1
Approaching cost-effective water protection in the Baltic Sea
2
3
1 INTRODUCTION
4
International environmental agreements are tools to mitigate trans-boundary environmental
5
problems such as nutrient pollution of marine areas. In the Baltic Sea region, the Helsinki
6
Convention on the Protection of the Marine Environment of the Baltic Sea Area has been the focal
7
agreement to encompass efforts to prevent pollution of the marine ecosystem (HELCOM 1992).
8
The Helsinki Commission (HELCOM) is the governing body of the Helsinki Convention and it has
9
served as a coordinating body for its members - the riparian countries of the Baltic Sea and the EU
10
- to mutually agree on the protection targets. The Baltic Sea Action Plan is the specific programme
11
of HELCOM to restore the good environmental status of the marine environment by 2021, and it
12
specifies regional targets for nutrient loads to reduce eutrophication to a sustainable level
13
(HELCOM 2007). Implementation, monitoring and revision of the BSAP and the earlier targets has
14
been an iterative cycle of processes, where also the target levels of nutrient pollution have been
15
revised based on the latest available statistics and research information on the current level of
16
pollution and the ecological status of the sea. As latest step in this cycle, the HELCOM Ministerial
17
Meeting held in Copenhagen in October 2013 (HELCOM 2013b) revised the Maximum Allowable
18
Inputs (MAI) of nutrients to each sea basin and Country Allocated Reduction Targets (CART) for
19
nitrogen and phosphorus, which are the two main nutrients causing eutrophication. Another
20
important reform was to include load reductions achieved in the atmospheric deposition of
21
nitrates and marine traffic as partial accomplishment of reduction targets, in addition to load
22
reductions from point and non-point sources to inland and coastal waters.
23
The spatial distribution of nutrient reduction targets by riparian countries and sub-
24
basins of the Baltic Sea are based on an ecologically justified aim of restoring the good
1
1
environmental status of the Baltic Sea and proportional reductions from countries pouring their
2
waters to the same sub-basin to accord with the Polluter Pays Principle. However, the potential
3
and the costs of additional nutrient abatement vary spatially. This raises questions such as, how
4
large are the total costs of achieving the agreed targets and how do they distribute by countries,
5
and what is the cost-effective combination of measures to meet these targets. The costs and cost-
6
effective measures of combatting eutrophication have inspired researchers. Several studies have
7
investigated the costs of meeting the earlier 50% reduction targets of N and P of the 1990’s (e.g.
8
Gren 1997, Ollikainen and Honkatukia 2001, Elofsson 2003) and the original BSAP targets from
9
2007 (e.g. Gren 2008, Elofsson 2010a,b, Hyytiäinen et al. 2013). These studies combine
10
information on the marginal costs and effects of alternative nutrient abatement measures to
11
compute the cost-effective combination of measures to achieve the required load reductions, and
12
to compute the aggregate costs of such measures. According to the existing research results for
13
meeting the original requirements of the BSAP from 2007, the total cost falls in the class of 4200-
14
4600 million euros when using the 1997-2003 reference loads as initial loads, and in the class of
15
1400-2800 million euros annually if using more recent, flow normalized loads of 2004-2008 as
16
initial states (see Hyytiäinen et al. 2014 for a review of recent cost studies).
17
The objective of this study is to analyze the cost-effective combination of measures
18
and the total costs of meeting the revised Baltic Sea Action Plan targets as specified in the 2013
19
HELCOM Copenhagen Ministerial Declaration. We analyze the costs and the measures needed for
20
strict implementation of all the country-wise and sub-basin wise targets and two more flexible
21
interpretations of the agreement. In particular, we pay attention to estimate the potential
22
efficiency gains from introducing flexibility mechanisms such as joint implementation mechanism
23
to the Baltic Sea Action Plan. Also a comparison of the estimated costs of the present and earlier
24
agreements is made.
2
1
For these ends, we employ a modelling framework of Ahlvik et al. (2014) to compute
2
the cost-effective combination of measures to reach the revised maximum allowable inputs using
3
statistics on the flow-normalized mean loads of years 2004-2008 as initial loading and allowing for
4
30 years for the riparian Baltic Sea countries to reach the target. The analysis is limited to estimate
5
the costs of nutrient reductions made in water-borne sources (point and non-point sources in the
6
catchment area) in the littoral Baltic Sea countries that account for 85% of the present phosphorus
7
load and 68 % of the present nitrogen load (HELCOM, 2011). The water-borne emissions from non-
8
littoral, non-member states and atmospheric deposition are assumed to be developed as assumed
9
in the Copenhagen declaration, but their costs are not estimated in an analysis.
