GroPro, September 2008 Applying Cost-Effectiveness Analysis to Select Measures for Groundwater Protection Andrew Lovett School of Environmental Sciences,

GroPro, September 2008

Applying Cost-Effectiveness Analysis to Select Measures for Groundwater Protection

Andrew Lovett

School of Environmental Sciences, University of East Anglia, Norwich, NR4 7TJ, UK

[email protected]


Introduction: The WaterCost Project

• The EU Water Framework Directive requires that economic costs and benefits are taken into account when identifying combinations of measures to achieve ‘good status’ objectives.

• WaterCost investigated the practicalities of implementing cost-effectiveness analysis for groundwater protection.

• The results are now available as a handbook from http://www.watercost.org.


Main Steps in Cost-Effectiveness Analysis

1. Define the problem (gap between baseline and WFD target).

2. Identify measures.

3. Consider effectiveness of measures

4. Consider cost of measures

5. Combine measures (to address gap)

6. Compare cost effectiveness of combinations

7. Assess whether non-market benefits would change ranking of combinations.


UK Study Area: Slea Catchment


27 2 km grid cells = 10,800 ha

UK Study Area: Slea Catchment


Baseline CharacteristicsLand Use Area Area Loading Total Category ha % N kg/ha N kg N kg % Wheat 2328 21.55 44.23 102961 27.42 Winter Barley 768 7.11 27.87 21398 5.70 Spring Barley 1104 10.23 34.94 38582 10.27 Other Cereals 16 0.15 35.64 586 0.16 Potatoes 206 1.91 61.13 12581 3.35 Sugar Beet 988 9.15 15.26 15079 4.02 Field Beans 160 1.48 50.00 8008 2.13 Peas 267 2.47 80.00 21350 5.69 Oilseed Rape 382 3.54 77.10 29469 7.85 Other Arable 107 0.99 16.26 1744 0.46 Horticulture 177 1.64 40.78 7204 1.92 Permanent Grass 1110 10.28 11.73 13024 3.47 Temporary Grass 170 1.58 18.17 3092 0.82 Rough Grazing 31 0.28 5.00 153 0.04 Bare Fallow 11 0.10 5.00 53 0.01 Setaside 1088 10.08 25.00 27206 7.24 Unfertilised Grass 342 3.17 5.00 1711 0.46 All Agriculture 9256 85.70 0.00 Woodland 264 2.44 8.00 2111 0.56 Non Agricultural 1280 11.85 5.00 6402 1.70 Total Area 10800 100.00 83.28 Livestock Numbers N kg/hd Cattle 1290 11.93 15392 4.10 Sheep 7236 1.72 12424 3.31 Pigs 3999 1.692 6767 1.80 Poultry 583682 0.0275 16051 4.27 Humans 8693 1.4 12170 3.24 Total 375519 100.00


Baseline Assumptions

• All the land is in a Nitrate Vulnerable Zone (NVZ)

• Existing setaside is assumed to remain

• 5 % of arable land has 6 m grass buffer strips

• 25 % of spring crops have a cover crop

• 10 % of relevant crops under minimal cultivation

These assumptions reduce the baseline loading to 364,206 kg N, (105.80 mg/l NO3 in soil zone).

A target of 50 mg/l NO3 equates to 172,112 kg N (47% of revised baseline).


Soil and Groundwater Nitrate Levels

Modelling results from the Water4all project made it possible to estimate soil N loadings associated with 2027 groundwater NO3 concentrations of 42 and 50 mg/l.


Measures Examined

Based primarily on measures in a UK government inventory of diffuse pollution controls for agriculture.

