Ecological Economics 30 (1999) 333–352

ANALYSIS

Managing nutrient fluxes and pollution in the Baltic: aninterdisciplinary simulation study

R. Kerry Turner a,*, Stavros Georgiou a, Ing-Marie Gren b, Fredric Wulff c,Scott Barrett d, Tore Soderqvist b, Ian J. Bateman a, Carl Folke b,c,

Sindre Langaas e, Tomasz Z; ylicz f, Karl-Goran Maler b,Agnieszka Markowska f

a Centre for Social and Economic Research on the Global En6ironment, Uni6ersity of East Anglia and Uni6ersity College London,Norwich, NR4 7TJ, UK

b Beijer International Institute of Ecological Economics, The Royal Swedish Academy of Sciences, Box 50005,S-10405 Stockholm, Sweden

c Department of Systems Ecology, Uni6ersity of Stockholm, 106 91 Stockholm, Swedend London Business School, London, NW1 4SA, UK

e UNEP/GRID-Arendal, P.O. Box 1602, Myrene, N-4801 Arendal, Norwayf Warsaw Ecological Economics Centre, Economics Department, Warsaw Uni6ersity, 00-41 Warsaw, Poland

Received 21 July 1997; received in revised form 6 April 1999; accepted 15 April 1999

Abstract

This interdisciplinary paper reports the results of a study into the costs and benefits of eutrophication reduction inthe Baltic Sea. A large multidisciplinary team of natural and social scientists estimated nutrient loadings andpathways within the entire Baltic drainage basin, together with the costs of a range of abatement options andstrategies. The abatement cost results were compared with clean-up benefits on a basin-wide scale, in order to explorethe potential for international agreements among the countries which border the Baltic. Most countries would seemto gain net economic benefits from the simulated 50% nitrogen and phosphorus reduction policy. © 1999 ElsevierScience B.V. All rights reserved.

Keywords: Nutrient pollution; Eutrophication; Cost-effective abatement costs; Environmental benefits valuation; Contingentvaluation

www.elsevier.com/locate/ecolecon

1. Introduction

All countries with a coastline have an interest inthe sustainable management of the coastal re-

* Corresponding author. Tel.: +44-1603-593176; fax: +44-1603-593739.

E-mail address: r.k.turner@uea.ac.uk (R.K. Turner)

0921-8009/99/$ - see front matter © 1999 Elsevier Science B.V. All rights reserved.

PII: S 0921 -8009 (99 )00046 -4

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352334

source systems. The task of sustainable manage-ment, i.e. sustainable utilisation of the multiplegoods and services provided by coastal resources(processes, functions and their interrelationships),is likely to be made more difficult because of theconsequences of global environmental change(GEC). Understanding the interactions betweenthe coastal zone and global changes cannot beachieved by observational studies alone. Modelingof key environmental processes also has an impor-tant role to play. In particular, modelling work onthe dynamics of carbon (C), nitrogen (N) andphosphorus (P) in the coastal ocean needs to becombined with socio-economic analysis of thedrivers of C, N and P fluxes and the humanwelfare consequences of changes in these fluxesacross the coastal zone over time.

A particular characteristic of GEC (encompass-ing population growth and density increases, ur-banisation and the intensification of agriculture,etc.) is that it has led to, among other things, theprogressive opening of biogenic nutrient cycles,e.g. much increased mobility of nitrogen andphosphorus. This increased mobility of nutrientshas meant increased exchanges between land andsurface water and consequent impacts on the eco-logical functioning of aquatic systems. Other pro-cess changes have also added to the cumulativechanges experienced in coastal systems.

The major flux of nutrients from land to seaoccurs through river transport via the drainagebasins network. The network contains various‘filters’ such as wetlands which retain or assimilatenutrients during their downstream passage to thesea. The effectiveness and selectivity of thesefilters depend on the strong biogeochemical cou-pling existing between carbon, nitrogen, phospho-rus and silica circulation. They are also affectedby hydrology and land use/cover (Howarth et al.,1996).

This paper reports the overall results of aninterdisciplinary study which focused on N and Pfluxes on a drainage basins-wide scale in the BalticRegion (Turner et al., 1995). The Baltic Sea re-gion catchment area covers around 1 670 000 km2

and contains a population of about 85 millionpeople in 14 countries. A significant proportion ofthe world’s industrial production comes from this

area, but up until around 40 years ago there waslittle recorded environmental damage in the BalticSea. However, since 1960 the environmental con-dition of the Baltic Sea has increasingly become acause of public concern and is currently perceivedto be in an unacceptably polluted state. Symboli-cally, eutrophication is a major problem facingpolicymakers and the public. The aims of thestudy were decomposed into a number of interre-lated intermediate goals including: (1) to providea comprehensive and rigorous picture of the landuse and ecological carrying capacity of the region,and to relate this resource inventory to the pat-terns of human activity in the region; a ‘pressure-state-impacts-response (P-S-I-R) framework (Fig.1) was adopted to facilitate the analysis; (2) todevelop a model looking at different nutrientloading scenarios and their consequences on theecological state of the Baltic Sea and its sub-sys-tems; (3) to estimate the costs of various strategiesdesigned to reduce the nutrient loading of theBaltic Sea, and the identification of the mostcost-effective nutrient abatement options; (4) toestimate the economic valuation of eutrophicationdamage to the Baltic Sea; (5) to increase ourunderstanding of the institutional issues involvedin the management of the Baltic Sea.

The GEC process is a complex flux of factors,the impacts of which can manifest themselves at anumber of different spatial and temporal scales. Itis, however, possible to identify a group of inter-related socio-economic trends and pressureswhich both contribute significantly to the Baltic’senvironmental change impacts, as well as to anincreasing degree of environmental risk to themarine ecosystem and the surrounding drainagebasins’ biophysical and socio-economic systems.This paper therefore seeks to analyse the prob-lems of the Baltic region in terms of a ‘pressure-state-impacts-response’ (P-S-I-R) framework (Fig.1).

2. Pressure-state-impact-response framework

Within the Baltic Sea area the northern sub-basins (Bothnian Bay, Bothnian Sea) have a lowpopulation concentration, extensive forests, wet-

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lands, lakes and a mountainous terrain. Thesouthern sub-basins (Baltic Proper) contain 55million of the 85 million population and havesignificant agricultural areas. The Baltic Sea itselfhas a total surface area of 415 000 km2 and be-cause of its semi-enclosed character has a veryslow water exchange, the mean residence time forthe entire water mass being of the order of 25–30years (Folke et al., 1991). As we shall see thiscombination of biophysical and socio-economiccharacteristics has important implications for theenvironmental vulnerability of the Baltic Sea andits resource system.

