On the Choice of Cost and Effectiveness Indicators in the Context of the European Water Policy

The Water Framework Directive requires EU Member States to analyse economic impacts of the Directive's implementation. To reach a "good status", instruments have to be judged according to their cost-effectiveness. We evaluate costs and effects of measures to reduce nitrate emission of Austrian agriculture. Results are based on a model that integrates production decisions with stochastic environmental outcomes. The Directive's requirement to involve stakeholders may make it necessary to take a large number of indicators into consideration. We find that alternative calculations of the effectiveness criterion give different rankings of the most effective combination of measures.