Ecological Economics of Sustainable Watershed Management: Volume 7

The term sustainability has evolved rapidly over the past two decades beyond the general definition of the 1987 report Our Common Future (the Brundtland report) which defined “sustainable development” as that which “meets the needs of the present without compromising the ability of future generations to meet their own needs.” Although the Brundtland definition provided a common rallying point for all those concerned with the environmental and social consequences of global economic development, it quickly became apparent that there were deep divisions among the advocates of sustainability.

Over the past three decades ecological economics has emerged as a coherent transdisciplinary approach to environmental problem solving. However, its evolution has been quite dissimilar in different parts of the world. In the US and UK, ecological economics evolved as a critique of and alternative to a comparatively strict application of economic theory to environmental decision making. In particular, the narrow application of benefit–cost analysis often reduced environmental decisions to one metric within a single value system (the market economy). The attractiveness of these traditional economic approaches to environmental policy has always been their “one size fits all” approach. No matter what the problem faced, the same methods were applied with a primary goal of cost effectiveness. But it has become increasingly clear that the ease of application of a strict economic approach is outweighed by its failure to capture the social and environmental contexts and realities of specific environmental problems. In contrast, ecological economics has been more problem-oriented, incorporating multiple stakeholder and disciplinary perspectives in specific contexts to shape the methods that define policy choices. Furthermore, ecological economic approaches involve multiple metrics, multiple points of view, and evolutionary and flexible policy recommendations.

Given that the European Water Framework Directive (WFD) calls for the management of water resources at the river basin level, the German water sector, which has historically been dominated by the federal states and has been organized along administrative borders, is now challenged to be reorganized. The article introduces the German water sector, reviews past experiences with river basin management such as North Rhine–Westphalia's water associations, the river basin organizations of the former German Democratic Republic, and international river commissions, and addresses current challenges in connection with the implementation of WFD.

The United States today boasts of a complex and extensive set of public and private institutions and arrangements for managing its water resources. Today's system of watershed management is neither entirely top-down nor bottom-up. It is not entirely planned, nor is it entirely laissez-faire. Rather it is a hybrid. This chapter analyzes through a historical lens how American watershed management evolved to this state. It looks at two driving factors: technological change and trends in American political culture. Technology provided the reason for water resource and watershed management to evolve because of the conflicts provoked by its unintended and negative side effects, such as pollution. American political culture mediated the way that individuals and government reacted to these conflicts and spurred the evolution of new institutions.

This chapter describes the scenario technique used for the integrative methodological approach (IMA) of the German global change project GLOWA Elbe. It is outlined how regional scenarios are systematically derived to analyze water use conflicts and their resolution in the context of global change for the German Elbe river basin. Through the combination of frameworks of development and policy strategies a consistent set of developmental scenarios can be generated that makes it possible to examine the regional impact of policy strategies under conditions of different future global change development paths. The scenario analysis of the framework of development starts on the global level with qualitative IPCC storylines, translates them to the regional level, and quantifies their regional effects by means of modeling and statistical estimation methods. The policy strategies are derived in close cooperation with regional stakeholders.

Our primary goal is to develop an integrated, quantitative assessment tool evaluating how human economic activities influence spatial patterns of urbanization, and how land-use change resulting from urbanization affects stream water quality and aquatic ecosystem health. Here we present a prototype of a holistic assessment tool composed of three “building blocks” simulating the social and economic structures, spatial pattern of urbanization, and watershed health as determined by various metrics. The assessment tool is applied to Dutchess County, New York and two of its largest watersheds, Wappinger and Fishkill Creek watersheds, demonstrating how an explicit link can be established between human economic activities and ecosystem health through changes in land use.

An interdisciplinary model network consisting of the regional agricultural economic model RAUMIS and the hydro(geo)logical models GROWA/WEKU is used to analyze the effect of different scenarios of maximum agricultural nitrogen balance surplus on water quality. The study area is the federal state of Lower Saxony, Germany, which features heterogeneous natural site conditions as well as agricultural production structures. A focus of the study is the modeling of supra-regional manure transports that, according to the model's results, considerably increase due to a lowering of maximum nitrogen balance surpluses. The assessment of the examined nitrogen reduction measures reveals that adequate indicators have to be applied. In this regard, the model results show that even though the analyzed measure leads to a substantial overall reduction of agricultural nitrogen surpluses, nitrogen discharges into surface and groundwater can regionally increase.

This chapter describes a method to analyse agricultural land use in terms of net value added and employment (working time requirement) in the agricultural sector as well as a corresponding ecological indicator: the nitrogen-leaching-rate. Watershed management demands a basic approach, which deals with common statistics and spatial information from digital maps. This causes a range of uncertainties, which are calculated in relation to the data input. A metamodel derived from a process model calculates the most probable value of the ecological indicator, whereas the economic indicators are estimated by the cumulative numbers of primary production. The uncertainties are expressed as the standard deviation of all impacts as percentages. The method described is applied to a rural district in the Elbe river basin.

Direct economic use and changing patterns of human habitation have long been a cause of concern for the ecological health of many rivers and tributaries. Current development trends in many watersheds are driving the conversion of rural, agricultural and forestland to urban or industrial uses. While any single project may not have an adverse effect on the watershed as a whole, the summation of development can rapidly change the character of the landscape and alter the ecosystem functions of a river, its tributaries and an entire watershed. This chapter is a discussion on using available tools to help piece together economic transactions and their relationship to the land.

