Cost function approach to water protection in forestry

The European Water Framework Directive (WFD) strongly emphasizes that all water polluting sectors must enhance the protection of water bodies in a cost-effective way. River Basin Management Plans need to be made to achieve a good environmental status for all water bodies by 2027 at the latest. This article examines three principal water protection measures used in forestry: buffer zones, overland flow fields and sedimentation ponds. We analytically develop marginal abatement cost functions for each of these measures and apply them numerically for the Finnish forestry. We find that the marginal abatement costs of nutrients using buffer zones in clear-cut mineral soil forests are very high, as they entail leaving financially mature and uncut trees. In contrast, the marginal costs of using overland flow fields in conjunction with ditch cleaning and clear-cutting in peatlands are very low. Furthermore, for sediments using overland flow fields as a water protection measure entails significantly lower abatement costs than does using sedimentation ponds in conjunction with ditch cleaning in peatland forests. A cost-effective solution in a river basin entails that the highest nutrient reductions are made in agriculture but that forestry also does its share. A cost-effective allocation of abatement measures entails that the proportions of the overall nutrient reduction are 3% (1%) in forestry and 97% (99%) in agriculture when the reduction target is set as 10% (30%).