dimensions that are further detailed below.   

As depicted in Fig. 4.2 above (see the boxes in dark blue), water management’s strategic 
financing  efforts  should  be  driven  by  an  adequate  assessment  of  policy  gaps.  Such  an 
assessment  is  often  constrained  by  the  definition  of  baseline  scenarios  (sometimes 
perceived as the current situation rather than the projection of what would happen in the 
absence  of  new  actions),  and  by  a  weak  analysis  of  drivers  in  planning  documents. 
Currently, decisions are made within a context of cascading uncertainty, not only stemming 
from  global  climate  models  and  scenarios,  and  their  downscaling  to  regional  climate 
models,  but  also  from  the  assessment  of  their  potential  impacts  in  socio-economic 
modelling.  However,  as  reflected  in  Fig.  4.2,  climate  change  is  far  from  being  the  only 
source of uncertainty: the overall macroeconomic performance and the structural change 
in  the  economy  as  a  result  of  digitalisation  are  also  major  sources  of  uncertainty.  As 
explained  above,  strategic  financing  approaches  allow  to  explicitly  connect  the  level  of 
(financial) effort to policy objectives.  

Measures stemming from this analysis cannot only be those that result from a conventional 
financial appraisal or a least-cost exercise (in line with the economic analysis prescribed in 
the  EU  WFD  Art.  9),  no  matter  how  important  that  is.  Precisely  on  the  basis  of  the 
acknowledgement of the layers of uncertainty mentioned in the previous paragraph, it is 

24 

 
 
 
 
also of chief importance to consider the wider, ancillary benefits, thus moving away from 
least-cost towards best-value solutions for society (see boxes in light blue).  

Within  this  context,  the  consideration  of  the  following  dimensions  is  of  paramount 
importance. 

Dimension 1 – Ensuring capital investment (and its funding) to address the policy 
gap 

  The  estimation  of  the  long-term  funding  needs  is  critical  to  connect  the 
discussions on financing and those on cost estimates, policy needs and societal 
challenges.  

  When  assessing  costs  required  for  achieving  policy  goals,  one  should  pay 
sufficient attention to the potential to reduce overall costs, through water use 
efficiency,  circular  economy,  asset  management,  the  implementation  of 
nature-based solutions that contribute to the objectives of both the WFD and 
the FD, et cetera.  

  Whether  revenues  from  water-related  financial  instruments  should  be 
earmarked  for  water  expenditure  (following  the  principle  that  water  should 
fund water), should also receive attention.   

 

It  is  also  critical  to  ascertain  what  role  the  private  sector  (i.e.  commercial 
financiers)  can  play  and  how.  Private  preferences  in  terms  of  investment 
processes  and  policy  priorities  may  diverge  (for  example  as  regards  the 
financing  of  grey  infrastructures  versus  nature-based  solutions).  Part  of  the 
challenge is to increase the number of bankable projects in a sub-set of actions 
that  may  attract  the  attention  from  commercial  banks  in  support  of  public 
funds. This can be done by strengthening the development and preparation of 
projects that can be accommodated by existing investment processes, as well 
as  through  de-risking  projects  in  order  to  render  them  more  attractive  to 
investors.  

  How to account for the value of water services not provided by the market (i.e. 
some  ecosystem  services)  is  also  an  important  element  in  designing  the 
financing of water projects. 

  Given  the  need  to  connect  the  water  policy  goals  with  the  wider  social  and 
economic development goals, one should include as investment criteria their 
ability to contribute to macroeconomic performance and to social and territorial 
cohesion,  bridging  the  gap  in  terms  of  inequality,  competitiveness  and 
productivity.   

Dimension 2 – Ensuring long-term financial sustainability / sufficiency  

  Given the possible drawbacks to attaining higher cost-recovery rates31 (such 
as those perceived in agriculture), it is critical to address simultaneously the 
(investment-related)  funding  needs  and  the  financial  revenues  to  cover 
operational  and  maintenance  costs.  These  obstacles  include  the  lack  of 
metering  infrastructure,  resistance  from  water  users  to  higher  water  pricing 
levels,  the  unintended  outcomes  of  a  number  of  subsidies,  the  lack  of 
enforcement of pollution and abstraction charges, et cetera.  

31 Such potential drawbacks include:  
 

 
 

drawbacks related to the rigidity of water allocation (and reallocation) schemes, such as the existence 
of senior water use rights that prevent more efficient and innovative farmers from performing at better 
levels, thus with the potential to reach higher cost recovery rates;  
the reluctance of some farmers to pay more (if at all) for water abstractions; and  
drawbacks  stemming  from  the  assessment  of  cost-recovery  rates,  such  as  in  the  case  of  deficit  and 
supplementary irrigation, or when resource costs are largely unknown (as often the case), or when there 
are feedback effects from national and international markets on the price of crops. 

25 

 
                                                 
  Financial appraisals should feed into the decisions on cost-, benefit- and risk-

sharing schemes and risk management structures.  

  The  strategic reflections  on long-term  financial sustainability  help to identify 
relevant issues concerning procurement practices (i.e. public procurement of 
innovative solutions, circular procurement, et cetera).  

  Reflecting  on  ensuring  financial  sufficiency  is  also  instrumental  for  the 
identification  of  new  revenue  streams.  A  good  example  of  this  concerns  the 
circular economy approaches, where new revenues can arise from material and 
energy recovery.  

  Financial sustainability needs to take account of the quality of water services 
delivered to inter alia households, farmers and industries. Low quality can lead 
to low recovery of operational expenses that often leads to increases in new 
capital investments.  

  Aligning  individual  efficiency  gains  and  the  wider  social  objectives  requires 
specific  attention,  as  illustrated  by  the  financing  of  investments  in  the 
modernisation of irrigation systems that deliver significant savings at individual 
level, but not necessarily so at the basin level.  

Dimension 3 – The role of economic incentives  

  The  role of  economic policy instruments is of  paramount importance  both in 
terms of funding capital expenses and of financially sustaining the PoMs. This 
entails  facing  a  number  of  challenges,  in  terms  of  both  the  design  and 
implementation  of  those  instruments.  Their  delivery  mechanisms  and 
governance are important pre-conditions for success.  

  Economic policy instruments never perform in isolation, but rather interact with 
other policy instruments as part of complex policy mixes, including information 
mechanisms  (i.e.  metering)  or  command-and-control  mechanisms  (i.e. 
pollution standards). 

  Existing and new economic instruments that support the achievement of the 
WFD and FD goals (see figure 4.3 below) cannot only contribute to fund raising 
but  also  send  signals  in  terms  of  water  use  efficiency  and  long-term  water 
security  (i.e.  the  diversification  of  water  supply  sources  in  order  to  enhance 
resilience and adaptability, the restoration of aquatic ecosystems, et cetera).  

26 

 
 
 
Figure 4-3 Wide range of economic policy instruments (EPIs) for sustainable water management32 

32 The figure mentions trading schemes; according to a commenter to this report, this may be a sensitive and controversial issue. Trading schemes are often criticised by civil society 
organisations, who fear a potential commodification of water resources (see also recent public declarations of the new UN Rapporteur for the right to water), and by environmental 
NGOs, who see it as a potential gateway for a relaxation of environmental standards in the context of the existing over-exploitation of the resource, et cetera). 

27 

 
                                                 
Dimension  4  –  What  is  needed  for  a  sustainable  financing  approach  to  deliver 
what would be expected?  

  Strategic  financing  is  inherently  linked  to  strategic  thinking.  This  implies 
investigating:  the  alternatives  available  to  make  use  of  current  and  future 
financial  resources;  the  mechanisms  and  solutions  that  can  reduce  future 
financing  needs;  and  the  solutions  that  help  harnessing  additional  financing 
sources, including from other sectors.  

  Strategic financing does not deliver a set package of finance options. It rather 
supports  potential  pathways  to  bridging  financing  gaps  while  responding  to, 
and accounting for, new challenges and societal demands. 

28 

 
 
 
 
 
5.  ASSESSING  THE  EFFORTS  (COSTS)  REQUIRED  FOR 

ACHIEVING WATER POLICY GOALS 

5.1.  What do we know about costs and future level of efforts?33 

Water Framework Directive 

Objectives 

The WFD aimed to achieve good status or potential for the surface and groundwater bodies 
in the EU by 2015. This concerns over 111 000 surface water bodies (e.g. rivers, lakes, 
coastal  waters)  and  over  13  000  ground  water  bodies.  Achieving  “good  status” 
encompasses good ecological and chemical status for surface waters and good quantitative 
and chemical status for ground water bodies. However, the Directive allows for extensions 
beyond  the  2015  deadline  up  to  2027,  on  the  grounds  of  technical  feasibility, 
disproportionate costs or natural conditions (Article 4), unless natural conditions prevent 
reaching  the  WFD  objectives  within  the  time  limits  set.  In  order  to  achieve  the  set 
environmental  objectives,  MS  have  developed  and  implemented  Programs  of  Measures 
(PoMs) defining basic and supplementary measures34. 

Costs of measures 

Most countries estimate and report costs (CAPEX and OPEX) of planned measures in their 
RBMPs.  The  knowledge  base  on  costs  of  planned  measures  is,  however, 
heterogeneous and incomplete across the EU. First of all, cost estimates of measures 
included  in  the  2nd  RBMPs  are  partial,  covering  mainly  capital  investment  costs  with  no 
corresponding estimates of annual operational and maintenance costs that are known in 
less than a third of the countries (see Figure 5-1 below).  

33 Discussions at the ATG “Economics” meeting on 26 March, 2021, highlighted that the study tends to overlook 
the  costs  of  staff  needed  to  monitor  and  implement  some  measures.  This  is  because  data  on  this  are  often 
unavailable. However, these costs can be important, and would merit further investigation. 

34 According to WFD Article 11.3, basic measures are defined as “the minimum requirements to be complied 
with and shall consist of” the following: “measures required to implement Community legislation for the protection 
of  water”  (Article  11.3(a)),  such  as  the  Urban  Waste-water  Treatment  Directive,  the  Nitrates  Directive,  the 
Drinking Water Directive et cetera, and other basic measures (Article 11.3(b-l)), such as measures to implement 
Article 9 (cost recovery), measures to protect drinking water quality et cetera).  

According to Article 11.4 and 11.5, supplementary measures are defined as “those measures designed and 
implemented in addition to the basic measures, with the aim to achieve the [environmental] objectives [of the 
WFD].” Supplementary measures can include additional legislative and administrative instruments, economic or 
fiscal instruments, emission and abstraction controls, research projects, educational campaigns, et cetera, that 
go beyond the basic measures and that are deemed necessary for the achievement of objectives. 

29 

 
 
 
 
 
 
 
 
 
 
 
                                                 
Figure 5-1 Knowledge base – number of countries estimating total costs of measures in 
the 2nd RBMPs (2016-2021) 

Note:  

 
 

 

“Yes” cover MS that report costs of measures in the 2nd RBMPs;  
“Yes, partial” cover MS that provide costs of measures only partially, e.g. for selected RBDs rather than 
the country;  
“No” cover MS that do not report costs of measures in the 2nd RBMPs 

Source:  Information  provided  by  the  MS  in  the  context  of  this  study  (including  2nd  RBMPs  and  EC(2019)35, 
EC(2019)36) 

In  many  instances  where  cost  estimates  (CAPEX  and  OPEX)  are  available,  they  are 
partial in terms of: 

  The types of measures, providing the costs for some types of measures only. For 
example,  the  costs  of  basic  measures  are  not  reported  by  Belgium,  the  costs  of 
supplementary measures are not reported by Luxembourg; 

  Selectiveness in measures, providing cost estimates for some individual measures 

but not for others; 

  Selectiveness in areas – estimating costs in selected River Basin Districts only; 

  Selectiveness in sectors – excluding certain types of costs from the cost appraisals, 
e.g.  private  industry  costs  associated  with  abatement  measures,  or  the  non-
financial costs of measures implemented by farmers (e.g. loss of yields). 

Available estimates of capital investment costs of measures included in the 2nd RBMPs are 
presented  below  in  Figure  5-2.  The  cost  estimates,  however,  should  be  treated  with 
caution, because for some countries, they are partial (for the reasons stated above). For 
instance,  the  values  for  Belgium,  Netherlands  and  Lithuania  only  encompass  costs  of 
supplementary  measures,  while  the  cost  estimates  for  Luxembourg  only  cover  basic 
measures.    

35 European Commission, 2019, “European Overview – River Basin Management Plans”, SWD(2019) 30. 

36 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,”. COM(2019) 95. 

30 

 
 
 
 
 
                                                 
Figure 5-2 Capital investment costs of all measures in the 2nd RBMPs (2016-2021) (EUR 
million) 

Italy

France

Germany

Romania

Spain

Ireland

Poland

Croatia

Belgium

Czechia

Hungary

Sweden

Latvia

Slovenia

Bulgaria

Greece

Slovakia

Luxembourg

Portugal

Netherlands

Austria

Denmark

Estonia

Cyprus

Malta

Lithuania

0

5000

10000

15000

20000

Capital investment cost of WFD measures

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)37, EC 
(2019)38) Finland is not included as only provides annual costs (EUR 1.6 billion per year). Germany did not 
report total costs of the 2nd RBMPs and total value was provided separately by stakeholders.  

In total, the capital investment costs of the measures planned in the 2nd RBMPs reach 
at  least  EUR  142  billion  (likely  an  underestimation  in  light  of  the  comments  made 
above).  This  has  a  similar  order  of  magnitude  as  the  total  capital  investment  costs 
estimated in the 5th WFD Implementation report39 of EUR 115.6 billon40 and may reflect 
updated information since41.  

37 European Commission (2019), “European Overview – River Basin Management Plans,” SWD(2019) 30. 

38 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

39 European Commission, 2019, Report from the Commission to the European Parliament and the Council   “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans First Flood Risk Management Plans,” COM(2019) 95. 

40 As a result of manual aggregation of costs in some RBMPs as part of this study. 

41 It is also noted that the OECD reports that by 2030 the additional expenditures for water supply and sanitation 
would amount to EUR 289 billion for the 28 MS. The values differ due to differences in the scope and timeline of 

31 

 
 
                                                 
The knowledge is even more partial when considering available cost data (CAPEX and 
OPEX) separately for basic measures (as defined in Art 11(3)(a)) and supplementary 
measures42 (Art 11(3)(b-l), 11(4) and 11(5)), as included in the 2nd RBMPs (see below in 
Figure 5-3).  

Figure  5-3  Knowledge  base  –  number  of  countries  reporting  costs  of  basic  and 
supplementary measures separately in the 2nd RBMPs (2016-2021) 

Note:  

 
 

 

“Yes” cover MS that report costs of basic and supplementary measures separately in the 2nd RBMPs;  
“Yes, partial” cover MS that provide costs of basic and supplementary measures separately but 
partially, e.g. for selected RBDs rather than the country;  
“No” cover MS that do not report costs of basic and supplementary measures separately in the 2nd 
RBMPs 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)43, EC 
(2019)44) 

In general, between 59% and 67% of the MS reported estimates for the capital investment 
costs of different types of measures in their 2nd RBMPs (2016-2021). The knowledge base 
on operational and maintenance costs is relatively poorer, ranging from 33% to 41% of 
MS reporting these costs for basic and supplementary measures. It should, however, be 
noted  that  some  countries  do  not  separately  estimate  and  report  on  the  costs  of  basic 
measures as these form part of ongoing budgetary expenditures.  

the  assessments.  See  for  the  OECD  estimates:  OECD,  2020,  “Financing  Water  Supply,  Sanitation  and  Flood 
Protection: Challenges in EU Member States and Policy Options,” OECD Studies on Water, OECD Publishing, Paris, 
https://doi.org/10.1787/6893cdac-en  

42 It is noted that the allocation of measures to basic or supplementary measures may differ across and within 
countries.  

43 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

44 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

32 

 
 
 
 
                                                 
The 5th WFD Implementation report45 estimated that in the planning period 2016-2021, for 
the basic measures (as defined in WFD Article 11(3)(a)), the total capital investment costs 
amount to at least EUR 56 billion. For the supplementary measures (i.e. those required by 
Articles  11(3)(b-l),  11(4)  and  11(5)),  they  amount  to  at  least  EUR  59.6  billion.  This 
represents  a  48%  versus  52%  balance  between  the  different  types  of  measures  in 
aggregated terms. 

Across the Member States, there is a significant fluctuation in the shares for the basic 
and supplementary measures in  the total capital  investment  costs  of measures 
included in the 2nd RBMPs (see Figure 5-4 below).  

Figure  5-4  Capital  investment  costs  of  measures  -  share  of  basic  and  supplementary 
measures in the total costs of 2nd RBMPs (2016-2021) 

100

90

80

70

60

50

40

30

20

10

0

Basic measures

Supplementary measures

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)46, EC 
(2019)47) 

The shares for basic and supplementary measures respectively range from 5% and 95% 
in  Malta  to  98%  and  2%  in  Greece48.  In  general,  the  countries  in  Central  and  Eastern 
Europe  still  report  significant  capital  investment  costs  related  to  the  implementation  of 
basic measures in the water supply and sanitation sectors.  

Finally,  very  few  countries  assess  the  total  costs  of  achieving  the  water  policy 
goals,  i.e.  the  costs  of  achieving  the  environmental  objectives  set  by  the  WFD,  as  the 
majority of countries report the costs of their PoMs covering a 6 year period (see below in 

45 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on 
the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); 
Second River Basin Management Plans First Flood Risk Management Plans,” COM(2019) 95. 

46 European Commission, 2019, “ European Overview – River Basin Management Plans,” SWD(2019) 30. 

47 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

48 When excluding the countries that only provide cost estimates either for basic measures (Luxembourg) or for 
supplementary  measures  (Belgium,  Netherlands,  Lithuania).  Czechia  reported  EUR  0  as  the  costs  for  basic 
measures.  

