ECRAN Introductory Workshop on Economic Analysis in Accordance with WFD

Date: 21-22.10.2014
Place: Skopje, Macedonia
Organizer: ECRAN Secretariat in cooperation with the EC TAIEX Unit

In terms of regulatory principles, Article 9 of the WFD introduces the principle of cost recovery for water services in accordance with the “polluter pays” principle (PPP). In addition, Article 9 promotes the internalisation of environmental and resource costs that result from existing uses of water resources and of aquatic ecosystems. It is not simple to calculate a price that reflects the true value of water, and thereby contributing to the long-term sustainable management of water resources, but it is critical for both, the effectiveness and the integrity of the proposed water pricing systems. In more detail, Article 9 establishes that:

• water prices must allow for the (adequate) cost recovery of water services, including environmental and resource costs;
• the main water uses (disaggregated for households, industry and agriculture) must adequately contribute to the recovery of costs of water services, proportionally to their contributions to the pressures imposed on aquatic ecosystems in line with the PPP;
• water pricing policies must 'provide adequate incentives for users to use water resources efficiently and thereby contribute to the environmental objectives' of the WFD.

In implementation of Water Framework Directive and reaching environmental objectives the most challenging is the implementation of the so called heavy directives: Drinking Water Directive and Urban Wastewater Treatment Directive, especially for the new member states and candidate countries.

The process of implementation of cost recovery in beneficiary countries will be demanding task. Therefore, an introductory workshop should help to establish common understanding on basic terms, definitions and principles, as well as to determine appropriate approach to enhance beneficiary capacities to implement cost recovery principle effectively throughout appropriate, institutional structure and policy framework for implementation of structure of costs, efficient water tariff and financial flows settings, polluter pays and other principles

Objectives of the Workshop:

Wider Objectives:

• To provide practical knowledge on the cost-recovery principle through water pricing and to share recent experience in undertaking package of measures for institutional structure and policy framework of water utility sector to achieve better recovery of the costs of water services as required by the WFD and other water directives.

The focus of the introductory workshop will be given to the following:

Specific objectives:

• To establish common understanding on main terms, definitions and principles, related to instruments, water pricing, water pricing structures and schemes, incentives, mechanisms, etc.
• To present and discuss legal basis of water pricing in the context of current EU water policy and governance together with practical examples from the selected Member States.
• To present and discuss the structure of different types of water services (water supply, sanitation, and irrigation), abstraction and pollution charges, taxes, supporting measures, economic instruments and price development.
• To present and discuss a basic requirement of WFD, DW, and UWWTD connected to needed standards in water utility sector and needed investments.
• To present and discuss policy framework to be on place for institutional structure and regionalisation, as one of the measures to reach efficient and effective water utility sector.
• To present and discuss the reasons for institutional setup (regionalisation) of the water utility sector and provide example.
• To agree on next steps.