Participatory Cost-Benefit Analysis for Water Quality Improvement – Helge River Catchment, Sweden

• The Helge River catchment is in southern Sweden (Skåne and Kronoberg counties). It is part of the Baltic Sea drainage basin, representing 0.39% of rivers' water inflow. 
• It is dominated by forestry land use.
• It contains Kristianstad Vattenrike UNESCO Biosphere Reserve with regional, national and international biological values. 
• Water colouration is identified as the dominant environmental pressure affecting multiple stakeholders.

To apply bottom-up Cost-Benefit Analysis for water quality improvement, enabling local stakeholders to identify environmental pressures, suggest management strategies, and assess costs and benefits from their perspectives.

• Strategy 1 ("River"): Total costs SEK 328.06 million over 2017–2030. Agricultural sector bears SEK 256.28 million. 
• Strategy 2 ("Forest"): Total costs SEK 1,868.96 million, forestry sector bears SEK 1,754.58 million. Hydropower sector contributes SEK 114.38 million under Strategy 2. No support mechanisms assumed in baseline CBA; compensation schemes needed where private costs exceed private benefits.

• Benefit-to-cost ratios up to 7.75 indicating strong social returns. 
• Nitrogen reduction of 88,089 kg/year and phosphorus reduction of 5,563 kg/year. 
• Biodiversity preservation valued at SEK 565–776 million. 
• Flood risk reduction benefits up to SEK 762 million. 
• Recreation and tourism value up to SEK 423 million. Improved water quality and reduced colouration.

• Stakeholder workshops to identify pressures and propose strategies. 
• Expert elicitation to assess ecosystem service impacts. 
• Benefit transfer using income-adjusted values from Baltic Sea region studies. 
• Dynamic spreadsheet-based CBA template allowing real-time assumption adjustments during meetings. 
• Qualitative expert ratings of impacts on biodiversity, flood risk, erosion control, recreation and water quality.

J.F. Carolus et al. (MIRACLE project)

Environmental cost-benefit analysis - the Helge River

The Helge River catchment in southern Sweden implemented a participatory environmental planning process using a bottom-up Cost-Benefit Analysis (CBA) approach to address water quality issues. Unlike conventional top-down CBA where central authorities define policy options, this process began with local stakeholders identifying environmental pressures and proposing strategies to improve ecosystem services.

The Helge River catchment serves as the system boundary, with stakeholder groups including agricultural producers, forestry sector representatives, hydropower operators, and public sector institutions. Three primary strategies were developed: "River" (restoring aquatic ecosystems through stormwater ponds, flood plains, and wetlands), "Forest" (sustainable water management in forestry through wet forest restoration and riparian zones), and baseline measures under existing CAP and Water Framework Directive programmes.

The analysis covered the period 2017–2030 with a social discount rate of 3.5% following Swedish national guidelines. Results showed substantial variations in benefit-to-cost ratios across strategies. The "River" strategy achieved a BCR of 7.75 with net present value of SEK 2,212.95 million, while the "Forest" strategy had a BCR of 1.76 with NPV of SEK 1,428.59 million. The baseline scenario yielded negative returns with BCR of 0.31.

Key benefits included biodiversity preservation, flood risk reduction, recreation and tourism value, and improved surface and groundwater quality. Reduced water colouration was valued at SEK 1,323.73 million across strategies. Nutrient mitigation achieved 88,089 kg/year nitrogen reduction and 5,563 kg/year phosphorus reduction under Strategy 1.

The bottom-up approach revealed important distributional effects. In Strategy 1, the agricultural sector bore SEK 256.28 million in costs, while Strategy 2 placed SEK 1,754.58 million costs on forestry. This highlights how positive social returns may coexist with unequal burden-sharing among stakeholder groups.

The study demonstrates that participatory CBA can integrate local knowledge, increase stakeholder acceptance, and inform compensation mechanisms when private costs exceed private benefits despite positive social NPV.