Eutrophication is a major problem in both marine and freshwater areas in Europe, changing the structure and functioning of the ecosystem and reducing its ability to produce human well-being. Information on the monetary benefits of reduced eutrophication is needed to design economically efficient environmental policies. This thesis provides information on citizens willingness to pay for reduced eutrophication in Europe, the Baltic Sea area and Finland, contributing to the literature by providing up-to-date benefit estimates to support decision-making and examining methodological issues in the economic valuation of environmental benefits.
Three valuation approaches are used: meta-analysis, contingent valuation and choice experiment. The meta-analysis provides an overall understanding of the benefits of reduced eutrophication in European marine areas, the contingent valuation study investigates the benefits of reaching a specific eutrophication reduction target in the Baltic Sea, and the choice experiment reveals Finnish summer house owners preferences and values for water quality changes. The contingent valuation results are further used in a cost-benefit analysis of nutrient abatement in the Baltic Sea. The methodological issues examined include conducting a meta-analysis when only few primary valuation studies are available, preference heterogeneity and asymmetry in choice experiments, and the use of international contingent valuation studies in costbenefit analysis.
The results show that substantial benefits can be gained from reduced eutrophication. In European marine areas, the annual benefits from reduced eutrophication are 5-210 euros per person, depending on the country, sea area and extent of the change. In the coastal countries of the Baltic Sea, the annual benefits range from 6 to 76 euros per person. The findings clearly indicate that the benefits differ between sea areas and countries, being greater in high-income countries. Results of the contingent valuation study in the Baltic Sea indicate that even when the sea area and the environmental change are the same, willingness to pay and its determinants differ between countries. Based on the choice experiment, deterioration in water quality results in larger welfare losses compared to the gains from an improvement of the same size, indicating that it is particularly important to prevent the deterioration of water quality.
The benefit estimates can be utilized in deciding whether and how much to reduce eutrophication. The monetary benefits of reaching a good environmental status in the Baltic Sea with regard to eutrophication are estimated at 3600 million euros per year. The results also serve as justification for implementing additional nutrient abatement measures in the Baltic Sea area, as the benefits of nutrient abatement exceed the costs. In addition, identifying the differences in benefits across countries may aid international negotiations. Countries that benefit more, such as Sweden, Finland and Germany, could pay for nutrient abatement measures in Estonia, Latvia, Lithuania and Poland to reach an international agreement.