CASE STUDY REPORT. 12 March 2009

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1 DENMARK Assessing Economic Benefits of Good Ecological Status under the EU Water Framework Directive. Testing practical guidelines in Odense River basin CASE STUDY REPORT Illustration: Maps of Odense River basin and Odense River used for the valuation in the Danish case study. B. Hasler, S.L. Brodersen, L.P. Christensen, T. Christensen, A. Dubgaard, H.E.Hansen, M. Kataria, L.Martinsen, C. J. Nissen, A. F. Wulff 12 March 2009 WP4 TESTING OF THE PRACTICAL GUIDELINES IN REPRESENTATIVE EUROPEAN PILOT RIVER BAINS. WP Leaders: Joaquín Andreu and Manuel Pulido, Technical Univ. of Valencia, Spain

2 Table of Contents Policy summary....3 Acknowledgement Introduction Description of the case study Location of the case study area, including sampling area The sampling Water system characteristics Short characterization of water use and water users Set up of the survey Questionnaire design (common) Valuation results Non-respondent characteristics Respondent characteristics and sample representativeness Public perception of water management problems Estimated economic values for water resource management Factors explaining economic values for water resource management Total Economic Value Conclusions Best practice recommendations...44 References...48 Appendix A. The questionnaire (In Danish)...50 Appendix B. The generic water quality ladder used in the common valuation in AQUAMONEY

3 Policy summary The study. The main objective of this study was to estimate the benefits of improvements of the ecological status of Odense River according to the water framework directive. The survey focused on households recreational use of water bodies and their willingness to pay for improvements of the ecological status of Odense River. An internet survey was conducted on 754 households in Funen and the municipalities of the Southern Danish region in the summer of The valuation methods used are contingent valuation and choice experiments, and the aim of the valuation is to capture recreational use values as well as non use values. The improvements valued were good and very good water quality, and the initial conditions of the river are moderate water quality, according to the classification in the Water Framework Directive. As a part of the study we paid attention to evaluate at what distance from the improved river households willingness to pay falls to zero, as this estimation is necessary to determine the population who benefits from the effects of the measures under the Water Framework Directive in this particular river The report In this case study report we consider the Odense River, being the main river in the Odense River basin at Funen. As part of a wider Danish study the benefits of similar improvements of the 10 largest lakes at Funen, Odense Fjord and the whole river catchment are also considered, using the same questionnaire and valuation design as in the Odense River case study. Valuation data will be available in 2009 for all these water bodies (illustrated on the cover), as well as for Roskilde fjord at Zealand in the eastern part of Denmark, where the same design is applied for valuation of the Water Framework Directive effects. Valuation of the benefits of the Water Framework Directive. The present study is the first economic valuation of the benefits of attaining good and very good ecological status in water bodies in Denmark. Results Willingness to pay per household per year, including sensitivity to scope: The sensitivity to scope is tested by asking of the WTP for improvements of the whole river versus one stretch of the river. The stretch is located outside Odense city, and is 15 km out of the total of 60 km. With the contingent valuation method the mean willingness to pay for an improvement in Odense River to good ecological status is estimated for a short improvement (15 km out of Odense River which is approx. 60 km long) to be 323 DKK 3

