Analysis of economic instruments for water management

Evaluating Economic Policy Instruments for Sustainable Water Management in Europe (EPI-WATER)

EPI-WATEREvaluation of effectiveness of economic instruments in integrated water policy (EPI-Water)
Economic policy instruments (EPI) have received widespread attention over the last three decades, and have increasingly been implemented to achieve environmental policy objectives. However, whereas EPI have been successfully applied in some policy domains (such as climate, energy and air quality), their application to tackle water management issues (drought/water scarcity, floods, water quality control) is beset by many practical difficulties.


  • Using a common multi-dimensional assessment framework, to compare the performance of single economic instruments with alternative policy instruments and baseline scenarios. In particular:
    • To analyse the extent to which economic instruments contribute to achieving water policy goals (e.g. good ecological status of water bodies, flood protection, reducing risk and uncertainty in water availability), either directly (via changing use/consumption behaviour) or indirectly (via raising financial resources for implementing water policy protection measures);
    • To analyse the efficiency implications of economic instruments, that is to what extent they contribute to an optimal allocation and use of water resources (or goods and services provided by aquatic ecosystems) also in situations in which not all use- and non-use values are known or fully accounted for.
  • Identifying the preconditions for economic instruments (or group of instruments) to be implementable, effective and/or efficient in given socio-economic, hydrological, cultural and institutional conditions of Europe, be it in isolation or in combination with command and control mechanisms.
  • Identifying remaining research and methodological issues that need to be addressed, in particular with regards to the further development and use of national accounting, for supporting the design, implementation and evaluation of EPI in the field of water management.

Further information:

7FP-Environment  Uni贸n Europea 

Analysis of farmer’s decisions within a context of water scarcity and drought, and in the presence of risk aversion: design and analysis of agricultural insurance mechanisms

Funding: AGROSEGURO (Study and assessment of hydrologic drought risk in irrigation agriculture of Ebro, Guadalquivir and Segura river basin authorities).

Bidirectional links between the generation of energy and the provision of water and analysis of programs of regeneration of highly modified rivers

Funding: Spanish Plan for R&D (CICYT: CGL2006-11679-C02-02; CICYT: REN2001-C02-02; CICYT: CGL2005-06989-C02-01)


IWRM (Integrated Water Resources Management): economic and legal dimensions

Knowledge, Assessment, and Management for Aquatic Biodiversity and Ecosystem Services Across EU Policies (AQUACROSS)

AQUACROSSKnowledge, Assessment, and Management for AQUAtic Biodiversity and Ecosystem Services aCROSS EU policies (AQUACROSS) aims to support EU efforts to protect aquatic biodiversity and ensure the provision of aquatic ecosystem services. Funded by Europe's Horizon 2020 research programme, AQUACROSS seeks to advance knowledge and application of ecosystem-based management (EBM) for aquatic ecosystems to support the timely achievement of the EU 2020 Biodiversity Strategy targets.


To do this, AQUACROSS considers the EU policy framework for aquatic ecosystems and builds on knowledge stemming from different sources to develop innovative management tools, concepts and business models for aquatic ecosystems.

The AQUACROSS approach is built around four pillars of work and eight case studies:

  • Pillar 1: Real-world testing—the project will ensure stakeholder engagement, knowledge exchange and social learning to achieve practical policy solutions and end-user uptake. Representatives from science, policy, business and case study areas will compose the project’s Science-Policy-Business Think Tank, which acts as an external advisory board to help steer project activities and check the accuracy and relevancy of its results.
  • Pillar 2: Giving direction—it is important to understand the current political setting in order to facilitate policy coordination across aquatic ecosystems. Work under this pillar will assess existing political processes and legislation to identify synergies and barriers to aquatic management. AQUACROSS will develop a conceptual Assessment Framework (AF) to assess aquatic ecosystems in line with integrated management, taking into account concepts of resilience and uncertainty.
  • Pillar 3: Increasing scientific knowledge—work under this pillar will develop and test protocols and guidance materials for testing the AQUACROSS AF in the case studies. This work includes identifying and assessing drivers and pressures of aquatic ecosystems; understanding causalities between biodiversity, ecosystem functions and services; ensuring exchange of data, information and research results through the Information Platform; and forecasting biodiversity and ecosystem service provision.
  • Pillar 4: Improving management— building on the work undertaken in the previous pillars, this pillar aims to develop concepts, practices and tools for better implementation of EBM. This includes identifying and understanding the linkages between aquatic ecosystems and human well-being and identifying innovative management responses for aquatic ecosystems.

Uni贸n EuropeaFunding: AQUACROSS has received funding from the European Union’s Horizon 2020 Programme for Research, Technological Development and Demonstration under Grant Agreement no. 642317.

More information:   Leaflet


The analysis of water insertion into economic development.

UNESCO - Organizaci贸n de las Naciones Unidas para la Educaci贸n, la Ciencia y la CulturaFunding: UNESCO (International Hydrology Programme assessment, 6th phase: 2002-2007). World Bank (Modernization of water management in Chile; Water conflict management in Peru)

Modernization of water management, regarding economic, legal and institutional aspects; specifically, use and water use rights markets, within a context of water economic scarcity, and regulation of drinking water and sanitation services

Funding: World Bank (Modernization of water management in Chile; Water conflict management in Peru)

Water conflict management

Funding: World Bank (Modernization of water management in Chile; Water conflict management in Peru)


The Transnationalisation of Local Water Battles: water accumulation by agribusinesses in Peru and Ecuador and the politics of corporate social responsibility

More information:
Funding: The Netherlands Organisation for Scientific Research (NWO)


Economic and legal analysis of drinking water and sanitation service regulation

Analysis of international agreements on international trade and legal protection of foreign investment in water resources, rights and uses of local population and drinking water and sanitation supply

Funding: World Bank (Water conflict management in Perú)

Analysis of factors driving the industrial structure of drinking water and sanitation (W&S) services

Naciones Unidadas CEPALFunding: Economic Commission for Latin America and the Caribbean (ECLAC), United Nations (UN).

Scientific & technical offer: Economical analysis of water resources management