33 

 
 
                                                 
Figure 5-5)49. Some countries, like Belgium, employ scenario approaches to estimate the 
costs  of  achieving  objectives  while  other  countries  (such  as  Estonia  and  Slovakia)  focus 
such assessments on the investments in water supply and sanitation infrastructure (again 
see Figure 5.5). 

Figure  5-5  Knowledge  base  –  number  of  countries  estimating  costs  of  achieving  WFD’s 
environmental objectives  

Costs of achieving WFD objectives

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

Yes

No

Note:  

 
 

“Yes” cover MS that assess costs of achieving the WFD’s environmental objectives;  
“No” cover MS that do not assess costs of achieving the WFD’s environmental objectives 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)50, EC 
(2019)51) 

49 Separately, Germany informed that the total costs for the implementation of the WFD for 2010-2015 amounted 
to EUR 12 billion and that for the period 2016-2021, they would be EUR 15 billion Euro. Meanwhile, further data 
on German costs have been published in the reports of the river basin management plans, for example in the 
RBMP for the German River Basin District.  

50 European Commission, 2019, “European Overview –River Basin Management Plans,” SWD(2019) 30. 

51 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

34 

 
 
 
 
                                                 
BOX 5.1 ASSESSMENT OF INVESTMENT NEEDS TO FULLY ACHIEVE WFD OBJECTIVES  

 

In Belgium, all three regions defined maximum scenarios in the RBMPs to estimate 
the costs required to achieve the objectives set by each region by 2027. However, 
whether or not these scenarios would be sufficient to fully reach the WFD objectives 
is uncertain due to the intrinsic uncertainty about the effectiveness of measures. In 
Flanders  and  Brussels,  the  additional  costs  for  the  maximum  scenarios  are  high 
(EUR 10 billion), while in Wallonia the additional costs are limited: 

  Capex  of  EUR  9.7  -  14.5  billion  in  Flanders  for  achieving  the  maximum 
scenario. The costs of baseline “efficient” scenario included in the 2nd RBMPs 
(2016-2021) amount to 2.7 billion Euro. 

  Capex  of  EUR 5 - 9 billion in Brussels for achieving the maximum scenario. 
The  costs  of  baseline  “efficient”  scenario  included  in  the  2nd  RBMPs  (2016-
2021) amount to 1.5 - 3 billion Euro. 

  Capex  of  EUR  1.1  billion  in  Wallonia  for  achieving  the  maximum  scenario. 
Costs of baseline “efficient” scenario included in the 2nd RBMPs (2016-2021) 
amount  to  0.8  billion  Euro.  The  net  additional  costs  are  limited  (0.3  billion 
Euro) due to the better current water status. 

 

 

 

In France, the investment gap that would need to be filled for achieving good status 
is estimated at EUR 66.65 billion.  

In  Hungary,  the  investment  needs  to  ensure  full  achievement  of  the  WFD 
objectives  by  2027  amount  to  EUR  10.17  billion  (of  which  basic  measures:    EUR 
5.86  billion;  supplementary  measures:  EUR  4.09  billion;  and,  preparatory 
measures: EUR 0.23 billion). The estimation was made in the 1st RBMP.  

In Lithuania, the achievement of the WFD goals has been postponed mainly as a 
result of natural conditions. According to the RBMPs, the achievement of good status 
or potential for water bodies will require more than EUR 240 million of investments 
for relevant state and municipal institutions as well as individual (private) operators. 
About  EUR  46  million  per  year  will  be  needed  for  pollution  reduction  and  other 
improvement measures yearly (2016–2021); 

 

In Romania: The analysis of the total investment gap to ensure full achievement 
of the WFD objectives (for the period 2021-2027) will take place in the context of 
the 3rd planning cycle for delivering the 3rd RBMPs; 

 

In Italy, total estimated investment needs are EUR 16.7 billion Euro, of which: 

o  EUR 8.7 billion (52% of the total) for waste water treatment investments 
o  EUR 4.7 billion (28% of the total) for investments in aqueducts 
o  EUR 3.2 billion (19% of the total) for investments in impoundments. 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)52, EC 
(2019)53) 

52 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

53 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

35 

 
 
 
 
                                                 
In some countries, the assessments of future investment needs have a strong focus 
on those for the water supply and sanitation infrastructure (see Box 5.2 below). 

BOX 5.2 FOCUS ON WATER INFRASTRUCTURE 

 

 

In Estonia, the "Water Infrastructure Investment Plan" estimated that 1.1 billion 
Euro should be invested in the water management infrastructure in the next 12 
years.  In order to maintain or achieve compliance with the  requirements of the 
UWWD and DWD, around 893 million Euro will be required, out of which 434 million 
Euro in the next 4 years and 459 million Euro in the next 5-12 years. 

In Slovakia, cost estimates for upgrading the sewerage networks and wastewater 
treatment  plants  (WWTPs)  by  2027  are  1.56  billion  Euro.  Cost  estimates  for 
improving public water supply by 2027 are 656.60 million Euro. 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)54, EC 
(2019)55) 

Measures 

The 2nd RBMPs include a wide range of measures to address pressures caused by: 

  Abstraction  and  water  scarcity,  for  example  the  improvements  in  flow 
regime, water efficiency measures, drinking water protection measures, water 
pricing policy measures, et cetera; 

  Non-agricultural pollution sources, for example construction or upgrades 
of  urban  wastewater  treatment  plants  and  industrial  wastewater  treatment 
plants,  remediation  of  contaminated  sites  (historical  pollution  including 
sediments,  groundwater,  soil),  measures  tackling  Priority  Substances  and 
Priority Hazardous Substances, et cetera; 

  Pollution  from  agriculture,  for  example  measures  to  reduce  nutrient 
pollution  from  agriculture,  measures  to  reduce  pesticides  pollution  from 
agriculture,  the  phase-out  or  the  reduction  of  the  emissions  of  Priority 
Hazardous  Substances  /  Priority  Substances,  and  drinking  water  protection 
measures; and  

  Hydro-morphological  alterations,56  for  example  improving  longitudinal 
continuity,  improving  hydro-morphological  conditions  of  water  bodies  (e.g. 
river  restoration),  improvements  in  flow  regime  and/or  establishment  of 
ecological flows, natural water retention measures.57 

The majority of countries estimate and report costs of planned measures by sector or by 
type of measure in their RBMPs (see below in Figure 5-6).  

54 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

55 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

56 During the ATG “Water Economics” meeting on 26 March, 2021, a representative from PIANC - WFD Navigation 
Task Group noted that, in the case of hydro-morphological modifications, there is a need to link the delivery of 
measures to the requirements of articles 4(3) and 4(7) (exemptions) and to cost-recovery. This was not explicitly 
planned during the present study, and hence this is an area for further investigation. 

57 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on 
the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans, COM(2019) 95. 

36 

 
 
 
 
                                                 
 
Figure 5-6 Knowledge base – number of countries reporting costs of measures (CAPEX and 
OPEX) by sector or type in the 2nd RBMPs 

Note:  

 
 

 

“Yes” cover MS that report costs of measures by KTM, sector or other national categorisation;  
“Yes, partial” cover MS that provide costs of measures by type or sector but partially, i.e. for selected RBDs rather 
than the country, for specific types of water bodies (e.g. groundwater), for selected sectors or supplementary 
measures only;  
“No” cover MS that do not report costs by sector, type or other form of disaggregation 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)58, EC 
(2019)59) 

There is, however, a substantial heterogeneity in the available information on the costs 
of measures (CAPEX and OPEX) by sector or by measure type, hindering comparisons 
between countries. Depending on the countries, cost estimates are presented by: 

  Sector (agriculture, industry, urban sector et cetera); 

  The (national categorisation of) type of measures;  

  Key Types of Measures (KTM);  

  Other  categorisation  comparing  basic  and  supplementary  measures,  surface 
water  bodies  and  groundwater  bodies,  costs  of  measures  implemented  for 
different spatial units (e.g. different (sub)-basins). 

The divergence in the lists of sectors, types of measures and other groupings to estimate 
and  report  costs  of  measures  (CAPEX  and  OPEX)  in  the  2nd  RBMPs,  has  rendered  the 
comparison of cost estimates for different measures challenging. The situation is somewhat 
better for the measures that address wastewater treatment / drinking water supply, and 
the measures proposed for reducing agricultural pollution (see the examples in Box 5.3).  

Despite  the  fact  that  hydro-morphological  alterations  are  one  of  the  main  pressures  on 
water  bodies,  there  is  a  limited  focus  on  assessing  the  costs  of  measures  that  improve 
hydro-morphological conditions. Where these costs are estimated, they represent a limited 
share of the total costs, in some cases stressing the gap between the recognition of the 
importance of addressing hydro-morphological pressures for achieving good water status 
and the selection of measures that remain focused on pressures traditionally addressed by 
the  EU  legislation  such  as  point-source  pollution.  On  the  other  hand,  the  lower  costs 
associated with hydro-morphological measures (in absolute terms) may also reflect their 
cost-effectiveness in contributing towards status improvements in  comparison to further 
wastewater treatment. 

58 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

59 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

37 

 
 
 
                                                 
BOX 5.3 COSTS OF MEASURES BY SECTOR OR TYPE 

 

 

 

 

 

 

In  Belgium  (Flanders),  the  costs  of  measures  that  improve  water  supply 
and sewerage account for 90% of total costs, followed by the costs of hydro-
morphological measures (3.3%). 

In  (mainland)  Portugal,  reducing/eliminating  pollution  load  accounts  for 
75.85% of costs (between 2016-2027) while minimising hydro-morphological 
alterations accounts for 15.45%.  

In Romania, the costs of measures in urban agglomerations account for 89% 
of total costs, followed by agriculture accounting for only 4.1% of total costs.  

In  Hungary,  the  costs  of  agricultural  measures  account  for  51.5%  of  total 
investment costs, followed by water supply and sanitation (29%). 

In Slovakia, the measures in water supply and sanitation account for 40.60% 
of total costs, followed  by measures for  nature protected areas (27.8%), 
agriculture (13.6%) and industry (9.80%).  

In Cyprus, pollution control measures (urban areas and transport) account 
for  46%  of  total  costs,  followed  by  measures  targeting  water  efficiency 
(31%). 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)60, EC 
(2019)61) 

Floods Directive 

Objectives 

The  Floods  Directive  aims  to  reduce  and  manage  the  risks  that  floods  pose  to  human 
health,  the  environment,  cultural  heritage,  and  economic  activity.  The  Floods  Directive 
requires EU MS to prepare Flood Risk Management Plans (the FRMPs) at the scale of river 
basin  districts  (or  Units  of  Management  (UoMs)).  The  FRMPs  present  flooding  risk, 
measures for reducing this risk and they set out how stakeholders will cooperate to manage 
flood risk.   

Countries  report  objectives  for  flood  risk  management  in  their  Flood  Risk  Management 
Plans. The information collated from the MS shows  that the formulation of flood risk 
management  objectives  is  heterogeneous  across  the  EU.  In  many  instances, 
objectives  are  defined  qualitatively  and  the  lack  of  quantified  and  measurable 
objectives represents an important knowledge gap62. Several countries present general 
objectives  related  to  the  quantification  and  reduction  of  flood  risk  (hazard,  exposure, 
vulnerability)  through  prevention,  protection  and  preparedness  measures,  while  other 
countries  set  more  detailed,  measure-oriented  objectives  such  as  on  non-structural 
measures  (Hungary,  Czechia),  spatial  planning  measures  (Estonia,  Spain,  Portugal), 
awareness  raising  (e.g.  Austria,  Spain,  Portugal)  or  additional  research  (Spain).  Some 
countries (e.g. Sweden, Latvia, Romania) specify objectives in terms of avoided negative 
impacts,  in  particular  impacts  on  human  health,  the  environment,  nature  loss,  cultural 

60 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

61 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

62  European  Court  of  Auditors,  2018,  “Floods  Directive:  progress  in  assessing  risks,  while  planning  and 
implementation need to improve,” ECA Special Report 25.  

38 

 
 
 
                                                 
heritage,  and  economic  activities.  Finally,  some  countries  aim  to  strengthen  the 
coordination  (1)  between  the  FD  and  the  WFD  (Spain,  Portugal),  (2)  with  neighbouring 
countries (Hungary), or (3) among all actors involved in flood risk management (Spain).  

Previous studies have also highlighted that there is scope to better spell out the flood risk 
management  objectives  and  to  explain  more  clearly  how  measures  will  be  effective  in 
achieving  the  objectives.63,64  Poorly  elaborated  objectives  may  hinder  tracking 
implementation  progress  as  well  as  the  evaluation  of  the  contribution  of  individual 
measures to the achievement of objectives. Quantified and measurable objectives are key 
to  estimating  the  level  of  effort  and  associated  costs  and  they  set  a  basis  for  the 
quantification of future flood investment needs accounting for climate change and  socio-
economic developments.65 Box 5.4 illustrates the practice of Sweden that has proposed an 
articulated system of objectives, with four overarching objectives set at national level and 
three types of objectives – specific, measure-oriented and knowledge objectives – set in 
individual FRMPs.  

BOX 5.4 SETTING OBJECTIVES FOR FLOOD RISK MANAGEMENT 

All  five  FRMPs  of  Sweden  define  objectives  that  contain  specific  and  measurable 
elements. Examples include the following objectives from the FRMP for Älvsbyn:   

  No  cultural  heritage  objects  or  areas  classified  as  cultural  heritage  of  national 

interest shall be permanently damaged due to a flood;   

  Electricity distribution installations should not be affected by floods with a 100-year 

return time.  

The  FRMPs  for  Falun  and  Kristianstad  also  include  ‘measure-oriented’  objectives.  For 
example, the FRMP for Falun has an objective that by 2018, the Falun municipality has 
established forms of cooperation on flow regulation and preventive measures regarding 
the smaller streams of the municipality (examples of preventive measures may be the 
preservation of wetlands and the maintenance of streams).  

The ‘knowledge’ objectives found in the Falun, Karlstad and Kristianstad FRMPs can also 
be linked to measures. For example, the Karlstad FRMP contains the following objective: 
developing  detailed  knowledge  about  the  flow  levels  in  Klarälven  and  water  levels  in 
Vänern that can lead to serious flooding consequences for cultural heritage.  

All the FRMP objectives set specific aims or actions that can be measured. The measures 
shall be achieved during the 1st implementation cycle 2016-2021. 

Source: Commission Staff Working Document. First Flood Risk Management Plans – MS: Sweden. Accompanying 
document.  

63  European  Commission,  2019,  “Fitness  Check  of  the  Water  Framework  Directive,  Groundwater  Directive, 
Environmental Quality Standards Directive and Floods Directive,” SWD(2019) 439.  

64 See also European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31.  

65 See also CIS WGF workshop, 2019, Report on “setting and measuring objectives and measures for flood risk 
management,” 16-17 October 2019; available on: Circabc (europa.eu). 

39 

 
 
 
 
                                                 
 
Costs 

Most countries estimate and report total costs of planned measures (CAPEX and 
OPEX)  in  the  1st  FRMPs.  Some  countries  do  not  report  costs  as  the  prioritisation  and 
implementation of measures fall under the responsibility of local or regional authorities and 
consequently the results and cost estimates have not been aggregated at the national scale 
(for example Denmark, Sweden, France). Other countries (Germany, the Netherlands) do 
not present costs as they are estimated and reported in national flood management plans 
or strategies that are complementary to FRMPs66.  

However, the reported knowledge base on costs is heterogeneous and incomplete 
across  EU  countries.  Where  cost  estimates  are  available,  they  provide  a  partial  view  on 
total costs, in particular: 

  Some MS report costs for some types of measures only (e.g. Croatia includes 

estimates for infrastructure measures only); 

  Some  MS  report  costs  for  selected  river  basins  only  (e.g.  Italy  reports  cost 

estimates for three River Basin Districts); 

  Countries rarely provide cost estimates for different categories of costs (e.g. 
the breakdown of capital costs and operational costs is not provided, and it is 
unclear if operational costs have been considered at all); 

  Different  time  periods  underpin  the  cost  estimates  (e.g.  the  6  years  of  the 
planning period, or a longer time period required for reducing flood risk levels 
to set objectives); sometimes the period considered is not specified. 

Figure 5-7 below reports the estimated total costs of measures included in the 1st FRMPs 
for the countries that reported costs. These cost estimates should therefore be interpreted 
with  caution  for  the  reasons  mentioned  above.  Furthermore,  previous  studies  have 
highlighted heterogeneity in cost estimates across countries because67: 

  MS  set  their  own  objectives  and  select  appropriate  measures  accordingly; 
consequently,  MS  setting  higher  levels  of  flood  protection  will  incur  higher 
implementation costs.  

  The large geographical variability in climate translates into a large variability 

of costs and benefits across countries.    

  Some countries may have invested a lot in the past and may therefore have 
limited investment requirements in the programming period  of the 1st FRMP 
(or  vice  versa).  Therefore,  the  reported  costs  cannot  be  interpreted  as  a 
benchmark of the importance a country attaches to flood protection.    

In total, flood risk costs planned in the 1st FRMP reach at least EUR 14 billion68.  

66  The  Netherlands  applied  a  wider  approach  and  therefore did  not  present  separate  numbers for  the  FD.  The 
country invests quite a bit of money each year in flood protection, but they do not report them separately as 
costs of Flood Directive measures. Figures on annual costs of water management and who pays for them in NL, 
can be found in a dedicated report (https://edepot.wur.nl/364993; in Dutch). In particular, the Table on page 5 
of  this  report  shows  that  the  Netherlands  pay  for  flood  protection  ('Waterveiligheid')  EUR  1051+118  =  1.169 
million annually.  

67 See European Commission, 2019, “Fitness Check of the Water Framework Directive, Groundwater Directive, 
Environmental Quality Standards Directive and Floods Directive,” SWD(2019) 439. 

68 The Fitness Check reports that the measures reported in the Flood Risk Management Plans cost in total amount 
to EUR 12.5 billion between 2016 and 2021.   

