Global Issues in Water Policy 14 Manuel Lago Jaroslav Mysiak Carlos M Gómez Gonzalo Delacámara Alexandros Maziotis Editors Use of Economic Instruments in Water Policy Insights from International Experience Global Issues in Water Policy Volume 14 Editor-in-chief Ariel Dinar, Department of Environmental Sciences, University of California, Riverside, Riverside, California, USA Series editors José Albiac-Murillo, Zaragoza, Spain Stefano Farolfi, CIRAD UMR G-EAU, Montpellier, France Rathinasamy Maria Saleth, Chennai, India More information about this series at http://www.springer.com/series/8877 Manuel Lago • Jaroslav Mysiak Carlos M Gómez • Gonzalo Delacámara Alexandros Maziotis Editors Use of Economic Instruments in Water Policy Insights from International Experience Editors Manuel Lago Ecologic Institut gemeinnützige GmbH Berlin, Germany Carlos M Gómez Departamento de Economía Universidad de Alcalá and IMDEA-Water Foundation Alcalá de Henares (Madrid), Spain Jaroslav Mysiak Fondazione Eni Enrico Mattei (FEEM) Venice, Italy Gonzalo Delacámara Madrid Institute for Advanced Studies in Water (IMDEA-Water Foundation) Alcalá de Henares (Madrid), Spain Alexandros Maziotis University of Manchester Manchester, UK ISSN 2211-0631 ISSN 2211-0658 (electronic) Global Issues in Water Policy ISBN 978-3-319-18286-5 ISBN 978-3-319-18287-2 (eBook) DOI 10.1007/978-3-319-18287-2 Library of Congress Control Number: 2015945335 Springer Cham Heidelberg New York Dordrecht London © Springer International Publishing Switzerland 2015 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper Springer International Publishing AG Switzerland is part of Springer Science+Business Media (www springer.com) Preface and Acknowledgements Despite growing interests worldwide, little is known about the actual performance of economic policy instruments (EPIs) in achieving water policy objectives Fostered by a research grant from the European Commission, this book displays a large body of evidence on the different types, design features and outcomes of water-related economic policy instruments in place and the practice guiding their choice and implementation Compared to other horizontal reviews of environmental EPIs, this book has an exclusive focus on water uses and services, and the breadth and depth of the analysis is unique from the international perspective The scope of this review is to explore and identify conditions under which the EPIs perform well in practice and for this purpose; a large number of existing instruments are reviewed and assessed against a common set of assessment criteria A variety of EPIs presented include selected instruments in place in Cyprus, Denmark, France, Germany, Hungary, Italy, Spain, the UK, Australia, Chile, Israel and the USA This book does not advocate for the application of any specific EPI, but sets out the basis for the policymaker (and interested reader) to choose a particular form of EPI in specific circumstances The book follows three fundamental objectives: (1) to learn more about the practical application of EPIs to specifically achieve water policy objectives, (2) to better understand the policy frameworks under which water-related EPIs are or have been designed and implemented and (3) to advocate the use of economic assessment tools and methods to inform available choices in the development of environmental protection policy at large and, more specifically, decisions regarding the management of water resources These key objectives can be translated into broad research questions that this book aspires to address: (1) What are the purposes and motives that have led some policymakers around the world to promote the design and implementation of these instruments to achieve specific water policy objectives? (2) How water EPIs interact and perform as part of complex policy mixes? (3) What is the level of information required and what assessment tools can be applied to impart significance regarding their performance? v vi Preface and Acknowledgements The research leading to this book has received funding from the European Union’s Seventh Framework Programme (FP7/2007–2013) under grant agreement no 265213 (EPI-WATER – Evaluating Economic Policy Instruments for Sustainable Water Management in Europe) The EPI-WATER project was carried out by a consortium led by Fondazione Eni Enrico Mattei (FEEM), Italy, and 10 other European institutions: ACTeon, France; Ecologic Institute, Germany; Università di Bologna, Italy; Wageningen University, the Netherlands; National Technical University of Athens, Greece; Instituto Madrileño de Estudios Avanzados – Agua, Spain; University of Valencia, Spain; Middlesex University, Flood Hazard Research Centre, UK; Aarhus Universitet – National Environmental Research Institute, Denmark; and Corvinus University of Budapest, Regional Centre for Energy Policy Research, Hungary The consortium liaised with overseas experts from Resources for the Future, the Australian University of Sydney, the Australian University of Adelaide, the Hebrew University of Jerusalem, the University of California, the University of Colorado, Kieser & Associates, the University of Richmond, Pontifical Catholic University of Chile and Peking University The book is composed of contributions presented at the international conference Water Management: Review of Empirical Evidence, Experiences and Lessons Learned from Europe and Elsewhere, held in Berlin from January 26–28, 2012 The authors are grateful for the conference’s fruitful discussion, which engaged experts and practitioners, representatives from governments and river basin authorities, EU institutions and non-government and