2nd „Water Science meets Policy“ Event

Volkmar Hartje, Malte Grossmann

TU Berlin

Economic valuation of dike relocation at the German Elbe

An ecosystem services perspective

Implementation of the WFD: when ecosystem

services come into play

29-30 September 2011

Topics

1. Decision-making situation and concept

2. Evaluation of ecosystem services of riverine floodplains

2.1. Flood protection services: avoided damages

2.2. Nutrient retention: replacement costs

2.3. Biodiversity: Benefit Transfer

3. Summary

Background

• Presentation is the result of a study funded by the German Federal Agency for Nature Protection (BfN)

• During the debate about flood protection strategy in Germany dike relocation vs. dike strengthening + creation of controlled storage

• Study proposed to contribute by assessing two alternative strategies with ecosystem services approach as a means to value multifunctional effects

• Study was not included in planning for WFD programme of measures for German part of Elbe

Status of riverine floodplains and potential measures

Map of lowland stretch of Elbe with historical and current floodplains

Conceptual approach: Function, Use, Value

FUNCTIONS OF RIVERINE LANDSCAPES

USES OF RIVERINE LANDSCAPES

Goods & Services (hydrological, biogeochemical, biotic)

VALUES OF RIVERINE LANDSCAPES

Structure Processes

Direct Use values

Indirect Use Values

Non-Use Values

= Total Economic Value

Logic of the value of ecosystem services

Coverage of wetlands ecosystem services

Ecosystem services Relevance for floodplains

Covered in study

Hydrological services

Flood water detention yes X property damages

Groundwater recharge yes

Sediment retention yes

Biochemical services

Nutrient retention yes X replacement costs

Trace element storage yes

In-situ-carbon retention yes

Ecological services

Biodiversity yes X WTP benefit transfer

Food web support yes

Recreation yes

Cost benefit analysis

Valuation of marginal changes in the relationship of diked to

active floodplains

On the basis of the total economic value of ecosystem services

Covered categories of costs and benefits

-Investment costs

-Changes in rehabilitation costs

-Changes in maintenance costs

-Changes in agricultural and forestry productive value

- Changes in biodiversity benefits

- changes in benefits from nutrient retention

- changes in flood protection benefits

Cost benefit analysis

Measures included in analysisOption description Polder

operationRiver stretch (Elbe km)

Number of sites

Polder-area (ha)

Relocation area (ha)

DR L Dike shifting (large scope)

-- 117-536 60 0 34 658

DR S Dike shifting (small)

-- 120,5-536 33 0 9 432

P L Polder (controlled retention large)

flood 117-427 31 25 576 0

P S Polder (Controlled retention small)

flood 180 5 3 248 0

P(e) S Polder (small) with ecol. flooding

ecological 180 5 3 248 0

P+DR Multi-functional flood 117-536 17 4 143 3 402

P(e)+DR Multi-functional ecological 117-536 17 4 143 3 402

Flood protection service

Valuation method: avoided flood damages

1. Assessment of flood risk (average annual damage

vs. expected value of damage)

2. Benefit of flood protection effect as the difference

between average annual damage with and without

measures

0 100 200 300 400 5000

1000

2000

3000

4000

5000

Elbe km

Beitrag der Nebenflüsse

Ist Zustand (100 Jahr Hochwasserereignis)

Beispiel mit Maβnahmen

Max

imal

er

Ab

fluss

m3s-1

0 100 200 300 400 5000

1000

2000

3000

4000

5000

Elbe km

Beitrag der Nebenflüsse

Ist Zustand (100 Jahr Hochwasserereignis)

Beispiel mit Maβnahmen

Max

imal

er

Ab

fluss

m3s-1

0 25 50 75 1000

1000

2000

3000

Tage

Abf

luss

(m

3 s

-1)

50-JAHR EREIGNIS100-JAHR EREIGNIS200-JAHR EREIGNIS

140 150 160 170 180 190

75

80

85

Elbe km

Wasserstand HQ200 (m NN)

Deichkronenhöhe (m NN)

140 150 160 170 180 190

75

80

85

Elbe km

Wasserstand HQ200 (m NN)

Deichkronenhöhe (m NN)

Downstream routing with retention

Inundation model

Generation of artificial flooding events Dresden

Elbe km

Höh

e (m

NN

)

Max

imal

er A

bflu

ss (

m3 s

-1)

Beitrag Nebenflüsse

1D-hydraulic model with HEC-6

0 500 1000 15000

10

20

30

40

50

60

70

80

90

100

Überflutungsvolumen in million m3 im Deichhinterland

Was

sers

tand

(m

NN

)

Beispiel Geländehöhe (m NN)

Überflutungshöhe (m)

Flooding modelling for Elbe river

Damage assessment on a macro-scale

0

100

200

300

400

Siedlun

g dic

ht

Siedlun

g loc

ker

Indu

strie

Verke

hr

Acker

land

Wal

d

Sonst

iges

Infra

struk

tur

Sp

ezi

fis

ch

e V

erm

ög

en

sw

ert

e [

€/m

²]

