An Economic Analysis of Transparency Improvement in the Baltic Proper, Baltic Sea







































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The Baltic Sea is the one of the most studied seas area in the world and it is severely affected by human activities where eutrophication is the overall environmental problem. Although there is an international agreement that nutrient input to the Baltic should be reduced, the measures taken so far have not resulted in major reductions in nutrient inputs nor in environmental improvements. Sewage reduction is the most important factor for transparency improvement of the Baltic Proper and wetland restoration and change of N spreading time have no effective role in this aspect. Within the Baltic area, establishment of sewage treatment technology in Russia and Poland is more cost-effective than it would be in Sweden. Without this measure transparency improvement would be expensive. In Sweden NOx reduction is most cost-effective measure for transparency improvement in the Baltic Proper and without this measure the total cost would be ~ 58.5 million euro.































































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I am very much indebted to Åsa Danielsson, Department of Water and Environmental Studies, former Program Coordinator of Water Resources and Livelihood Security, who is my thesis supervisor. I am also grateful to Dr Juile Wilk, Department of Water and Environmental Studies, for her guidance at the beginning of my thesis work. I would like to thank the rest of teachers and staff of Tema Vatten, who perform their work with an engagement and commitment that is truly amazing. I would also like to thank all of my class friends specially Rafiq Ahmed and Ansar Hayat. I would also like to be thankful to my family members and friends for their unconditionally support, who are living in Bangladesh.

Finally, I would like to dedicate this paper to my mother who always initiates positive way of life and whose love and commitment never yield.









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1.1 Thesis Aim --- 10

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2.1 Main Features of the Baltic Sea --- 12

2.2 Catchment Area ---13 2.3 Nutrient loads --- 14

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3.1Secchi depth --- 17

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4.1 Sweden --- 21 4.2 Poland ---22 4.3 Russia ---22

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5.1 Different Measures of Transparency Improvement ---28

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6.1 Cost-effective Solution---31

6.2 Measures in Poland --- 32

6.2.1 Sewage Reduction in Poland --- 32

6.2.2 Fertilizer Use in Poland --- 33

6.3 Measures in Sweden --- 33

6.3.1 Sewage Reduction in Sweden ---35

6.3.2 Fertilizer Use in Sweden ---35

6.3.3 NOx Reduction in Sweden ---35

6.3.4 Land Use in Sweden ---36

6.4 Measures in Russia ---36

6.4.1 Sewage Reduction in Russia --- 36

6.4.2 Livestock Reduction in Russia--- 37

6.4.3 Fertilizer Use in Russia--- 38

6.5 Summary--- 38



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Table 1: The Catchment area per basin (km2) Table 2: The characteristics of sub-basins (km2)

Table 3: Population and countries catchment area in the Baltic

Table 4: Nitrogen and phosphorous anthropogenic loads to the Baltic Sea

Table 5:Summertime Secchi depth (m) of HELCOM target levels based on 25 % deviation from reference levels and present levels as well as wintertime nitrogen and phosphorus concentration and chlorophyll a levels based on 50 % deviation and present levels Table 6: Water transparency in the Baltic Sea between 1903 and 2006

Table 7: Situation of the Baltic Sea before and after transparency improvement in the Baltic Proper

Table 8: Joint action of all countries Table 9: Different measures in Poland Table 10: Different measures in Sweden Table 11: Different measures in Russia

Table 12: Result of NEST scenarios for all measures in Poland, Sweden and Russia

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Figure 1: The Baltic Sea area, sub-basins and drainage area Figure 2: Cost calculation model of the NEST program Figure 3: Measurements setting in the Cost Model

Figure 4: Abatement cost of different sectors in Expert Mode













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The Baltic Sea is the one of the most populated seas area in the world where eutrophication is an environmental problem. Excess nitrogen and phosphorus enrichment lead to eutrophication and are generally regarded as the greatest threat to the ecosystems of the Baltic Sea (Elofsson, 2000). Although there is an international agreement that nutrient input to the Baltic should reduced, the measures taken so far have not resulted in major reductions in nutrient inputs nor in environmental improvements (Gren HWDO, 2002).



