Ecosystem services

Rapport 2014/

Ecosystem services

Kristin Magnussen

Ecosystem services

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Underkategori(er)	n/a
År	2014
Forfatter(e)	Kristin Magnussen
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Ecosystem Services
In Nordic Freshwater Management	
Ved Stranden 18
DK-1061 Copenhagen K
www.norden.org
Human wellbeing is dependent upon and benefit from ecosystem 
services which are delivered by well-functioning ecosystems. 
Ecosystem services can be mapped and assessed consistently 
within an ecosystem service framework. This project aims 
to explore the use and usefulness of the ecosystem service 
framework in freshwater management, particularly water 
management according to the Water Framework Directive (WFD). 
There are several examples of how ecosystem services have been 
used in WFD related studies in all the Nordic countries. Most 
of them involve listing, describing and categorizing freshwater 
ecosystem services, while there are few comprehensive Cost 
Benefit Analyses and analyses of disproportionate costs that apply 
this framework. More knowledge about ecosystem services and the 
value of ecosystem services for freshwater systems is needed.
Ecosystem Services – In Nordic Freshwater Management	
TemaNord 2014:561	
TemaNord 2014:561
ISBN 978-92-893-3851-6 (PRINT)
ISBN 978-92-893-3852-3 (PDF)
ISBN 978-92-893-3853-0 (EPUB)
ISSN 0908-6692	
TemaNord 2014:561	
TN2014561 omslag 2.indd 1	02-12-2014 08:01:17

Ecosystem Services 
In Nordic Freshwater Management
 
 
Kristin Magnussen, Berit Hasler a
nd Marianne Zandersen 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TemaNord 2014:561

Ecosystem Services 
In Nordic Freshwater Management
 Kristin Magnussen
, Berit Hasler and Marianne Z andersen 
ISBN 
978-92- 893 -3851 -6 (PRINT) ISBN 
978-92- 893 -3853 -0 (PDF) ISBN 
978-92- 893 -3852 -3 (EPUB) http://dx.doi.org/10.6027/
TN2014-561 
TemaNord
 2014:561 ISSN 
0908 -6692 
©
 Nordic Council of Ministers 201 4 Layout: 
Hanne Lebech Cover photo: 
SignElements 
Print: 
Rosendahls -Schultz Grafisk 
Printed in Denmark
 
 
 
 
 
 
 
 
 
 
This publication has been published with financial support by the Nordic Council of Ministers. 
However, the contents of this publication do not necessarily reflect the views, policies or reco m-
mendations of the Nordic Council of Ministers. 
 www.norden.org/en/publications 
 
 
 
 
 
 
 
 
 
 
Nordic co-operation 
Nordic co-operation is one of the world’s most extensive forms of regional collaboration, invol v-
ing Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland. 
Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an i m-
portant role in European and international collaboration, and aims at creating a strong Nordic 
community in a strong Europe. 
Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the 
global community. Common Nordic values help the region solidify its position as one of the 
world’s most innovative and competitive. 
 
Nordic Council of Ministers Ved Stranden 18
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-1061 Copenhagen K Phone
 (+45) 3396 0200 
www.norden
.org

Content 
Foreword ................................................................................................................................................... 7	 	
Acknowledgement ................................................................................................................................ . 9	 	
List of abbreviations........................................................................................................................... 11	 	
Summary ................................................................................................................................................ 13	 	
1. Introduction ................................................................................................................................... 23	 	
1.1	 	Background and motivation ....................................................................................... 23	 	
1.2	 	Project goals ..................................................................................................................... 24	 	
1.3	 	Our approach and outline of the report ................................................................ . 24	 	
2. Introduction to Ecosystem Services, Payment for Ecosystem Services and 
implementation of the Water Framework Directive ....................................................... 27	
 	
2.1	 	Introduction to the ES framework and the use of this framework in 
EU and the Nordic Countries ...................................................................................... 28	
 	
2.2	 	Overview of Ecosystem Services in freshwater ................................................... 32	 	
2.3	 	The links between the Water Framework Directive (WFD) and the 
Ecosystem Services (ES) framework ....................................................................... 35	
 	
2.4	 	Economic instruments for locally targeted measures – PES and 
water quality trading ..................................................................................................... 43	
 	
2.5	 	Main findings in this chapter ...................................................................................... 49	 	
3. Use of the ES framework to describe and value benefits of improved 
ecological status in water .......................................................................................................... 51	
 	
3.1	 	Benefit assessment based on ecosystem services .............................................. 51	 	
3.2	 	Some issues to consider in ecosystem services benefit assessment 
of improved water status ............................................................................................. 57	
 	
3.3	 	Examples of identification and mapping ................................................................ 68	 	
3.4	 	Examples of quantification and valuation ............................................................. 74	 	
3.5	 	Main findings in this chapter ...................................................................................... 94	 	
4. Assessment of disproportionate costs ................................................................................. 97	 	
4.1	 	Disproportionate costs in WFD ................................................................................. 97	 	
4.2	 	Examples of assessment of disproportional costs according to WFD ......... 98	 	
4.3	 	Main findings in this chapter .................................................................................... 108	 	
5. Perspectives for locally adapted instruments, inc luding PES, for enhanced 
ecosystem services provision ................................................................................................ 111	
 	
5.1	 	Introducing the examples .......................................................................................... 112	 	
5.2	 	Agri-environmental policies ..................................................................................... 113	 	
5.3	 	Moving towards more locally adapted instruments in Nordic 
countries .......................................................................................................................... 117	
 	
5.4	 	Farmers paid as climate adapters for cities ........................................................ 121	 	
5.5	 	Nordic Payments for ecosystem services from restored/managed 
wetlands ........................................................................................................................... 123	
 	
5.6	 	Watershed programmes ............................................................................................ 126	 	
5.7	 	Water quality trading .................................................................................................. 129	 	
5.8	 	Main findings in this chapter .................................................................................... 134

Ref
erences
 ........................................................................................................................................... 139	
 	
Norsk sammendrag .......................................................................................................................... 147

Foreword 
This report has been commissioned by the Nordic working group for 
environment and economy in collaboration with the Nordic working 
group for terrestrial ecosystems. The aim of the report is to explore the 
use and usefulness of the ecosystem services framework in freshwater 
management in Nordic countries, addressing the following four topics: 
 
• Ways and methods for using ecosystem services in ass essing the 
benefits of ecological improvements in water courses . 
• Ways and methods for assessing costs, particularly disproportionate 
costs in line with the water framework directive . 
• How the ecosystem services framework might contribute to develop 
targeted and locally adapted instrument mixes at the level of each 
river basin or water region . 
• Possible use of payment for ecosystem services as an instrument for 
targeted freshwater management . 
 
The structure of the report reflects these central themes. The repo rt is a 
follow -up of a report from 2012 on ecosystem services in Nordic wate r-
sheds (Valuation of Ecosystem Services from Nordic Watersheds, NCM 
2012). In that report the emphasis was on describing and mapping the 
ecosystem services provided by different ecosystems on a more general 
level. The aim of this report is to provide a more policy oriented a p-
proach by exploring how the ecosystem services concept can be applied. 
Management of ecosystem services has lately been among the corner 
stones in Nordic activi ties aiming at enhancing green economy. 
The report has been written by the Norwegian consultancy Vista An a-
lyse. The core team responsible for the report consisted of Kristin Ma g-
nussen (project leader), Berit Hasler (Aarhus University), and Marianne 
Zander sen (Aarhus University). Comments and guidance on the report 
have been provided by the two Nordic working groups. The interim r e-
sults of the project were presented and discussed at a Nordic seminar in 
Mariehamn in March 2014. The authors of the report are however re-
sponsible for the content of the report which does not necessarily reflect 
the views and positions of the governments in the Nordic countries.

8 Ecosystem Services 	
The main contribution of this report is to focus on practical issues 
and provide examples on how the ecosystem services framework has 
be en used in this respect , mainly in a Nordic context. The report does 
not provide a complete overview of Nordic studies of ecosystem se r-
vices , or valuation of ecosystem services , as such an overview has been 
given before. E xamples have been chosen in order to demonstrate usage 
of the ES framework in different countries and with different purposes, 
in the hope that they may inspire and potentially be useful for others. 
The report reveals that t here are several practical exa mples of use of 
the ecosystem services framework in water framework directive related 
studies in all the Nordic countries. Most of the examples involve listing, 
description and categorization of freshwater ecosystem services, whi le 
there are few comprehensive cost benefit analyses and analyses of di s-
proportionate costs that apply this framework. R elatively few studies in 
the Nordic countries value ecosystem services per se, while there are 
some more which value improved water environment , including reach-
ing good ecological status . 
The examples provided illustrate that the ecosystem services fram e-
work is used increasingly in Nordic aquatic management . More 
knowledge about ecosystem services and the value of ecosystem se r-
vices for freshwater systems is howeve r needed. Despite the scarcity of 
empirical studies, the examples and the discussion in this report demo n-
strate that the ecosystem services framework may be useful in Nordic 
water resource management, including in the implementation of the 
w ater framework directive. 
 
October 2014 
 
 
 
Magnus Cederlöf 
Chairman of the Working Group on Environment and Economy under 
the Nordic Council of Ministers

Acknowledgement 
Kristin Magnussen (Vista Analyse), Berit Hasler (Danish Centre for Env i-
ronment and Energy (DCE)/Department of Environmental Science, Aarhus 
University (AU)), and Marianne Zandersen (Danish Centre for Environment 
and Energy (DCE)/Department of Environmental Science, Aarhus Univers i-
ty (AU) have written the report. Henrik Lindhj em (Vista Analysis and Nor-
wegian Institute for Nature Research) has reviewed the report. 
We would like to thank the members of our advisory group for their 
contribution, particularly in providing us with case study examples. The 
members of this group were: 
 
• Anni Huthala, Government Institute for Economic Research, Finland. 
• Virpi Lehtoranta, Finnish Environment Institute, Finland. 
• Bjørn Walseng, Norwegian Institute for Nature Research, Norway . 
• Ann Kristin Lien Schartau , Norwegian Institute for Nature Resear ch, 
Norway . 
• David Barton, Norwegian Institute for Nature Research, Norway. 
• Simon Haraldsen, fylkesmann en in Oslo and Akershus, Norway. 
 
We would like to thank Virpi Lehtoranta in particular, for writing text 
and providing figures for the two recent Finnish examples on valuation 
of reaching good ecological status (chapter 3.3.4.). 
Any errors or omissions remain the responsibility of the authors. 
 
8 th September 2014 
 
 
Kristin Magnussen 
Project manager 
Vista Analyse AS

List of abbreviations 
AEP Agri-Environmental Policy 
CAP Common Agricultural Policy 
CBA Cost Benefit Analysis 
CEA Cost-effective Analysis 
CICES Common International Classification of Ecosystem Services 
DG Directorate General 
EAFRD European Agricultural Fund for Rural Developmen t 
EFAs Ecological Focus Areas 
EQR Environmental Quality Ratio 
ES Ecosystem Services 
ETS Emission Trading System 
EU European Union 
GAEC Good Agricultural and Environmental Condition 
GEP Good Ecological Potential 
HMWB Heavily Modified Water Body 
GES Good Ecological Status 
MA Millennium Ecosystem Assessment 
MAES Mapping and Assessment of Ecosystems and their Services 
NWRM Natural Water Retention Measures 
PES Payment for Ecosystem Services 
PoMs Programme of Measures 
RBMP River Basin Management Plan 
TEEB The Economics of Ecosystems and Biodiversity 
WFD Water Framework Directive

Summary 
Abstract 
Ecosystem Services (ES) are the contributions which ecosystems make 
to human well -being. Ecosystem services can be mapped and assessed 
consistently within an ES framework, building on the understanding of 
the link between ecosystems and human well -being . This project aims to 
explore the use and usefulness of the ES framework in freshwater ma n-
agement, particularly water management according to the Water 
Framework Directive (WFD) in the Nordic countries by providing exa m-
ples. The examples provided in this report illustrate that the ES fram e-
work is used increasingly in Nordic aquatic management, but that rel a-
tively few studies in the Nordic countries value ecosystem services per 
se, while more value improved aquatic environment, including reaching 
good ecological status, according to the WFD . There are several exam-
ples of studies using various techniques to value ecosystem services 
related to the WFD in all the Nordic countries. Most of the examples i n-
volve listing, description and categorization of freshwater ecosystem 
services, while there are few comprehensive Cost Benefit Analyses and 
analyses of disproportionate costs that apply this framework.. There are 
several projects that study targeted and locally adapted instruments in 
the Nordic countries, mainly in the agricultural sector, and targeted and 
locally adapted instruments are increasingly used for ES management. 
Local adaption and use of the ES fram ework is emphasized, however, the 
link between improved ES flows and the economic mechanisms and size 
of payments is often indirect. More knowledge about ES and the value of 
ES for freshwater system management is still needed. The examples and 
the discussi on in this report demonstrate that the ES framework may be 
useful in Nordic water resource management, including in the impl e-
mentation of the WFD.

14 Ecosystem Services 
Background and motivation 
Ecosystem Services (ES) are the contributions that ecosystems make to 
human well-being. By different classification schemes ecosystem se r-
vices can be mapped and assessed consistently within an ES framework, 
building on the understanding of the link between ecosystems and h u-
man well -being . 
In the project VALUESHEDS (“Valuation of Eco system Services from 
Nordic Watershe ds” by Barton et al . 2012) and several other projects 
concerning ecosystem services in the Nordic countries, emphasis has 
been on describing and mapping the ecosystem services provided by 
different ecosystems. Now there is a need to further explore how to ap-
ply the concept and valuation of ecosystem services in practical water 
resources management. 
The ES framework is not a part of the Water Framework Directive 
(WFD). When discussing ecosystem services in freshwater syst ems, howev-
er, it may be appropriate to relate to the WFD, which is one of the key pillars 
of water management in all the Nordic countries. Hence, a useful next step 
for considering ecosystem services in freshwater is to explore what the role 
of the ES fram ework may be for different water management tasks in ge n-
eral, and more specifically according to the WFD. 
Project goals 
This project aims to explore the use and usefulness of the ES framework 
in freshwater management in the Nordic countries, addressing fou r re-
lated topics in particular: 
 
• Ways and methods for using the ES framework in assessing the 
benefits of ecological improvements in water courses . 
• Ways and methods for assessing costs, particularly what the WFD 
calls disproportionate costs, of improvement measures . 
• How the ES framework might contribute to developing targeted and 
locally adapted instrument mixes at the level of each river 
basin/water region . 
• Possible use of Payment for Ecosystem Services (PES) as an 
instrument for targeted freshwater manag ement.

Ecosystem Services 15 
Our approach 
These four key topics, being the foci of this report, have to some extent 
been described and discussed before in a WFD context. The main contr i-
bution of this report is to provide examples on how the ES framework 
has been used in a Nordi c WFD-context. While the VALUESHEDS report 
(Barton et al. 2012) mainly discussed basic methodological and principal 
issues, this report will focus on the practical issues and provide exa m-
ples. We will not provide a complete overview of Nordic studies of ec o-
system services, or valuation of ecosystem services, as such an overview 
was given in Barton et al . (2012). The approach in this report is to pick 
examples in order to demonstrate uses in different countries and with 
different purposes, hoping that they may inspire and potentially be us e-
ful for managers in the Nordic countries. 
Ecosystem Services, Payment for Ecosystem Services 
and the Water Framework Directive 
The ES framework has received much attention and substantial work is 
currently underway to develop this framework further and to impl e-
ment it in practical management. The ES framework can be used to map 
and measure the value of the changes in supporting, provisioning, reg u-
lating and cultural services, and the trade- offs between these. 
The Water Fram ework Directive (WFD) is the main Directive regula t-
ing the quality and the use of freshwater as well as coastal waters in the 
EU -countries, and Norway and Iceland have adopted the requirement in 
the Directive as well. The aim of the WFD is to maintain and improve the aquatic enviro n-
ment, with specific emphasis on the ecological and physical -chemical qua l-
ity of the water bodies concerned in order to obtain good ecological status 
(GES), and good ecological potential for those water bodies that are class i-
fied as modified. The main areas where economic analysis in the WFD can 
be linked to the ES framework are the required r iver basin characteriza-
tion in the WFD (Article 5), the use of water pricing and cost recovery 
(Article 9), the assessment of disproportionate costs (Article 4), and fina l-
ly the requirement for identification and implementation of cost -effective 
combinations of measures to achieve good ecological status of water bod-
ies as a part of the Program of Measures (PoMs) (Article 11).

16 Ecosystem Services 	
Water services are defined as part of the WFDs article 2(38) (“ Def-
initions ”): 
“Water services means all services which provide, for households, public inst i-
tutions or any economic activity: (a) abstraction, impoundment, storage, trea t-
ment and distribution of surface water or groundwater, (b) waste -water colle c-
tion and treatment facilities which subsequently discharge into surface water .” 
EU commission, 2000 	
It is clear that the ES concept and framework has a broader definition of 
services than the WFD. Still, the ES framework can be used in analyses 
which are part of the implementation of the WFD . 
The primary suggestion from this report is that the use of the ES 
framework can be very helpful to assess and illustrate how goods and 
services are affected by implementation of the WFD, and the trade -offs 
between different goods and services. In particular, it can illuminate 
how different water policy implementation strategies might lead to di f-
ferent results for the provision of ecosystem services, and hence dem on-
strate differences between the total benefits of different implementation 
strategies and the distribution of benefits between different users or 
beneficiaries across space and time. 
The ES framework offers a more thorough way to assess benefits of 
posit ive environmental changes in a complex ecological system. It can 
help improve the evaluation methodology of disproportionate costs in 
the WFD. Furthermore, the ES services framework can be used to assist 
the analysis of the Programme of Measures and the co st-effectiveness of 
the measures. 
The ES framework is one of the cornerstones in a number of econo m-
ic policy instruments relating to water pollution, comprising both volun-
tary and mandatory instruments. The voluntary policy instrument PES is 
based on a pay ment made for the delivery of ecosystem service(s). W a-
ter quality cap- and-trading is an example of a mandatory regulatory 
instrument which is also based on the ecosystem services concept, 
where ecosystem based quotas for e.g. nutrient loads are traded b e-
tw een polluters. PES schemes that target water quality pollution are 
already in use in the Nordic countries and Europe. These PES schemes 
are not initiated because of the WFD, but are typically firmly established 
in the Common Agricultural Policy (CAP) of the EU, in drinking water 
policies (targeted drinking water protection) and aquifer replenishment. 
Nevertheless, these economic policy instruments contribute significantly 
to meeting the obligations under the WFD and may have the potential to 
play a larger r ole for the WFD than they do today. Common for policy

Ecosystem Services 17 
instruments aiming at improving water quality is the growing recogn i-
tion that they need to be adapted to local conditions, since both costs 
and benefits (ecosystem services) differ substantially between areas. 
Use of the ES framework to describe and value 
benefits of improved ecological status in water 
The necessary steps for benefit assessment of water status improv e-
ments based on the ES framework are identification, quantification and 
valuation. Identi fication of ecosystem services can be done, and is done, 
on different scales (water body, river basin, country, region) depending 
on the purpose. In some studies the identification and valuation is ca r-
ried out with focus on one or a few selected ecosystem services. In a 
WFD context the most interesting question is how the benefits from all 
ecosystem services are changed (enhanced) when reaching the goal of 
good ecological status. 
The included examples show that it is demanding to identify, and par-
ticularly to quantify and, when relevant, value in monetary terms the 
benefits of reaching good ecological status. 
There are many interesting examples of the use of the ES framework 
in order to identify, quantify and value the benefits provided by freshw a-
ter in general, and the improvement of freshwater conditions (ecological 
and chemical status in WFD terms) in particular, across the Nordic cou n-
tries. Most of the studies and reports so far do not, or only to a minor 
extent, take into account the need to consider tra de-offs, or double 
counting. In the ecosystem services literature there is an on -going di s-
cussion of these issues. Probably, the issues of concern will be taken 
more into account as the framework is more commonly applied. 
The ES framework can be a tool for systematic identification of ben e-
fits and to investigate the connection between ecological changes and 
welfare gains, and the examples show that the framework is coming into 
use across the Nordic countries. However, this framework is clearly no 
“ quick fix ”. Much work is still needed on all aspects of identifying, qua n-
tifying, mapping and not at least valuing) ecosystem services (by mon e-
tary and non -monetary approaches), both with respect to the ecological 
underpinnings and the economic methodology.

18 Ecosystem Services 
Assessm ent of disproportionate costs 
There are relatively few examples of Cost Benefit Analysis (CBA) in the 
context of the Water Framework Directive, and even fewer where the ES 
framework is used for benefit assessment. This is the case in Europe, as 
well as in the Nordic countries. 
Martin -Ortega (2012) in her paper on economic perspectives and 
po licy applications in the implementation of the WFD concludes that 
“… while CEA [Cost Effectiveness Analysis; authors note] has been wid e-
ly adopted by most national gui delines in Europe, and the estimation of 
the environmental benefits has received a significant attention from the 
literature, the way these two should be joined up in a CBA has received 
much less attention”. 
We could add that even if the benefits are esti mated, the ES frame-
work is not commonly used. For example, some studies value “good ec o-
logical status”, which is the aim of the WFD. Still, it can be difficult to 
retrieve information about the value of the specific ecosystem services, 
like recreation, fisheries and fish habitats etc., from these studies. There are some examples though, mainly used as screening proc e-
dures, on national, regional and local (water body) levels, where the ES 
framework is used in evaluation of disproportionate costs. This is ex em-
plified in Jensen et al. (2013) who use information on the values of the 
ecosystem services included in the Aquamoney study, i.e. the economic 
valuation results of water quality and ecological improvements in Odense 
river basin, in a benefit transfer	
1 to other Danish water bodies. The benefit 
transfer results by river basins are subsequently used in a cost -benefit 
analysis for the WFD implementation in Denmark. The CBA is used as a 
conservative screening of where costs appear to be disproportionate, i.e. 
exceed the benefits provided by these ecosystem improvements. Much of 
the same procedure and framework is used on the local water body scale 
in two rivers in urban Oslo as a screening procedure to evaluate benefits 
and potentially disproportional costs (Ma gnussen et al. 2014). 
The ES framework is seen as useful, because it helps provide a sy s-
tematic and comprehensive picture of all benefits (valued in monetary 
terms, quantified or qualitatively described) which is necessary to a s-
sess benefits of the improve ments in water status. The conclusion in 	
────────────────────────── 
1 Transfer of benefit estimates from one location where a valuation study has been carried out to another 
place of study where no valuation study exists.

Ecosystem Services 19 
Jensen et al. (2013) is, however, that a more comprehensive application 
of the ES framework should include more services into the assessment 
of those areas where the screening indicates that the costs exceed the 
ben efits, because not all affected ecosystem services were valued in the 
primary study. This is an area where more work is needed and probably 
will be carried out in the coming years. 
Locally adapted instruments, including PES, for 
enhanced provision of ecosystem services 
There are a number of examples and lessons of locally adapted or tar-
geted policy instruments that contribute to meeting WFD objectives and 
targets. Some of the examples are applied in practice and show results 
whereas other examples represent trends, recommendations, pilot stu d-
ies or on -going research. PES schemes vary in the degree to which they 
are locally adapted to the circumstances and characteristics of land 
owners and/or physical and biological conditions of catchment areas. 
Mixed inst ruments are frequently used in the Nordic countries (for 
example in agriculture), however, most of the mixed instruments used 
are general and not locally adapted. There is therefore a substantial p o-
tential for more targeted adaption, differentiated to loca l conditions for 
example creating or restoring wetlands. The examples we present focus 
on market -based policies and frameworks for managing non -point poll u-
tion from land use (primarily) in agriculture because associated pro b-
lems and examples are found rele vant in the Nordic context. 
Non -point pollution is difficult to control in practice, in particular 
when using uniform instruments that ignore differences in soil retention 
capacities, farm typologies and costs as well as farmer characteristics. 
This so -ca lled wicked problem requires a mix of instruments and 
measures that are adapted to local conditions as well as the involvement 
of a mix of stakeholders. The three examples of comprehensive water 
quality management programmes at watershed levels from Morsa in 
Norway, Munich in Germany and Catskill Mountains in the State of New 
York, USA, represent programmes that appear to produce significant and 
positive results for water quality within relatively few years using the ES 
framework and to a large extent PES. The motivation behind the Catskill 
Mountains case described in literature has been contested, however. 
Common for the programmes is locally adapted measures and instr u-
ments, some voluntary and others mandatory; an appropriate mix of

20 Ecosystem Services 
different policies and the active involvement and engagement of land 
owners and households. 
The idea of developing locally adapted PES instruments at the catc h-
ment level was also part of pilot projects in Denmark to look at how 
farmers could enter into contracts with towns and cities to provide ec o-
system services on their land that would regulate excess water and 
avoid inundations in the built environment. It is also used in a proposed 
regulatory approach for targeted regulation of nutrient reductions in 
Denmark, where the nutrient management will be differentiated accor d-
ing to the resilience of the agricultural soils, the retention capacity (i.e. 
the regulating ecosystem service) and the effect on the ecosystem se r-
vices of the water body (Kjær, 2014). Wetland PES schemes, which have 
a direct relevance to the WFD, are found in the three Nordic EU member 
state countries, co -financed through the second Pillar of the EU Common 
Agricultural Policy (CAP). Whereas the measure and objectives are 
larg ely similar across the countries, the payment levels and conditions in 
the contracts differ. 
Water quality trading does not currently exist in the Nordic countries 
or in the EU, but could in principle be established as a measure at the river 
basin level as a cost -effective way of reducing emissions. The EU Commi s-
sion proposed in the Communication “ A Blueprint to safeguard Europe’s 
water resources ”	
2 to develop Common Implementation Strategies (CIS) 
Guidance on trading schemes by 2014. Another example, outside the EU, 
include the nitrogen sou rcing and trading in the lake Taupo catchment in 
New Zealand that aims at maintaining current good water quality, at risk 
from intensified agriculture and expanding urban areas. According to 
Stanton et al. (2010) there are currently 66 water quality trading pr o-
grammes in the US, four in Australia and one in each of New Zealand and 
Canada. Voluntary off -sets of nutrient loads to recipients have been a t-
tempted in Sweden, and a full -scale pilot in Denmark has recently been 
carried out, indicating that compensa tory mussel farming can be both an 
environmentally and economically efficient and effective measure. 
Generally, when targeting economic policy instrument to catchment 
or even sub -catchment levels the challenge becomes striking the right 
balance between policies and measures that make sense locally while 
keeping transaction costs down in relation to management, coordination 
and control of both measures and policies. 	
────────────────────────── 
2 (COM (2012) 673) .

Ecosystem Services 21 
Conclusion 
There are several examples of the use of the ES framework in WFD -
related studies in all the Nordic countries. Most of the examples involve 
identification/listing, description and categorization of freshwater ec o-
system services, while there are relatively few comprehensive CBAs and 
analyses of disproportionate costs that use this framew ork. 
Relatively few studies in the Nordic countries value ecosystem se r-
vices per se, while there are some more that value improved water env i-
ronment, including reaching good ecological status. Apart from the A q-
uamoney study described in VALUESHEDS (the Mor sa and Odense stud-
ies) there are a couple of new Finnish studies that value improved fresh 
water status according to the objectives of the WFD. These do not use 
the ES framework per se, but the improvement in water status can be 
linked to affected ecosystem services. Benefit transfer is, when pe r-
formed, frequently used to value improved water status, and there exist 
a number of examples that transfer benefits within Denmark, from 
Denmark and Norway to Sweden, from one river in Oslo to other rivers 
in Oslo e tc. However, there is a shortage of relevant primary studies to 
transfer from, and particularly there is a lack of good primary valuation 
studies which use the change in water status as their point of departure 
to elicit which ecosystem services are affect ed and to what extent. 
Several studies, pilot projects and full scale projects use targeted and lo-
cally adapted instruments in the Nordic countries, mainly applied to the 
agricultural sector. In many of the studies the use of the ES framework is 
emphasize d. However, the direct link between improved ecosystem se r-
vices, the economic mechanisms and size of payment may not be so direct. 
One will need to know even more about the ecosystem services and the 
value of ecosystem services in order to target these ins truments further. 
Still, there is a growing awareness that water pollution instruments need to 
be locally adapted and that the ES framework can be of great use. 
It is perhaps not surprising that it takes some time to incorporate the ES 
framework in actual management of fresh water resources, and that the 
more economic parts of the framework, valuation in monetary terms and 
uses in CBA, take more time than the rest. The notion of ecosystem services 
has been around for a while, however it was not until the T EEB project was 
launched from 2008 and onwards that the foundation for the more econom-
ic and practical uses of the framework was developed. It does take time to 
integrate new ways of thinking into public resource management. However, 
much has been done, an d there is much ongoing work in this field in the 
Nordic countries, as the examples in this report fully illustrate.

1. Introduction 
1.1 Background and motivation 
With ecosystem services (ES) we mean the benefits – goods and services 
– we receive from ecosystems. Water ecosystems provide for example 
drinking water and nutrition in the form of fish and shellfish, and they 
provide basis for recreation like swimming and angling. 
In the project VALUESHEDS (“Valuation of Ecosystem Services from 
Nordic Watersheds ” by Barton, Lindhjem, Magnussen and Holen 2012) 
and several other projects concerning ecosystem services (ES) in the 
Nordic countries, emphasis has been on describing and mapping the 
ecosystem services different ecosystems provide (e.g. watersheds in 
VALUESHEDS; freshwater ecosystem services in Maes et al . 2012; or all 
ecosystems in the Nordic TEEB	
3 (Kettunen et al. 2013) and the TEEBS 
for separate countries (NOU 2013:10 for Norway, SOU 2013:68 for Sw e-
den, the ongoing Finnish and Dani sh processes). This work is important 
and necessary as a starting point for describing and demonstrating the 
values associated with different ecosystems. Currently there is a need to further explore the question of how to i n-
tegrate and use lessons from wo rk on the concept and valuation of ec o-
system services in practical management, and how to integrate this in an 
overall framework of ecosystem management, e.g. related to the impl e-
mentation of the European Water Framework Directive (WFD). For w a-
ter manageme nt all the Nordic countries are currently implementing the 
WFD, as this EU directive is also made part of the European Economic 
Agreement for Norway and Iceland. The ES Framework	
4 is not me n-
tioned in the WFD, but when discussing ecosystem services in fresh wa-
ter, however, it may be appropriate to relate to the WFD. Hence, a useful 	
────────────────────────── 
3 TEEB – The Economics of Ecosystems and Biodiversity is described in chapter 2.1. 4 With the ES Framework we mean an analytical framework where “Ecosystem Services are derived from ec o-
system functions and represent the realized flow of services for which t here is demand. For the purpose of this 
framework, ecosystem services also encompass the goods derived from ecosystems. People benefit from ecosy s-
tems (goods and services). These benefits are, among others, nutrition, access to clean air and water, health, 
safety, and enjoyment and they affect (increase) human wellbeing which is the key target of managing the socio -
economic systems” (COM 2013: Mapping and Assessment of Ecosystems and their Services).