10
The paper is structured as follows. The second chapter presents the model and data
11
used for deriving cost-effective combinations of nutrient abatement measures. The third chapter
12
presents three different problem formulations. Fourth chapter presents the results on total costs
13
and division of the costs by countries and regions for the three objectives, and elaborates cost-
14
effective combinations of measures. The fifth chapter discusses the prospects for cost-effective
15
nutrient abatement in the Baltic Sea, and the sixth chapter concludes the paper.
16
3
1
2 MODEL FOR COMPUTING THE COSTS OF NUTRIENT ABATEMENT
2
Cost-and-effect models are tools to evaluate the total cost of environmental policies such
3
HELCOM’s Baltic Sea Action Plan. Such models identify the most important potential nutrient
4
abatement measures and estimate their costs and effects on nutrient loading in order to compute
5
the cost-effective combination of measures to reduce nutrient pollution. In this study, we use the
6
model of Ahlvik et al. (2014) to evaluate the costs of meeting the revised nutrient reduction
7
targets of the Copenhagen Ministerial Meeting (HELCOM 2013a). This model uses information on
8
the (a) marginal costs and effects of ten alternative nutrient abatement measures, (b) initial level
9
of nutrient loading, (c) target level of loading, (d) baseline projection of nutrient loads and (e) time
10
period during which the target needs to be met, to compute optimal programme of measures to
11
minimize the overall costs. Model is based on parameters from the period of 2004-2008 and
12
results are presented in 2008 euros. The model divides the Baltic Sea catchment into 23
13
subcatchments such that each country and a sea basin form a single area1 (see Figure 1).
14
The abatement measures considered in this model can be divided into four classes:
15
(1) those that reduce nutrient inputs to the agricultural soil (reduced use of inorganic N and P
16
fertilization, reduced numbers of production animals divided into cattle, poultry and pigs), (2)
17
measures that increase nutrient retention (cultivation of catch crops, restoring wetlands and
18
constructing sedimentation ponds), (3) increased capacity of the waste water treatment, and (4)
19
reduced application of phosphates in detergents. The model predicts the joined impacts of these
20
measures on nutrient loading and the soil phosphorus dynamics at a time step of one year.
21
Furthermore, the model assumes that all measures are started immediately and applied, or
22
maintained, over the entire time horizon of 30 years. The exact mathematical formulation of the
23
model can be found in Ahlvik et al (2014).
1
Sea areas considered are the same ones that are used in the BSAP: Bothnian Bay (BB), Bothnian Sea (BS), Baltic
Proper (BP), Gulf of Finland (GoF), Gulf of Riga (GoR), Danish Straits (DS) and Kattegat (KT) (HELCOM 2007)
4
1
Data and constraints
2
Tables 1a and b show the average flow-normalized2 water-based loads of total nitrogen and
3
phosphorus from the nine riparian countries to the Baltic Sea basins (see Figure 1). This data is
4
from HELCOM’s PLC-5 statistics that are based on regular measurements at river-mouths in 2004-
5
2008 (HELCOM 2013b). Maximum allowable inputs of waterborne loads were obtained by
6
subtracting the estimated airborne loads, loads from shipping and loads from third noncontracting
7
countries from the maximum allowable inputs (MAI) as specified in the Copenhagen Ministerial
8
meeting (HELCOM 2013b). The needed reduction is the subtraction of average loads of 2004-2008,
9
MAI and the impact of baseline development3. Airborne loads of nitrogen are assumed to
10
decrease as a consequence of implementing the Gothemburg Protocol (UNECE 1999) to abate
11
acidification, eutrophication and ground-level ozone. Atmospheric nitrogen pollution from marine
12
traffic is also assumed to reduce due to the planned implementation of the Baltic Sea Nitrogen
13
Oxide Emission Control (Baltic Sea NECA). The costs pertaining to reductions of atmospheric
14
nitrogen pollution are not accounted here.
15
It must be noted that our initial loads (2004-2008) differ from the reference period of
16
1997-2003 of the Baltic Sea Action Plan and the Copenhagen Ministerial Meeting (see Figure 2).
17
The phosphorus loads have already somewhat reduced from the reference level suggesting some
18
advances in water protection in the early 2000s. On the other hand, the average nitrogen loads
19
were even higher in 2004-2008 compared to the reference period. Loads have increased and
20
meeting the target level of nitrogen pollution have become even more challenging in the Bothnian
21
Bay, Gulf of Finland and Gulf of Riga, in particular.
2
flow-normalization means removing the impact of annual weather-driven variations in loads
According to the baseline development assuming no new water protection effort, N loads are assumed to slightly
increase from Poland and decrease from other countries. The P loads are assumed to slightly increase for Denmark
and Poland and decrease for other countries.