This chapter presents projections of residential development in Wappinger Creek watershed of Dutchess County, New York in the Hudson River Valley. A spatial econometric model is developed based on data from a geographical information system (GIS) of county-level socio-economic trends, tax parcel attributes, town-level zoning restrictions, location variables, and bio-geophysical constraints including slope, soil type, riparian and agricultural zones. Monte Carlo simulation is employed to distribute spatially explicit projections of land-use change under various residential development scenarios. Scenario analysis indicates the likelihood of continued residential, decentralized development patterns in formerly agricultural and forested parcels. Policy scenarios demonstrate possible courses of action to direct development and protect watershed health.

Environmental decision making involving multiple stakeholders can benefit from the use of a formal process to structure stakeholder interactions, leading to more successful outcomes than traditional discursive decision processes. There are many tools available to handle complex decision making. Here we illustrate the use of a multicriteria decision analysis (MCDA) outranking tool (PROMETHEE) to facilitate decision making at the watershed scale, involving multiple stakeholders, multiple criteria, and multiple objectives. We compare various MCDA methods and their theoretical underpinnings, examining methods that most realistically model complex decision problems in ways that are understandable and transparent to stakeholders.

In this chapter it is shown how economic evaluation algorithms of water use can be integrated into a long-term water management model such that surface-water availability and economic evaluation of various levels of water availability to different uses can be modeled simultaneously. This approach makes it possible to include essential features of economic analyses of water use into water resource modeling and thus improves the capability of such models to support decision making in water management. This is especially relevant for the implementation of the Water Framework Directive, which requires economic analyses to be included in the decision process about future water management strategies.

The water management simulation model WBalMo is presented and the integration of economic-evaluation algorithms is demonstrated for the examples of surface-water use for fish farming and for filling open-cast mining pits in order to achieve acceptable water-quality levels in the emerging pit lakes. Results of applying this integrated evaluation approach are shown for different water management scenarios under conditions of global change in the East German Spree and Schwarze Elster river basins, where water scarcity is an urgent issue. Among the lessons which are drawn by the authors one lesson reads that integrating economic evaluation algorithms into a pre-existing model might bring enormous problems. Therefore, such model approaches should be developed together by water engineers and economists in an interdisciplinary endeavor right from the start.

In this chapter, the integrative methodological approach (IMA) of the research project GLOWA Elbe is introduced, which represents a scientific methodology to support water management under uncertainty regarding future paths of global change. The approach paves the way for integration of research work of many disciplines, of different assessment methods, of various policy fields, and the involvement of relevant stakeholders and decision makers. IMA can be roughly described by four research elements (scenario derivation, indicator and criteria identification, model-based impact analysis, and final scenario assessment based on combined benefit–cost and multi-criteria analysis), which lay the basis for the IMA activities of the global change research sequence. Its practical application is demonstrated by a case study on the Spree and Schwarze Elster river basins. Specific results of Chapter 4 (on scenario derivation) and Chapter 11 (on integrating economic evaluation into water management simulation) in this volume are picked up in order to focus on the illustration of the integrated assessment results for this German case study.

The interaction of urban cores and their rural hinterlands is considered from an ecological–economic perspective. The concept of ‘urban metabolism’ motivates discussion of urban dependence on geographic regions outside their borders for both sources of inputs and as waste sinks. The U.S. Environmental Protection Agency's 1989 Surface-Water Treatment Rule forces cities to consider the ecosystem services preserved by appropriate land-use management inside suburban and rural watersheds used for urban water supplies. A case study of New York City and its water supply from the Catskill–Delaware watershed system is used to explore these themes. Compensation from the city to watershed communities may be an effective way to motivate protection of those ecosystem functions. Both direct payments and investment in economic development projects consistent with water quality goals are reviewed as policy instruments.

Provision of ecological goods and services at the local level is often related to benefits at higher governmental levels. On the one hand, sustainable watershed management and biodiversity conservation are strongly connected to local land-use decisions. On the other hand, related conservation activities and protected areas are frequently associated with regional, national or even global public goods. Therefore, spatial externalities or spillover effects exist that – if not adequately compensated – lead to an under-provision of the public goods and services concerned. This chapter investigates fiscal transfers as an innovative instrument for compensating local jurisdictions for the ecological goods and services they provide across local boundaries. From a public finance perspective, fiscal transfers are a suitable instrument for internalising spatial externalities. A case study is presented that investigates the present and potential use of fiscal transfers for ecological public functions in the German federal systems. Analysis of the German system of fiscal equalisation at the local level shows that, so far, mostly end-of-the-pipe activities are currently considered with resource protection and nature conservation being widely underrepresented.

The requirement of full cost recovery for water services including environmental and resource costs in accordance with the polluter pays principle in Art. 9 EU-Water Framework Directive is a unique provision in the history of the European environmental law. The wording of the provision is a compromise between the Council's and the Parliament's versions that mirrors different conceptual ideas on how to internalize environmental and resource costs. Art. 9 now contains a two-step concept for the achievement of the aim. The uniform implementation of the full cost-recovery calls for common accounting standards for the calculation of financial cost and a common methodology for the estimation of environmental and resource costs on the European level. In Germany, the requirements of the first step are partly fulfilled, but necessities of the second step are not being met at the moment.

The paper reviews current experience with water quality trading programs and evaluates trading's potential as a future water quality management tool. The relative virtues of cap and trade (CAT) versus regulatory offset programs are discussed, as are administrative and technical barriers to trading. Several existing trade programs are discussed in detail. The article places particular emphasis on the relationship between water quality trading and watershed-based regulatory initiatives such as the total maximum daily load program.