24 Ecosystem Services 
next step for considering ecosystem services in freshwater seems to be 
to explore more in depth what the role of the ecosystem services fram e-
work may be for water quality management and administration, espe-
cially connected to the requirements for economic information connect-
ed to the implementation of the WFD, and this is one of the main pu r-
poses of this project. 
1.2 Project goals 
This project aims to explore the use and usefulness of t he ecosystem 
services framework in freshwater management in the Nordic countries, 
addressing four related topics in particular: 
 
• ways and methods for using ecosystem services in assessing the 
benefits of ecological improvements in water courses 
• ways and methods for assessing costs, particularly what the WFD 
calls disproportionate costs of improvement measures 
• how the ecosystem services framework might contribute to develop 
targeted and locally adapted instrument mixes at the level of each 
river basin/water region 
• possible use of Payment for Ecosystem Services (PES) as an 
instrument for targeted freshwater management. 
1.3 Our approach and outline of the report 
The key topics of this report; benefits of improved freshwater quality, 
disproportionate costs, targeted and local instrument mix and payment 
for ecosystem services have to some extent been described and di s-
cussed before in a Water Framework Directive (WFD) context. The main 
contribution of this report is to explore how the ecosystem services 
framework may be used in this respect and mainly in a Nordic context. 
While the VALUESHEDS report mainly discussed basic methodological 
and principal issues, this report focuses on the practical issues and pr o-
vides examples. Examples from different Nordic countries, and different 
uses, will be the main contribution of this report. We will not provide a 
complete overview of studies of ecosystem services, or valuation of ec o-
system services, as such an overview was given in Barton et al . (2012). 
We have picked examples in order to demonstrate uses in different

Ecosystem Services 25 
countries and with different purposes, hoping that they may inspire and 
potentially be useful in others’ water management work. 
Chapter 2 gives an introduction to the WFD and the ecosystem se r-
vices framework, and some of the main tasks in WFD where economic 
benefits and costs need to be assessed, and where we believe the ecosy s-
tem services framework may be of added value for this assessment. We 
will also introduce the payment for ecosystem services (PES) framework 
and locally adapted measures/instruments and how the ecosystem se r-
vices framework can be helpful in this respect. The main part of the r e-
port will present and discuss examples in order to illustrate how the 
ecosystem services framework can be used to describe and value i m-
proved environmental status in fresh water, and discusses topics which 
are important for how this can be done (chapter 3). Chapter 4 in a sim i-
lar way provides examples of how disproportionate costs may be as-
sessed using an ES framework and chapter 5 present examples of PES 
and locally adapted measures/instruments. 
Summary and final conclusions are presented in the summary and 
conclusions chapter in English at the beginning of the report, and in 
Norwegian at the end of the report.

2. Introduction to Ecosystem 
Services, Payment for 
Ecosystem Services and 
implementation of the Water 
Framework Directive 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 In this chapter we : 
 
• 	Present background for the presentations and discussions of examples in the 
following chapters. 	
• 	Introduce the ES framework and describes the use of this framework in the 
Nordic countries (section 2.1). 	
• 	Give an overview and example of classification of ecosystem services in 
freshwater (section 2.2). 	
• 	Discuss the potential links between the Water Framework Directive and the 
ecosystem services framework, where specific emphasis is given to how the 
ecosystem services concepts and framework can be used to support the 
main economic tasks in the water management policies, and how the ec o-
system servi	
ces framework might be helpful in situations where economic 	
benefits and costs need to be assessed (section 2.3). 	
• 	Discuss how the ecosystem services framework might be linked to economic 
instruments for locally targeted measures (PES and water quality tra ding) 
(section 2.4). 	
• 	Discuss and conclude regarding findings and what we can learn from this 
chapter (section 2.5).

28 Ecosystem Services 
2.1 Introduction to the ES framework and the use of 
this framework in EU and the Nordic Countries 
The term ecosystem services has been used since the early 1980s (see 
e.g. Ehrlich and Money, 1983; Erlich and Ehrlich 1987) to describe the 
relationship between nature (ecosystems) and goods and services that 
people appreciate and which are essential for our continued well -being 
and welfare (NOU 2013). The term had a revival in the Millennium Ec o-
system Assessment (MA 2005) where the concept is central, and since 
then the term has been in much use. The Economics of Ecosystems and 
Biodiversity (TEEB) project has further spread the ecosystem services 
framework to a broader use during the last few years. TEEB emphasises 
the impor tance of asking questions like “ which ecosystem services are 
central to my local/regional society and economy? Who depends on 
these services? Which services are at risk? How will a policy action affect 
these services? ” (TEEB 2012, p. 5). 
These questions are also important in the context of Nordic freshw a-
ter ecosystems, with numerous different users, services and policies 
influencing the quality and use of them – on the one hand the Water 
Framework Directive and national water policies, an d on the other hand 
the Common Agricultural Policy (the CAP) and national agricultural pol i-
cies. We will take these potential conflicts into consideration in the ana l-
ysis o f the provision and management of freshwater ecosystem services 
in the forthcoming chapters in this report. For further general and basic 
description and definition of ecosystem services we refer to the MA and 
TEEB publications (see e.g. Millennium Ecosyst em Assessment 2005; 
TEEB 2012) , and for a general description of ecosystem services in a 
watershed framework in a Nordic context we refer to the “VALUESHEDS 
report” (Barton et al ., 2012). 
Further refinement of the relationship between ecosystems and the 
s ocio- economic systems has been carried out for instance as part of the 
Analytical Framework for Mapping and Assessment of Ecosystems and 
their Services developed under MAES (Mapping and Assessment of Ec o-
systems and their Services (COM 2013, further develop ed in COM 2014.) 
The MAES group defines the ES framework as an analytical fram e-
work where : 	
“Ecosystem functions are defined as the capacity or the potential to deliver 
ecosystem services. Ecosystem services are, in turn, derived from ecosystem 
functions and represent the realized flow of services for which there is d e-
mand. For the purpose of this framework, ecosystem services also encompass 
the goods derived from ecosystems18. People benefit from ecosystem (goods

Ecosystem Services 29 	
and) services. These benefits are, among others, nutrition, access to clean air 
and water, health, safety, and enjoyment and they affect (increase) human 
wellbeing which is the key target of managing the socio -economic systems .” 
European Union, 2013, p. 16 	
This is also how we will use the term “ES framework” in this report. 
MAES’ framework figure for ecosystem services is used here as an i l-
lustration of the relationship between ecosystems and their functions 
and the ecosystem services these ecosystems provide for the socio -
economic systems (Europe an Union, 2013). 
Important to notice in the figure is that the ecosystems provide se r-
vices to the socio -economic system. But it is use and management that 
change these ecosystem services into benefits for people and contribute 
to human well -being and welf are. Another important issue to note from 
the figure is that most often capital inputs and labour are needed in ad-
dition to the ecosystem services in order to make the ecosystem services 
useful for us. What we aim at valuing in this system are the benefits we 
receive, not the ecosystem services themselves. It is also noteworthy 
that the socio -economic systems in term influence the ecosystems. 
Figure 2.1: MAES’ framework for ecosystem services	5 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
────────────────────────── 
5 http://biodiversity.europa.eu/maes

30 Ecosystem Services 
2.1.1 Use of the ecosystem services framework in the 
Nordic Countries 
The TEEB project in particular has launched a considerable amount or work 
in many countries related to assessment of ecosystem services in countries, 
in regions, from specific ecosystems etc. Kettunen et al. (2013) surveyed 
Nordic ecosystem services, including ecosystem services from freshwater 
and suggest ways of doing this on this scale. Examples from this assessment 
as well as for the national assessments described below will be presented in 
the following chapters of the report. 
A Finnish study , “TEEB Finland – National Assessment of the Econo m-
ics of Ecosystem Services in Finland” has been launched in 2014 with the 
aim to “ improve the knowledge and understanding of the concepts of 
ecosystem services, as well as the ways different benefits provided by 
ecosystems – including the underpinning functions of these benefits – 
can be measured and valued .”	
6 The description of the TEEB Finland e m-
phasizes the need to expand the attention of different land- use related 
ecosystem services beyond the provisioning services. The study aims to 
identify key ecosystem services, methods to assess quality and economic 
importance, and to make them useful for national and local management 
and governance. The work measuring the economic importance will 
howe ver be at a preliminary level. TEEB Finland also aims to support a 
number of ongoing national and regional policy processes, e.g. the d e-
velopment of a national framework for assessing and monitoring ecosy s-
tem services and developing indicators (e.g. the FE SSI project producing 
national ecosystem service indicators); the development of green eco n-
omy, sustainable energy production and consumption etc. by the use of 
national policies and policy instruments. The final results of TEEB Fi n-
land are foreseen to be published at the end of 2014. 
The Norwegian study: The Norwegian government appointed an e x-
pert commission in October 2011 “to assess and study the value of ec o-
system services .” The Commission was asked, among other things, to 
describe the consequences for society of the degradation of ecosystem 
services, to identify how relevant knowledge can best be communicated 
to decision makers, and to make recommendations about how greater 
consideration can be given to ecosystem services in private and public 
decision making. On 29 th August 2013, the Commission submitted its 
recommendations to the Minister of the Environment in the form of a 	
────────────────────────── 
6 http://www. es- partnership.org/esp/81104/9/0/50

Ecosystem Services 31 
Norwegian Official Report entitled NOU 2013: 10 Natural benefits – on 
the values of ecosystem services (Naturens goder – om verdier av økosy s-
temtjenester) . In September 2013 the report was distributed for a broad 
public consultation among affected stakeholders, including the author i-
ties, business and industry, academic communities and NGOs. After this 
consultation, the Government wi ll consider how to follow up the work .	
7 
The Swedish Study : The Swedish Government decided 17th January 
2013 to give a mandate to a special investigation in order to analyse 
interventions and suggest methods and efforts to improve the valuation 
of ecosystem services and to improve the knowledge about the ecosy s-
tem services value for society (Dir 2013:4). The report should also su g-
gest interventions and measures suitable for raising the awareness in 
society of the importance of biodiversity and ecosystem services for 
integrating biodiversity and ecosystem services in decision making. This 
report, called “ Demonstrating the values of Ecosystem Services – 
Measures to improved welfare through biodiversity and Ecosystem Se r-
vices ” (SOU 2013:68; Synliggöra värdet av ekosystemtjänster – Åtgärder 
för välfärd genom biologisk mångfald och ekosystemtjänster) was fi n-
ished 15 th October 2013.	
8 
In addition, Statistics Sweden launched a report called “Mapping of 
data sources for quantifying ecosystem services” (MIR 2013:2). In this 
report the main ecosystems and their ecosystem services, including 
fresh water, are considered, and the possible meth ods and estimates for 
quantifying and valuing the different ecosystem services are assessed. 
The Danish Study : The Danish Ministry of Environment has launched 
a short term study with the aim to describe and map Danish ecosystem 
services (Termansen et al. 2014). The background of the study is that 
important characteristics of environmental problems make the ecosy s-
tem services framework promising; e.g. the conflicting interests related 
to land -use decisions and the instruments used to regulate land- use. The 
aim of the project is to provide an overview of data sources, data and 
maps that can be used for ecosystem services mapping in Denmark, 
building upon existing and present mapping exercise of ecosystem se r-
vices and biodiversity. The project will consider re levant indicators to 
ensure that present and future mapping is performed so as to ensure the 
possibility for valuation of the ecosystem services using the mapping 	
────────────────────────── 
7 For more information about NOU 2013:10; the commission’s mandate, recommendations and work see 
www.regjeringen.no/okosystemtjenester 
8 For more information about SOU 2013:68, see: www.regeringen.se/content/1/c6/22/61/92/97321dd6.pdf

32 Ecosystem Services 
exercise. A system of green, yellow and red lights will be used to indicate 
whether the ecosystem service is mapped (green light), whether it is not 
possible to use the mapping for valuing the ecosystem services (yellow 
light), and a red coloured light that indicate that the services cannot be 
mapped. The study will build on existing data and mapping exercises, 
but also on existing and previous projects relevant for the ecosystem 
services assessment. 
2.1.2 Ecosystem Services Classification 
Ecosystem services are usually categorised into provisioning, regulating, 
cultural and supporting, following the ma in classifications in the Millennium 
Ecosystem Assessment	
9 (MA), while the classifications in The Economics of 
Ecosystems and Biodiversity	
10 (TEEB), and Common International Classif i-
cation of Ecosystem Services (CICES)	
11 categorise the services into prov i-
sio ning, regulating and cultural services. There are also numerous other 
classifications used in specific reports, for specific purposes etc. Most of 
these are slightly different, but closely related to the three mentioned above. 
We will not discuss different categorisations in detail here, as we believe the 
choice of classification is not crucial for ecosystem services considerations 
related to water management. We use the CICES categorisation (see table 
2.1 in section 2.2.) as our point of departure in the g eneral discussions and 
analyses throughout the report. However, since we will also discuss diffe r-
ent examples from different countries, the ecosystem services categoris a-
tion will vary somewhat across examples. 	
2.2 Overview of Ecosystem Services in freshwater 
Based on the general definition and categorisation of ecosystem services 
and the known ecosystems and ecosystem functions in freshw a-
ter/watersheds, one can derive the potential freshwater ES. The illustration in Box 2.1 represents a listing of “typical» ec osystem 
services from freshwater in Nordic countries. 
────────────────────────── 
9 “The Millennium Ecosy stem Assessment” (MA) from 2005 describes and classify Ecosystem Services and 
make an assessment of status and trends in the Ecosystems worldwide. 
10 The Economics of Ecosystems and Biodiversity (TEEB), was initiated in 2007 by the leaders of the G8 -
countries . TEEB’s purpose is to increase the understanding for “ the true economic value of the benefits we 
receive from nature.” 
11 http://cices.eu

Ecosystem Services 33 
Box 2.1
: Ecosystem Services in Nordic freshwater 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COWI (2014) gives an overview of ecosystem services which are rel e-
vant for WFD using CICES as their underlying framework for listing the 
potential ecosystem services we receive from freshwater (cf. section 2.3 
in this chapter for a further discussion of the WFD). 
Table 2.1 shows a detailed version of the classification of eco system 
services in fresh water according to CICES for the biotic resources. All 
the ecosystem services in this table may potentially be relevant for a s-
sessing benefits from water status improvements according to WFD. 
 
 
 
 
 
 
 
 
 
 
 
 
Ecosystem services freshwater 
Freshwater 	Provisioning 	Regulating 	Cultural 	
Lakes Fish, drinking water, 
cooling water, water 
for agriculture, 
transport Retention and recircu-
lation of nutrients, 
carbon sequestration
 Recreation; bathing 
water, sailing, walking 
along the shoreline and 
on beaches, tourism, 
angling/recreational 
fisheries
 
 
Waterways, rivers Fish, drinking water, 
cooling water, water 
for agriculture, 
transport Retention and recircu-
lation of nutrients, 
carbon sequestration
 Recreation; bathing 
water, sailing, walking 
along the riverside, 
tourism, angling/
 
recreational fisheries 
 
Wetlands Can be used for cattle 
(grazing) Retention and re
circu-
lation of nutrients, 
carbon sequestration Wildlife/Bird watching, 
hunting, picking mus
h-
rooms and berries, 
walking 
 
Groundwater Drinking water Retention No

34 Ecosystem Services 
Table 2.1 : Ecosystem servic es which may be relevant from water status improvements in freshwater 
– biotic 
Section 	Division 	Group 	Class 	
Provisioning 	Nutrition 	Biomass 	Algae and their outputs 	 	 	 	Aquatic animals and their outputs 	 	 	 	Plants and algae from in-situ aquaculture 	 	 	 	Animals from in-situ aquaculture 	 	 	Water 	Surface water for drinking 	 	 	Ground water for drinking 	 	 	Water for agriculture 	 	 	Process water for industry 	 	Materials 	Biomass 	Fibres and other materials from algae and animals for direct use or processing 	 	 	Materials from algae and seagrass for agricu l-tural use 	 	 	Water 	Surface water for non -drinking purposes 	 	 	 	Ground water for non -drinking purposes 	 	Energy 	Bi omass -based energy sources 	Plant-based resources 	Regulation & 
Maintenance Mediation of waste, 
toxics and other 
nuisances
 Mediation by biota
 Bio-remediation by micro -organisms, algae, 
plants, and animals 
 
 
 Filtration/sequestration/storage/accumulation 
by micro-organisms, algae, plants, and animals 
 
 Mediation by 
ecosyst ems Filtration/sequestration/storage/accumulation 
by ecosyst ems
 
 
 Dilution by atmosphere, freshwater and 
marine ecosystems 
 
 Mediation of flows Mass flows Mass stabilisation and control of erosion rates 
 
 Buffering and attenuation of mass flows 
 
 Liquid flows Hydrological cycle and water flow maintenance 
 
 Flood protection 
 
 Maintenance of 
physical, chemical, 
biological conditions Lifecycle maint
e-
nance, habitat and 
gene pool protection Maintaining nursery populations and habitats
 
 
 
 
 Sediment formation 
and composition Decomposition and fixing processes
 
 
 
 Water conditions Chemical condition of freshwaters

Ecosystem Services 35 
Section 	Division 	Group 	Class 	
 Chemical condition of salt waters 
 
 Atmospheric composi-
tion and climate 
regulation Global climate regulation by reduction of 
greenhouse gas concentrations in the atmos-
phere
 
 
 
Cultural Physical and intelle c-
tual interactions 
with biota, ecosy s-
tems, and land-
/sea scapes [env i-
ronmental settings] Physical and experie
n-
tial interactions Experi
ential use of aquatic plants and animals 
and land/seascapes in different environmental 
settings 
 
 
 
 
 Physical use of land/seascapes in different 
environmental settings 
 
 Intellectual and 
representative inter-
actions Scientific
 
 
 
 
 Educational 
 
 Heritage, cultural 
 
 Entertainment 
 
 Aesthetic 
 
 Spiritual, symbolic 
and other interac-
tions with biota, 
ecosyst ems, and 
land- /seascapes 
[environmental 
settings] Spiritual and/or 
emblematic
 Symbolic
 
 
 
 
 
 
 
 
 Other cultural outputs Existence 
 
 Bequest 
Source: Modif ied from COWI (2014). 
2.3 The links between the Water Framework 
Directive (WFD) and the Ecosystem Services (ES) 
framework 
The Water Framework Directive (WFD) is the main directive regulating 
the quality and the use of freshwater as well as coastal waters in EU -
countries, and as mentioned the Nordic countries Norway and Iceland 
have adopted the requirement in the Directive as well. The ES fram e-
work can be used in the implementation of the WFD, and in this section 
the mai n claims for economic assessments in the WFD will be described 
along with a description of the ecosystem services framework and Pa y-

36 Ecosystem Services 
ment for Ecosystem Services (PES), with the aim to propose how this 
framework can be utilised for the WFD implementation with specific 
focus on freshwater management. 
This is not the first attempt to describe how the ecosystem services 
framework can be linked to the WFD – other studies are e.g. the 
ESAWADI project (Blancher et al . 2013) and the assessment made by 
COWI for the E U Commission (COWI 2014). Following Blancher et al . 
(2013) the use of the ecosystem services framework is of specific inte r-
est because of the requirement of stakeholder involvement in the WFD, 
and COWI (2014) also point at the ecosystem services framework for 
communication of the benefits of the directive. Furthermore COWI de-
scribes the ecosystem services framework’s advantages for the selection 
of measures in the WFD as it allows for consistent assessments of the co -
benefits delivered by a measure, and the ability to align the implement a-
tion of the WFD and the EU Biodiversity Strategy. 
Following the recommendations from the MAES group (Maes et al. 
2013; Maes et al. 2014) the primary suggestions from the present as-
sessment is that the use of the ecosystem services framework can be 
very helpful to assess and illustrate trade- offs between different goods 
and services, i.e. how different implementation strategies might lead to 
different results for the provision of ecosystem services, and hence also 
illustrate differences between implementation strategies when it comes 
to the total benefits (see box 2.2 defining the total benefits or the total 
value) of a strategy but also for the distribution of benefits between di f-
ferent users or beneficiaries.

Ecosystem Services 37 
Box 2.2
: Total Economic Value of an environmental change consists of several parts 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
2.3.1 Introduction to WFD and the ecosystem services 
framework 
Following Article 1 of the WFD the aim of the WFD is “ maintaining and im-
proving the aquatic environment in the Community. This purpose is prima r-
ily concerned with the quality of the waters concerned. Control of quantity 
is an ancillary element in securing good water quality and therefore 
measures on quantity, serving the objective of ensuring good quality, should 
also be established .“ The aim of the WFD is therefore to maintain and i m-
prove the aquatic environment in the EU, with specific emphasis on the 
quality of the waters conc erned. The general objective of the WFD is to 
achieve “good status” for all surface waters by 2015, where “good status” 
means both “good ecological status” and “good chemical status”.	
12 
Another aim of the WFD is to integrate water policies, and also to int e-
grate water policies with other policies. In the Article 1 the following is 	
────────────────────────── 
12 http://ec.europa.eu/environment/water/water- framework/objectives/status_en.htm 
Total Economic Value (TEV) include the following parts:	 	
 
• 	Use values 	include the value of using goods and services, and the use values 	
can be divided into direct, indirect and option values. 
- The direct use values we can derive from freshwater ecosystems co m-	
prise e.g. the value of fisheries and the fish resources, and other species 
with commercial value. The direct use values also include recreation 
services; e.g. bathing waters etc. 	
- The indirect use 	values include the utility related to e.g. the knowledge 	
and ability to see a river basin in good conditions with healthy functions 
and ecosystems. 	
- The option value 	is the value of having the possibility to use the services 	
and goods in the future. 	
• 	Non -us e values is the value of an ecosystem good and service that is not used – 
i.e. the value of knowing that the goods and services are protected and pr e-
served (existence value). The value can also be altruistic, i.e. the value o	f 	
knowing that other persons can obtain utility from these goods and services. 
The value for future generations can also be important (testamentary value).

38 Ecosystem Services 
mentioned: “Further integration of protection and sustainable management 
of water into other Community policy areas such as energy, transport, agr i-
culture, fisheries, regional poli cy and tourism is necessary. This Directive 
should provide a basis for a continued dialogue and for the development of 
strategies towards a further integration of policy areas. This Directive can 
also make an important contribution to other areas of cooper ation between 
Member States, inter alia , the European spatial development perspective 
(ESDP). Utilization of the ecosystem services framework is helpful for the 
assessments of trade -offs and barriers between freshwater ecosystem ser-
vices provision and other ecosystem services. 
“Water services” is an important notion in the WFD, as well as for the 
interpretation of how the ecosystem services framework potentially can 
be used in the implementation of the WFD. “Water services” in the WFD 
are defined as part of Article 2(38) ( “Definitions ”): 	
“Water services means all services which provide, for households, public inst i-
tutions or any economic activity: (a) abstraction, impoundment, storage, trea t-
ment and distribution of surface water or groundwater, (b) waste-water colle c-
tion and treatment facilities which subsequently discharge into surface water .” 
EU commission , 2000 	
According to the Article 9, member states shall account for the recovery of 
the costs of these water services. Article 9.1.states, that m ember states 
shall “take account of the principle of recovery of the costs of water se r-
vices, including environmental and resource costs”, and in 9.4 the D i-
rective states, that “member states shall not be in breach of this Directive 
if they decide, in accordance with established practices, not to apply the 
provisions of paragraph 1 (….) where this does not compromise the pu r-
poses and the achievement of the objectives of this Directive.” 
From these citations from the WFD it is clear that the ecosystem se r-
vi ces concept and framework has a broader definition of ecosystem ser-
vices than the WFD. The ecosystem services framework can however be 
used in analyses which are part of the implementation of the WFD where 
the WFD incorporates economic principles and econo mic tools into wa-
ter management and water policy. This overview illustrates that the WFD incorporation of economic 
principles and a number of economic tools into water management and 
water policy (cf. Martin -Ortega and Balana 2012) is important for the 
li nkages between the WFD and the ecosystem services framework. The 
main areas where economic analysis in the WFD can be linked to the 
ecosystem services framework are the required r iver basin characteriza-
tion in the WFD (Article 5), the use of water pricing and cost recovery

Ecosystem Services 39 
(Article 9), the assessment of disproportionate costs (Article 4), and 
finally the requirement for identification and implementation of cost -
effective Program of Measures (PoMs) (Article 11), see table 2.2. 
The ecosystem services framework can also be valuable for the non -
economic parts of the WFD, as description, quantification and spatial 
mapping of the freshwater ecosystem services, as well as the assessment 
and mapping of the status of these services might be used for the defin i-
tion of good ecological status as well as for the monitoring of the status. 
Table 2.2: Economic requirements of the WFD and the use of the ecosystem services framework 
WFD Article 	Requirement 	
Article 4: 
Environmental 
objectives The Member States shall implement the necessary mea sures to prevent deterioration 
of the status of all bodies of surface water to achieve Good Ecological Status (GES) of 
water bodies in EU countries as well as in Norway and Iceland preferably by 2015 and 
n
o later than 2027. 
Following the EU Commission (2013) the inter calibration exercise is used as a harm o-
nised framework to define GES. The inter calibration	
13 process involves harmonisation 
of the monitoring results from different countries so that similar ecological status of 
water bodies in different countries leads to an equal environmental quality evaluation 
for these bodies (Møller et al . 2014). The Member States are organised in Geograp h-
ical Inter -calibration Groups consisting of Member States sharing particular surface 
water body types, making the national results comparable. The common Environme n-
tal Quality Ratio (EQR) is used for the definition of the GES. 
Paragraph 4.4 of the WFD opens for exemptions from the GES target, extended dea d-
lines, or less stringent environmental objectives if achieving GES are considered dispr o-
portionately costly. The concept of disproportionate costs is only vaguely defined in the 
WFD. Two examples of interpretations are the welfare economic interpretation, where 
costs ca n be defined as disproportionate when they exceed the environmental benefits. 
General guidelines on how to perform the disproportionate cost analysis are available 
(Wateco 2003; European Commission 2009), and even though these guidelines are not 
very detai led and they do not suggest a practical procedure by which a country can carry 
out t hi s anal ysi s, t hey sugg est t hat judg ment of di sproporti onat e cost s coul d be based on 
an economic analysis of the costs and benefits of achieving GES (European commission 
20 09, Wateco 2003). Some studies have investigated how welfare economic cost -benefit 
analysis can be used for the assessment of disproportionate cost ( e.g . Bat eman et al . 
2006; Hanley and Black 2006; De Nocker et al . 2007; Lago et al. 2 01 0; M oli nos-Senant e et 
al . 2011; Kinnel et al. 2012; Vinten et al . 201 2). Ex ampl es i n a N ordic cont ext are Jensen 
et al . 2 013 ; Hol en and Mag nussen 2 01 1; Mag nussen and Hol en 2 01 1). 
 	
Article 5:	 	Charact eristics of 
the river basin 
district, review of 
the environmental 
impact of human 
activity and eco-
nomic analysis of 
water use 	Water quality and status depend on several water characteristics – i.e. chemical, 
physical, hydro morphological and biological conditions. Thi s means that measur e-
ment of water quality and status is directed against different pollutants and conditions 
depending on the water body observed. It also means that the relevant measure of 
quality varies between different types of water bodies. The typology developed for 
the WFD is useful, as the water bodies are cla ssified in terms of quality and status on a 
5 step scale from High to Bad (High, good, moderate, poor, bad) where this classific a-
tion can be tied back to the status of the specific physical and quality conditions of the 
specific water body. 
 
 
 	
────────────────────────── 
13 This is however not the case for heavily modified water bodies.

40 Ecosystem Services 
WFD Article 	Requirement 	
Article 9:	 	Recovery of costs 
for water services Each member state shall take account of the principle of recovery of
 the costs of 
water services, including environmental and resource cost s. The water services 
include all services (public or private) of abstraction, impoundment, st orage, trea t-
ment and distribution of surface water or groundwat er, along with wastewater 
collection and treatment facilities. Economic analysis of the environmental and 
resource cost s should be made and cost recovery should be in accordance with the 
polluter pays principle. 
 
Article 11: 
Programme of 
measures The aim of article 11 in the WFD is to identify cost
-effective programmes of mea sures 
(PoMs). Each member state shall ensure the establishment for each river basin di s-
trict, or for the part of an international river basin district within its territory, of a 
PoMs, taking account of the results of the analyses required under the above d e-
scribed Articles 4, 5 and 9. A central requirement is that the sel ection of PoMs should 
be based on a cost -effectiveness analysis (CEA) of abatement and mitigation 
measures. CEA aims at finding the combination of the least costly measures at river 
basin level that reach the goal of the WFD; these are then to be included in the PoMs 
in local river basin management plans. The mea sures should also safeg uard water 
quality in order to reduce the level of purification treatment required for the produ c-
tion of drinking water; i.e. safeguard this provisioning service. 
A large num ber of studi es have assessed cost -effectiveness of nutri ent reduction 
measures, including WFD measures. A few examples relevant in a Nordic cont ext 
compri se Barton et al. 2005; Barton et al . 2008; Brady 2003; Jacobsen 2007; Hasler 
1998; Elofsson 2012; Iho 2005. 
 
In the next section we present and discuss how the ecosystem services 
framework can be used for these tasks in the WFD, and vice versa – how 
the WFD implementation activities can be used for the assessment of 
ecosystem services. 
2.3.2 The use of the ecosystem services framework for the 
different steps in WFD 
We have described that the ecosystem services framework may be of use 
in several tasks connected to water management. The ecosystem se r-
vices framework is useful as a tool to capture and describe b enefits and 
possible co -benefits of achieving the objectives of the WFD, and thereby 
support the implementation of the WFD. 
It is clear that the ecosystem services framework can be used in rel a-
tion to the assessment of disproportionality of costs of imple menting the 
WFD objectives, as the ecosystem services approach can be used to i n-
clude the full range of benefits of water quality changes and of the 
measures implemented to obtain these, and also, as mentioned be used 
to describe and include non -quantifiab le benefits which is described as 
part of the assessment. The benefits to people from environmental i m-
provements include use and non- use values, see Box 2.2, and the listing 
of ecosystem services can be used as a way to identify benefits to diffe r-
ent groups of people, both use and non -use values. However, in order to 
be useful, we need to carefully identify the ecosystem services that will

Ecosystem Services 41 
be affected and the benefits they give to people, quantify them, and if 
possible value them. 
This benefit assessment m ay be performed at different scales – on a 
national level, on a river basin level, and on a water body level. And it 
may be used as a screening procedure (as in Jensen et al . 2013), or in a 
more detailed benefit cost analysis on water body level. Jensen et al . 
(2013) use Danish data to propose such a CBA -based, river basin level 
screening procedure as a first step to identify the river basins in a cou n-
try, here Denmark, where disproportionate costs are likely to occur. 
Jensen et al. (2013) propose that this screening can be used to identify 
where more comprehensive and costly assessments, e.g. of the full range 
of ecosystem services as inputs for more comprehensive CBAs, should be 
undertaken in order to assess disproportionality. Jensen et al . (2013) 
use an existing valuation study from Odense River Basin (Hasler et al. 
2010; Jørgensen et al . 2013; Bateman et al. 2011) and benefit transfer of 
these results to the other river basins to estimate the benefits of the 
WFD, and on the other hand existing cost asses sments (Jacobsen 2013) 
are used. Their conclusion is that if the welfare gain is clearly positive 
for the CBA in a given area it is likely that the costs do not exceed the 
benefits and achieving GES should not be claimed disproportionate, but 
if the welfar e gain is not clearly positive the potential for disproportion-
ality between costs and benefits should be further investigated. Jensen et 
al . (2013) do not explicitly discuss how to use the potential of using the 
ecosystem services framework for extending s uch CBAs. 
Another issue that needs to be dealt with in estimating the benefits 
from water quality improvements are trade -offs between different ec o-
system services. As discussed in TEEB (2010) and in Barton et al . (2012) 
the need for detail and carefulness with respect to scale, trade -offs, and 
the value of other inputs, differ with the intended use of the benefit e s-
timates. If the purpose is to demonstrate the values we receive from 
rivers, a more general, not so detailed assessment of the ecosystem ser-
vic es and their benefits to people might be appropriate. But if CBA is 
performed in order to consider whether the project is beneficial to soci e-
ty, or if costs are disproportionate, a more careful and detailed asses s-
ment is needed. If the value (priced or unp riced) of affected ecosystem 
services are to be part of a CBA we need the net value from ecosystem 
services improvements, and it means that we need to identify any other 
inputs (capital, labour etc.) used to measure the final benefits. 
The discussion above reveals that the ecosystem services framework 
can be used in many ways to guide the discussion and measurement of 
disproportionality.

