Cost-benefit analysis and the water framework directive in Scotland

The Water Framework Directive seeks to achieve the enhancement of aquatic ecosystem quality for all waters across Europe. However, it recognizes the need to accommodate social and economic considerations, so Heavily Modified Water Bodies may be designated where achievement of the Directive's objectives may result in disproportionate costs. This necessitates the use of cost and benefit data, which may be hard to acquire. Benefits and costs of implementing the Directive also can be tested at the national level. This paper considers the evaluation of costs and benefits at 2 scales in Scotland: microlevel analysis, for case studies on the rivers Tummel and Dee and the Forth Estuary, and macrolevel analysis. In the microlevel analysis, costs of hydroelectric power generation are compared with the marginal benefits of increased fisheries revenues and are argued to be disproportionate. In the estuary environment, the benefits of returning an area to ecologically productive salt marsh and mudflats are compared with the costs of lost agricultural revenue. In the macrolevel analysis, we compare the costs to impacted industries with the estimated national benefits from implementing the Directive. We find that for Scotland as a whole, implementation is predicted to result in positive net social benefits.