_bau _aus _ert

0

10

20

30

40

50

60

70

80

90

100

0 1 2 3 4

Überflutungshöhe in m

Sch

aden

in

% d

es s

pez

ifis

chen

Ver

mö

gen

wer

tes

Macro map of land cover

+ Value density

Spe

cific

va

lue

for

land

co

ver

type

s

Effect: Number of overtopped dike stretches

Annual frequency of flood event

Num

ber

of

over

topp

ed d

ike

stre

tche

s

Benefits: avoided flood damagesA

void

ed

floo

d d

ama

ges

(Mio

.€)

options

Nutrient retention service

Nutrient retention yield

Retentions yield per day of flooding:

~ 1,5 kg TN ha/d and 0,8 kg TP ha/d

Method: replacement costs

Indirect valuation: Does not value the benefit of the

service (clean water), but the value of the service

based on ecosystem function as replacement of

other fmeasures which can be values

Prerequisite for application:

1. The valued measure (substitute) yields a

comparative services

2. The substitute measures is the most cost efficient

3. The demand for the service exist at the given price

(its costs)

Se

wa

ge

trea

tme

nt p

lan

ts

Urb

an

su

rfac

es

Dra

ina

ge

Atm

os

ph

eric

de

po

sitio

n

Gro

un

d w

ate

r

Su

rfac

e d

isc

ha

rge

s

Ero

sio

n

Nutrient discharge into the river

Nutrient load in the river

Nutrient load in coastal waters

Flo

od

pla

ins

/we

tlan

ds

Measures

Costs of measures

Min

imiz

ati

on

Sim

ula

tio

n

Indicators: - reduction potential - avoidance costs - cost-effectiveness

Model MONERIS

Se

wa

ge

trea

tme

nt p

lan

ts

Urb

an

su

rfac

es

Dra

ina

ge

Atm

os

ph

eric

de

po

sitio

n

Gro

un

d w

ate

r

Su

rfac

e d

isc

ha

rge

Ero

sio

n

Nutrient discharge into rivers

Nutrient load in rivers

Nutrient load in coastal waters

Flo

od

pla

ins

/we

tlan

ds

Measures in municipal water management

Rainwater treatment

Technologiy of sewage treatment

Decentralized sewagetreatment technology / connection rate

Model MONERIS

Se

wa

ge

trea

tme

nt p

lan

ts

Urb

an

su

rfac

es

Dra

ina

ge

Atm

os

ph

eric

de

po

sitio

n

Gro

un

d w

ate

r

Su

rfac

e d

isc

ha

rge

Ero

sio

n

Nutrient discharge into river

Nutrient load in the river

Nutrient load in coastal waters

Flo

od

pla

in/ w

etla

nd

s

Measures in agriculture

Reduction of surplus of N-balance

Erosion protection

Model MONERIS

Se

wa

ge

trea

tme

nt p

lan

ts

Urb

an

su

rfac

es

Dra

ina

ge

Atm

os

ph

eric

de

po

sitio

n

Gro

un

d w

ate

r

Su

rfac

e d

isc

ha

rge

s

Ero

sio

n

Nutrient discharges into river

Nutrient load in the river

Nutrient load in coastal waters

Flo

od

pla

ins

/ we

tlan

ds

Measures in water management

Drainage ponds

Gewässerrandstreifen

Rewetting wetlands

River restroration

Modell MONERIS

Cost minimization

i m

mimix

xcmi

)(min ,,,

(1)

s.t.

i

sm

simip TRxq ,, )( (2)

mimi xx ,, ' (3)

where indexes denote i spatial model units (sub-basins and waste water treatment plants) m measure p pollutant / nutrient (phosphorous and nitrogen) s location for nutrient reduction goals (river outlet, upstream location) and x is the implementation level of a measure c is a function describing the total costs of implementing a measure q is a function describing the reduction of nutrients emitted by implementing a measure

si, is the retention coefficient describing the share of nutrients emitted from a basin

reaching the sea TR is the targeted load reduction

'x is the upper limit to the possible implementation level of a measure in a basin First order conditions for cost minimisation:

i m i m i m mi

mimi

mi

imips

mi

mimi

x

x

x

xq

x

xC0

**)(*)(

,

,,

,

,

,

,, (4)

Minimize the sum of the

individual cost components

in relation to the desired

reduction of the load

Shadow value of floodplains

-

10.000

20.000

30.000

40.000

50.000

60.000

5 15 25 35

Reduktionssziel Fracht (%)

Sc

ha

tte

np

reis

Ja

hre

sk

os

ten

(€

/ h

a)

0 ha Aeff

1718 ha Aeff

Reduction target load (%)

Sha

dow

pri

ce a

s a

nnua

lized

cos

ts (

€/ha

)