42 Ecosystem Services 	
The ecosystem services framework can be used for defining good ec o-
logical status according to WFD if knowledge of the re lationships between 
the good ecological status and the services can be established. I.e. what are 
the ecosystem services of the different indicators for good ecological st a-
tus of the water? The ecosystem services framework can also be used for 
setting targ ets and objectives by integrating indicators for good quality of 
the goods and services and the ecosystem services framework. 
The ecosystem services framework can further be used for the choice 
of measures for the PoMs. Through the integration of the ecos ystem 
services framework into the assessment of the PoMs, the additional be n-
efits can be illustrated and taken into account in the choice of measures. 
The ecosystem services framework can be applied with and without 
valuation of the services so that non -qu antifiable services can be inclu d-
ed in the assessment and choice of PoMs. The implementation of some of the measures in the PoMS can pr o-
vide additional ecosystem goods and services, while others don’t. Exa m-
ples are creation of wetlands and buffer strips t hat, beside the regulating 
service of increa sing the nutrient retention and the transformation of 
nitrogen (N) to harmless nitrogen compounds (NO	
2), wetlands and buf f-
er zones can also be habitats for wild animals, flora and insects, and 
therefore improve b iodiversity compared to agricultural fields. Fu r-
thermore wetlands might be a measure to reduce floods in the cities by 
regulating the water flows. The conversion of arable land to permanent 
grasslands is a measure which can increase the carbon storage, i.e. imply 
a regulating service affecting climate change. In comparison a measure 
like nitrogen fertilizer reductions cause few indirect ecosystem services 
beyond the effects on the aquatic environment, and some reductions in 
energy use which might be relevant for the use of fossil energy. 
The objective of good ecological status can also be obtained by hydr o-
logical and other technical measures as planned in the current River 
Basin Management Plans (RBMP). One measure aims at changed 
maintenance of water ways by reduced removal of plant biomass from 
the bottom and edges. This measure will affect the retention of nutrients 
and improve the conditions for flora and fauna in the waterways. Anot h-
er measure is changing of the hydrological conditions in the creeks and 
waterways, by adding stone and gravel to the bottom that will improve 
the oxygen conditions at the bottom, and also improve the habitat value 
for juveniles and fish. Closed, excavated watercourses can be reopened 
and barriers for fish can be removed as measures to improve the quality 
of these habitats, e.g. increase the recreational value of angling.

Ecosystem Services 43 	
An example is that for lakes the present indicator of good ecological 
status is the content of chlorophyll. The objective of good ecological st a-
tus can be obtained by hydrological and technical measures within the 
lakes, and by reducing nutrient loads to the lakes, especially phosphorus. 
The phosphorus loads to lakes can be reduced by measures at fields 
under risk for phosphorus losses, and by restoration and construction of 
wetlands with the aim to retain phosphorus in the drainage areas to 
lakes. Buffer zones along rivers, streams and lakes is another measure 
aiming at retaining phosphorus, and as mentioned above both wetlands 
and buffer zones might improve additional ecosystem services beyond 
their effect on the nutrient retention. 
COWI (2014) also discusses the use of the ecosystem services 
framework with the PoMs, also connected to communication. This is one 
of the major motivations for the TEEB project for example, while the 
WFD in many cases seem to under -estimate the need for communicating 
benefits to people. 	
2.4 Economic instruments for locally targeted 
measures – PES and water quality trading 
The ecosystem services framework is one of the cornerstones in a nu m-
ber of economic policy instruments relating to water quality pollution. 
The voluntary policy instrument PES is based on a payment made for the 
delivery of ecosystem services and the mandatory water quality cap -
and -trading instrument is based on understanding and counteracting 
the effects of deteriorated ecosystem functions on ecosystem services. 
PES schemes that target water quality pollution are found already in the 
Nordic countries and Europe (See Chapter 5). These PES schemes are 
not initiated because of the WFD, but are typically firmly established in 
the Common Agricultural Policy (CAP) or target drinking water prote c-
tion and aquifer replenishment. Nevertheless, these policy instruments 
contribute significantly to meeting the obligations under the WF D and 
may potentially play a larger role for the WFD than today. Water quality 
cap- and-trading is primarily found in the US with a few cases in Canada 
and New Zealand. Common for policy instruments aiming at improving 
water quality is the growing recognition that instruments need to be 
adapted to local conditions.

44 Ecosystem Services 
2.4.1 Payment for Ecosystem Services – PES 
PES works as a conditional performance contract where the provider of 
ecosystem services is contractually obliged to create, enhance or protect a 
specific ecosystem service or a bundle of ecosystem services. The benef i-
ciaries of the ecosystem services pay conditionally upon the delivery of 
the ecosystem services. Beneficiaries can be the state on behalf of society, 
an enterprise in order to protect its produ ction, an NGO or municipality on 
behalf of a community or landowners to offset own obligations. Ideally, 
ecosystem services in PES schemes should be well -defined or a land -use 
be clearly identified that is likely to secure the ecosystem services. 
An argum ent in favour of paying for ecosystem services as compared 
to command and control regulation is that PES may offer a more cost -
efficient way to ensure that nature and landscape is taken care of and 
improved in the agricultural areas and by offering a volun tary scheme, 
resistance from land owners can be minimised. Some of the challenges 
in the use of PES, however, is obtaining the appropriate spatial coverage 
(since the instrument is voluntary) and securing financing of the co n-
tracts and keeping transaction costs down when moving towards local 
PES schemes. Chapter 5.5 presents two cases where it has been possible 
to obtain an almost complete spatial coverage at a catchment area scale. 
In one case, sufficient financial incentives combined with a clear ou t-
reach and communication made the uptake cover 80% of the intended 
area, while in the second case, a combination of carrot and stick ensured 
that within five years of the scheme, 93% of farms had signed up (if 85% 
of land owners had not enrolled within five year s, regulations would 
replace financial incentives). 
PES schemes come in a variety of forms and set -ups; there are nece s-
sary conditions along with desirable/useful conditions; there are diffe r-
ent elicitation methods for closing contracts. Most PES schemes, howe v-
er, are paid based on an activity as a proxy for delivering a specific ser-
vice as opposed to an outcome based payment. In practice, PES is rarely 
contracted directly for the delivery of an ecosystem service, but indirec t-
ly through the agreement to und ertake a change in land management or 
land use. PES can be spatially targeted or non -targeted; they can be set 
up to accommodate local conditions or they can be designed as uniform 
contracts with uniform payments. Neither subsidies nor other compe n-
sating m echanisms like PES function according to the Polluter Pays Pri n-
ciple. However, if PES is a payment for a service or a bundle of services 
that lead to positive external effects, this would be according to econo m-
ic theory. Zandersen et al. (2009) provide a m ore in-depth analysis of 
ecosystem services classification and PES in a Nordic context.

Ecosystem Services 45 	
As a policy instrument, PES belongs to the group of market -based 
voluntary incentives. Box 2.3 gives an overview of the different types of 
policy instruments that are i n use to deal with the problem of water 
quality pollution. These policy instruments are most often mixed to be t-
ter deal with complex environmental issues.	
14 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
 	
 	
────────────────────────── 
14 There is increasing attention paid to policy or instrument mixes in the EU and worldwide. See for example 
the ongoing E C funded project POLICYMIX: http://policymix.nina.no/

46 Ecosystem Services 
Bo
x 2.3 : Overview of different types of policy instruments 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sources: A dapted fr om Jack et al . (2008) and Ferraro (2009). 
 	
 
 
An example of mixing policy instruments from Denmark for the same farm is: 
 	
• 	the requirement to respect a fixed not tradable quota for the application of 
fertiliser which is 10% below the economic optimum (command and co n-
trol instrument) 	
• 	the requirement to apply catch crops on 14% of the fields grown with crops 
where catch crops are required (command and control instrument) (only 
farms larger than 10 ha). 	If the farmer chooses not to establish catch crops 	
he can establish energy crops, in -	between crops (“mellemafgrøder”), burn 	
the fiber fraction of animal manure, or transfer the obligatory catch crop 
area to another farmer or between years so that surplus catch crops areas 
from former years counts as catch crops this year. If the farmer does not 
adopt any of these actions, the nitrogen quota will be reduced. In other 
words the catch crop requirement can be traded between farmers, between 
years as well as between measures, so that too low implementation of catch 
crops may be compensated by a lower N -quota 	
• 	a tax on phosphorus in fodder, as well as a pesticide tax (a market -based 
compulsory incentive) 	
• 	a possibility to receive a one -	off payment and yearly management fee for the 	
establishment of wetlands (a voluntary performance contract).	 	
Market	-based voluntary incentives	
Land acquisition Easements 	Subsidies 	Conditional performance contracting 	Pre	-acquisition	
Command & control	
Market	-based compulsory incentives	
Charges	Tradable permits 	Market friction reductions	
Other policy instruments	
Ecolabelling 	Information campaigns	Voluntary agreements

Ecosystem Services 47 
Agri-environmental policies are examples of Payments for Ecosystem 
Services that pay farmers to reduce the negative externalities of agricu l-
tural production (Baylis et al ., 2008). In agri-environmental schemes, 
governments represent the wider society as “ buyers” of the delivery of 
one or multiple ecosystem services. Chapter 5.1 provides an overview of 
the greening of the EU Common Agricultural Policy and Chapter 5.4 
gives examples of Nordic PES schemes under the EU CAP that are rel e-
vant to the WFD. 
2.4.2 Water quality trading 
The ecosystem services framework is also central to water quality tra d-
ing, a market -based compulsory incentive. Water qualit y trading offers a 
possibility to increase flexibility and reduce costs when aquatic quality 
standards are established or tightened as under the WFD. It allows emi t-
ters with new obligations to either adapt their own facilities and land 
use practices or fin ance comparable emission reductions by others. 
Trading makes it profitable for sources with low treatment costs to r e-
duce their own effluents beyond legal requirements, to generate an 
emission reduction credit and to sell these credits to emitters with hig h-
er treatment costs (Faeth, 2000). Trading necessitates clear emission 
ceilings that are mandatory for all emitters in the defined market. By 
allowing trading, it’s possible to obtain a less expensive (more cost effe c-
tive) outcome overall while achieving – or in some cases going beyond – 
the mandated environmental target. Water quality trading is not nece s-
sarily a stand -alone policy instrument but typically enters a mix of i n-
struments combining regulations, taxes and subsidies. Trading per se is 
voluntary f or emitters while the emission ceiling is mandatory. Exa m-
ples of water quality trading in practice are presented in Chapter 5.6. 
2.4.3 Locally adapted policy instruments 
River basins vary considerably with respect to the natural state and the 
current quality. Different factors affect different river basins and the same 
is the case for sources of pollution. Non -point source pollution such as 
arable nitrogen emissions to water bodies are in practice very difficult to 
control because of the prohibitive costs of meas uring the contribution of 
individual farms to ambient pollution levels. In practice therefore, regul a-
tion of non -point pollution has been based on factors that indirectly de-
termine pollution levels and are possible to monitor at a reasonable cost. 
This includes taxes on commercial inputs (e.g. fertiliser), changes in crop

48 Ecosystem Services 
management practices (e.g. catch crops during winter), or land use chan g-
es (e.g. construction of wetlands or riparian buffer zones). 
However, socio -economic, physical and geo- chemical conditions dif-
fer across space. Some farm systems have higher opportunity costs 
and/or production costs than other farm systems; within farm systems, 
farmers vary in their abil ity to run a farm profitably; soil conditions and 
retention capacities can vary within a fairly small area; and water bodies 
have different quality levels and different capacities to cope with addi-
tional loads. Given this complexity of heterogeneous condit ions across 
space, uniform or undifferentiated policies are unlikely to i) meet the 
ambient water quality targets and ii) ensure an implementation at least -
cost or relatively low cost. This large variation makes it difficult to esta b-
lish nationwide (econom ic) instruments that will be economically opt i-
mal (or even work well) in all river basins across a country. In practice, 
however, uniform or undifferentiated policy instruments dominate in 
the Nordic countries as well as in Europe. 
Dealing with non -point source pollution at a catchment scale as u n-
der the WFD represents a “ wicked” problem for which there can be no 
single instrument or measure; rather there is the need for a mix of i n-
struments, a mix of measures as well as a mix of stakeholder involv e-
ment. T his mix of instruments can be more efficient when adapted to 
local conditions. 
Wicked problems are characterised as complex, dynamic, uncertain 
with diverse legitimate values and interests. There is no definite pro b-
lem formulation because there are many ex ternalities, beneficiaries and 
multiple trade- offs (Smith et al . 2011). For instance, on the issue of loca l-
izing land use measures optimally in terms of cost efficiency, it is cha l-
lenging because i) there are multiple conservation practices with diffe r-
ent effectiveness and costs; ii) there are multiple water quality en d-
points (nitrogen, phosphorous, sediments, etc.); and iii) water quality 
effects from one field may be affected by choices on other fields, impl y-
ing the need for cooperation among polluters. 
T he provision, quality and value of ecosystems services are very site 
specific – the provision of groundwater for drinking water is for instance 
dependent on the soil’s ability to purify the water so that polluting co m-
pounds are not above the limit values, bathing water quality depends 
not only on the nutrient loads but also geomorphological conditions, and 
wetlands’ ability to retain nutrients depends on site specific hydrological 
conditions, among other factors. Instruments with an ability to target 
these local conditions will be preferable, and a mix between local and 
general instruments (e.g. PES schemes and taxes/transferable quotas)

Ecosystem Services 49 
can be a cost -effective mix. This is also important since not only recip i-
ents have different characteristics, also polluters and other actors have 
different characteristics, objectives and behaviour, and they will ther e-
fore react differently to different incentives. This suggest that one should 
think more varied when it comes to the structure and choice of instr u-
ments in a se cond best option – as first best are seldom achievable b e-
cause of the diffuse character of nutrient emissions. 
Targeting pollution control programmes means abating more where 
it will be most effective and least costly (Braden and Segerson 1989). It 
require s combined ecological -economic models that identify the best 
methods and locations for reducing and containing discharges (See 
Chapter 5.2). Literature on this issue agrees that targeting areas and 
adapting measures locally will be cheaper, less disruptive (for the farm-
ing industry) and more ambitious targets can be imposed than if all 
farmers are met by the same abatement standards (Braden and Sege r-
son 1989; Brady 2003). 
There are good reasons to consider combining different instruments 
and establishing m ixes of instruments for each river basin/water region 
given the WFD required region based management, variation in appr o-
priate instruments across sectors and the heterogeneity of agents within 
sectors. This has been suggested for example in Norway in an ev aluation 
of increased use of water pricing in Norwegian water management 
(Magnussen and Holen 2011). Several countries have discussed and 
tried such models, e.g. this is the case in Morsa which is one of the exa m-
ple river basins in VALUESHEDS as well as in Denmark where the Co m-
mission of Nature and Agriculture have proposed more targeted 
measures in a mix of general and local instruments for nutrient abat e-
ment and mitigation (See Chapter 5.2). 
2.5 Main findings in this chapter 
The ecosystem services framework can be used to map and measure 
the value of the changes in provisioning, regulating and cultural ser-
vices, and the trade- offs between these when the policy targets of the 
WFD are modelled. 
The ecosystem services framework offers a more thorough assessment 
of benefits of positive environmental changes in a complex ecological sy s-
tem. It can help improve the evaluation methodology of disproportionate 
costs. This is exemplified in Jensen et al . (2013) who use information on 
ecosystem services and eco nomic valuation of water quality and ecolog i-

50 Ecosystem Services 
cal improvements in Odense river basin in a benefit transfer to other Da n-
ish water bodies. The benefit transfer results by river basins are subs e-
quently used for a cost -benefit analysis for the WFD implementation in 
Denmark. The CBA is used as a conservative screening of where costs 
appear to be disproportionate, i.e. exceed the benefits. Furthermore the ecosystem services framework can be used to assist 
the analysis of the Programme of Measures and the cost -effe ctiveness of 
the measures. Examples hereof are presented in the next chapters. 
This chapter also introduces economic instruments for locally targe t-
ed measures, PES and water quality trading and show how the ecosy s-
tem services framework is one of the corne rstones in such policies. The 
voluntary policy instrument PES is based on payment made for the d e-
livery of ecosystem service. The mandatory water quality cap -and -
trading instrument on the other hand is based on understanding and 
counterac ting the effects of deteriorated ecosystem functions on ecosy s-
tem services.

3. Use of the ES framework to 
describe and value benefits 
of improved ecological status 
in water 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.1 Benefit assessment based on ecosystem services 	
“The ecosystem services framework does not necessarily imply something 
radically different in terms of the application of the valuation techniques 
themselves, but it does imply the development of valuation scenarios more 
solidly rooted in the biophysical underpinning of ecosystem functions, se r-
vice delivery and stakeholder engagement processes, and can help to address 
issues such as at which scale costs and benefits are to be measured .” 
Martin -Ortega (2012; pa ge 87) 	
 
In this chapter we: 
• 	Discuss the necessary steps for benefit assessment of 	water status improv	e-	
ments based on the ecosystem services framework: identification, quantif i-
cation and valuation (section 3.1). 	
• 	Discuss identified important issues to consider in ecosystem services based 
benefit assessment: the purpose of the study, the scale (local, regional, n a-
tional, etc.), the need to consider trade- offs, the ecosystem services’ share of 
final benefits (value added from ecosystem services), and the issue of double 
counting (section 3.2). 	
• 	Provide examples from the Nordic countries (and a few others) in order to 
illustrate how ecosystem services can be identified and mapped (section 3.3) 
and quantified and valued (section 3.4). 	
• 	Discuss and conclude regarding findings and what we can learn from this 
chapter (section 3.5).

52 Ecosystem Services 
This way of seeing the role of ecosystem services for benefit estimation 
connected to WFD is the approach taken in this report. 
Following traditional welfare economic analysis (Cf. e.g. Ministry of 
Environment, 2010) an assessment of ecosystem services should follow 
these three steps: 
 
In the following sections, we will describe each of these steps, respectively. 
3.1.1 Identification of ecosystem services – which ones will 
be affected 
In order to assess the benefits of ecosystem services from improved 
water status, we need to identify exactly which benefits are affected by 
the change. In chapter 2 we described the different categories of ecosy s-
tem services, which is the basis for identification. Furthermore, there are 
descriptions and listings of which ecosystem services are potentially 
important in rivers and watersheds which may be used. 
If a recognition of ecosystem services in freshwater is the main pu r-
pose, a general identification and listing of the ecosystem services that will 
be improved by improved water status may be all that is needed – in or-
der to demonstrate and communicate the importance of improved water 
environment by reaching the environmental goals of the WFD – good eco-
logical status (GES). On the other hand, if the purpose is to use th e ecosys-
tem services framework to estimate the benefits as input to a CBA of the 
benefits and costs of achieving GES, we need to be more specific about 
which ecosystem services are really being of relevance and affected by the 
proposed measures which will be implemented in order to improve the 
water environment. And if the purpose of applying the ecosystem services 
framework is to enable assessment of how different ecosystem services 
are affected by a policy change, the ecosystem services also have to be 
se parated and not merged into a general description. 
The first step in all cases will be to identify the ecosystem services of 
importance in the river basin or water body of the study. In the second 
step we need to be more specific about whether the proposed measures 
will change the quantity or quality of these ES. 
This identification of affected ecosystem services could be carried out 
for each measure or intervention in a cost -effectiveness analysis. Ho w-	
1) Identification 	2) Quantification 	3) Valuation

Ecosystem Services 53 
ever, it is a quite demanding process to do this for each measure. If the 
purpose is to estimate the total benefits of the improved water status, 
therefore assessing the benefits of the total package of measures can be 
an alternative. However, as mentioned in chapter 2, different kinds of 
measures may affect different ecosystem services (Magnussen et al . 
2014; Termansen et al . 2014). Our description of measures used for the 
implementation of the WFD also show this as different measures pr o-
vide different additional ecosystem goods and services, beyond the w a-
ter quality improvement, such as e.g. flood protection (wetlands), carbon 
storage (grasslands/set aside). One could make benefit assessment for 
different packages of measures – which affect different ecosystem se r-
vices and hence result in different total bene fits. Programming (optim i-
sation) models can also be used to analyse and quantify trade- offs be-
tween different ecosystem services and the share of each ecosystem 
services of the total benefits of an optimal policy. Such models are de-
veloped for e.g. nutrient load reductions (e.g. Hasler et al . 2014), and 
these models can be extended to include e.g. the effect on climate regul a-
tion, biodiversity etc., and used to assess the specific value of e.g. rete n-
tion as a regulating ecosystem services. In real life studies, we often find 
that it is not so easy to identify precisely which ecosystem services are 
affected. This may be due to lack of ecological knowledge regarding the 
effects of different measures. It may also be difficult to quantify and val-
ue the benefits. 
3.1.2 Quantification 
The next step is to quantify in physical units the identified, affected ec o-
system services. This is often challenging. It can be difficult enough to 
tell that the water will be more suitable for fishing or swimming if the 
water status is im proved. In this step, however, we want to quantify 
“how much better” it is suitable for swimming, how many people benefit 
from this improvement, how much will breeding conditions improve, 
and how much will the living conditions improve – and how many, and 
which fish species, will be available for anglers to catch? 
The quantification can be based on existing sources, such as monitor-
ing data and maps, statistical data on fish catches, the number of visitors 
etc. It may be necessary to combine different existi ng sources. For ex-
ample, the number of people who will benefit from water improvement 
in a specific river or lake may be important information. We then need to 
identify how far from the water string people are affected. This may 
differ for different ecosys tem services. Then combining maps and stati s-

54 Ecosystem Services 
tics of population, one can estimate the number of people affected. This 
is illustrated in the example from urban Oslo’s water bodies (see section 
3.4.3) where the local community’s GIS -office could give exact nu mbers 
of inhabitants living less than 100, 300 and 1 ,000 meters from the water 
bodies in question, respectively. Similarly the respondents of the Aqu a-
money study in Odense were asked about where they live and to indi-
cate their address either on a map or to provide information about the 
road -name and house number (within an interval to avoid drop outs 
because of lack of anonymity), and also to click on a map to indicate the 
area along the coast, fjord, river or lake where they went to for their last 
visit. The researchers therefore obtained information about the distan c-
es from where people live to the places they go for recreational visits, 
and in the same survey the respondents were also asked about their 
willingness to pay for water quality improvements. Bu t the missing link 
is the connection between the water quality and their preferences for 
particular services, such as swimming and angling, as they are not spec i-
fied in the study. We return to that question in the next section. 
3.1.3 Valuation 
In conducting a cost -benefit analysis in order to assess the benefits co m-
pared to costs, we aim at monetizing all effects that may be meaningfully 
monetized. The effects that cannot be meaningfully monetized should 
also be included, as so -called un -priced effects, which ar e treated in the 
analysis in quantified, physical terms or qualitatively described. In all 
cases, we should start with identifying the effects (identify ES), quantify 
them as far as possible in physical terms (quantification of ES) and value 
in monetary te rms as far as possible. 
In practice we are not always able to value all benefits from water 
quality and water ecosystem services improvements. This may be due to 
several reasons. We discussed in 3.1.1 and 3.1.2 difficulties of identifying 
and quantifying e cosystem services from water status improvements. 
Furthermore, some ecosystem services are difficult to value due to 
shortcomings in the methodology for valuation, because we do not know 
enough about the ecological effects or because laymen being asked 
abo ut their willingness to pay don’t have knowledge of the ES. For most 
or many ecosystem services there are no market prices. Therefore we

Ecosystem Services 55 
need to estimate prices using methods developed to value non -market 
(environmental) goods. 
There are several methods av ailable and applicable to value env i-
ronmental goods, both use and non -use values ,	
15 see box 3.1 for a brief 
overview. We will not discuss valuation methods further here, as a d e-
scription of such methods is provided many other places, for instance in 
Barton et al. 2012 with reference to fresh water management. 
Sometimes it is deemed too time consuming and/or costly to carry 
out new primary studies. In some cases, we can find valuation studies 
and “prices” for similar ecosystem services in other river basins or water 
bodies, and then benefit transfer is an option. The concept and methods 
for benefit transfer are presented in box 3.2. Valuation results will be 
more uncertain when using benefit transfer instead of collecting new 
site -specific information for valu ation. The more similar the change in 
ecosystem services to be valued, the context of the ES, and the affected 
population are, the better one can expect the benefit transfer value to be. 
However, in most of the Nordic countries, the largest problem with be n-
efit transfer is the lack of available, original studies to transfer from. Still, 
this is often the option used in practice. 	
Box 3.1 : Valuation methods for environmental goods 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
────────────────────────── 
15 Use and non-use values are described in box 2.2 in chapter 2. 
Market 	Approach 	Type of value elicited 	Common valuation methods 	
Existing markets Market based Use values Market prices, Produ c-
tion Function Methods, 
Preventive costs, 
Mitigation costs, 
Replacement costs 
 
Parallel market Revealed Preferences Use values Travel Cost Method, 
Hedonic Price Method 
 
Hypothetical Markets Stated pref erences Use and non- use 
values Contigent Valuation 
Method, Choice 
Experiments

56 Ecosystem Services 
Box 3.2
: Benefit transfer 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
 
Transfer of the valuation results from Odense to other water bodies has 
been tested between Danish water bodies (Odense and Roskilde fjords) 
and between Odense and other North European rivers, among them 
Morsa in Norway. The tests showed that the benefit transfers from this 
study, where the ecosystem services are presented and valued in a holi s-
tic manner, resulted in relatively low transfer errors (Bateman et al . 
2011; Källström et al . 2010). 
From Sweden, we present a benefit transfer exercise where value e s-
timates from river basins in Norway (Morsa) and Denmark (Odense) are 
used to estimate values in nearly all Swedish rivers, see chapter 3.4 
(Hasselstrøm et al. 2014). 
Another issue, raised by the valuation study in Odense, is that the 
measurement of water quality according to the WFD does not necessar i-
ly conform to laymen’s perception of good water quality (cf. Kataria et al . 
2012). When valuation studies use the monitoring results to characte r-
ise the water quality this might differ from laymen’s perception of the 
quality and also differ in terms of their preferences for when they will 
Benefit transfer (BT) involves transferring an economic value of a public good 
estimated from a study site (source site; 	primary valuation study) to a policy site 	
(target site). Both benefits and costs can be transferred, and the term “Value 
Transfer” (VT) is also used to cover both. 	
There are three basic requirements for value transfer: 
 	
• 	D atabase with primary valuation stud ies. 	
• 	C riteria for assessment of the quality of primary valuation studies . 	
• 	M ethods for value transfer . 
 
There are different approaches to value transfer (and different ways of categ o-
rizing the approaches; the listing below builds on Navrud 2008). So far, th ere is 
no single universally adopted methodology used for BT (VT). 
 	
• 	Unit value transfer: the unit value at the study site is assumed to be repr e-
sentative for the policy site, with or without adjustments for differences in 
income levels etc. between the two sites. 	
• 	Value function transfer: a valuation function is estimated at the study site 
and transferred to the policy site. 	
• 	Meta analytic transfer: A valuation function is estimated from several study 
sites using meta	-analysis.

Ecosystem Services 57 
use the water body for recreational purposes. Therefore, the recreatio n-
al services, as perceived by the users, might not be directly linked to the 
water quality indicators in the WFD. 
3.2 Some issues to consider in ecosystem services 
benefit assessment of improved water status 
In most cases, where we want to assess the benefits received from water 
quality improvement s, the above mentioned steps to identify, quantify 
and value the ecosystem services affected will be necessary. Still, although 
the steps are the same, different purposes may influence the way these 
steps are carried out; and it may influence which scale i s appropriate and 
whether or not trade -offs or double counting need to be considered. 
3.2.1 Purpose 
The purpose of the study will be important for how the ecosystem se r-
vices assessment is carried out. For instance, if the purpose is to 
demonstrate the values of good ecological status, the demand for detail 
and precision may not be so high, and it may or may not be appropriate 
or necessary to monetize the values. On the other hand, if the purpose 
is to compare benefits and costs, and assess whether the costs are dis-
proportionate to analyse if exemptions from the general environmen-
tal goal of WFD are justified, the demand for detail and precision is 
much higher. We will show examples of different purposes and detail 
in sections 3.3 and 3.4. 
3.2.2 Scale 
Ecosystem service s may be identified on different geographical scales, 
depending on the scale and purpose of the study to be carried out. One 
of the first, and still most famous (though much disputed) papers on the 
value of ecosystem services, was Costanza et al .’s paper in “Nature” on 
the value of the world’s ecosystem services and natural capital (Costan-
za et al . 1997). There are also studies on the European scale, for instance 
on the value of climate change induced losses of wetlands in Europe 
(Brander et al. 2012), and Kettunen et al.’s (2013) assessment of Nordic 
values of different ecosystem services, although they do not value ec o-
system services from fresh water as such. We will come back to this pu b-
lication in section 3.4. Another recent publication of interest in th is re-

58 Ecosystem Services 
spect is TEEB for water and wetlands (Russi et al . 2013) which empha-
sise the importance and values of water and wetland. Neither of these 
publications discusses freshwater ecosystem services related to WFD. 
However, the general framework for identific ation, quantification and 
valuation of freshwater ecosystem services is much the same. 
In order to assess the benefits and compare to the costs in a CBA, this 
may potentially be useful at different scales and at different stages in the 
WFD implementation. 
An interesting example of using CBA on a national scale is Jensen et 
al . (2013) who use CBA, including valuation of good ecological status 
according to the WFD as a national screening procedure, in order to 
identify the rivers/river basins where the costs of measures may be too 
high compared to the benefits achieved, in which case they recommend 
that further CBA analysis should be carried out. This example is d e-
scribed in 4.3, but worth noticing here is that for this overall screening 
the value of good ecol ogical status is satisfactory, but in areas where this 
coarse framework indicate that the costs are disproportionate there is a 
need to apply the precautionary principle by assessment and valuation 
of the detailed, partial ecosystem services more in depth – such as the 
recreational, provisional and regulating services. 
Similar procedures could be used on a river basin scale – screening 
water areas or water bodies which need further and deeper analysis in 
order to estimate benefits and (disproportionate) co sts. One way to 
deepen the analysis could be to include the ecosystem services of the 
measures in the Programs of Measures (PoMs) on a water region scale, 
as described in chapter 2. We will give some examples of this in the fo l-
lowing (section 3.4.). 
The wa ter body level is also the correct scale for assessing goals and 
exemptions for heavily modified water bodies (HMWB). Assessment on 
this scale for HMWBs is mentioned in the example from river Alna and 
Hovinbekken in urban Oslo, Norway (section 4.4). 
3.2.3 Trade -offs 
In many studies in which the purpose is to demonstrate or illustrate the 
benefits we receive from improved water status, it is not (so) important to 
consider the potential need for trade -offs between different ecosystem 
services. In cost -benefit asse ssments however, including CBA for assess-
ment of disproportionate costs, this may be of importance. There are four 
main types of trade -offs considered central (Magnussen et al . 2013):

Ecosystem Services 59 
• Between goods and services : Use and management of water resources 
may e nhance one or a few services or use areas, at the expense of others. 
• Over time : Management may give benefits in the short run, but 
negative impacts and costs at a later point in time. For management 
and use of natural resources the long -term perspective is normally of 
great importance. 
• Between interest groups : Prioritizing of use areas which are 
important for some interest groups compared to others. If such 
trade- offs have to be made, it may be that some groups mainly 
receive the benefits while others bear the costs. 
• Spatial : Different kinds of regulations or management regimes may 
give benefits and costs that are spatially differentiated. 
 
These trade -offs may be more or less inter -related. However, we will di s-
cuss each of them in turn. Trade -offs between goods and services and over 
time are traditionally handled in welfare economic analysis while this is 
not the case for the latter two because these aspects are considered to be 
distributional/equity effects. However, these issues may be of great i m-
portanc e in practice, because they relate to who should pay for the i m-
provements. In rivers, for example, the maximum benefits to society could 
be to reduce pollution in the water bodies upstream, because all the 
downstream water bodies then will reach improved w ater status. Howev-
er, people living in the upstream water bodies may not receive so much of 
the benefits, while they may have to pay for most of the measures. 
Trade- offs between goods and services 
Much of the literature on trade -offs between ES, analyses ecosystem 
services measured in physical units, e.g. water quality and quantity, fish 
production, etc. (Kareiva et al . 2011). Obviously, there may be purely 
biological trade- offs: More of one ecosystem services result in less of one 
or several others. For ex ample increased fishing of one species can r e-
duce the fish catch of another species or of other services in the river. 
There are complicated and often not well -known ecological relation-
ships between different provisioning, regulating and cultural services. 
How these relationships are in the watersheds will be important for how 
different uses affect the functioning of ecosystems. 
One central question in an economic analysis is what someone has to 
give up of one service in order for someone (else) to receive more of 
another. This trade- off is dependent on the underlying physical and ec o-
logical relations, but also on how the different ecosystem services are 
valued on the margin. In a situation where we have much of one ecosy s-

60 Ecosystem Services 
tem service, for example much trout in a river, increasing the number of 
trout may not be highly valued. This fact implies that trade -offs between 
more trout and less water for irrigation will depend on the current flow 
of services and the value of each of them. 
F igure 3.1 can illustrate thi s point (based on Polasky et al . 2011). 
Suppose that there are four political choices, regulations or measures 
that are considered for a particular river basin (points A, B, C and D in 
the figure) and that the costs of these measures are equal. Suppose fu r-
ther that there are two ecosystem services or potential uses only, for 
example using water for irrigation or for angling. These two services are 
marked as Ecosystem Service 1 and 2 respectively on the two axes in the 
figure. Each of the four alternatives g ives different combinations of the 
two ecosystem services. We can interpret the axes as showing physical 
units or economic units (Euro). 
Figure 3.1: Simplified example of combinations of level on two different ecosy s-
tem services under four hypothetic management regimes 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Based on Polasky et al. (2011); her e reproduced from Magnussen et al . 2013.

