Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/225-962 Introduction to Benefit.

Analysis for ENPI countries of Social and Economic Benefits

of Enhanced Environmental Protection

EuropeAid DCI-ENV/2009/225-962

Introduction to Benefit Assessments

Samuela Bassi - [email protected] for European Environmental Policy (IEEP) www.ieep.eu

Final Workshop ENPI South – Brussels, 28-29 June 2001

mailto:[email protected]

http://www.ieep.eu/

Content of this presentation

Benefit Assessment (BA): framework The BA Manual BA methodology

Environmental categories Benefits Level of analysis Methodological steps

Practical issues Data gathering Case studies Assumptions

Conclusions & future of BAs

23-24 .06.2011 Final Project Event: ENPI-East , Chisinau 2

Benefit Assessment: framework

23-24 .06.2011 Final Project Event:: ENPI-East , Chisinau

3

What is a benefit assessment (BA)?

What environmental BAs do:Examine the potential positive outcomes for society from the adoption of environmental targets and actions – like environmental policies, legislation and investments (e.g. construction of WWT plans, improved management of PAs etc).

Why BAs are important:Understand the implications on implementing env measuresMake benefits comparable and understandable to wide audience;Provide improved scientific evidence base;Move focus from costs to benefits; Offer arguments to support funding decision / env policy integration


Examples of BAs

A growing interest in assessing the value of the environment

Several European Commission’s BAs on EU acceding countries, e.g. :•Ecotec (2001) The Benefits of Compliance with the Environmental Acquis for the Candidate Countries;

•Ecolas and IEEP (2005) The benefits for Croatia of Compliance with the Environmental Acquis; c

•Arcadis-Ecolas, IEEP, Metroeconomica, Enviro-L (2007) Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis

•IEEP (2008) Benefit Assessment methodology for ENP countries

Assessment of environmental funding needs & benefits, e.g.:•GHK, IEEP, Ecolas, Cambridge Econometric (2006): Strategic Evaluation on Environment & Risk Prevention under Structural & Cohesion Funds for 2007-2013 - A report for DG Regio

Valuation of benefits of nature & ecosystem services, e.g.:•The Economics of Ecosystem & Biodiversity (TEEB) www.teebweb.org

•Cost and benefits of EU Natura 2000 – several studies by IEEP et al

Etc. 23-24 .06.2011 Final Project Event: ENPI-East , Chisinau 5

http://www.teebweb.org/

Gross Value Added (GVA)

Natural C

apital

Business as Usual path with overall trade-offs Win (Econ) – Loss (Env)

Development Pathways, trade-offs and natural capital

Good Practice in Environmental Management Path (still trade-offs,

though balance better)

Non Declining (over time) Natural Capital PathOver time path to no trade-offs (overall win-wins) –

Decouple economic development from natural capital use

Trade-offs

Specific measures: some win-wins, others win-neutral, win-loss, some loss-loss

Overall: win-loss for this path

TodayPast Potential Future

Source: ten Brink 2011 in Hjerp et al 2011

Gross Value Added (GVA)

Natural C

apital

WIN (Economy) LOSS (Environment)e.g. Road that facilitates economic growth

via needed connectivity

Interventions – win-wins and win losses

WIN (Economy) - WIN (Environment)e.g. Investment in natural capital that brings high returns to the

economy and improves ecological statuse.g. Flood plains that reduce risk at lower cost

e.g. Investment in ecosystem for water purification at lower cost than man-made capital.

e.g. investment in natural carbon storage

LOSS (Economy) LOSS (Environment)e.g. Investment in not needed roade.g. Uncontrolled invasive species that impacts agriculture or forestry e.g. Fisheries subsidies (underperforming natural asset)

Win (Economy) - WIN (Environment)e.g. Protected area where some (opportunity) costs, but also some economic gainse.g. Waste water treatment plant

WIN (Economy) Loss (Environment)e.g. Factory built after due EIA, compliant with

legislation, with proactive risk management strategy and environmental management

system (EMS); some “unavoidable impacts”

LOSS (Economy) WIN (Environment)e.g. Restoration of polluted land that poses little risk and offers little return

Loss (Economy) WIN (Environment)e.g. Ban on trade of threatened species

Win (Economy) LOSS (Environment)e.g. Airport in already well connected area (eg by rail)

WIN (Economy) - n/a (Environment)Pure economic gain, no effect on natural capita

e.g. Investment with no-net-loss policy, using suitable offsets

Source: ten Brink 2011 in Hjerp et al 2011

Reference point = the state of environment ‘now’. This requires an understanding of the relationship between pollution and impact

Baseline: a projection of how the state of the environmental will change to the target year (e.g.2020) based on project developments in the underlying economic and social (population, GDP growth and other relatively straightforward ones) factors that drive these changes.

