Environmental Cost of Groundwater: A contingent Valuation Approach

The Water Framework Directive of the European Union has become a milestone in the water policy for this area. This Directive aims to achieve a “good ecological status” of bodies of water in the Member States of the European Union by 2015. The Water Framework Directive calls for the application of economic principles, economic approaches, tools and instruments. The functions of this economic analysis include identifying methods to estimate resource and environmental costs. The purpose of this paper is to define the applications of Environmental Economics techniques in a groundwater valuation, taking the Gavil?n Aquifer, located in the southeast of Spain, as a case study. This aquifer discharges support a very important wetland, with high biological, recreational and landscaping values. As this groundwater is also used for agricultural purposes, it is an ideal case to test a methodology aimed at measuring both environmental and resource costs. Two valuation techniques % Contingent Valuation Method and Production Function Approach% were applied so as to achieve this goal. The total economic value estimated for this groundwater is 0.454 €/m3 , out of which 16.1% is related to environmental and recreational aspects.