Ecosystem Services 61 
It is easily seen that alternative B and C are preferred to A, because in B and 
C we can have more of both ecosystem services than in A. Choosing b e-
tween B, C or D (or between A and D) however, includes trade -offs: Each 
alternative gives more of one ecosystem services and less of the other. 
If we were in situation A, in our illustration this would not make it 
necessary to make trade- offs to choose alternative B or C, since these 
alternatives give more of both services. 
Considering one set of management alternatives that gives the most 
efficient combination of the two ecosystem services, we can draw a li ne 
between these alternatives that define an “efficiency frontier ” for the 
ecosystem services. These management alternatives are defined where 
it is not possible to achieve (produce) more of one service without r e-
ducing (producing less of) the other, that is one has to make trade- offs. 
Figure 3.2 illustrates four different possible connections between pairs 
of ecosystem services. We may imagine the service measured in physical 
units (number of recreation days, fish in tons, etc.) or in Euros. 
Figure 3.2 : T rade -offs between pairs of ecosystem services dependin g on how 
they affect each other 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Barth et al . (undated); here repr oduced fr om Magnussen et al . 2013.

62 Ecosystem Services 
In the top left diagram a relatively typical connection between pairs of 
services (and production of goods) is shown.	
16 If we are in a situation 
with much of service 1, reducing this a little, we can have much more of 
service 2. The “exchange rate” changes as we have less of service 1 and 
more of service 2. This has analogies in reality for many kinds of ecosys-
tem services and commercial and non -commercial uses of natural r e-
sources. Polasky et al . (2011) modelled for a specific forest area a con-
nection with this shape for expected number of protected species (y -
axis) and potential economic result (x -axis) from different use of the 
same forest area. Their calculations show that by reducing the demand 
to yield a little , the number of species protected increased significantly. 
This trade- off pattern assumes the possibilities for substitution, and 
may be relevant for trade -offs between resources/services where none 
of the actual alternatives are critical to the ecosystems. On a micro level 
we will relatively seldom deal with resources /services that are “ critical” 
from an economic perspective. However, the sum of many micro dec i-
s ions may cross critical limits. This is a basic problem that can imply a 
need for more overarching frameworks. 
The top right illustration in Figure 3.2 shows a situation where it is 
not possible to make a trade- off between the two services, within a re a-
son able interval (up to 100 points in the diagram). This means that we 
can increase our use of one ecosystem service without decreasing the 
use of the other. The analogy in practical management is that the prov i-
sion of many services is not, or to a minor degr ee, directly connected. 
This can be interpreted as a case where we can increase the use based 
on one resource in a large interval, without affecting other services. If we 
use/take out more than 100 units in the diagram, the other service is 
nearly totally lost. 
The illustration at bottom right in the same figure shows nearly e x-
actly the opposite, the choice is roughly to choose between one use or 
the other. In other words, prioritizing one service (nearly) completely 
excludes prioritizing the other. In some cases we can meet these kinds of 
trade- offs in practice, for example by reserving one area to one kind of 
use which excludes other uses or services. 
The final illustration in Figure 3.2 (bottom, left) shows a more or less 
linear relationship: “the excha nge rate” between services is nearly the 	
────────────────────────── 
16 This line can be interpreted as typically for the “ production possibility frontier”-curve, often presented in 
textbooks in ec onomics.

Ecosystem Services 63 
same independent of how much we have of one or the other. This is not 
a typical connection between services. 
Our discussion so far has used trade -offs between pairs of ecosystem 
services as examples. These kinds of trade- offs do not only exist between 
pairs of ecosystem services. They also exist between ecosystem services 
and other goods in society. Depending on how wide the definition of 
ecosystem services is made, we may consider trade -offs between ecosy s-
tem services or between ecosystem services and other goods and se r-
vices (including abiotic natural resources). 
Trade- offs over time 
So far, we have discussed trade -offs between services and use of natural 
resources at the same point in time. However, different management 
strategies can give benefits and costs that arise at different points in 
time. Two aspects are of particular relevance in this discussion: 
 
• Discounting : How should we discount the value of a benefit or cost 
that arises in the future, so that all costs and benefits that accrue in 
the near or distant future can be compared? And of particular 
relevance for management of nature and ecosystem services: How 
can this best be done when the effects potentially will arise in a 
distant future? 
• Real price ad justment: The value of goods and services can develop 
differently over time for many reasons. For example, it is reason to 
believe that some environmental goods may increase their relative 
value in the future, due to increased scarcity. Also, people’s pref erences 
may change over time, influencing the relative prices. This factor may 
work both ways for ecosystem services, and the values for some 
ecosystem services may increase relative to other prices (and indexes 
for such goods, such as the Consumer Price I ndex) due to scarcity and 
changes in preferences while others may not. 
 
We will not discuss the issue of trade -offs over time much further here, 
as they should be treated according to the guidelines for CBA the Nordic 
countries have developed, and which in clude guidelines for discount 
rates and real price adjustments. Also the need for real price adjus t-
ments are discussed in CBA guidelines in several countries, and the 
countries should check their own rules. This issue is first and foremost a 
case when using the ecosystem services framework in economic analysis 
where the value of ecosystem services over time is a question.

64 Ecosystem Services 	
The issue is often less clear, also in CBA guidelines, for the so -called 
unpriced effects, for which ordinary discounting rules cannot be used. 
However, this is an issue beyond the scope of this report. 
Trade- offs between interest groups 
There may be several ways of dividing interest groups/interested pa r-
ties/stake -holders which carry the costs or receive the benefits of a pr o-
ject or a management decision: 
 
• Administrative (local communities, counties, region, country) . 
• Private and public sector . 
• Economic sectors (fisheries, tourism, other sectors) . 
• Groups of people (for example based on sex, age, income, educations) . 
• Geographic (spatial) . 
 
D istributional effects can be analysed and illustrated in many ways. The 
most advanced analyses use economic model tools to calculate how the 
effects are distributed in the economy for different groups. In many ca s-
es it is more realistic to make rougher ass essments of which main 
groups that are affected. It can be difficult to decide to what extent different groups are affec t-
ed. An alternative framework can be to make a simple list of “ winners” 
and “losers ”, as suggested for example in NOU (2012). 
Hein et al. (2006) suggest a way of showing distributional effects for 
local, county, national and global interests. This example is shown in 
Figure 3.3 below. The example is about assessment of the values of the 
flow of ecosystem services from a wetland in the Ne therlands. 
The diagram shows relative value per year in Euros for different 
kinds of services (straw harvest, fisheries, recreation and nature prese r-
vation) and how these values are distributed between institutional le v-
els. We can see that nature preserva tion mainly has a national value 
(and possibly global) while the provisioning services straw harvesting 
and fisheries benefit local groups.

Ecosystem Services 65 
Figure 3.3 : The relationship between institutional scale and the value of eco sys-
tem services 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Hei n et al . (2006). 
Spatial trade -offs and relationship between production and use of 
ecosystem services 
A much used illustration for spatial relations between the place where 
an ecosystem service is produced and where it is used or exploited i n 
shown in Figure 3.4 below. The place of production is indicated with “P” 
in the figure, while the place of ecosystem service use is indicated with 
“B” (“ beneficiary ”). The figure shows four possible spatial relationships. 
The first on top left in the fig ure indicates that a service is produced and 
used within the same, limited area. This will be the case where all the 
effects are local, for instance in a small lake. The other kind of relatio n-
ship shows that the service is used by people outside the area i n which 
the service is produced. This is typical for river basins or larger rivers, 
and for management decisions which affect ecosystem services of r e-
gional or national importance. 
The two last illustrations (bottom of the figure) show that the ben e-
fits of services are provided to individuals outside and in a particular 
geographic direction from the production area. A typical example of 
situation 3 is when a wetland purifies water so that water quality is i m-
proved for the population downstream. Spatial r elationships between producers and consumers (beneficia r-
ies) areas (which is analogous to assess spatial distribution of costs and 
benefits in a cost -benefit analysis) is an important part of the under-

66 Ecosystem Services 
standing of trade- offs or conflicts of interest. For ex ample it may be 
more difficult to solve a conflict where the costs of production of i m-
proved services are carried locally or by a particular economic sector 
while the benefits are harvested somewhere else or of other groups of 
people or sectors. 
Figure 3. 4: Possible spatial relationships between production and use of ecosy s-
tem services 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Fisher et al . (2009). 
3.2.4 The ecosystem service’s share of final benefits and 
the need for other inputs 
Sometimes we cannot use the ecosystem services directly, we have to add 
other inputs before the goods and services from nature are perceived as 
benefits to people. The clearest example of this may be agricultural pr o-
duction, where the soil is essential for production, but where lots of other 
inputs ar e added before we get the steak that gives us welfare. 
Also ecosystem services from freshwater may need other inputs, for 
instance fishing equipment and man time, water treatment plants before 
we can drink the water from the tap etc. If the purpose is to demonstrate 
the values we receive from ecosystems, the presence and amount of 
these other inputs are not so important.

Ecosystem Services 67 	
However, in assessing costs and benefits in a CBA, for example in o r-
der to assess disproportional costs, we need to be more precise. If we 
include the total value of fish as a benefit we receive from ecosystems, 
we overestimate the role of ecosystems. For example for benefits such as 
drinking water, flood control etc., which we receive from fresh water, a 
considerable amount of “other inpu ts” may be necessary in order to give 
us the benefits. For other ecosystem services from freshwater the ben e-
fits are received more or less without any other inputs. In CBA the net 
benefits of the ecosystem services should be included implying that the 
tota l value of the ecosystem services is the value of the final good minus 
the value of the other inputs to produce the final good (like labour/time 
and equipment/capital). 	
3.2.5 Double counting 
Related to the question above, is the issue of double counting. One topic 
is that economists prefer to value the final goods only, in order to avoid 
double counting if both intermediate and final goods are valued. That is, 
we should be careful not to value and include both the functions of the 
ecosystems and the final services. It is worth remembering that this 
question depends on whether we want to analyse the trade -offs between 
ES’s or the total value of the final goods. 
Another concern is that because o ur valuation methods are less than 
perfect, we may not value exactly the ecosystem service we aim at val u-
ing, but rather a “bundle” of ecosystem services, or even indicators. This 
is of particular concern if we aggregate value estimates for several ec o-
syst em services one by one. It is also relevant if we have values for some 
ecosystem services, for example from a contingent valuation study of 
improved water quality, and then add values for other services which 
were not directly included in the Contingent valuation study, like reg u-
lating services, provision of drinking water etc. Then we should take 
care that we do not include the value of the same ecosystem services 
twice (totally or partially) and add up. 
The double counting issue has been discussed to some extent in the 
economic literature (e.g. Boyde and Banzhaf 2007). We should also note 
that many (perhaps most) of the ecosystem services are in many cases 
not valued at all, so that the danger of “zero -counting” is also present. 
However, particularly, when value estimates are used in CBA, for a s-
sessing disproportionate costs, or for PES and other economic instr u-
ments, we should take care to avoid double counting.

68 Ecosystem Services 
3.3 Examples of identification and mapping 
3.3.1 Introducing the examples 
In order to assess the benefit s we receive from improved water status in 
fresh water, we need to identify the ecosystem services which are su p-
plied by freshwater in a country, in a region, river basin, river, or in a sp e-
cific water body area. Sometimes the purpose may be to recognize o r 
demonstrate all the goods and benefits we receive. More often, this ident i-
fication is used as a point of departure for more quantification and valu a-
tion, or for demonstration of trade -offs or implications of policy options. 
In this section we will show some examples where the main purpose 
has been to illustrate and map which ecosystem services we receive 
from fresh water. Relating to the steps in section 3.1., these examples 
focus on identifying which ecosystem services are found or are i m-
proved due to improved water status, on different scales. The level of 
detail can be different, depending on the purpose, the scale and the pr e-
sent knowledge. 
As an introduction we present two examples which map ecosystem 
services on a broader scale than just ecosystem services from fresh w a-
ter. These are included because we see them as an elegant way to pr e-
sent how ecosystem services are distributed in the landscape, and b e-
cause we believe a similar assessment could be carried out for river b a-
sins (or other scales relevant for water management). 
In the next section we present an interesting Finnish example that 
use some of the same techniques in order to map the linkage between 
biodiversity information with the landscape’s capacities to provide ec o-
system services, the example we include shows examples for water pr o-
visioning. This kind of mapping is not so common yet, but much work is 
expected in this area the coming years. 
The more factual examples are from Finland and Norway, illustrating 
different scale and detail. Th e first one is from a Finnish report (Al a-
huhta et al. 2013), in which the authors discuss the general categories of 
ecosystem services and which ones are relevant for freshwater in Fi n-
land on a national scale. They also illustrate the richness of waters and 
t he water regions in Finland as background for the categorisation. Th e 
last example is from a study on a local scale (water body/river) in the 
urban Oslo area in Norway where the potentially affected ecosystem 
services from measures to improve water status according to WFD was 
investigated (Magnussen et al . 2014). They used a listing of ecosystem 
services in fresh water as a starting point for identifying which ecosy s-

Ecosystem Services 69 
tem services would actually be affected by the planned measures in 
these rivers according to the WFD. 
3.3.2 Examples 
Illustration of mapped flow of ecosystem services 
Below we show an illustration of mapped assessment of average values 
of ecosystem services per unit of area for a landscape (Figure 3.5). First, 
the ecosystem services are divided into “service bundles”, with a content 
of hunting, carbon sequestration, tourism, etc., which is indicated in the 
circle at the bottom right of the figure. Then the areas are classified in six 
different kinds at the right side in the figure, depending on which of the 
services dominate (as indicated in each of the six circles). These six 
kinds of areas can be retrieved on the map on the left with their specific 
number. This is an elegant way to illustrate how ecosystem services are 
distributed in the landscape, b y this kind of management which gives a 
very heterogeneous exploitation. A similar assessment could be carried 
out for river basins. However, we would expect that the use would not 
show the same heterogeneity or diverseness of services. 
Figure 3.5: Averag e values of bundles of ecosystem services in a landscape 	
 
 
 
 
 
 
 
 
 
 
 	
Source: Raudsepp-Hearne (2010). 
 
The same type of analysis bundling ecosystem services in Danish lan d-
scapes is performed by Turner et al . (2014). Figure 3.6 illustrates Turner 
et al .’s (2014) assessment of 11 ecosystem services that they mapped at 
10 km × 10 km grid scale, while covering most of Denmark. Their aim is 
to describe the spatial distribution as well as the interactions between 
the ecosystem services. They identified trade -offs between regulatory 
and cultural services on one hand and provisioning services on the other

70 Ecosystem Services 
hand. The figure shows the identification of six ecosystem service bundle 
types which indicate interactions at landscape level. The analysis r e-
veals, taking the underlying data and assumptions for granted, that there 
is a large potential for recreation at the coast, indicated by summer co t-
tages and tourism, while there are more multifunctional mixed- use bun-
dle types around urban areas. As mentioned by the autho rs the bundling 
results are sensitive to the input data, the indicators, available to define 
the services. 
Figure 3.6 : Ecosystem service bundle types 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Turner et al. 2014, page 96. 
Mapping of ecosystem services in natural protection areas in 
northern Finland 
Vihervaaraa et al. (2012) used detailed tools such as aerial photographs 
and field surveys to produce high -quality biotope data to map ecosystem 
services in natural protection areas in northern Finland. The use of 
detailed biotope data supports the linkage of biodiversity information 
with landscapes’ capacities to provide ecosystem services. Figure 3.7. 
shows examples for water provisioning in the bottom, and the mapping 
of six different services at the top (the green map), as an e xample of how 
trade- offs and conflicts between ecosystem services can be mapped.

Ecosystem Services 71 
Figure 3.7 : Mapping of ecosystem services in natural protection areas in Nort hern 
Finland 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Vihervaaraaa et al . 2012.

72 Ecosystem Services 
Identification of freshwater ecosystem services on country scale in 
Finland 
In a report from the Finnish Environment Institue (Alahuhta et al . 2013) 
the authors compile the first systematic suggestion for the classification 
of the boreal freshwater ecos ystem services in Finland. F igure 3.8 below 
illustrates the richness of inland waters of Finland. 
Figure 3.8: The inland waters of Finland. Two major, artificial reservoirs are 
marked in ora nge 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Alahuhta et al . 2013

Ecosystem Services 73 
The report discusses the different categories of freshwater ES, and 
suggest the following ecosystem services categories to be used, as 
shown in table 3.1. 
Table 3.1 : Suggested freshwater ecosystem services in Finland 	
Freshwater ecosystem services 	
Provisioning 	Regulating 	Cultural 	Supporting 	
Food Macro-climate regulation (!) Recreation 	Nutrient cycling 	Clean water (!) Micro-climate regulation Aesthetic value (!) 	Soil formation (!) 	Energy Air quality regulation Cultural heritage (!) 	Food web dynamics (!) 	Transportation Water flow regulation Science and education (!) 	Habitat (!) 	Biochemical resources (!) Water purification Inspirational value (!) 	Primary production 	Ornamental resources (!) Invasion resistance (!) 	Photosynthesis 	Construction Disease regulation (!) 	Water cycling (!) 	Genetic resources (!) Seed dispersal and 
pollination (!) 
 
 
 
 Erosion regulation (!) 
 
 Natural hazard regulation 
The mark (!) i n the columns means that more research is needed to confirm and understand the 
meaning of that particular service as a fr ehwater ecosystem service in boreal region, accordi ng to 
the source. 
Source: Alahuhta et al . 2013. 
Identification of freshwater ecosystem services on water body scale 
in local rivers in urban Oslo area, Norway 
The Norwegian NOU (2013:10) on ecosystem services (see description 
in section 2.2.) does not make a listing of all the potential ecosystem 
services in freshwater, however it mentions the main ecosystem services 
we receive from different ecosyste ms. An example of practical use of the 
classification is a recent Norwegian case study which analyse how ben e-
fits and (disproportional) costs to society can be assessed in urban ri v-
ers (on the water body level) using the ecosystem services framework 
for be nefit assessment (Magnussen et al. 2014). As part of the asses s-
ment, a list was first made of all potential ecosystem services that can be 
derived from rivers and the fjord recipients, using the Norwegian NOU -
ecosystem services -categorisation. Magnussen et al . (2014) then make a 
shortlist of which ecosystem services will actually be affected by the 
water status improvement, given the measures suggested according to

74 Ecosystem Services 
the program of measures developed for the area under the Water 
Framework Directive, see table 3.2. 
Table 3.2 : Identified ecosystem services potentially relevant/important for assessment of i m-
proved water status following program of measures according to WFD in Hovinbekken and Al na 
rivers in urban Oslo, Norway 
Basic life processes (Supporting ES) 	Potentially important 	Relevant/important for assessment of 	measures? 	
Hovinbekken 	Alna 	The Oslofjord 	
Water cycle Yes Yes Yes Yes Evolutionary processes and ecological interactions	 Yes 	? 	? 	? 	Regulating ES 
Water flow regulation Yes Yes Yes 
Erosion protection Yes Yes Yes Yes 
Nature damage prot ection Yes Yes Yes Yes 
Water cleaning and waste treatment Yes Yes Yes Yes 
Regulation of diseases Yes Yes Yes Yes 
Pest regulation and biological control Yes ? ? ? 
Provisioning services	 	 	 	 	 	Fresh water Yes Yes Yes Yes 
Genetic resources Yes ? ? ? 
Cultural services 
Recreation and nature based tourism Yes Yes Yes Yes 
Wellbeing and aesthetic values Yes Yes Yes Yes 
Local identity Yes Yes Yes Yes 
Inspiration and symbolic perspectives Yes Yes Yes Yes 
Knowledge and learning	 	Yes 	Yes 	Yes 	Yes 	Natural heritage Yes Yes Yes Yes 
Source: Magnussen et al. (2014). 
 
We come back to these following steps in section 3.4 and chapter 4 when 
we discuss quantification and valuation, and assessment of dispropo r-
tional costs. 
3.4 Examples of quantification and valuation 
3.4.1 Introducing the examples 
In this section, we will give some examples of how ecosystem services 
are, or could be, quantified and valued in the Nordic countrie s. We start 
with how ecosystem services f rom fresh water was summarized in the 
“Nordic TEEB”, that is for a region including all the Nordic countries. The 
Nordic TEEB did not quantify or value all ecosystem services from No r-
dic fresh water. However, they suggest some indicators that could be 
used across the Nordic region in order to value these ES. This is seen as 
an interesting suggestion, as it is supposed to hold true for all the Nordic

Ecosystem Services 75 
countries, and because, as this section will indicate; there is still a lot of 
work left to do when it comes to quantification and valuation of Nordic 
freshwater ES. 
We then move on to how quantification and valuation can be done 
within a country, on a country scale, river basin scale, local scale or for 
one ecosystem services in particular. Although the focus of this report is 
how the ecosystem services framework can be used in water manag e-
ment, we will also include some recent studies which have not used the 
ecosystem services framework directly, but where the ecosystem se r-
vices categories valued are recognizable, and where the valuation is 
relevant for water management according to WFD. We see these exa m-
ples as highly relevant in our context because there are so few examples 
which follow the ecosystem services framework so far – due to its quite 
recent break -thr ough. And even if the study does not mention ecosystem 
services as such, often improvements in a bundle of ecosystem services 
are assessed in these studies, and therefore one can go back to these 
studies and identify which ecosystem services were valued. T herefore, 
being able to exploit this information will be important in order to move 
forward in using the ecosystem services framework in water manag e-
ment. We have focused on including recent work in our examples; this is 
again because the VALUESHED report (Barton et al. 2012) gave an ove r-
view of Nordic studies of interest carried out until 2011. 
In the next section we describe a valuation study of ecosystem se r-
vices from the wetland area Store Åmose in Denmark. We should note 
that this study even included cultural heritage as an ecosystem services 
connected to wetland restoration. The different ecosystem services were 
valued using a Choice Experiment, so that the values of the different 
ecosystem services could be estimated. These benefit valuation results 
were also used in a CBA. This study is related to a wetland, but the goals 
are not directly connected to WFD, and the benefit and cost estimates 
are used in a traditional CBA, but not for assessment of potential dispr o-
portional costs. This is one of relati vely few examples where ecosystem 
services for wetlands are valued and used in a CBA. 
We then briefly discuss the case study in Odense river basin where 
the benefits of reaching GES was investigated. This example was d e-
scribed in some detail in Barton et a l. 2012, and therefore not repeated 
here. However the study is briefly mentioned and the information used 
for the valuation survey is presented. This is because this case -study 
(together with the case study in Morsa, which was also presented in 
detail in B arton et al. 2012), are still some of the most comprehensive 
studies of the benefits of reaching GES according to WFD framework.

76 Ecosystem Services 
The Odense river study (and Morsa) did not use the ES framework per 
se, but the goods and services valued are easily recognisable in an ec o-
system services terminology. 
The Odense and Morsa valuation results are used for benefit transfer 
to nearly all Swedish rivers in a recent study, which is presented briefly . 
They are used to give estimates for the benefits of reaching the WFD 
goals of GES in Swedish rivers. 
We then move on to two new valuation studies of reaching GES in 
Finnish water. These studies do not use the ecosystem services term i-
nology directly in the valuation, but again the goods and services valued 
are easily recogni sable in ecosystem services terminology. As far as we 
know, these studies are two of the very most recent valuation studies 
undertaken in the Nordic countries, and there of great interest event if 
they do not use the ecosystem services terminology directly . The valua-
tion results in one of the Finnish studies are used to compare benefits 
and costs of carrying out programmes of measures, and the benefits are 
found to be much higher than the costs. 
In the next example the scale is very local – down to the wate r body level 
in WFD terminology. This study does not value ecosystem services itself, but 
uses all steps identified in section 2.1 to identify, quantify and put a mon e-
tary value on the benefits, expressed as improvements in identified ecosy s-
tem services. This case study therefore is one of the few we have found that 
try to follow the ES framework in order to assess the benefits of water st a-
tus improvements following the fulfilment of the WFD goals. 
Most of the studies discussed so far in the report assess the bundle of 
ecosystem services that are affected by water status improvements. 
However, there are also some examples that focus on one ecosystem 
service only. Barton et al . (2012) and the national reports about the ES 
framework, include lists of valuatio n studies of separate ES, e.g. recrea-
tional fishing, and flow reduction. Many of these were carried out before 
the ES framework was much discussed, but are still relevant. We will not 
repeat these here. However, following the interest for ecosystem se r-
vice s, and following the foundations for the ES framework (see figure 
2.1) there seem to be a growing interest to dig deeper into the bi o-
tic/ecosystem functions and combine with assessment of the value of 
the benefits these provide society. We included one exa mple of mapping 
of water provision based on landscape and biodiversity in section 3.3. In 
this section we include one example which shows the linkage between 
mapping and estimating the scientific changes in retention due to diffe r-
ent agricultural practices and the values that can be attached to these 
ecosystem functions.

Ecosystem Services 77 
3.4.2 Examples 
The Nordic TEEB – suggested indicators for assessment of 
ecosystem services 
The Nordic TEEB (Kettunen et al . 2013) presents the results of a 
synthesis on the socio -economic importance of biodiversity and 
ecosystem services in the Nordic countries. It also gives a synthesis of 
the (at the time) existing information on the status, trends and value of 
Nordic ecosy stem services, identifies gaps in existing information and 
knowledge and develop recommendations for key future policy action 
on ecosystem services in the Nordic countries. When it comes to ecosystem services from fresh water the report 
states that professional freshwater fishing in the Nordic countries is 
small compared to marine fishing, and mainly taking place in Finland 
and Sweden where fishing is concentrated to a few big lakes. There are 
some 56 fish species in Nordic countries’ freshwater, of which 13 are 
introduced species. The main problem with fresh water fishing lie in 
water quality issues (eutrophication and acidification) and not som 
much in overfishing, according to Kettunen et al . (2013). 
The other importan freshwater provisioning service me ntioned is 
drinking water, of which the Nordic countries have abundant resources 
compared to other European countries. The freshwater’s importance for water purification and nutrient 
retention is acknowledged. Generelly speaking, it is said that in the 
No rdic countries the state and quality of the water ecosystems has been 
relatively good compared to Central and Southern Europe. However, 
water quality has decreased in many parts of the Nordic region due to 
agricultural loads, ditching of forests and drainage of mire either for 
forestry or peat production, or due to nutrient loads from point sources. 
Recreation and supporting ecosystem services are not described in 
detail for freshwater ecosystem services in the Nordic TEEB. In the table below we have listed some of the major fresh water 
ecosystem services identified in the Nordic TEEB, and the identified 
direct and proxy indicator suggested used to estimate the socio -
economic value of Nordic ecosystem services.

78 Ecosystem Services 
Table 3.3 : List of identified direct and proxy indicators to estimate socio -economic value of Nordic 
ecosystem services, suitable to be explored to be adopted at national level. Note that the table 
does not address the issue of double counting which needs to be considered when calculating 
aggret ate values f or multiple ecosystem services 
Ecosystem service in fresh water 	Identified direct indicator 	Identified proxies 	
Fishing: fresh water (Market) value/value added of 
catch (sustainabl e) 
Number of jobs/employment/ 
businesses/income Size/value of catch (current amount 
or value)
 
Number/% of fish and other speci es 
in commercial use 
 
Aquaculture (Market) value/value added of 
catch (sustainabl e) 
Number of jobs/employment/ 
businesses/income Amount of cultured fish and other 
species (current)
 
 
 
 
Fresh water (provisioning of:) 
drinking and potable water, 
water for other human 
consumption (Market) value/value added of 
(drinking) water, adjusted to 
reflect the real value (remove 
effect s of any di rst orti ng 
subidies)
 Population/business served by 
renewable w
ater sources 
 
 
 
 
Carbon sequestion and storag e Value of carbon sequestrion 
and storage (e.g . based on CO	
2-
markets) Cost s related to climate change (real 
or estimated), e.g. based on costs of 
climate induced natural disasters
 
 
Natural hazards: Mud flow/flood Value of prot ective function 
Replacement/avoided cost s Economic losses associated with mud 
flow (real or estimated)
 
Population living in areas depending 
(directly) on ecosyst em based 
regulation 
 
Water and water flow: drainage 
and stabilisation of water flow 
(non -flood related) Difficult to find a reasonably 
indepandent indicator, mostly 
integrated into values below
 Not identified
 
 
 
 
Water and water flow: Drought 
mitigation Value of prot ective function
 
Replacement/ avoided csots Economic losses associated with 
droughts (real or estimated). 
Population living in areas depending 
(directly) on ecosyst em based 
regulation (i.e. drought risk areas)
 
 
Water and water flow: Irrigation Value of prot ective function 
Replacement/ avoided costs Not identified
 
 
 
Water and water flow: Aquifer 
recharge (Market) value of water 
orig inat i ng from aquifers, 
adjusted to reflect the real value 
(remove effects of any distorting 
subsidies)
 Replacement/ avoided 
costs Economic losses associated with lack 
of ground water (real or estimated). 
Population living in areas depending 
(directly) on ecosyst em based 
regulation )
 
 
 
Water retention and purification 
and waste treatment Value of
 regualting and 
protective function 
Replacement/ avoided cost Economic losses associated wi
th lack 
of water quality (real or estimated). 
Population living in areas depending 
(directly) on ecosyst em based 
regulation

Ecosystem Services 79 
Ecosystem service in fresh water 	Identified direct indicator 	Identified proxies 	
Recreation and tourism related 
to fishing Money/time invested in 
carrying out activities (e.g. 
travel costs, fishing licences, 
equipment)
 
Number of recreation 
fishermen/ fishing licences 	Val ue of servi ce based on stat ed 
preference methods (e.g. willingness 
to pay derived via contingent 
valuat i on) and revealed preference 
methods (e.g. travel cost met hods) 
General investment in the 
conservation /restoration of natural 
areas, e.g. local/regional/state budgets for maintenance of green areas, 
extension of national and nature 
parks/prot ect ed areas, affor est ati on 
etc. 	
Source: Modified from table 10.1. in Kettunen et al . 2013. 
Valuation of ecosystem services from wetland area Store Åmose in 
Denmark – Valuation and CBA, but not WFD 
The wetland area “ Store Åmose” has delivered different services to h u-
mans throughout history, and therefore one of the services delivered by 
restoration of the wetlands in this area is the protection of cultural he r-
itage and artefacts. In the stone -age the area was a good place to live for 
hunters, and there are a lot of artefacts buried in the top soil. These art e-
facts are protected by the wetland so that future generations can exper i-
ence these artefacts if they are unearthed then. 
In the 19th and 20th century the area, like many other wetlands, was 
used for energy production. After the 2nd world war the area was dried, 
a channel was built and the area was used for agricultural production. In 
the last 15 years parts of the area has been protected and some of the 
wetland has been restored , hereby protecting nature in the areas, pr o-
tecting the cultural heritage and creating recreation possibilities for 
people. This historical development is illustrated in figure 3.9 below.