An increasing degree of environmental pressurehas been felt in the Baltic region as a result of arange of socio-economic drivers. The outcome has

been that the Baltic Sea and coastal zone re-sources (including the waste assimilative capacity)have been subject to a range of, often competing,usage demands. In this paper we pay particularattention to nutrient (nitrogen and phosphorus)pollution of the Baltic Sea and its consequences.Evaluating the importance (in human welfareterms) of the various environmental impacts re-quires that their effects be measured in biophysi-cal and then in monetary terms. This gives ussome measure of the state of the Baltic environ-ment and the importance of the environmentaldegradation that has taken place. In addition, weseek to identify the causes of the problem, priori-ties for action and cost-effective policyinstruments.

Fig. 1. P-S-I-R cycle, continuous feedback process.

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The Baltic Sea is the largest brackish body ofwater in the world and is a naturally very sensitivearea. It depends on short- and long-term varia-tions in climate and has several times in its historytransformed from lake to sea, from freshwater tosaline water. Vertical variations in salinity causepermanent stratification, hampering the exchangeof oxygen in the deeper parts of the sea. In someyears as much as 100 000 square kilometres(nearly 25% of the total area) approach ‘deadbottom’ conditions.

The natural vulnerability of the area has beenmagnified by the magnitude and extent of socio-economic activities, impacts and interventionsthat have become commonplace since the 1950s.The economic and the environmental systems arenow sufficiently interrelated as to be jointly deter-mined. They are now in a process of coevolution.Because of the sheer scale of economic activity thepollution generated is a pervasive problem acrossthe drainage basin and beyond. Localised solu-tions, for example at the municipal level, are nolonger sufficient; international co-operative agree-ments and actions are required.

The principal pollution sources for the BalticSea are municipalities, industries and agriculture,located both in the coastal zone and also beyondin the drainage basin. A range of pollution path-ways can also be identified, including diffuse ‘non-point’ sources such as airborne emissions andagricultural run-off, and ‘point’ source pollutionfrom urban areas and industry.

Inadequate or absent municipal sewage treat-ment in the eastern, southern and south-westernsections of the drainage area pose problems whichare exacerbated by the synergistic effects of un-treated industrial effluent wastestreams passingthrough the same facilities and into the rivers andthe sea. Agricultural practices, including intensivelivestock husbandry, are also a major contributorto the high nutrient load and consequent eu-trophication problem. Current loads of nitrogenand phosphorous entering the Baltic sea are threetimes those of the 1950s (Nehring et al., 1990).The resulting excessive biomass growth causesoxygen depletion when it decays and threatensmarine life. Eutrophication is now pronounced inthe Gulf of Finland, Gulf of Riga and in limited

coastal areas in the eastern, southern and south-western Baltic Sea area. Many toxic algae out-breaks have also occurred.

It is important therefore to know what theprincipal causes of the resource degradation andpollution problems in the Baltic Sea are. One wayof analysing these problems is to identify a set ofinterrelated ‘failures’ phenomena which seem tounderlie the degradation and quality declinetrends. There are two main related ‘failures’ whichcan be distinguished—market failure and policyintervention failure–which when combined withscientific and social uncertainties (informationfailure) can account for the environmental dam-age process.

3. Market and policy intervention ‘failures’

Table 1 presents a typology of market andintervention failures which is relevant to the Balticcontext. The most widespread type of marketfailure is that of pollution externalities. The exter-nal costs result from waste generators (municipal-ities, industry and farms) who over-utilise thewaste assimilative capacity of the ambient envi-ronment, e.g. rivers and the Baltic Sea, becausethis environmental function is perceived to bevirtually free of charge (absence of market prices).Some waste generators also have had over timeclose to open access to the marine wasterepository.

Government interventions have also been partlyresponsible for the environmental degradationprocess in the Baltic. The effectiveness of theregulation of sewage treatment facilities and prac-tices, for example, varies dramatically from coun-try to country around the Baltic. There is ageneral absence of properly integrated coastal re-source management policies and water catchmentmanagement and planning. This has resulted inintersectoral policy inconsistencies and resourcedepletion and degradation, with the loss of wet-land ecosystems being an important damageimpact.

Although these ‘failures’ phenomena are orwere pervasive across the entire drainage basin,they tend to be focused in greater numbers and

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Table 1Market and policy intervention failures in the Baltic region

Market failures1. Pollution externali-

tiesExcess levels of nitrogen and ammonia con-Air pollution, outside catchment sources, e.g. North(a)

Sea area tributing to eutrophication of water bodiesWater pollution, land-based within catchment(b) Excess nitrogen and phosphorus from sewage

and agricultural sources; industrial wastewatersourcesand toxic effluent pollution particularly fromthe pulp-and-paper industry

(c) Excess nitrogen and phosphorus from coastalWater pollution, coastal and marine sourcessewage outfalls; oil spills and contaminatedbilge water from ships

2. Public goods-typeproblems

Ground-water depletion/surface-water supply(a) Over exploitation on- and off-site of wetlands’water supplydiminution

(b) Recreation pressure on beaches, wetlands andCongestion costs, on-siteother sensitive ecosystem areas

(c) Fisheries yield reduction Over exploitation due to badly defined propertyrights

Inter6ention failures3. Intersectoral policy

inconsistencyAgricultural price fixing and associated land re-Competing sector output prices(a)quirements

(b) Tax breaks or outmoded tax categories on agri-Competing sector input pricescultural land; or tax breaks for non-agriculturalland development, including forestry; land con-version subsidies; state farming subsidies (histor-ical)Zoning; regional development policy; direct con-Land-use policy(c)version of wetlands policy; waste disposal policyand regulation (uncontrolled waste disposaldumping)

4. Counterproductivepolicy

(a) E.g. policies that lack a long-term structure;Inefficient policywastewater and industrial effluent combinedtreatment practices; general lack of enforcementof existing policy rules and regulations

(b) Non-integrative agencies structure, non-existentInstitutional failureagencies; lack of monitoring and survey capac-ity; lack of information dissemination; lack ofpublic awareness and participation

with greater severity in Poland, Russia, the Bal-tic Republics and the Slovak and Czech Re-publics, partly as a result of the historical leg-acy left by a central planning system based oninput intensive, inefficient heavy industry com-plexes.

In the Nordic countries and the western partsof Germany municipal and industrial pollutionloads have been significantly reduced over the lastfew decades. Nevertheless, the agricultural sectorposes problems due to the intensive nature of thefarming regimes.

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The dire message for Baltic policymakers in thefuture is clear — if the agricultural sectors inPoland, etc., develop intensive methods similar tothose fertiliser/pesticide-dominated regimes com-monplace in Denmark and Sweden, the outlookfor the reduction of eutrophication pollution ispoor.