40 

 
 
 
                                                 
Figure 5-7 Total costs of measures reported by MS (EUR million) 

Source: Information provided by the MS in the context of this study (including 1st FRMPs and EC (2019)69, EC 
(2019)70) 

There  is  very  limited  information  available  on  the  costs  (CAPEX  and  OPEX)  of 
individual  measures  or 
individual  measures  types  (prevention,  protection, 
preparedness, and recovery). Only a few countries provide costs  estimates per measure 
type, see Box 5.5. Undoubtedly, more information on the relative costs per measure type 
in the PoMs would elucidate their relative importance in financial terms, even though some 
types  of  measures  are  location  specific  and  thus  the  corresponding  cost  estimates  less 
suitable for extrapolation over other countries. 

BOX 5.5 COSTS OF MEASURES BY TYPE 

In Cyprus, protection measures make up to 99% of the total costs of the PoM.  

 
  Greece reports that 382 measures are included in the Greek FRMPs. These are structured along  four 
axes (prevention, protection, preparedness, and recovery). The costs of prevention measures account 
for 86.1% of the total costs of measures, with the costs of preparedness measures, costs of protection 
measures and costs of recovery accounting for 7.1%, 5.4% and 1.4% of the total costs, respectively. 

Source: Information provided by the MS in the context of this study (including 1st FRMPs and EC (2019)71, EC 
(2019)72)  

69 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC);  Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

70 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31.  

71 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

72 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31. 

41 

 
 
                                                 
Few countries report on the total future investment needs to achieve flood risk objectives. 
In the cases where the investment needs are reported (see Box 5.6), this information 
is heterogeneous and built on current expenditures (through the assumption that current 
expenditure levels are sufficient to reach FD objectives in the future). For the estimation 
of the short-term investment needs (i.e. until 2027), these figures may be accurate, but 
for  long-term  projections,  climate  change  and  socio-economic  developments  should  be 
factored into the analysis.  

BOX 5.6 ESTIMATED INVESTMENT NEEDS TO REACH FD OBJECTIVES  

  Belgium reports costs estimates: 

  For  Flanders,  it  can  be  deduced  that  the  yearly  capital  expenditures  for 
flood measures is EUR 55 – 60 million per year in the period 2016 – 2019. 

  For  Brussels,  the  CAPEX  ranges  from  EUR  1.3  and  1.7  billion  over  the 
period,  or between EUR 93 and 112 million annually; this is based  on a 
maximum scenario in the 2nd RBMP/1st FRMP, reflecting future investment 
needs.  

 

 

 

In Austria, the federal state invests around EUR 200 million per year into protection 
against  natural  hazards.  The  larger  part  of  this  amount  is  used  for  structural 
measures  and  maintenance,  followed  by  hazard  zone  planning  and  the 
compensation of flood damages. In total, around EUR 400 million Euro is invested 
per year in flood risk management measures.   

In  its  Water  Sector  Development  Programme,  Lithuania  reports  financing  needs 
by 2023 of EUR 72 million, of which EUR 18 million are high priority, EUR 32 million 
low priority and EUR 22 million earmarked for additional road protection measures. 

In  the  Netherlands,  the  existing  expenditures  on  flood  risk  management  are 
approximately  EUR  1  billion  annually  or  13%  of  total  water  expenditures.  The 
national water plan mentions additional investment needs of EUR 19 billion before 
2050 based on the Delta program 2015. 

  Slovakia estimates a total cost of EUR 1 287 million for flood protection measures 

until 2027, of which EUR 866.548 million for FD measures after 2021.  

  The first FRMP of Slovenia mentions an expenditure between EUR 263.2 and 326.2 
million  for  investments  in  flood  risk  management  measures,  with  EUR  75  million 
allocated to flood remediation on the basis of past experience. EUR 60 to 125 million 
is planned for the maintenance of flood protection infrastructure. 

Source: Information provided by the MS in the context of this study (including 1st FRMPs and EC (2019)73, EC 
(2019)74) 

73 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

74 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31.  

42 

 
 
 
 
 
 
                                                 
 
In  the  context  of  the  OECD  study  on  “Financing  Water  Supply,  Sanitation  and  Flood 
Protection: Challenges in EU MS and Policy Options”75, additional future expenditures for 
flood protection were projected (but not monetized) for EU MS based on WRI data from 
Aqueduct Floods76. Box 5.7 briefly explains the key assumptions and type of results from 
this study that could set the basis for any future investigations into this topic.      

BOX 5.7 - PROJECTING ADDITIONAL EXPENDITURES FOR FLOOD RISK PROTECTION 

Due to the paucity of data, the additional expenditures on flood protection are projected 
but not monetized. Projections reflect the respective impact of climate change and of 
socio-economic developments (economic and demographic growth). These impacts are 
projected on three variables: 1. the value of assets at risk of flooding, 2. the number of 
people  affected  by  floods  and  3.  the  value  of  GDP  affected  by  floods.  The  analysis 
assumes that the costs of mitigating flood risks rise at the same rate as the share of the 
population at risk, the value of assets or GDP exposed to floods.  

The figure below shows the growth factors for the three indicators. A growth factor is 
defined as the factor by which current flood risk expenditures should be multiplied in 
order to maintain current flood risk protection standards in the future (by 2080).  

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Source:  OECD  study  on  “Financing  Water  Supply,  Sanitation  and  Flood  Protection:  Challenges  in  EU  Member 
States and Policy Options”77 and WRI data from Aqueduct Floods78.  
Note: The value of assets at risk of flooding and the value of GDP affected by floods are in EUR billion; the  people 
affected by floods are in number of people. 

75 OECD, 2019, ”Financing Water Supply, Sanitation and Flood Protection: Challenges in EU Member States and 
Policy Options,” Available in the OECD Library.  

76 https://www.wri.org/publication/aqueduct-floods-methodology.  

Note that results are based on rough estimations that are not always reliable at local and regional scale. 

77 OECD, 2019, “Financing Water Supply, Sanitation and Flood Protection: Challenges in EU Member States and 
Policy Options,” Available in the OECD Library.  

78 https://www.wri.org/publication/aqueduct-floods-methodology.  
Note that results are based on rough estimations that are not always reliable at local and regional scale. 

43 

 
 
                                                 
 
Measures 

The  Floods  Directive  stipulates  that  an  FRMP  must  contain  the  measures  to  achieve  the 
objectives the Member State has set for the areas at risk, and that these measures should 
cover  all  aspects  of  flood  risk  management:  prevention,  protection,  preparedness,  and 
recovery.  The  reported  information  on  the  types  of  applied  flood  measures  is 
heterogeneous and partial across EU countries.   

Many  countries  report  the  total  number  of  planned  measures  (e.g.  Germany  17 568 
measures, Italy 8 346, Poland 2 429, Finland 410, Czech Republic 60, Hungary 46, Cyprus 
38, Slovenia 20). Others give a differentiated overview of planned measures per main type 
of measure (prevention, protection, preparedness, and recovery measures). For example, 
Austria,  Cyprus,  Luxembourg,  and  Hungary  provide  an  estimate  of  the  number  and 
percentage  of  planned  measures  per  main  measure  type.  The  Commission  evaluation 
report on the submitted FRMPs highlights that the numbers of reported measures cannot 
be compared across MS due to many different reporting approaches79.   

The  FRMPs  seems  to  have  a  specific  emphasis  on  structural  protection  measures 
(such as dikes, polders, diversion channels, and dams) (, even though non-structural flood 
risk measures (such as land-use change, early warning systems, risk communication and 
emergency management), have a high flood risk reduction potential and can be flexible, 
cost-effective  solutions  compared  to  structural  measures.  For  instance,  in  Luxembourg 
94%, mainland Portugal 81%, Poland 87%, structural measures account for respectively 
94,  81  and  87  %  of  the  total  amount  of  measures.    Often,  a  persisting  knowledge  gap 
follows from the  difficulties to quantify the costs and  the  effectiveness  of non-structural 
flood  risk  management  options,  since  their  effectiveness  depends  on  socio-economic 
changes  and  governance  arrangements.80,81  This  is  also  reflected  by  the  evidence  that 
several  countries  report  they  consider  only  structural  measures  in  economic  ranking 
procedures  (e.g.  Cyprus,  Estonia,  Finland,  Hungary,  Lithuania).  The  lack  of  information 
and practical illustrations is potentially hindering their implementation.  

The EU asks for “natural flood management options” or “nature-based solutions” 
to  align  the  Floods  Directive  with  the  wider  objectives  of  the  environmental  acquis,  for 
example those formulated by the Water Framework Directive and Habitats Directive. The 
Commission  recently  published  a  guidance  document  on  green  infrastructure  aimed  at 
scaling  up investments82.  In  the  information  received  from  MS,  some  countries  mention 
the  integration  of  natural  flood  management  measures  (e.g.  Natural  Water  Retention 
Measures  or  green  infrastructure)  replacing  or  complementing  grey  measures  in  their 
Programs  of  Measures.  Some  countries  provide  detailed  information  on  the 
interaction between,  on the  one hand, these types of measures  and,  on the  other 
hand,  nature  conservation  (environmental  impacts)  and  contributions  to  the 
objectives  of  the  Water  Framework  Directive.  Box  5.8  provides  examples  of  the 
integration  of  natural  flood  management  measures  in  the  PoMs  for  Portugal  and 
Luxembourg. 

79 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31. 

80  Shah  M.A.R,  Rahman  A.,  Chowdhury,  S.H.,  2018,  “Challenges  for  achieving  sustainable  flood  risk 
management,”. Journal of Flood Risk Management, vol. 11, issue 51.  

81 Dawson, R.J., Ball, T., Werrity, J., Werrity, A., Hall, J.W., Roch, N., 2011, “Assessing the effectiveness of non-
structural  flood  management  measures  in  the  Thames  Estuary  under  conditions  of  socio-economic  and 
environmental change,” Global Environmental Change vol. 21, issue 2.  

82 European Commission, 2019, “Guidance on a strategic framework for further supporting the deployment of EU-
level green and blue infrastructure,” SWD(2019) 193.  

44 

 
 
                                                 
BOX 5.8 THE INTEGRATION OF NATURAL FLOOD MANAGEMENT MEAUSRES IN POMS  

  Portugal  has  reported  38  measures  for  natural  flood  management,  a  category 
equivalent  to  NWRMs  or  nature-based  solutions.  Within  this  category,  Portugal 
proposed  in  the  Douro  FRMP  measures  for  the  establishment  of  connectivity 
between lagoons and the river Tâmega;  the stabilisation of the banks and bed  of 
this river in order to minimize the risk of floods; the restoration of the natural state 
of the Samaiões riverbank. 

 

In Luxembourg, Natural Water Retention Measures (NWRMs) have been planned 
in  catchments  (3  measures)  and  in  wetlands  (725  measures),  as  well  as  for  the 
reduction  in  impermeable  surfaces  (1  measure),  rainwater  management  (2 
measures)  and  restoration  of  flood  plains  (16  measures).    NWRMs  comprise  the 
lion’s share (about 90 %) of individual measures. 

Source:  Information  provided  by  the  MS  in  the  context  of  this  study.  Completed  with  information  from  the 
European Commission’s evaluation of the set of FRMPs submitted by the Member States, specifically: 1. European 
Commission  “First  Flood  Risk  Management  Plans  –  Member  State:  Portugal,”  SWD(2019)  77;and  2.  European 
Commission ” First Flood Risk Management Plans – Member State: Luxembourg,” SWD(2019) 73.  

45 

 
 
 
 
 
5.2.  Which current practice in applying methods and tools for 

assessing costs? 

Water Framework Directive 

The WFD stipulates that PoMs need to include a cost-effective set of measures. Almost all 
countries  employ  (at  least  partial)  Cost-Effectiveness  Analysis  (CEA)  of  planned 
measures in their RBMPs (see Figure 5-8 below).  

Figure 5-8 Knowledge base – number of countries using Cost Effectiveness Analysis in the 
2nd RBMPs 

Note:  

 
 

 

“Yes” cover MS that used CEA of measures in the 2nd RBMPs;  
“Yes, partial” cover MS that used CEA of measures but partially, e.g. for selected types of measures or 
selected RBDs;  
“No” cover MS that did not use CEA of measures in the 2nd RBMPs 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)83) 

In  many  instances,  CEA  is  applied  to  a  sub-set  of  measures  and  in  combination  with 
qualitative  appraisals.  Furthermore,  an  integrated  assessment  of  different  types  of 
measures is rarely applied with CEA largely focusing on pollution mitigation measures and 
on the quantitative management of water resources when water scarcity is a priority water 
management  challenge  (e.g.  Malta).  This  is  in  line  with  findings  of  the  European 
Commission’s RBMPs evaluation report84, which stresses that the MS do not appear to be 
widely using quantitative cost effectiveness analysis techniques as a tool in the measures’ 
selection  process.  Furthermore,  the  evaluation  notes  that  it  was  not  always  possible  to 
easily  identify  from  the  information  provided  by  the  MS,  their  methods  to  prioritise 
measures, and how cost effectiveness analysis fits into this process, suggesting room for 
further  improvement.  While  the  use  of  economic  assessment  methods  such  as  CEA  and 
MCA  (Multi-Criteria  Analysis)  is  common,  countries  rarely  use  fully  fledged  Cost-Benefit 
Analysis (see below in Figure 5-9).  

In practice, MS use a combination of MCA and CEA to prioritise measures for the inclusion 
of the RBMPs (see Box 5.9 below). 

83 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

84 For more information: European Commission, 2019, “European Overview – River Basin Management Plans,” 
SWD(2019) 30. 

46 

 
 
 
 
                                                 
Figure 5-9 Knowledge base – number of countries using Cost Benefit Analysis in the 2nd 
RBMPs 

Note:  

 
 

 
 

“Yes” cover MS that used CBA of measures in the 2nd RBMPs;  
“Yes, partial” cover MS that used CBA of measures but partially, e.g. for selected types of measures; in 
combination with wider MCA and semi-quantitative criteria;  
“No” cover MS that did not use CBA of measures in the 2nd RBMPs 
“Unknown” cover MS for which no conclusions could be drawn due to lack of information on the methods 
employed. 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)85) 

BOX 5.9 METHODS APPLIED FOR MEASURE SELECTION AND PRIORITISATION IN 
RBMPS 

 

 

 

In  Belgium  (Flanders),  MCA  and  CEA  were  combined  to  select  the  necessary 
measures:  i)  Cost-effectiveness  analysis  was  used  only  for  the  prioritisation  of 
sewage  infrastructure  and  wastewater  treatment  projects;  and  ii)  Multi-criteria 
analysis  was  used  for  all  other  types  of  actions.  It  was  mostly  expert  driven  and 
included criteria such as cost effectiveness, feasibility, public support and coherence 
with other actions. In Wallonia, effectiveness was expressed as the amount of water 
bodies that would reach objectives as a result of the implementation of measures.  

In Austria, a qualitative CEA of measures was applied using a concept of “step-
wise reaching of objectives” by designating areas/regions as “priority areas” with 
different time-frames for achieving objectives while focusing on the main pressures 
(hydro-morphological).  

In  Cyprus,  measures  were  ranked  in  terms  of  effectiveness  based  on  multiple 
criteria  such  as  the  importance  of  the  measure,  the  time  required  for 
implementation and for delivering results, the number of water bodies influenced, 
the  relevance  of  the  measure  to  climate  change  and  cost  where  applicable  (for 
measures for which capex/opex could be estimated). 

  In  Sweden,  new  tools  and  studies  are  being  developed,  e.g.  new  tools  to  aid 
decision-making  and  to  identify  cost  effective  measures,  including  a  study  on 
Swedish households’ willingness to pay for improved water quality in lakes, streams 
and the coastal zone (SwAM, 2019).  

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)86) 

85 European Commission, 2019, “European Overview – River Basin Management Plans, SWD(2019) 30. 

86 European Commission, 2019, “European Overview –River Basin Management Plans,” SWD(2019) 30. 

47 

 
 
 
 
 
                                                 
Floods Directive 

The Floods Directive requires that countries prioritise measures in accordance with their 
flood risk management objectives outlined in the FRMPs. The majority, 55% of the MSs, 
report systematically applying economic assessments, such as cost-benefit analysis, 
multi-criteria  analysis,  or  cost  effectiveness  analysis  to  evaluate  flood  risk  mitigation 
measures  in  their  FRMPs,  see  below  Figure  5-10.  Furthermore,  30%  of  the  countries 
partially apply economic evaluation methods. This can mean that expert judgement is used 
to prioritize measures on the basis of their economic implications (Austria, Czech Republic); 
that economic methods are not systematically applied in all FRMPs (Belgium, Denmark); 
that only a subset of measures (protection measures mainly) are considered in economic 
assessments (Cyprus, Czech Republic); and that the economic analyses’ results are neither 
aggregated nor reported in FRMPs (France, Latvia, Malta, Spain).  

Figure 5-10 Application of economic ranking procedures to select and prioritize flood risk 
measures 

Partial
30%

No
15%

Yes
55%

Source: Information provided by the MS in the context of this study (including 1st FRMPs and EC (2019)87 and EC 
(2019)88) 

Even  though  the  majority  of  MSs  apply  some  form  of  economic  evaluation  to  rank  and 
prioritize measures, applied methods are heterogeneous between and within countries.  

In  the  case  of  Belgium,  Bulgaria,  Estonia,  Lithuania,  and  Romania,  the  results  of  cost-
benefit  assessments  (benefit/cost  ratios)  are  used  as  a  criterion  for  the  prioritization  of 
measures. However, for the majority of MSs that reported applying economic assessments, 
it is  unclear  from  the  FRMPs  if  and  how  exactly  the  results  of  economic  analyses  have 
been used in the selection and prioritization of measures. Box 5.10 below presents 
the  example  of  Bulgaria  that  systematically  prioritizes  all  flood  measures  based  on  a 
common national methodology across all river basin districts.  

87 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

88 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31.  