4 (43 EURO) per household per year. For the large improvement (the whole river) the equivalent is estimated to be 479 DKK (64 EURO) per household per year. Hence, households willingness to pay is sensitive to the magnitude of the improvement, i.e. whether the whole river is improved or only a minor part. However, the internal scope is much stronger than the external, which is tested by introducing the short and the large improvement first in two split samples, and subsequently asking about the long/short improvement. The respondents answering the long improvement first and then the short have a significantly lower WTP for the smallest improvement, while this difference is not significant for the other part of the sample receiving the smallest improvement first. With the CE method the mean WTP for obtaining good valuing the river in three stretches is estimated to be 1053 DKK (141 EURO) per household per year for the whole river ( DKK). To obtain very good quality of the water the mean WTP is estimated to be 1430 DKK (192 EURO) per household per year ( DKK). Valuing the whole river at once gives a mean WTP, for good status, 430 DKK (58 EURO) per household per year. Surprisingly there is a lower estimated WTP for a higher water quality as to obtain very good status the WTP is 423 DKK (57 EURO) per household per year. These results imply no scope sensitivity as the respondents are willing to pay the same amount for 1/3 of the river as for the whole river. Households in Denmark currently pay on average DKK 4000/yr (533 Euro) per household for water and sanitation. Distance decay and spatial extent of willingness to pay. Estimated with the contingent valuation method the willingness to pay drops by 1.53 DKK/kilometre for the short improvement and 2.31 DKK/kilometre for the large improvement. This means that for the short improvement the radius of households affected by the improvement is 144 km, while it is 212 km for the large improvement. The larger distance for the large improvement despite the faster drop, is caused by the higher mean WTP. Total Willingness to pay: The total economic value (TEV) is calculated using the estimated distance decay function. Alternatively, aggregation could have been done within the administrative/political region. For the CV, the TEV for the short improvement to obtain a good quality, is estimated to be between million DKK per year (18-20 million EURO). For the large improvement the TEV is estimated to be between million DKK per year (27-30 million EURO). For the CE, the TEV is more than 3 times as large as for the CV to obtain a good quality, 489 million DKK per year (66 million EURO). To obtain a very good quality (using CE) the TEV is 664 million DKK per year (89 million EURO). 4

5 Berit Hasler (NERI, Aarhus University) led the Danish case study and carried out the analyses together with Louise Martinsen (NERI), Tove Christensen (FOI), Carsten Junker Nissen (FOI) and Alex Dubgaard (FOI) (study design), Sisse Liv Brodersen (NERI), Anders Fonnesbech Wulff (NERI) and Leise Pil Christensen (NERI) (CV-estimations) and Mitesh Kataria (NERI) (CE-estimations). Gregor Levin (NERI) and Sickan Flindt Ibsen (NERI) designed the maps and carried out the GIS-based distance calculations. Henriette Engel Hansen (NERI) assisted carrying out the pilot survey, and used the pilot survey data for Choice experiment estimations in her master thesis in economics (Hansen, 2008, Copenhagen University). Leise Pil Christensen (NERI) used the CV data from the main survey for her bachelor thesis in economics (Copenhagen University). Acknowledgement The authors acknowledge Stig Eggert Pedersen, Harley Madsen and Susanne Thomsen from the Environmental Centre Odense for taking the time to discuss study site characteristics with us, visiting Odense River and fjord with us, providing data and information on the water quality in Odense River Basin and in particular Odense River, as well as from valuable comments on the web-survey and the water quality description, the illustrations and the maps. We will also acknowledge Jacob Ladenburg (AKF) for valuable discussions on the choice experiment part of the study, and for commenting this case study report, and Bernd Münier who helped us with the GIS work. We have benefitted from the funding of this project from both EU FP6 and from the Danish Directorate for Foods. Thanks to all the members of the team working on the common survey design for water quality within AQUAMONEY. A special thank to Roy Brouwer (IVM) and Ian Bateman (UEA) for inspiration and coordination. 5