Biodiversity benefits

Method: Willingness to Pay: Elbe example

Source: Meyerhoff, 2002

Method: Step 2 Benefit Transfer / Meta-Analyse

Meta-Analysis: systematic analysis if available studies

Evaluation of existing studies with wtp for the protection of riverine

wetlands

Problem: Divergent goods under the heading of wetlands

Own study:

- Only wtp for biodiversity and nature protection(non-use and use values)

for wetlands in Europa

- 28 studies from Europe, 60-90 observations

Estimate with a meta-model:

WTP = f (area of measures, covered population, income, method)

Result: decreasing marginal WTP with size

0

1

2

3

4

5

6

7

- 20.000 40.000 60.000 80.000 100.000

Wetland area (ha)

WT

P (

US

D 2

00

0)

Grossmann, in press

100 km

max distance

1000 km

Max distance

Costs of measures

• Cost of newly constructed new dikesRegression equation from different sources as a function of dike

heights• Costs of dike rehabilitation

references in the literature• Costs of dike cutting

references in the literature• Costs of dike maintenance

references in the literature• Costs of regulation of controlled polder

references in the literature• Costs of flood damages to agriculture for polder

estimate of expected damages to yield, valuation via contribution margin

• Costs for permanent land use changes

Costs for permanent change of land use

Opportunity costs: Loss of agricultural services

Land purchase:

Verkehrswert

=> Purchasing price differences (farmland / grassland/ forests

Uncultivated land/ forested wetland)

Ertragswert

capitalized land rent or lease payments

=> Correction by income transfer (EU Land payments) necessary

Results

Results of the cost benefit analysis

Total values for Elbe

according to cost and

benefit categories

Total values for Elbe

according to cost and

benefit categories

# Only direct effects

of dike relocation

no indirect effects

# Only direct effects

of dike relocation

no indirect effects

Net present value

PC SC AD CV NR Sum

Pro-gram

Area Dis-count rate

Pro-ject costs

Saved maintenance costs

Avoided flood damage#

Wtp for biodiv

Nutrient reten-tion

for flood only

Multi-functional

ha % Mio. €

DR L 34.659 3 -566 159 177 926 486 -230 1.182

1 -629 216 337 1.191 970 -76 2.085

DR S 9.432 3 -224 96 20 252 176 -108 319

1 -252 130 38 324 351 -84 591

P 3.248 3 -42 0 415 0 0 373 373

1 -52 0 792 0 0 739 739

P ecol 3.248 3 -70 0 415 87 27 345 459

1 -79 0 792 112 54 712 878

P+DR 7.545 3 -118 32 427 91 37 342 469

1 -140 44 815 117 74 719 910

Pecol+ DR

7.545 3 -156 32 427 202 54 304 559

1 -178 44 815 259 107 681 1.048

Results of the CBA: distribution along the Elbe

Program DR large

Only dike relocations (Large scope)

Program DR large

Only dike relocations (Large scope)

NPV: Net present value (3%)

PC: Project costs;

SC saved maintenance costs

FD: avoided flood damage

BD: WTP for Biodiversity in floodplain

NR: Nutrient retention

Results of the CBA: Distribution along the Elbe

Program DR small:

Only dike relocation

(small scope)

Program DR small:

Only dike relocation

(small scope)

NPV: Net Present Value (3%)

PC: Project costs;

SC: saved maintenance costs

FD: avoided flood damage

BD: WTP for Biodiversity in floodplain

N NR: Nutrient retention

Results of the CBA: distribution along the Elbe

Program P:

Only large flood protection polder upstream

Program P:

Only large flood protection polder upstream

NPV: Net present value (3%)

PC: project costs;

SC saved maintenance costs;

FD: avoided flood damage;

BD: WTP for Biodiversity in floodplain;

NR: nutrient retention.

Results of the CBA: Distribution along the Elbe

Program:

Combination DR + P

Program:

Combination DR + P

NPV: Net Present Value (3%)

PC: Project costs;

SC: saved maintenance costs

FD: avoided flood damage

BD: WTP for Biodiversity in floodplain

NR: Nutrient retention

Summary: Methods

• Economic valuation allows the integration of

multifunctional effects of restoring wetlands as an

option to improve the morphological quality of water

bodies

• Ecosystem services are a convincing and a

practical concept to structure the multifunctional

problem

• The spatially explicit identification/ analysis of

changes within the biophysical realm and on the

use side are very important

• Non-linearities are important

• Including uncertainties is critical for the estimates of

quantities and for values.

Summary: Relevance for WFD

• Economic valuation allows the comparison of alternative

strategies for flood protection in a multifunctional manner

• It enables us to take nature protection objectives into account.

• Dike relocations are an economic option to improve the

morphological quality of riverine water bodies in lowlands

• Dike relocations can be well assessed with the ecosystem

services approach

• The effects on the carbon budget and on recreation need to

be added

• Core requirement is the availability of a large scale

hydrological flooding model

• Thanks for listening!!

Source: Heimlich et al. (1998 modified)

Calculation of „optimal“ share of active and diked floodplains

Analysis of incremental changes with/ without social benefits