Possible policy targets and target year (e.g. from EU/international standards, such as sewage network connection rate)

Environmental improvements: Comparing the baseline with the targets in order to assess the environmental improvements if targets are met

Benefits: Look at environmental, social, health and economic effects of environmental improvements (in qualitative, quantitative and monetary terms)

BA valuation framework:

Benefit AssessmentManual


9

The BA Manual (BAM)

‘Manual on the Assessment of Social and Economic Benefits of Enhanced Environmental Protection in the ENPI countries’

Step by step guidance on the methodology for BAs Developed as a working tool for the project Simplified & tailored to policy makers/experts to carry

out/update own BAs


...The BA Manual (BAM)

‘The Manual will be available from 15 July at:

ENPI project website: www.environment-benefits.eu


http://www.environment-benefits.eu/

BAM content

Method– Environmental categories to analyse (themes, sub-themes,

parameters)– Benefits to assess (env, health, social, economics)– The level of the analysis (qualitative, quantitative, monetary)– Approach for each parameter

Practical issues:– Data requirements– How to carry out case studies– Assessment


12

Methodology


13

Environmental categories

• ‘The environment’ comprises a vast range of issues.

• Clearly not everything can be covered

• Selection of environmental issues - criteria:• sufficiently representative of the environment,

• common across the countries under study,

• sufficiently simple to be assessed rigorously.

• Choice of 5 themes, sub-divided into sub-themes, and these into parameters

The BA assesses the benefits of improvements for each of these parameters.


...Environmental categories

5 THEMES:

1. AIR: How may society benefit from improvements in ambient air quality, espec. health?

2. WATER: Infrastructures – what benefits of extending access to safe drinking water, improved hygiene

and sewage connection, additional waste water treatment? Natural resources – What benefits from enhancing the quality of bathing and river waters,

and to whom?

3. WASTE - What benefits of reducing waste, improving collection and treatment?

4. NATURE - What benefits of enhancing biodiversity and sustainable use of natural resources?

5. CLIMATE CHANGE - What risks related to global warming and what actions can contribute to the solution?


….Environmental categories


Themes

Sub- Themes

Parameters

Benefits of environmental improvements

Environmental benefits: positive impacts that meeting environmental targets have on the natural environment

e.g. environmental improvement: higher share of WW under secondary treatment env benefit: reduced eutrophication

Social benefits: benefits to the society at largee.g. improved air quality better conservation of historical heritage, open air recreation

Health benefits: Direct benefits to public health (part of social benefits, but assessed separately given magnitude)

e.g. improved sanitation reduction of illness/mortality due to water-borne diseases

Economic benefits: value added to economy, employment opportunities, cost savings, etc

e.g. improved bathing water quality tourism opportunities


Level of analysis

The benefits can be assessed in:

Qualitative terms: description of the benefit, including people, areas & sectors affected, spatial distribution - applicable to all parameters

Quantitative terms : scale of the benefit (e.g. reduction in the number of cases of respiratory disease from air pollution) - more data intensive, applicable when data available

Monetary terms: value of the benefit: multiply quantitative benefits by standard economic value (or range) – applicable only when values representing the monetary value for society of a certain environmental improvement exist (e.g. carbon values, crop prices, WTP etc.). •Note: It can be controversial (e.g. VSL) and comparisons can be misinterpreted (e.g. air values higher than waste values, due to data) >> numbers to be interpreted with care


Annual Value of Benefits for Full Compliance: Lower Estimate

0

500

1000

1500

2000

2500

3000

3500

4000

4500

PL TU CR RO HU SK BU LI SL LV EE CY MA

ME

UR

Waste

Water

Air

From: The benefits of compliance with the environmental acquis for the candidate countries (July 2001) led by Ecotec and supported by the Institute for Environmental Policy (IEEP), Metroeconomica, EFTEC and national experts.

Scale of monetary benefits: example NMS

…Level of analysis


Benefits pyramid The 3-stage approach ensures that :

•the full range of benefits is covered, even if data availability uneven

•the BA is not constrained by focusing only on elements that can be quantified or monetised.

Methodological steps

5 key steps to carry out a BA:

1) Describe state of the environment

2) Define future baseline

3) Set targets

4) Assess environmental improvements

5) Assess Benefits


1) State of environment

1) Define the current state of the environment (reference point): a description of the current environmental conditions (e.g. in 2008). Needed to establish a reference point.

