EconPapers    
Economics at your fingertips  
 

What Are the Benefits of the Water Framework Directive? Lessons Learned for Policy Design from Preference Revelation

Janne Artell () and Anni Huhtala ()

Environmental & Resource Economics, 2017, vol. 68, issue 4, 847-873

Abstract: Abstract 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.

Keywords: Hedonic price method; Water quality; Environmental amenities; Valuation; Waterfront properties (search for similar items in EconPapers)
JEL-codes: Q51 Q53 Q26 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10640-016-0049-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: What are the benefits of the Water Framework Directive? Lessons learned for policy design from preference revelation (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:enreec:v:68:y:2017:i:4:d:10.1007_s10640-016-0049-8

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-10-08
Handle: RePEc:kap:enreec:v:68:y:2017:i:4:d:10.1007_s10640-016-0049-8