4. Land use, nutrient loads and damage in theBaltic Sea

The current status of the Baltic Sea is deter-mined by the set of activities present in the entiredrainage basin. The load of nutrients to the vari-ous sub-drainage basins is determined by severalfactors such as land use, population density, cli-mate, hydrology, and air transportation of nitro-gen oxides and ammonium. A set of geographicinformation system (GIS) map layers were createdand used to generate information on the currentlandscape characteristics and population distribu-tion patterns in the drainage basin. The maplayers included: land cover, drainage basis, ad-ministrative units, population distribution, arablelands, pasture lands, wetlands, and the terrestrialnet primary production of the Baltic drainagebasin. A description of the technical proceduresand the primary data sources used to create eachlayer, as well as an assessment of data quality, ispresented in Sweitzer and Langaas (1994), Folkeand Langaas (1995), and Sweitzer et al. (1996).

The map layers in this database were combinedto generate new results. The maps were used togenerate basic statistics on land use and popula-tion in the drainage basin, which we briefly reporton below. We also present results showing thedistribution of land cover and population as afunction of distance from the coast, since thisinformation is directly relevant to the eutrophica-tion problem in the Baltic Sea.

It was found that forests dominate the land-scape in the drainage basin (48% coverage), fol-lowed by arable land (20%), and non-productiveopen lands (17%). Wetlands cover roughly 8% ofthe drainage basin and are most prominent in thenorthern regions. Turning to population, about85 million people live in the Baltic Sea drainage

basin. Of these, the vast majority (64%) live in theBaltic Proper drainage areas. Of the totaldrainage basin population 26% (22 065 000 peo-ple) live within metropolitan areas (population\250 000). Of the total population, 54% live intowns or small cities (population between 200 and250 000), and 29% are inhabitants of rural settle-ments (population B200 000).

Using the land cover and population map lay-ers and an adjusted map of the drainage basin wefurther determined the characteristics of thedrainage basin as they relate to distance from thecoast. The further away from the coast or fromrivers that eutrophying substances are released,the more likely they are to be absorbed throughecosystem processes and prevented from enteringthe Baltic Sea. High population concentrations,agricultural land, and urbanised land are all im-portant nutrient generation sources. Wetlands,forests and inland water bodies can act as naturalfilters/sinks for nutrients as well as other pollu-tants. Given this, it is important to determine thelandscape characteristics of the drainage basin asa function of distance from the coastline andrivers.

At its furthest point, the drainage basin isnearly 650 km away from the Baltic Sea shoreline.Land cover and population of the drainage basinwere assessed at 10-km intervals extending awayfrom the coast. It was found that while most ofthe land use classes are distributed fairly evenlythroughout the drainage basin, population—par-ticularly urban population—is heavily concen-trated toward the coast. Within a 10-km distancefrom the Baltic coast, for example, we find 27% ofthe populated area and 19% of the total drainagebasin population—nearly 15 million people. Ofthese 90% are concentrated in urban areas. Alsowithin this area we find 8% of the total arableland, 5% of the pasture land, 5% of the forests,and 2% of the inland water bodies.

Expanding to a 50-km distance from the coast-line, population remains the dominant feature ofthe landscape. In this zone we find 43% of thetotal populated area and 31% of the total popula-tion (over 26 million people). Of this population,83% are urban. Additionally, 23% of the totalarable land, 17% of the pasture land, 20% of the

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forest, and 10% of the inland lakes are foundwithin a 50-km distance from the coast. Moredetailed results are reported in Sweitzer et al.(1996).

The information on the location of various landuses and population within the drainage basinprovides a useful basis for the estimation of nutri-ent load discharged directly into the Baltic Sea ortransported by surface water to which we nowturn.

In 1993, the total load of nitrogen and phos-phorous to the Baltic Sea amounted to approxi-mately 1022 000 t of N and 39 000 t of P. Thelargest basin of the Baltic Sea, the Baltic Proper,receives about 85% of the total load of bothnitrogen and phosphorous (Table 2).

In principle, there are two major sources ofwaterborne nutrient loads, arable land and sewagetreatment plants. In addition atmospheric trans-ports of nitrogen are also deposited directly onthe Baltic Sea. Air transports originate, not onlyfrom countries within the drainage basin, butfrom other external countries.

The agricultural sector, excluding the emissionsof ammonium, accounts for one-fifth of the totalload of nitrogen. Other water transports of nutri-ents include flows from sewage treatment plantsand air emissions deposited on land within thedrainage basin, accounting for nearly 50% of thetotal load. The direct discharges, mainly sewagetreatment plants located at the coast, correspondto approximately 10% of the total load. Poland isthe largest discharging country with respect tototal nitrogen loading (28.5%), followed by Swe-den (10.4%) and Germany (10.2%).

Poland is also the country providing the largestload of phosphorous to the Baltic Sea, approxi-mately 50% of total load. The phosphorous load

from the agricultural sector accounts for aboutone-third of the total load and the direct dis-charges, mainly from sewage treatment plants cor-respond to one-quarter of the total load.

The increased nutrient flux entering the BalticSea implies a higher concentration of a givennutrient which in turn may lead to an overabun-dance of phytoplankton production. As a resultof increases in phytoplankton production, oxygendeficits may occur which reduce the spatial extentof regions available for successful cod reproduc-tion. On the other hand, more zooplankton in-creases the stocks of other fish species (Fig. 2).

Although the impacts of greater nutrient inputare well documented, the quantitative relation-ships between variations in loads of nutrients andconcentration are poorly understood. For in-stance, the eutrophicating processes will alter re-dox conditions and thus the biogeochemicalpathways and efficiency of internal sinks of nitro-gen and phosphorous through denitrification;phosphorous adsorption will also be altered. Thedifferent sub-basins vary in terms of water andnutrient residence times, load received, and inter-nal biogeochemical processes. These differenceswill significantly alter the N/P ratios in each sub-basin. Fig. 3 illustrates that there are processes inthe sea that change the concentrations of nutri-ents, with specific differences between basins aswell as between nutrients species: in the BothnianBay, the phosphorus loss (P-sink) is much moreefficient than the sink for nitrogen. In the BalticProper, it is the opposite—a more efficient N-sinkthan P-sink. There is a gradient from north tosouth where the production in the Bothnian Bayis P-limited and the Baltic Proper is N-limited.The N/P ratio of 18 in the Baltic Proper is fortotal-N and P that includes a lot of refractoryorganic matter: for the inorganic fractions it isabout 4, far below the Redfield ratio (data are notavailable to show inorganic N/P ratios both interms of load and concentration).

