Europe 2020 Strategy the European Semester

Europe 2020 Strategy – The European Semester Linking water management to economic growth

COUNTRY: Finland

The overall 1 Water management at a glance 2 macroeconomic outlook

The current account balance Finland’s renewable water resources have been estimated to amount to 107 billion m3 a year (or 21,268 m3 continued its decline and from a per inhabitant). Only 2.4 billion m3 of water are currently used each year (around 2% of the total resources). surplus of 8% in 2002 reached a Finnish groundwater rank in quality among the best reserves in the world (EEA). Groundwater pollution is deficit of 0.5% in 2011. At the prohibited in Art.8 of the water Act. The specific consumption of water from waterworks has decreased same time Finland’s population is considerably in recent years, largely due to increased charges and new efficient technologies. Industries growing and if left unchecked this have meanwhile been making many improvements to reduce the consumption of water, energy and raw might pose problems in the materials, and these measures have also reduced pollution loads in wastewater. (Efficient water future. In the coming years the consumption) Finnish government will have to Some 52% or rivers, 87% of lakes and 36% of the coastline have high or good ecological status of service create an environment in which waters. The rest is ‘moderate, poor or bad’ (EEA). Eutrophication is the most serious problem facing the competitiveness is enhanced, inland water in Finland and the Baltic Sea. (Ministry of Environment) labour market participation Most waterworks are owned by local authorities. Users pay charges to cover water supply and treatment. among the labour force increased Charges define consumption levels and the quality of water. and households are discouraged to be overly indebted. (EC staff Compliance for UWWTD: Article 3 (100%), Article 4 (>96%), Article 5 (100%) (EC Staff Working paper on working document – In-depth UWWTD implementation) review of Finland) About 80% of the population is connected to sewer networks and urban wastewater treatment plants. WWTP performance has been improving. All WWTPs use biological-chemical treatment methods and both the organic matter and phosphorus loads to receiving waters have decreased remarkably since the 1970s. The Finnish economy is relatively The national average removal rate for BOD and phosphorus is currently around 95%. Nitrogen removal open and is characterized by processes were introduced later than phosphorus precipitation and the present removal rate is about 50%. strong industry which is export- oriented. The Eurozone is the main export market for Finland

[Tapez un texte] (30.7% in 2011). The main import is oil from Russia (63.3% in 2011) which puts the country in fuel dependency position. The following industries are the strongest in the Finnish economy: paper industry, electronics (Nokia). Machinery and equipment and chemicals and basic metal industry to a smaller extent. The R&D sector is high in Finland but its impact could be further improved.

Finland’s GDP growth has slowed strongly during 2012. The Bank of Finland forecasts overall GDP growth of just 0.3% in 2012 and 0.4% in 2013. In 2013, household purchasing power will contract and private consumption growth come to a halt. Private consumption will begin to grow again only in 2014, when economic growth and decelerating inflation support development of real incomes. The central government deficit will remain unchanged in 2012, at a full 3% of GDP.

The unemployment rate is around 8% and relatively stable. (Bank of Finland)

[Tapez un texte] Water management and 3 Recommendations 4 economic growth

Water and the economy: water Explore options to achieve full cost recovery for the whole water system and not only for water supply, as an economic asset sewerage and waste water treatment. Some 3,000 people were involved in Finland in water collection, Continue research in the most water intensive industries to achieve further savings and keep their position treatment and supply and an of first movers and leaders in the field. additional 1,000 people in sewerage (Eurostat). Data seems Continue the significant support to R&D in the water sector and improve its efficiency and quality of underestimated. The GVA of outcomes. water collection, treatment and supply in 2009 was EUR 332 million and for sewerage – EUR In connection with high level of eutrophication and the goals set for 2015, intensify research on new cost- 256 million. The person effective water protection measures in agriculture and stimulate voluntary measures by farmers. Existing productivity for water collection, subsidies for farmers should be targeted more efficiently. treatment and supply in 2009 was EUR 123,000 per person which is Achieve higher level of integration of water policies into other sectors like agriculture, energy and climate. one of the best in the EU. For comparison, in Denmark it is 57,000, in Spain – 94,000, in There is a further need for improvement of WWTP where wastewater is released into water bodies suffering France – 145,000, in Belgium – from eutrophication. There is a need to further improve nitrogen removal. 88,000, etc. It has increased significantly since 2000 when it Review the existence and efficiency of agri-environmental subsidies in terms of promoting water protection, was EUR 94,000. Some 0.109% of less water intensive stocks, less fertilizer use, etc. the workforce is employed in water collection, treatment and supply and some 0.043% - in sewerage. Sources of freshwater pollution include: runoff from farmland, managed forests or peat mining sites, wastewater from WWTP, industrial facilities, livestock facilities, effluent from fish farms, and storm water from built-up

[Tapez un texte] areas. Impacts of pollution mean a loss of money for farmers and loss of marine life and in this sense clean water acquires significant importance as an economic asset for agriculture.

Water policy as support to economic growth strategy The compliance cost estimate for Finland for the UWWTD is EUR 243 million for Article 5. No additional investments are needed for Articles 3 and 4. Full- compliance annual re-investment costs are estimated at EUR 103 million and the accumulated re- investment for 2007-2013 period – at EUR 649 million. There is no financial gap. (COWI, 2010) There are no data on the link between full implementation and direct and indirect economic impacts and employment. However, water policy implementation has served as a driver to innovation and to economic development especially in the case of the paper and pulp industry and the brewery industry. In November 2006, the Finnish Government approved a new set of national Water Protection Policy Outlines to 2015 defining measures for improvement of

[Tapez un texte] water quality. One of the objectives is reducing the nutrient loads that cause eutrophication, especially diffuse pollution from agriculture. Agricultural nutrient releases are still responsible for more than 50% all the nutrient discharges and this is in spite of recent reductions in the use of fertilizers, the widespread establishment of buffer zones, and the adoption of farming practices that reduce erosion. Another important policy document is Finland’s Programme for the protection of the Baltic Sea. Regarding cost recovery of water services in 2011 the EC asked Finland among other countries to recover costs from water services. Finland was of the opinion that cost recovery should apply only to water supply, sewerage and waste water treatment but this was not the interpretation of the EC.

Water efficiency: opportunities and challenges for green growth

Two such good practices are presented below: the breweries and the paper and pulp industry

The water used for producing one litre of beer in 1974 reached almost 25 l. falling to below five

[Tapez un texte] litres in 2003. The main driver behind the dramatic increase in water efficiency in breweries was the legislation on sewerage charges from 1974. Before that, water user only paid the water supply whereas after this date their bill almost doubled. (Ministry of Environment)

Pulp and paper production are highly water-intensive processes. The Finnish pulp and paper industry has improved water use efficiency and water consumption has dropped from 250 m3 of water per tonne of sulphate pulp in 1970s to the current figures of 40-50 m3 of water per tonne of pulp. This is a factor five improvement. The use of raw water in paper production has dropped from 100-150 m3 of water per tonne of newspaper to 7-15 m3 of water per tonne of paper, or even less which is a factor 10 improvements. The driving forces behind this radical drop have been both economic and environmental factors. Side benefits of lower water consumption include energy savings, since less water needs to be heated.

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