In Water Words Dictionary “eutrophication” is defined as the degradation of water quality due to enrichment by nutrients, primarily nitrogen (N) and phosphorus (P), which results in excessive plant (mainly algae) growth and decay. The term Eutrophication comes from the Greek word “eutrope”, where ‘eu’ means well and ‘trope’ means nourishment (Andersen, 2005). Eutrophication is a process occurring due to increased nutrient loads to a water body. It is a common feature all round the world with serious consequences for ecosystems, including the life of man (Elofsson, 2002). With a continuously changing world, also the problem of eutrophication change and new areas are affected. Eutrophication is defined by the European Union as follows-“the enrichment of water by nutrients, especially nitrogen and/or phosphorus, causing an accelerated growth of algae and higher forms of plant life to produce an undesirable disturbance to the balance of organisms present in the water and to the quality of water concerned” (Andersen, 2005).

Eutrophication is a natural process in the continuously changes of lakes, estuaries and seas. Humans are involved in the process of increasing eutrophication by their activities which are supply of nutrients and organic substances to the aquatic ecosystem. There are two types of nutrient sources: point and non-point sources. Point sources are those where nutrients discharge from some specified sources and the nutrient effluents are discharged directly into the coastal water and we can take direct treatment action. Non-point sources are those where nutrients comes from the relatively large upstream areas and their discharges into the costal water follow much more complex pathways via surface and groundwater in the drainage basin (Gren HW DO,2000). Atmospheric deposition of nitrogen is another major non-point source which is approximately one quarter of total nitrogen input into the Baltic Sea (Bartnicki HWDO., 2006). It is difficult to specify any single source and to take any action directly. Nutrient inputs from non point sources like intensive agriculture, forestry, animal husbandry farmland and air pollution, as well as point sources like sewage and industrial wastewater outlets cause eutrophication and various environmental problems disrupting the natural balance of the Baltic Sea

One of the main indicators of eutrophication in water body is high biological productivity with algal blooms, high deposition and often followed by oxygen deficiency. Human add excess amounts of plant nutrients primarily N and P to the water body in various ways (Cloern, 2003). The essential nutrients causing eutrophication are nitrogen in the form nitrate or ammonium and phosphorus in the form of phosphate (Wikipedia). The accelerated growth and overcrowding of plants is due to either natural fertilizing agents that are washed from the soil or runoff of chemical fertilizer applied to agricultural lands (Wikipedia). Untreated or partially treated domestic sewage is another major source. Sewage is a particular source of phosphorus to the water body where detergents contain large amounts of phosphate. The

coastal ecosystems are more complex than open sea and include many biogeochemical elements which are sensitive to eutrophication. Eutrophication leads to an accelerated amount of phytoplankton, which causes a reduction in the amount of light reaching the surface layer and the shallow (UNEP, 2005).

Total loads of N and P have increased four and eight times respectively during the last century in the Baltic Sea (Elofsson, 2002). From 1969 to 1991 the average Secchi depth decreased a 0.05 m/yr in the Baltic Sea (Sandén HWDO., 1996). A main cause of Secchi depth reduction is the increasing concentration of algae production. It is clear that nitrogen loading has been reduced to lower the general production and phosphorus loading has been reduced to limit the growth of blue-green algae (Forsberg, 1991). Hence nutrient enrichment favours the productivity of fast growing algae (Bergström, 2005) and the extensive algal blooms. An inverse relation between the mean secchi depth and the rate with nitrogen and phosphorus loads in the surface layer as observed in the Baltic Sea. Another study of Finnish Institute of Marine Research (FIMR) found that during the last hundred years the water transparency decreased by almost 50% in the Baltic Sea (Laamanen HWDO., 2005). In 1988, the ministerial declaration of HELCOM decided that the nutrient discharge should be reduced by 50%, by each country in the Baltic Sea drainage area as early as possible but not latter than 1995 (HELCOM, 1988). From 1998, HELCOM emphasizes the Joint Comprehensive Program (JCP) which will be ensured to avoiding double work and in 2003 they realized the importance of social and economic aspects of nutrients reduction (HELCOM, 1998 & 2003). Nutrient reduction is one of the most effective procedures to solve the eutrophication problem (HELCOM, 1988). Since all countries, i.e. the four Nordic, the three Baltic countries, Poland, Russia, Germany and the European Union (EU) have signed the Helsinki Convention and agreed to reduce the load with 50%. They all have a responsibility to take action to improve the Baltic situation. Except Russia all of other countries are now also members of the EU and have to follow the EU Water Framework Directives (WFD). According to the WFD every countries has responsibility to protect the watershed within their territory. One main objective of the EU Water Framework Directives is maintain a ‘high status’ in waters where they exist, preventing any deterioration of existing status of water and achieving at least good status by 2015 (WFD, 2000).

