Economics
Water has an economic value in all its competing uses and therefore needs to be recognized as an economic good. In order to protect water as a valuable ressource, investments are needed to be implemented by Danube countries. The implementation of measures is beneficial for all sectors including water-related ecosystems.
EU Water Framework Directive and Economics
The EU Water Framework Directive (EU WFD) is the first environmental directive that gives a prominent role to economic approaches in its implementation. The EU WFD stipulates in its first rendition that "water is not a commercial product like any other, but rather a heritage that must be protected, defended, and treated as such”, underlining the importance of prioritizing the protection and sustainable management of water resources over purely commercial interests.
EU WFD Article 5 and Annex III request that each Member State undertakes an “economic analysis of water use” for each river basin district or for the portion of an international river basin district falling within its territory. This "economic analysis" forms the foundation on which to base the subsequent implementation steps. It provides valuable insights into the economic importance of water uses and services, as well as on costs and benefits associated with improving water quality.
Furthermore, EU WFD Article 9 stipulates that EU Member States must consider the principle of cost recovery, encompassing environmental and resource costs, to ensure that water-pricing policies provide adequate incentives for users to use water resources efficiently, and thereby contribute to the environmental objectives of this Directive. Ensuring an adequate contribution of the different water uses (industry, households, and agriculture) to the recovery of the costs of water services, taking into account the polluter pays principle to complete the EU WFD-related economic analysis.
A first economic analysis of water uses was carried out in the Danube River Basin in 2004, in the framework of the first Danube Basin Analysis (DBA) and is regularly updated in the Danube River Basin Management Plans (DRBMPs) according to the EU WFD planning cycles.
The DRBMPs include a description of relevant economic water uses and their economic meaning, including characteristics of the “water services,” such as water abstraction, impoundment, storage, treatment, and distribution of surface water or groundwater for different water uses. Such uses include industry, agriculture (including irrigation), hydropower, drinking water supply, and wastewater collection and treatment.
As for the requested cost-recovery, the DRBMPs summarise cost-recovery approaches and methodologies used by Danube countries. Cost-recovery is seen as a key tool for effectiveness of public expenditures, financial reliability of water service providers as well as for ensuring the financial sustainability of utilities, whereas socio-economic circumstances and affordability issues have to be taken into consideration.
For the successful implementation of the Joint Programme of Measures with the aim to achieve the good status of water bodies in the Danube River Basin, it is necessary to mobilize adequate ways of financing the planned measures. The financing of measures is a national responsibility. EU-supported funding programs for EU MS as well as non-EU MS are available for specific measures. Further efforts are needed to address still existing challenges and gaps in the financing of the implementation of EU WFD related measures.