Example of key points to describe

-State of the parameter (e.g. surface water quality)

-Driving forces affecting it (e.g. population increase etc)

-Environmental pressures (e.g. waste water pollution etc)

-Current value/importance (e.g. bathing, drinking water etc.)

-etc


2) Define the future baseline: baseline projections of state of environment in the future (e.g. 2020) if no action/business as usual (BAU) – e.g. effect of economic and demographic changes. Needed to compare ‘like with like’: future improvements with future ‘no action’ scenarios.

Examples:


2) Baseline

3) Targets

3) Establish the targets: theoretical environmental targets for each parameter (e.g. by 2020). Needed to establish what future ‘action’ scenarios can be.

>> Here: not actual policies in ENPI countries (the work did not aim to assess national policies), but theoretical (yet feasible) targets – e.g. based on EU/international standards (e.g. achieving ‘good ecological status’ of surface water after EU WFD)

Examples:


What are the improvements and what are useful targets / benchmarks?

Level of pollution

Current Situation

COPI: 100% reduction

50% reduction EU acquis

Reference year pollution level = static

baseline

Baseline pollution levels

Policy Target: eg benchmark OECD

…targets

e.g. IEEP (2011) Manual of European Environmental Policy http://www.ieeplondon.org.uk/publications/manual.php

http://www.ieeplondon.org.uk/publications/manual.php

4) Environmental improvement

4) Compare the targets to the reference point and baseline >> env improvements: compare the proposed target with baseline (BAU e.g. in 2020). Needed to estimate expected environmental improvements.

>> If baseline cannot be assessed (e.g. lack of data) compare to reference point (e.g. 2008)

Example: ambient air quality


Basic Valuation Framework

Damage Cost / Benefits Savings

Business as Usual

Reference Full End TimeYear Implementation Year(eg 2005)

(eg 2020) (2030)

If difficult to define use the reference year

... environmental improvement

5) Benefits

5) Assess the benefits: estimate benefits (health, environmental, social, economics) if the targets met. Use a combination of qualitative, quantitative and monetary approaches (see 3. Level of analysis)

Note:>> not all the benefit categories are applicable (e.g. limited/no health benefits

from reduced deforestation)

>> avoid double counting (e.g. health benefits of drinking water quality overlap with improved sewage – assess joint benefits)


Establish/describe link between pollution and benefits/avoided impacts

•Eg water treatment/improved sanitation/air quality >> reduced cases of morbidity, children mortality etc

•Eg improved management of natural areas>> tourism benefits, reduced cost of water purification etc

Benefits: qualitative

Health benefits Avoided respiratory illnesses and premature deaths

Resource benefits

Avoided damage to buildings and crops

Ecosystem benefits

Avoided global warming from CO2 emissionsAvoided damage to lake & forest ecosystems from acidic rains

Social benefits Improved access to cultural heritage (less damage to historic buildings)Lesser social inequality by poor being more exposed to air pollution

Wider economic benefits

Cultural tourismAttracting investmentEmployment from environmental goods

From: Benefits for fYRoM and other countries of SEE of compliance with the environmental acquis by Arcadis-Ecolas and the Institute of European Environmental Policy (IEEP) with input from experts from across the SEE countries – Enviro-L and associates

Qualitative benefits – air (examples)

Health benefits Households benefiting from connection to (improved) quality water

Resource benefits

Reduction of contaminants in surface water

Ecosystem benefits

Likely changes in river and lake water quality

Social benefits Confidence in drinking water


Employment via tourism related to water recreation


Qualitative benefits: Water (examples)

Health benefits

Lower pollution to groundwater and surface water Reduced health and explosions risks as well as lower impact on global warming as methane emissions from landfills are captured and made to generate energy. Reduced health risks by improved treatment and disposal of hazardous waste

Resource benefits

Increased efficiency in the use of material and reduced production of primary material as a result of higher levels of recycling. The recovery of energy is increased through the Incineration Directive.

Ecosystem benefits

Benefits to eco-systems and other environmental resources as emissions from waste activities into air, water and soil are reduced (avoided leachate, methane emissions) – reduced pressure

Social benefits Reduced discrimination by fewer low income households living close to unprotected landfills, etc.


Lower costs for waste collection, treatment and disposal, as less waste will be produced.