3
5
1
The target year of BSAP to meet the load reduction target is 2015 and this is assumed
2
to change the Baltic Sea marine environment to the good environmental state by 2021. However,
3
this target is difficult to obtain due to long lags attribute particularly to agricultural phosphorus
4
abatement measures. Instead, we consider a longer term, and assume that load reduction targets
5
will be met by 2040 (T=30).
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6
1
3 OPTIMIZATION PROBLEM AND THREE COSTRAINTS
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The management problem is to minimize the aggregate cost of nutrient abatement. This is
3
achieved by adjusting the levels of ten alternative nutrient abatement measures in 23 sub-
4
catchment areas of the Baltic Sea (see Figure 1) such the waterborne load reduction targets are
5
met with minimum cost:
30
9
7
𝑚𝑖𝑛
⏟∑∑∑
6
𝑥𝑖𝑗 𝑡=0 𝑖=1 𝑗=1
1
𝐶 (𝑥 )
(1 + 𝑟)𝑡 𝑖𝑗𝑡 𝑖𝑗
(1)
7
𝑛𝑗𝑘𝑡 = 𝐹𝑖𝑗𝑡 (𝑥𝑖𝑗 ) 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖, 𝑗
(2)
8
𝑝𝑗𝑘𝑡 = 𝐹𝑖𝑗𝑡 (𝑥𝑖𝑗 ) 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖, 𝑗
(3)
9
where index i denotes country, j denotes sea basin and t denotes time period. xij is a vector of
10
abatement measures, Cijt is a function for total cost and Fijt is a function for the total effect of
11
abatement measures xij on nitrogen (njkt) and phosphorus (pjkt) loads in catchment ij. Nutrient
12
balances in each sea basin develop as follows
9
13
𝑁𝑗𝑡+1 − 𝑁𝑗𝑡 =
∑ 𝑛𝑖𝑗𝑡
⏟
𝑖=1
External load
14
7
+ ∑(𝐹𝑘𝑗 𝑁𝑘𝑡 − 𝐹𝑗𝑘 𝑁𝑗𝑡 ) +
𝐷
− ⏟
𝛿𝑁 (𝑁𝑡 , 𝑃𝑡 ) + ⏟
𝐹𝑖𝑥(𝑁𝑡 , 𝑃𝑡 ) (4)
⏟𝑛
⏟
Deposition
Denitrification
Fixation
𝑘=1
Nitrogen exchange
9
7
𝑁𝑗𝑡+1 − 𝑁𝑗𝑡 = ∑
⏟𝑖=1 𝑛𝑖𝑗𝑡 + ∑
⏟𝑘=1(𝐹𝑘𝑗 𝑁𝑘𝑡 − 𝐹𝑗𝑘 𝑁𝑗𝑡 ) +
External load
Phosphorus exchange
𝐷
⏟𝑝
Deposition
−𝛿
⏟𝑃 (𝑁𝑡 , 𝑃𝑡 ) (5),
Permanent
burial
15
where δN and δP are the decay processes of nitrogen and phosphorus, namely denitrification and
16
permanent burial of phosphorus, and Fix is the nitrogen fixation by cyanobacteria. These
17
processes are explained in more detail in Ahlvik et al. (2014). In addition to the model described in
18
equations (1)-(5), we consider three optimization constraints. The Copenhagen Ministerial
19
Meeting specifies, relative to the reference level, both Country Allocated Reduction Targets (CART)
20
and the subbasin-wise Maximum Allowable Inputs (MAI). In addition the revised agreement allows
21
for its member to account for extra reductions, in proportion to their effect on a neighboring
7
1
basin, in reaching their CARTs. Accordingly, we conduct computations for three, stepwise more
2
flexible objectives:
3
Objective 1: CART & MAI i.e. each riparian country reduces its loads to meet the Country
4
Allocated Reduction Targets (CARTs, 𝑛̅𝑖 and 𝑝̅𝑖 ) and the countries together reduce their loads to
5
accord with the basin-wise Maximum Allowable Inputs (MAIs, 𝑛̅𝑗 and 𝑝̅𝑗 ).
6
∑7𝑗=1 𝑛𝑖𝑗𝑇 ≤ 𝑛̅𝑖
for all i
7
∑7𝑗=1 𝑝𝑖𝑗𝑇 ≤ 𝑝̅𝑖
for all i
8
∑9𝑖=1 𝑛𝑖𝑗𝑇 ≤ 𝑛̅𝑗
for all j
9
∑9𝑖=1 𝑝𝑖𝑗𝑇 ≤ 𝑝̅𝑗
for all j
10
Objective 2: MAI only, meaning that the riparian countries reduce their aggregate loads below
11
maximum allowable inputs specified for each sea basin
12
∑9𝑖=1 𝑛𝑖𝑗𝑇 ≤ 𝑛̅𝑗
for all j
13
∑9𝑖=1 𝑝𝑖𝑗𝑇 ≤ 𝑝̅𝑗
for all j
14
Objective 3: Flexible MAI, meaning that the total loads to each basin (including exchange of
15
nutrients between the basins) would not exceed MAIs.
