Progress in the Implementation of Cost-Effectiveness Analysis (CEA) in France

Progress in the implementation of cost-effectiveness analysis (CEA) in France

Date : January 2006

Author : S. Croguennec, WFD implementation Unit, water department, French Ministry of Ecology and Sustainable Development

Background : During the meeting related to cost-effectiveness sub-activity of group B on 21 December 2005, participants were invited to draft a paper on the state of progress in addressing cost-effectiveness issues in their country. This document describes the state of play in France.

Summary

A national methodology has been developed in order to provide French districts with guidelines on cost-effectiveness analysis.

During the first half 2005, testing activities took place in some local river basins, in order to test the implementation of CEA with local water issues, take into account the results and develop a national methodology.

The second half 2005 made it possible to draft such a methodological document (entitled “7 questions – 7 answers”). A national working group being used to dealing with economic issues has been working on the document in order to get a final version adapted to issues met at district level.

The methodology is based on several main principles :

 the need to implement CEA at the level of the main identified water management issues (cf article 14 of the WFD) and, when necessary, on the basis of individual water bodies,

 the non-systematic need to implement CEA,

 the need to involve local parties in the process, in particular to decide when and where should CEA be implemented,

 the usefulness of following a three-stage approach when implementing CEA,

 the importance of checking with CEA the overall consistency of the combinations of various groups of measures selected at local level,

 the need to address uncertainty issues with pragmatic solutions, such as the definition of local testing areas.

Introduction

During the first half 2005, testing activities took place in some local river basins, in order to test the implementation of CEA on basis of local water issues, take into account the results and develop a national methodology.

The second half 2005 made it possible to draft such a methodological document (entitled “7 questions – 7 answers”). A national working group being used to dealing with economic issues has been working on the document in order to get a final version adapted to issues met at district level.

The methodology is based on several main principles.

1. CEA is highly connected to the identification of the main water management issues and the process of definition of the programmes of measures

Article 5 reports made it possible to identify the risk of not meeting the good status. By looking at the relationships between the various water bodies, some main water management issues have been identified. For instance, areas affected by eutrophication, nitrate pollution, pesticide pollution and green tides, are part of these issues.

For each identified issue, an appropriate group of measures need to be defined. Consequently, the programme of measures for a basin or sub-basin will comprise all the groups of measures needed to address the issues, and in addition, the existing measures and any other action that comes to be seen as necessary locally to ensure achievement of the good status in each water body at risk of not achieving that status.

In order to help this work at district level, the water department of the French Ministry of Ecology and Sustainable Development developed a catalogue of measures. This catalogue benefits from a classification of measures according to the main issues, and consequently facilitate the selection of the measures delivered at local level. The description of the overall structure of this catalogue is presented in annex to this document.

As measures lead to address issues at the level of areas made up of groups of water bodies, CEA logically needs to be implemented at this same level.

1. CEA does not need to be used systematically

The existing measures relate to the application of the regulations, and the latest deadline for them to be implemented is set by the regulations themselves. Account has already been taken into account of the existing measures when assessing the risk of failing to achieve the good status in 2015, so those should not be examined by CEA.

The new measures relate to strengthening of the existing measures and/or to other measures that have been found relevant for achieving the 2015 objective for good status or good potential (in the case of the heavily modified water bodies).

CEA will be applied only to the new measures, identifying the best, and least costly, route possible for achieving the objective. Even with a lot of imagination, however, it will not always be possible to find alternative routes. In order to reduce pollution from urban waste water, for instance, there is little else that can be done but to treat waste.

1. The involvement of the local parties in CEA implementation is essential

CEA is a decision-making aid, that makes it possible to compare the various type of action that can be taken to achieve a previously set objective, in order to decide the most effective route involving least cost.

It should be used whenever necessary in deciding on each group of measures to address a particular issue.

Local stakeholders need to take part in the identification of the most effective measures and their cost. They will then be able to detail technical obstacles, cost of the works, time needed and impacts of the measures.

Therefore, CEA should enable the discussion to be pursued in more depth at local level. It is impossible to fix rules for how to go about the CEA without previously looking at the results from consultation between the parties involved locally.

1. A three-stage approach to identify the most effective and lowest-cost combination of measures

1rst stage : identifying what measures are possible

This stage involves identifying the possible measures to address each of the issues identified thanks to the article 5 reports. The listing will record the possible measures, identify the most promising, and for each one, the key actions on which success will depend as well as the relevant regulations.