6 1. Introduction The main objective of the case study in the Odense River Basin (ORB) is to value the benefits of obtaining Water Framework Directive objectives and to test guidelines for valuation according to the WFD objectives. We have delimited the study to focus on Odense River being the main river in the Odense River Basin. The case study is part of a larger Danish study with the objective to value WFD effects in the whole ORB as well as in different main water bodies within the River Basin i.e. the main river (Odense River), the ten largest lakes and the fjord (Odense fjord). The reasons for valuing the benefits of the proposed changes in surface water quality in the ORB are to: 1) assess the overall benefits of WFD changes in this river basin and compare them to the costs for obtaining the necessary changes. Hereby cost-benefit assessments will be made. 2) contribute to the basis for deciding on whether exemptions from the WFD- objectives can be built on cost-benefit/npv-assessments. We focus on improvements in the environmental quality of the surface water, and the description of the current quality as well as the WFD objectives are built on data and descriptions from the Environmental Centre in Funen, who are responsible for the WFD implementation in this river basin. The present quality of most of the water bodies in the River Basin is of poor to moderate quality, and improvements to good and very good conditions are valued. At the time when the survey design was decided and implemented the WFD objectives were not yet decided as it took longer than expected to reach an agreement on the objectives of the intercalibration process among the EU countries. 2. Description of the case study 2.1. Location of the case study area, including sampling area The Odense River Basin is together with 13 other European catchments a pilot area and test study for implementation of the WFD. As part of this test study, water bodies (surface water, wetlands, and groundwater) have been characterised and the pollutant loading of groundwater and surface water assessed including the impact of human activities on water status. Odense River basin (ORB) is located on the Island of Funen, the second largest Danish Island. 6

7 Figure 1. The Odense River basin Lake Bryrup Odense Fiord Odense city Odense River Map 1. The ORB 7

8 The catchment area which constitutes ORB comprises an area of km 2. The area is predominantly rural but contains one major city Odense - with a population amounting to 180,000 citizens. In comparison the substantial rural area at Funen and the closest small islands are inhabited by approximately 64,000 people; in total the area of Funen is inhabited by 242,000 citizens The sampling As we expect that the beneficiaries of improvements of Odense River are located both inside and outside the river basin, we sampled across the whole island of Funen in the pilot survey. This sampling did not result in a significantly declining WTP with distance, however, and it was decided to sample in a larger area for the main survey to assess the potential distance decay. The sampling area for the main survey was the area of Funen and the municipalities in the southern part of the South Danish region, being close to Funen. Funen and these municipalities are divided by a bridge (the Lillebæltsbro, the Little Belt bridge), but as apposed to the Storebæltsbro (the Great belt bridge) the Lillebæltsbro is not tolled. Because the Storebæltsbro is a toll-bridge (price approx 75 Euro for each trip) we decided not to sample at the area on eastern side of Storebælt, i.e. the island of Zealand. The sampling area for the pilot and for the main survey is shown on map 2 and 3 below. The sampling is further described in section 3. Figure 2. The sampling areas for the main and the pilot surveys Map 2 Main Survey sampling area Map 3 Pilot survey sampling area 8

9 The sampling area for the main survey encompasses the 19 municipalitie Assens, Kerteminde, Odense, Nordfyn, Ærø, Billund, Tønder, Fredericia, Vejle, Vejen, Middelfart, Faaborg-Midtfyn, Nyborg, Svendborg, Langeland, Haderslev, Sønderborg Kolding and Hedensted. The case study questionnaire was submitted on the internet by the GALLUP institute. The GALLUP panel consists of 35,000 individuals all over Denmark, and GALLUP was asked to sample in all minimum 700 respondents (households). In all the questionnaire was submitted to 2001 persons, and the survey sampling was stopped at 754 responses, resulting in a response rate of pct. The relatively low response rate can be explained by a need to send the questionnaire to a large number of households who did not respond because of summer holiday. 2.3 Water system characteristics The aquatic environment within the whole ORB comprises a significant number of aquifers and surface water bodies in the categories of watercourses and lakes, as well as the fjord: ORB includes approx km of open watercourse and lakes and ponds (>100 m2). Only 21 lakes occupy an area of more than 3 ha each (County of Funen 2005a). These water bodies are subject to varying pressures to their environmental state. The pressures have been identified and when possible quantified in connection with the WFD prescribed article 5 analyses. The status and risk of not fulfilling the requirements of good ecological status in 2015 are summarised in table Table 1. Characterisation of the water bodies in the Odense River basin Water body Water at risk Reason for not fulfilling objectives, main pressures Rivers (incl Odense River) 96% Physical regulation of river and river valley due to agricultural demand for land Waste water outlets, storm water Lakes 86% (75 high risk, 15 at risk because of lack of data) Nutrient losses from agriculture, europhication Coastal waters, Odense fjord 100% Nutrient losses from agriculture, eutrophication. Hazardous substances. Groundwater 50% Nitrate load, hazardous substances. High abstraction level. Source: Modified after Odense Environmental centre, Harley Madsen 9