Given the biophysical and socio-economic characteristics of the Baltic drainage basin it is clear that an already naturally sensitive and vulnerable area is under increasing environmental pressure (Turner HWDO, 1997). The Baltic Sea is the one of the largest shallow and almost landlocked brackish water bodies in the world surrounded by a large number of cities and regions with intensive agriculture and industry and a busy shipping lane (Andersen, 2005). The ecosystem of the Baltic Sea is unique and fragile with naturally low number of species and very sensitive to all kinds of pollution. All countries with a coastline have an interest in the sustainable management of the costal resource of the Baltic Sea. Because the Baltic Sea is a common natural resource for which the riparian states acknowledge a common responsibility, as expressed in the Convention of the protection of the Marine Environment of the Baltic Sea (Partanen-Hertell HW DO, 1999). Population growth, increasing rate of urbanization, industrialization and intensification of agriculture, and increasing emphasis on economic growth maximization has generated an increasing degree of environmental pressure (Turner HWDO., 1997)



Fig1: The Baltic Sea area, sub-basins and drainage area (Source: HELCOM, 2001)





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The purpose of the thesis is to find out the cost-effective solution of transparency improvement in the Baltic Proper by the available scenarios of NEST (a decision support system for management of eutrophication in the Baltic Sea and mainly to provide basis for decision-making at international negotiations, http://nest.su.se/index.shtml) cost calculation model including nutrient loads reduction. It includes a consideration of total cost minimization as well as of partial changing of cost in different areas and sectors for the different measurements. To estimate the costs of various strategies designed for transparency improvement and the identification of the most cost-effective improvement options is also within my goals. A special focus is on comparison of the cost of measurements between Sweden, Poland and Russia. For this purpose it is necessary to test all possible scenarios. Poland is one of the largest polluters and the most populated country within the Baltic catchment area. Sweden has longest coast line to Baltic Sea but few inhabitants and Russia has a totally different political system from the other contracting countries and is a HELCOM country that is not within the EU. Beside this, these three countries have different economic and political systems. GDP and living standard of these countries are also very different. Initially, we can guess that all measures would not be cost-effective for these countries. Different measurements would be cost-effective in different areas and within a country certain measurements would most cost-effective but others relatively less.



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The Baltic Sea is situated between 540 -660 N, and 10030´-310 E. It is located in Northeastern part of Europe, bounded by the Scandinavian Peninsula, the mainlands of Northern Europe, Eastern Europe, Central Europe, and the Danish islands. It drains into the Kattegat by way of the Öresund, the Great Belt and the Little Belt (Fig. 1). Kattegat then continues in the Skagerrak into the North Sea and the Atlantic Ocean. The Baltic Sea is artificially linked to the White Sea by the White Sea Canal and directly to the North Sea by the Kiel Canal. More than 200 large rivers bring fresh water from 14 countries around the Baltic Sea, which makes it the largest brackish water body in the world, consisting of fresh upper layers of water and more saline ones further down (Wikipedia; HELCOM, 2005; Bonsdorff HWDO., 2002; Eliasson, 2004). The condition of these layers is determined by the inflow of salt water from North Sea, particularly during winter storms, and the continuous discharge from the large rivers. Since the Baltic Sea has only a very narrow link with the North Sea, the exchange of water is limited; it typically takes about 25-30 years for all waters to be replaced (HELCOM, 2004). Its surface area is 415000 km2 and the volume is 21,721 km3 with average depth of ~52.3 meters (Table 2). The Baltic Sea is a unique marginal ecosystem with a surface salinity ranging from 1-2 psu in its inner parts up to 25 psu at its entrance to the Skagerrak (HELCOM, 2006). This salinity is much lower than that of ocean water where usually ocean water has a salinity 35 psu.