80 Ecosystem Services 	
 	
Danish 	valuation	study	of a 	wetland	
Figure 3.9 : Store Åmose – uses and development over time 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source:http://www.aabne -samlinger.dk/svm/skoletjenesten/kulturkoerekort/pdf_aamosen/ 
Laerervejledning _aamosen.pdf 	
 
Wetland restoration has been proposed for this area to protect biodiver-
sity, the artefacts and also to improve the recreational opportunities in 
the area. This means that wetland restoration in this area have poten-
tia lly a number of ecosystem services with value for society. If no we t-
land preservation takes place the artefacts and also the biodiversity in 
the area is threatened by destruction, because agricultural practices, 
with artificially low water levels and processing of the soil, cause ox y-
genation of the soil. The Nature Protection Agency anticipated in an ac-
tion plan for the Åmose; “Åmose – the green heart of West-Zealand” in 
2001 that t he value of the recreational area as well as the nature protec-
tion would be high. 
T hree different scenarios were proposed, where these three scenar i-
os differed in how large area would be protected. The protection should 
take place by restoring wetlands by raising the water level by cutting off 
drains and dikes and damming up watercourses. The recreational assets 
were anticipated from paths, information signs, and a visitors’ center. In 
2005 –2006 a valuation study was made by researchers at the former 
Nation al Environmental Research Institute and the former AKF (the 
institute for Local Governmental research) (Lundhede et al . 2006; 
Lundhede et al. 2013). The researchers tried to elicit the value of the 
different ecosystem services of the wetland creation: the biodiversity

Ecosystem Services 81 
protection and improvement, the protection of the artefacts and the 
improved recreational possibilities, taking departure in the three sce-
narios for the Åmose. The valuation method used was Choice Exper i-
ments, which allowed for trade -offs betw een the different services. The 
nutrient uptake by the wetland was not assessed in the analysis. 
The results indicate that the respondents care much about protection 
of the artefacts, even if they cannot be seen and experienced now, and 
also for the biodiversity of the area. But the major proportion of the r e-
spondents did not care about improved access to the area; i.e. these cu l-
tural services did not have a value for the respondents. The sampling 
was the whole country, to explore the value of the ecosystem services of 
this area among the Danish population. These results from the valuation 
study are summarized in figure 3.10 . 
Figure 3.10 Restoring wetland Store Åmose: Results of a valuation study, sho w-
ing how important the respondents meant different values were 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Lundhede et al. 2013. 
 
As shown in figure 3.10 the value of the cultural service, i.e. the prote c-
tion of the artefacts, is considered higher among the interviewees than 
protection of the biodiversity in the area.

82 Ecosystem Services 	
The results from the valuation study have been used for a CBA. The 
CBA of this project shows how sensitivity analysis can be done to e x-
plore the certainty of the results. The CBA addressed the three different 
scenarios for the protection of the Store Åmose . The CBA indicate that 
each of the three Åmose scenarios gives a substantial welfare -economic 
surplus; the costs of the restoration are not very high, except for the lost 
agricultural production and the visitor center there are no costs and the 
benefits f rom protecting both artefacts and biodiversity was found to be 
high. The CBA showed that the overall welfare is improved significantly 
by completing each of the three scenarios, and the large welfare -
economic surplus is primarily explained by the values co nnected to the 
improvement of the cultural historic and biological assets. Since these 
benefits exceeded the costs with a very high ratio the Ministry of Env i-
ronment (2005) decided to base their social -economic analysis of the 
wetland project on a break -ev en price. 
This assessment of the break -even price was done calculating all the 
other costs and benefits, and then the necessary value of improving the 
biological, cultural historic and recreational services were added in o r-
der for the project to result in a welfare economic surplus. In this way 
the Ministry of Environment made it possible to compare the break -even 
price with the results of the valuation study, and they also claim that this 
method can be used to assess “whether the uncertainty in the valuat ion 
is significant enough to affect the conclusion on the welfare -economic 
surplus from completing each of the three scenarios” (Ministry of the 
Environment 2005). The results indicate that the break -even price 
should be at least DKK 56 mill, DKK 85 mill, and DKK 59 mill, respectiv e-
ly, at present value for the three scenarios, if there is to be a welfare -
economic surplus from completing the project. These numbers are much 
lower than the willingness -to -pay results from the valuation study 
(Lundhede et al. 2013). The Ministry therefore concluded that the we l-
fare gain would be high. 
In addition to this conclusion, it is of importance to notice that even if 
the valuation result might be overestimated because the sampling area 
was the whole Denmark and no substi tute sites were mentioned, the 
trade -offs between the different services provide valuable information of 
which services of a wetland restoration project like this are most valuable.

Ecosystem Services 83 
Odense river basin – valuation according to GES, not ecosystem 
services per se – used for benefit transfer in Denmark for screening 
of disproportional costs and to Sweden for assessment of benefits 
of reaching WFD goals 
The benefits of reaching good ecological status (GES) were investigated 
in Odense catchment as part of the Aq uamoney project (2009). This case 
was presented in some detail in Barton et al . 2012, and we will not re-
peat the case study description here. However, we will present some 
important aspects of the study, as this is one of the first and most com-
prehensive s tudies used to value improved water status according to 
WFD. It did not use the ecosystem services notion per se. The goods and 
services valued, however, are easily recognizable in an ecosystem se r-
vices terminology. 
In the textbox below we introduce the in formation used for the valu-
ation survey, referring to the water status classes in WFD, and how the 
water status classes were described in the Odense survey. 
Box 3.5 : Illustration of water status classes according to WFD in the 
Aquamoney survey in Odense 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Hasler et al . 2010.

84 Ecosystem Services 
As can be seen the four different water quality classes (poor and very 
bad water quality was merged into one class) the water quality is d e-
scribed by the four pictures illustrating the water clarity and the biod i-
versity in the water as well as the landscape of the land close to the w a-
ter, i.e. the river bank, or the coastal area. Furthermore the text related 
to the four pictures describe what the water is suitable for, highlighting 
both the use of the water for recreation as well as the fish composition in 
the recipient of this quality. The usability of the water is also indicated 
by the icons used for each of the four water quality classes. 
The information was linked to monitoring results and specific targets 
for nutrient content etc. in the water bodies necessary to achieve good 
ecological status. The information about the present situation (quality) 
was used to characterise the status quo in maps, see figure 3.11. below. 
Then the present water quality was presented together with two other 
alternatives for water quality improvements of the water bodies in the 
catchment. Hereby the valuation design facilitated spatial assessments 
of the value of the improvements. 
Figure 3.11: Presentation of the present situation and two alternative scenarios 
in the Aquamoney survey in Odense 	
 
 
 
 
 
 
 
 
 
 
 
 
 	
Souce Hasler et al. 2010.

Ecosystem Services 85 
In this way the description of the water quality highlights the ecosystem 
services provided when the water has different status according to WFD, 
and hence this is an example of how the WFD water quality classification 
can be linked to ecosystem services assessments. The Odense study is 
further discussed in chapter 4 as the study results have been used for a 
cost benefit analysis and screeni ng of disproportionate costs (cf. Jensen 
et al . 2013, presented in Chapter 4). 
Assessment of the benefits of reaching good ecological status in 
Swedish river basins based on benefit transfer from Odense 
(Denmark) and Morsa (Norway) 
This study is based on benefit transfer from Odense river basin in De n-
mark (see examples above) and Morsa in Norway (the two case- study-
areas in Barton et al . 2012 (“VALUESHEDS”) to most of the Swedish river 
basins ( “åtgärdsområder ”). Both the Morsa and the Odense study used 
bot h Choice Experiment (CE) and Contingent Valuation (CV), and the CE 
part was used for the transfer to the Swedish areas. Furthermore the 
differences between the Norwegian and the Danish results were used to 
construct an interval for the transfer. The purpos e of the Swedish study 
was to estimate the value of good ecological status (and if possible also 
high ecological status) for as many as possible of Swedish river basins. 
The authors underline that the estimates are not meant to be used for 
policy decisions for example to assess disproportionate costs. However, 
they may be used in order to point to the areas where further analyses 
are needed. The study naturally does not say more about ecosystem 
services than the Odense and Morsa studies do, and as mentioned even if 
different ecosystem services are described as part of the water quality 
description the valuation did not focus on ecosystem services per se. 
The benefits of reaching good ecological status in local water 
course in Lake Vesijärvi, Finland – Valuation, not ecosystem 
services per se, but ecosystem services are recognizable, compare 
benefits and costs, but not disproportional costs 
The purpose of this study was to estimate the welfare effects of water 
management in monetary units (Lehtoranta 2013). T he demand for 
water management was surveyed in the city of Lahti and the local 
community Hollola in a situation where water status in Lake Vesijärvi 
would be improved from moderate to good. The study area is whown in 
figure 3.12. In the survey the Continge nt Valuation (CV) method was 
applied. The households were asked about their willingness -to -pay 
(WTP) for improved water quality to gain increased recrational values 
(several forms of recreation uses, these were not specified in the

86 Ecosystem Services 
survey). The survey was carried out as a mail survey sent to 2 ,550 
random households in Lahtis and Hollola. Out of these, 1 ,362 (54% of 
the sample) answers were completed and could be analysed. 
The probability that the households would pay for water quality 
improvement was invest igated using regression analysis. The most 
important reason for people to pay was the wish to preserve water in a 
good status for the future generation. 
The households were willing to pay the following five years an 
average of EUR 11 with certainty and EUR 23 with “quite high certainty”. 
The total benefits for improvement from moderate to good status was 
estimated to be more than 1 .3–2.5 the yearly costs needed to reach the 
water quality improvments in Lake Vesijärvi. Hence the benefit and cost 
estimates were compared at water body level. 
Households with higher income and housholds who believed in the 
payment mechanism used (payment to a water improvement foundation 
that would carry out the necessary water improvement measures) were 
willing to pay more than households with smaller incomes and who 
doubted the foundation’s work. The belief that the suggested restauration 
methods will work also increase people’s willingness to pay.

Ecosystem Services 87 
Figure 3.12 : Study area: Enonselkä basin is the largest basin of Lake Vesijärvi 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Lehtoranta 2013. 
The benefits of improved water status in local water course in 
northern Finland – Valuation, not ecosystem services per se, but 
ecosystem services are recognisable 
This survey responded to a need by the Kello village association and the 
Kiiminki- Jääli water management association to consult local residents on 
the goals of, and the willingness to participate in water management in the 
river Kalmenjoki catchment area ( Lehtoranta et al. 2013), see figure 3.13. 
The scope level was the river catchment area. As a research method, the 
questionnaire -based contingent valuation method, the most common 
framework taken to economic valuation on non -market resources, was 
employed. Two versions of the questionnarie were created and were sent

88 Ecosystem Services 
to 1 ,632 households in the catchment area. Half of the households were 
asked about their hypothetical willingness -to -pay (WTP) to the water 
management association while the other half were presen ted with an 
actual option to pay for water management. The benefits gained by way of 
implementing the restoration plan were explained in the questionnaire 
scenario. The catchment area would provide for example increased 
recreational and aesthetic values, h abitats for fauna and flora and local 
pride. There was a response rate of ca. 31% . 
The respondents’ unanimity about the major impact of the river 
basin on the residential environment’s attractiveness demonstrated that 
both the river landsapce and water quality are important to residents of 
the Kalimenjoki river basin. For most of the respondents, it is extremely 
important that minor water bodies in the Oulu Region be nurtured and 
restored. Almost a tenth had participated in pracitcal restoration 
activities. However, despite regarding the river basin and its restoration 
important, respondents felt that responsibility for improving the river 
basin’s status was held by those contaminating it and society. Only ten 
per cent were uninterested in the river basin . 
Most respondents were unwilling to pay “a water management 
donation”, in most cases because they believed that the polluter and 
society should pay. A total of 150 named the maximum management 
donation that they would be willing to pay. This fee ranged fr om euro 
18.70 –25.70 per household. Those asked about the hypothetical 
payment option were willing to pay around 1.9 –2.5 times more than 
recipients of the actual option to pay the association. At its most 
powerful, WTP was based on the wish to use the river basin for leisure 
activities. A third of the respondents willing to pay wanted to keep the 
river catchment area in good status for future generations. 
The survey presented a new method of describing national water 
management goals and making them tangible for the general public. Its 
results provide valuable information in support of regional activities and 
decision -making, information on the survey was efficiently described by 
the local media. At the same time, the survey led to the widespread 
distribution of information on water management and river basin 
restoration based on almost half of all the households in the catchment 
basin. It also prompted a discussion of the benefits and costs of water 
management in the operating area. Surveys, based on the Kalm enjoki 
model could also be used in other areas, where there is a need to 
ascertain the views of catchment area residents on water management.

Ecosystem Services 89 
The aim of this study was to estimate the benefits of improved water 
status, and to compare hypothetical and real willingness-to -pay. It did 
not compare benefits to costs. 
Figure 3.13: The River Kalimenjoki catchment area (numbe r 84.114) 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Lehtoranta et al . 2013. 
Hovinbekken and Alna local rivers in urban Oslo, Norway – 
ecosystem services quantification and valuation by benefit transfer 
– used to assess disproportional costs 
In this project the aim was to assess and compare benefits, costs and 
disproportionate costs in water bodies in two urban rivers in Oslo. We 
will come back to the asses sment of disproportionate costs in chapter 4, 
and have described the potential ecosystem services which are of inte r-
est in these rivers in section 3.3. Here, we will describe how the ecosy s-
tem services which could be affected by measures to improve water 
s tatus in the two rivers were quantified and valued in what the authors 
call a screening process for assessment of benefits and – potential dis-
proportionate costs. The two rivers, and the water bodies they consist 
of, are illustrated in figure 3.14.

90 Ecosystem Services 
Fig ure 3.14 : Case study rivers in urban Oslo, Norway. River Hovinbekken on the 
left, divided into two waterbodies (Hovinbekken 1 and Hovinbekken 2). River Alna 
on the right divided into five+two water bodies (Alna 1 -Alna 5 plus two water bo d-
ies consisting of side streams side streams of Alna and stream Tokerudbekken) 	
 
 
 
 
 
 
 
 
 
 
 	
 
 
 
Source: Magnussen et al. 2014. 
 
The authors follow the same procedure for assessing the value of i m-
proved water environment as we described in chapter 3.1 in this report : 
 
• Identify relevant benefits resulting from carrying out relevant 
measures, based on the description of ES . 
• Quantify the identifi ed, affected ecosystem services. 
• Yalue the identified benefits in money terms. 
 
By using the table, reproduced in section 3.1 (table 3.2) in our report, as 
a point of departure, the relevant measures are discussed with respect 
to which ecological and other effects they will have, and which ecosy s-
tem services will be affected. Following this procedure, it is concluded 
that cultural ecosystem services will be most affected (improved) and 
some regulating ecosystem services may be slightly improved, but not 
much in the present period (until 2021). The most important ecosystem 
services affected are shown in box 3.6 .

Ecosystem Services 91 
Box 3.6
: Important ecosystem services affected by relevant measures in 
Hovinbekken and Alna rivers 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Magnussen et al. 2014. 
Quantification and valuation of effects of water improvements 
• Quantification of improved recreation 
As a proxy for quantification of increased recreation services, the 
number of people who can potentially enjoy the improvements is 
used. Since the rivers in the case study are small and local, and there 
are 11 rivers running through Oslo, it is assumed tha t these rivers 
have local use and non -use -values only. Therefore, the number of 
people living at a certain distance from the rivers (water bodies) is 
used in order to quantify the ecosystem services improvement. 
• Valuation of benefits 
Since the measures in PoMs first and foremost will affect cultural 
ecosystem services, the main emphasis has been on valuation of 
these services. There was no existing primary valuation study for the 
two rivers in question, and very few valuation studies of improved 
water environment in general in Norway, and even fewer with 
relevance to urban rivers. However, there was one, quite recent pilot 
study using the Contingent Valuation Method to value improved 
water status in another river in Oslo, called river Akerselva. Although 
th is is a larger and more often sought river for recreation, the 
estimates from this was used as a screening benefit transfer 
procedure in order to give a rough estimate of the values of improved 
water environment in all the water bodies in the two rivers. T he 
results from Akerselva was that the WTP per household was 137 
Identification of the most important ecosystem services affected by relevant 
measures:	 	
 
• 	Cultural ecosystem services: 
- Recreational ecosystem services. 
- Aesthetic ecosystem services . 
- Knowledge and learning . 	
• 	Regulating ecosystem services: 
- To some 	degree: reduced flow and erosion, however modest effects of 	
suggested measures in the period considered (until 2021). 	
• 	Supporting ecosystem services : 
- 	Preservation and improve	ment of the ecosystem, including values rela	t-	
ed to biodiversity:	 non	-use	-values	.

92 Ecosystem Services 	
(2012) Norwegian kroner (NOK) per year in a ten -year period in 
order to secure good swimming water quality. 
Using the same estimates for the number of households living within 
different distances from the water bodies, and the WTP estimate 
referred to above, a rough estimate for the value of increased 
recreation and non- use-values from the improvements are presented 
in the table below. There is a thorough discussion of these estimates 
in the M agnussen et al. (2014) report, whether they should be seen as 
maximum values etc. However, for our purpose, we do not repeat this 
discussion, but present the results, which can be used for comparison 
with estimated costs for relevant measures in the same water bodies. 
It should be pointed out though, that the study and the discussion, 
underlines that the uncertainty by using benefit transfer instead of 
primary studies, increases the uncertainty in CBA and assessment of 
disproportionate costs. 	
Table 3.4: Est imated Economic Present Value (PV) of total Willingness to pay (WTP) for the pop u-
lation living at a certain distance from different water bodies (less than 100; 300 or 1, 000 meters), 
under the assumption that WTP per household is NOK 140 per year in a 10 -year period. Numbers 
are in million NOK 
 	Distance from water body 	
 	1,000 meter 	300 meter 	100 meter 	
Water body 	PV in mill. NOK 	PV in mill. NOK 	PV in mill. NOK 	
Alna 1 7.2 0.7 0.1 
Alna 2 26.0 9.3 2.3 
Alna 3 11.5 0.3 0.1 
Alna 4 22.2 4.1 0.7 
Alna 5 23.8 4.6 0.7 
Side strea ms to Alna 25.6 7.8 2.4 
Tokerudbekken 30.3 13.2 4.6 
Total Alna Ca. 147 Ca. 40 Ca. 11 
Hovinbekken 1 13.2 6.2 1.8 
Hovinbekken 2 38.5 10.6 2.9 
Total Hovinbekken Ca.52 Ca. 17 Ca.5 
Source: Magnussen et al. (2014). 
 
Danish example on quantification and valuation of the regulating 
ecosystem service, retention 
Retention is a regulating service, because nutrients and other pollutants 
are transformed or kept in the soil, and prevented from loading into the 
water bodies. The illustration in figure 3.15 is from a Danish yet u n-
published study (Termansen et al . 2014); where root-zone leaching and 
leaching through drain is retained in soil, in groundwater and in we t-
lands, before the final loading enter the water body shown in blue. The

Ecosystem Services 93 
retention in a Danish catchment can be up to 80 –90% of the initial load-
ing from the root zone, and down to between and 10%. The high vari a-
tion in retention calls for targeted regulation utilising the retention as an 
ecosystem services. The valu e is high as its replacement cost is high: if 
we did not have this retention farmers had to reduce non -point pollution 
for their fields by costly actions, and some places lost retention capacity 
would result in double efforts from farmers. 
Figure 3.15: Regulating services from fresh water 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Maes et al. 2013. 	
 
In a recent study in Denmark the value of increasing the retention in the 
Odense catchment is valued. The modelling of the retention is based on 
1) a retention map for the sub -catchments within the Odense fjord 
catchments. As can be seen from map 1 in the figure 3.16 below, the 
retention (the retainment of nitrogen in soil, groundwater and surface 
water) is relatively high in the catchment, but it varies a lot; between 35 
an d 95% of the initial nitrogen load is retained in the sub -catchments, 
and do not reach the fjord. The retention map has been linked to a map 
of the agricultural production in the area and an agricultural model used 
for modelling changes in land use from ch anges in regulation – nitrogen 
tax, requirement for wetland restoration etc. Subsequently the benefits 
of these nutrient reductions are mapped using the Odense valuation 
study carried out in Aquamoney (see section 3.2.2). These results are 
not yet publishe d but are forthcoming.

94 Ecosystem Services 
Figure 3.16 : Mapping nitroge n reductions from the root zone 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Termansen et al . 2014. 
3.5 Main findings in this chapter 
This chapter has demonstrated that there are some interesting examples 
on the use of the ecosystem services framework in order to identify, 
quantify and value the benefits from freshwater in general, and the i m-
provement of freshwater status according to WFD in particular, across 
the Nordic countries. The presentation of the examples also seek to 
demonstrate that there are a number of studies that do not use the ec o-
system services approach per se, but the studies provide information 
about the value of ecosystem services. 
However, when we move from the ambition of illustrating and 
demonstrating the different ecosystem services from freshwater and 
improvements in freshwater status, the examples show that it is d e-
manding to identify, and particularly quantify and value in monetary 
terms the benefits of reaching good ecological status (GES). 
Identif ication of ecosystem services can be done, and is done, on di f-
ferent scales (water body, river basin, country, region) depending on 
the purpose. In some studies the identification and valuation has been 
done with focus on one or a few ecosystem services. I n a WFD context

Ecosystem Services 95 
the most interesting question is how the benefits from all ecosystem 
services are changed (increased) by reaching the goal of good ecolog i-
cal status. There are only few primary valuation studies that follow the 
ecosystem services terminology to full extent. Even rather new valu a-
tion studies aiming at valuation of the benefits of reaching the WFD 
goals of reaching GES (e.g. the Aquamoney study in Denmark and No r-
way; and two recent valuation studies in Finland) do not use the ec o-
system service s terminology per se, however the benefits valued are 
easily recognisable in ecosystem services terminology. Since the nu m-
ber of new primary valuation studies has been limited in the Nordic 
countries, we need to use the information from valuation studies 
w here the ecosystem services terminology has not been used. This was 
the approach taken in the study from local rivers in Oslo, where ec o-
system services affected by water status improvements were evaluated 
in an ecosystem services framework, and prior valua tion results were 
used to give a rough estimate of the value of the changes in these ide n-
tified ecosystem services. What one would wish for are new primary 
valuation studies for fresh water that use the ecosystem services te r-
minology from the beginning, an d follow the identified steps. 
Most of the studies and reports so far do not, or only to a minor d e-
gree, take into account the need for trade -offs, and other issues we 
discussed in 3.1 and 3.2. There is an on -going discussion of these issues 
in the academ ic literature. The ecosystem services framework is still 
new in applied work, however, and much emphasis so far has been on 
how the framework can be used, which ecosystem services are i n-
volved, how they could be described etc. Probably, the issues of co n-
ce rn will be taken more into account as the framework is more co m-
monly applied. 
The ES framework can be a tool for systematic identification of ben e-
fits and to investigate the connection between ecological changes and 
welfare gains, and this chapter shows th at the framework is coming into 
use across the Nordic countries. However, this framework is no “quick 
fix ”. Much work is still needed on all aspects of identifying, quantifying, 
and not at least valuing ecosystem services – both with respect to the 
ecologi cal underpinnings and the economic methodology.

4. Assessment of 
disproportionate costs 
 
 
 
 
 
 
 
 
 
 
4.1 Disproportionate costs in WFD 
According to the WFD costs can be disproportionately high compared to 
financial ability to meet the targets, or compared to the benefits of mee t-
ing the targets. Financial ability cannot be a justification for reducing the 
targets of good ecological status (GES), and will not be treated further 
here. However, if the costs are disproportionately high compared to the 
benefits of reaching the water status targets, this may justify less amb i-
tious t argets or justify postponement of reaching the targets. 
In the latter case, we need to compare the benefits with the costs. We 
often assume that the costs are easier to estimate than the benefits. Still, 
a review analysis carried out would most likely reve al that there are 
only a few examples of estimates of costs to society of reaching the ta r-
gets of WFD. 
This is noted in Martin -Ortega (2012) in her review of economic 
analysis applied in WFD, that while cost effective analysis (CEA) has 
been widely adopted by national guidelines, and the estimation of the 
benefits has received significant attention in literature, the way these 
two should be joined up in a CBA has received much less attention. This 
is in accordance with our own experiences from the Nordic co untries. 
Although we would add that the interest in benefit estimation has also 
I n this chapter we: 
 
• 	Start with a brief reminder about disproportionate costs in WFD (section 4.1). 	
• 	Give some examples on how assessment of disproportionate costs can be 
done. We start with a couple of examples from outside the Nordic region, and 
then show how this assessment is done in two Nordic examples (section 4.2).	 	
• 	Discuss and conclude regarding findings and what can be learnt from this 
chapter (section 4.3).

98 Ecosystem Services 
been very limited in these countries, and the attempts made have been 
mainly on a research basis, and to a very little extent included in pract i-
cal implementation of WFD. The extent to which CEA has been carried 
out in practice is also varied, though all countries have some guidelines 
telling that this is supposed to be part of the work. 
The guidelines for WFD suggest that the most cost -effective measures 
should be carried out i n order to reach the goals, and there are calcul a-
tions of program of measures around. In many countries and PoMs the 
financial costs are calculated only, not the economic costs for society. 
Still, we believe it is easier to calculate the costs to society than to 
calculate the total benefits of environmental improvements. Therefore, it 
seems reasonable to start with calculating the real economic costs of 
measures, and to use these to compare with the benefits. 
If we get the costs reasonably correct, we have a “benchmark” t o-
wards which we can compare the benefits. 
Getting from financial costs to economic costs to society may take 
some necessary steps, which are explained on a country basis in Jensen 
et al . (2012) and on a water body level in Magnussen et al . (2014). 
Like assessment of benefits, assessment of disproportionate costs 
may be carried out at different scales /levels – on a country scale, as a 
screening procedure to identify river basins where the costs of fulfilling 
the WFD may be disproportionate, on a river basin level and at the water 
body level. A focus of our report is to assess whether the costs are di s-
proportionate which could lead to exemptions (time delay or permanent 
exemption), and this procedure will need to be carried out on the water 
bo dy scale, as exemptions are to be made on the water body level. 
4.2 Examples of assessment of disproportional costs 
according to WFD 
4.2.1 Introducing the examples 
There are not many examples of using CBA to assessment of dispropo r-
tional costs in the Nordic countri es, or in EU as a whole. Even if the ben e-
fits of improved water status are estimated, it is not necessarily the ES 
framework which is used. Therefore, the number of case studies or a p-
plied work to choose among in order to present examples in this chapter 
i s somewhat restricted. Still, there are a few examples, as we will show, 
and this is probably an area where more work will be carried out in the 
coming years.

Ecosystem Services 99 	
Our first example is from Scotland (section 4.2.2.1) where the author-
ities have suggested to use cost estimates only in order to assess dispr o-
portionate costs, but where researchers recently have suggested how 
the known information about costs in different lochs in Scotland can be 
combined with results from benefit estimates for reaching GES in the 
sa me lochs, in order to include more thorough cost benefit assessment 
for reaching GES in all the lochs in Scotland. 
This framework is interesting because it combines information about 
costs and benefits on a national (Scotland) scale and uses existing data 
on benefits and costs in order to reach more rigorous results about costs 
and benefits, and in which lochs the costs seem to be disproportionate. 
This framework does not include the ES framework. 
Our next example from region Emilia -Romagna in Italy (sectio n 
4.2.2.2) does not include the ES framework either. Still, it is briefly me n-
tioned because it develops a methodology for the assessment of dispr o-
portionate costs, using estimates of benefits and costs, and the study 
identifies areas where disproportionate costs are more likely to occur. 
We then move to Nordic examples. The first is a study where the A q-
uamoney study in Odense (described in section 3.4.) is transferred to 22 
Danish river basins and used for å screening of the costs and benefits of 
achieving GES. As mentioned in section 3.4; this primary study from 
Odense did not use the ecosystem services terminology per se, but the 
goods and services valued would be characterised as ecosystem se r-
vices. This is an interesting and seldom Nordic example in which there is 
a good quality primary study of one river basin which has been tran s-
ferred to the other rivers in the country, and where the researchers also 
have put in emphasis in order to calculate the costs to society (which are 
the costs we aim for in CBA ). It is interesting that Swedish authorities 
chose to make a benefits transfer from Danish and Norwegian valuation 
studies when they wanted to value the benefits of reaching GES in Sw e-
dish rivers. In Norway, the case study from Aquamoney (Morsa) has not 
b een used in order to estimate benefits for the other rivers in the cou n-
try, and no estimates of the benefits of reaching GES, or comparison of 
benefits and costs on a national or river basin scale exist, as far as we 
have knowledge of. In Finland several v aluation studies for freshwater 
benefits of reaching GES are carried out, and also CBAs of reaching GES, 
as we saw in chapter 3 (section 3.4.2). 
As our last example in this chapter we have included one recent 
study for two local rivers in urban Oslo, which has been introduced in 
chapter 3 (sections 3.3 and 3.4), and where also an assessment of di s-
proportionate costs was carried out. This was also done as a screening

100 Ecosystem Services 
process in order to see in which water bodies more detailed benefits and 
cost assessments ne ed to be carried out in order to decide whether costs 
are disproportional so that exemptions from the general goal of GES 
must be given. 
4.2.2 Examples 
National level analysis – An example from Scotland – 
disproportionate costs, but not ES framework 
Martin -Orte ga (2012) mentions the framework of the Scottish Environ-
ment Protection Agency (SEPA), which has been largely to rely on CEA 
alone (SEPA 2005). This decision was based on the outputs of the Impact 
Assessment of the River Basin Management Plan (RBMP) (Scott ish Gov-
ernment, 2008), which includes a qualitative assessment of benefits and 
led the regulator to assume that mitigation is usually proportional u n-
less costs seem particularly high or if concern is raised. This implies, in 
principle, that there has been an assessment of benefits, but not all env i-
ronmental benefits are estimated quantitatively. 
In order to include cost benefit assessment more thoroughly within the 
disproportionate cost assessment in Scotland, Vinten et al. (2012) pr o-
posed a framework for proportionality assessment of phosphorus (P) 
pollution mitigation in 544 Scottish lochs at national and local water body 
scales. For 293 (31 %) of the lochs GES already occurred. Mitigation cost -
effectiveness was assessed using combined mitigation cost curves for 
managed grassland, rough grazing, arable land, sewage, and septic tank 
sources. These provided sufficient mitigation for GES to be achieved in 
another 31 % of lochs areas at annualized cost of GBP 2.09 million per 
year. Mitigation of the residual P loading preventing other lochs achieving 
GES was considered by using a “mop -up” cost of GBP 200 per kg P (as-
sumed cost -effectiveness of removal of P directly from lochs), leading to a 
total cost of GBP 189 million per year. Lochs were ranked by mitigati on 
costs per loch area to give a national scale marginal mitigation cost curve. 
A published Choice Experiment valuation of WFD targets for Scottish 
lochs (Glenk et al . 2011) was used to estimate marginal benefits at n a-
tional scale and combined with the marginal cost curve. It can be a s-
sumed that at a national level, benefits will decline as the area (number) 
of lochs restored to GES increases due to limited national WTP and scare 
resources for government support. The national scale benefit estimates 
were derived from Glenk et al . (2011). Vinten et al. note that these na-
tional scale benefit estimates were quite well suited to guide decisions 
about national improvement targets if ecological standards adopted by

Ecosystem Services 101 
the regulator constitute reliable local estimate s of the balance between 
societal benefits of clean water and the social costs of achieving it. At a 
local scale, it is pertinent to characterise benefits and costs, independent 
of management of other lochs in the country. However, in the absence of 
suitab le benefit transfer studies, benefits of mitigation for individual 
lochs were estimated by reference to a national average mean WTP for 
achieving GES, derived from Glenk et al . (2011). 
This gave proportionate costs of GBP 5.7 million per year leading to 
GES in 72 % of loch area. Using national mean marginal benefits with a 
scheme to estimate changes in individual loch value with P loading 
gave proportionate costs of GBP 25.6 million per year, leading to GES 
in 77 % of loch area (491 lochs). That is, accordi ng to these results, 
72 % of the lochs that could be mitigated proportionately at a cost of 
GBP 5.7 million per year. Mitigation beyond this point would be dis-
proportionate. 
Regional level analysis – An example from Italy – disproportionate 
costs, but not E S framework 
Galioto et al. (2013) develop a methodology for the assessment of di s-
proportionate costs according to the WFD guidelines for the region Em i-
lia -Romagna in Italy. According to the authors the originality of the 
framework lies in the focus on the interdependencies between water 
bodies and the consideration of the multiple interactions between 
measures and pressures. However the broad architecture of the study 
fits into a wider assessment procedure already developed in recent stu d-
ies. Specifically, a cost -effectiveness analysis, implemented to select an 
efficient combination of measures, is integrated with a cost benefit ana l-
ysis, which allows for the evaluation of the economic feasibility of the 
proposed actions. This methodology is applied to the Emilia -Romagna 
Region in Italy. In spite of the uncertainties in the estimations of costs 
and benefits, the study enables the identification of areas where dispr o-
portionate costs are more likely to occur. The results show that dispr o-
portionality tends to i ncrease from foothill regions, where most of the 
functional uses of regional water resources are found, to plain areas, 
where the sources of pressure tend to be located. 
Danish example – Screening procedure for 23 rivers – 
disproportionate costs, but not ecosystem services per se 
Jensen et al. (2013) use the benefit results from the Aquamoney study in 
Odense (see chapter 3.4.2 and Barton et al. (2012), as well as Hasler et al . 
2010), and transfer the results to the other 22 Danish river basins for a 
screen ing of the costs and benefits of achieving good ecological status. The

102 Ecosystem Services 
study demonstrates a methodology designed to investigate dispropo r-
tionate costs in the 23 river basins. The CBA which is performed as a basis 
of the screening applies a conservative fra mework where the lowest levels 
of the benefit results are compared to the highest levels of costs, to ensure 
that all river basins where the benefit cost ratio is positive is surely so, 
while those with a negative benefit cost ratio will be further investi gated 
as a basis for whether the costs are disproportionate. 
The study is done for all 23 river basins. The water status of these b a-
sins is described in table 4.1 below. As can be seen the water status of 
the streams is generally good, while the status of the lakes, fjords and 
coastal areas is much worse. 
Table 4.1: The current average ecological status in the 23 river basins 
River basins 	Streams 	Lakes 	Fjords 	Coastal waters 	
Kattegat and Skagerrak Moderat e Good No Fjord Poor 
Limfjorden Moderat e Poor Poor Poor 
Mariager fjord Good Poor Poor 	
No coastal water	c 	Nissum fjord Good Good Poor Poor 
Randers fjord Good Moderat e Poor 	No coastal water	c 	Djursland Good Moderat e No Fjord Poor 
The Bay of Aarhus Moderat e Poor Poor Poor 
Ringkøbing fjord Good Good Poor Poor 
Horsens fjord Good Poor Poor 	
No coastal water	c 	Wadden sea Moderat e Moderat e No Fjord Poor 
The Belt sea (Lillebelt, Jutland) Good Moderat e Poor Poor 
The Belt Sea (Lillebelt, Funen) Moderat e Poor Poor Poor 
Odense fjord Moderat e Poor Poor Poor 
The Belt sea (Storebelt, Funen) Moderat e Poor Poor Poor 
The Sea south of Funen Moderat e Moderat e 	
Moderat e	a 	Moderat e 
Kalundborg Moderat e Poor Poor Poor 
Isefjord and Roskilde fjord Moderat e Poor Moderat e 
No coastal water	c 	Oresund Moderat e Good No Fjord Poor 
The Bay of Koge Moderat e Moderat e No Fjord Moderat e 
The sea south -w est of Zealand Moderat e Moderat e 	
Poor	a 	Moderat e 
The Baltic Sea (Baltic Proper) Moderat e Moderat e Moderat e Moderat e 
Bornholm Good Good No Fjord 
Moderat e 	b 	
Kruså/Vidå Good Moderat e No Fjord Poor 
a The status is not classified in the final RBMP. Instead we use the status from the hearing version of 
the RBMP. The classification in Denmark will in the second planning phase be based on the “one -
out -all out” princi ple, but this is not the case in the ab ove classification. 
b The status of water quality of coastal waters is not classified in either the final or the hearing 
version of the RBMP. Instead w e have used the status of the Baltic Sea basi n to indicate the water 
quality of coastal waters. 
c In these basins the water exchange between the fjords and the surrounding coastal waters is 
particularly weak and therefore coastal waters has not been included in these basins. While water 
does flow from fjord to sea it is assessed that sea quality impac ts will mainly occur further from the 
coastline than w hat is covered by the WFD. Furthermore, these basins have very limited direct 
coastline were benefits can be found.