An empirical budget model of the Baltic Properhas been expanded to cover all three sub-basins.The model consists of the three coupled basinswith advective water and nutrient transports be-tween these and with Kattegat (Wulff, 1995). Em-pirical relationships between load, nutrient

Table 2Nutrient loads to the Baltic Sea, 1993

Nitrogen (t) Phosphorous (t)

Bothnian Bay 300860 787100 699Bothnian Sea 3063

32 817Baltic Proper 861 26838 8881 022 754Total

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352340

Fig. 2. Eutrophication impacts. Regarding eutrophication problems, the quantitative relationships between variations in loads ofnutrients and concentration are poorly understood.

concentrations and advective transports derivedfrom extensive regional data sets over the last fewdecades have been used to empirically calculaterelationships between concentration and internalnutrient sink terms. These models rely on pastrelationships between inputs of water, nutrientsand the observed trends in concentrations in thedifferent basins of the Baltic. Several analyseshave been undertaken to collate and verify thesedata sets.

The basic information on the flow of nutrientsfrom the land to the Baltic Sea and their impacton the sea is required in order that abatementmeasures designed to improve the conditions in

the Baltic Sea can be selected on the basis ofminimum cost. But before we can address theabatement options and their costs question weneed to estimate the ‘filter’/sink capacities of wet-lands in the drainage basins.

The natural wetlands in the drainage basinaccount for about 8% of the total area. Theirnitrogen retention/elimination capacity was esti-mated to be close to 65 000 t per year when onlyatmospheric downfall of nitrogen was taken intoaccount. Adding direct emissions per capita interms of excretory release, in relation to the loca-tion of the wetland to human population densi-ties, we estimated the nitrogen retention/

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352 341

elimination capacity to be about 100 000 t peryear (Jansson et al., 1999).

The GIS database was used to assess the spa-tial relationship between nutrient sources andsinks. Maps were created to show the locationof wetlands in relation to population centres inthe Baltic drainage basin. The assumption isthat wetlands will function more effectively asnutrient traps if they are in close proximity tonutrient sources. A visual assessment of themaps shows that areas with high concentrationsof wetlands in the drainage basin are not nearthe densely populated regions. Areas with mod-erate or low concentrations of wetlands tend tohave low or moderate population densities.These results suggest that development andrestoration of wetlands in highly populated andalso intensively cultivated areas could be an ef-fective and practicable means to reduce nutrientflows into the Baltic Sea.

Therefore, we estimated the potential nitrogenretention/elimination capacity in a scenariowhere drained wetlands in the drainage basinwould be restored. The capacity of wetlands toretain/eliminate nitrogen in such a scenario wasestimated at about 180 000 t per year (Janssonet al., 1999). Additional analyses on the nitrogenfiltering capacity will be reported on below inrelation to the analyses of cost-efficient nitrogenabatement.

Fig. 4. Reduction from current levels of both N and P loadwith 50% to Baltic Proper.

Fig. 3. Variations in N/P ratios.

5. Nutrient reduction simulations

Two nutrient reduction simulations were car-ried out.

In the first simulation, both N and P loads arereduced, but only to the Baltic Proper. Since theeffect of eutrophication is most clearly seen in theBaltic Proper, this scenario would be the mostobvious choice for a future abatement strategy. Inthis scenario it is assumed that the nutrient reduc-tion occurs instantaneously in year 2000 and thechanges in concentrations follow on until a newsteady state occurs. As can be seen from Fig. 4

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the nitrogen concentrations reach this new steadystate within 10 years while it takes about 25 yearsfor phosphorous. This is due to the inherentlydifferent behaviour of these nutrients in the Baltic(and in most other marine systems). Denitrifica-tion represents an efficient internal nutrient sinkfor N while P reduction is less efficient in thisbrackish system. According to the results pre-sented in Fig. 5, the final concentration of P andN are about 50 and 70% of the current levels inthe Baltic Proper.

It is difficult to estimate the ecological conse-quences from the output of this model alone—theresults have to be related to empirical knowledgeof ‘the state of the Baltic’ with different concen-trations of nutrients. The ‘new’ nutrient concen-tration corresponds roughly to levels foundduring the 1960s, before the drastic deterioration

Fig. 6. Reduction of phosphorus loads to Baltic Proper.

Fig. 5. Reduction from current levels of both nitrogen andphosphorus load but only to the Baltic Proper.

of the Baltic environment occurred. We wouldexpect less primary production of organic matterand thus less frequent periods of oxygen defi-ciency in the deep basins. It is also likely that thedecrease in P concentrations will reduce the fre-quency of cyanobacterial bloom during the latesummer. These are now favoured by the high Pconcentrations (and low N/P ratio) found duringsummer and cause accumulations of sometimestoxic algal mats on the surface of the BalticProper.

In the second simulation, only the P load isreduced to the Baltic Proper. This scenario wasincluded since it is likely that the inputs of P aremore easily reduced than those of N, since thesources are mostly municipal and agricultural(Wulff and Niemi, 1992). The model simulationsshow corresponding reductions of P concentra-tions on N (50% for the Baltic Proper and 80%for the Bothnian Bay) (Fig. 6). A decrease of

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input and concentration of P means that less Nwill be utilised in the biogeochemical cycles, sincethese nutrients are utilised in fixed stochiometricRedfield ratios (16 mol of N for each mol P).Thus, less N will be incorporated into organicmatter and subsequently mineralised and deni-trified (lost) in this scenario. The Baltic Properand Bothnian Sea will change from N-limited toP-limited systems in this scenario.

The model simulations presented above illus-trate the consequences of nutrient reductions on abasin-wide scale. However, decisions about abate-ment policies are often made because of concernsat the local or regional level, rather than on thebasis of large-scale environmental concerns. Theresulting conflicts from a Baltic-wide perspectiveare discussed by Wulff and Niemi (1992), and arefurther explored below in a regional study of theGulf of Riga. A nutrient budget exists that de-scribes nutrient inputs, retention and exports ofnitrogen and phosphorous from this highly eu-trophicated bay adjacent to the Baltic Proper.This is a region of the Baltic where lack of sewagetreatment contributes to very large inputs of P tothe sea. A reduction of P inputs of more than 30%would occur if a modern sewage treatment plantwas built for the city of Riga. A model wastherefore built to explore the consequences ofdifferent N and P reduction schemes on the Gulfand the Baltic Sea. One model run is illustrated inFig. 7. The net exports of nitrogen and phospho-rous to the Baltic are shown in relation to differ-ent levels of P reduction in the inputs of the Gulf.Naturally, a P reduction in inputs will result inreduced exports of P. However, more nitrogenwill be exported to the (N-limited) Baltic Proper.

These model simulations, although based onvery simplistic assumptions, empirical relation-ships and basic physical and biogeochemicalproperties, show very clearly the basic featuresand interactions of hydrodyanamics and biogeo-chemistry of nitrogen and phosphorous in theBaltic Sea region. The overall model clearlydemonstrates that it is reduction of inputs to theBaltic Proper that is most efficient in reducingconcentrations in this basin. A strategy where allinputs are uniformly reduced is not optimal sincethe situation in the two northern basins is not

critical in terms of eutrophication (only smallamounts of nutrients are exported southwards).

