The economics of the European Water Framework Directive - A retrospective remark focusing on Sweden

The Water Framework Directive (WFD) explicitly acknowledges the role of economics in the process of reaching the environmental quality objectives. The purpose of this paper is to discuss the implementation of the WFD in Sweden based on standard economic theory regarding instruments for cost efficient- and effective solutions to environmental problems. A lesson is that although incentive based instruments are beneficial from a cost-efficiency perspective, the complexities associated with environmental water management may somewhat challenge their implementation. Flexibility is a key issue for cost-effectiveness and, since Swedish water management mainly consists of command-and control instruments, the cost effectiveness is likely to be limited. Furthermore, the paper also points at how policy instruments relate to the economic burden aspect and the PPP – both highlighted in the Directive.