48 

 
 
 
 
                                                 
BOX 5.10 THE USE OF COST-BENEFIT ANALYSIS TO SELECT AND PRIORITIZE FLOOD 
MEASURES IN BULGARIA 

In Bulgaria, CBA was used for the prioritisation and planning of all measures included in 
the  four  FRMPs.  A  national  CBA  methodology  was  applied  in  all  FRMPs  based  on  the 
'Guide  to  Cost-Benefit  Analysis  of  Investment  Projects:  Economic  Appraisal  Tool  for 
Cohesion Policy 2014 - 2020'.  

To select the most appropriate combination of measures for each specific APSFR (Area 
of Potential Significant Flood Risk), a Multi-Criteria Analysis (MCA)was used to evaluate 
the various flood risk management options in that APSFR. The assessment is based on 
the application of several basic criteria. The evaluation criteria include:   

  Effectiveness of the selected combination for risk reduction;  

  Cost comparison of measures;  

  Comparison of benefit / cost ratio between different combinations of measures;  

 

 

 

Impact of the relevant combination of measures on the environment;  

Impact of the relevant combination of measures on public well-being / social impact;  

Impact  on  other  social  aspects  such  as  the  development  of  transport  and 
employment;  

 

Impact on society opportunities for recreation. 

Source: FRMPs and 'Guide to Cost-Benefit Analysis of Investment Projects: Economic Appraisal Tool for Cohesion 
Policy 2014 - 2020'.89 

The  completeness  of  cost-benefit  analyses  differs  across  applications  in  terms  of  the 
benefits considered. Most cost-benefit analyses consider the avoided damage as the main 
benefit  category,  probably  as  a  result  of  data  availability  (e.g.  Cyprus,  Finland,  Greece, 
Lithuania, Slovakia). Due to methodological difficulties, the environmental benefits of 
measures  are  rarely  considered  in  such  analyses  even  though  they  may  have  an 
important effect on the outcome of cost-benefit analyses. This is in line with findings of the 
Commission’s evaluation report, which stresses that across all MS, there is little reference 
to impacts on ecosystem services90.  

The inclusion of environmental benefits in economic appraisals matters in particular for the 
evaluation of nature-based solutions (“natural flood protection measures”, Natural Water 
Retention Measures, Green Infrastructure or alike) which simultaneously reduce flood risk 
and produce various environmental co-benefits as a result of their multi-functionality. To 
consider potential co-benefits in economic assessments, some MS combine cost-benefit 
analysis  with  multi-criteria  analysis  (e.g.  Bulgaria,  Finland,  Ireland,  Lithuania, 
Romania).  Multi-criteria  analyses  are  particularly  relevant  when  only  part  of  the 
environmental (and other non-market) benefits can be captured in monetary terms and 
when it is expected that these impacts will be decisive for assessment results and measure 
prioritization. There is a need to build a coherent analytical framework to better support 
decision-makers in their choice amongst green, grey and hybrid infrastructure solutions91.  

89 Bulgarian Ministry of Environment and Water, FRMPs 

90 See for more information: European Commission, 2019, “European Overview – Flood Risk Management Plans,” 
SWD(2019) 31. 

91  See  for  more  information:  European  Commission,  2019,  “Guidance  on  a  strategic  framework  for  further 
supporting the deployment of EU-level green and blue infrastructure,” SWD(2019)193.  

49 

 
 
                                                 
The  coordination  of  the  Floods  Directive  and  Water  Framework  Directive  requires  an 
integrated  approach  in  order  to  identify  the  cost-effective  measures  that  serve  multiple 
objectives from both Directives and that can result in the identification and implementation 
of “win-win measures”. The WFD and the FD have a high level of synergy. For example, 
natural flood measures can contribute to the achievement of both FD and WFD objectives 
and  conversely,  WFD  measures  to  restore  the  hydro-morphology  of  water  bodies  can 
contribute to reducing flood risk.  

However, economic assessment methods to prioritise synergistic measures in the 
appraisal  of  PoMs  are  currently  lacking.92,  93  Few  examples  exist  of  MSs  applying 
economic  appraisal  methods  that  explicitly  account  for  synergies.  Box  5.11  present  two 
examples from Luxembourg and Cyprus. Several countries indicated that there is a need 
to develop approaches to measure selection and prioritisation that account for synergies 
between the WFD and the FD (Belgium, Sweden).    

BOX 5.11 THE USE OF COST-BENEFIT ANALYSIS TO SELECT AND PRIORITIZE FLOOD 
MEASURES 

 

 

In Luxembourg, the relevance of selected measures to the WFD’s environmental 
objectives  was  assessed  in  a  semi-quantitative  effectiveness  analysis  resulting in 
five categories of effectiveness (scale from zero to ++++).  

In Cyprus, specific FRMP measures have been identified that provide synergies with 
RBMP measures and that support WFD objectives. An assessment has been carried 
out  on  the  adverse  environmental  impacts  of  measures  proposed  for  the  FD,  in 
particular  in  terms  of  WFD  objectives,  in  order  to  identify  potential  impacts  and 
undertake  remedial  actions.  Cost-effectiveness  and  cost-benefit  assessments, 
including the consideration of multi-benefits (specifically for WFD objectives), were 
conducted for proposed measures. 

Source: Information provided by the MS in the context of this study (including 1st FRMPs and EC (2019)94) 

92 The European Commission report “European Overview – Flood Risk Management Plans” (SWD(2019) 31) also 
highlights that relatively few indications were found that multi-benefits were considered in economic appraisals. 
See also the draft “Scoping Report” on “the interaction between the Floods and Nature Directives,” submitted to 
the 27TH meeting of the CIS Working Group on Floods, 29 October 2020.  

93  European  Commission,  2014,  “EU  policy  document  on  Natural  Water  Retention  Measures,”  (By  the  drafting 
team of the WFD CIS Working Group Programme of Measures (WG PoM)), Technical Report - 2014 – 082. 

94 European Commission, 2019, “European Overview – Flood Risk Management Plans,” SWD(2019) 31.   

50 

 
 
 
 
 
 
 
                                                 
 
6.  MOBILISING  FINANCIAL  RESOURCES  TO  SUPPORT  THE 

ACHIEVEMENT OF WATER POLICY GOALS  

6.1.  What do we know about financing?  

This study focuses on the economic aspects of WFD (and FD) implementation as a whole, 
thus including water and sanitation services (WSS) as a subset of the overall Programmes 
of Measures. This distinction is particularly important for funding water management, as 
usually a lot is attention is given to WSS and water tariffs. Figure 6-1 below illustrates the 
different costs involved in the WFD implementation and the corresponding recovery (i.e. 
funding) mechanisms. 

Figure  6-1  Financing  the  Programme  of  Measures:  types  of  costs  and  corresponding 
recovery mechanisms 

Water  and  sanitation  services  are  a  large  subset  of  water  management,  and  water 
tariffs are the instrument designated to recover their costs. However, the Programme 
of Measures is much wider than just WSS, and this involves additional costs: the 
selected instruments to recover these costs are environmental charges – including not 
only  abstraction  and  pollution  charges  but  also  charges  on  other  significant  water  uses. 
The  Guidance  that  the  CIS  WG  on  Economics  produced  in  201595,  considered  the 
Environmental and Resource Costs (ERCs) as follows: 

  The total ERCs are the costs of having all WBs in good status or potential at the end 

of the planning period; 

  Due to exemptions or lack of implementation of some measures, the PoM will likely 
result in only a percentage of WBs in good status or potential: the costs of the PoM 
can be considered as the ERCs recovered by the PoM; 

95 CIS WG Economics, 2015. A guidance for assessing Environmental and Resource Costs and their recovery in 
the context of the Water Framework Directive. Internal document. 

51 

 
 
                                                 
  The difference between the costs of reaching good status or potential in all WBs and 
the actual costs of the PoMs can be considered as the residual ERCs of the planning 
period. 

Thus, environmental charges are the instruments to recover ERCs of water use other than 
the  financial  costs  involved  in  the  provision  of  WSS.  In  the  case  of  WSS,  there  may  be 
externalities  that  other  measures  in  the  PoM  need  to  address,  such  as  for  example 
groundwater pollution by nitrates and pesticides in the case of agriculture.  They constitute 
the ERCs of WSS. 

Of course, public funds (at the European, national and local level) can intervene in covering 
a part of the costs of WSS and those of other measures. 

Funding and financing concern another area where data and information are scattered 
and heterogeneous across MS. This limits the feasibility of quantitative analysis, e.g. 
the ability to rank with precision the relative importance of funding sources, as data are 
often  incomplete  and  non-comparable.  Nevertheless,  data  collected  from  MS  contain  a 
wealth  of  qualitative  and  quantitative  information,  from  which  one  can  gain  important 
insights. 

When  talking  about  the  water  management’s  financial  aspects,  especially  expenditures, 
both  CAPEX  and  OPEX  as  well  as  funding,  there  usually  is  a  wealth  of  quantitative 
information available on water and sanitation services, since it concerns a well-developed 
sector  in  all  EU  MS,  which  attracts  a  large  share  of  the  financial  resources  deployed  for 
water management as a whole.  

The OECD has collected data on projected expenditure needs in EU MS in order to comply 
with  the  Drinking  Water,  Urban  Wastewater  Treatment  and  Flood  Directives.  Although 
these data only include water and sanitation services, they provide a good indication of the 
expenditure  trends  for  the  coming  years.  They  indicate  that  all  EU  countries  need  to 
increase the current expenditure levels for water supply and sanitation by 20% or more, 
although some MS face  the challenge of much larger finance needs, such as for example 
Finland  (+85%),  Bulgaria  (+100%)  and  Romania  (180%).  Additionally,  it  is  likely  that 
finding the additional funding sources for these future investment needs will become more 
challenging, as past investments have likely used up already the more easily accessible 
funding sources (OECD, 2020).  Taking a comprehensive outlook on water management, 
thus including for example the management of agricultural pressures,  the restoration of 
aquatic ecosystems, flood protection measures, et cetera, implies even larger  additional 
financing  needs  as  compared  to  those  today,  in  view  of  climate  change  adaptation  and 
pollution challenges that need to be addressed.  

In this light, it is of crucial importance to have an overview of current financing practices 
in EU MS, especially to identify the untapped or emerging sources that could contribute 
to respond to the growing financing needs.  

Figure 6-2 provides an  overview of the financing sources used in EU  MS, as well as  the 
data  gaps.  In  most  countries,  quantitative  figures  could  not  be  found  for  the  different 
funding sources, i.e. as regards the amounts allocated to water management by funding 
sources  in  a  reference  period96.  In  some  cases,  qualitative  information  suggests  that  a 
funding source is in place in the country, but annual quantitative figures are not available. 
In other cases, the funding source is not in place or no information on its use has been 
found. 

96 Please note that reference periods vary across Member States as well as within one country, across funding sources. Often, even 
within the same country, financing figures for the different sources are taken from different data sources. This is why data are not 
comparable across countries, and sometimes even within the same country. 

52 

 
 
                                                 
Figure  6-2 Financing sources in EU MS  – percentage  of MS where a funding source is in 
place and type of information available 

Notes: quantitative, i.e. yes in place and value available/qualitative, i.e. yes, but value unavailable 
Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)97, EC 
(2019)98) 

The observations emerging from the assessment of the available information on financing 
are as follows:  

  The most widely mobilised funding sources used to finance water management in 
Europe concern EU funding (96% of MS), the revenues from tariffs from water and 
sanitation tariffs (93%) and the public budget (89% of MS); 

  Abstraction  and  pollution  charges  and  taxes  are  in  place  in  75%  of  countries. 
However,  only  a  part  of  the  collected  revenues  are  re-directed  to  water 
management, as shown later in this chapter; 

  Private funding was reported in only 52% of MS, whereas private funding is surely 
not in place in 15% of MS - no information on the use of this funding source was 
found in the remaining 33% of MS; 

  Other  types  of  charges  on  significant  water  uses,  such  as  a  nitrogen  tax,    are  in 

place in 41% of MS. 

Thanks to the quality of available data, it is possible for ten EU MS (BE, EE, FR, EL, ES, IT, 
HU, NL, PT, SK) to provide a more detailed analysis of the different funding sources’ relative 
importance in the annual total funding for water management – see Figure 6-3 below. 

97 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

98 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC); Second 
River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

53 

 
 
 
 
 
                                                 
Figure 6-3 Share of funding sources over the total yearly funding for water management 
in ten EU MS  

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)99, EC 
(2019)100).  
In Italy, data on revenues from abstraction and pollution charges are incomplete 

These country-level data reflect differences in funding sources across countries, not only 
as regards the relative availability of the different financial resources, but also as regards 
the  governance  structure  of  water  management  (including  direct  public  management, 
public or private delegated management and direct private management), for example: 

  The  revenues  from  water  and  sanitation  tariffs  take  up  at  least  50%  of  the  total 
financing mix in all countries, with the exception of Greece and Italy. In these two 
countries,  national  and  EU  funds  have  a  larger  role  in  water  management  as 
compared to other MS; 

  Public funds still play an important role in financing of water management in several 
countries.  This  is  hardly  surprising,  as  water  management  is  a  domain  of  public 
interest.  There  are  three  exceptions:  (i)  Hungary,  where  EU  funds  have  a  larger 
role; (ii) Belgium, where the private sector provides a significant contribution to the 
financing  of  water  management  as  compared  to  the  other  MS;  and  (iii)  France, 
where the public sector contribution is equivalent (slightly lower) than the financial 
resources  provided  by  abstraction,  pollution  and  other  charges;  in  fact,  Water 
Agencies are mostly self-funded through user charges; 

  Private sector funding has a slightly more important role in only two countries: (i) 
the  Netherlands,  where  some  business  operators  recur  to  self-  water  supply  and 
treatment;  and  (ii)  Spain,  where  private  funds  are  invested  in  the  urban  water 
cycle; 

  With  the  exception  of  France,  water  abstraction  and  pollution  charges  (when  in 
place)  contribute  to  only  a  small  share  of  the  total  expenditure  in  water 
management – it is slightly higher in Estonia and Spain; 

99 European Commission, 2019. “European Overview – River Basin Management Plans,” SWD(2019) 30. 

100 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

54 

 
 
                                                 
  Similarly,  other  charges  on  significant  water  uses  have  a  minor  role  in  the  total 
financing for water management – with the notable exception of the Netherlands 
(for more details, see box 6.4 further down in this chapter. 

Overall,  these  results  suggest  that  public  funds  at  all  levels  and  water  tariffs  are  well-
established financing sources and that they represent, in terms of financial volumes, the 
largest funding sources deployed by MS for water management, as illustrated in Figure 6-
4 below. One should  note that this figure can  only provide an  illustration of the relative 
sizes  of  funding  sources,  because  the  data  on  the  revenues  from  the  various  financing 
sources are hardly comparable across the Member States. As shown in more detail later 
on, in the section on  cost-recovery, public funds tend to be used more in funding other 
measures other than WSS provision, whereas water tariffs usually recover a large share of 
the WSS costs. 

Figure 6-4 Financial volumes from the different sources at the EU level – Illustrative only 
due to heterogeneous data across MS 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)101, EC 
(2019)102) 

These  figures  illustrate  that,  at  present,  private  financing  and  charges  on  other 
relevant water uses are rarely applied, or, at least, rarely reported in official documents 
(e.g. RBMPs). This suggests that these two sources can offer some untapped potential 
for  funding  and thus that they have the potential to play a larger role in MS financing 
strategies for water management.  

The evidence reported in the MS fiches suggests that private funding, when used, has a 
subsidiary role in the financing of water management, complementing revenues from water 
and sanitation tariffs and public funding at all levels. This is corroborated by the fact that 
information on it is scarce and, when available, is often incomplete.  

Private funding is usually deployed in the water and sanitation sector, rather than in other 
types of measures. In this respect, the recent OECD report103 on the investment needs in 
the WSS sector can provide additional information that does not emerge from the MS data 
collated in the context of this study, in particular on debt (reimbursable) finance.  Loans 
are typically employed to contribute to the upfront financing of capital investments when 
cash flow may be insufficient for on-balance sheet financing or when borrowing conditions  

101 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

102 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

103 OECD, 2020, “Financing Water Supply, Sanitation and Flood Protection; Challenges in EU Member States and 
Policy Options,” OECD Studies on Water. 

55 

 
 
 
                                                 
Figure  6-5  Share  of  debt  finance  in  estimated  total  expenditures  for  water  supply  and 
sanitation for the EU-20, the EU-15 and EU-13 

Source: OECD, 2020 

Figure 6-6 Share of debt in estimated total expenditure for WSS, by MS104 

Source: OECD, 2020105 

104 A reviewer noted that private investment may not be an option when water infrastructure is public, stressing 
that this is a political choice.  

105 OECD, 2020, “Financing Water Supply, Sanitation and Flood Protection; Challenges in EU Member States and 
Policy Options,” OECD Studies on Water. 

56 

 
 
 
 
 
 
                                                 
are particularly attractive106. The graph in Figure 6-5 reports the share of debt finance in 
the estimated total expenditure for water and sanitation services (WSS) for the EU-28, the 
EU-15  and  the  EU-13,  distinguishing  between  loans  provided  by  the  EIB/EBRD  and 
commercial loans. Debt finance occurs a bit more in the EU-15 (over 10%) than in the EU-
28 (around 9%). Overall, commercial banks provide a larger share of loans than the EIB 
and  EBRD.  The  graph  in  Figure  6-6  reports  the  share  of  debt  finance  in  estimated  total 
expenditure at MS level. 

It is important to note that there is a positive correlation between cost-recovery levels 
and access to debt finance: in fact, loans are typically granted to entities and projects 
able  to  demonstrate  a  reliable  ability  to  pay  back.  For  WSS  providers,  this  ability  is 
dependent on the ability to recover supply costs through WSS tariffs. The entity’s financial 
health will also play a major role in its ability to attract commercial loans (OECD, 2020107).  