The simulations also demonstrate that bothnitrogen and phosphorous inputs have to be re-duced. This is also emphasised in the regionalGulf of Riga study where it was shown that a Premoval might actually increase the net export tothe off-shore Baltic Proper. It has also beendemonstrated that it will take several decadesbefore the nutrient levels are returned to an ac-ceptable level, particularly for phosphorous.

To understand the institutional implications ofthis result, consider a problem in which there aretwo basins, each controlled by a different countryacting unilaterally. Basin A is phosphorus-limited(like the Gulf of Riga) while Basin B is nitrogen-limited (like the Baltic Proper). Country A con-trols discharges into Basin A and has preferencesonly over the quality of this Basin. Similarly,Country B controls discharges into Basin B andcares only about eutrophication in this Basin. AsBasin A is phosphorus-limited, A can enhance itswelfare by reducing its phosphorus discharges andimproving the state of Basin A. However, thereduction of phosphorus in A will also release

Fig. 7. % Change in nitrogen and phosphorus export from theGulf of Riga at different levels of reduction in P load.

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nitrogen, and this released nitrogen will be ex-ported to Basin B. As B is nitrogen-limited (i.e.phosphorus-rich), eutrophication will increase inBasin B as a consequence of the actions under-taken by A. Similarly, if Country B reduces itsnitrogen discharges in Basin B, phosphorus willflow into Basin A, exacerbating A’s eutrophica-tion problem.

As abatement of phosphorus by A increaseseutrophication in B, Country B’s best response isto reduce its nitrogen discharges further. But indoing so eutrophication is made worse in A, andA will therefore respond by reducing its phospho-rus discharges even further. The process will con-tinue until neither country can improve its welfareby abating discharges any further. This state defi-nes the equilibrium in unilateral policies. As nei-ther A nor B take into account the effect of theiractions on the welfare of the other country, eachis driven to abate its own Basin’s limiting pollu-tant too much and the other Basin’s limitingpollutant too little. As is typical of all equilibria inunilateral policies, pollution of both Basins isexcessive compared with the full co-operative out-come. However, in contrast to every paper so farpublished in the literature, abatement (of eachBasin’s limiting pollutant) is also excessive in theequilibrium in unilateral policies. For more detailsee Barrett (1995). The policy implication is thatfull co-operation is the optional strategy, but onein which abatement effort is redistributed ratherthan merely increased overall. Since marginalcosts increase with abatement effort, this meansthat a small redistribution in abatement will lowertotal costs as well as total environmentaldamages.

6. Cost effective abatement strategies

Cost effectiveness is defined as achieving one orseveral environmental targets at minimum costs.A condition for cost-effectiveness is that the mar-ginal costs of all possible measures are equal.Marginal cost is defined as the increase in costswhen, in our case, nutrient load to the Baltic Seais decreased by 1 kg N or P. As long as themarginal costs are not equal it is always possible

to obtain the same level of nutrient reductions ata lower cost by reducing the load via measureswith relatively low costs and increasing the loadby the same amount via measures with relativelyhigh costs. Thus, in order to calculate cost-effec-tive nutrient reductions to the Baltic Sea we haveto (i) identify all possible measures, (ii) quantifytheir impact on the Baltic Sea, and (iii) calculatemarginal costs for all measures.

The environmental impact of a certain reduc-tion of nutrient load at the source is, ceterisparibus, determined by the location of the source.If the source is located some distance away fromthe coastal waters of the Baltic Sea, only a frac-tion of any reduction at the source is finally felt atthe coast. The share of the source reduction thatreaches the coast depends on the retention of thenutrient that may occur at various points betweenthe source and the coast. This implies that, for agiven marginal cost at the source, the marginalcost of coastal load reduction is higher than forremote sources with low impact on the coast. Inorder to calculate impacts of source-related mea-sures we require information on source locationas well as on transportation of nitrogen and phos-phorous. No water and soil transport models existfor the drainage basin and so we use very sim-plified retention numbers.

The abatement measures can be divided intothree different classes:1. reductions in the deposition of nutrients on

Baltic Sea and on land within the drainagebasin,

2. changed land uses reducing leaching of nutri-ents, and

3. creation of nutrient sinks which reduce thetransports of nutrients to the Baltic Sea.

The first class of measures includes improve-ment in sewage treatment plants, reductions in airborne emissions from traffic and stationary com-bustion sources, and reductions in the agriculturalapplication of fertilisers and manure on land.Reductions in air emissions are obtained by theinstallation of catalysts in cars and ships, reduc-tions in the use of motor fuel and other petroleumproducts, and the installation of cleaning tech-nologies in stationary combustion sources. Reduc-tions in agricultural deposition of nutrients are

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352 345

Table 3Marginal costs of different measures reducing the nitrogen load to the coast, SEK/kg N reduction

Sewage treatment plants Atmospheric depositsRegion WetlandsAgriculture

Sweden 20–242 24–72 135–9500 2324–60 874–618757–220 66Finland

20–122Germany 24–60 210–3576 27Denmark 23–200 24–60 544–3576 12

7–35 523–341212–101 10Poland59–196Latvia 7–35 183–1195 20

7–35 254–1723Lithuania 1572–2087–35 153–199955–192 36Estonia

43–236St Petersburg 7–35 353–1884 517–35Kaliningrad 273–159328–210 43

742–4184BelgiumFrance 1507–9045

562–7184Netherlands475–3460Norway

UK 785–4855

obtained by a reduction in the use of fertilisersand reductions in livestock. Another measure in-cluded is a change in spreading time of manurefrom autumn to spring. Decreases in leachingfrom arable land are obtained by increasing thearea covered by catch crops, energy forests, andley grass. Nutrient sinks are created by con-structing wetlands downstream in the drainagebasin close to the coastal water.

In principle, the cost of an abatement mea-sure includes the cost at the emission source andthe cost impacts on other sectors of the econ-omy. In the following analysis we only includethe abatement costs at the source, which arecalculated by means of engineering methods andeconometric techniques (see Gren et al., 1995,for details about the cost estimation work). Thecalculated marginal costs at the source for dif-ferent abatement measures aimed at reducing ni-trogen load in different regions (Table 3)indicate that increased nitrogen cleaning capac-ity at sewage treatment plants is a low costmeasure in all countries. Further low cost mea-sures include, in the agricultural sector, the re-duction in use of nitrogen fertilisers andcultivation of cash crops. Another low cost op-tion is the construction of wetlands, whereasmeasures reducing air emissions are relativelyexpensive in all countries.

