COST BENEFIT ANALYSIS IN PRACTICE Thierry Davy Inspired

COST BENEFIT ANALYSIS IN PRACTICE Thierry Davy Inspired from Representative of the French water agencies to the EU

2/10 Cost/benefit Source: Ministry of the environment, Québec, Canada COST BENEFIT IN PRACTICE AT RIVER BASIN SCALE

DESCRIPTION OF THE SITUATION Aquifer Description of the site û aquifer intensely polluted by mining activity: huge waste deposits of salt û efficient measures already implemented: geomembrane on some dumps, artificial dissolution of waste with high concentration of salt. . . salt e h t f o 10 -15% n every year w withdra 3/10 Cost/benefit limit of the aquifer Prospective û model shows that the impact of the measures is not sufficient to reach the goal by 2015 (after 2027) û supplementary measures are needed g/l m 0 5 2 salt < ifer u q a e h in all t polluted zone salt tips Source: BRGM & Agence de l'eau Rhin-Meuse

SUPPLEMENTARY MEASURES AND THEIR EFFECTIVENESS E ss? e n e v i ffect 5 in 201 tive c e f f e n I 4/10 er h t r u f Maybe if d e t a g i invest ary Cost/benefit necess

CBA LOGICAL STEPS Define scale of assessment 5/10 Cost/benefit Who will be affected? To what extent? Directly or not? . . . Identify types of costs and benefits Quantitative, qualitative or monetary? Present and/or future? Which appear significant? . . . Choose methodology Is it necessary to apply different methods? What resources are available for original research? . . . Collect data Do we need first hand data? Can we rely on other resources? . . . Assess costs and benefits Are impacts important and properly weighted? How can different types of impacts can be presented in a way that facilitates decision-making? . . .

WHICH ELEMENTS MAY INFLUENCE CBA l l l l Cost/benefit The number of contributors/scale of analysis the effectiveness of the measures The time frame The way of calculating the costs The discount rate The integration or not of the environmental benefits The comparison with ability to pay

CBA IDENTIFICATION OF COSTS AND BENEFITS TD OD 7/10 Cost/benefit l Types of costs l Types of benefits

CBA: environmental and health benefits l l l Cost/benefit With a CBA you can calculate and integrate environmental and health benefits (where and when they exist) Monetarisation of environmental benefits (contingent valuation, transportation costs, hedonic prices, …) Monetarisation of health benefits or costs avoided (costs of lost working days, costs of deaths, …. )

COST BENEFIT ANALYSIS A 9/10 Cost/benefit ential t o p d te Estima equal costs ts benefi

CROSSING CBA AND ABILITY TO PAY AT LARGE SCALE 34 000 households directly concerned by the aquifer To compare with 1995 estimates of the ability to pay: 36€/year/household nate o i t r o rop p s i d t 015 No 2 n i d che a e r l Goa ome s h t i but w nity ai t r e c n u 817 interviews - Contingent valuation A 10/10 Cost/benefit

COST BENEFIT ANALYSIS T: TARGE oal he g t h c a re 5 in 201 B 9/12 Cost/benefit

ARE THE COSTS DISPROPORTIONATE in 2015? 34 000 households concerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household ATE N O I T 2015 POR B 10/12 Cost/benefit O in DISPR e reached … gation an't b c ro goal ider time de cons

COST BENEFIT ANALYSIS 1 02 2 r o f tion a l u m i S B 11/12 Cost/benefit

ARE THE COSTS DISPROPORTIONATE IN 2021? 34 000 households directly concerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household B 12/12 Cost/benefit RE YMO N A E T NA O I T ation R g O o r P e O d e me SPR i t I D h t i T w O 1 but th e 2 02 r 2 u ed s n i n a l o e a p m t o s g o the re p h a c y a e e r h t o allows t lower because are s t i f e n e b N

COST BENEFIT ANALYSIS T TARGE goal h the c a e r 7 in 202 C 9/12 Cost/benefit

ARE THE COSTS DISPROPORTIONATE in 2027 ? 34 000 households directly concerned by the aquifer (virtual example) To compare with virtual example of the ability to pay: 36€/year/household ATE N O I T 2015 POR in d e h c a e re t far b o t n ' n e r a a c goal 27 the costs table 0 ccep a g In 2 n i e from b O C 10/12 Cost/benefit DISPR

CBA some lessons from this example tions a l u m on measures 1 i S 7 2 0 2 1202 ter And af l l l C 11/12 Cost/benefit Type 1 measures are not costly They are not efficient to reach the environmental objective: the good ecological status The benefits are quite zero for the current users (household and farmers) The benefits will not increase in the future: no improvement of the water quality These measures 1 could have been eliminated on the basis of the cost efficiency analysis: no need of CBA to see that they are not appropriate

CBA some lessons from this example on measures 2 Simulations 2021 -2027 And after l l l Cost/benefit The CBA of measures 2 is balanced in 2015 The ability to pay shows that users can afford to pay for them even in 2015 If we postpone measures 2, CBA becomes negative in 2021 due to the decrease of benefits The ability to pay shows that it is still possible to pay for them in 2021 There is still some uncertainity (even low) to evaluate if measures 2 allow to reach GES

CBA some lessons from this example on measures 3 l l Cost/benefit Measures have a negative CBA for each date The efficiency of the measures 3 is proved to achieve the good status The ability to pay shows that even in 2027 the affordabilty is low Crossing CBA with ability to pay allows to see that around 2030 we will be able to reach good status at an « acceptable price » for local actors

Thanks for your attention Cost/benefit