16
∑9𝑖=1 𝑛𝑖𝑗𝑇 + ∑7𝑘=1(𝐹𝑘𝑗 𝑁𝑘𝑇 − 𝐹𝑗𝑘 𝑁𝑗𝑇 ) ≤ 𝑛̅𝑗
for all j
17
∑9𝑖=1 𝑝𝑖𝑗𝑇 + ∑7𝑘=1(𝐹𝑘𝑗 𝑃𝑘𝑇 − 𝐹𝑗𝑘 𝑃𝑗𝑇 ) ≤ 𝑝̅𝑗
for all j
18
8
1
4 RESULTS
2
The costs of meeting the revised load reduction targets
3
Table 2 shows the costs of meeting the requirements of the Copenhagen Ministerial Meeting in a
4
cost-effective manner. The costs are shown by country and catchment and for all three objectives
5
in Tables 2a, b and c, respectively. The aggregate cost of meeting both the country allocated
6
reduction targets and basin-wise maximum allowable inputs are 1978 million euros annually
7
(Table 2a)4. The great majority (94%) of the costs is allocated to reduce nutrient loading to the
8
Baltic Proper, Gulf of Finland and Gulf of Riga, the three most eutrophic sea basins.
9
Relaxing the constraints reduces the total cost of nutrient abatement. The costs of
10
meeting the basin-wise MAI targets only (objective 2) are 1696 million euros and meeting the
11
most flexible arrangement accounting for the nutrient reductions done in other than the target
12
basins into account 1495 million euros annually. There are two reasons for lower cost: (1)
13
efficiency gains can be obtained if the countries pouring their waters to the same sub-basin
14
cooperate and choose load reductions such that their marginal costs are equal, and (2) additional
15
reductions of N or P that are due to joint production nature of nutrient abatement. Many
16
measures reduce both nutrients, and thus sometimes meeting the upper bound of one constraint
17
means that load of another nutrient is reduced more than what is required. Thus strict
18
interpretation of country-specific constraints can lead to excessive abatement and unnecessarily
19
high cost. Meeting both CARTs and MAIs (Objective 1) leads to 12% and 5% additional reductions
20
of N and P respectively, in comparison to the required reductions, and thus would lead the marine
21
ecosystem to a better state than what is required. The additional reductions are smaller for more
22
flexible formulations (Objectives 2 and 3).
4
Note however that the CARTs cannot be fully met in Estonia and Latvia.
9
1
Figure 3 shows the division of costs between the five different groups of measures
2
for objectives 1-3. Increasing the capacity of the waste water treatment is the most important
3
measure to combat eutrophication in particular in the catchment areas of the Baltic Proper and
4
the Gulf of Finland, the two heavily eutrophicated sea basins. The second most important means
5
for nutrient reduction are measures directed to improve the retention capacity of the agricultural
6
soils. Such measures become more important with more flexible arrangements allowing offsetting
7
of the nutrient reduction in one basin by carrying out measures in other neighboring basins.
8
Reduction of inorganic fertilizers is also a measure with relatively low marginal cost, and therefore
9
it is part of the cost-effective solution in most of the catchment areas. Reduction of production
10
animals (cows, pigs and poultry) is, on the contrary, an expensive measure which is applied only in
11
case all the other measures have already been applied. The application of P-free detergents will
12
increased at fairly the same level independent of problem formulation.
13
The original Baltic Sea Action Plan (HELCOM 2007) assumed that the agreed load
14
reductions were conducted solely on water-borne sources. In order to make the BSAP and the
15
Copenhagen 2013 agreements comparable, the costs of meeting the load reduction targets of the
16
Copenhagen 2013 meeting should be computed by assuming that only the waterborne load is
17
reduced. Table 3 shows the costs for Objective 2 targeted to meet the basin-wise MAIs and
18
assuming that atmospheric deposition and pollution from marine traffic will decrease (Case I), only
19
nitrate pollution from marine traffic reduces (Case II) and neither pollution from marine traffic nor
20
atmospheric deposition will reduce (Case III). The total costs increase by 200 million euros
21
annually (12%) by assuming that NOx abatement measures are replaced by other measures.