The marginal cost of phosphorous reductionstends to be much higher than those for nitrogen(Table 4). Nevertheless, measures involving im-provements in sewage treatment plants representrelatively low cost reduction options. Restora-tion of wetlands is relatively expensive. It can beseen that phosphorus reduction in Swedish wet-lands is more than ten times more expensivethan Finland, for example. This is because thecheaper Swedish measures with respect to wet-lands have already been extensively deployed,whereas they have not in the other countries.

Table 4Marginal costs of phosphorous reductions, SEK/kg P reduc-tion

Region Agriculture Sewage treat- Wetlandsment plants

155–6604Sweden 41–52 18232225–6080Finland 41–52 1748

Denmark 144–2610 41–68 1202899188–2964 41–68Germany

20–100 611114–2033PolandEstonia 282–5622 20–100 6090

234–5662Latvia 20–100 1234964Lithuania 20–100186–6696

230–4314 20–100St Petersburg 823338–4290Kaliningrad 54520–100

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352346

Fig. 8. Cost effective N and P reductions.

6.1. Minimum costs of nutrient reductions

Because it is reductions in nutrient loads to theBaltic Proper which have the main impact on theratio N/P, we estimate minimum costs for loadreductions to this basin only. The minimum costsfor various reductions in either N or P are shownin Fig. 8.

We can see from the figure that the costs ofreducing the load of nitrogen are much higherthan the costs of corresponding decreases in phos-phorous loads.

Several of the measures, such as livestock re-ductions, change of manure spreading time andwetlands restoration, imply reductions in bothnitrogen and phosphorous. When one of thesemeasures is implemented with the aim of reducingthe load of one nutrient, reductions are obtainedin the other nutrient load ‘free of charge’. Thesejoint impacts on several nutrients imply thatabatement measures are relatively less costly ifsimultaneous reductions in N and P are under-taken. Total costs for various reduction levels arethen lower for simultaneous decisions on N and P

than for separate decisions, especially for abate-ment levels in excess of 40% reductions (see Gren(1995) for more details). Note that P is more‘mobile’ than N and therefore requires moreabatement effort, thus P can be the ‘keystone’pollutant, i.e. if P is managed then so is N but notusually the other way around.

In order to achieve a 50% reduction in nitrogenloading the most cost effective mix of measureswould be one in which agriculture, wetlands andsewage treatment plant-related measures accountfor 35, 28, and 31%, respectively, of the totalnitrogen reduction. Measures involving air emis-sions account for 6%. The single most importantcountry source in a cost effective reduction strat-egy is Poland, which accounts for 40% of the totalreduction (corresponding to about 2/3 of the Pol-ish load of nitrogen). We also note that Poland,Russia and the Baltic states account for 72% ofthe total nitrogen reduction. The nitrogen reduc-tion contribution of Swedish and Finnish regionsamounts to only 8 and 7%, respectively.

For phosphorous load reductions wetland mea-sures can only play a minor role in coastal waters,

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352 347

and in fact it is only in Germany that suchmeasures form part of a cost-effective abatementpackage. Instead, measures relating to sewagetreatment plants are of major importance, ac-counting for 66% of the total reduction. This is areflection of the relatively large load of phospho-rous from households and industries and theavailability of low cost abatement options. Againthe single most important country source in a costeffective reduction strategy is Poland, which ac-counts for 67% of the total reduction. The Balticstates, Poland and Russia together account forapproximately 90% of the total phosphorusreduction.

It is important to emphasise that the cost esti-mates are based on several assumptions of abiological, physical and economic character. Thebiological assumptions refer to retention of nutri-ents, the leaching impact of agricultural measuresand the nitrogen removal capacity of wetlands.The physical assumptions concern the feasibilitylimits of different measures such as nutrient clean-ing capacity of sewage treatment plants and areaof land available for alternative land uses. Theeconomic assumptions relate to the estimation ofthe costs of the various measures. According tothe results of sensitivity analysis, both the costs ofnitrogen and phosphorous reduction seem to besensitive to assumptions of a biological character.Changes in the physical assumption about landavailable for agricultural measures often have asignificant impact of the total costs. It should benoted, however, that the sensitivity analysis wascarried out only for an overall reduction of 50%in the load of both nutrients. At other overallreduction levels, the costs may be sensitive toother types of assumptions.

7. Benefits valuation

The process of measuring the economic value ofeutrophication damage in the Baltic involves threebasic stages. Firstly, discharges of nutrients intothe Baltic lead to eutrophication as outlined ear-lier and this leads to reductions in the variousmeasures of environmental quality. Second, thesechanges in environmental quality lead to changes

in the stream of services (use and non-use values)provided by the Baltic region. Third, the changein the stream of services will affect individuals’well-being and the economic proxy for well-being,money income, such that willingness to pay forthe stream of services will change.

A concerted attempt was made to estimate theeconomic benefits of environmental improvementsin the Baltic. A total of 14 empirical valuationstudies in three countries—Poland, Sweden, andLithuania—were carried out to look at benefitestimation issues. These included the total eco-nomic value of reducing the effects of eutrophica-tion, as well as sub-components of this total valuesuch as beach recreation benefits, existence andoption values of preserving species and their habi-tats, and the benefits from preserving and restor-ing wetlands. Of the applied studies that havebeen done in the different countries, some of themhave focused on similar valuation issues, thusenabling a comparative evaluation of the studiesto be carried out between the differing economic,cultural and political systems. We also have con-sidered the question of total basin-wide benefitestimates and benefits transfer. Whilst the studiesoutlined here provide a large amount of informa-tion about the value of the Baltic’s resources,there are still gaps in our knowledge of totalbasin-wide benefit estimates. Nevertheless, the es-timates that are available indicate the significantvalue of the limited number of resource typesconsidered.

The full results of all the studies are presentedin Georgiou et al. (1995). Here we present theresults of two of the studies carried out in Polandand Sweden which looked at the use and non-usevalue of reducing eutrophication to a sustainablelevel. These two studies were used to estimatebasin-wide benefits.

The first study was a contingent valuation studyfocusing on Baltic Sea use and non-use values inSweden. This study was designed as a mail ques-tionnaire survey. The questionnaire was sent toabout 600 randomly selected adult Swedes. Theresponse rate turned out to be about 60%, whichis quite similar to other contingent valuationmethod (CVM) mail questionnaire surveys thathave been undertaken in Sweden.

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352348

The eight-page questionnaire is presented indetail in Soderqvist (1995). It contained, inter alia,summary information on the causes and effects ofeutrophication of the Baltic Sea. In the valuationscenario, the respondents were asked to assumethat an action plan against eutrophication hadbeen suggested, and that this action plan wouldimply that the eutrophication in 20 years woulddecrease to a level that the Baltic Sea can sustain.The types of action that this plan would involvewere briefly described. It was also explained thatthe way to finance the actions would be to intro-duce an extra environmental tax in all countriesaround the Baltic Sea.