• Establish cover crops in autumn

• Adopt minimal cultivation systems

• Reduce fertiliser application rates by 20 %

• Establish 6 m grass buffer strips on arable land

• Convert arable land to extensive grassland

• Convert arable land to farm woodland

• Convert arable land to energy crops (Miscanthus)


Scenarios ExaminedMeasure Baseline

Realistic Scenario

Optimistic Scenario

Utopian Scenario

Establish Cover Crops in Autumn

25% of relevant crops


75% of relevant crops *


Adopt Minimal Cultivation Systems



30% of relevant crops *


Reduce Fertiliser Application Rates

- 20% reduction in N application to 30% of cropland and pasture

20% reduction in N application to 60% of cropland and pasture *

20% reduction in N application to 100% of cropland and pasture

Establish Grass Buffer Strips

5% of arable land with 6m grass buffer strips


50% of arable land with 6m grass buffer strips *


Convert Arable Land to Grassland

342 ha of unfertilised grass in study area




Convert Arable Land to Farm Woodland

264 ha in study area

Plant 20 ha Plant 50 ha Plant 540 ha

Convert Arable Land to Energy Crops

None Plant 40 ha Plant 100 ha Plant 250 ha

* Only these four measures were included in Version 1 of the Optimistic scenario.


Cost-Effectiveness of Measures

Results for Realistic Scenario

Measure N Reduction (kg) Cost (£) C/E Ratio (£) C/E Ratio (€ )

Minimal Cultivation 834 -13336 -16.0 -23.5Reduced Fertiliser 14376 16321 1.1 1.7Cover Crops 18265 89690 4.9 7.2Buffer Strips 4249 38561 9.1 13.3Arable to Grassland 11970 119700 10.0 14.7Arable to Energy Crops 1280 18280 14.3 21.0Arable to Woodland 640 12660 19.8 29.1

Total 48585 223073 4.6 6.7

Using exchange rate of £1 = €1.47


Scenario Results

These results suggest that the Optimistic scenarios could meet a 50 mg/l NO3 groundwater target and the Utopian combination a 42 mg/l NO3 objective.

% of Cost (€) perScenario Total N (kg) N Reduction Cost (€) Average C/E Soil NO3 Soil Gap % of Gap

Revised Baseline 364206 106.04

Realistic 312592 51614 414359 8.03 90.81 26.87 15421

Optimistic 1 291898 72307 380064 5.26 84.80 37.64 10097

Optimistic 2 270724 93481 824629 8.82 78.65 48.66 16945

Utopian 214085 150120 1689916 11.26 62.19 78.15 21624

GW 2027 50 Target 302920 88.00

GW 2027 42 Target 231790 67.34

Soil Target 172112 50.00

Using exchange rate of £1 = €1.47


Non-Market Benefits

• A review of the literature suggested these were unlikely to be significant for the land management measures.

• The most substantial visual amenity, recreation and greenhouse gas benefits were associated with woodland planting. These were estimated at €1,700 per hectare (for a small woodland) and in a break-even analysis appear sufficient to favour the Realistic scenario over the Optimistic version with just management measures.

• For other scenario comparisons the non-market benefits did not appear sufficient to overturn the cost differences.

• The merits of woodland planting are also much less clear-cut if compensation costs are increased to reflect recent increases in the profitability of arable crops.


Conclusions

• All four partner countries found it feasible to implement a CEA in their case study area.

• Consideration of non-market benefits resulted in relatively few changes to the rankings of measures.

• Data requirements can be considerable and much depends on how targets are defined, costs calculated and effectiveness evaluated.

• There is certainly scope for improving CEA, but it does provide a viable approach for groundwater protection and management.


Acknowledgements

• Other contributors to the UK case study (Kevin Hiscock, Ian Bateman, Gilla Sünnenberg, Paddy Johnson, Helen Johns and Sean Burke).

• Representatives from other partners in the WaterCost project.

• Funding from the Interreg IIIB North Sea Programme, with additional support for the UK case study from the Environment Agency.

Documents

GroPro, September 2008 Applying Cost-Effectiveness Analysis to Select Measures for Groundwater Protection Andrew Lovett School of Environmental Sciences,