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The Baltic Sea has five main basins: Baltic Proper, Bothnian Sea, Bothnian Bay, Gulf of Finland and Gulf of Riga. The Kattegat is only transition zone to the North Sea (HELCOM, 2005). Within these basins the Baltic proper is the largest basin (Fig 1). It is directly connected with all other basin by the water circulation (Kautsky HWDO., 2000). The Gulf of Bothnia consists of the Bothnian Bay, Bothnian Sea and Archipelago Sea, with a total catchment area 490440 km2 (Table 1) and brings 193 km3 fresh water per year to the Baltic Sea (Table 2). Most of the areas of Gulf of Bothnia are in Sweden and Finland which is 59% and 40% respectively (Table 1). The catchment area of the Gulf of Finland comprises 413100 km2 and major parts of this sea are in Russian territory which is about (276100 km2) 67% of total catchment area (Table 1). It has a 29,600 km2 sea area in the Baltic (Table 2). Two large rivers the Neva and the Narva are in the catchment area of Gulf of Finland and they are loading a large proportion of nutrient in the Baltic Sea, especially Neva which is the largest river in Baltic catchment area and drains from Russian territory directly into the Gulf of Finland (HELCOM, 2004). There is a 127840 km2 catchment area in the Gulf of Riga and its major parts in Latvia which about 39% of total catchment area and second largest catchment area are in Russian territory which about 18% (Table 1).

7DEOH7KHFKDUDFWHULVWLFVRIVXEEDVLQVNP Sub-basin Sea area

(km2) Sea volume (km3) Maximum depth (m) Average depth (m) Fresh water input (km3/yr) Baltic Proper 211,069 13,045 459 62.1 100 Gulf of Bothnia 115,516 6,389 230 60.2 193 Gulf of Finland 29,600 1,100 123 38 100-125 Gulf of Riga 16,330 424 >60 26 18-56 Belt Sea/Kattegat 42,408 802 109 18.9 37 Total 415,266 21,721 459 52.3 Source: HELCOM, 2001

While it is important to consider threats to the Baltic marine environment as a whole, the different parts of the Sea also need to be addressed individually. The sub-basin catchment area of the Baltic Proper is the largest including territories belonging to all the contracting parties except Finland (Fig. 1 and Table 1). Three of the seven largest rivers around the Baltic enter the Baltic Proper. The Baltic Proper receives loads both directly from the countries, nearby to the basin and indirectly from other countries due to the water-exchanges between different basins. It receives about three-fourth of both total nitrogen and phosphorous, and agricultural loads to the Baltic Sea (Elofsson, 2002).

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The catchment area of the Baltic Sea is 1720 000 km2 which is more than four times larger than the water surface area (UNEP, 2005; Kautsky HWDO. 2000). Ninety-three percent of the total catchment areas are belongs to the nine riparian countries (Table 1): Denmark, Estonia, Finland, Sweden, Russia, Lithuania, Poland and Latvia situated almost entirely within the catchment. The remaining 7% lies within the territories of five upstream states, which have a relatively insignificant influence on the Baltic Sea. Less than half of the land area in Denmark and only one-eighteenth in Germany is situated within the catchment. Only a very small fraction of the total area of the Russian Federation, including St. Petersburg, Leningard oblast and Kaliningrad, is found within the catchment (1.7%; Table 1&3). The land use in the basin is dominated by forests, covering about 50% of the area, followed by agricultural land (about 25%), wetlands, inland water bodies and other land use (Jansson, 2002). Most of the arable land and pasture land of the Baltic Sea are in the Baltic Proper drainage area which is around 64% and 48% respectively of total area (Sweitzer HWDO, 1996).