10 The wetlands and watercourses have undergone major physical changes and many of them have disappeared in recent decades. Restoration of these areas is one of the measures to obtain good quality of the water-bodies in the basin. The watercourses of the ORB constitute major pollution pathways from the source of pollution to the fjord, and further to the sea. Apart from serving as transporters of pollution watercourses also serve as habitats for flora and fauna, as well as human use. The relatively low retention period of water in a given stretch of the watercourses makes them less vulnerable to pollution with phosphorous- and nitrate pollution than other water bodies, and the environmental derogation of watercourses originating from changes to the physical and hydrological attributes of the watercourse is more significant. Based on the division in fauna classes currently applied to watercourses as a measure of environmental quality and the interpretation of what ecologically good status is equal to in this index, the watercourses within the ORB have been investigated and their environmental status determined. The ORB contains approximately 931 km natural watercourses divided in three types where type 1 is the smallest and type 3 the largest. Odense River is approximately 60 km long, belonging to class 3 and the largest river in the river basin. Odense River is classified as poor to moderate quality; most of the river is in a moderate state. The state can be seen from figure 3 below, where the blue colour indicate very good status, the green colour good status, the yellow moderate and the red poor status. As can be seen the river does not fulfil the WFD requirements of good ecological status. Figure 3. The current quality of Odense River (Source: Odense env. centre, map made by Gregor Levin, NERI). The environmental state of the lakes within the ORB is in general below the requirements of good ecological status stated in the WFD; and the quality of most of the lakes is poor. NERI estimates that nitrate concentration can not be in excess of 1 mg/l if a lake is to hold good ecological status (Søndergård et al. 2003). Furthermore phosphorous content of a lake should not exceed 0.05 mg/l in shallow lakes and mg/l in deep lakes if 10

11 good ecological state is to persevere. Due to extensive diffuse nitrate and phosphorus pollution mainly originating from agriculture and point source pollution originating from sewage, most lakes experience a nitrate and phosphorous content significantly larger than what is specified as a requirement to uphold good ecological status. Although sewage is less responsible for the pollution than was the case before the first action plans were contemplated it is still a significant source of pollution as rural waste treatment has not been updated at the same speed as seen in urban areas. Phosphorous pollution influence the ecological state of a lake much more than is the case for most other water body types due to the long retention periods of water present in lakes (County of Funen 2005a). Odense fjord is by far the largest surface water body in the river basin and may be categorised within the ORB as a terminal recipient of nearly all waterborne pollution which have not been remedied artificially or naturally. The fjord is subject to a substantial load of a multitude of polluting substances originating from both agricultural lands in the entire river basin as well as several major industries including Shipping and Shipyard activities as well as waste dumps and other minor activities. Odense fjord occupies an area of 6500 ha, divided in an inner and outer part with diverse physical attributes. Both sections of the fjord are in general shallow but the innermost part is especially so with an average registered depth of only 0.8 meters (County of Funen 2005d). The fjord resembles a large estuary of the Odense River more than a typical Danish fjord. The retention period of water is thus rather short (17 days) and the fjord holds some unique physical qualities which supports a large range of species. Thus, the fjord constitutes an important habitat for birds and is as such subject to extensive environmental legislation independent of the WFD. Despite prior environmental legislation recent investigations in relation to the article 5 analyses have shown that the ecological status is significantly below good for the fjord. Most of the fjord is of poor ecological quality. 2.4 Short characterization of water use and water users Households Households consume drinking water from groundwater in the area, discharge wastewater and use the water bodies in the basin for a number of recreational purposes. From a value point of view, it is possible to determine household sector expenses for drinking water and for wastewater disposal and treatment. The expenses for consumption of drinking water are calculated on the basis of a distribution of the total production costs in relation to the household sector s share of the consumption. The expenses for drinking water also include a charge to cover groundwater mapping by the Counties. The household sector s contribution to this mapping is expected to amount to approx. DKK 2 million. Expenses have not been calculated for actual pollution-limiting measures to protect the groundwater, measures that are part of the current planning of the future groundwater protection initiatives. With respect to wastewater, there are no immediately available calculations of the amount discharged apportioned by consumer groups. This expense is therefore estimated as households pay for disposal of the same amount of wastewater as their water 11

