What are the benefits of the Water Framework Directive? Lessons learned for policy design from preference revelation
Huhtala, Anni; Artell, Janne (2015-10-21)
Huhtala, Anni
Artell, Janne
Valtion taloudellinen tutkimuskeskus VATT
21.10.2015
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2018042618674
https://urn.fi/URN:NBN:fi-fe2018042618674
Tiivistelmä
The Water Framework Directive (WFD) seeks to achieve good ecological status of surface waters across the European Union by 2027. The WFD guidelines explicitly recognize the economics of water management by providing exceptions to water areas with disproportionately high restoration costs. This calls indirectly for estimations of benefits lost due to non-attainment. We employ a hedonic property pricing approach on waterfront recreational properties to estimate the welfare impacts of attaining the good ecological status described by the WFD. The empirical challenge is that the quality measure proposed by the WFD specifically denotes ecological quality, whereas economically measurable water quality values are heavily dependent on recreation impacts. Intuitively, the choice of water quality measure should have an effect on estimating the value of water quality. Our data provide a unique chance to compare three alternative indicators of water quality: 1) a usability-based index, 2) subjectively reported measure and 3) the ecological status determined by the WFD. We find that an improvement in water quality is associated with a statistically significant, non-linear change in recreational property values. We show how the ecological status compares with the other two indicators, and discuss the justifiability of using revealed preference methods when the valued good is defined purely on the basis of ecological criteria.
Tutkimusteema
Environment, Ympäristö, Labor market and policies promoting economic growth, Työmarkkinat ja kasvua tukeva politiikka
JEL
Q260 - Recreational Aspects of Natural Resources, Q510 - Valuation of Environmental Effects (Recreational Effects; Health Effects; Contingent Valuation), Q530 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Avainsanat
hedonic price method, water quality, environmental amenities, valuation, waterfront properties
Kokoelmat
- VATT Working Papers [164]