22
Furthermore, when assuming that only the waterborne load is reduced, the total cost is increased
23
by additional 112 million euros annually. These costs estimates, 200 and 112 million euros
24
annually for reduction of atmospheric pollution and marine traffic, respectively, can be also
10
1
considered as upper bounds for conducting measures in those sectors in order to be cost-
2
effective.
3
11
1
5 DISCUSSION
2
Impacts of revised BSAP on the costs of nutrient abatement
3
Economically the most important changes made to the Baltic Sea Action Plan in the Copenhagen
4
Ministerial Declaration (HELCOM 2013) include: (1) Nutrient load reductions obtained through
5
reducing atmospheric nitrate pollution and marine traffic can now be explicitly included as partial
6
accomplishment of country-wise load reduction targets, (2) spatial distribution of load reductions
7
have been changed, and (3) the emphasis has been somewhat shifted towards phosphorus
8
abatement5. Consequently, the total cost of nutrient abatement decreases. Computing the costs
9
of meeting the requirements of revised BSAP and neglecting chances to reduce atmospheric
10
pollution (Case III in Table 4) is comparable to earlier results obtained by Hyytiäinen et al. (2013).
11
That study employed the same model and data on initial loads as employed here. The costs of
12
meeting both MAIs and CARTs of BSAP2007 were 2336 million euros annually, while the aggregate
13
cost of meeting the revised MAIs and CARTs, shown in this study, are only 1978 million euros
14
annually. In other words, the cost of meeting the revised targets is 358 million euros (14 %) less
15
than the cost of meeting the original BSAP targets, despite the fact that the requirement for
16
phosphorus reductions is now stricter than earlier.
17
The revision of the BSAP is economically well justified step provided that the
18
resulting state of the sea is no worse than the one achieved by the original BSAP targets. The most
19
important reason for the declined cost is that Copenhagen declaration no longer requires large
20
and costly nitrogen reductions to be taken in Danish Straits and Kattegat catchments. Instead,
21
larger reductions are required in the catchments where the marginal cost of nutrient abatement is
According to original BSAP (HELCOM 2007), the maximum allowable inputs were 787,000 and
23,247 tons of N and P, respectively, while after revision in Copenhagen the target level of
nutrient pollutions are 792,210 and 21,717 tons of N and P, respectively.
5
12
1
lower, most notably in the Baltic Proper catchment. Studying the ecological consequences of the
2
changes in the spatial allocation of load targets would require the use of marine models.
3
Our computations also provide upper bound cost estimates for reducing atmospheric
4
nitrate loads through implementation of the Gothemburg Protocol and through reducing NOx
5
emissions of the marine traffic by establishing a NOx emission control area (NECA) status for the
6
Baltic Sea. According to our computations, the opportunity cost for implementing Baltic NECA are
7
112 million euros annually. According to the report made on economic impacts of Baltic NECA
8
(Kalli et al. 2010) the total additional costs from the strictest implementation of the Baltic NECA
9
would increase gradually and will be 76 and 289 million euros annually in years 2020 and 2030,
10
respectively. Further comparisons of the flows of discounted costs for the two options reveals that
11
the costs of implementing Baltic NECA are well comparable and in the same magnitude with the
12
costs of achieving the load reductions solely from waterborne sources.
13
The corresponding opportunity cost for implementing the Gothemburg Protocol are
14
200 million euros annually. The costs of implementing the Gothemburg Protocol have been
15
estimated to range 104,000 -115,000 million euros annually for the entire Europe, depending on
16
the scenario (Holland et al. 2011). These figures are more difficult to compare because nitrate
17
deposition to the Baltic Sea represents only a tiny proportion of the European atmospheric nitrate
18
pollutions, and due to fact that benefits from reduced eutrophication represent only a small
19
proportion of the overall benefits, the health benefits being the most important societal impact of
20
reduced pollution.
21
Potential for additional efficiency gains in trans-boundary nutrient abatement
22
In addition to computing the economic consequences of implementing all the requirements
23
Copenhagen Declaration, the computations were extended to two other, more flexible problem
24
formations to analyze the prospects for additional efficiency gains in nutrient abatement in the
13
1
Baltic Sea. The costs of meeting MAIs only (Objective 2) – allowing countries to fulfill their CARTs
2
partially in other countries - are 282 million euros (or 14%) less than the aggregate costs of the
3
most inflexible interpretation of the agreement (Objective 1). This could be achieved, for instance,
4
by a joint implementation (JI) mechanism – that is well known from its application within the
5
Kyoto Protocol to reduce C02 emissions to the atmosphere. Joint implementation has been
6
suggested as a mechanism to mitigate marine pollution e.g. Ollikainen and Honkatukia (2001).