2nd stage : formulating two or three contrasting strategies

Then ,the contracting authorities should be identified and assessments should be made of the costs, what contributions each measure will make to achieving the objective, the impacts in other fields and the degree of uncertainty in the results.

The aim of this assessment is to specify the most relevant combinations, as seen by the parties locally involved. The measures are grouped to constitute two or three strategies that are sufficiently different from each other. Reductions in cost and uncertainty and maximisation of the benefits to be derived should provide guidelines for this investigation.

Consultation of the local stakeholders should then make it possible to propose the strategy that, overall, emerges, as the most appropriate and most efficient.

In many cases, either the difference between the forecast status in 2015 and the good ecological status objective is not particularly large, or the additional measures needed are obvious and there is no feasible alternative. In such cases, it would be pointless to seek many alternative scenarios and a single scenario would be identified. The 2nd stage would then be reduced to grouping the only relevant measures.

If, on the other hand, the parties locally involved say that a number of scenarios are possible, the alternatives will have to be identified and subjected to CEA.

3rd stage : identifying the priorities within the selected scenario and the optimal deployment of each type of measures

CEA should then be used to help in defining the priorities in time and space for each measure included in the most efficient scenario.

CEA should assist in optimising deployment of the most efficient measures. It can be carried out simply in qualitative terms, using a table describing the measures to be used.

1. CEA can be used to check the overall consistency of the combinations of the various groups of measures selected at local level

It is indeed essential to ensure the overall consistency of the process and examine the effects of jointly applied measures.

CEA should be used when combining the various groups of measures, to ensure they are consistent as some may have a number of effects (grassed strips and restoration of wetlands that affect the elimination of residual organic pollutants, plant-health products or nitrates).

1. It is essential to address uncertainty issues with pragmatic solutions

It is simple to calculate the pollution removed by a treatment plant, but what is the impact of other actions such as Fertimieux [French government initiative to minimise the use of fertilisers where they could seep into watercourses], introducing grassed strips, DTQD recovering, water savings, etc ?

Some measures have been carried out, and in a few cases, they have been assessed. Such case studies will progressively be collected, and sheets describing them will be uploaded on the web, at and .

Uncertainties will remain in a number of cases, due to the impossibility of transposing with any certainty the results obtained in an experimental location, to another site. These uncertainties will have to be managed by carrying out, as a priority, the most efficient and least uncertain actions.

Where it becomes clear that the uncertainty is too great, local “workshop sites” should be set-up so that full-scale experiments can be monitored appropriately, and uncertainty about the impacts subsequently reduced. Localizations for these “workshop sites” should be identified as soon as possible, even before adopting the programme of measures. That way, it will be possible to use the initial results obtained to draw up an interim evaluation of the programme of measures and decide, as necessary, on any modifications that are required.

1. Progress in testing activities

Some tests were carried out in Seine-Normandie and Loire-Bretagne districts. Their implementation helped draft the overall methodology described in the national document.

It is also clear that this national document is now being used at the level of each district, in the process of preparation of the programmes of measures. Depending on the results obtained in the different districts and reactions of the local experts and stakeholders, the document may evolve in order to refine it and introduce possible complements.

Attached : Economic analysis for the drafting of programmes of measures – synthesis of the methodological test in the Bocages Normands, May 2005 , Seine Normandie Water Agency.
Annex : Main features of the French catalogue of measures

The catalogue is organised according to :

- 40 issues classified in 8 components and grouped in 4 axes

- about 250 measures attached to one or several issues

Issue factsheets include :

 a presentation of the issue (names of the issue, axis and component attached to the issue, WFD recommendations linked to the issue, description of the issue and national regulatory framework of the measures attached to the issue)

 a list of measures attached to the issue, with their title, nature and main actor of their implementation

 possible links with other issues

Measure factsheets include :

 a presentation of the measure (name and nature of the measure, natural environment concerned, issues linked to the measure)

 the description of the measure, the main actor responsible for its implementation and documents that describe examples of implementation of the measure

 other features of the measure, to be filled later : economic estimations of direct costs (investissment and functioning) and induced costs, follow-up indicator

Issue Factsheet :

Measure Factsheet :

1

Selection Sheet (selection by axis and component) :

Selection Sheet (selection by the list of issues) :

Selection Sheet (selection by key word) :