The economic value of water use: Implications for implementing the Water Framework Directive in Scotland

Abstract

The European Union Water Framework Directive (WFD) enshrines several economic principles in pursuit of ‘good ecological status’ for Europe's waters and rationalising water use in society. The implicit principle of maximising the social value from use of a scarce resource is reminiscent of the debate about treating water as an economic good, which has competing uses in society. This paper locates the debate about the economic value of water in the requirements of WFD. Specifically, we consider the implications of national reporting requirements for the economic characterisation report that stress the identification of relative value derived from use. As part of the Scottish contribution to the UK reporting exercise, we use a range of secondary data sources to derive economic values for water on a sector basis. We suggest whether the implications of different water values can be followed through in the WFD.