7
Under such a mechanism countries could invest in nutrient abatement projects in different
8
countries (in mutual understanding) as an alternative to reducing solely its domestic nutrient load.
9
That is, countries could reduce their total cost by investing in countries where the marginal cost of
10
load reduction is lower. Joint implementation could possibly be organized with moderate
11
administrational burden, e.g. though bilateral agreements between the member states and
12
coordinated by HELCOM. Joint implementation mechanism is potential instrument in particular for
13
investments (such as construction of wastewater treatments plants or other large scale facilities)
14
but is probably less well-suited to control non-point source nutrient pollution that is typically
15
controlled trough
16
compensations paid for farmers. An alternative institution to joint implementation mechanism is a
17
cap-and-trade nutrient trading scheme, where the initial allocation would follow MAIs and CARTs
18
and countries could trade emission permits (suggested by e.g. Gren and Wulff 2004, Lankoski et al
19
2008, NEFCO 2007 and Elofsson 2010). Setting up and running a nutrient trading scheme might
20
however turn out to be complex and more costly to administer than case specific applications of
21
joint implementation mechanism.
agri-environmental policy instruments such as command-and-control and
22
Finally, we propose an even more flexible interpretation of the Copenhagen
23
declaration in which countries could reduce their nutrient load to any sea basin taking into
24
account the effect on focal basins via water exchange (objective 3). In fact, the Copenhagen
14
1
declaration already allows for this kind of interpretation6. According to our results, the annual cost
2
of this flexible interpretation would be 1495 million euros annually, which reduces the total cost
3
by 201 million euros (12 %) further. In that case less abatement measures would be done in the
4
Bothnian Bay and Gulf of Finland catchments where the present MAI targets are more costly to
5
achieve, and those would be replaced by nutrient abatement in Bothnian Sea where reductions
6
were originally not needed, and the Baltic Proper and the Gulf of Riga where the marginal costs
7
are relatively low.
8
“RECOGNIZING that reductions in nutrient inputs in sub-basins may have wide-spread effects, WE
AGREE that extra reductions can be accounted for, in proportion to the effect on a neighboring
basin with reduction targets, by the countries in reaching their Country Allocated Reduction
Targets” (HELCOM 2013, p. 8).
6
15
1
6 CONCLUSIONS
2
All in all, the cost of reducing the waterborne inputs to accord with the Copenhagen Declaration
3
targets can be significantly reduced by allowing more flexibility in its implementation. There is
4
probably no need to revise the targets on economic basis for as long as HELCOM establishes some
5
kind of flexibility mechanism (e.g. joint implementation mechanism) and accounts for nutrient
6
reduction in other sea basins. The reduced total costs will increase the societal welfare and the
7
acceptability of the agreement, and make it more likely to achieve the good environmental status
8
of the Baltic Sea. As a shortcoming of our analysis, we neglect any transaction costs related to
9
organizing these flexibility mechanisms and they are justified only if the expected efficiency gains
10
exceed the additional transaction costs of their implementation.
11
16
1
LITERATURE
2
Ahlvik, L., Pitkänen, H., Ekholm, P. & Hyytiäinen, K. 2014. An economic-ecological model to
3
evaluate impacts of nutrient abatement in the Baltic Sea. Submitted manuscript.
4
Elofsson, K. 2010a. Cost-effectiveness of the Baltic Sea Action Plan. Marine Policy 34: 1043-1050.
5
Elofsson, K. 2010b. The Costs of Meeting the Environmental Objectives for the Baltic Sea: A Review
6
7
8
9
10
11
12
13
of the Literature. Ambio 39: 49–58.
Gren, I.M, Elofsson K. & Jankke, P. 1997. Cost-effective nutrient reductions to the Baltic Sea.
Environmental and Resource Economics, 10: 341-32.
Gren, I.-M. 2001. International Versus National Actions Against Nitrogen Pollution of the Baltic Sea
Environmental and Resource Economics 20: 41–59.
Gren, I.-M. 2008. Costs of nutrient reductions to the Baltic Sea - technical report. Swedish
University of Agricultural Sciences, Working Paper Series 2008:1.
Gren, I.M. & Wulff, F. 2004. Cost-effective nutrient reductions to coupled heterogeneous marine
14
water basins: An appliation to the Baltic Sea. Regional Environmental Change 4: 159-
15
168.
16
HELCOM 2007. Helcom Baltic Sea Action Plan. Adopted on 15 November 2007 in Krakow, Poland
17
by the HELCOM Extraordinary Ministerial Meeting. Helcom, Helsinki. Available at:
18
www.helcom.fi
19
20
21
HELCOM 2011. The Fifth Baltic Sea Pollution Load Compilation (PLC-5). Balt. Sea Environ. Proc. No.