7DEOH3RSXODWLRQDQGFRXQWULHVFDWFKPHQWDUHDLQWKH%DOWLF Country Population (Millions)

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Country area (km2) Country’s area within catchment (%) Poland 38.1 312700 99.7% Russian Fed. 10.2 17100000 0.02% Sweden 8.5 450000 97.8% Finland 5 338200 89.1% Denmark 4.5 43100 72.2% Belarus 4 207600 40.4% Lithuania 3.7 65200 100% Germany 3.1 357000 8% Latvia 2.7 64600 100% Ukraine 1.8 603700 2% Czech Rep. 1.6 78900 9.1% Estonia 1.4 45100 100% Slovak Rep. 0.2 49000 4.1%

Source: HELCOM, 2001 and UNEP, 2005

The catchment area holds a population of approximately 85 million inhabitants, with 29 large cities and more than 15% of the world’s total industrial production (Table 3; UNEP, 2005; HELCOM, 1994; Kautsky HW DO., 2000). Almost 15 million people live within the 10 kilometres from the coast, where population densities vary from over 500 inhabitants per square kilometre in the urban areas of Poland, Germany and Denmark, to less than 10 inhabitants per square kilometre in northern parts of Finland and Sweden (UNEP, 2005; HELCOM, 2003). Expanding to a 50 kilometre distance from the coastline, population remains the dominant feature of the landscape. Forty three percent of total populated area and thirty one percent of total population within this zone.

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Nutrients and hazardous substances originating from cities, farmland, commercially management forests, industries, transport and other human activities from whole catchment area, drain into the sea via rivers. Emissions and discharges from shipping and fish farms also directly enter the sea.

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Sweden: Bothnian Bay 1.9 1.3 2.6 5.8 0 0.5 0.5 Sweden: Bothnian Sea 6.3 4.5 3.1 13.9 0.2 1.0 1.2 Sweden: Baltic Proper 11.5 31.4 27.7 70.6 0.5 0.6 1.1 Poland 21.8 108.5 102.9 233.2 6.5 11.9 18.4 Russia Kaliningrad 1.0 5.1 9.9 16.0 0.1 0.5 0.6 Russia St Petersburg 9.6 7.7 4.5 21.8 0.3 2.5 2.8 Total 125.0 370.3 232.7 728.0 13.1 23.7 36.8

Source: Gren HWDO, 2000

Annually 719-1527 ktons of nitrogen and 53-80.6 ktons of phosphorus discharge form riverine load, costal point sources, and atmospheric deposition (Stålnacke, 1996; HELCOM, 2000). About 75% of the nitrogen enters into the Baltic Sea as waterborne input and 25% as airborne input. The sewage accounts for about 33 percent of total nitrogen and 80 percent of the phosphorus in the entire Baltic Sea drainage basin (Gren HWDO, 2000). Agriculture and managed forestry contribute about 60% of the waterborne nitrogen inputs to the sea, 28% enter from natural background sources and 13% comes from point sources (Elofsson, 2002; HELCOM, 2000). Poland contributes most of the nutrient load (Table 4) and is inhabited by approximately half of the 85 million people (Table 3) that live in the area of the Baltic

drainage basin. The per capita load is not dramatically different between, for example, Sweden and Poland, in spite of much more advanced sewage treatment in the former country. The airborne nitrogen originates from emissions from inside as well as outside the Baltic Sea catchment area and from ship traffic (Elofsson, 2002). Wulff HWDO. (2001) show that by the denitrification and sediment burial, internal nitrogen sink almost equals the external nutrient load and there are about 18 ktons of phosphorus release from anoxic sediments per year (Savchuk, O. P., 2005). The algae growth in the Bothnian Bay is phosphorus limited, while the Bothnian Sea is partly phosphorus and partly nitrogen limited. All other basins are nitrogen limited though the Kattegat is nearly balanced (Table 5; HELCOM, 2003).

The main sources of nutrients inputs into the Baltic Sea are:

Direct atmospheric deposition on the water surface of airborne nitrogen compounds emitted in combustion of fossil fuels, heat and power generation, traffic and waterborne nitrogen compounds from animal manure and husbandry. Land run-off and leakage of waterborne nutrients transported by rivers to the sea, mainly from arable and forest land (Turner HWDO, 1997; HELCOM, 2006). Discharges of treated, untreated or insufficiently treated sewage and insufficiently treated industrial waste water, including stormwater, from municipalities and individual household inland or on the coast (HELCOM, 2005).