The EIB in particular is sometimes referred to as the largest lender worldwide to the water 
sector. Thanks to its  public  nature, the institution can  work  with longer term maturity 
and  low  returns,  the  two  characteristics  that  are  specific  to  the  structure  of  asset 
management  of  the  water  sector.  More  in  general,  all  public  banks  operate  with  a 
mandate for the general interest, so that there are clear synergies with water operators 
– and public operators in particular. This provides opportunities to strengthen the sectors 
and positively affect the local and national economies. Some examples of such synergies 
concern (Aqua Publica Europea, 2019108): 

  An EIB loan of EUR 200 million to Sardinian operator Abbanoa (Italy) to support the 
operator’s  infrastructure  investment  plan  to  with  a  strategic  focus  on  new 
technology and hydraulic and energy efficiency; 

 

In the context of its sustainability strategy and its Green Finance Framework, and 
in collaboration with the Belgian bank Belfius, SWDE (Wallonia, Belgium) announced 
the emission of EUR 10 million of Green Bonds through which the operator aims to 
attract  new  investors  looking  to  support  sustainable  projects.  The  financing 
concerns in particular renewable energy and energy efficiency projects, as well as 
resource protection, amongst others. 

106  More  detailed  information  could  not  be  found,  so  it  was  not  possible  to  discern  whether  loans  are  used  to 
finance CAPEX or OPEX. 

107 See previous footnote. 

108 Aqua Publica Europea, 2019, “The public water services of the future within society for sustainability,” 10-year 
publication, 2019 issue.   

57 

 
 
                                                 
BOX 6.1 USE OF PRIVATE FUNDING FOR FLOOD RISK MANAGEMENT IN BELGIUM 

In Belgium, most of the measures are financed by the public sector. Specific information 
on private sector financing are not available and are not reported in the RBMPs. However, 
it is estimated that in Flanders in 2017 EUR 2.6 billion were spent on water (an increase 
from EUR 2.3 billion in 2014), 25% of which concerned private expenditures, mostly by 
industrial  companies  on  water  provision  (pumping)  and  wastewater  treatment  and  by 
agriculture  on  manure  management.  In  general,  both  public  and  private  expenditures 
have increased during the last two decades. 

Service 

Private expenditures 

Private expenditures 

(million Euro, 2014) 

(million Euro, 2017) 

Water supply 

Water sanitation 

Water  management  and 
regulation  (incl.  flood  risk 
management) 

Total 

243 

334 

6 

583 

296 

351 

7 

653 

Source: De Nocker en Broekx, 2017 ; De Nocker en Broekx, 2019 

Note: private expenditures are roughly based on unit costs derived from interviews and literature, and the amount 
of different types of water consumed by the different sectors. 

In addition to debt finance and commercial loans, the assessment of current MS financing 
practice  shows  that  the  situation  is  evolving  with  some  new  (innovative)  funding 
arrangements being developed including with the involvement of private entities (see Box 
6.2).  

58 

 
 
 
 
BOX 6.2 INNOVATIVE FUNDING ARRANGEMENTS IN EU MS 

Payments for Ecosystem Services (PES) schemes in France 

In  accordance  to  the  national  Biodiversity  Plan  (measure  24),  Water  Agencies  can  provide 
financial support to test the interest for Payments for Ecosystem Services (PES) on pilot sites, 
through a dedicated funding of 150 million EUR in total for all Water Agencies over three years 
(2019-2021). The schemes must target the agricultural sector. This measure aims to support 
the  agro-ecological  transition,  and  to  address  biodiversity  losses  and  water  quality  issues. 
Several entities can apply to Water Agencies’ tenders and implement a PES project, including 
for example local communities and municipalities, drinking water and river basin syndicates, 
groups of economic and environmental interest, cooperatives of collective interests, Natural 
Regional Parcs, Conservatories des Espaces Naturels. 

In 2019, Water Agencies launched tenders for setting up PES studies and schemes (such as 
for example the Artois-Picardie and the Seine-Normandie Water Agencies). As of June 2020, 
about 100 PES schemes were at the project stage. The setting up of pilot PES scheme in the 
different RBDs is supported by the development of a national methodology, which includes 
the definition of national guide-values for environmental services. 

Targeted Agricultural Modernisation Schemes (TAMS) in Ireland 

Ireland’s  Targeted  Agricultural  Modernisation  Schemes  (TAMS)  provide  grant  assistance  to 
farmers for investments in the pig and poultry sectors, dairy equipment and the storage of 
slurry,  wastewater  and  other  farmyard  manures.  Funding  of  EUR  395  million  has  been 
allocated  to  these  investments,  which  will  leverage  a  further  EUR  500–600  million  in 
investment by farmers. Of TAMS’ budget of EUR 395 million, about half, EUR 190 million, is 
specifically  targeted  at  two  schemes:  the  Animal  Welfare,  Safety  and  Nutrient  Storage 
Scheme and the Low Emission Slurry Spreading Scheme. Over the period of the next river 
basin planning cycle, they will lead to a significant investment by farmers in nutrient storage, 
and to improved nutrient utilisation.  

Sweden: two “electric” initiatives  

  The  eight  largest  hydropower  companies  in  Sweden  have  agreed  to  establish  a 
Hydropower Environmental Fund, and to invest SEK 10 billion over 20 years with the aim 
to  improve  the  environmental  quality  in  the  Swedish  hydropower  industry,  through  a 
national plan (NAP) in the context of the holistic Energy Agreement.* The latter includes 
several energy policy objectives and guidelines, including hydropower. At the same time, 
Sweden has decided to gradually lower the real estate tax in the hydropower sector from 
2,8%  to  0,5%  of  the  taxation  value.  Following  that  agreement,  the  hydropower 
companies  set  up  the  fund**.  In  2020,  the  Swedish  government  adopted  the  national 
hydropower  plan  that  inter  alia  notes  the  importance  of  hydropower  production  and 
prioritizes the rivers according to the ecological potential and production flexibility. Now, 
the fund is starting its operation. 

 

“Good environmental choice” label for electricity: There are voluntary initiatives such as 
the eco label “good environmental choice”, where customers pay extra for electricity with 
this  label.  An  amount  per  kWh  renewable  electricity  is  destined  for  finance  restoration 
measures and/or energy efficiency measures. 

* Energiöversekommelsen 11.6.2016, https://www.government.se/articles/2016/06/agreement-on-swedish-energy-policy/  
** More information on the fund https://vattenkraftensmiljofond.se/  (in Swedish) 

59 

 
 
 
 
 
 
In  the  case  of  WSS,  the  involvement  of  private  operators  or  investors  is  rather 
straightforward.  In  contrast,  it  can  be  challenging  to  identify  the  potential  of  other 
measures  that  private  finance  may  be  interested  in  to  invest  in  and  for  which  reasons, 
considering  that  many  measures  in  the  PoMs  have  a  clear  “public  good”  nature  (e.g. 
nature-based solutions). This can be an area for further investigation. 

In times of tight constraints on public budgets, charges on significant water uses, other 
than water abstraction and polluting discharges, could offer a solution to raise revenues 
and  to  strengthen  the  application  of  the  polluter-pays  or  user-pays  principles.  As  noted 
above, such charges are in place in less than half of the MS. The picture emerging from 
the  review  of  all  instruments  in  place  across  MS  is  that  of  a  plethora  of  different 
instruments, including: 

  Taxes on pesticides and/or nitrates are in place in three MS in slightly different 
formats. As this tax addresses a commonly found water management issue in 
Europe,  these  existing  instruments  are  described  in  more  detail  in  Box  6.3 
below; 

  Water metering fees; 
  A charge on obstacles in water bodies or, according to another name, on flow 

continuity disruption; 

  A charge on alluvial sediment extraction; and 
  Several  other  different  instruments,  such  as  a  hydraulic  tax,  a  charge  on 

aquaculture, navigation fees, et cetera. 

Figure 6-7 below illustrates this variety of instruments; Box 6.3 provides an insight on the 
existing taxes and charges on nitrates and pesticides. 

Figure 6-7 Other charges on significant water uses in place in the different MS 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)109, EC 
(2019)110) 

109 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

110 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

60 

 
 
                                                 
BOX 6.3 TAXES ON NITRATES AND/OR PESTICIDES 

Taxes  on  nitrates  and/or  pesticides  exist  in  Denmark,  France  and  Sweden;  they  are  aimed  at 
reducing pesticides and/or nitrates use.  Thus, revenue raising is not the main objective of these 
instruments, but rather a positive “collateral” effect. The fee is charged on the quantity of phyto-
sanitary products used (rates per kilogram). It can be charged either on producers/ importers or 
on final consumers (farmers), but in both cases the charge is reflected in the final retail price of 
products, thus providing an incentive for a reduced product use. 

In Denmark, the pesticide tax is part of the Danish Pesticides Strategy adopted for 2017-2021. 
The strategy is focused on four pillars:  (i) an approval system for pesticides,  (ii) the control of 
substances, (iii) the increase of knowledge through research and information, and (iv) guidance. 
Following the introduction of the  Danish pesticide tax,  the  sales of pesticides in Denmark have 
decreased by almost one-third (31%) between 2011 and 2018. In addition to the pesticide tax, 
the Danish Pesticides Strategy aims to support research on unintended and undesirable effects of 
pesticides on the environment and human health, and on the promotion of the development and 
use of alternatives to chemical pesticides. Finally, the Danish Pesticides Strategy supports specific 
regulations for greenhouses as well as for sites for the filling and washing of spraying equipment, 
and the establishment of protection zones in the vicinity of wells in order to further minimize the 
risk of water contamination. 

In  France,  the  fee  is  charged  on  both  pesticides  and  nitrates.  It  is  managed  and  collected  by 
Water Agencies. Different rates are set, based on the risk level of phyto-sanitary products, with 
higher rates for riskier products. As for 2017, around 70% of the revenues collected entered in 
the  Water  Agencies’  budget  (for  the  financing  of  measures  to  preserve  and  protect  water 
resources). The remaining 30% was directed to the French Office for Biodiversity (OFB) to fund 
the Ecophyto Plan (this plan goes 100% to the agricultural sphere, directly or indirectly, although 
around EUR 1 million is intended for amateur gardeners) 

In Sweden, the pesticide tax is also based on the weight of the product. In this case, revenues 
from the tax go to the general State budget and are not earmarked for specific uses. 

Although not yet in place, a fee for diffuse pollution from agricultural sources has been proposed 
by the Minister of Agriculture and Food in Bulgaria. 

As  reported  in  Box  6.3,  although  nitrates  and  pesticides  are  one  of  the  main  water 
management  issues  in  the  EU,  only  three  countries  have  a  specific  charge  in  place  to 
address  the  problem,  and  another  one  is  planning  to  implement  it.  This  reveals 
weaknesses in the implementation of the polluter-pays principle in the EU – in the 
absence of specific charges, the environmental costs of using nitrates and pesticides are 
born by the society as a whole, or by other users’ groups. 

61 

 
 
 
BOX 6.4 ECONOMIC INSTRUMENTS ON OTHER SIGNIFICANT WATER USES IN THE 
NETHERLANDS 

The  Netherlands  derive  14%  of  total  funding  for  water  management  from  taxes  and 
charges on significant water uses other than abstraction and pollution charges, mainly 
from the water system management charge. The Water Authorities levy this charge 
on households, industry, agricultural land and nature areas. They use the revenues for 
water quantity, flood protection, and surface water quality measures. Households pay a 
levy depending on the value of the houses. Industry pays a levy depending on the value 
of  the  real  estate.  Agriculture  pays  a  levy  depending  on  the  value  of  the  agricultural 
land. Owners of natural areas pay a levy depending on the size of the natural land. 

The  Netherlands  are  also  the  only  EU  country  where  a  tradable  phosphate  rights 
system  is  in  place,  to  ensure  that  phosphate  production  from  the  agricultural  sector 
remains below the set phosphate ceiling. It is not a levy or a charge, and thus it is not 
a  revenue-raising  instrument.  However,  it  is  worth  mentioning  as  an  innovative 
economic instrument to cap and reduce diffuse pollution from agriculture.  

Revenue  figures  alone  do  not  say  much  about  the  revenues  actually  allocated  to 
improvements in water management and thus contributing to the achievement of 
current  water  policy  goals.  As  shown  in  Table  6-1  below,  the  revenues  from  water 
abstraction  and  pollution  charges  are  mainly  used  to  fund  water  management,  with  a 
variety of arrangements in place.  

In  France,  for  example,  water  abstraction  and  pollution  charges  are  the  main  financing 
source  for  Water  Agencies,  which  directly  levy  and  collect  payments.  In  Bulgaria,  the 
revenues  from  abstraction  and  pollution  charges  are  received  by  the  Enterprise  for 
Management  of  Environmental  Protection  Activities  (EMEPA)  and  used  for  water 
management. Similarly, in Croatia, the  revenues from abstraction and pollution charges 
(the latter is called water protection fee) are levied and collected by Croatian Waters and 
used for financing of the RBMP measures and related operational costs of Croatian Waters. 

In other cases, revenues are partly re-allocated to water management and partly to the 
general state budget. In the Czech Republic, fees are set for groundwater abstraction. The 
revenue from the fee on the amount of groundwater abstracted is split in two halves, with 
one halve going to the budget of the region where the abstraction of groundwater takes 
place,  and  the  other  halve  going  to  the  budget  of  the  State  Environmental  Fund  of  the 
Czech Republic111. In the Czech Republic, there are also fees for surface water abstraction. 
The  revenues  are  used  to  pay  for  the  management  of  watercourses  and  river  basin 
management.112 The revenues from the fee on the discharge of wastewater into surface 
waters  may  be  used  to  support  the  construction  and  upgrade  of  water  management 
infrastructure  and  to  cover  the  costs  of  the  authorised  laboratory  selected  by  the  State 
Environmental  Fund  of  Czechia  and  professionally  qualified  persons  to  conduct 
measurements. The revenues from the fee on the permitted discharge of wastewater into 
groundwater go into the budget of the municipality where the discharge takes place, with 
no specific requirements on how the fee must be used. 

111  These  fees  are  regulated  by  §  88  to  88l  of  Act  No.  254/2001  Coll.,  On  Waters  and  on  the  Amendment  of 

Certain Acts (Water Act).  

112 These fees are regulated by § 101 of Act No. 254/2001 Coll  

62 

 
 
                                                 
In  some  cases,  however,  the  revenues  go  into  the  general  State,  regional,  local  or 
municipal budgets, without an earmarking for water management purposes.  

Table 6-1 Reallocation of revenues from water abstraction charges in those EU MS where 
the charge is in place 

Revenues go to… 
Financing water 
management (or 
environment) 
General State budget 

Regional, local or municipal 
budgets 

SW 
GW 

SW 
GW 
SW 
GW 

EU MS 

BG  FR  HR  LU  PL  PT  RO  SK  SI  BE  CZ 

EE  LT  LV  HU 

EE  LT  LV 

CZ 

No information/ unclear/ several uses  DE  ES 

IT 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)113, EC 
(2019)114) 

Table 6-2 Reallocation of revenues from water pollution charges in those EU MS where the 
charge is in place 

SW 
GW 

Revenues go to… 
Financing water 
management (or 
environment) 
General State budget 

Regional, local or 
municipal budgets 

SW 
GW 
SW 
GW 
No  information/  unclear/  several 
uses 

EU MS 

CZ  LV  NL  RO  HR  BE 

BG  EE  DE  FR  LT  LU  PL  PT  SK 

HU*  LT 

DK  LV  NL 

CZ 

ES  SI 

* In specific cases, the charge is collected by the local governments of the municipalities, and revenues collected 
are used for qualitative and quantitative protection of soil and the sub-surface water and groundwater. 
Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)115, EC 
(2019)116) 

In some cases, the revenues from other charges on significant water uses are also allocated 
to water management (see for example the case of Netherlands  as described in Box 6.4 
above). However, the information on the allocation of these revenues is in most cases not 
available. 

In France, these charges are all used to finance water management, although in different 
ways: 

  The revenues from the navigation fee are used to maintain facilities such as sewage 
disposal, water points and electricity charging points (unclear which institution is in 
charge); 

113 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

114 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

115 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

116 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans, COM(2019) 95. 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
  The Hydraulic Fee is paid by all the managers of a structure or a management that 
takes or discharges water within the public river domain or uses its driving force. 
Revenues are collected by Voies Navigables de France, the institution in charge of 
managing fluvial transport,  contributing to global land and water management in 
the country, and make up to 25% of its budget; 

  The diffuse pollution charge is charged and collected by the Water Agencies. Around 
70%  of  the  collected  revenues  enter  into  the  Water  Agencies’  budget  (for  the 
financing of measures to preserve and protect water resources), and 30% into the 
budget for the French Office for Biodiversity (OFB) to fund the “plan Ecophyto” (this 
plan goes 100% to the agricultural sphere, directly or indirectly, despite around 1M 
Euro intended for amateur gardeners). 

  The “GEMAPI tax” is a local fee for the management of aquatic environments and 
flood prevention. It is an optional tax and its revenues can only be used for flood 
protection purposes.  

In Portugal, all water-related charges are components of the TRH, the Water Resource Tax; 
water abstraction and pollution charges are also components of this tax. The TRH includes 
a component for the aggregate extraction within the public water domain and another one 
for land occupation within the public water domain. Individuals or organisations carrying 
out  actions  that  correspond  to  the  base  of  the  various  tax  components  pay  the  tax. 
Payments are collected by the water management organisations  that are responsible for 
providing  the  services,  and  they  are  subsequently  sent  to  the  respective  River  Basin 
Authorities  (regional  departments  of  the  Portuguese  Environment  Agency,  which  is  the 
National Water Authority).  

In  Slovakia,  the  charge  for  use  of  hydropower  potential  is  paid  to  the  Slovak  Water 
Management Enterprise to cover maintenance costs. 

