Drastic changes in charging and pricing policies are likely to occur in the coming years, in the context of the enlargement process of the European Union (EU) and with the increasing importance given to the environment in Central and Eastern European Countries. However, economic instruments are already widespread in the water sector, such as abstraction and pollution charges to ensure to consume water efficiency and to reduce the discharge of harmful pollutants into the natural environment, in the countries of the region. The Member States of the European Union recently adopted the Water Framework Directive which integrates economic concepts and approaches into water policies. This Directive makes compulsory an adequate recovery of the costs of water services for each economic sector, i.e. households, industry and agriculture. As specified in the Water Framework Directive, for example, water pricing policies will need to act as incentives in order to achieve environmental improvements in the status of water bodies. A great deal of work remains to be undertaken in designing policy packages and mechanisms to integrate environmental considerations into structural adjustment programmes, and in designing applicable economic instruments for specific sectors of high priority to accession countries, as the case of agricultural sector may be. Agriculture is one of the sectors of the economy where failure to integrate environmental and economic policies is most visible. Soil and water quality, biodiversity and rural amenities are all affected by policy decisions on agricultural sector. Several studies have been undertaken during the recent years to examine the strengths and weaknesses of water pricing policies implemented in Central and Eastern European Countries: The study 'Agricultural water management policies in Bulgaria, Hungary, Romania and Slovakia' commissioned by the Sofia Initiative on Economic Instruments (SIEI) analyses the situation of agricultural water uses in the selected countries. It specifically addresses agricultural water pricing policies and the short and long-term impacts on the agricultural sector resulting from water management policies   The project 'Water pricing in Croatia - Current situation and trends' carried out under the work programme of the SIEI at the REC provides added information to the recently undertaken EU on 'Water pricing in selected accession countries to the EU' Many of these issues were discussed at the International Conference 'Economic Instruments and Water Policies in Central and Eastern Europe: Issues and Options' which was jointly organized by the Secretariat of the Sofia Initiative on Economic Instruments at the Regional Environmental Center for Central and Eastern Europe (REC) and the European Commission, DG Environment. The conference took place in Szentendre, September 29-29, 2000.

Economic instruments in the water sector Last updated: August 2001