international organizations We would like to acknowledge the constant support to the project by a panel of experts from AgroParis Tech, the Organization for Economic and Co-operation Development, the SeineNormandie Water Agency, the Swedish Agency for Marine and Water Management, the Spanish Ministry of Environment, the UK Department for Food and Rural Affairs, World Wide Fund for Nature (WWF), the Committee of Professional Agricultural Organisations and General Committee for Agricultural Cooperation in the European Union, the Romanian Waters National Administration, the EC Directorate-General for the Environment (DG Environment) and the European Environmental Agency In addition, we would like to acknowledge the support from Henriette Faergemann and Łukasz Latała (DG ENV, European Commission), Xavier Leflaive (OECD), Tania Runge (COPA-COGECA), Martina Mlinarić (EEB), Lucile De Boisson (WWF), Edi Interwies (InterSus), Bernard Barraqué (CNRS), Thomas Dworak (FreshThoughts), Miguel R Solanes (IMDEA Agua), Hans-Peter Weikard (WUR), David Zetland, Pedro Andrés Garzón Delvaux and Pierre Strosser (ACTeon) Last but not least, we would like to thank Carlos Mario Gómez, Gonzalo Delacámara and Alexandros Maziotis for their excellent contributions to editing this book and all lead and contributing authors of this book for their hard work and efforts towards making this publication happen This book would have not been possible without their constant support Finally, many thanks to the staff at Springer for their help throughout Germany Italy Manuel Lago Jaroslav Mysiak Contents Defining and Assessing Economic Policy Instruments for Sustainable Water Management Manuel Lago, Jaroslav Mysiak, Carlos M Gómez, Gonzalo Delacámara, and Alexandros Maziotis Water Pricing and Taxes: An Introduction Jaroslav Mysiak and Carlos M Gómez 15 Effluent Tax in Germany Jennifer Möller-Gulland, Manuel Lago, Katriona McGlade, and Gerardo Anzaldua 21 The Water Load Fee of Hungary Judit Rákosi, Gábor Ungvári, and András Kis 39 Water Abstraction Charges and Compensation Payments in Baden-Württemberg (Germany) Jennifer Möller-Gulland, Manuel Lago, and Gerardo Anzaldua 53 The Danish Pesticide Tax Anders Branth Pedersen, Helle Ørsted Nielsen, and Mikael Skou Andersen 73 Subsidies for Drinking Water Conservation in Cyprus Maggie Kossida, Anastasia Tekidou, and Maria A Mimikou 89 Residential Water Pricing in Italy 105 Jaroslav Mysiak, Fabio Farinosi, Lorenzo Carrera, Francesca Testella, Margaretha Breil, and Antonio Massaruto Water Tariffs in Agriculture: Emilia Romagna Case Study 121 Michele Vollaro, Laura Sardonini, Meri Raggi, and Davide Viaggi vii viii Contents 10 Corporatization and Price Setting in the Urban Water Sector Under Statewide Central Administration: The Israeli Experience 135 Iddo Kan and Yoav Kislev 11 Water Budget Rate Structure: Experiences from Several Urban Utilities in Southern California 147 Ariel Dinar and Tom Ash 12 Green Energy Certificates and Compliance Market 171 Jaroslav Mysiak, Fabio Farinosi, Lorenzo Carrera, Francesca Testella, Margaretha Breil, and Antonio Massaruto 13 Subsidies for Ecologically Friendly Hydropower Plants Through Favourable Electricity Remuneration in Germany 185 Verena Mattheiß 14 Water Trading: An Introduction 201 Gonzalo Delacámara and Carlos M Gómez 15 Water Quality Trading in Ohio 209 Mark S Kieser and Jamie L McCarthy 16 Nitrogen Reduction in North Carolina 223 Andrew J Yates 17 Evaluation of Salinity Offset Programs in Australia 235 Tiho Ancev and M.A Samad Azad 18 Water Trading in the Tagus River Basin (Spain) 249 Gonzalo Delacámara, C Dionisio Pérez-Blanco, Estefanía Ibáđez, and Carlos M Gómez 19 Chilean Water Rights Markets as a Water Allocation Mechanism 265 Guillermo Donoso 20 Unbundling Water Rights as a Means to Improve Water Markets in Australia’s Southern Connected Murray-Darling Basin 279 Michael D Young 21 The Development of an Efficient Water Market in Northern Colorado, USA 301 Charles W (Chuck) Howe 22 Other Types of Incentives in Water Policy: An Introduction 317 Alexandros Maziotis and Manuel Lago Contents ix 23 Cooperative Agreements Between Water Supply Companies and Farmers in Dorset (E) 325 Christophe Viavattene, Simon McCarthy, Colin Green, and Joanna Pardoe 24 Financial Compensation for Environmental Services: The Case of the Evian Natural Mineral Water (France) 337 Pierre Defrance 25 New York City’s Watershed Agricultural Program 351 Carolyn Kousky 26 Voluntary Agreement for River Regime Restoration Services in the Ebro River Basin (Spain) 365 Carlos M Gómez, Gonzalo Delacámara, C Dionisio Pérez-Blanco, and Marta Rodríguez 27 Voluntary Agreements to Promote the Use of Reclaimed Water at Tordera River Basin 379 Francesc Hernández-Sancho, María Molinos-Senante, and Ramón Sala-Garrido 28 Key Conclusions and Methodological Lessons from Application of EPIs in Addressing Water Policy Challenges 393 Carlos M Gómez, Gonzalo Delacámara, Alexandros Maziotis, Jaroslav Mysiak, and Manuel Lago Index 417 ... http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52012DC0673 &from= EN Defining and Assessing Economic Policy Instruments for Sustainable Water both to induce some desired changes in the behaviour of all water users in the economy (being individuals,... Defining and Assessing Economic Policy Instruments for Sustainable Water 11 The book has a practical remit and is aimed to anyone interested in finding out more about the use of economic instruments. .. construction of Defining and Assessing Economic Policy Instruments for Sustainable Water green roofs aimed at improving rainwater management/reducing excess water; voluntary agreements for restoring