Table 6-3 Reallocation of revenues from other charges on significant water uses – such as 
for example on pesticides and nitrates, hydropower production, sediment extraction, etc: 
- in those EU MS where the charge is in place 

Revenues go to… 
Financing water management (or 
environment) 
General State budget 

Compensation to farmers and research 
on pesticides pollution 

No information/ unclear/ several uses 

EU MS 

FR  NL  PT  SK 

SE 

DK 

BG 

IT  MT  SI  ES  AT 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)117, EC 
(2019)118) 

An innovative way to increase financial resources available for water management is the 
creation of attractive investment cases benefiting people and nature. This is the case 
with  restoration  projects,  green  infrastructures  and  nature-based  solutions.  As  often 
mentioned, these measures pursue multiple purposes and deliver multiple benefits (e.g. 
water purification, flood protection, support to biodiversity, et cetera), so they are usually 
indicated  as  cost-effective  measures.  This  can  be  brought  a  step  forward,  through 
designing strategies and measures addressing not only environmental challenges, but also 

117 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

118 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
pursuing  social  and/or  economic  objectives  –  thus  attracting  funding  sources  usually 
employed in other policy areas. For example, in the Weser catchment area, several local 
authorities along the rivers Werre and Else decided to combine water restoration measures 
with  job  opportunities.  A  joint,  integrated  programme  was  established  and  run  in 
cooperation with other relevant bodies ( such as the   employment administration). As a 
result, more than 100 long-term unemployed people were (temporarily) employed and – 
simultaneously – gained a qualification. Furthermore, at least one fifth of the employees 
got a long-term job following their work on this project (EEB, 2015119). 

In  some  countries,  the  revenues  from  abstraction  and/or  pollution  charges  as  well  as 
(some)  revenues  from  other  water-related  charges  are  allocated  to  Water  (or 
Environmental) Funds, which are then used to finance water management or, in some 
cases, environmental management as a whole. This is the case of Belgium, Luxembourg, 
Portugal, Slovakia and Slovenia.  

In Slovakia, in particular, the revenues from groundwater abstraction and water pollution 
charges feed the Environmental Fund, and thus they are used for environmental purposes 
at large. In contrast, the revenues of surface water abstraction charges are received by a 
river basin authority directly, namely the Slovak Water Management Enterprise, a state-
owned company who is the administrator of watercourses and river basins in Slovakia. 

6.2.  What are implications on cost-recovery? 

As shown in the previous section, the revenues from tariffs on water supply and sanitation 
(WSS)  constitute  the  largest  funding  source  for  water  management  in  the  EU.  In  fact, 
within water management as a whole, WSS is the sector with the largest financial flows 
from  both  public  and  private  funding.  The information  on  how  the  WSS  are  financed,  is 
largely available, and thus also on financial cost-recovery for WSS.  

Therefore, this section focuses on the financial recovery of water and sanitation services. 
Figure  6-8  below  provides  an  overview  of  financial  cost  recovery  for  water  and 
sanitation  services  in  the  EU.120  Please  note  that  this  diagram  does  not  include 
irrigation, as in several MS irrigation water is managed independently (e.g. by irrigation 
consortia) from water and sanitation services for households, industry and services. As a 
consequence, specific data for the irrigation sector are not available in several countries 
(as shown later in this section).  

In one third of the MS (namely 9 out of 27), cost recovery is 100% or higher, with cost-
recovery  between  90  and  100%  in  5  additional  MS.  In  6  MS  cost  recovery  levels  are 
between 80 and 90% and in 4 MS, they are below 80%. Information that can support cost-
recovery assessment, was not available in 3 MS. Overall, the implementation of full cost-
recovery  still  presents  some  weaknesses  at  the  EU  level,  although  improvements  have 
taken place since 2006, following the WFD implementation.  

119 European Environmental Bureau, 2015, “2nd River Basin Management Plans; Healthier rivers, less dams, dykes 
and Nitrogen; a campaigning paper.”   

120 Average cost-recovery levels including both water supply and wastewater collection and treatment 

65 

 
 
 
 
 
 
 
                                                 
Figure 6-8 Cost-recovery levels in EU MSs 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)121, EC 
(2019)122) 

Figure 6-9 below provides individual cost recovery levels in each EU MS, reflecting data 
availability. In some countries, separate cost recovery levels are available for water supply 
and  for  wastewater  collection  and  treatment,  whereas  in  other  countries  only  an 
aggregated cost-recovery level is available. 

121 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

122 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

66 

 
 
 
 
 
                                                 
Figure  6-9  Cost-recovery  levels  in  EU  MSs (the  red  lines  indicate  the  levels  of  80%  and 
100%)123 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)124, EC 
(2019)125)  

123 In France, the cost-recovery rate provided in the data fiche (and in the diagram of Figure 6-9) is in fact the 
rate of the domestic sector as calculated in RBMPs – and thus it refers to water management costs as a whole, 
not to domestic WSS. This rate does not include financial transfers from other users’ sectors. 

124 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

125 European Commission, 2019, Report from the Commission to the European Parliament and the Council on the 
implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC): Second 
River Basin Management Plans and First Flood Risk Management Plans, COM(2019) 95. 

67 

WSWater supplyWWWastewater collection and treatmentWS+WWWater supply, wastewater coll. and treatm. 
 
                                                 
In most countries, the revenues from water and sanitation tariffs are the major, if not the 
only source of funding for these services. But what are the  implications of high cost-
recovery  rates  on  affordability  of  water  and  sanitation  services?  The  following 
diagrams summarise the available data and thus attempt to answer this question. 

The first diagram, in Figure 6-10 below, provides an overview of the average domestic 
water tariffs in EU MS – the data exclude irrigation and combine water supply, sewage 
collection and wastewater treatment; separate information on industrial water tariffs 
is  not  available  in  several  countries,  which  is  why  here  only  domestic  tariffs  are 
presented. In most countries, the average price includes households, industry and services. 
In 8 MS out of 27, water supply and sanitation tariffs are set between 1 and 2 EUR/m3, in 
8 MS between 2 and 3 EUR/m3; and in 5 MS, tariffs above 5 EUR/m3.  

Figure 6-10 Average domestic water and sanitation tariffs in the EU - overview 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)126, EC 
(2019)127) 

The  next  figure,  Figure  6-11,  presents  water  tariffs  at  the  MS  level,  combined  with 
information on financial cost recovery levels: MS with cost recovery levels equal to 
or higher than 100% are highlighted in dark green, whereas MS with cost recovery levels 
between 90 and 100% are marked in light green. Different rates allow for achieving full or 
high cost recovery levels. This mightreflect a difference in the costs of water management 
across  the  MS,  but  it  can  also  highlight  different  levels  of  cost-effectiveness  in  the 
management  of  water  and  sanitation  services.  The  data  collected  in  the  context  of  this 
study do not allow for an analysis distinguishing these two causes. Hence, this is something 
that would merit further investigation in future economic studies of water management in 
the EU. 

126 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

127 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

68 

 
 
 
 
                                                 
Figure 6-11 Average domestic water and sanitation tariffs in EU MS128 and countries with 
cost-recovery levels ≥ 100% and between 90% and 100% 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)129, EC 
(2019)130) * In Ireland, households pay water tariffs only for volumes exceeding 213 000 l/year. 

128 When available, Eureau data (2018) were used to build the graph, to achieve the best comparability of data. 
EUREAU data were included in MS fiches whenever available. 

129 European Commission, 2019,” “European Overview – River Basin Management Plans,” SWD(2019) 30. 

130 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

69 

  
 
 
                                                 
Figure 6-12 reports on the affordability levels in EU MS. The diagram presents average 
affordability levels, expressed as the percentage of the average water bill over the average 
income in the country, and the affordability levels for the vulnerable groups, expressed as 
the percentage of the average water bill over the lowest income decile. In the latter case, 
the average water bill is considered, and not the actual water bill which would include social 
tariffs and other affordability measures, which are in place in several countries. The graph 
also  includes  the  projected  affordability  levels  for  the  lowest  income  decile  in  the 
(hypothetical) case full cost recovery (full cost-recovery equivalent).   

70 

 
 
 
Figure 6-12 Affordability levels in EU MS131 (Red lines - 3% and 5% thresholds; dark and 
light green boxes indicate MS with 100% and 90÷100% cost recovery levels respectively) 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)132, EC 
(2019)133) 

131  Whenever  available  and  possible,  OECD  data  on  affordability  were  used  as  source  data,  to  improve  data 
comparability across countries. The source for all full cost-recovery equivalent rates is always the OECD. 

132 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

133 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

71 

 
 
                                                 
Overall,  water  and  sanitation  tariffs  in  the  EU  do  not  present  particular 
affordability concerns on average, as the expenditures for WSS by households in the 
lowest  income  decile  remains  below  5%  in  all  MS,  with  the  noteworthy  exception  of 
Hungary (8.4%). In the case of Romania, full cost recovery in the WSS sector would result 
in low-income households spending 7.3% of their budget; this will deserve further attention 
in the context of water pricing policies aiming to achieve full cost recovery, for example by 
introducing  social  tariffs  to  protect  lower  income  groups.  In  two  further  MS  (Belgium-
Flanders  and  France),  continued  specific  attention  would  be  needed:  for  current  cost-
recovery levels (between 90 and 100%), the lower-income groups spend between 4 and 
5% of their income on water and sanitation services. This cost burden  may rise if prices 
were  to  increase  to  achieve  full  cost  recovery  levels,  so  current  support  mechanisms  to 
vulnerable  groups  might  need  to  be  adapted  (social  tariffs  in  Belgium  and  Housing 
Solidarity  Fund  in  France).  Continuous  attention  is  already  provided  in  Belgium: 
economically  vulnerable  customers  (based  on  social  security  support  categories)  are 
granted  a  80%  discount  on  the  water  bill  in  Flanders.  The  criteria  to  identify  these 
customers are defined by the law. In 2015, 8% of the families in Flanders received support 
on the water invoice (WAREG, 2017). 

Overall, a clear message emerges from the figure above: full cost recovery levels – and 
also  cost-recovery  levels  between  90  and  100%  -  do  not  seem  to  compromise  the 
affordability of water services overall. In all these MS, water and sanitation services 
are affordable for almost all, including many households in the lowest income decile, while 
still  some  vulnerable  groups  might  be  challenged,  including  in  countries  where  average 
affordability does not seem challenging.  

However, this is a high-level analysis based on average data (e.g. water bills, income, 
lowest income decile), which delineates overall trends but hides difficult situations that 
still exist in the EU. Some EU citizens have problems to pay their water bills. Reportedly, 
this may become clearer when considering the poorest 5% of the population134 - which is 
why measures to address affordability concerns (in place in several MS) are still important 
and need to be maintained and constantly revised or adapted if needed. 

So far, the analysis has focused on the domestic sector, i.e. the sector for which the most 
and  better-quality  information  is  available  in  several  MS.  When  it  comes  to  irrigation 
water tariffs and cost-recovery, the overall picture becomes scattered and incomplete. 
There  are  for  several  reasons  for  this:  information  is  often  missing;  there  are  large 
differences  within  the  same  country  regarding  both  tariffs  and  cost-recovery  levels; 
irrigation is not in place in some countries; tariffs are not in place in some countries or only 
water  abstraction  fees  are  charges  on  farmers  for  irrigation;  and,  finally,  the  basis  for 
charging is different (volumes or irrigated area), often within the same country.  

Table  6-4  below  attempts  to  provide  a  summary  of  this  complex  situation,  reporting 
average data whenever possible or at least ranges of values. One should note that, in some 
MS, no information was provided by the MS or found otherwise, although it is likely that 
irrigation plays a minor role in these countries (e.g. MS with abundant precipitation). In 
addition, one should keep in mind that some irrigation water is self-abstracted in case of 
need. In other cases, the country fiche clearly reports that water is self-supplied and that 
only an abstraction charge is paid by farmers; this is reported in the table as well. 

134 Affordability issues deserve further study and discussion. According to some European experts, present at the 
CIS ATG “Water Economics” meeting on 26 March 2021, the affordability of drinking water is still an issue in the 
EU for the poorest 5% of the population. However, this study has only considered affordability levels for the lower 
income decile as a whole. 

72 

 
                                                 
 
Table  6-4  Irrigation  water  tariffs  and  cost-recovery  in  EU  MS  –  Overview  of  data  and 
information provided by the MSs 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)135, EC 
(2019)136) 

135 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

136 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

73 

CountryEUR/m3EUR/haCost-recovery (CR)CommentsATno infono infono infoBEno infono infono infoBG0,1161,36no specific infoCY0,01No56%Only abstraction chargesCZno infono infono infoDEno infono infono infoDKno infono infono infoEErates not availableNoNot applicableAbstraction charges on self-supplyEL0,005 - 0,11590 - 21056,50%ES0,06 - 0,960,3678,10%Rates depend on RBDFIno irrigationno irrigationno irrigationFR0,08Rate not available87%HRNo infoNo info8%HUNo infoNo info25,20%IENo infoNo infoNo infoIT0,540,62 - 200056,00%CR rate includes irrigation and reclamation fees, estimated average - CR for O&M costs is reported as 100%LT0,003NoNot provided for irrigationOnly abstraction chargesLUno infono infono infoLVNo infoNo info100%CR provided in RBMPs for own supplyMTNo chargesNo chargesNo chargesSelf supply onlyNLunclearNoCR calculation in RBMPs not differentiated by sectorPL0,015 - 0,088NoNo (self-abstraction only)Abstraction charges on self-supply, rates on GW and SW respectivelyPT0,0212092,20%ROunclearunclearunclearFiche unclearSENoNoNoWater supplied by municipalities not used for irrigationSK0,001NoNo (self-abstraction only)Abstraction charges on self-supplySIunclearunclear0,1% (?)Fiche unclearData availableNo data availableOnly water abstraction chargesNot in place 
 
 
 
                                                 
With  such  fragmented  data,  it  is  difficult  to  come  up  with  some  overall  considerations. 
Nevertheless,  it  is  still  possible  to  make  a  synthesis  of  financial  cost-recovery  levels  in 
those  countries,  where  irrigation  tariffs  are  placed  on  top  of  water  abstraction  charges. 
Thus, the synthesis excludes those countries where only water abstraction fees are charged 
on  farmers,  since  these  fees  are  not  aimed  at  recovering  the  financial  costs  of  water 
provision, but rather to cover the environmental costs of water abstraction. 

Figure 6-13 Financial cost-recovery rates for irrigation water provision in those countries 
where irrigation water tariffs are in place 

Source: Information provided by the MS in the context of this study (including 2nd RBMPs and EC (2019)137, EC (2019)138) 

As compared to the domestic sector, where detailed financial data are generally available 
in  several  MS,  and  where  cost-recovery  issues  have  received  a  lot  of  attention,  the 
financial aspects of the provision of irrigation water seem to get less attention at 
the  EU  level.  Data  are  often  scattered,  and  the  implementation  of  the  cost-recovery 
principle is often weak.  

137 European Commission, 2019, “European Overview – River Basin Management Plans,” SWD(2019) 30. 

138 European Commission, 2019, Report from the Commission to the European Parliament and the Council  “on 
the  implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” COM(2019) 95. 

74 

 
 
 
 
 
 
                                                 
7.  PUTTING MAIN RESULTS INTO A WIDER PERSPECTIVE  

7.1.  Main results: Assessing the costs of the Water Framework 

Directive 

In spite of the progress achieved in improving the status of surface and groundwater 
bodies in the EU since the first cycle of river basin management planning, further work 
and investment are required to improve the condition of aquatic environment.  

In particular, in the 2nd river basin management planning cycle, 40% of surface waters 
were  in  good  ecological  status  or  potential  and  33%  in  good  chemical  status.  It 
should be noted that in most MS, only a few priority substances (e.g. mercury) account for 
poor chemical status.  MS are making progress  in tackling sources  of  contamination, but 
due  to  the  one-out-all-out  principle,  these  improvements  are  usually  visible  only  at  the 
level of individual pollutants and often not at the aggregate level of the overall status. In 
addition,  the  proportion  of  water  bodies  with  unknown  status  has  decreased  and  the 
confidence  in  status  assessment  has  grown  as  regards  both  ecological  and  chemical 
status/potential of surface water bodies. 

Overall,  surface  water  bodies  were  affected  by  pressures  from  hydro-morphological 
changes  (39%),  diffuse  sources  (39%),  point  sources  (17%)  and  abstraction  pressures 
(7%). The main impacts on surface water bodies include chemical pollution (50%), altered 
habitats due to morphological changes (37%) and nutrient pollution (27%)  

In comparison, 92% of groundwater bodies were in good quantitative status and 
82% in good chemical status. Similarly to the surface waters, groundwater bodies were 
affected by pressures from diffuse sources (25%), point sources (12%) and abstraction 
(10%). In particular, in the EU, agriculture is the main cause of groundwater's failure to 
achieve good chemical status, as it leads to diffuse pollution from nitrates and pesticides. 
The main impacts on  groundwater bodies  are  chemical pollution (13%) and nutrient 
pollution (9%). 

The costs of achieving good status or potential for over 111 000 surface water bodies 
and over 13 000 groundwater bodies in the EU27 have been significant. In total, capital 
investment costs of the measures planned in the 2nd RBMPs reach at least EUR 142 
billion (noting that these cost estimates are incomplete). While the majority of countries 
estimate and report costs of planned measures in their RBMPs, the knowledge base on 
the costs of planned measures is heterogeneous and incomplete across the EU27. 
First, many cost estimates are partial, because they cover capital investment costs with no 
corresponding estimates of the annual operational and maintenance costs (the latter are 
known in about one third of the countries).  

Furthermore,  in  many  instances  where  cost  estimates  are  available  for  the  countries, 
they  are  partial  because  they  only  cover  selected  types  of  measures  (e.g.  basic  or 
supplementary),  selected  measures  (i.e.  cost  estimates  not  available  for  all  measures 
include  in  the  PoMs),  selected  areas  (i.e.  for  some  River  Basin  Districts  only)  and  /  or 
selected sectors (e.g. costs to public sector only). 