12 consumption. The expenses for wastewater include part of the wastewater levy, which is determined by actual discharges of BOD5, N and P. Based on the combined national proceeds and the proportion of the population inhabiting the basin, the levy can be estimated at just over DKK 10 million. Of this the households pay just under half. Household expenses for wastewater disposal comprise almost two thirds of the expenses for the actual services to this tax on water consumption of DKK 5/m3 which, together with VAT, comprises one third of the total costs. If the calculated costs per m3 are compared with water fees it should be noted, for example, that the meter charge helps cover the costs, and that the variable part of the fee for drinking water will be less than that stated in the table. The cost of one m3 of water is typically DKK 4 6. On average households pay 4,000 DKK per year for water consumption and wastewater disposal. Industry/services Like the households, industry/services use drinking water and dispose wastewater. A small number of enterprises in the basin have their own water supply, and a couple of them have their own wastewater outfall. To this should be added Fynsværket Combined Heat and Power plant, which uses large amounts of fjord water as cooling water. This heated water is subsequently led out into the lower reach of the River Odense. In addition to the above-mentioned expenses, a minor fee for the protection of groundwater against soil contamination is included. In this respect, a rough estimate has been made of the expenses for remediating contaminated sites that are paid by members of the public. This cost has been ascribed to industry/services, even though a minor share might be defrayed by households. These expenses are placed in relation to the industry/services production value. This measure is an attempt to determine the proportion of the sectors total production costs comprised by water and wastewater services, and hence how important water use is as a production factor. It should be noted that industry s expenses for complying with various discharge criteria are not included. Such expenses are not calculated in Denmark as they are often process-integrated, and it is thus quite random how much is ascribed to environmental requirements and what is an operation-related improvement in production. The relative expenses for industry alone are somewhat higher since water and wastewater together account for approx. 0.6% of the production value, as compared with 0.1% for the service sectors alone. Agriculture and market gardens Agriculture is a central sector in the analysis of the existing water use in that it accounts for the greatest proportion of nutrient loading of surface waters and groundwater in the basin. The environmental pressure is an unintentional side effect of the intensive production. The calculations of agricultural expenses associated with water use include an estimate of the annual expenses associated with pollution-limiting activities. First and 12

13 foremost, these encompass expenses associated with the implementation of the nationwide Action Plan on the Aquatic Environment II. Agriculture uses water as a necessary input to both livestock and crop production. The sector primarily uses water abstracted from the public waterworks in livestock production. Field irrigation is primarily based on individual abstraction wells, and accounts for approx. 50 percent of combined water consumption by agriculture and market gardens in Odense River Basin. In addition, drainage measures have been or are being carried out in the form of the drying- out of wetlands, watercourse regulation, drainage and watercourse maintenance in order to optimize agricultural production and maximize the size of the area suitable for cultivation. At the same time, these measures enhance pressure on the environment due to a reduction in the maturation capacity of the soil. Expenses for these drainage measures are paid for by agriculture with respect to wetland drainage (pump and dyke associations), and by the Counties and Municipalities with respect to watercourse maintenance. Expenses associated with wastewater are estimated on the basis of just under farms in the basin. The latter are assumed to be connected to an emptying scheme for sewage sludge from the individual mechanical treatment facilities, while at the same time paying the wastewater levy of DKK 3.8 per m3. These expenses each correspond to approx. DKK 1 million per year. The expenses for the pesticide tax have been calculated from the proportion of arable land in Odense River Basin relative to that in Funen County as a whole and the total tax proceeds. Agriculture s own expenses for their agri-environmental measures account for just below 15 percent of the sector s total expenses immediately related to water use in Odense River Basin. Expenses for environment-related green taxes (tax on pesticides) account for 21 percent of the total expenses. Relatively, the expenses for water use comprise a higher proportion of agricultural market garden production value than is the case with industry/services. The percentage is still relatively small, though. The consumptive non market use values related to the water bodies in the river basin, which is in focus for the valuation within this case study, comprise recreation, both bathing waters and fishing waters. The following maps and tables indicate the localisation of these sites. Recreational fisheries: The map shows localities suitable for recreational fisheries at the island of Funen. Apparently both the coast and the Odense River have good locations for anglers. 13