Discharge of waterborne phosphorus compounds in municipal sewage and industrial waste water industry from inland sources and especially directly in the coastal area. Industrial waste water can contain phosphorus from production of fertilizers, pulp and paper, steel and metal, and mining (HELCOM, 1998; 2003; 2004; 2005; 2006; UNEP, 2005).

Today, intensive monitoring is coordinated in all the surrounding countries and periodic evaluation of the state of the Sea is carried out under the auspices of the HELCOM (Stålnacke HWDO, 1998). This and other international agreements on nutrient reduction have so far not resulted in major changes of nutrient input or in improved environmental conditions. There are several reasons for this. These countries differ in nutrients emissions to different parts of the Sea and in costs for nutrient reductions (Gren HWDO., 2000). A large proportion of nutrient loads come from agriculture, where national legislation is not as efficient as for the point sources and where many measures should be made. HELCOM would like to get clean water, natural levels of algal blooms, natural distribution and occurrence of plants and animals, natural oxygen levels of ecological status to overcome from the eutrophication (HELCOM, 2006). For this purpose HELCOM have a view to reduce 13% and 52 % of nitrogen and phosphorus loads respectively to the Baltic proper.

To protect the marine environment, HELCOM has identified over 100 environmental hotspots within the catchment area (Bonsdroff HW DO., 2002; HELCOM, 2003). Most of them are hotspots related to eutrophication. Since the 1970’s HELCOM has taken different type of action to reduce pollution by nutrients in all sectors, including industry, municipal waste water treatment and agriculture Gren HWDO, 2000. But the decrease in discharge of nutrients is not reflected in the basin-wide status and no radical improvement in the Baltic Sea scale of its ecosystem has taken place. Therefore there still is need for further action including cost-effective schemes to reduce nutrient enrichment which would give maximum reduction effects.

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The causes and consequences of the Baltic Sea eutrophication are well documented and qualitatively understood as a result of complex interplay between man-made impacts and natural climate-driven variations. At the early stage of 1900’s the Baltic Sea changed from an oligotrophic clear-water sea into a eutrophic marine environment (HELCOM, 1998). Chlorophyll-a concentration, phytoplankton species composition, phytoplankton blooms, state of the benthic macrofauna and deep-water oxygen conditions indicate the eutrophication situation in the seawater (Partanen-Hertell HW DO, 1999). The effects of nutrients have been documented on a long time scale in the Baltic Sea, not only locally, but also in large, open sea areas (Wulff HW DO, 2001). Eutrophication gives rise to an increased rate of oxygen consumption, decreased oxygen concentrations and increased frequency of oxygen depletion but also supersetoration during blooms. In the 2001 and 2002 observed oxygen concentration in the Baltic Sea is below 2 mg l-1 and oxygen free bottom water found in large parts of the Baltic Proper (Ærtebjerg HW DO., 2003). The nitrogen and phosphorus loads come from the land, via rivers, into the Sea and directly by the communal and industrial sewage discharge. In the 20th century, an increasing discharge of nutrients led to reduced water transparency and fewer large algae in deep waters, as well as an increase in the occurrence of oxygen depletion (Eliasson, 2004). At present, nutrient levels in the seawater are much higher than they used to be and due to eutrophication, the water is generally less transparent than it was fifty years ago (HELCOM, 2001). It is well known that the mircroalgae are widely distributed in the Baltic. In the time perspective of the entire 20th century, primary production has increased (SandénHW DO., 1996). In terms of responses to eutrophication, the red and brown algae are generally considered to be favoured by eutrophication in many areas (Bergström, 2005). Nitrogen fixation by planktonic cyanobacteria occurs in a coastal ecosystem. But rates of nitrogen fixation are not sufficient to fully alleviate nitrogen limitation (The national Academy of Science, 2000).                  