128
HELCOM. 2013a. HELCOM Copenhagen Ministerial Declaration. Taking further action to
22
implement the Baltic Sea Action Plan – Reaching Good Environmental Status for a
23
healty Baltic Sea. 3 October 2013, Copenhagen , Denmark.
17
1
http://www.helcom.fi/Documents/Ministerial2013/Ministerial%20declaration/2013
2
%20Copenhagen%20Ministerial%20Declaration.pdf
3
HELCOM 2013b. Summary report on the development of revised Maximum Allowable Inputs (MAI)
4
and updated Country Allocated Reduction Targets (CART) of the Baltic Sea Action
5
Plan.
6
http://www.helcom.fi/Documents/Ministerial2013/Associated%20documents/Suppo
7
rting/Summary%20report%20on%20MAI-CART.pdf
8
9
Holland, M., Wagner, A., Hurley, F., Miller, B., Hunt, A. 2011. Cost Benefit Analysis for the Revision
of the National Emission Ceilings Directive: Policy Options for revisions to the
10
Gothenburg Protocol to the UNECE Convention on Long-Range Transboundary Air
11
Pollution.
12
http://ec.europa.eu/environment/air/pollutants/pdf/Gothenburg%20CBA1%20final
13
%202011.pdf
14
Hyytiäinen, K., Ahlvik, L., Ahtiainen, H., Artell, J., Dahlbo, K., Huhtala, A. 2013. Spatially explicit bio-
15
economic modelling for the Baltic Sea: Do the benefits of nutrient abatement
16
outweigh the costs? MTT Discussion Papers 2/2013.
17
https://portal.mtt.fi/portal/page/portal/mtt_en/mtt/publications/mttdiscussionpap
18
ers/2013
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Hyytiäinen, K., Blyh, K., Hasler, B., Ahlvik, L., Ahtiainen, H., Artell, J., Ericsdotter, S. 2014.
20
Environmental economic research as a tool in the protection of the Baltic Sea – costs
21
and benefits of reducing eutrophication. TemaNord (in print)
22
Kalli, J., Repka, S., and Karvonen, T. 2010. Baltic NECA – economic impacts. Study report by the
23
University of Turku, Centre for Maritime Studies.
24
http://helcom.navigo.fi/stc/files/shipping/CMS_Baltic_NECA_FINAL.pdf
18
1
2
3
Lankoski, J., Lichtenberg, E. & Ollikainen, M. 2008. Point/nonpoint effluent trading with spatial
heterogeneity. America Journal of Agricultural Economics 90: 1044-1058.
NEFCO 2007. Helcom Baltic Sea Action Plan - Background document on financing and cost-
4
efficiency. Case: Eutrophication.
5
http://www.nefco.org/documents/Nefco_Helcom.pdf
6
7
8
9
Ollikainen, M. & Honkatukia, J. 2001. Towards efficient pollution control in the Baltic Sea: an
anatormy of current failure with suggestions for change. Ambio 30: 245-253.
UNECE, 1999. The 1999 Gothenburg Protocol to Abate Acidification, Eutrophication and Groundlevel Ozone. http://www.unece.org/env/lrtap/multi_h1.html
10
19
1
2
3
Figure 1. Division of the Baltic sea into 7 sea basins (A-G) and 23 sub-catchment areas Sub-basins:
A. Bothnian Bay, B. Bothnian Sea, C. Baltic Proper (northern and southern parts combined), D. Gulf
of Finland, E. Gulf of Riga, F. Danish Straits, G. Kattegat. Source: Hyytiäinen et al. (2013)
4
5
20
2
3
Figure 2. Past development of the waterborne nutrient loads in comparison to reference levels of
1997-2003, average level 2004-2008 and the target level (MAI)
(a) Nitrogen
1200000
50000
1000000
40000
800000
TP
30000
600000
1997-2003
20000
400000
200000
10000
0
0
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
4
(b) Phosphorus
2004-2008
1970
1976
1982
1988
1994
2000
2006
2012
1
5
6
21
1
Figure 3. Optimal allocation of investments across measures for the three objectives
1000
Million Euros annually
800
Obj. 1
Obj. 2
Obj. 3
600
400
200
0
2
inorg. fert.
prod. anim.
retention
WWTP
P-free det
3
22
1
Table 1. Initial riverin loads (2004-2008) and target loads as agreed according to the targets of the
2
Copenhagen declaration
(a) Riverine N loads 2004-2008, MAIs and the needed reduction
Riverine
Riverine
Needed
Add.red.