The  knowledge  is  even  more  partial  when  considering  available  cost  data  for  basic 
measures (Art 11(3)(a), (b-l)) and supplementary measures (Art 11(4) and 11(5)). In 
general, the knowledge base across the countries is stronger for the costs of supplementary 
measures  (capital investment  and  operational and  maintenance  costs)  in  comparison  to 
the costs of basic measures. This is due to the practice that in some countries,  the cost 
estimates  only  cover  the  additional  costs  of  measures  for  which  funding  needs  to  be 
sourced.  

On  a  country  basis,  there  is  a  significant  fluctuation  in  the  shares  of  basic  and 
supplementary measures in total capital investment costs of measures. The shares 

75 

 
for basic and supplementary measures  respectively  ranges from 5% to 95% in Malta to 
98% and 2% in Greece for basic and supplementary measures respectively139. In general, 
countries  in  Central  and  Eastern  Europe  focus  their  capital  investment  efforts  on  basic 
measures (including water supply and sanitation sector measures).  

Finally, few countries assess the total costs of  achieving water  policy  goals (i.e. 
the  costs  of  achieving  environmental  objectives  as  opposed  to  the  costs  of  measures 
included  in  the  PoM).  Some  countries  (e.g.  Belgium)  employ  scenario  approaches  to 
estimate  costs  of  achieving  environmental  objectives,  while  in  other  countries  (e.g. 
Estonia, Slovakia), such assessments of future investment needs strongly focus on water 
supply and sanitation infrastructure. 

A wide range of measures is included in the 2nd RBMPs, including measures aiming to 
address  pressures  caused  by  abstraction  and  water  scarcity,  pollution  from  agriculture, 
point  sources  and  hydro-morphological  alterations,  showing  overall  consistency  with 
significant pressures and impacts. 

While the majority of countries estimate and report costs of planned measures by sector 
or by type of measure in their RBMPs, there is a substantial heterogeneity in the available 
information on costs of measures by sector or type. Countries are using different lists of 
sectors,  types  of  measures  and  other  groupings  to  estimate  costs  of  measures  limiting 
comparability. However, one should note that in many countries the measures in the water 
supply and sanitation sector account for a large proportion of the costs (e.g.  90% of total 
in Belgium). Measures aiming to reduce diffuse agricultural pollution also feature in PoMs 
accounting for up to half of total costs (e.g. in Hungary ~52%). 

At  the  same  time,  measures  aiming  to  alleviate  hydro-morphological  pressures,  while 
included  in  the  PoMs,  attract  a  relatively  small  proportion  of  planned  investments  (e.g. 
~3% in Belgium and ~15% in Portugal).  

In  order  to  identify  the  set  of  planned  measures,  MS  are  using  economic  appraisal 
methods. The WFD stipulates that PoMs need to include a cost-effective set of measures. 
While most countries employ Cost-Effectiveness Analysis (CEA) of the planned measures, 
in many instances, the analysis is applied only to a sub-set of measures and in combination 
with qualitative appraisals. Furthermore, an integrated assessment of the different types 
of measures is rarely applied with CEA largely focusing on pollution mitigation measures 
and fully fledged Cost-Benefit Analysis rarely used by countries. 

7.2.  Main results: Assessing the costs of the Floods Directive 

In the context of flooding, MS have identified in total 7,906 areas of potential significant 
flood risk (APSFRs) during the development of preliminary flood risk assessments (PFRA) 
and  flood  risk  management  plans  (FRMPs).  Contrary  to  the  Water  Framework  Directive, 
the  Floods  Directive  does  not  define  country  specific  measurable  targets  that  should  be 
fulfilled within a certain period. Instead, countries have defined their own  objectives in 
the FRMPs.  

The  formulation  of  flood  risk  management  objectives  is  heterogeneous  across  countries 
and  concerns  the  quantification  of  flood  risk  levels,  areas,  impacts  targeted,  measure 
types, and coordination. Generally, the objectives are not quantified and measurable, 
hindering the estimation of the level of effort, the linking to measures, and the estimation 
of  costs  and  of  the  cost-effectiveness  of  measures  (including  the  importance  given  to 
nature-based solutions in addressing flood risk while delivering additional benefits).  

139 When excluding the countries that only provide cost estimates for basic (Luxembourg) or supplementary 
measures (Belgium, Netherlands, Lithuania); note that  Czechia reported EUR 0 cost for the supplementary 
measures. 

76 

 
 
                                                 
Measures  aiming  to  reduce  floods’  adverse  consequences  for  human  health,  the 
environment, cultural heritage and economic activity have been put in place in the national 
FRMPs necessitating substantial capital investment and maintenance costs. The total flood 
risk mitigation costs planned in the 1st FRMPs reach at least EUR 14 billion, but these 
figures should be interpreted with caution as the knowledge base on costs is heterogeneous 
and  incomplete.  Not  all  countries  report  costs  in  their  1st  FRMPs  and  the  available  cost 
estimations are often partial covering specific types of measures, areas or cost categories. 
The costs of some types of measures are location specific (spatial planning measures and 
nature-based  solutions that  depend  on  land prices)  and  therefore  the  estimates  of  such 
costs are difficult to transfer to other countries. 

Detailed  information  on  the  costs  per  flood  risk  component  (prevention,  protection, 
preparedness, and recovery) or per type of measure (structural/non-structural) is lacking. 
Few countries report on future investment needs and this information is heterogeneous 
as concerns the use of time horizons and scenarios. 

Countries  apply  a  wide  range  of  flood  risk  reducing  measures  targeting  specifically 
prevention, protection, preparedness, and recovery. There seems to be a specific emphasis 
on structural measures. The costs and effectiveness of non-structural measures are 
often difficult to quantify and, therefore, these types of measures are often discarded in 
economic  ranking  procedures.  Few  countries  provide  detailed  information  about  the 
application  of  natural  flood  management  measures,  even  though  they  are  an 
interesting option worth to be considered in analyses because of the multiple benefits they 
provide.  

Most  countries  apply  some  form  of  economic  appraisal  approaches  to  evaluate 
measures. However, in many cases it is unclear if and how the results have been used for 
the selection and prioritization of measures.  

The  completeness  of  cost-benefit  analysis  differs  across  countries  that  apply  this 
method.  Environmental  benefits  are  rarely  considered,  even  though  they  can  be 
especially  important  for  the  evaluation  of  non-structural  measures  and  natural  flood 
management options. In these cases, the  combination of cost-benefit analysis with 
multi-criteria  analysis  seems  to  be  promising  as  it  allows  to  capture  environmental 
benefits that can be decisive.  

Few countries account for the synergies of so-called “win-win measures” (the measures 
that simultaneously serve WFD and FD objectives) in economic evaluation procedures and 
in  the  prioritisation  of  measures.  A  method  allowing  the  prioritisation  of  synergistic 
measures is currently lacking.  

7.3.  Main results: Financing of Measures 

When  it  comes  to  the  financing the management of  water  ecosystems/resources 
and floods, data and information are scattered and heterogeneous across MS – and thus 
the analysis of the fiches has been mostly qualitative. Nevertheless, some important key 
messages emerge from the wealth of information included in MS fiches: 

  The most important funding sources for water management in Europe are  water 
and sanitation tariffs, EU funds and national public funds – they are in place 
in a vast majority of MS140, and the financial volumes deployed are larger than other 
sources; 

140  These  funding  sources  are  likely  to  be  in  place  in  all  MS  –  however,  some  MS  fiches  do  not  provide  any 
information on their use. 

77 

 
 
                                                 
  Abstraction  and  pollution  charges  are  in  place  in  several  MS,  and  generate 
significant revenues. However, while in some MS their revenues are earmarked and 
directed  to  water  management,  in  a  few  other  MS,  these  revenues  go  into  the 
Central Government budget or are allocated to regional, local or municipal budgets 
for several uses. In these countries, earmarking revenues may be a way to unlock 
additional revenues for water management; 

  Private investments receive limited application in EU MS. Further investigations 
to assess the potential for additional private financing, and its potential impacts (in 
particular  in  the  economic  and  social  domain)  would  help  identifying  untapped 
potential  for  funding,  and  thus  would  deserve  further  attention  in  the  debate  on 
financing water resource management at the EU and national level; 

  Innovative funding arrangements would deserve further attention in the future, 
so as to assess their potential for funding water management measures. It concerns 
for example PES schemes; financial assistance schemes combining public funding 
and financial participation by recipients (e.g. farmers); and an environmental fund 
financed by hydropower companies; 

  At present, a variety of charges on other significant water uses (e.g. taxes on 
pesticides,  charges  on  alluvial  sediment  extraction)  are  in  place  in  some  MS, 
targeting different types of water users. These charges improve the implementation 
of the polluter-pays and user-pays principle, and hence their implementation in MS 
should be promoted. For example, while nitrates and pesticides are one of the main 
water management issues in the EU, only three MS currently have specific charges 
in place (and a fourth one is planning to have one), revealing weaknesses in the 
implementation of the polluter-pays principle in the EU.  

Surely, all untapped or emerging sources of funding should be carefully explored at EU and 
MS level before commencing design and implementation, in order to ensure that they fit 
into the specific architecture of the national economic, social and environmental settings141. 

Overall, the implementation of full-financial cost-recovery for the WSS sector (excluding 
irrigation) still presents some weaknesses in the EU, although improvements have taken 
place since 2006 – following WFD implementation. In  one third of the MS (9 out of 27), 
financial cost recovery is 100% or higher; in 5 countries, the cost-recovery rate is between 
90  and  100%  and  6  countries  between  80  and  90%;  in  4  MS,  cost  recovery  levels  are 
below 80%; and in 3 MS this information was not available. In 10 MS out of 27, water and 
sanitation tariffs are set between 1 and 2 EUR/m3; in 6 MS between 2 and 3 EUR/m3; and 
in 5 MS, tariffs are above 5 EUR/m3. Further investigation is required to better identify the 
factors  that  constrain  the  application  of  the  cost-recovery  principle,  and  the  possible 
solutions for addressing those.  

A comparison between  cost  recovery levels and  the affordability of water and sanitation 
expenditures in the EU suggested that, in general, full cost recovery levels – and also 
cost-recovery  levels  between  90  and  100%  -  do  not  seem  to  compromise  the 
affordability of water services. In all these MSs, water and sanitation services appear 
affordable for all, including  on average, the  households in the lowest income decile, i.e. 
when considered at the aggregated level.142 However, in the countries not yet reaching full 
cost-recovery and planning to achieve it by raising current water and sanitation tariffs, it 
is recommended to carry out an ex-ante assessment of the affordability of higher water 
tariffs, in particular concerning the vulnerable households, and to implement accompanying 
measures (e.g. social tariffs) to mitigate any affordability-related issues. 

141  A  MS  representative  suggested  that  this  might  be  a  good  starting  point  to  think  about  the  future  work 
programme of the CIS Strategic Coordination Group. 

142 Still, water consumers in the majority of countries might still face challenges in paying their water bills, with 
mechanisms put in place for supporting them to ensure they benefit from the essential water services.  

78 

 
                                                 
7.4.  Putting 

the  assessment 

results 

into  perspective: 

discussion 

The  analysis  of  the  available  MS  data  has  led  to  the  following  findings  on  the  need  to 
progress towards a more strategic approach to financing water-related investments (in line 
with what was discussed in Chapter 4): 

  Integrating  or  mainstreaming  water  financing  considerations  across  all 
water-related sectors should be a priority in order to leverage additional funds for 
sustainable water resources  management. Currently, a sector-biased approach is 
predominant, which is actually hindering the possibility to leverage funds from other 
sectors but also to adopt a more holistic approach to financing, one that actually 
matches the nature of some of the policy challenges: i.e. a nexus approach143, the 
conservation  of  biodiversity,  macroeconomic  performance,  resource  efficiency, 
circularity, et cetera. To put it in a different way, there seems to be scope to unlock 
some  institutional  lock-ins  in  the  current  financing  approaches:  a  bias  in  public 
investment  systems  towards  conventional  infrastructures,  and  weak  institutional 
innovation to address wider challenges (such as adaptation or long-term security 
from  a  nexus  approach).  International  finance  for  climate-related  purposes  has 
grown  significantly,  but  over  80%  of  disbursements  are  geared  to  mitigation 
programmes in the energy and transport sectors (UNEP, 2016)144, with an untapped 
potential from adaptation funds. 

 

In terms of assessment, additional lock-ins can be found, such as comparing grey 
and green infrastructures at the hand of cost-effectiveness analysis, which does not 
factor in the multiple benefits from the latter infrastructure type.  Hence, there is 
‘best-value’ 
significant  potential  to  move  away  from 
approaches: using existing financial resources to fund water-related activities that 
provide  the  highest  social,  environmental  and  economic  benefits.  As  regards  the 
practical steps in policy preparation, this does not only entail a wider use of cost-
benefit  analysis,  beyond  cost-effectiveness  analysis,  but  also  the  use  of  these 
analytical  frameworks  to  inform  decisions  ex  ante  rather  than  to  justify  them  ex 
post. There is evidence (Urrea et al, 2020145) that infrastructure maintenance and 
conservation policies have been developed mainly from a corrective point of view, 
i.e. once the asset has failed.  

‘least-cost’  to 

  Looking at the multi-level governance schemes in place, it seems that what should 
be improved is not just the coordination of sectoral policies but also of water-
related investments,  as shown in the definition of match-funding schemes and 
the discussion on public interest investments, pervasive in the new Plan DSEAR in 
Spain.  

  Part  of  the  potential  to  minimize  the  need  of  financial  resources  remains 
untapped. Although there have been major efforts to increase water use efficiency 
(for instance in the modernisation of irrigation systems in Mediterranean countries) 
and to ensure adequate asset management, none of those efforts has delivered in 
general  terms  as  required,  especially  when  it  comes  to  achieving  the  overall 

143  See  for  an  introduction  to  the  “nexus  approach,”  this  internet  page  of  the  Global  Water  Partnership 
(Mediterranean). 

144 United Nations Environment Programme. The Adaptation Finance Gap Report 2016; Nairobi, Kenya 

145 Urrea-Mallebrera, M. A., Altarejos-García, L., & García-Bermejo, J. T. (2020). Management of River Basin 
Physical Assets. In River Basin Management. IntechOpen. 

79 

 
 
                                                 
 
objectives, i.e. the wider long-term water security at a basin level). There are very 
significant  savings  in  a  number  of  irrigation  districts  in  Southern  European 
countries,  but  those  savings  are  not  always  transferred  to  the  river  basins  (as 
evident in countries like Spain or Italy).  

  There  seem  to  be  ways  of  increasing  revenues  internally  generated  in  the 
water  sector,  an  approach  that  may  complement  the  use  of  funds  generated 
elsewhere (i.e. climate financing, integrated projects in LIFE, et cetera). This should 
also be compatible with the increase of public budgetary resources to water-
related activities, although trade-offs will need to be considered in view of, on the 
one hand, the joint effect of increased indebtedness and fiscal consolidation efforts 
and,  on  the  other  hand,  the  significant  stimulus  from  recovery  and  resilience 
packages.  Overall, a public debate on how to share costs and benefits as to water 
policy seems a pending issue. 

  The  strategic  use  of  resources  from  the  Recovery  and  Resilience  Facility 
under  Next  Generation  EU  (as  ‘intelligent  money’)  may  contribute  to  leverage 
other sources of finance. 

Opportunities  to  improve  financial  appraisals  and  economic  assessments 
informing financing decisions 

As  discussed  above  in  Section  5.2,  there  is  evidence  that  the  improvement  of  financial 
appraisals and wider economic assessments is of chief importance to improve the decisions 
about the prioritisation of investments and the strategic financing of measures overall. The 
most critical findings are: 

  Overall,  difficulties  are  observed  to  make  a  clear  difference  between 
ensuring upfront capital investment and project finance (to deal with opex 
and financial sustainability), and how to connect these to water pricing (tariffs, 
charges/fees, taxes, subsidies, et cetera), in line with the discussion under Section 
4.  This  shows  the  lack  of  an  integrated,  strategic  approach.  However,  some 
progress can be observed in a number of MS. 

  In Belgium, comprehensive scenarios have been developed (September 2020) 
to estimate the investment necessary to achieve full compliance with the WFD 
objectives (GES). Whether or not these scenarios suffice to reach the objectives 
remains, however, uncertain.  

  In the Netherlands, the future investment needs in flood protection have been 
assessed  through  a  comprehensive  cost-benefit  analysis  (CBA).  Before  the 
Delta  Plan  (2011),  the  country  already  spent  about  EUR  1billion  annually  on 
flood risk management. Responding to the 1990s intense flooding of the Meuse 
riverbanks  in  Limburg,  the  Delta  Plan  established  new  safety  targets  for 
maximum flood risk ranging from a risk level of death of 1/1250 to 1/100,000 
a year. Climate change and land subsidence are amplifying risks.  

  As discussed in Section 5.2, the use of sound financial appraisals could be 
improved; wider economic assessments (dealing with multiplier effects 
on  macroeconomic  performance  and  externalities)  are  even  weaker. 
The European Commission’s (2019) evaluation146 recognised that a number of 
MS  had  upgraded  their  water  pricing  policies  by  fulfilling  the  ex-ante 
conditionality  for  water  under  the  Common  Provisions  Regulation  for  the 

146 European Commission, 2019, Report from the Commission to the European Parliament and the Council “on 
the  Implementation  of  the  Water  Framework  Directive  (2000/60/EC)  and  the  Floods  Directive  (2007/60/EC); 
Second River Basin Management Plans and First Flood Risk Management Plans,” 2019 COM(2019) 95. 

80 

 
 
                                                 
European Structural and Investment Funds for the period 2014-2020. Progress 
was acknowledged in terms of the definition of water services, the calculation 
of financial costs, the performance of economic analyses and the assessment 
of both environmental and resource costs for compliance with the cost recovery 
principle. 

