The Water Framework Directive Economics 25 years on: From Promise to Practice - and the Case for Reform

Twenty-five years ago, the European Water Framework Directive (WFD) was the first EU Directive to systematically integrate economic analysis and instruments as supporting tools intended to contribute to achieving its core environmental policy objectives: attaining good water status, reducing pollution, promoting sustainable use, and protecting and restoring aquatic ecosystems. As the original deadline for the WFD’s objectives (2027) approaches, discussions are underway on the lessons learnt and the future of EU water policy and management. This paper documents the experience of a group of water economists from a broad range of different European countries, who participated in the final adoption and first implementation steps of the economic provisions of the WFD. It analyses the role water economics has played in practice. Based on an overview of the lessons learned from their 25 years’ experience, this paper provides insights on how economics, as currently required by the WFD, could better support EU water policy and management, and what are the new and forthcoming challenges that water economics may need to respond to. The paper shows that over the past 25 years, the WFD’s implementation process has revealed a persistent structural mismatch between water policy—meant to be adaptive, integrative, and cross-sectoral—and water management, which has increasingly become an end in itself. The emergence of the EU Green Deal and the Water Resilience Initiative offer a new context to revisit and revitalize the WFD’s original ambition—aligning ambitious water policy goals with supportive and coherent water management. In line with this, this paper argues for a strategic reform of the WFD’s rules, methods, and processes to support more integrated, resilient, and future-oriented water governance—one in which economic analysis becomes a meaningful input to decision-making.