Qualitative benefits: Waste (examples)


Ecosystem benefits

Increased size of protected areasIncreased level/quality of protectionIncreased connectivity between protected areas: eg reduced fragmentation in FYROM due to infrastructuresReduced threats/risks to species and habitats: eg wetlands destruction, intensive agriculture etc threatening birds in Kosovo; reduced soil erosion from deforestation in Albania

Social benefits Amenity value: improved areas for recreationOpportunities for rural development


Torism benefitsCost savings eg from water purification

Qualitative benefits: Nature (examples)

Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine

Exposure to pollution leads to a possibility for illness. This is measured as a “probability function”, aka ‘Dose Response Function’

Likely number of impacts = number of people exposed * Dose Response

Function * ambient air quality (pollution levels).Results given in probable no. of cases of bronchitis, early mortality cases etc

Benefits: quantitative

Assign a monetary value (eg M€, %GDP) to quantified benefits

For health impacts - use value of statistical life (VSL) + use of transfer values for early mortality & Cost of Illness (COI) / discomfort estimates (eg for bronchitis), based on WTP.

For other benefits – eg benefits from improvements in quality of access to drinking water – used willingness to Pay (WTP) estimates

Not all parameters & benefits can be monetised. Values may be more available in some areas than in others – it does not mean one is more valuable than others

>> Need to interpret with care

Benefits: monetary

!

Value (Benefit) Transfer Approach

Source: Elena Strukova, Alexander Golub, and Anil Markandya, Air Pollution Costs in Ukraine

When data not available, values can be ‘borrowed’ from other areas/countries with similar issues (e.g. transfer data on morbidity cases caused by PM10)

BUT: Important to take into account income/GDP disparities as countries have different levels of wealth!

...Benefits: monetary

Practical issues


37

Data Gathering

Data to collect include:

General data on the current economic and social state and trends (GDP, GDP/capita, population size and growth rate etc.); Data describing the current state of the environment (and, when possible, trends) for each parameter;Data that measure the relationship between environmental change and socio-economic benefit (where available – e.g. mortality associated to air pollutants);Data on the valuation of benefits (where available – e.g. WTP for safe drinking water).


Air Water Waste Nature

Main pollutants:SO2 NOx Particulates (PM10, PM 2.5)VOCsCO2COHeavy metalsDioxinsFuransHalogensOzoneCH4

Main pollutants:BOD and CODpHNitrogen & PhosphorusHeavy metalsDioxinsFluorideE. coli

Main data:

Connection to water supply and waste water systems and level of waste water treatment.

Quality of rivers (classification x km)

Number of aquifers polluters (nitrates or pesticides)

Main pollutants:CH4

Main data: Tonnes of Domestic, Industrial and Inert wastePopulation served by the collection systemNo. of existing and planned facilities (landfills, incineration plants, recycling) and collected materialNo. of illegal dump sites and quantity of waste

Main data: Ha and % of protected areasNo. of species and level of risk Ecosystem services

Data: What issues are likely to be important

…Data gathering

Possible sources of data:

National reports and databases: e.g. national State of the Environment Reports, statistical reports,Peer-reviewed research studies,Personal contacts with relevant authorities and experts.International reports and databases: e.g. by UNEP, UNDP, World Bank, OECD, EU Commission, Eurostat, FAO etc.; can be country specific or cover several countries or regions.Etc


...Data gathering

A checklist was developed to guide data collection

Extract:


WATER Unit Source Comments SUB-THEME: Water Infrastructures PARAMETER: Connection to safe drinking water

1 Population with improved water supply (population with access)

% WHO/UNICEF JMP Total, Urban & Rural

a Piped water supply % WHO/UNICEF JMP Total, Urban & Ruralb Other improved water sources % WHO/UNICEF JMP Total, Urban & Ruralc Population with pre-treated piped water

(municipal treatment) with good quality at tap%

Total, & Urban

2 Population with unimproved water supply % WHO/UNICEF JMP

3 Water supply interruptions

Only if it is an issue, and if information easily available

4 Household appropriately treating drinking water % DHS, MICS

Case studies

Analysis complemented by case studies:Each to focus on a single parameter

Apply same methodology as above

Main objectives of case studies:• Provide a practical application of environmental valuation

• Complement and/or fill a gap in the country BA

• and/or highlight important cases that demonstrates the value of environmental improvements.


Assumptions

Several assumptions had to be made to make the BA practical & allow for (some) comparability across countries

Overview:


Issue AssumptionsTimescale 2020Reference year 2008 if and where data available, and note year if other than 2008. Targets Usually a single common target for year 2020 used across the

countries for each parameter under analysis.Baseline Usually a set of essential factors are included in the baseline

projection, such as GDP, population and their growth rates. These are kept to a minimum to keep the analysis reasonably simple.