The respondents then met the following ques-tion: ‘‘If there were a referendum in Sweden aboutwhether to launch the action plan or not, wouldyou vote for or against the action plan if yourenvironmental tax would amount to SEK X peryear during 20 years?’’. Seven different amountsof money, X, were randomly used for the ques-tion. The answers to the question give an estimateof mean annual Willingness To Pay (WTP) ofabout 5900 SEK per person (or 3300 SEK if weassume non-respondents to the survey have a zerowillingness to pay).

It is likely that the respondents considered usevalues as well as non-use values when they an-swered the WTP question. This means that theWTP reflects perceived total benefits. However,note that there may be important differences be-tween perceived benefits and real benefits. Onereason for this is that the information communi-cated to the respondents about the eutrophicationand its effects was far from complete. Moreover,the results from this CVM study may be influ-enced by embedding phenomena, i.e. that therespondents have also considered their WTP forother environmental improvements, and not onlyfor a reduction of eutrophication. Embedding is arecognised problem in CVM studies. Note alsothat it is not easy to relate the outcome in thevaluation scenario—a reduction of the eutrophi-cation to a level that the Baltic Sea can sustain—to a specific reduction of the nutrient load(though such an outcome is probably consistentwith the 50% nutrient reduction target adopted bythe Helsinki Commission). A time horizon of 20

years is reasonable in the sense that even if con-siderable action is taken today, it takes manyyears until any results will be evident. The de-scription of the outcome as a ‘sustainable’ levelreflects the fact emphasised by ecologists thatactions against eutrophication will probably resultin neither the complete disappearance of eutrophi-cation, nor a return to the same ecological situa-tion that characterised the Baltic Sea somedecades ago, but rather to some new equilibrium.

The second study was almost identical to thefirst, except that it was carried out in Poland, thusproviding a direct international comparison to bemade between the benefit estimates found in bothcountries. Again a mail questionnaire was usedand 600 questionnaires were sent out to a randomsample of Polish adults. The response rate wasjust above 50% which was considered reasonablefor this context and location. It was found thatthe level of support for the environmental tax was54.9%. Mean annual willingness to pay per personfor the action plan was 840 SEK (or 426 SEK ifwe assume non-respondents to the survey have azero willingness to pay).

In order to calculate basin-wide benefit esti-mates we need to add up the values for thedifferent activities carried out, taking care not todouble count, and using the relevant correct pop-ulations. Since there are benefit estimates avail-able for the same valuation scenario in only twoof the 14 countries that are included in the Balticdrainage basin, any aggregation to the wholebasin has to rely on strong assumptions. Theaggregate benefit estimates to be presented belowshould thus not be taken too literally. However,they may give useful information regarding theorder of magnitude of basin-wide benefitestimates.

Table 5 shows estimates of aggregate benefitsfor the total economic value of a Baltic Seanutrient reduction strategy. Data from the Polishand Swedish mail surveys are used since they areboth concerned with total economic value (use+non-use value), and they contain the same valua-tion scenario. Given an adjustment for thedifference in GDP per capita levels between thecountries, the Polish mean WTP estimate of 840SEK (426 SEK) will be regarded as representative

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352 349

for the transition economies around the BalticSea, i.e. Estonia, Latvia, Lithuania, Poland,Russia; and the Swedish mean WTP estimate of5900 SEK (3300 SEK) is taken as representativeof the market economies of Finland, Germany,Norway and Sweden (Table 5). The possibleWTP of the population in the other countriesincluded in the Baltic drainage basin (Belarus,Czech Republic, Norway, Slovakia and Ukraine)will be ignored in this analysis.

In order to calculate national WTP estimates,the estimate per person was multiplied by the(adult) population in the Baltic drainage basinpart of each country. According to Table 5, thebasin-wide estimate for total economic value isSEK 69 310 million per year (SEK 37 892 mil-lion per year). This is a highly uncertain figure,but it indicates that the benefits from a BalticSea clean-up of eutrophication may be consider-able.

Table 6 brings together both the costs of pollu-tion abatement and related economic benefit esti-mates in a cost-benefit analysis framework. It isclear that there are considerable net benefits avail-able to a number of Baltic countries, sufficient forthem to pay their own clean-up costs and sub-sidise the Baltic republics’ abatement programme,while still gaining increased economic welfarebenefits. While the economic benefit calculationsare not precise point estimates, they are indicativeof the range or order of magnitude of clean-upbenefits in the Baltic.

Poland faces the largest cost burden because ofits relatively high pollution loading contributionand the modest levels of effluent treatment that itcurrently has in place.

The costs in Table 6 refer to the allocation ofnitrogen reductions that minimises total costs. Wenote that the reductions, measured in percentagesof original loads, vary between 39% (Germany)

Table 5Basin-wide benefit estimates

GDP per cap- National WTP,Country Annual WTP National WTP, present National WTP, presentyear 1c (MSEK) valued (MSEK)per personb value per year (MSEK)ita at PPPa

(SEK)(US$)

Transitioneconomies

Estonia 8369 (4248) 418 (212)790 (401)700 (355)e3823569 (284) 1100 (549)Latvia 11653 (5816)3058 583 (291)

Lithuania 3632 665 (337) 1743 (883) 18465 (9355) 923 (468)840 (426) 21958 (11136) 232623 (117974)Poland 11631 (5899)4588

4970 909 (461)Russia 6585 (3340) 69761 (35384) 3488 (1769)

Marketeconomies

6770 (3790) 23365 (13080) 247529 (138570) 12376 (6929)Denmark 1930615483 5430 (3040)Finland 20387 (11414) 215980 (120920) 10799 (6046)

Germany 18541 6500 (3640) 15800 (8848) 167385 (93736) 8369 (4687)5900 (3300)Sweden 20723 (11591)414458 (231818)39122 (21882)16821

Total 130850 (71533) 1386223 (757821) 69310 (37892)

a PPP=purchasing power parity.b For the transition economies, the Polish mean WTP estimate of SEK 840 (SEK 426) was multiplied by the ratio between each

country’s GDP per capita (at purchasing power parity) and Poland’s GDP per capita at PPP. For the market economies, theSwedish mean WTP estimate of SEK 5900 (SEK 3300) and Sweden’s GDP per capita at PPP were used correspondingly. Source ofGDP data: OECD.

c The annual mean WTP estimates per person multiplied by the (adult) population in the Baltic drainage basin part of the country.d Time horizon: 20 years (specified in the CVM studies). Discount rate: 7% (this rate was also used in the estimation of nutrient

reduction costs.e Figures in brackets are for benefit figures which assume zero WTP of non-respondents.

