Miljøprojekt, 967 – Samfundsøkonomisk analyse - Forskellige drifts- og forvaltningsformer for Lindenborg Å og Gerå samt de vandløbsnære arealer

Socio-economic Analysis - Operation and Management Scenarios for Lindenborg and Gerå Watercourses and Adjacent Areas

2 Summary and conclusions

2.1 Background & objective
2.2 Main conclusions

2.1 Background & objective

Farmlands surrounding the watercourses Lindenborg Å and Gerå in the County of North Jutland are characterised by frequent flooding and waterlogged land, which causes problems for agriculture in these areas. It is also problematic that the watercourses do not fulfil the requirements laid down in the regional development plan for diversity in animal and plant life in the watercourses.

There is a conflict of interests so to speak in the areas around Lindenborg Å and Gerå. On the one hand agriculture would like to intensify the cutting back of vegetation in watercourses as well as regulate watercourses, thereby increasing the drainage depth and reducing the number of floodings. On the other hand the environmental state of the watercourses is poor, particularly because of intensive maintenance of the watercourses and the subsequent poor physical conditions.

On this basis the Danish Minister for the Environment has set up at committee whose objective is to analyse the preparation of watercourse regulations and watercourse maintenance in the County of North Jutland. As a part of these efforts the Danish EPA has made a socio-economic analysis of several administrative measures concerning Lindenborg Å and Gerå in North Jutland.

So as to shed light on the socio-economic consequences of different management forms, the Watercourse Committee set up different management scenarios for two project areas. Gerå was chosen to illustrate the consequences of different ways of managing a watercourse in an intensely cultivated agricultural area. Lindenborg Å was chosen to illustrate the consequences of different ways of managing a watercourse in an area with room for both agriculture and nature. The Watercourse Committee set up the following management scenarios for the two project areas:

Gerå
A status quo situation
Setting up a double profile that minimises the risk of flooding significantly. A double profile consists of digging up the banks of the watercourse. This reduces the water level and thereby the risk of flooding in periods where there is substantial water flow to the stream. See appendix A for a description of a double profile (only available in Danish).
Lindenborg Å
A status quo situation
Intensification of the cutting back of vegetation to reduce the risk of flooding and thereby improve the basis for cultivation (the cutting back of vegetation the same as in 1988).
Extensification of the cutting back of vegetation and cessation of pumping so as improve the quality of nature and the environment. In this scenario the project area cannot be cultivated.

The socio-economic analysis comprises a budget and a welfare-economic analysis. The purpose of the analysis is thus both to illustrate the budget- and welfare-economic consequences of the management measures described for the project areas.

The budget-economic analysis illustrates what the economic consequences of the different management alternatives are for agriculture, the state and the county respectively. That is, who stands to "win" and who stands to "lose" from the different management alternatives. This analysis illustrates the directl the economic consequences.

The objective of the welfare-economic analysis is to assess how the different management measures affect welfare in society. The welfare-economic analysis includes values that cannot be traded as such – and therefore have no price. An example is the value of a nitrogen reduction. Furthermore the calculation price is used as an indicator of the marginal changes in welfare caused by the different management measures.

2.2 Main conclusions

2.2.1 Budget-economic conclusion

With regard to Gerå, it can be concluded that it is not worthwhile for agriculture to establish the double profile as this does not improve the farming potential of the land. If the Watercourse Committee had known this from the beginning, the scenario for establishing a double profile would probably never have been set up. Establishing the double profile has meant extra costs for the county for maintenance of the watercourse, while the state has not been affected.

With regard to Lindenborg Å, it can be concluded that the extensification scenario is the most beneficial for agriculture, primarily due to support for agri-environmental measures as well as saved costs for pumping. The second best solution is the intensification scenario that yields the highest budget-economic surplus, while the status quo scenario is the least beneficial. Intensifying the cutting back of vegetation involves extra costs for the county for watercourse maintenance. The state finances half of the support for agri-environmental measures in the extensification scenario, which is why this scenario is the most expensive for the state. All in all, it can be concluded that agriculture stands to gain the most both from intensification and extensification, while the county and the state face increased costs. The results in the analysis are based on the assumption that all applications for support for agri-environmental measures are granted.

2.2.2 Welfare-economic conclusion

With regard to Gerå, it can be concluded that it is not worthwhile to establish the double profile as the farming potential is not improved noticeably.

With regard to the project area around Lindenborg Å, it can be concluded that society is best served with extensifying maintenance of the watercourses. This is primarily due to the positive environmental effects (reduction of nitrogen and green-house gasses) and support for agri-environmental measures. Intensification of maintenance of watercourses is the second best solution for society. This is primarily because farming production is improved. The most expensive solution for society is the status quo scenario.

The sensitivity analyses for Lindenborg Å show that the results of the analysis are particularly sensitive toward:

changes in the value of the nitrogen reduction,
changes in the possibility to apply for support for agri-environmental measures,
whether the project area is used as harmony land – in accordance with the harmony criteria ^[11] and
how the yield from live stock production ^[12] is calculated.

Even though the sensitivity analyses change the ranking of the three management alternatives, the results of the analysis are considered robust. This is primarily because not all the environmental effects (e.g. improved conditions for wild animals and plants and outdoor activities) are valued. Extensification is thought to improve the conditions for outdoor activities as well as wild animals and plants, while intensification will worsen their conditions. All in all this means that seen from a welfare-economic point of view, it is beneficial to extensify low-lying areas around Lindenborg Å compared to the intensification and status quo scenario.

Fodnoter

[11] The harmony criteria mean that the size of a farmer's holding of livestock is determined by how much his own land, plus any land he may lease (either to grow crops or to apply manure, the so-called manure agreements) can sustain according to regulations. The farmer must own one ha farmland for every 1.4 animal unit (AU) in order to be in compliance with the harmony criteria for pig holdings.

[12] The yield from livestock production is included as there will be less land to fulfil the harmony criteria and livestock production must therefore be reduced (only applies to areas with dense livestock population and where there is no harmony land available).