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Sub-basin Secchi Depth (m) DIN DIP Chl-a

Target Present Target Present Target Present Target Present

Bothnian Bay 5.6 5.6 5.3 7.1 0.15 0.04 1.5 1.8 Bothnian Sea 6.8 6.6 3.0 2.7 0.30 0.17 1.5 1.0 Gulf of Finland 6.0 4.1 3.8 8.8 0.45 0.90 1.8 4.9 Baltic Proper 6.8+/-0.7 5.9+/-1.5 3.3+/-0.4 3.3+/-0.3 0.41+/-0.1 0.55+/-0.1 1.7+/-0.5 2.5+/-0.2 Gulf of Riga 4.5 3.4 6.0 11.2 0.20 0.85 1.7 5.1 Kattegat 7.9 8.2 6.8 8.6 0.60 0.59 1.9 1.8 Source: HELCOM, 2006

Cyanobacteria with their nitrogen fixing ability can use available phosphorus for growth and compare well with other phytoplankton (The national Academy of Science, 2000). They are, however, found in waters with high concentration of phosphorus and fairly common in eutrophic waters. In waters with a nitrogen/phosphorus ratio close to, or exceeding, the Redfield ratio (16N:1P), cyanobacteria are usually not dominant (Gren HWDO, 2000). However, when all available nitrogen has been consumed by phytoplankton, cyanobacteria thrive and can form massive bloom if only phosphorus and necessary micronutrients as iron and molybdenum are present in sufficient amounts. Cyanobacteria in turn switch the N/P ratio again by depleting phosphorus and adding new nitrogen. In the Baltic Sea, diatoms and dinoflagellates dominate the spring phytoplankton bloom (Borgendahl, 2006). The Baltic proper is a nitrogen-limited area in the Baltic Sea. The strength of harmful and toxic cynobacterial blooms has increased to level to raise wide public concern. Currently, the poisonous blooms annually limit the recreational and economic use, and moreover, represent a clear health risk for humans and domestic animals (Swedish Environmental Protection Agency, 1994).

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A Secchi depth measurement is a method of indirectly determining biological production in the water body. It is a procedure that indicates the amount of particulate material in the surface layer. It can also be used to assess the long-term changes of primary production. To understanding and determining underwater visibility, it is a simple and widely-used suitable method which has been in use, during the last century (Hou HWDO, 2007; Sandén HWDO 1996). According to Preisendorfer (1986) Secchi depth depends on following 10 factors: amount of attenuating material; optical state of the sea surface; reflected luminance of the sky;

reflectance of the body of water; disk reflectance; diameter of the disk; altitude of the sun; immediate height of the observer over the surface of the rater; adaptation luminance; and shadowing. In practice amount of attenuating material in the water body is mainly effecting the Secchi depth measurement (Sandén HWDO 1996). If the intent of the measurement is simply to obtain transparency information, then the Secchi depths can be used without problem. A Secchi depth value should be considered nothing more or less than a simple index of the clarity of a body of water. We know there is strong and negative relationship between Secchi depth and the amount of algae in the water (Savchuk, 2006). This relation is based on the idea that algal particles affect the presentation of light into the water and therefore the Secchi depth. In essence, the light entering the water will be either absorbed or scattered by particles, dissolved coloured matter, and the water itself. As the attenuation of light by dissolved coloured matter or particles increase, the Secchi depth decrease. This inverse relationship produces the hyperbolic curve when Secchi depth is plotted against potential attenuating substances, such as algal chlorophyll, colour, turbidity, or suspended solids (Carlson HWDO., 1996).

During the 20th century, water clarity of the Baltic Sea has decreased dramatically because of extensive human activities (HELCOM, 2006). Water transparency measured by Secchi depth is proposed to be considered as an indicator for clear water. The Baltic Sea had a high level of water transparency in the beginning of the 20th century which was around 10 m and it has reached the poor or bad condition in 2006 (Table 6).

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Region Water Transparency (m) in

1903 Water Transparency(m) in 2006 Bothnian Sea 10 5.5 Bothnian Bay 7.5 5.1 Gulf of finland 8 4

Northern Baltic Proper 9.5 4

Western Baltic Proper 8 6

Estern Baltic Proper 9 6.3

Southern Baltic Proper 8 6.2

Kattegat 10.3 8.2

Source: HELCOM, 2006

During the last hundred years transparency level has decreased dramatically in the different areas of Baltic Sea, with an average of around 5 m (Table 6). During the last 10 to 15 years, transparency level has been nearly stable in the Kattegat, southern and eastern Baltic Proper, the Bothnian Sea and the Bothnian Bay (HELCOM, 2006). There are seasonal variations of the water transparency (Renk HWDO., 1991). During winter, low light and high wind energy slow down primary production for this reason transparency situation is slightly better than in the summer time (Wulff HWDO, 2001).