  CEA is becoming more widely used as compared to the first cycle of river 
basin  management  planning,  and  as  required  for  decisions  on  PoMs,  but 
cost  curves  stemming  from  those  CEA  tend  to  be  used  ex  post  to  justify 
previously made decisions.  

  In  October  2020,  Spain  released  the  so-called  DSEAR  plan  for  public 
consultation.  The  plan  concerns  wastewater  treatment,  sanitation,  efficiency, 
savings and reuse. Part of that effort is on improving the use of CEA to prioritise 
investments. 

  In  Cyprus,  both  RBMPs  and  FRMPs  are  ranked  based  on  a  multivariate, 
qualitative CEA. This assessment was performed for all measures in the RBMP. 
Measures were ranked in terms of effectiveness based on multiple criteria such 
as  the  relevance  of  measures,  the  time  required  for  implementation  and  for 
delivering  outcomes,  the  number  of  water  bodies  affected,  the  relevance  to 
climate change, and costs. However, it remains unclear how the results of the 
CEA feed into the prioritisation of measures, as there is no specific mention of 
the methodology or the results from such a prioritisation.  

  In  Belgium  (Flanders),  CEA  was  only  used  for  the  prioritisation  of  sewage 
infrastructure and wastewater treatment projects; Multi-Criteria Analysis (MCA) 
was used for all other actions. 

  In Finland, CBA was used in the prioritisation and the planning of measures in 
all five of the FRMPs assessed. CBA did not consider multiple benefits, but only 
those  based  on  avoided  damage  from  conventional  flood  defences.  Not  all 
measures could thus be assessed. 

  In  Greece,  the  magnitude  of  flood  damages  was  estimated  during  the 
preparation  stage  of  the  flood  risk  maps.  In  addition  to  the  identification  of 
potentially affected uses, an evaluation of flood impacts was carried out via a 
vulnerability assessment of affected areas, uniformly applied across all FRMPs 
and based on a common CBA framework. 

  In  Lithuania,  measures  for  FRMPs  were  selected  at  the  hand  of  a  CBA  and 
multi-criteria analysis. Costs and benefits were assessed for all measures. As 
in other cases, a more detailed CBA for structural, grey infrastructural measures 
was developed. 

  Full-fledged  CBAs  are  very  scarce.  There  is  hardly  any  discussion  on 
discounting even when decisions on climate change adaptation and long-
term water security are to be made.  

  Although there is evidence that many MS delivered some analysis of costs and 
benefits  of  measures  and  also  that  the  majority  of  them  did  so  through  a 
national approach, most of these analyses are partial and some of them remain 
mostly largely qualitative. The lack of basic information on costs and benefits 
is  evident  as  well  for  the  assessment  underlying  “disproportionate  cost” 

81 

 
decisions, which are at the core of many exemptions (see for instance Machác 
et al., 2020)147.  

  The  lack  of  an  adequate  use  of  discount  rates  is  somewhat  problematic, 
particularly  with  measures  addressing  water  quality  and  with  investments 
addressing climate change adaptation, whose benefits may need decades to be 
evident (IEEP et al, 2018).  Discounting is a technical procedure to put costs 
and benefits occurring now and in different periods in the future on a common 
denominator. It shows the weight we give today to impacts happening in the 
future  (the  “present  value”  of  these  impacts).  The  choices  underlying  the 
discounting method (such as the choice of discount rate) matter for a proper 
and  meaningful  assessment  of  the  expected  benefits  and  costs  of  policy 
measures, especially in cases where the most relevant outcomes are expected 
to materialise many years or decades from now.    

  Some MS have identified the need to apply new decision-making methods 
(such as those that have been developed to deal with risk and uncertainty), 
but  in  most  RBDs,  these  methods  have  not  yet  been  implemented. 
Innovative  financing  mechanisms  and  innovation  in  decision-making 
theories  (including  robust  decision-making,  stochastic  modelling,  real 
option methods, et cetera) are not pervasive. 

  In Sweden, new tools (such as robust decision-making and resilience thinking 
principles) are being developed to support decision-making. Studies have been 
carried  out  to  measure  the  cost  of  flood  prevention  measures  for  the 
municipalities,  and  the  effects  of  floods  on  economic  output,  which  does  not 
seem a very innovative metric anyway. 

  In  Austria,  the  concept  of  “step-wise  reaching  of  objectives”  by  designating 
areas/regions  as  “priority  areas”  (Sanierungsraum)  is  not  a  straightforward 
prioritisation of measures. However, this framework works with different time-
limited objectives, focusing on main pressures (hydro-morphological alterations 
in that case, mostly referred to hydropower and flow regulation actions). 

  Circular economy approaches offer a significant potential for innovation in 
pricing schemes (and public procurement, i.e. circular procurement). The 
Commission’s  proposal  for  a  “Renewed  Sustainable  Finance  Strategy,”  under 
development in 2020148, contains the goal of mainstreaming finance for a circular 
economy.  It  is  developing  policies  and  regulations  to  influence  businesses  to 
measure and report on circular economy activities 

  Cyprus  offers  an  example  where  water  reclamation,  tertiary  treatments  and 
water  reuse  projects  are  based  on  public-private  partnership  (PPP)  schemes 
(such  as  BOT  (Build,  Operate  and  Transfer),  as  part  of  a  policy  to  outsource 
projects149),  partially  funded  from  public  funds,  based  whereas.  The  costs  of 
producing desalinated water are to a large part charged to end users, reportedly 
unlike  in  other  countries  (e.g.  Spain),  where  desalinated  water  is  sometimes 
subsidised. 

147  Macháč,  J.;  Brabec,  J.  and  Vojáček,  O.  2020.  Development  and  implementation  of  the  concept  of 
disproportionate  costs 
the  EU  WFD. 
Water Alternatives 13(3): 618-633  
148  The  Commission  is  expected  to  adopt  this  Strategy  soon  after  the  conclusion  of  this  report.  In  2020,  the 
Commission carried out extensive public and expert consultations. 

in  water  management 

in  central  Europe 

light  of 

the 

in 

149 BOT, a model used in Public-Private-Partnerships, is a project delivery method used for large-scale (water and 
other) infrastructure projects: a private entity receives a concession from the public sector to finance, design, 
construct, own, and operate a facility stated in the concession contract.  

82 

 
                                                 
  Malta provides incentives to farmers to use reclaimed water (at 0.20 €/m3, for 
consumption levels below 2,500 m3 and 0.5 ha of cropland), in order to replace 
groundwater  sources  (abstracted  on  average  at  0.56  €/m3).  In  addition,  the 
public  utility  Water  Services  Corporation  (WSC)  is  undertaking  the  project 
‘Towards Net Zero Impact Utility’, which  aims to move towards the full recovery 
of costs of the urban water cycle in the longer term, through a combination of 
charges. 

83 

 
 
 
 
 
8.  CONCLUSIONS - STRENGTHENING STRATEGIC FINANCING 

IN MS: AREAS FOR FURTHER WORK 

This  study’s  assessment  illustrates  the  current  application  of  economic  assessment 
methods in the frame of the implementation of the WFD and FD. It stresses, in particular, 
the following:  

  Some  economic  knowledge  receives  very  limited  attention  in  the  WFD  and  FD 
planning process as well as in water policy making in general, including because of 
the limited knowledge base that is currently available at the MS and EU scale. These 
include inter alia information on:  

  The operational and maintenance costs of the majority of measures (apart 

for measures related to water services);  

  The assessment of the costs of the FD measures when they are carried out 
mostly at the local levels, and mechanisms that would facilitate the aggregation 
of (locally defined) costs to the river basin and national scales.  

  The  non-financial  economic  impacts  of  measures,  including  the  macro-

economic impacts of proposed PoM;  

  The  costs  of  measures  proposed  for  addressing  hydro-morphological 
pressures (these costs been very dependent on local conditions including access 
to land), and the costs (and benefits) of multifunctional measures (nature-
based solutions) that can benefit both the WFD and the FD;  

  The total costs required to achieve policy goals for both the WFD and the 
FD (with the additional challenge to Member States to define their goals for the 
latter), while accounting for ongoing climate change (an area not well covered 
in  the  WFD  implementation)  and  socio-economic  trends.  As  regards  the  FD 
implementation, studies at national level using the Aqueduct Floods framework, 
could deliver more detailed and context-specific results than what the Aqueduct 
Floods  tool  delivers,  supporting  FD  planning  and  strategic  financing.  The 
assessments  supporting  FD  decisions  would  also  benefit  from  a  better 
understanding  of  the  additional  (marginal)  costs  that  would  be  required  to 
achieve stricter levels of security (in terms of flood standards) in different MSs; 

  There  is  very  limited  evidence  on  how  the  results  of  economic  assessments 
are inform the selection and prioritisation of measures. In some cases, it is 
clear that the choice of measures is made independently of the outcome of economic 
assessments, in particular when some measures (e.g. basic measures) have to be 
implemented anyway and take up the bulk of (readily) available (public) financial 
resources. In other cases, economic assessments are carried out  ex-post without 
informing  the  selection  of  measures,  thus  mainly  to  respond  to  reporting 
requirements. In the majority of cases, the selection of measures under the WFD 
and  FD  PoMs  carried  out  at  the  level  of  a  river  basin  accounts  for  the  readily 
available  financial  resources  (with  a  few  iterations  between  cost  assessment  and 
the search for financial resources), as set in public institution budgets or resulting 
from  negotiated  revenues  from  water-related  charges.  Thus,  the  priorities  in 
investments rarely affect financing sources and instruments directly – as changes 
in financing instruments mostly originate from nationally driven policy changes and 
/  or  political  processes.  With  investment  and  finance  decisions  remaining  mostly 
sector-specific  and  then  in  parallel  siloes,  and  in  the  absence  of  a  systematic 
prioritisation  of  cost-effective  measures  (e.g.  treating  problems  at  source,  soft 
measures  supporting  changes  of  practices  instead  of  high-cost  infrastructure, 
nature-based solutions…), more attention needs to be given to estimating the cost-

84 

 
saving potential MS could seize to reduce implementation costs. The estimation of 
such  cost-saving  potential  would  lead  to  a  more  systematic  consideration  and 
subsequent  implementation  of  more  cost-effective  measures  (e.g.  pollution 
prevention, nature-based solutions, PES). This could be promoted through a better 
availability  and  diffusion  of  easy-to-apply  methodologies,  helping  to  compare 
options quickly and effectively. In this domain, sharing of best practices and more 
exchanges of information on how to implement these approaches could be useful 
for MS.  

  An increasing number of Member States appear open to consider or already apply 
a range of (new) innovative instruments including mechanisms that involve the 
private sector. They require more attention and knowledge on the following factors: 
their  design  and  implementation;  their  performance  in  terms  of  the  additional 
financial  resources  provided;  the  conditions  under  which  they  perform  (including 
the  synergies  with  other  regulatory,  voluntary  and  economic  instruments);  the 
types  of measures  and improvements they can support;  their contribution to the 
overall policy goals, hence in terms of enhanced water status and reduced in flood 
risk. Of particular interest are: 

  A  wider  application  of  environmental  charges  and  taxes,  along  with 
mechanisms that enhance the earmarking of their revenues to effective water 
management improvements;  

  The  establishment  of  a  Payments  for  Ecosystem  Services  (PES)  system 
connecting  the  farming  community  supplying  these  services  and  the  (private 
and public) beneficiaries of these services, an instrument that is available in the 
new Common Agricultural Policy;  

  Voluntary agreements with / instruments targeting the (energy) hydropower 
operators who can deliver additional financial resources to support river and 
hydro-morphological restoration; 

  The  establishment  of  mechanisms  that  facilitate  the  streamlining  of  financial 
resources  from  different  sectors/funds  in  order  to  support  the  effective 
implementation of (multi-functional) nature-based solutions; 

  Existing  evidence  on  financing  instruments  (in  terms  of  their  operational 
application, revenues generated and use of these revenues) is rarely presented 
and  put  into  the  context  of  the  wider  water  financing  framework.  Indeed, 
financing solutions are mainly developed and set on a sector-by-sector basis, 
with  limited  interactions  between  sectors  or  integration  of  sectors.  More 
attention  could  be  given  to  the  appropriate  combination  of  sources  of 
finance, acknowledging that different public and private sources have different 
roles to play, driven by different considerations.  

Experiences reported by MS as well as the European stakeholder workshop organised in 
the context of this study suggest a range of actions for filling the economic and financial 
knowledge gap and supporting the development of sound financial strategies in line with 
the ambitions of the two Directives. They include (not presented in any order of priority):  

  Update MS reporting in order to gather more robust and coherent information. In 
relation to the FD, MS could provide a set of quantifiable objectives in the various 
FRMPs, in terms of targeted flood risk reduction against which impacts of measures 
can  be  measured.  This  information  would  ensure  that  the  various  measures’ 
contributions to and the overall progress towards the objectives can be monitored 
and  that  the  cost-effectiveness  of  measures  can  be  used  as  criterion  in  the 
prioritisation process. In relation to the WFD, a more coherent cost reporting would 
clearly help improving the understanding of the magnitude of the efforts required 

85 

 
for  achieving  policy  goals  and  the  distribution  of  costs  among  water  users  and 
sectors. The cost reporting should cover the investment costs and the operational 
and maintenance costs, and it should not be limited to the measures that benefit 
from public (financial) support. The reporting should also cover the current financing 
and cost-recovery levels. However, such efforts to upgrade the reporting standards 
require  a  shared  understanding  of  its  purpose  and  benefits  among  all  actors 
involved  in  the  Common  Implementation  Strategy  (CIS)  process.  Rather  than  a 
mere compliance checking exercise, it should be a collective effort to set a shared 
knowledge base on costs (and financing) so that the challenges of the WFD and FD 
implementation are made visible, shared and known by policy makers at different 
levels. At the same time, the reporting could then help water managers in charge 
of  the  WFD  and  FD  implementation  to  give  attention  to  costs  and  financing 
challenges in the various MS, including in relation to the adequate mobilisation of 
EU funds.  

  Strengthen the knowledge base that can support the implementation of the WFD 

and FD with studies and additional research:  

  This  relates  to  the  knowledge  gaps  already  identified  above,  in  relation  to 
specific  cost  and  benefit  categories  and  to  pre-conditions  to  and  the 
performance  of  (innovative)  economic  instruments  and  financing 
schemes that may represent alternative sources of financing some MSs could 
adapt  to  their  own  water  management,  socio-economic  and  institutional 
context; 

  This  relates  also  to  nature-based  solutions  that  can  contribute  to  the 
objectives  of  both  Directives.  One  should  give  attention  to  the  costs  and  the 
direct  and  indirect  benefits  of  multi-functional  measures,  accounting  for  the 
contributions to the different services ; as well as the mechanisms that can help 
reducing  the  bottlenecks  to  an  effective  implementation,  in  terms  of 
governance,  social  acceptability,  and  as  regards  the  streamlining  of  funding 
from  different  (sectoral)  sources  (WFD,  FD,  agriculture,  climate,  urban 
development, et cetera). Different efforts are made in MS for developing such 
knowledge.  A  coordinated  evaluation  framework  and  tools  would  then  help 
establish a wider knowledge base that would support the comparison of grey 
and  green  solutions  (paying  specifically  attention  to  the  environmental 
impacts).  

  Support the allocation of financial resources coming from the different financial 

instruments, e.g.:  

 

Increase the earmarking of revenues (such as from the existing water charge 
schemes)  to  water-related  financial  investments,  also  going  beyond  the 
traditional  water  services  (for  example  hydro-morphological  restoration 
projects that can contribute to both the WFD and the FD objectives), and / or 
put political processes in place that explicitly consider how the revenues of new 
market-based  instruments  regulating  water  use  can  be  used  to  contribute  to 
WFD and FG goals;  

  Establish  the  conditions  for  seizing  the  opportunities  offered  by  the  new 
Common  Agriculture  Policy  in  the  implementation  of  Payments  for 
Ecosystem/environmental Services. This would help to ensure that these 
instruments connect the valuation of aquatic ecosystem services to the design 
and  implementation  of  financial  instruments  that  address  various  water 
management challenges (water quality, water quantity, hydro-morphology and 
ecology, flood risk, erosion, et cetera). The available information suggests that 
so  far,  mainly  theoretical  work  has  been  carried  out  on  this  topic.  Hence, 

86 

 
additional  information  on  practical  studies  and  examples  would  be  welcome, 
because at present the main challenge is to gain expertise on how to turn this 
potential into practice. In addition, sharing and comparing the experience with 
actual  applications  would  also  be  useful  to  shed  light  on  the  effectiveness  of 
these  measures.  To  help  in  this  direction,  the  European  Commission  has 
published a non-exhaustive list of measures that can get financial support under 
Eco-schemes - although MS can be creative and propose additional innovative 
measures. Eco-schemes could be used to promote nature-based solutions. 

  Making the best out of new revenue streams in circular economy approaches, 
within  the  context  of  industrial  symbiosis  (i.e.  clustering  relevant  economic 
activities);  or  make  optimal  use  of  (combining  and  blending)  different  EU 
financing  instruments  for  investments  in  enhancing  the  knowledge  base, 
experimenting novel approaches and supporting investments.    

  Build  (and  strengthen)  the  connection  between  the  water  community  and  the 
financial  sector  (both  public  and  private  financers)  at  different  levels  (national  & 
European) in order to bolster the actual “strategic financing” and risk-management 
approaches. This will  promote  outcome-oriented investment schemes  and deliver 
long-term financing contributing to the achievements of the WFD and FD objectives. 
It can also provide a better understanding of the interaction of different instruments 
and  of  the  “incentive  compatibility”  of  various  instruments  within  complex  policy 
mixes  (i.e.  economic  incentives,  information  mechanisms,  command-and-control 
instruments, et cetera).  

  Enhance  the  sharing  and  benchmarking  of  practices  between  EU  MS  – 
mobilising representatives of the water and financing communities e.g. on economic 
and financing assessments, strategic financing, innovative instruments, et cetera.  

87