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Assessing Cost Recovery

A New Comparative Framework in Line with WFD Article 9

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Britta Ammermüller

This study proposes a comparative accounting framework for assessing cost recovery of water supply and sewerage services for households and agriculture in line with the requirements of Article 9 of the EU Water Framework Directive (WFD). It provides an integrative analysis of the partly contradictory objectives of Article 9 and the Directive’s approach to cost recovery. The book defines cost categories and accounting guidelines in line with the specific requirements of WFD Article 9. On this basis, an integrative framework for analysing different financing schemes for water services provision and their compliance with the objectives of Article 9 is developed, along with a pragmatic approach for the incorporation of environmental and resource costs in the overall cost recovery analysis.

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3 Methodology for a comparative assessment of cost-recovery in line with WFD Article 9 157

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157 3 Methodology for a comparative assessment of cost- recovery in line with WFD Article 9 “The adoption of common definitions for key cost variables would facilitate the comparison between costs and prices […] for different water services, uses and countries.” European Commission (2000a) This chapter first recapitulates the analytical prerequisites for developing the assessment framework, by describing the ‘ideal path’ to cost-recovery in line with WFD Article 9. Next to a cost accounting system, which delivers definitions and accounting guidelines in line with Article 9 on each cost component to be considered in the assessment, the chapter provides a complementary revenue accounting framework. Furthermore, a pragmatic procedure for an area-wide integration of environmental and resource costs in the assessment of cost- recovery is presented. The chapter also addresses the question which frame- work conditions are decisive for a comparative assessment of cost-recovery in different EU Member States and through which indicators they can be effective- ly measured. Next, it proposes an assessment scheme for justifying exemptions from achieving cost-recovery in line with Article 9 and provides guidelines for analysing the implementation of the Article’s additional objectives. The chapter concludes with an overall plan of procedure. 3.1 Analytical prerequisites: the ideal path to cost-recovery according to WFD Article 9 As the discussion of possible interpretations of the cost-recovery concept along with the analysis of Article 9 objectives revealed, the WFD promotes a strong internal approach to cost-recovery (cf. Section 2.2.1.2). This is documented by the role designated to the polluter-pays principle...

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