Ecosystem Services 103 
The table 4.2 shows the benefit cost ratio under different assumptions. 
Table 4.2: Annual welfare gains and benefit cost ratios (B/C) under baseline and sensitivity analysis 
scenarios 
River basin 	Baseline Baseline benefit - Baseline cost 	
S ce n ario 1 Alternate benefit Baseline cost 	
Scenario 2 Baseline benefit Alternate cost 	
Scenario 3 Alternate benefit Alternate cost 	
 	€ (Mill) 	B/C 	€ (Mill) 	B/C 	€ (Mill) 	B/C 	€ (Mill) 	B/C 	
Category 1: Costs are 
higher than benefits 
 
Bornholm -1.340 0.0 -0.833 0.4 -1.308 0.0 -0.801 0.4 
Kruså/Vidå -6.723 0.1 -1.962 0.7 -4.576 0.1 0.186 1.0 
Djursland -3.361 0.1 -0.768 0.8 -2.147 0.1 0.446 1.2 
Category 2: Cost and benefits 
are at the same level 
 
The Belt sea (Lillebelt, Jutland) -6.819 0.7 6.487 1.3 -5.885 0.7 7.421 1.4 
Kattegat and Skagerrak -1.229 0.8 5.476 1.9 -0.514 0.9 6.190 2.2 
Limfjorden -12.210 0.8 10.981 1.2 1.783 1.0 24.975 1.5 
Nissum fjord -1.427 0.8 3.608 1.6 0.506 1.1 5.541 2.2 
Randers fjord -5.175 0.8 -5.175 0.8 -3.153 0.8 -3.153 0.8 
Ringkøbing fjord -0.934 0.9 4.931 1.7 -0.966 0.9 4.900 1.7 
Wadden sea -0.314 1.0 10.963 
2.1 -0. 150 1	
 .0 11.127 2.1 
Mariager fjord 0.336 1.1 0.336 1.1 0.666 1.3 0.666 1.3 
The Sea south of Funen -0.239 1.0 0.993 1.2 -0.189 1.0 1.043 1.2 
Category 3: Benefits are 
higher than costs 
The sea south -west of Zealand 9.342 1.5 13.072 1.7 10.737 1.7 14.466 1.9 
The Baltic sea (Baltic Proper) 1.879 1.9 2.798 2.3 	
1.874 1

.9 2.793 2.3 
Horsens fjord 4.674 2.0 4.674 2.0 4.979 2.1 4.979 2.1 
The Belt Sea (Lillebelt, Funen) 7.358 4.0 11.385 5.6 7.489 4.2 11.515 5.9 
Odense fjord 20.453 4.0 31.636 5.6 21.377 4.6 32.559 6.5 
The Belt sea (Storebelt, Funen) 3.553 4.1 5.476 5.8 3.558 4.1 5.482 5.8 
The Bay of Koge 17.361 4.2 25.664 5.7 17.380 4.2 25.684 5.7 
Kalundborg 6.135 4.4 9.391 6.2 6.453 5.3 9.708 7.5 
Isefjordand Roskilde fjord 25.776 4.5 25.776 4	
 .5 25.936 4.6 25.936 4.6 
Oresund 29.390 10.0 67.581 21.8 31.103 21.1 69.581 45.9 
The Bay of Aarhus 42.201 15.8 60.661 22.3 43.053 22.6 61.513 31.8 
National 128.687 1.6 293.438 2.3 158.006 1.8 322.756 2.7 	
After J ensen et al . 2013. 
 
The so-called base line assumption use the benefit estimates from the 
Odense valuation results, and compare to the costs of achieving GES, ca l-
culated by Jacobsen (2012). In this baseline it is assumed that the benefits 
in coastal areas are zero (because they w ere not assessed in the Odense 
study). In the scenario 1 a sensitivity analysis is performed assuming that 
the benefits of improving coastal areas are equal to the benefit estimated 
for the fjord. Naturally fewer river basins are at risk of negative benefi t 
cost ratios when the coastal areas are included. The scenario 2 assumes 
the benefits used for the baseline, while the costs are lower because the 
localisation of the measures is optimised. In the last scenario 3 both alte r-
natives are used, i.e. lowest costs and highest benefits.

104 Ecosystem Services 	
The authors (Jensen et al . 2013) conclude that the results from the 
study indicate that this procedure may serve as a first step towards a s-
sessing disproportionate costs. By using the river basins as the ge o-
graphical scale for the analysis existing data is utilised for describing the 
average water quality status and whether GES is obtained. The costs and 
benefits of achieving GES relative to the current situation are assessed, 
also using existing knowledge on both costs and bene fits. For three ba-
sins the study conclude that there is a high likelihood of obtaining dis-
proportionate costs, and the recommendation is that more detailed 
analyses in these areas should be performed, as well as in nine areas 
where costs and benefits are a round zero. This recommendation does 
not mean that costs are disproportionate in these areas but that further 
analyses should be carried out to investigate the benefits. In addition 
one could add that further analyses of more cost -effective measures and 
in struments could also improve the solutions, cf. chapter 5. In this r e-
spect both the ecosystem services framework and a more targeted use of 
instruments and measures has a strong potential in order to obtain sol u-
tions where benefits outweigh costs. 
Norwegia n example – Hovinbekken and Alna rivers in Oslo – 
screening of disproportionate costs, using the ES framework and 
benefit transfer 
In a study for the regional environmental agency in Oslo and Akershus, 
Norway, Magnussen et al . (2014) show how benefits and costs that arise 
from reaching the environmental goals of WFD can be compared. The 
study aims at methodological development and use of the methodology 
in a case study in two rivers in urban Oslo: rivers Hovinbekken and Alna. 
The project used the ecosystem services framework in order to assess 
and value the benefits of improved water quality, as described in chapter 
3. Further, the project developed a “ screening procedure” for assess-
ment of disproportionate costs. The project suggests a step -wise fram e-
work u sing economic cost benefit analysis as the methodological fram e-
work and point of departure. The project emphasized the need for si m-
plified and not too demanding and cost -driving framework for screening 
of benefits and costs, because this procedure should be possible to use in 
rivers around the country on the water body level.

Ecosystem Services 105 
Suggested step -wise framework for assessment of benefits and 
costs of improved water environment in urban rivers 
• Main steps in the analysis 
The suggested steps are shown in figure 4.1. The first step is to 
describe the rivers and water bodies to be analysed, their present 
status, whether the water bodies are “ natural” or heavily modified 
(HMWB). Thereafter, relevant measures and their effects and 
mitigation costs are estimated. The benefits of the measures 
(reaching GES) were identified, quantified and valued in monetary 
terms using the ecosystem services framework (See chapter 3) and 
finally, benefits and costs were compared and an assessment of 
whether costs were disproportionate were discussed, and whether 
GES could be reached in the first period (until 2021). 
The case study revealed that there were very few examples where 
economic analysis has been attempted used in order to estimate 
benefi ts and costs in Norwegian water regions. Therefore, it was 
emphasised the need to develop and document rather detailed – how 
costs as well as benefits can be assessed and calculated. Limited 
access to data, and restrictions on time and money, made it neces sary 
with adjustments and simplifications from an id eal cost benefit 
analysis. F igure 4.1. summarizes the steps taken in this assessment of 
benefits and (disproportionate) costs.

106 Ecosystem Services 
Figur e 4.1: The steps in the analysis 
1.Determine current status, normal or heavily modified water body and the need for improvements in each water body 
1a) Current status in each water body with respect to: 
- Hydro -morphological quality elements 
- Biological quality elements 
(like fish) 
- Physical -chemical parameters (eutrophication and hazardous substances) 	
1b) Determine which kind of water body: 
- Natural water bodies, in which Good Ecological Status (GET) is the goal 
- Heavily modified water bodies in which Good Ecological Potential (GEP) is the goal 	
1c) Assess the need for improv e-ments 
Assess the need for improv e-ments considering the distance between goal and current status 	
 
 
 
 
2.Identify measures, effects and costs to society in each water body (WB) 
2a) Identify relevant mea sures and groups of measures in each WB 	
2b) Assess, and if possibl e, quantify, the effects of different groups of measures 	
2c) Calculate economic costs to society of different mea sures 
 	
 
 
 	
 	
3. Identify, assess and calculate benefits of improved water status	 	
3a) Identify benefits using the Ecosystem Services Framework 	3b) Quantify benefits as far as possible 
 	
3c )Value the benefits as far as possible 	
 
 
 
4. Compare costs and benefits, and make an assessment of whether the costs must be considered to be disproportionate
 (screening), and possibilities to reach environmental goals in year 2021 
4a) Assess the decision rule for screening of whether the costs must be considered to be dispro-portionate. 	
4b) For natural water bodies: 
i) Assess benefits and (dispropo r-tionate) co sts 
ii) Assess the possibilities for reac h-ing environmental goals in 2021, and eventually the need for pos t-ponement or exemption 	
4c) For heavily modified water bodies: 
i) Assess which measures should be included in GEP. 
ii) Assess the possibilities for reaching GEP in 2021 and event u-ally the need for postponement or exemption 	
Source: Magnussen et al. 2014.

Ecosystem Services 107 
Regarding the fourth step, Magnussen et al . (2014) write: Comparing 
costs and benefits, assess whether costs are disproportionate, and the 
possibilities for reaching environmental goals until 2021. 
In this step benefits and costs were compared and an assessment of 
disproportionate costs was made, in order to consider the need for e x-
emptions from the general goals of environmental status (from GES in 
natural water bodies and from Good Ecological Potential – GEP – in 
Heavily Modified Water Bodies, HMWB). For HMWB an assessment of 
which measures should be included to reach GEP was discussed. 
In the case -study -rivers, it was found that there was s ubstantial un-
certainty in calculations, benefit estimations in particular, because it was 
only to a minor extent certainty about which exact effects the mitigation 
measures will give, and because they could not carry out primary valu a-
tion studies in order to estimate the benefits, they had to rely on benefit 
transfer (see chapter 3) from one pilot study in a nearby river. Cost ca l-
culations are often considered less uncertain. However, there are made 
several simplifications in the cost calculations in the ca se studies. The 
authors argue that it is a good way of proceeding in assessment of di s-
proportionate costs, to estimate the economic costs of mitigation with as 
much certainty as appropriate, and use these cost estimates as a “bench 
mark” towards which the benefit estimates can be compared, and then 
assess the identified ecosystem services, and quantified and valued be n-
efits seem to be larger, less or approximately the same as the costs. 
Magnussen et al. (2014) see this process with assessment of benefits 
a nd costs as a screening in order to find the approximate size of benefits 
and costs of relevant mitigation measures and as a basis to assess ben e-
fits and costs in more detail later. If the benefits are unquestionable 
much larger than costs of reaching the environmental goals, they suggest 
there is no need to go further in discussing exemptions. Mitigation 
measures should be carried out in order to reach the environmental 
goals of WFD. If the costs unquestionably are much larger than the ben e-
fits, there is g ood reason to consider exemptions. If the costs and ben e-
fits are of approximately equal size, there is reason to make more tho r-
ough assessments and calculations. The study discussed benefits and 
costs in the first period of the WFD, till 2021, and because of consider a-
ble uncertainties about relevant measures and their effects, the authors 
suggest that a reasonable decision rule is to let the environment have 
the benefits of doubt. That is; if the costs and benefits are nearly equal 
according to the analysis , this should trigger more thorough analyses in 
the period to the next six -year -planning period according to WFD, in 
order to reduce uncertainty. If the calculated costs obviously are larger

108 Ecosystem Services 
than benefits, one should consider making exemptions in time and co n-
sider that the goals should not be reached in the first period. And at the 
same time they suggest that the authorities should carry out more d e-
tailed investigations and calculations towards next planning period in 
WFD. This was the framework suggested a nd used in the case studies. 
The same decision rule was used as the basis for considering measures 
to include in Good Ecological Potential. 
The study does not compare benefits and costs for individual mitig a-
tion measures, but for the total of mitigation measures, because it is 
deemed too time consuming and demanding to estimate benefits from 
each measure. The Norwegian guidelines do not recommend estimating 
benefits for each measure but for the total of measures. In follow -up ana l-
yses which are more detailed, however, the authors suggest that it may be 
needed to assess benefits and costs for individual measures. This may be 
of particular relevance for particularly costly measures, and for discussion 
exactly which measures should be included in setting GEP in HMWB. 
4.3 Main findings in this chapter 
There are relatively few examples of Cost Benefit Analysis (CBA) in the 
context of the Water Framework Directive (WFD), and even fewer where 
the ecosystem services framework is used for benefit assessment in such 
analyses. This is not only the case in the Nordic region, but holds true for 
all of Europe. 
Martin -Ortega (2012) in her paper on economic prescriptions and 
policy applications in the implementation of the European Water 
Framework Directive concludes that “… while CEA [Cost Effectiveness 
Analysis – authors note] has been widely adopted by most national 
guidelines in Europe, and the estimation of the environmental benefits 
has received a significant attention from the literature, the way these 
two should be join ed up in a CBA has received much less attention”. 
We could add that even if the benefits are estimated, it is not nece s-
sarily the ES framework which is used. 
We refer to a couple of examples from Scotland and Italy in which it 
is suggested how CBA can be used to assess benefits and costs – and 
potentially disproportionate costs – of reaching the goals of good ecolog-
ical status in WFD. These studies do not use the ecosystem services 
framework directly, but still represent interesting examples of economic 
a nalysis for water management.

Ecosystem Services 109 	
We also have identified a few Nordic examples, in which the ecosy s-
tem services framework more or less directly has been used for asses s-
ment of disproportionate costs, mainly as screening procedures, on a 
national, regional and local (water body) level. 
This is exemplified in Jensen et al . (2013) who use information on the 
ecosystem services included in the Aquamoney study, i.e. the economic 
valuation results of water quality and ecological improvements in Odense 
river basin, in a benefit transfer to other Danish water bodies. The benefit 
transfer results by river basins are subsequently used for a cost -benefit 
analysis for the WFD implementation in Denmark. The CBA is used as a 
conservative screening of where costs appear to be disproportionate, i.e. 
exceed the benefits provided by these ecosystem improvements. Much of 
the same procedure and framework is used on the local water body scale 
in two rivers in urban Oslo as a screening procedure to evaluate benefits 
and potentially di sproportional costs (Magnussen et al. 2014). 
The ES framework is seen as useful, because it helps make a system-
atic and comprehensive picture of all benefits (valued in monetary 
terms, quantified or just verbally described) which is necessary to assess 
the total benefit of the improvements in water status. Implementation of 
a more full use of the ecosystem services framework should be impl e-
mented by including more services into the assessment than what is 
often done. It will also be important to pay attenti on to the supporting 
ecosystem services which in many respects are the basic foundation for 
providing the regulating, provisioning and cultural. Many of these sup-
porting services will probably be part of the so -called non -use values in 
economic terminology (see textbox 2.2.). This is an area where more 
work is needed and probably will be carried out in the coming years.

5. Perspectives for locally 
adapted instruments, 
including PES, for enhanced 
ecosystem services provision 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 In this chapter we: 
 
• 	Provide a number of examples and lessons of locally adapted or targeted 
economic policy instruments that have an impact on meeting WFD objectives 
and targets and which are introduced in section 5.1. 	
• 	Give background from agri -environmental poli cies that play an important 
role in the achievement of the WFD targets (section 5.2). 	
• 	Discuss some examples and policy recommendations in the Nordic countries 
that suggest moving towards more locally adapted instruments in the agr i-
cultural sector for the b enefit of the ecosystem services of the aquatic env i-
ronment (section 5.3). 	
• 	Present some examples where farmers are paid as climate adapters for cities 
(section 5.4) and a Nordic payment schemes for ecosystem services from r e-
stored and/or managed wetlands (section 5.5) and voluntary and mandatory 
PES programmes from Europe and the US that relate to paying land owners 
for actions that lead to improving water quality and thereby ecosystem ser-
vices in a catchment area (section 5.6). 	
• 	Discuss different types of w	ater quality trading programmes that exist in 	
practice, operating at catchment level (section 5.7). 	
• 	Discuss	 and conclude regarding findings and what can be learnt from this 	
chapter (section 5.8).

112 Ecosystem Services 
5.1 Introducing the examples 
Achieving the targets of the WFD depends to a large extent on limiting 
negative externalities from land use practices. Negative externalities 
include excess leakage of nutrients (phosphorous and nitrogen) to water 
bodies causing eutrophication and the unat tended spreading of envi-
ronmental toxins from pesticides and herbicides impacting the chemical 
status of surface and groundwater bodies. As mentioned in Chapter 2, 
non -point pollution is difficult to control in practice, in particular when 
using uniform in struments that ignore differences in soil retention c a-
pacities, farm typologies and farmer characteristics. This “ wicked” pro b-
lem, cf. chapter 2, calls for a mix of instruments and measures that are 
adapted to local conditions and the involvement of a mix of stakehol d-
ers. The following sections provide a number of practical examples, pol i-
cy trends and research insights of how locally adapted policy instr u-
ments, including PES, have been or are intended implemented that all 
have a direct impact on WFD targets . 
The first section provides an overview of the greening of the EU CAP 
and the attempts to integrate water policy objectives. The section shows 
how the role of the ecosystem services framework increase in the new 
CAP in the attempts to reduce negative env ironmental externalities from 
agriculture. This applies to Pillar I (direct payments to farmers) with the 
obligatory introduction of Ecological Focus Areas as well as for Pillar II 
(Rural Development Programme) where voluntary agri -environmental 
measures profit from a significant budget increase. This is relevant for 
EU Member States only. The second section provides two examples from 
Denmark and Norway of moving towards more locally adapted instr u-
ments primarily in the agricultural sector. This implies new policy i n-
struments that work with local hydrological and biogeochemical condi-
tions to improve aquatic ES. The third section describes the preliminary 
thoughts and investigations in Denmark to set up locally based contracts 
with land owners to deliver climate regulating services from their land 
in partnership with cities. This is an example of how local stakeholders 
work together to enhance flood regulating services on agricultural land, 
which also have positive side -effects on WFD targets. The fourth secti on 
lists PES schemes in Denmark, Finland and Sweden in relation to we t-
land construction, an effective use of the ecosystem services framework 
to reduce nutrient load to the aquatic environment. The fifth gives e x-
amples from outside Nordic countries on esta blishing comprehensive 
PES programmes at catchment level to improve water quality, making 
use of a wide range of local measures that combined lead to improved

Ecosystem Services 113 
water quality. The local measures range from ecosystem based a p-
proaches to changes in land use management and improved sewage 
water treatments. The final section deals with water quality trading as a 
market -based compulsory incentive for dischargers to comply with 
capped emissions. The ecosystem services approach in water quality 
trading is central wh ere mitigation measures involve improving fun c-
tions of natural ecosystems. 
5.2 Agri- environmental policies 
Common agricultural and agri -environmental policies play an important 
role in the achievement of the WFD targets in EU Member States given 
the importance of diffuse pollution to water bodies from agricultural 
practices and water abstraction. In Europe, agriculture accounts for 
around 33% of total water use and is the main source of nutrient poll u-
tion in water (EEA, 2012). The Common Agricultural Policy (CA P) con-
tains two instruments which can be used to integrate the EU’s water 
policy objectives: cross -compliance	
17 and the European Agricultural 
Fund for Rural Development (EAFRD), often referred to as rural deve l-
opment programmes. RBMP measures can in some cases be financed 
through the CAP. 
The reform of the European Common Agricultural Policy (CAP) 
2014 –2020 that started in 2010 and was formally adopted in December 
2013 aimed at creating a better targeted, more equitable and greener 
support framework with increased emphasis on rural development and 
enhanced safety net (DG Agriculture, 2013). Both Pillar I (direct pa y-
ments to farmers) and Pillar II	
18 (Rural Development Programme) are 
maintained but links are strengthened and the green dimensions of both 
pillars have clearly been stepped up: 	
────────────────────────── 
17 Cross- compliance is a mechanism that ties direct payments and a number of rural development payments 
to compliance with a series of rules relating to the environment, food safety, animal and plant health and 
maintaining agricultural land in good agricultural and environmental condition (GAEC). Cross -compliance 
rules cover currently 18 statutory management requirements and 15 GAEC standards; non -compliance can 
lead to a reduction in CAP payment to the farmer. 
18 Pillar I is offered to 100% of agricultural land and is 100% EU -funded, whereas Pillar II is offered to a part of 
agricultural land and is 50% EU -co -funded. In terms of budget, of the total CAP budget of EUR 362.8 billion (2011 
prices), slightly more than ¾ of the total CAP budget is allocated Pillar I and slightly less than ¼ Pillar II. In real 
terms the budget for Pillar I has been cut by 1.8% and Pillar II by 7.6% (2011 prices). (DG Agriculture, 2013).

114 Ecosystem Services 	
In Pillar I, a new direct payments system for farmers replaces the 
former Single Payment Scheme. On top of the new Basic Payment 
Scheme, a mandatory share of 30% of national direct payment envelopes 
is earmarked a new policy instrument: the Direct Green Payment. This 
pays farmers for mandatory agricultural practices beneficial for the cl i-
mate and the environment (See Box 5.1). 
In Pillar II, at least 30% of the budget of each Rural Development 
programme must be reserved for vo luntary measures that are beneficial 
for the environment and the climate, such as agri -environment -climate 
measures, organic farming and Natura 2000. This has been increased 
from 10% of total CAP expenditures in the past CAP. 
The requirement to establish ecological focus areas under the new 
Green Direct Payment (See Box 5.1) contains elements, such as buffer 
strips, which could serve as Natural Water Retention Measures (NWRM), 
a type of Green Infrastructure with beneficial effects on water quality. 
 	
Box 5. 1 : Green Direct Payment in the EU Common Agricultural Policy 2014 –2020 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Regulation (EU) No 1307/2013 – LOJ L 347/608 of 20.12.2013 
The new Green Direct Payment consists of three obligatory agricultural practi	c-	
es, deemed beneficial for climate and the environment: 	 	
 
• 	M aintenance of existing permanent grassland – Member States are required 
to maintain the ratio of permanent grassland at national, regional or farm	-	
level such that it does not decrease by more than 5% compared to a refe r-
ence period to be determined in 2015. 	
• 	E cological focus areas (EFAs) – aim at safeg uarding and improving biodiver-
sity on farms either directly through land lying fallow, terraces, buffer strips, 
afforested areas and agro -forestry areas 	or indirectly through reduced use of 	
inputs on the farm, such as areas covered by catch crops and winter green 
cover. Farms above 15ha are required to safeguard ecological focus areas 
covering five percent. Farms with more than 75% grassland or forests are 
exempted. Member States and farmers have the possibility to implement the 
EFAs at a regional or collective level to obtain adjacent areas. 	
• 	C rop diversification - small farms (10 -30ha) are required to have at least two 
different crops of which the main crop may not cover more than 75%. For 
farms larger than 30ha, at least three different crops are required where the 
main crop may not cover more than 75% and the two main crops not more 
than 95% of the arable land. 	Farms with more than 75% grassland are 	
exempted.

Ecosystem Services 115 
Despite the greening of the CAP, the vast majority of subsidies under 
Pillar I (70%), the basic payment, still goes to intensive farming systems. 
Despite expectations, the new cross -compliance rules under CAP 2014–
2020 do not include the basic measures from the RBMPs under the WFD 
(article 11.3) nor do they include compliance rules with the principles of 
sustainable use of pesticides and integrated pest management. Neve r-
theless, there was a declaration from Parliament and Council when the 
CAP was adopted th at the Commission should come forward with a pr o-
posal for the inclusion of relevant parts of the WFD once the obligations 
for farmers were clarified .	
19 The timing of this inclusion is dependent on 
the progress made by Member States in implementing the Direc tives, 
which implies that the implementation of a very important policy dec i-
sion could be very slow (European Court of Auditors, 2014). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
────────────────────────── 
19 Joint statement by the European Parliament and the Council on cross c ompliance attached to Regulation 
(EU) No 1306/2013.

116 Ecosystem Services 
Box 5.2
: Lack of use of additional funding to tackle water management as one 
of the crucial new challenges for European agriculture 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: European C ourt of Auditors (2014). 
 
At member state level, work is now on-going to define the detailed n a-
tional rules of how to apply the new direct payment system, which 
comes into operationalization in January 2015 and to formulate the n a-
tional Rural Development Policies. Comparing EU and US agri -environmental policies (AEPs) directed at 
payments for environmental services produced by agriculture, Baylis et 
al . (2008) find pronounced differences in how instruments are targeted. 
While the EU member states through pillar II pays farmers for technol o-
gies or activities that are expected to reduce negative externalities of 
In 2009, the Council decided to strengthen the response to a number of ’crucial 
new challenges’ identified in 2003. 	Water management was identified as one of 	
the new crucial challenges for European agriculture (Council Decision 
2009/61/EC). In line with this decision, the Health Check made available an 
additional budget through the EAFRD funds of a total of EUR 1,332 mi llion, re p-
resenting close to 27% of the total new budget for new challenges. The European 
Court of Auditors found that by the end of 2012, the additional financial instr u-
ment targeting water management has barely been used. Of the total EU funding, 
17.5% was spent by the end of 2012. For Denmark and Finland the rate of imple 
mentation was lower at 12.5% and 7,3% respectively. There was no information 
available on total funds allocated in Sweden, although a significant 35.4 million 
euro was spent by the end of 2012. 
 	
 	
0
10 20
30
40
50
60
70
Denmark SwedenFinland	
Million euro 
HC & EERP funds allocated to the 'new challenge' of water 
management (data for 2010) (mil. €) 
Expenditure (to end 2012) (mil €)

Ecosystem Services 117 
farming activities (e.g. nitrogen leakage), US farmers are paid by the 
Federal State to directly reduce negative externalities, regardless of the 
method(s) applied. The main conservation programme in the US, the 
Conservation Reserve Program (CRP), also takes opportunity costs of 
farmers into account by requiring competitive tendering for con tracts 
that enhance ES. The CRP requires farmers wishing to apply for funding 
to submit bids based on environmental benefits to their land. Contracts 
are then allocated based on highest benefits for least cost. In compar i-
son, the EU payments for providing ecosystem services under AEPs are 
typically based on national or regional set fees based on the individual 
member state’s calculation of the income foregone and additional costs 
resulting from the commitment. 
5.3 Moving towards more locally adapted 
instruments in Nordic countries 
Some examples and policy recommendations exist in the Nordic cou n-
tries to move towards more locally adapted instruments in the agricu l-
tural sector for the benefit of the aquatic environment. 
5.3.1 Denmark 
Current nutrient regulation in Danish agriculture is applied by setting 
general norms, buffer zones, general requirement of catch crops as well 
as a general requirement for animal manure utilisation. Each farm is 
given a per hectare quota of nitrogen, differentiated between crops. It is 
possible to choose different implementations of the quotas dependent 
on the yield level, crop distribution, catch crops etc. The current norms 
are general in the sense that they regulate the nitrogen input ever y-
where regardless of the resultant loads of n utrients to the water bodies. 
Since 1998, fertilizer norms are at 10% below economic optimal level of 
land use (Ministry of the Environment of Denmark, 1998). 
A Nature and Agriculture Commission was established in Denmark in 
2012 as an independent committe e to analyse the current economic and 
environmental status of agriculture and provide recommendations of 
how to obtain a resource -efficient agricultural production in balance 
with nature, climate and the environment. The Commission produced 44 
recommendati ons and 144 proposals of action by spring 2013 (Natur - 
og Landbrugskommissionen 2013).

118 Ecosystem Services 	
The Commission recognized that pursuing the current environmental 
regulation with general fertilizer norms and limits on agricultural pr o-
duction would not be a cost -effe ctive instrument as it would both be too 
costly for farmers and would not obtain sufficiently good environmental 
quality. The recommendations aim at changing fundamentally the reg u-
lation framework away from placing restrictions on production towards 
meetin g local environmental targets and to create a complete regulation 
of nutrients with the primary aim of meeting the requirements in the 
WFD with regard to surface water. The recommendations included a 
more targeted and efficient environmental regulation: 
 
• A new model for regulating the use of fertilizer in the fields. 
• Conversion of several sensitive agricultural areas to areas with more 
extensive farming, natu re, grass or perennial crops. 
• Establishing new emissions -based regulation of stables and 
installatio ns for livestock production, allowing for a higher nitrogen 
input than today depending on the retention in the area and the 
resultant nitrogen loads to the fjord. 
 