14 Figure 4. Map of suitable fishing locations (www.visitdenmark.dk) Bathing resorts/beaches (58 results). The map in figure 5 indicates the bathing resorts at the island of Funen, these are apparently located mainly at the coast. Figure 5. Map of bathing locations (www.visitdenmark.dk) In summary, little is known about the value of the non-marketed water uses in the ORB as there is no prior valuation studies carried out in this area. There is therefore no knowledge of whether the costs are disproportionate to the benefits of the WFD improvements. 14

15 3. Set up of the survey There are in all 5 splits in the Odense River Basin study, where two splits are used as basis for this case study report. The split sample approach was chosen to enable 1) assessments of different water bodies within the river basin: the Odense River, the ten largest lakes in the river basin, and Odense Fjord 2) the whole river basin. In these split samples maps were used to show differences in water quality, later sections describes this. In addition to the map split samples a choice experiment split was added using a more traditional/conventional study design than employed in the common valuation design. Emphasis was paid to the presentation of quality changes and scenarios using maps in the common valuation design. The traditional split sample used verbal descriptions and a choice table describing alternative choices and the attributes and their levels. This split used a contingent valuation question identical to the map-split continent valuation question. Each of the 5 splits embraced 350 answers as a minimum. As mentioned before we use the river split (including the river-traditional split) for this case study report. The traditional river and the mapped river splits are only differing when it comes to the design of the choice experiments, as the river split use maps for these and is compatible to the designs used for the CE in UK and Norway. The traditional CE is more compatible to the CE design used in Belgium and Holland. We have focused on the valuation of Odense River as this enables comparisons of the results to the other river case studies in AQUAMONEY. The questionnaire was composed of questions that were common to all the water quality case studies in the AQUAMONEY project, and some questions specific to the Danish case study. The specific Danish questions were all asked after the valuation questions to avoid bias comparing results with the other AQUAMONEY studies, and in the benefit transfer. As in many of the other case studies the questionnaires in the Danish study composed both CV and CE questions. The CV questions were asked before the CE questions. Furthermore, the Danish case study was conducted as a web based survey using the internet panel of the professional survey institute GALLUP 12. The questionnaire was carefully tested by focus groups, individual interviews and a pilot test. 1 There is a well-known discussion in the literature about different data collection methods. It is not possible to come to a general conclusion about what data collection method is the best one as they have there own pros and cons. 15