Mortality and morbidity Valuation of mortality follows a benefit transfer approach of willingness to pay (WTP) for mortality risk reduction that translates to a value of statistical life (VSL) which varies across countries in proportion to GDP/capita (PPP terms). The same WTP and benefit transfer approach is used for valuing an avoided case of illness, unless otherwise stated.

Time development of willingness to Pay (WTP)

Assumes a proportional relationship – e.g., if GDP/capita goes up by a factor of 2, the WTP goes up by a factor of two.

…Assumptions

Specific economic and demographic assumptions had to be made when estimating the BAU & target scenarios in 2020:


Country cluster Data

Annual growth factor

ENP South

population 1.68%GDP 3.75%GDP/capita 2.03%

ENP East

population 0.02%GDP 3.35%GDP/capita 3.33%

Russia

population -0.55%GDP 3.75%GDP/capita 4.32%

E.g. GDP and population future annual growth rates

…Assumptions

• Estimated values of statistical life (VSL)


VSL (PPP Euros), 2008

VSL (LCU), 2008 VSL (PPP Euros), 2020

VSL (LCU), 2020

Algeria 419,008 23,886,257 533,281 30,400,641

Armenia 316,529 90,389,617 468,954 133,916,996

Azerbaijan 460,803 336,782 682,704 498,961

Belarus 650,350 1,031,931,969 963,527 1,528,861,765

Egypt 281,987 833,061 358,892 1,060,258

Georgia 253,889 331,426 376,150 491,025

Israel 1,491,002 7,760,987 1,897,636 9,877,603

Jordan 289,420 197,357 368,352 251,182

Lebanon 628,743 822,193,776 800,217 1,046,426,730

Libya 861,764 1,409,812 1,096,788 1,794,303

Moldova 153,774 1,329,991 227,824 1,970,451

Morocco 220,577 1,625,356 280,735 2,068,631

Russia 1,090,701 29,437,594 1,811,827 48,900,494

Syria 237,485 9,462,892 302,253 12,043,661

Tunisia 417,937 369,846 531,919 470,712

Ukraine 381,041 1,574,310 564,532 2,332,423West Bank and Gaza 152,202 399,746 193,712 508,767

Can be controversial!

•Not the ‘value of life’ but rather people’s WTP for reductions in risk.

•Depends on GDP (PPP) hence differ across countries.

… Assumptions

Carbon value:- Used for methane capture, deforestation & RES- Based on range of values from European studies (consistent with

several international studies)- Same values across countries (assuming the value of carbon &

climate change risk the same value worldwide)


GHG Range 2010 2020Carbon dioxide (CO2) or

CO2 equivalentLow 17.2 39

High 32 56

Conclusions/way forward


47

Improving environmental policies/measures can help improve the health and quality of life for citizens within a country and in neighbours countries

Co-operation across countries is crucial to maximise the transboundary benefits (e.g. From air & water pollutions)

Benefits are likely to be of the same order of magnitude (if not larger) than the costs

Benefits can help communicate the importance of the environmental issues at political level.

Quantification of the health and environmental benefits is crucial

Valuable economic message from the monetisation aspect – reaching some new audiences (e.g. economists, finance dept, media etc)

Overall conclusions

In some countries (e.g. EU MS) benefits have to be assessed within Impact

Assessments for major policies/legislation, programmes etc.

BA for new candidates/neighbours is arguably becoming ‘good practice’ – it

was done for Croatia, also for FYROM and other SEE countries, and now for

ENP. It is increasingly recognised as a tool that can help the Commission, and

Ministries of Environment in the countries themselves.

Benefits assessments are being done in an increasingly wide range of areas

– eg eco-system services (TEEB in National & International Policy Making);

socio-economic benefits of natural areas (e.g. Natura 2000 in EU); international

processes (e.g. COP of CBD) etc

Being complemented by cost of policy inaction (COPI) studies (EC) and

cost of degradation (WB) to help present the scale of the need for action.

The future of BAs

Thank you for your attention ENPI project website:

www.environment-benefits.eu

Project Analysis for ENPI countries of social an economic benefits of

enhanced environment protection (DCI-ENV/2009/225-962)

Samuela Bassi – [email protected] for European Environmental

Policy (IEEP)

http://www.environment-benefits.eu/

mailto:[email protected]

Analysis for ENPI countries of Social and Economic Benefits of Enhanced Environmental Protection EuropeAid DCI-ENV/2009/225-962 Introduction to Benefit.

Documents

environmental bas

environmental management

environmental policies

environmental acquis

tradeoffs overall winwins

state of environment

benefits of compliance

netloss policy