The Commission conclude that with locally adapted and differentiated 
regulation of fertilize r use and the application of buffer strips and catch 
crops flexibly where it makes most sense, it’s possible to obtain both a 
better aquatic environment and in some more robust areas increase 
production. Also, the emissions -based regulation of livestock pr oduction 
focuses on discharge requirements rather than size and design of pr o-
duction, allowing for innovation and new investments while keeping 
within environmental targets. The recommendations on these locally 
adapted and differentiated instruments are co mbined with general in-
struments such as requirement of buffer strips, catch crops etc. Farms 
with low retention fields and located in a catchment with high nutrient 
vulnerability should then move towards more extensive land use pra c-
tices or land be taken o ut of production. Such changes in land use could 
be financed through increased flexibility (modulation) of EU CAP funds. 
Spatial agricultural catchment models have been developed for two 
catchments: the Odense Catchment and the Limfjorden Catchment (the 
TargetEcon models) (Termansen, 2014) , and these models allow for 
assessment of the least cost localisation of measures to reduce the nutr i-
ent loads to the fjords – such as fertiliser reductions, wetland restor a-
tion, catch crops and a large number of other measures (Konrad et al ., 
2012). The models include data on the agricultural production at field 
block level in the catchments, the nutrient inputs and the retention of

Ecosystem Services 119 
nutrients in soil, groundwater and surface water in the sub -catchments. 
The models minimize the costs of achieving load reduction targets of 
nutrients, e.g. the load reductions required to fulfil the WFD. Utilisation 
of this characteristic of the models are applied in cost -minimising sc e-
nario modelling, and the main feature of the models is t he ability to map 
the results regarding the implementation of measures, fertilizer inputs 
and resultant loads to the fjord. A similar model structure is used in Ha s-
ler et al . (2014), which models the entire Baltic Sea region. Since we t-
lands and the retenti on in soil, ground- and surface water are included, 
the models can be run to estimate the saved costs (or replacement costs) 
of these regulating ecosystem services. Furthermore, nitrogen uptake by 
mussel farm production in Limfjorden is included in the Lim fjord Tar-
getEcon model, and the model is used to estimate the cost -effectiveness 
of this type of measure, which utilize the regulating ecosystem service of 
the mussels, compared to other measures, but the models can also be 
used to assess the value of this nutrient uptake in terms of saved costs in 
agriculture. The models provide information about how the most cost -
efficient solutions can be achieved because solutions are optimised. The 
modelling framework is usable for assessments of i) spatial targeting o f 
measures ii) sensitivity analysis of the importance of the retention as 
regulating service and iii) the comparison of measures at land and sea, 
including the cost -effectiveness of utilisation of the regulating services in 
the sea. The model studies are not published yet, so more document a-
tion is yet not available, but papers are in preparation. 
5.3.2 Norway 
The catchment area for river Morsa, situated in the south -eastern part of 
Norway, includes two counties (Østfold and Akershus) and eight local 
authorities. In 1999 “The Morsa project ” was started as a local initiative 
with co- operation between local authorities, counties, and other local 
and regional actors. This river basin is an area with many user interests, 
like recreation and drinking water, and the water quality (water status) 
has been severe for a long time. Despite several national programs with 
the aim of reducing eutrophication, the water quality has not improved. 
Therefore it was a need for a special program in this area. The main pu r-
pose was to improve water quality in the catchment area, because of 
severe problems particularly related to eutrophication. This initiative 
came before the WFD was implemented, and represented a new and 
more locally oriented perspective on water management.

120 Ecosystem Services 	
The Morsa pr oject was re-organised as a catchment management 
council ( “vannområdeutvalg ”) in 2007 to facilitate the implementation of 
the WFD. The strategy for the Morsa project has been to create voluntary 
participation among land owners based on motivation, counsell ing and 
co -operation. This included meetings with farmers, visiting farms, env i-
ronmental planning for each farm, co -operation with research institutions, 
local programs of measures, and juridical binding agreements with far m-
ers combined with economic incen tives. Farmers were encouraged to sign 
an agreement whereby they would be compensated for extra costs of i m-
plementing a set of restrictions and measures that reduce phosphorus 
run -off for a period of three years (Magnussen and Holen 2011). 
 	
Box 5.3 : Exampl e points in the Morsa agreement 	
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: www.morsa.org 	
 
Since the inception in 1999, the project has led to more than 2 ,000 hous e-
holds connecting their wastewater to public waste water treatment or 
improving decentralised waste water treatment; common local rules and 
control systems for drainage in 7 of 8 municipalities; increased area of 
agricultural land under reduced tillage from about 30% to close to 80%; 
phosphor fertilisation reduced by 50% in general and by 75% around one 
of the particularly vulnerable lakes; significant increase of buffer zones 
and afforested areas. The actions have to date cost about EUR 18.4 million 
in improved draining and sewage management and EUR 61 million in 
agricultural management changes ( Vannområdeutvalget Morsa, 2012). As 
a result, water quality has improved in several rivers and lakes. 
Points in the Morsa agreement:	 	
 
• 	Use less Phosphorus fertiliser than nationally recommended level . 	
• 	No use of manure. 	
• 	No tillage during autumn . 	
• 	No growing of potatoes or vegetables in fields exposed to flooding . 	
• 	Establishment of 10 meter buffer zones along open water . 	
• 	Establishment of grass covered water ways in areas prone to erosion . 	
• 	Establishment of artificial wetlands if this is recommended. 	
• 	Accept experiments on potato/vegetable fields in order to increase 
knowledge on how to reduce phosphorus.

Ecosystem Services 121 
5.4 Farmers paid as climate adapters for cities 
In addition to policy recommendations and research that attempt to 
develop more locally adapted instruments and measures (See 5.2), a 
pilot project and partnership from Denmark looks at the scope for set-
ting up locally based contracts with farmers to deliver climate regulating 
services from their land in a partnership with cities. A number of towns 
and cities in Denmark are looking for more cost-effective and natural 
ways of reducing risks of flooding from increasing climate driven preci p-
itation. While the objective of the scheme is adaptation to climate 
change, most of the practical measures will have positive impacts on 
local water quality levels. 
The pilot project “ landmanden som vandforvalter ” [the farmer as a 
water manager] and a national pilot partnership “ vandet på landet” [w a-
ter in the countryside]	
20 have recently been initiated in Denmark to de-
velop innovative climate adaptation measures and instruments to pr o-
tect cities from inundation due to more frequent cloudbursts during 
summer time and increased precipitation during winter months. 
Measures are thought implemented on agricultural land, and farmers 
paid for the water r etention services of their land by the local municipa l-
ity or region. Where the pilot project “ the farmer as a water manager” 
looked at the business case and effects of individual measures on agr i-
cultural land, the pilot partnership “ water in the countryside” models 
the practical dimensions and effects of using agricultural land for reten-
tion and storage at catchment scale. 
Different measures have been suggested: 
 
• Compensatory measure – a land owner receives a lump sum for 
entering into contract wi th the local municipality for making his land 
available for temporary inundations. When inundation occurs, an 
independent specialist assessor estimates the damage, and the 
farmer is compensated for the specific crop loss. 
• Competitive tendering – the local municipality sets up competitive 
tendering where land owners can make their bids in terms of 
payment for retaining a certain level of water. 
 	
────────────────────────── 
20 https://www.landbrugsinfo. dk/milj oe/landmandensomvandforvalter/sider/st artside.aspx (accessed 
29.04.2014) . http://ecoinnovation.dk/64690 (Accessed 29.04.2014).

122 Ecosystem Services 
In both cases, ideas are under development of how to incentivise far m-
ers to cooperate such that larger contiguous areas within a sub -
catchment area are created. 
Different instruments have been described in fact sheets, and follow -
up projects now look at designing and dimensioning at local catchment 
level. The instruments have potential synergy effects with the aims o f 
the WFD and in all cases, negative effects are debated and sought elim i-
nated. Examples of instruments include: 
 
• Intelligent buffer zones – work by cutting drainage tubes and lead 
water to a ditch parallel to a stream. When water reaches the 
maximum level , it flows across the buffer strip to the stream. The 
buffer strip is forested with native trees, helping infiltrate water to 
the soil; uptake nutrients and create significant shadow that benefits 
biodiversity in the stream. This instrument has not been tested to 
date in Denmark, but experts reckon that it is more efficient in 
reducing nutrient leakage than in traditional buffer strips where 
drainage water flows below the buffer strip to the stream. At the 
same time, intelligent buffer zones retain and dela y water during 
extreme weather events (Gertz, 2013). 
• Changes in watercourse management and water course renaturation – 
many water courses in the Danish agricultural landscape have been 
straightened in the past and aim at leading as much water as fast as 
p ossible away. By reducing weed cutting in water courses and re -
meandering water courses, water flow speed is reduced and water 
can be retained in targeted inundation zones. This can help protect 
downstream sensitive areas from flooding but also contributes to 
nutrient leakage reduction and sedimentation during flooding of 
meadows or through the increase of weeds in water courses, to 
enhanced biodiversity and more natural aquatic environment 
(Sørensen, 2014a; Kronvang, 2014). 
• Water retention in river valleys and wetlands – controlled flooding of 
either existing wetlands or river valleys could avoid flooding 
downstream during cloudbursts. In the case of river valleys, a study 
of Brenstrupkilen in the vicinity to the city of Aarhus looked at the 
case of constru cting three artificial basins crosswise in the valley 
with tubes allowing for water to flow normally during non -extreme 
events. Under extreme events, the tubes would slow down the water 
flow until water rises to the top of the barriers and flows to the nex t 
basin, and then to the third basin. In this way, the maximum water 
flow is reduced and risk of flooding downstream reduced. Experts

Ecosystem Services 123 	
believe this would also help retain nutrients, in particular particle 
bound phosphorous; also physical conditions in the w ater course 
would be improved (Sørensen 2014b). In the case of flooded 
wetlands, a re- meandering of Odense stream, combined with an 
elevation of the bottom led to a reduced rate of flow and 
establishment of wetlands as the stream would flood more easily. 
T hese wetlands function today as reservoirs during extreme rain 
events. Added effects of creating and flooding wetlands include 
nutrient reduction, enhanced biodiversity, more natural aquatic 
environment and enhanced recreation services (Poulsen and 
Kronvan g, 2014). 	
5.5 Nordic Payments for ecosystem services from 
restored/managed wetlands 
Voluntary PES schemes exist in the Nordic countries that pay land ow n-
ers for constructing/restoring and managing wetlands over several 
years, mainly in order to improve nutrien t retention and biodiversity in 
intensive agricultural areas. The PES schemes are part of the EU f i-
nanced agri -environment -climate instruments under the national Rural 
Development Programmes (RDPs). Wetlands provide a number of provi-
sioning, regulating, cu ltural and supporting ecosystem services. In rel a-
tion to the WFD, important services include the retention, recovery and 
removal of excess nutrients and other pollutants; groundwater r e-
charge/discharge; and storage, recycling, processing, and acquisition o f 
nutrients. Norway does not currently have PES schemes that provide 
financial support for the creation and maintenance of wetlands. Each 
Member State decides on a national RDP which is subsequently submi t-
ted to the European Commission for final approval. The RDPs from No r-
dic Member States were submitted in April 2014 in Denmark and Fi n-
land ( Ministry of Food, Agriculture and Fisheries of Denmark, 2014; 
Ministry of Agriculture and Fisheries of Finland, 2014) and in June 2014 
in Sweden (Swedish Board of Agric ulture, 2014c). Typically, the approv-
al process at the Commission takes 6 months. PES for wetland esta b-
lishment and management are proposed to continue as a scheme under 
the RDPs 2014 –2020 in all three countries. The following descriptions of 
national wetl and PES schemes under the RDPs are based on the specific 
decisions of RDPs 2007 –2013.

124 Ecosystem Services 
5.5.1 Denmark 
The conditional performance contracts on wetlands in Denmark aim at 
reducing nutrient loads to water bodies; and at the same time produce co -
benefits such as impr oved nature conservation, e.g. the creation of more 
habitats for birds (Ministry of Food, Agriculture and Fisheries, 2008). El i-
gible actions cover the creation and sustainable management of wetlands, 
lakes, natural meadows and other landscape elements by c hanging drain-
age, making wetter or creating waterholes, lakes and streams. The area 
must have a reduction potential of minimum 100 kg nitrogen/ha, be able 
to reduce a non -specified amount of phosphorous; have positive effects on 
wild flora and fauna and ca use no net ochre leakage. 
The payment part of the conditional performance contract between 
the State and land owners can be either via traditional compensation for 
income loss or an offer to reparcel agricultural land: 
 
• Land owners are paid 100% of eligible investment costs up to a 
ceiling of EUR 2013/ha and a monetary compensation for loss of 
income over 20 years. The yearly payments are differentiated 
according to the prior land use: EUR 470/ha for former cropland; 
EUR 242/ha on former grassland; and EUR 40/ha for land not in 
agricultural production during the last 5 years. In addition to the 20 -
year contract, land owners are offered payments for managing the 
wetland in 5 -year contracts. The contracts are set at five levels of 
fixed payments for different efforts of management varying from 
EUR 27/ha to EUR 540/ha. The condition for obtaining the payment 
is a wetland registration on a deed for 20 years. 
• The AgriFish Agency offers land reparcelling to land owners who 
prefer to continue production on non -marginal land, typically closer 
to their farm. The Agency places a conservation easement on the 
wetland area and subsequently sells the land in a public tender. 
 
An assessment of the previous wetland restorations in these t wo types 
of programmes has been made by Hansen et al . (2011), evaluating the 
different types of wetland restoration, the contracts and the effects of 
them. The conclusion was, among other, that the costs of wetland resto-
ration varies a lot depending on the lost production at the farm but also 
because of differences in construction costs etc. The conclusion was fu r-
thermore that the negotiated contracts where the farmers were enrolled 
in a land rotation scheme where they could buy other parcels of land to 
com pensate the lost land were better than lump -sum payments.

Ecosystem Services 125 
5.5.2 Sweden 
A similar conditional performance contract exists in Sweden with a few 
differences in payment levels and the addition of the instrument to i m-
prove the effectiveness of existing wetlands (Swedish Board of Agricu l-
ture, 2014a&b). The objectives are explicitly to improve biodiversity and 
reduce negative effects of nutrient leakage from agriculture. Eligible 
actions for the contract include the creation, restoration, improving e f-
fectiveness of existing wetlands and management of created wetlands. 
The payment part of the contract includes coverage of investment costs 
of up to 90% of actual costs. In particularly motivated cases, coverage is 
up to 100% of a ctual costs. Ceiling of compensation is set at either 
EUR 22,600/ha or EUR 45,150/ha depending on the region. Yearly ma n-
agement payments are offered at either EUR 339/ha or EUR 452/ha on 
cropland depending on the region and EUR 170/ha on grassland and 
othe r fields. Yearly management payments when improving effectiv e-
ness of existing wetlands: EUR 102/ha. 
5.5.3 Finland 
The conditional performance contracts on wetlands in Finland in the RDP 
2007–2013 period targeted areas where fields cover more than 20% agr i-
cultura l of the catchment area, notably the catchment areas of rivers flo w-
ing to the Gulf of Finland, Archipelago Sea, Bothnian Sea, the Kvarken A r-
chipelago, the Bay of Bothnia as well as catchment areas of lakes with 
intensively managed agriculture. Eligible act ions for the contracts co m-
prise construction and management of multifunctional wetlands or we t-
land -like flooding areas in places where they would be naturally formed, 
on arable areas susceptible to flooding, on terraced drainage areas as well 
as the restor ation of natural streambeds (Berninger et al. 2012). 
Based on modelled and observed research, the Finnish RDP 2007 –
2013 introduced the requirement of a relative minimum size for new we t-
lands in order to ensure optimal nutrient leakage reduction. Research 
s howed how misleading it can be to focus solely on the mass retained per 
unit wetland area as a measure of wetland efficiency. Although maximum 
retention efficiency per hectare of wetland is reached in small wetlands, 
large wetlands are more efficient in re taining large quantities of nutrients 
lost. In practice this is done by requiring a minimum wetland -to -
catchment ratio when determining the minimum size wetland, which 
should be at least 0.5% of upstream catchment area. The maximum su p-
port level for constr uction is euro 11,500/ha of wetland and 
EUR 3,226/ ha of wetland if these are between 0.3 –0.5 ha. These payment

126 Ecosystem Services 
levels were increased by 2010. Payments for maintenance are dependent 
upon cost estimates made by the land owner but with a ceiling of EUR 
450/ha /year. Contract length can be made for either 5 or 10 years. 
The current draft RDP 2014 –2020 extends the eligible areas for we t-
land restoration contracts to areas where fields upstream in the catc h-
ment area cover at least 10% (compared to 20% in previous pr o-
gramme) (Ministry of Agriculture and Forestry of Finland, 2014). 
5.6 Watershed programmes 
A number of voluntary and mandatory PES programmes are found in 
Europe and the US that relate to paying land owners for action that lead 
to improving water quality in a catchment area. Most of these types of 
programmes aim at improving drinking water quality either from 
groundwater or from surface water, to replenish aquifers and to protect 
general catchment functions against pressures of development. In E u-
rope, 15 payme nt programmes have been identified by the non -profit 
association Ecosystem Marketplace in the latest State of Watershed 
Payments 2012 (Bennet et al . 2013). In three instances, private beverage 
companies have initiated compensation mechanisms while the other 
nine are driven by a utility or municipality engaging private forest lan d-
owners and farmers in protecting drinking water supplies. We describe 
two examples of catchment programmes initiated by municipalities, one 
in Munich, Germany, the other in the state of New York, US. 
5.6.1 Munich watershed programme 
Grolleau and McCann (2012) describe and evaluate two payments for 
ecosystem services at watershed level, the Munich and New York City 
watershed programmes that have used ecosystem based and locally 
adapted measures at watershed level to ensure adequate water quality 
for drinking water purposes. This section describes the conditional 
payment scheme in Munich watershed and the following the scheme in 
the state of New York. 
Munich Waterworks noticed during a prolon ged period (1974 to 
1992) a slow but significant increase in nitrate and pesticides in the 
drinking water, which originate from springs about 40km from the city. 
Although the levels at the time were below regulatory requirements for 
tap water, the city dec ided in 1991 to undertake a targeted ecosystem 
based framework to improving water quality (or avoiding any further

Ecosystem Services 127 
deterioration). The targeted area was composed of forests and conve n-
tional dairy farms (120 farms covering 2,250 ha), a total of 6 ,000 ha. 
A first public information campaign towards the farmers encouraging 
them to switch to more environmentally friendly practices was met by 
reluctance as those practices would fundamentally change their produ c-
tion method. The city then moved to organizing farm er meetings provid-
ing information, guidance and possibility of financial incentives. At first 
the financial incentives were tailored to different types of practices, e.g. 
one level of incentive for limitations in nitrogen use, another level of 
incentive fo r transition to pasture etc. The practice by practice fram e-
work however was abandoned as it would have required a too expensive 
set of monitoring and verification system. 
Instead the city took a more comprehensive approach by offering 
farmers initial support to switch to organic farming. The city cooperated 
with three different organic producer associations and offered to pay for 
the first evaluation by producers’ union on the suitability of the farms to 
convert towards organic farming. This initial step h elped overcome un-
certainty about what a switch would entail in practice. Then, contracts 
that follow the existing organic farming standards were offered farms in 
the targeted area; farmers could choose which of the three standards 
they would opt for. The c ity offered an annual per hectare payment for 
the first six years of the contract ( EUR 280/ha/year) and a bit lower 
payment for the following 12 years ( EUR 230/ha/year) reflecting the 
loss of income and need for investments for the conversion. In addition, 
farmers could benefit from European CAP subsidies for five years 
( EUR 250/ha/year). On average, payments for farmers choosing to co n-
vert to organic farming amounted to more than EUR 10,000/ha/yr. The 
city developed a flexible framework such that for farms that couldn’t 
convert to organic farming could sign up for adopting practice changes 
that favoured water quality. These farms were offered EUR 200/ha/yr 
and have the status of “ supporting members”. Separate controls are 
made on the supporting farms by independent examining teams and the 
state level Department of Agriculture. 
The targeted ecosystem based framework to ensuring water quality 
in Munich city proved to be a cost efficient arrangement co mpared to 
cleansing water at end -of- pipe. Several circumstances contributed to 
this cost- effectiveness: 
 
• Firstly, the city capitalized upon the expertise and experience of 
organic producers unions to convince farmers to conve rt to organic 
farming practices.

128 Ecosystem Services 
• Secondly the city saved on enforcement costs as monitoring and 
verification of organic farms are performed by third party 
certification bodies. 
• Thirdly, the farmers were both eligible to European subsidy for 
converting to organic farming and locally fi nanced performance 
payments. The financial synergies reduced the local level of 
perfor mance payments. 
• Finally, payments were limited in time as previous evidence shows 
that organic farming after initial 7 –8 years are more profitable than 
conventional farming. The risk of farmers dropping out of the 
certification scheme and reverting to conventional unfriendly water 
quality practices is therefore very limited. 
 
By now, 80% of the agricultural area in the targeted area, representing 
110 of the 120 farms, is now under contract. It is considered to be the 
largest contiguous area of organic farming in Germany. In terms of 
drinking water quality, nitrate concentrations in drinking water have 
dropped from 15 mg/l to 7 mg/l and pesticide concentrations have als o 
decreased significantly. The price increase for the whole water scheme 
to consumers is estimated to about EUR 0.005/m	
3 (SVM, 2005; cited in 
Grolleau and McCann, 2012), while the estimated avoided costs of water 
treatment equipment was estimated at EUR 0.23/m	
3 (Simonet 2005; 
cited in Grolleau and McCann 2012). 	
5.6.2 New York Watershed Programme 
New York is not only the largest city in the US it also has the largest u n-
filtered water supply in the country, supplying some 9 million inhabit-
ants. Water is supplied f rom 518,000 ha in the Catskill Mountains and 
Hudson Valley regions. In the 1980s, changes in land use in the Catskill 
Mountains threatened the filtering capacity of the ecosystem, compr o-
mising drinking water quality. This included more intensive agricultural 
practices, faulty sceptic tanks and increased discharges from waste w a-
ter treatment plants as well as increased erosion and reduced filtering 
capacity of the ecosystem as residential areas and related impermeable 
infrastructure expanded in the mountains . 
The City of New York would normally have had to invest USD 4–6 bil-
lion in a filtration plant (plus ¼ billion yearly management costs) in 
order to comply with the Safe Drinking Water Act Amendment of 1986. 
This would have doubled the cost of water and det eriorated the taste 
significantly. An alternative was to successfully petition the US EPA for a

Ecosystem Services 129 
“filtration avoidance determination ” through a comprehensive water-
shed management programme involving landowners and communities 
to build infrastructure and imp rove natural filtration. The City opted for 
the natural filtration framework which cost the City USD 1.4 billion in 
payments to farmers and other landowners to implement changes to 
preserve water quality. 
Activities for which the City of New York paid incl uded the develop-
ment of innovative agriculture and forestry programmes; conservation 
easements ;	
21 upgrading sewage treatment plants and septic systems; as 
well as buying up land. Farmers could sign up for a “ Whole Farm Plan-
ning Program ” to reduce pollution by introducing best management 
practices. The programme was voluntary but farmers had to commit to 
getting 85% of farmers on board within five years, otherwise the city of 
New York would impose restrictive regulation. 
By 1998, ca. 500 dairy and livestock farms had signed up; within five 
years, 93% of farms in the Catskill Mountains had signed up and New 
York City has since 1993 avoided having to filter their drinking water. 
Despite several references to the case of the New York Watershed Pr o-
gramme [e.g. Ch ichinilsky and Heal, 1998; Pagiola et al ., 2004; Grolleau 
and McCann, 2012], one author has contested the basis of the case (S a-
goff, 2002): water quality had not decreased prior to the watershed pr o-
gramme, but due to new legislation (the Surface Water Treatment Rule), 
the City of New York had to either start an expensive technical filtration 
of drinking water or petition for a filtration avoidance determination by 
complying with EPA requirements to improve natural filtration services 
in the catchment area. 	
5.7 Water quality trading 
Different types of water quality trading programmes exist in practice, all 
operating at catchment level (Selman et al . 2009): 
 
• Point -to -point source trading – trade between regulated point 
sources, e.g. two sewage treatment plants where both seller and 
buyer are subject to regulatory discharge permits. This type of trade 
────────────────────────── 
21 A conservation easement is an instrument where conservation agencies buys up land, places a conserv a-
tion status on the land, limiting the type of land use practices on the land and then sells it again.

130 Ecosystem Services 	
does not relate to the use of ecosystem services to obtain emission 
reductions and we do not describe this further. 
• Trading between regulated point sources and non -reg ulated non -point 
sources – regulated dischargers can purchase pollution reduction 
credits (also known as offsets) from nonpoint sources with lower 
costs, e.g. between sewage treatment plants and farmers (See Box 5.4 ). 
• Trading between non -point sources – one or both of the non -point 
sources involved in the trades have been regulated (See 5.7.1 
Nitrogen Sourcing and Trading) . 
• Trading between point sources/nonpoint sources and nutrient 
sequestrators (See 5.7.2 Compensation Mussel Offsets). 
 	
Stanton et al. (2010) identify some 66 water quality trading pr o-
grammes based in the US, four in Australia, one in Canada and one in 
New Zealand. Cap- and-trade systems also exist to control air pollution 
such as for greenhouse gasses (e.g. EU ETS, New South Wales Gree n-
house Gas Abatement Scheme (Australia), NZ ETS (New Zealand), R e-
gional Greenhouse Gas Inventory (RGGI, US)), sulphur dioxide allow-
ance- trading programme (US), Volatile Organic Compounds (State of 
Illinois, US) and wood burning (Telluride city council, Colora do, US). 
Water quality trading programme exist mostly in the US, but is also 
found in Canada, New Zealand and up to 2010 was also attempted in 
Sweden (See Section 5.7.2).

Ecosystem Services 131 
Box 5.4
: Ohio River Basin Trading Project – Trading between point sources and 
nonpoint sources 	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 	
Source: Barret, K., (2014) . 
5.7.1 Nitrogen Sourcing and Trading in the Lake Taupo 
Catchment, New Zealand – Trading between non -
point sources 
Lake Taupo is the largest lake in New Zealand and is known together 
with the surrounding catchment area as an iconic feature of the North 
Island of New Zealand. The water quality is still exceptional but land use 
development from intensified agriculture and expanding urban areas 
have over the past 30 to 50 years gradually led to increasing levels of 
nutrients in the lake and subsequent declining water clarity. With a co n-
siderable time lag between the activity causing nutrient discharge and 
the consequences on water quality indicators as well as the concern to 
limit costs to the agricultural sector and urban development, Wakaito 
Regional Council chose to cap the amount of nitrogen entering the lake 
from agricultural and urban areas and to allow nitrogen trade between 
land owners (http://www.waikatoregion.govt.nz/). The target of the 
policy is to maintain current water quality well into the future (by 2080 ) 
by capping all sources of manageable nitrogen at their 2001 levels (Ac t-
Ohio River Bas	in Trading Project is the world’	s only interstate water quality 	
trading program that started operating in March 2014. The project trades su	r-	
face water quality across three US states, Ohio, Kentucky and Indiana. The Ohio 
River is the largest tributary to the Mississippi river meandering through eight 
states westward from Pennsylvania to Illinois. Twentyfive million people live 
within its basin and three million rely on the river for their drinking water 
supply (B arret 2014). Effluent pollution from city run off, waste water trea t-
ment plants (WWTPs), power plants and agricultural land has deteriorated 
water quality while inter -state water regulation has made it difficult to obtain 
acceptable results. The trading pr oject attempts to reduce nutrient pollution 
flowing into the Ohio River by 30 tonnes of nitrogen and 15 tonnes of phosph o-
rous over a five year period by paying farmers to keep nutrients from reaching 
the river through conservation practices. Farmers then sell emission reduction 
credits to point source polluters. The area would then be subject to a cap, i.e. a 
maximum amount of nutrient emissions allowed to the river. At full scale, the 
project could create a market that fits all eight states, allowing for the particip a-
tion of 46 power plants, thousands of wastewater utilities and 230,000 farmers.	 	
Starting out though, the project includes up to 30 farmers in a pilot run.

132 Ecosystem Services 
ing Group Manager 2012). This corresponds to a reduction of 20% of 
nitrogen discharges across the catchment area. 
Each landowner in the Lake Taupo catchment area now has an ind i-
vidua l nitrogen discharge allowance corresponding to the average emi s-
sion level between 2000 and 2005. Any landowners wishing to increase 
their nitrogen discharge need to purchase allowances from other lan d-
owners in the catchment area. In addition, a separate f und, the Lake 
Taupo Protection Trust, was established with a mandate to achieve the 
20% reduction in nitrogen emissions primarily through a mix of land 
retirement, land conversion and purchasing allowances thereby retiring 
permits to pollute from the marke t. 
Evaluation of the nitrogen sourcing and trading programme shows 
the policy has successfully limited additional nitrogen leaching that 
would otherwise have been emitted in the absence of regulation, esp e-
cially from expansion in dairy farming (Duhon et al. 2011). The Lake 
Taupo Protection Trust had entered into agreement with farmers to 
remove 100 tonnes of nitrogen by July 2011 and was ahead of schedule 
to secure its required 153 tonnes of nitrogen reductions by 2018. Tra d-
ing among farmers is picking up , but is expected to increase in future as 
productivity increases. 
5.7.2 Compensatory mussel offsets – Trading between 
nutrient dischargers and nutrient sequestrators 
A 3-year research project in Limfjorden, Denmark, investigated the 
economic and environmental f easibility and effects of setting up 
compensatory mussel farming that would remove excess nutrients 
from coastal waters in order to improve surface water quality 
( http://forskning.skaldyrcenter.dk/muslinger -som -virkemiddel -mumihus /). 
Mussel farmers would be paid to establish and harvest additional 
cultured long -line produced blue mussel colonies. The blue mussels 
provide a nutrient regulating service by removing nutrients from the 
water column. When harvesting these mussels, nutrients are r e-
moved from coast al waters. Mussels can in turn be utilised as fertili s-
er on agricultural land, bringing back the nutrients bound in the mu s-
sels from sea to land, reducing demand for artificial fertilisers and 
increasing the source of phosphorous. 
The pilot project showed a total amount of nutrients incorporated in 
the mitigation mussels between 10.5 –16 t nitrogen and 0.5–0.7 t 
phosphorous, corresponding to a potential nutrient removal of 0.6 –0.9 t

Ecosystem Services 133 
nitrogen per ha per year and 0.03 –0.04 t phosphorous per ha per year 
(Petersen et al. 2014). 
Trading of nutrient emission units could be possible between 
compensatory mussel producers as sellers of reduced emission units 
and buyers of emission reduction units, for instance i) farmers who 
could be allowed to either increase the current level of fertiliser use or 
avoid meeting future more stringent restrictions on fertiliser use; ii) 
waste water treatment plants as part of their compliance with urban 
waste water treatment Directive; or the State as a way of cleaning up 
past emissions of excess nutrients stored in the sediments and water 
colum ns. Box 5.5 illustrates the trading mechanism and the potential for 
compensation mussel production in coastal waters in Denmark. 
A compensatory mussel offset project was lauched in Lysekil 
municip ality, Sweden in 2004, where the waste water treatment plant off -
set part of their nutrient emissions through compensatory mussel 
production, thereby avoiding a more expensive extension of the treatment 
plant. A private entity obtained the contract to harv est 3,500 tonnes of 
mussels yearly which would offset 39 tonnes of nitrogen emitted from the 
waste water treatment plant (Lindahl and Kollberg 2008). In addition to 
income generated from nutrient removal from the water body, the mussel 
producer had based i ts business plan on the sale of mussels for human 
consumption as well as for fertiliser and fodder. Irregularities in the 
management and statutory control of the mussel production for safe 
human consumption, however, led to police charges against the compa ny 
(FiskeribladetFiskaren, January 2010). The waste water treatment plant 
therefore ceased the contract by 2010 and invested in its own treatment 
unit. Combined with difficulties in finding readily open retail markets, the 
mussel producing company closed d own.

