Aarhus Universitets segl

No. 502: Economic impact calculations for the water framework directive in 2027. Scenarios for full implementation of VP3 effort requirements for coastal water catchments 2021-2027.

Hasler B., Filippelli R., Levin G. & Nainggolan D. 2022.  Økonomiske konsekvensberegninger for vandrammedirektivet i 2027. Scenarier for fuld implementering af VP3 indsatskrav for kystvandoplande 2021-2027. Aarhus Universitet, DCE – Nationalt Center for Miljø- og Energi, 78 s. - Videnskabelig rapport nr. 502. http://dce2.au.dk/pub/SR502.pdf


This report describes cost-effective solutions for achieving the input requirements for nitrogen in accordance with the river basin management plans for 2027. The calculations include a large number of instruments, both so-called targeted instruments and "collective" instruments, and the incorporation of the measures is based on the catalogue of measures (Eriksen et al., 2020) produced for the implementation of the Water Framework Directive, as well as updated data on potential of measures, retention etc. so that the data basis for the calculations is completely updated in relation to the knowledge base that applies.

The report documents how the TargetEconN model is updated with the incorporation of the latest updated spatial data layers for potentials for effects of measures, updated costs from the catalogue as well as nitrogen reduction targets set for the 108 coastal water catchments in the river basin management plans from June 2021 in order to achieve good ecological status of these water recipients (Ministry of the Environment, 2021), currently under public consultation. The total target is 13,075 tonnes nitrogen (N) for the river basin management plan (VP) 2021-2027. The target includes a continued effort of approximately 3,500 tonnes N from VP2 (river basin management plans 2).

The economic problem in TargetEconN is to minimize the cost of achieving the required reduction of the nitrogen loads from coastal water catchments to coastal waters. The TargetEconN model therefore identifies the most cost-effective way to achieve the nitrogen input requirements by combining the most cost-effective instruments. The dosage of measures is determined in relation to the composition and location at field level, which makes it possible to meet the targets for the individual catchment area at the lowest possible cost.

Based on the solutions, side effects for phosphorus and climate can also be calculated.

The scenario runs with the model are run for the 108 catchments and the targets set for these. Total costs, effects, costs per hectare and cost-effectiveness, per catchment area and total for the whole country, are calculated and presented. Sensitivity analyzes have been performed for significant model assumptions

Calculations have been made of two main scenarios for VP3 (river basin management plan 3):

  1. the most cost-effective implementation of the targets for the 108 catchments, and
  2. the costs of a pre-determined distribution between so-called “collective” and “targeted” measures, which the Ministry of the Environment has determined: 75 per cent targeted and 25 per cent collective measures.

The calculations take into account that mandatory catch crops have already been implemented, and these areas have therefore been withdrawn from the established calculated potential for this instrument. - It has also been taken into account that fields already covered with forest, wetlands, mini-wetlands and set-aside should be withdrawn from the potential. The reduction of the potentials is important as the cheapest areas are already used.

The results show that there are minimal differences in the total costs between the two main scenarios, as the cost-effective solution (scenario 1) is calculated at 510 million with a reduction cost of 41 DKK kg N, while scenario 2 with the determined distribution between collective and targeted measures, the distributed solution costs - DKK 545 million- and the reduction cost increases to DKK 42/kg N. Targeted measures are dominated by set-aside on mineral soils, while afforestation dominates together with set-aside in the cost-effective scenario. This difference is reflected in the climate side effects obtained from the scenarios, which are significantly reduced from 2,921,689 tonnes of CO2 equivalents in scenario 1 to 1,240,179 tonnes in scenario 2. There is also a reduction in the phosphorus side effects from 97 tonnes of phosphorus to 86 between scenarios 1 and 2.

The sensitivity analyzes are important to explore the uncertainty of the model and data assumptions. In one of the sensitivity analyzes carried out we have anticipated that the catch crops are sown as planned for by the Agricultural Agency (Landbrugsstyrelsen, 2021). The total cost increases significantly by DKK 310-330 million compared to the basic scenario 1 and 2. The solutions in scenarios 1 and 2 include a large proportion of set-aside of agricultural land and afforestation for all catchments, and the reason why this is cost-effective is that the model identifies the fields where the contribution margin (contribution margin II, i.e. the net earnings from the areas before incurring own wage costs) is low. The contribution margins were low for many crops in the period 2013 to 2018 and the solutions are of course affected by these costs.