16 The hypotheses we want to test by the study, within each of the splits are: Distance decay: WTP is distance dependent, but the hypotheses is that distance dependency /decay of WTP is significant for users, but not for non-users. Use and non-use values: WTP is significantly higher for users than non-users. For recreational users WTP are significantly higher for users than non-users. Users of Odense River have a significantly higher WTP from improvements of Odense River than users of other rivers Sensitivity to scope: WTP is significantly higher for an improvement from yellow to blue than from yellow to green. WTP for an improvement of the whole river is higher than for a shorter stretch, but WTP is decreasing for an improvement at the margin. The WTP for imprivements close to Odense city is higher than the WTP for improvements of the other stretches. Policy relevance: We will estimate cost of actions to improve river quality, as well as the quality of the other water bodies. The results should be used in a CBA to assess the net benefits of actions upstream versus downstream. This is the policy relevance of dividing into sub-water bodies like the stretches Questionnaire design (common) As mentioned above the Odense River survey was conducted in July and August 2008, and was sent out to in all 2100 households. A total of 754 responses were collected using two different survey versions. Both versions of the surveys were sent to people living within a radius of maximum 100 km from Odense River. GALLUP secured a geographically proportional sampling for both splits inside the radius. In both survey versions (splits) a water quality ladder is used to explain the different water quality options and the effects of water quality on the conditions for fish and plants, on the visibility of the water and on the recommended use of the water. As apparent from figure 6 each of the quality levels are linked to a colour. Being part of the Common valuation design in the water quality group in AQUAMONEY the questionnaire comprised a) Introduction and background questions, 2 The panel consists of approx individuals all over Denmark and the panel is representative for the Danish population. The panelists have been contacted by GALLUP and the panel is thus not self-recorded, hereby decreasing the risk of self-selection bias. 16

17 b) CV questions; for short and long improvement c) Follow up question to CV questions d) Introduction to CE e) CE questions f) Follow up questions to CE g) Socio economic questions A number of socio-economic characteristics of the respondent panel pre-recruited by TNS-Gallup was known prior to the survey. They were left out of the questionnaire, but are included in the common-design dataset. Therefore it is also possible to get this kind of information for the non-respondents. The present quality of Odense River is as mentioned classified as moderate in the current situation, i.e. the water quality is rather highly affected by human activity. This baseline is presented to the respondents before the contingent valuation questions. All survey split versions the CV questions are asked before the CE questions. The respondents are asked whether this quality description conforms with their own perception of the quality of the water, cf. figure 6. The water quality of Odense River, both the present quality and the quality presented in the scenarios (choice sets) are described for the respondents using a water quality ladder encompassing pictures, symbols and text, common for the water quality group studies in AQUAMONEY. The pictures, symbols, and text describe and illustrate the visibility of the water in four states of quality, conditions for fish and plants, the potential for using the river for fishing (coarse and game fishing), for bathing, boating and bird watching. The four quality classes are indicated by colours, where blue is the very good condition, and red the bad conditions. Green indicates good conditions, while yellow indicates moderate (status quo). The water quality in the status quo situation is described using data from the Environmental Centre in Odense, as this centre is the responsible authority for monitoring Odense River and associated waters. The full questionnaire can be seen in appendix A, and the different parts are explained below after the description of the pilot survey. The pilot study The pilot was submitted in December 2007 (N = 350). 10 respondents from the pilot test were subsequently interviewed individually about their understanding of the scenarios, resulting in a slight simplification of the information provided and the choice sets. The final design of the questionnaire was decided using the experiences from the tests, summarised below. The pilot test study comprised the above mentioned types of questions. Besides the Contingent Valuation questions and the Choice Experiment choice sets the questionnaire consisted of questions that should deduce the respondents attitude towards the nature and 17