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Table 6Costs and benefits from reducing the nutrient load to the Baltic Sea by 50%, millions of SEK/yeara

Costs BenefitsCountry Net benefitsReduction in %

5300Sweden 20 723 (11 591)42 15 423 (6291)Finland 52 2838 10 799 (6046) 7961 (3208)

2962Denmark 12 376 (6929)51 9414 (3967)4010 8369 (4687)39 4359 (677)Germany

63Poland 9600 11 631 (5899) 1761 (−3701)586 3488 (1769)Russia 2902 (1183)44

1529 418 (212)55 −1111 (−1317)Estonia56Latvia 1799 583 (291) −1216 (−1508)

2446 923 (468)Lithuania −1523 (−1978)5531 070 69 310 (37 892)50 38 240 (6822)Total

a Figures in brackets are for benefit figures which assume zero WTP of non-respondents.

and 63% (Poland). If the abatement cost strategywas based not on a cost-effectiveness criterionlinked to an overall ambient quality target, but onsome ‘political’ solution based, for example, onuniform national load reductions, then aggregatecosts would be increased significantly (Table 7).This cost increase is due to the expensive mea-sures that have to be implemented in Germanyand Sweden. However, several countries with re-duction levels exceeding 50% in Table 6 will gainfrom a country restriction as compared to a re-striction of the total load of nitrogen.

The costs presented in Table 6 may also beoverestimated because they do not include otherenvironmental improvements associated withthese nutrient reductions such as improvedground water quality and less acidification relatedto nitrogen oxides emissions. It is well known thatseveral of the measures implying land use changesalso yield other ecological services. For example,wetlands provide food, biodiversity and flood wa-ter buffering, and energy forestry on arable landprovides fuel and may act as a carbon sink. If allthese other positive aspects were included, somemeasures might imply internal net benefits insteadof net costs.

The simulation results derived from our mod-elling of nutrient transports in the Baltic Seaprovide a proxy for the missing dose-responsescientific data. The model simulates the impacts ofnutrient reduction on the concentration ratios ofN and P but does not provide any detailed infor-

mation on the impacts on the biological condi-tions and production of ecological services. Theavailable model does, however, predict that a 50%reduction in the loads of nitrogen and phospho-rous to the Baltic Sea may correspond to thelevels found during 1960s, i.e. before the majordeterioration in the Baltic environment occurred.This scenario is likely to be consistent with theone used in the CVM studies. Therefore, a crucialassumption when comparing costs and benefits isthat a 50% reduction in the loads of nitrogen andphosphorous imply that we reach ecological con-ditions which resemble those of the Baltic Seaprior to 1960s. Another important assumption

Table 7Cost change of a move from a 50% reduction in total load to50% reduction in the load of each country, in percenta

Region Phosphorous reduc-Nitrogen reduc-tiontion

Sweden 361.8−57.8−51.9Finland 718.1

Denmark −48.8 29.1Germany 543.6 32.1

−80.4Poland −57.9195.0Latvia 18.6

−17.5 289.2Lithuania−13.4Estonia 277.1981.8St. Petersburg −80.0

Kaliningrad 779.4 −81.6

a A negative sign implies cost savings when country restric-tions are imposed as compared to reduction by 50% in thetotal load of nutrient.

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352 351

concerns the nutrient filtering capacity of differ-ent Baltic Sea coasts, which is likely to vary alot. There is, however, no appropriate data onthe coasts’ filtering capacity. Therefore, no dis-tinction has been made between different coastli-nes. Given all these qualifying assumptions,estimated costs and benefits of an overall reduc-tion in the nutrient loads by 50% for differentcountries are as presented in Table 7. Note thatBelarus, Czech Republic, Norway, Slovakia andUkraine are excluded, since these countries wereexcluded from the cost estimation work.

8. Policy implications

There is considerable merit in the adoption ofa basin-wide approach to pollution abatementpolicy in the Baltic and therefore in the imple-mentation of an integrated coastal zone manage-ment strategy. It is clear that the ambientquality of the Baltic Sea is controlled by thecoevolution of both biophysical and socio-eco-nomic systems throughout the macro-scaledrainage basin.

Despite the pioneering nature (i.e. in the‘transition’ economies) of some of the economicbenefits research, there seems to be little doubtthat a cost-effective pollution abatement strategyroughly equivalent to the 50% nutrients’ reduc-tion target adopted by the Helsinki Commissionwould generate significant positive net economicbenefits (benefits minus costs). The research intothe monetary valuation of environmentalbenefits also indicated that the public’s and ex-perts’ perception of environmental quality andquality decline are not necessarily synonymous.

A policy of uniform pollution reductiontargets is neither environmentally nor economi-cally optimal. Rather, what is required is a dif-ferentiated approach with abatement measuresbeing concentrated on nutrient loads enteringthe Baltic Proper from surrounding southernsub-drainage basins. The northern sub-drainagebasins possess quite effective nutrient traps andcontribute a much smaller proportionate impacton the Baltic’s environmental quality state. Thecountries within whose national jurisdictionthese southern sub-basins lie are also the biggest

net economic gainers from the abatement strat-egy.

Although there are a range of feasible individ-ual N-reduction and P-reduction measures avail-able, our research indicates that thesimultaneous reduction of both N and P load-ings into the Baltic is more environmentally ef-fective as well as cost effective. The increaseddeployment of N-reduction and P-reductionmeasures within existing sewage effluent treat-ment works, combined with coastal wetland cre-ation/restoration schemes and changes inagricultural practice, would seem to be a partic-ularly cost-effective option set.

The marginal costs of nutrient reduction mea-sures increase sharply towards the full workstreatment end of the spectrum. This finding sug-gests that the greatest environmental and eco-nomic net benefits are to be gained by anabatement policy that is targeted on areas whichlack treatment works of an acceptable standard,rather than on making further improvements totreatment facilities that already provide a rela-tively high standard of effluent treatment. Thisfinding, combined with our findings relating tothe importance of the spatial location of nutri-ent loading, suggests that nutrient reductionmeasures in the Polish and Russian coastal zoneareas would be disproportionately effective. Thefinancing of such measures remains problematicif only ‘local’ sources of finance are to be de-ployed. Non-commercial funding from the Eu-ropean Commission and other internationalagencies, together with bilateral agreements,could play a vital role in the enabling processfor an effective and economic Baltic clean-upprogramme.

Acknowledgements

This research was funded by the EuropeanCommission, Project Number: EV5V-CT-92-0183. The project participants include CSERGE,Norwich and London; the Beijer Institute,Stockholm; University of Siegen, Germany; Uni-versity of Stockholm; GRID Arendal, Norway;and Stockholm School of Economics.

R.K. Turner et al. / Ecological Economics 30 (1999) 333–352352

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