load
BOB
BOS
BAP
GUF
GUR
DS
KAT
TOTAL
MAI
reduction baseline1)
DEN
25 149
23 752
48 901
48 561
340
-45
EST
921
18 727
14 000
33 649
24 083
9 566
-1 131
FIN
34 477
27 213
16 421
78 111
72 683
5 428
-710
GER
7 906
12 176
20 083
17 736
2 347
-38
LAT
9 668
72 141
81 809
74 537
7 272
-461
LIT
46 626
46 626
34 108
12 518
-1 628
POL
193 593
193 593 153 574
40 019
3 620
RUS
6 021
81 724
87 745
75 600
12 145
0
SWE
19 366
28 183
30 158
4 981
33 499 116 187 109 261
6 926
-2 616
Water-based loads
53 844
55 396 294 893 116 872
86 141
42 307
57 251 706 704 610 143
96 561
-3 009
MAI (waterborne load)
49 438
54 606 234 387
91 400
78 373
41 605
57 104 606 913
Needed reduction
riparian countries
4 406
790
57 276
25 472
7 768
702
147
96 561
third countries
3 230
3 230
(b) Riverine P loads 2004-2008, MAIs and the needed reduction
Riverine
Riverine
Needed
Add.rec.
load
BOB
BOS
BAP
GUF
GUR
DS
KAT
TOTAL
MAI
reduction baseline1)
DEN
975
744
1 719
1 890
0
52
EST
19
907
314
1 240
483
757
-85
FIN
1 455
1 247
656
3 358
3 196
162
-207
GER
174
304
478
351
127
-102
LAT
324
2 671
2 994
2 012
982
-151
LIT
2 111
2 111
1 168
943
-54
POL
11 790
11 790
4 833
6 957
436
RUS
833
4 704
5 537
3 390
2 147
-590
SWE
880
939
749
106
819
3 492
3 104
388
-168
Water-based loads
2 335
2 186
15 999
6 267
2 985
1 385
1 563
32 719
20 427
12 463
-869
MAI (waterborne load)
2 494
2 380
6 314
3 450
1 927
1 496
1 569
19 630
Needed reduction
riparian countries
0
0
9 016
2 817
930
0
0
12 763
third countries
669
128
797
1)
additional reduction needed to offset the baseline development during the following 30 years
3
4
23
1
Table 2. The costs of meeting the revised nutrient reduction requirements (in million euros) as
2
agreed in the Copenhagen Ministerial Meeting
(a) Cost of meeting both basin and country targets (Objective 1)
BB
BS
BP
GoF
GoR
DS
Sweden
5
1
37
Finland
69
0
89
Russia
18
517
0
Estonia
4
107
48
Latvia
35
101
Lithuania
64
8
Poland
776
Germany
65
Denmark
Total
74
1
998
713
156
(b) Cost of basin targets only (Objective 2)
BB
BS
BP
GoF
GoR
Sweden
4
1
44
Finland
70
0
95
Russia
19
526
Estonia
2
75
Latvia
22
Lithuania
91
Poland
694
Germany
22
Denmark
Total
74
1
895
696
KT
Total
3
9
21
2
26
1
10
DS
KT
Total
0
0
0
1
1
0
0
1
2
22
4
31
(c) Cost of meeting both basin and country targets (Objective 3)
BB
BS
BP
GoF
GoR
DS
Sweden
1
10
49
Finland
11
22
58
Russia
19
240
6
Estonia
3
50
8
Latvia
26
47
Lithuania
104
9
Poland
801
Germany
29
Denmark
Total
13
33
1 031
348
71
54
158
536
158
136
72
776
86
3
1 978
KT
49
164
547
80
45
95
694
22
1
1 696
Total
0
0
0
1
1
0
0
60
92
265
61
73
113
801
29
1
1 495
3
4
24
1
Table 3. Nutrient abatement costs by sea basins (Case I)
Case I
74
1
895
696
31
1
0
1 696
Case II
Case III
2
Bothnian Bay
Bothnian Sea
Baltic Proper
Gulf of Finland
Gulf of Riga
Danish Straits
Kattegat
Total
74
1
1 070
721
31
1
0
1 896
74
1
1 164
738
31
1
0
2 008
3
Case I: Atmospheric nitrate pollution is reduced as specified in the Gothemburg Protocol (1999)
4
and the nitrite pollution from shipping assuming that Baltic NECA is implemented
5
Case II: Assumed reduction from atmospheric nitrate pollution will not occur and must be
6
compensated by reduction of waterborne sources, Baltic NECA implemented
7
Case III. Assumed reductions of pollution from marine traffic or atmospheric sources are replaced
8
by reductions from waterborne sources
9
10
11
25