Climate change and the Water Framework Directive: cost effectiveness and policy design for water management in the Swedish Malar region

This paper calculates the impacts of climatic change on cost effective nutrient management under the Water Framework Directive (WFD) for the eutrophic Malar lake and Stockholm archipelago in south-eastern Sweden. This is carried out for two types of targets: actual nutrient reduction targets and water quality targets as suggested by WFD. Stochastic programming is applied where climatic changes are modelled as impacts on the mean and variability in nutrient loads and water quality. The results indicate significant impacts on abatement costs and associated nutrient policy design for both targets. Climatic change may under favourable conditions 'solve' the water quality problem by achieving the predetermined target without any need for policy instruments, but can also generate large increases in cleaning costs and required charge/subsidy schemes for the same target. The results also point to the importance of target setting, where water quality targets are more robust than nutrient reduction targets with respect to achievement under different climate change impacts.