18 water bodies on Funen, use and non-use of Odense River, distance to Odense River and certainty of their reply to in all 12 choice sets. The questionnaire was sent to people living on Funen by GALLUP. These people were part of GALLUP s panel group. GALLUP claimed that this group was representative of the population of Funen in regard to gender, age, education level and geography. 359 people participated in the pilot study of which 344 answers was usable. It turned out that the 344 respondents were not representatively distributed according to the socioeconomic variables gender, age, education level, household income and household size according to the population of Funen. The respondents was scattered all over Funen with the main emphasis in the greater towns and with a relatively short distance to Odense River. In the pilot study the 60 km of Odense River was divided into 11 stretches according to the stretches for the environmental centre monitoring of the water quality of the river. Only one of the stretches has a good ecological status. The rest of the river has a moderate to poor ecological status. The conclusion on this design issue was that this division into stretches was too detailed and too cognitively demanding for the respondents, and it was decided to reduce the number of stretches from 11 to 3. Further it appeared from the pilot that there was a sort of selection bias in the survey both in the panel group and in the sample. This resulted from the fact that both the panel group and the sample were not representatively distributed on the socio-economic variables. In the main survey it was therefore decided not to mention that the survey theme was water quality to avoid self selection bias from respondents being more interested in (aquatic) environment than the average. Moreover in analysing the descriptive part of the questionnaire it was clear that the respondents acted rational in the 12 choice sets, because they had the price level in their considerations when they selected their preferred alternative. There were 241 users and 103 non-users of Odense River in the sample. The average WTP per household per year was 2,020 DKK for implementing the WFD (good quality), corresponding to a total yearly willingness to pay of 432 mio. DKK aggregating over the population of Funen. The average WTP per household per year was 2,116 DKK for implementing a mix of good and very good quality as required by the local environmental targets. Furthermore the analysis found that the users on average had a higher value of implementing the WFD in Odense River irrespective of how it is carried through than the non-users. In regard to the socio-economic variables it turned out that women in general had a higher yearly WTP per household for the two scenarios than men. It appeared that the yearly WTP per household for the two scenarios did not increase with income. As regards the distance to Odense River it looks like there is some distance decay effects for people living within a distance of 20 km to Odense River, i.e. a decreasing WTP with distance up to 20 km from the river. The respondents living more than 20 km from the river have however a higher yearly WTP per household. These results motivated the choice of a larger sample region than the region used for the pilot. 18

19 The pilot study is fully documented in Heriette Engel Hansens master thesis, unpublished. The main study introduction to water qualities As mentioned a water quality ladder was used for the illustration, description and information of the different water qualities the river can attain. The ladder contains both pictures pictograms and text to ensure that information is provided whatever method one prefers. From focus groups it was acknowledged that different people use these different types of information, and that it was appreciated that we presented the different types. Before the ladder was shown, the respondents were informed about what type of information they would get, and after the ladder and before the valuation questions they were informed about budget constraints. No cheap talk was added because it was decided to leave the cheap talk out in the common AQUAMONEY design. 19

20 Highest quality This picture indicates a river in its highest quality. The water is suitable for boating, angling and swimming. The water is suitable for fish, plant and bird species being present under natural river conditions. This picture indicates a river where the water is suitble for boating, swimming and angling, even though the most pollution sensitive fish can be absent under these conditions. The diversity of birds and plants is somewhat lower than compared to the highest water quality. This picture indicates a river where the water is suitable for boating, but the possibilities for swimming and angling are more limited. Pollution sensitive fish species are present as they are artificially planted out. The presence of fish, birds and plant species are limited. This picture indicates a river where the water is not suitble for boating, swimming and angling. The presence of bird and plants are very limited, and there is few or no fish. Lowest quality Figure 6. The water quality ladder. The pictures and pictograms are protected by copyright, Hime & Bateman The generic water quality ladder can be seen in appendix C in this report. Hime & Bateman (2009) has carefully ensured that the vegetation and fish species presented in the drawings of each of the water quality classes are in accordance with the classification system used for the WFD in England. At the time of our survey design the intercalibration of the objectives and quality indicators between the EU countries was not yet ended and concluded in EU. We therefore compared the specied composition of both fish and vegetation with Danish data for the reference condtions, and found that even though there can be differences in species composition, Baattrup-Pedersen et al (2008) conclude that the reference conditions and quality classess in lowland rivers and streams in UK, Germany, Denmark and the Baltic countries conform rather well. Of course, Danish rivers can look different than an English river like the one pictured, but this was not mentioned as a problem of reliablity in the focus groups and personal interviews. The icons and text used was adjusted to the conditions in Odense River, because trout fishery is pretty good in this river even though the water quality is classified as moderate. 20

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