134 Ecosystem Services 
Box 5.5 : PES for shellfish/mussel production in Denmark 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Petersen et al . (2013). 
5.8 Main findings in this chapter 
This chapter has focused on market -based policy examples and approaches 
for managing non -point pollution from land use in (primarily) agriculture. 
Agriculture is recognised as the main contributor of nutrient pollution to 
the aquatic environment while receiving substantial public funding. 
Funding for voluntary agri -environmental policies under the new EU 
CAP 2014 –2020 for EU Member States has been significantly strengt h-
ened compared to the former CAP (from 10% of CAP budget to 30%) 
and a new mandatory Green Direct Payment representing one third of 
Pillar I budget has been introduced for recipients of first Pillar support, 
of which several instruments and requirements can have a direct benef i-
cial impact on the aquatic environment and ecosystem services. The 
strengthening is notable despite an overal l cut in the EU CAP budget of 
1.8% of Pillar I and 7.6% in real terms (2011 prices) compared to the 
previous CAP period. However, the new cross -compliance rules, which 
represent one of the two instruments available to integrate water policy 
objectives in the CAP, do not include rules on sustainable pesticide use

Ecosystem Services 135 
and integrated pesticide management nor on the basic measures under 
the RBMPs (WFD’s Article 11.3). Although the Commission has subse-
quently been asked by t he EU Parliament and the EU Council to propose 
to include relevant parts of the WFD, this is not due until obligations for 
farmers have been clarified in all Member States. Substantial additional 
funds made available under the EAFRD funds to tackle water m anage-
ment as one of the “ crucial new challenges ” for European agriculture has 
only sparingly been implemented, despite the greening of the CAP. Still 
Member States can choose to spend up to 15% of the CAP on Pillar II for 
the benefit of i.a. more wetland a reas and afforestation, and the mand a-
tory 5% Ecological Focus Areas further strengthen ecosystem services 
on agricultural land, of which for instance buffer strips may benefit the 
aquatic environment. 
Non -point pollution is difficult to control in practice , in particular 
when using uniform instruments that ignore differences in soil retention 
capacities, farm typologies and farmer characteristics. This so -called 
wicked problem requires a mix of instruments and measures that are 
adapted to local conditions a s well as the involvement of a mix of stak e-
holders. The three examples from Morsa watershed in Norway, Munich 
in Germany and Catskill Mountains in the State of New York, USA, repr e-
sent programmes at watershed levels that produce significant and pos i-
tive results for water quality within relatively few years using the ES 
framework and to a large extent PES, and involving a mix of stakehol d-
ers, both beneficiaries, polluters and ecosystem service providers. 
Common for the programmes is locally adapted measures and instr u-
ments, some voluntary and others mandatory; an appropriate mix of 
different policies and the active involvement and engagement of land 
owners and households. The examples indicate that it’s possible to o b-
tain significant results at lower costs wi thin relatively few years when 
making a concerted effort at catchment level with all relevant stakehol d-
ers. Despite the apparent opportunities and benefits, we have not come 
across many examples of this type in general or for the Nordic countries 
in partic ular. 
At a national level, the Danish Nature and Agriculture Commission 
recommended moving towards more targeted and efficient environme n-
tal regulation of agricultural discharges that is based on actual loads and 
vulnerability of individual recipients. Th is represents a fundamental 
change in how water pollution is regulated today, and currently the Dan-
ish Ministry of Environment is analysing and testing how new regulatory 
models can be designed to target the regulation more to the vulnerable 
areas and ther eby differentiate the nutrient regulation more compared

136 Ecosystem Services 
to current practice. There are modelling tools available (the TargetEcon 
models) for this testing (e.g. Konrad et al ., in prep.; Hasler et al. 2014) 
where examining assumptions of effort distribution between farmers 
can be important, e.g. the assumptions on retention of nutrients in sub -
catchments, both for economic and ecological reasons. 
The idea of developing locally adapted PES instruments at catchment 
level was also part of pilot projects in Denmark to look at how farmers 
could enter contracts with towns and cities to provide ecosystem se r-
vices on their land that would regulate excess water and avoid inunda-
tions in the built environment. Many of the practical measures investi-
gated could also have positive impacts on water quality. This exemplifies 
the scope for mainstreaming policies at catchment level i.e. with a firm 
basis set on local conditions and a clear understanding of which specific 
ecosystem services are enhanced for the benefit of whom a nd when. 
Wetland PES schemes, which have a direct relevance to the WFD, are 
found in the three Nordic EU Member State countries, co -financed 
through the second Pillar of the EU CAP. Whereas the measure and o b-
jectives are largely similar across the countrie s, the payment levels and 
conditions in the contracts differ. In Sweden, payment is also offered for 
the improvement of existing wetlands and in Finland wetland -to -
catchment ratios between wetland area and total catchment area are 
used to guide the require d minimum size of wetlands, recognising that 
larger wetlands are more efficient in retaining as large a quantity of n u-
trients lost from upstream fields as possible than small wetlands, even if 
these are more efficient on a per unit wetland basis. Norway ap pears not 
to use wetlands as a measure to combat excess nutrient leakages. This 
could be something to look into for Norway. 
Water quality trading does not currently exist in the Nordic countries 
or in the EU but could in principle be established as an ins trument at 
river basin level as a cost effective way of reducing emissions. The EU 
Commission proposed in the Communication “ A Blueprint to safeguard 
Europe’s water resources ” (COM 2012; 673) to develop CIS Guidance on 
trading schemes by 2014. Water qualit y trading exists primarily in the 
US where about 66 schemes are in operation, spurred by the Clean W a-
ter Act from 1972. Voluntary off- sets of nutrient loads to recipients has 
been attempted through compensatory blue -mussel farming in Lysekil 
municipality, Sweden, but stopped due to irregularities with the ecosy s-
tem service provider. A full -scale pilot in Denmark has recently been 
carried out, indicating that compensatory mussel farming can be both an 
environmental and economic efficient and effective measure. Water 
quality trading can be an instrument to save costs across polluters when

Ecosystem Services 137 
complying with abatement targets, but it necessitates a sufficient market 
size to bring about cost savings, which a catchment level market may or 
may not provide, depending o n local conditions. 
When targeting economic policy instrument to catchment or even 
sub -catchment levels the challenge becomes striking the right balance 
between policies and measures that make sense locally while keeping 
transaction costs down in relation to management, coordination and 
control of both measures and policies. The US CRP uses effects on the 
environment as determinant for paying land owners for ecosystem ser-
vices rather than measures. This can be one approach to circumvent the 
issue of high t ransaction costs when targeting policies and measures, but 
necessitates that effluent reductions are both measurable and controll a-
ble. The problem with measurement, monitoring, control and enforc e-
ment has in many cases led to water protection policies directed t o-
wards restricting the inputs of e.g. nutrients to agricultural crops or to 
improved utilisation of the nutrients by catch crops and requirements 
for manure handling by general measures. A regulation where the prov i-
sion of ecosystem services is more in focus necessitates a more targeted 
regulation where focus is on the outcome in the water bodies instead of 
the inputs to the fields, but still the problem of measurement and control 
is severe. Setting up differentiated point based systems for payments f or 
ecosystem services, based on scientific evidence of different outcomes 
between localities, could be an avenue to make different local measures 
comparable in terms of environmental effects and hence more cost -
effective to manage.

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Norsk sammendrag 
Abstract 
Økosystemtjenester (ØT) er økosystemenes bidrag til menneskelig ve l-
ferd. Økosystemtjenester kan klassifiseres, kartlegges og vurderes i n-
nenfor en ØT -tilnærming, som bygger på en forståelse av sammenhen g-
en mellom økosystemer og menneskelig velferd. Formålet med dette 
prosjektet er å utforske bruken og anvendeligheten av ØT -tilnærmingen 
i vannressursforvaltning, spesielt forvaltning i tråd med vanndirektivet 
(EUs Water Framework Directive) i de nordiske land. Det finnes en re k-
ke eksempler på bruk av ØT -tilnærmingen i studier knyttet til vannd i-
rektivet i alle de nordiske land. De fleste studiene inkluderer kartlegging, 
beskrivelse og kategorisering av økosystemtjenester, mens det er færre 
nyttekostnadsanalyser og analyser av uforholdsmessige høye kostnader 
ved å oppnå målsettingen om bedre vannmiljø. Relativt få nordiske st u-
dier verdsetter økosystemtjenester fra ferskvann som sådan. Noen flere 
verdsetter forbedret vannmiljø, inkludert det å nå direktivets målsetting 
om god økologisk tilstand. I disse benyttes ik ke ØT-tilnærmingen ekspl i-
sitt, men direkte eller indirekte kan man utlede hvilke økosystemtjene s-
ter som er vurdert og verdsatt. Det finnes en rekke eksempler på bruk av 
målrettede og lokaltilpassede virkemidler i de nordiske land, først og 
fremst innenfor landbruket. Lokaltilpasning og bruk av ØT -tilnærmingen 
understrekes, men det er ofte ingen direkte sammenheng mellom fo r-
bedrede økosystemtjenester, de økonomiske mekanismene og større l-
sen på betalingen for økosystemtjenestene. Rapportens eksempler viser 
at ØT -tilnærmingen er på vei inn i nordisk vannressursforvaltning. Det 
er fortsatt behov for mer kunnskap om økosystemtjenester og verdien 
av dem i vann, men eksemplene og diskusjonen i rapporten viser at ØT -
tilnærmingen kan være til stor nytte i sammenheng med nordisk van n-
ressursforvaltning, inkludert implementering av vanndirektivet.

148 Ecosystem Services 
Bakgrunn 
Økosystemtjenester (ØT) er økosystemenes bidrag til menneskelig ve l-
ferd. Ved ulike klassifiseringssystemer kan økosystemtjenester kartleg-
ges og vurderes innenfor en ØT -tilnærming, som bygger på en forståelse 
av sammenhengen mellom økosystemer og menneskelig velferd. 
I prosjektet VALUESHEDS (“Valuation of Ecosystem Services from 
Nordic Watersheds ”, se Barton et al. 2012) og flere andre prosjekter om 
økosystemtjenest er i Norden, er det lagt vekt på å beskrive og kartlegge 
de økosystemtjenester vi får fra ulike økosystemer. Det er nå behov for å 
utforske videre hvordan man kan integrere og bruke lærdommen fra 
arbeid med ØT -begrepet og - tilnærmingen i praktisk forvaltni ng. 
ØT -tilnærmingen er ikke en del av vanndirektivet, men når man di s-
kuterer bruk av ØT -tilnærmingen i ferskvannsøkosystemer, kan det 
være hensiktsmessig å knytte an til vanndirektivet, som er en viktig pilar 
for nordisk vannforvaltning. Å undersøke hvilk en rolle ØT-tilnærmingen 
kan spille for forskjellige vannforvaltningsoppgaver generelt, og oppg a-
ver som følger av vanndirektivet spesielt, anses som et naturlig steg i 
vurderingen av økosystemtjenester i ferskvann. 
Mål med prosjektet 
Prosjektets mål er å u tforske bruken og nytten av ØT -tilnærmingen i 
forvaltning av ferskvannsressurser i Norden, spesielt knyttet til følgende 
fire temaer: 
 
• Metoder for å benytte ØT -tilnærmingen ved vurdering av nytten av 
økologiske forbedringer i vassdrag . 
• Metoder for kostnads vurdering, særlig det vanndirektivet betegner 
som uforholdsmessig høye tiltakskostnader . 
• Hvordan ØT -tilnærmingen kan bidra til utvikling av målrettede og 
lokalt tilpassede virkemiddel - og tiltakspakker på nedbørfelt -
/vannregionnivå . 
• Mulighetene for bruk av betaling for økosystemtjenester ( ”Payment 
for Ecosystem Services, PES”) som et virkemiddel for målrettet 
ferskvannsforvaltning .

Ecosystem Services 149 
Vår tilnærming 
De fire hovedtemaene, nevnt i avsnittet over, har til en viss grad vært 
beskrevet og diskutert tidligere i sammenheng med vanndirektivet. 
Rapportens hovedbidrag er å gi eksempler på hvordan ØT -tilnærmingen 
har blitt benyttet, hovedsakelig i en nordisk sammenheng. Mens V A-
LUESHEDS -rapporten diskuterte grunnleggende metodiske og prins i-
pielle spørsmål, vil denne rapport en legge mer vekt på praktiske 
problemstillinger og gi eksempler. Vi gir ikke en komplett oversikt over 
nordiske studier om økosystemtjenester her, siden dette foreligger i 
Barton et al. (2012). Vi har valgt eksempler med tanke på å illustrere 
bruksområder for ØT-tilnærmingen i forskjellige land og med forskjell i-
ge hensikter, i håp om at de kan inspirere og være til nytte. 
Økosystemtjenester, betaling for økosystemtjenester 
og EUs vanndirektiv 
ØT-tilnærmingen har fått mye oppmerksomhet, og verden rundt legges 
det ned betydelig arbeid i å utvikle økosystemtjenestebegrepet videre og 
implementere det i praktisk forvaltning. ØT -tilnærmingen kan brukes for 
å kartlegge og måle verdien av endringer i støttende, forsynende, regul e-
rende og kulturelle økosystemtje nester, og avveininger mellom disse. 
Vanndirektivet er det viktigste direktivet for regulering av kvalitet og 
bruk av fersk - og kystvann i EU -land. Norge og Island har også innført 
direktivet i sin lovgivning. 
Målet med direktivet er å opprettholde og forbedre vannmiljøet, med 
særlig vekt på økologisk og fysisk -kjemisk kvalitet i de omfattede van n-
områdene. Direktivets mål er å oppnå god økologisk tilstand (GØT) i alle 
vannforekomster, og godt økologisk potensial (GØP) i vannmasser kla s-
sifisert som sterkt m odifiserte. Hovedområdene der økonomisk analyse 
innenfor direktivet kan knyttes til ØT -tilnærmingen er karakterisering 
av nedbørfelt (Artikkel 5), bruk av vannprising og kostnadsdekning (A r-
tikkel 9), vurderingen av uforholdsmessige kostnader (Artikkel 4), og 
krav til identifisering og implementering av kostnadseffektive kombin a-
sjoner av tiltak for å oppnå god økologisk status i vannforekomstene, 
som del av tiltaksprogrammet (Artikkel 11).

150 Ecosystem Services 	
Vanntjenester defineres som del av direktivets artikkel 2(38) ( ”defi-
nisjoner ”): 
 
” Vanntjenester er alle tjenester som forsyner husholdninger, offentlige instit u-
sjoner eller annen økonomisk aktivitet med (a) abstraksjon, oppdemming, la g-
ring, behandling og distribusjon av overflate - eller grunnvann, (b) fasiliteter for 
i nnsamling og behandling av avløpsvann, som tilbakeføres til overflatevann .” 
EU -kommisjonen, 2000 	
Økosystemtjenester er altså en bredere definisjon av tjenester enn de 
vanntjenestene som er definert i vanndirektivet. Vi mener likevel at ØT -
tilnærmingen kan være nyttig i analyser som er knyttet til implement e-
ring av vanndirektivet. 
Vår gjennomgang viser at ØT -tilnærmingen kan være nyttig for å vurd e-
re og illustrere hvordan ulike økosystemtjenester påvirkes av ulike valg av 
tiltak og virkemidler for å oppfyll e vanndirektivets målsettinger, og avve i-
ningen mellom forskjellige goder og tjenester. Særlig kan ØT- tilnærmingen 
bidra til å illustrere hvordan forskjellige strategier for å oppnå målsettingen 
om godt vannmiljø kan føre til forskjellige resultater for forsyning av ulike 
økosystemtjenester, og dermed vise forskjellene mellom den totale nytten 
av forskjellige tiltaksstrategier, og hvordan nytten fordeles mellom ulike 
brukere, tid og sted. ØT -tilnærmingen gir mulighet for å vurdere nytten av 
positive miljøendringer i et komplekst økosystem med et metodisk fund a-
ment for sammenhengen mellom endringer i økosystem og følgende en d-
ringer for ulike økosystemtjenester. ØT -tilnærmingen kan derfor bidra til å 
forbedre metoder for vurdering av uforholdsmessige kostnader i vanndi-
rektivet, samt være til hjelp ved analyse av tiltaks -programmet, og ved vu r-
dering av ulike tiltaks kostnadseffektivitet. 
ØT -tilnærmingen er en av flere som ligger til grunn ved utforming av 
økonomiske virkemidler for å redusere forurensning av van n. Betaling 
for økosystemtjenester (“Payment for Ecosystem Services, PES), går ut 
på at de som ” produserer” økosystemtjenester får betalt for dette. Kv o-
tehandel ( ”cap- and-trade”) med vannkvalitet er et annet eksempel på et 
virkemiddel som er basert på ØT -tilnærmingen, der økosystem -baserte 
kvoter for f.eks. mengde med forurensende stoffer (som nitrogen og 
fosfor) omsettes mellom forurensere. PES -systemer for å redusere van n-
forurensing er i bruk i de nordiske land og ellers i Europa. PES -
systemene er ikke initiert som følge av vanndirektivet, men er ofte fo r-
ankret EUs felles landbrukspolitikk (CAP), eller i virkemidler knyttet til 
drikkevann, men disse bidrar likevel til å møte kravene i vanndirektivet 
og kan potensielt spille en større rolle i vanndirektivet enn de gjør i dag.

Ecosystem Services 151 
Felles for virkemidler som tar sikte på å forbedre vannkvalitet, er en 
økende erkjennelse av at de må tilpasses lokale forhold, fordi både kos t-
nader og nytte (økosystemtjenester) varierer fra område til område. 
Bruk av ØT-tilnærming en for beskrivelse og 
verdsetting av nytteeffekter av forbedret økologisk 
tilstand i vann 
De nødvendige trinnene for nyttevurderinger av forbedringer i vannmilj ø-
tilstand basert på ØT -tilnærmingen, er identifisering/beskrivelse, kvant i-
fisering og verdsettin g. Identifisering av økosystemtjenester kan gjøres og 
blir gjort på forskjellige geografiske nivåer (vannforekomst, vassdrag, 
nedbørfelt, land, region) avhengig av formål. I noen studier er identifik a-
sjon og verdsetting gjort med fokus på én eller noen få, utvalg te økosy s-
temtjenester. I sammenheng med vanndirektivet er det mest interessante 
spørsmålet hvordan nytteeffektene fra økosystemtjenester endres (øker) 
når målet om god økologisk tilstand nås. 
En gjennomgang av studier om økosystemtjenester fra fersk vann 
og forbedringer i ferskvannstilstand viser at det er krevende både å 
identifisere, kvantifisere, og verdsette, nytteeffekten av å oppnå god 
økologisk tilstand. 
Det er mange interessante eksempler på bruk av ØT -tilnærmingen for 
å identifisere, kvantifisere og verdsette nytteeffektene fra ferskvann gen e-
relt, og forbedringer i ferskvannsforhold (økologisk og kjemisk status i 
direktiv -terminologi) spesielt, særlig i de nordiske landene. Fram til nå 
har de fleste studiene ikke, eller i liten grad, tatt hens yn til behovet for å 
vurdere avveininger eller dobbeltelling. I den vitenskapelige litteraturen 
om økosystemtjenester pågår det en diskusjon om disse temaene. ØT -
tilnærmingen er fortsatt ny i forvaltningssammenheng, og hittil er hove d-
vekten lagt på hvilke ØT som påvirkes, og hvordan de kan beskrives og 
kartlegges. Trolig vil problemstillingene knyttet til avveininger og dobbe l-
telling bli tillagt større vekt i takt med at tilnærmingen blir mer anvendt. 
ØT -tilnærmingen kan være et verktøy for systematisk iden tifisering 
av nytteeffekter og for å undersøke sammenhengen mellom økologiske 
endringer og velferdsøkninger, og eksemplene viser at tilnærmingen er i 
ferd med å bli tatt i bruk i de nordiske landene. Likevel er tilnærmingen 
åpenbart ikke noen ” quick fix”. Mye arbeid er fortsatt nødvendig på alle 
områder knyttet til identifisering, kvantifisering, klassifisering og ikke 
minst verdsetting av økosystemtjenester, både med tanke på det økol o-
giske fundamentet og de økonomiske metodene.

152 Ecosystem Services 
Vurdering av uforholdsmessige kostnader 
Det er relativt få eksempler på nytte-kostnadsanalyser i vanndirektiv -
sammenheng, og enda færre slike analyser der økosystemtjenester brukes 
i nyttevurderingen. Dette gjelder både for Norden og Europa forøvrig. 
Martin -Ortega (2012) konkluderer i sin artikkel om bruk av økonomiske 
metoder i implementering av vanndirektivet at ” … while CEA [”Cost Effe c-
tiveness Analysis” – vår merknad] has been widely adopted by most natio n-
al guidelines in Europe, and the estimation of the environmental benefits 
has received a significant attention from the literature, the way these two 
should be joined up in a CBA has received much less attention.” 
Vi kan legge til at selv om nytteeffekter estimeres, er ikke ØT -
tilnærmingen i utbredt bruk. For eksempel verdsett er mange studier ”god 
vannkvalitet ”, som er målet med vanndirektivet, men det kan være van s-
kelig å innhente informasjon om verdien av spesifikke økosystemtjene s-
ter, som rekreasjon, fiskeri og fiskehabitater osv. fra slike studier. ØT -
tilnærmingen represent erer derfor et nytt konsept i verdsettingsstudiene. 
Det finnes likevel eksempler på nasjonalt, regionalt og lokalt nivå der 
ØT -tilnærmingen er brukt for vurdering av uforholdsmessige kostnader, 
hovedsakelig som screening -prosedyrer. Et eksempel er Jensen et al . 
(2013) som benytter informasjon om økosystemtjenester fra Aquam o-
ney -studien, dvs. resultatene av den økonomiske verdsettingen av fo r-
bedringer i vannkvalitet og økologi i vannregion Odense, i en nytteover-
føring til andre danske vannregioner. Resultate ne av nytteoverføringen 
brukes deretter til en nyttekostnadsanalyse for gjennomføring av dire k-
tivet i Danmark. Nyttekostnadsanalysen brukes som en konservativ 
screening der kostnadene ser ut til å være uforholdsmessige, dvs. at de 
overstiger nytteeffektene av økosystem -forbedringer. Mye av samme 
prosedyre og tilnærming benyttes på lokalnivå for to elver i Oslo som en 
screeningprosedyre for å vurdere nytteeffekter og potensielt ufo r-
holdsmessige kostnader (Magnussen et al . 2014). 
ØT -tilnærmingen anses som nyttig, fordi den bidrar til en systematisk 
og dekkende oversikt over alle nytteeffekter (i økonomiske enheter, 
fysiske enheter, og/eller kvalitativt beskrevet) som er nødvendig for å 
vurdere nytten av forbedringer i vanntilstand. Konklusjonen i Jensen et 
al . (2013) er likevel at en videre anvendelse av ØT -tilnærmingen burde 
inkludere flere økosystemtjenester i vurderingen av de områdene hvor 
screeningen indikerer at kostnadene overstiger nytten, fordi ikke alle 
relevante økosystemtjenester er dekket i Aquamoney -studien. Dette er 
et område hvor mer arbeid er nødvendig, og trolig vil bli gjennomført de 
nærmeste årene.

Ecosystem Services 153 
Lokalt tilpassede virkemidler, inkludert PES, for å 
bedre forsyningen av økosystemtjenester 
Mange eksempler og mye kunnskap kan hentes fra lokalt tilpassede og 
målrettede virkemidler som bidrar til oppnåelse av vanndirektivet. Noen 
er gjennomført i praktisk politikk, mens andre er i form av anbefalinger 
fra pilotstudier eller pågående forskning. 
Blandede virkemidler ( ”mixed instruments ”) er mye brukt i de no r-
diske landene (for eksempel innen landbrukssektoren), men de fleste av 
disse er generelle og ikke lokalt tilpasset. Det er derfor stort potensial 
for mer målrettet tilpasning til lokale forhold, for eksempel for å kons t-
ruere nye eller re -etablere våtmarksområder. Eksemplene vi present e-
rer fokuserer på markedsbaserte virkemidler og tilnærminger som tar 
sikte på håndtering av forurensning fra diffuse kilder. Eksemplene he n-
tes hovedsakelig fra landbruket, fordi problemer og eksempler herfra 
anses som svært relevante i en nordisk sammenheng. 
Forurensing fra diffuse kilder er i praksis vanskelig å kontrollere, sæ r-
lig ved bruk av uniforme virkemidler som ikke tar hensyn til forskjeller i 
jordens retensjonskapasitet, type gårdsbruk osv. Dette er et sammensatt 
problem (ofte kalt ” wicked problem” i engelsk litteratur) og krever en 
blanding av virkemidler og tiltak som er tilpasset lokale forhold. Involv e-
ring av interessenter er også ofte både ønskelig og nødvendig. Tre e k-
semp ler på programmer på vannområdenivå fra henholdsvis Morsa i No r-
ge, München i Tyskland og Catskill Mountains i New York State, USA, r e-
presenterer programmer som ser ut til å gi betydelige og positive 
resultater for vannkvalitet innen relativt få år (Selv om det har vært noe 
diskusjon om motivasjonen for Catskill Mountains- eksemplet). Felles for 
programmene er bruk av lokalt tilpassede tiltak og virkemidler, noen fr i-
villige og andre obligatoriske, samt en hensiktsmessig blanding av ulike 
virkemidler og aktivt engasjement fra jordeiere og husstander. 
Ideén om å utvikle lokalt tilpassede PES -instrumenter på nedbørfeltn i-
vå har også vært undersøkt i pilotprosjekter i Danmark, som så på hvo r-
dan gårdbrukere kunne inngå kontrakter med byer og tettsteder om å 
produser e økosystemtjenester på eiendommen som så kunne håndtere 
flomvann og dermed unngå oversvømmelser og overløp i de bebygde 
områdene. Tilnærmingen er også utgangspunkt for en foreslått regulering 
av utslipp av forurensende næringsstoffer (nitrogen og fosfor) i Danmark, 
hvor kravene differensieres ut fra lokale forhold som jordas retensjonsk a-
pasitet og effekten på økosystemtjenester i resipienten (Kjær, 2014). Vå t-
marks -PES -systemer, som har direkte relevans for vanndirektivet, finnes i 
de tre nordiske EU- landene, finansiert gjennom ”Pillar II ” i EUs felles

154 Ecosystem Services 
landbrukspolitikk (CAP). Tiltakene og målene er mye like i alle land, men 
betalingsnivå og utforming av kontrakter varierer. 
Kvotehandel med vannkvalitet ( ”water quality trading ”) er ikke kjent 
fra de nordiske landene eller i EU, men kan i prinsippet etableres som et 
tiltak f.eks. for å redusere forurensende utslipp på nedbørfelt -nivå. EU -
kommisjonen foreslår i ”A Blueprint to Safeguard Europe’s water reou r-
ces ”	
22 å utvikle såkalte ” Common Implementation Strategi es (CIS) Gui-
dance ” (veiledning for felles implementeringsstrategier) for slike mek a-
nismer ( ”trading schemes ”) innen 2014. Et annet eksempel utenfor EU 
er nitrogenkvotehandel i området rundt innsjøen Taupo på New Ze a-
land, som har som målsetting å oppretthol de dagens gode vannkvalitet, 
som står i fare for å bli dårligere på grunn av intensiv jordbruksdrift og 
økende urbanisering i området. I følge Stanton et al . (2010) er det nå 66 
kvotehandelssystemer knyttet til vannkvalitet i funksjon i USA, fire i 
Austral ia og ett i henholdsvis New Zealand og Canada. Frivillige avtaler 
(” off- sets ”) har vært forsøkt i Sverige, og et full -skala pilotprosjekt er 
nylig gjennomført i Danmark, og indikerer at blåskjellanlegg kan være et 
miljøvennlig og kostnadseffektivt tiltak f or å redusere konsekvenser av 
næringsstofftilførlser til vann. 
Når økonomiske virkemidler skal tilpasses vannregionområder eller 
vannområder, er en utfordring å finne riktig balanse mellom virkemidler og 
tiltak som er fornuftige lokalt, samtidig som transa ksjonskostnadene knyt-
tet til forvaltning, koordinering og kontroll, holdes på et akseptabelt nivå. 	
Konklusjoner 
Det er flere eksempler på bruk av ØT -tilnærmingen i studier knyttet til 
vanndirektivet i alle de nordiske landene. Det er flest eksempler på ide n-
tifisering og kartlegging, beskrivelse og kategorisering av økosystemtj e-
nester, mens det er forholdsvis få omfattende nytte -kostnadsanalyser og 
vurderinger av uforholdsmessige kostnader. 
Relativt få studier i de nordiske landene verdsetter økosystemtjene s-
ter som sådan, mens det er noen flere som verdsetter forbedringer i 
vannmiljø, inkludert oppnåelse av god økologisk tilstand, som er målset-
tingen i vanndirektivet. Ved siden av Aquamoney -studien beskrevet i 
VALUESHEDS (verdsettingsstudier i Morsa, Norge o g Odense, Danmark) 
────────────────────────── 
22 (COM (2012) 673).

Ecosystem Services 155 
finnes det et par nye finske studier som verdsetter forbedret vannmiljø i 
tråd med målsettingene i vanndirektivet på lokalt nivå. Disse verdsetter 
ikke økosystemtjenester direkte, men forbedringen i vannmiljø kan 
knyttes til ulike økosys temtjenester. Nytteoverføringer er mye brukt for 
å si noe om verdien av forbedret vannmiljø, og det er mange eksempler 
på slike studier; innen Danmark, fra Danmark og Norge til Sverige, fra én 
elv i Oslo til andre Oslo -elver osv. Det er imidlertid stor man gel på rele-
vante primærstudier å overføre fra, og særlig mangel på gode primæ r-
studier som tar utgangspunkt i vannmiljøforbedring og derfra utleder 
hvilke økosystemtjenester som blir påvirket i hvilken grad. 
Det er flere studier, pilotprosjekter og fullskalaprosjekter som bruker 
målrettede og lokaltilpassede virkemidler i de nordiske landene. Disse 
finnes hovedsakelig innen landbrukssektoren. Den direkte samme n-
hengen mellom forbedrede økosystemtjenester og økonomiske mek a-
nismer og betalingsnivå i PES (betaling for økosystemer) er imidlertid 
ofte indirekte. Man må ha enda bedre kunnskap om økosystemtjenester 
og deres verdi for å målrette disse virkemidlene ytterligere. Videre er 
det en økende bevissthet om at tiltak og virkemidler for redusert van n-
forurensing må tilpasses lokale forhold og at ØT -tilnærmingen kan være 
nyttig i denne sammenheng. 
Det er kanskje ikke så overraskende at det tar tid å innarbeide ØT -
tilnærmingen i praktisk vannforvaltning, og at de mer økonomiske delene 
av tilnærmingen, monetær verdse tting og nytte-kostnadsanalyse, tar 
lengre tid enn resten. Økosystemtjeneste- begrepet og -tilnærmingen har 
vært i bruk en stund, men det var ikke før TEEB -prosjektet fra 2008 og 
utover at fundamentet for de mer økonomiske og praktiske bruksomr å-
dene i tilnæ rmingen ble utviklet. Det tar tid å integrere nye tenkemåter i 
offentlig ressursforvaltning, men mye har skjedd, og det pågår mye arbeid 
på dette feltet i Norden, som eksemplene i denne rapporten illustrerer.

Ecosystem Services
In Nordic Freshwater Management	
Ved Stranden 18
DK-1061 Copenhagen K
www.norden.org
Human wellbeing is dependent upon and benefit from ecosystem 
services which are delivered by well-functioning ecosystems. 
Ecosystem services can be mapped and assessed consistently 
within an ecosystem service framework. This project aims 
to explore the use and usefulness of the ecosystem service 
framework in freshwater management, particularly water 
management according to the Water Framework Directive (WFD). 
There are several examples of how ecosystem services have been 
used in WFD related studies in all the Nordic countries. Most 
of them involve listing, describing and categorizing freshwater 
ecosystem services, while there are few comprehensive Cost 
Benefit Analyses and analyses of disproportionate costs that apply 
this framework. More knowledge about ecosystem services and the 
value of ecosystem services for freshwater systems is needed.
Ecosystem Services – In Nordic Freshwater Management	
TemaNord 2014:561	
TemaNord 2014:561
ISBN 978-92-893-3851-6 (PRINT)
ISBN 978-92-893-3853-0 (PDF)
ISBN 978-92-893-3852-3 (EPUB)
ISSN 0908-6692	
TemaNord 2014:561	
TN2014561 omslag 2.indd 1	02-12-2014 08:20:22