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From May 2004, the Baltic Sea became an almost completely internal sea of European Union (EU) as the Baltic States and Poland became parts of the EU, leaving only the Russian metropolis of St Petersburg and the enclave of Kaliningrad Oblast as non-EU areas (Brodin, 2003). The European Union has great influence on the Baltic Sea area and the Baltic Sea region needs to develop into a European major region with social and economic structures which are characterized by growing homogeneity rather than by increased disparities. Through HELCOM, countries have realized the eutrophication problem in the Baltic Sea, but they have some constraints to overcome the problem. One of the main constraints is different economic and political structures of these countries (Bolin HW DO, 2005). It is important to promote cooperation and exchange of experience among the sub-regions around the Baltic Sea as well as ensuring the creation of new partnerships to solve the problem. It also needs to represent the interests of the sub-regions towards national governments as well as European and international organization.

The living standard varies quite considerable between the countries of the area and in some cases, even within the countries (Partanen-Hertell HWDO, 1999). There are clear distinctions between countries like Poland, Russia and Sweden with different economic structures. Russia has transitional economy some are centrally planned and some are private, while Sweden has a market economy (Szrubka, 1999; Gren HWDO., 2000). Before 1990, HELCOM could not take effective action against the environmental degradation because of different political situation of these countries. A major reason for this limited cooperation was that the Communist Party of the Soviet Union who did not allow transnational contracts to flow freely during its time (Karlsson, 2004). The end of the Cold War had considerable repercussions for the Baltic Sea region, including the development of transnational relations. From 90’s, the political situation of HELCOM countries are more liberal than previous time especially in the three Baltic States, Poland and Russian federation (Former Soviet Union) (Karlsson, 2004). Russia has an illiberal democracy or managed democracy and industrial feudalism or bureaucratic capitalism of economic situation (Riasanovsky HWDO, 2005).

For nutrient reduction the states have to make large efforts in different ways. For example, they have to compensate their present interest for their (continuous) future benefit. For effective and efficient nutrient reduction the main steps should be taken by the countries: to take joint action rather than individual. In the procedure of expenditure, the most important question is how to expense available funds. The solutions should be either cost minimization or utility maximization (Samuelson HWDO, 1995) which means that they should use the fund efficient way i.e. cost would be minimum for a specific level of nutrients reduction or nutrients would be reduced maximum by the available funds. In a public policy context, welfare economics can be extremely useful where one must make relative judgments about alternative public policies that affect society and select a ‘best’ or a number of ‘bests’ (Szrubka, 1999). Formally, welfare economics involves the ordering or ranking of alternative states of world, such as alternative outcomes that result from different policy actions based on a value judgment or criteria, e. g. economic efficiency (Samuelson HWDO, 1995).

In the Baltic Sea, the HELCOM countries play the main role for nutrient reduction as well as maintaining the good status of water body (Szczerba, 2004). There are eleven HELCOM countries working with the Baltic Sea status with their different problems and interests (Partanen-Hertell HW DO., 1999). To determine the low cost policy for transparency improvement would not be an exact task even though all of them have the same goal to improve the Baltic status. To determine the low cost policy for an improvement of water quality: the size of nutrient loads, the relationship between loads and environmental change and the relationship between human activities within the drainage basin and the nutrients loads to costal waters are needed (Gren HWDO., 1997). The transparency could be improved by the nutrient reduction which is related to expenditure side. HELCOM countries should reduce the nutrient level in the Baltic Sea in different ways. Effective actions against the nutrient loads are determined by experts who are working in HELCOM and other environmental institutions for the improvement of the Baltic environment.

Experts have specified some key factor/sectors which are the main source of nutrient loads to the Baltic Sea. These are, as follows changed land use, NOx reduction, change of N spreading time, livestock reduction, reduction of fertilizes use, wetland restoration and sewage reduction.

Algebraically we can explain the transparency conditions in the following way

TC= f (TI) (1)

Where TC denotes total cost for transparency improvement, TI denotes transparency improvement in water body and total cost is a function of transparency improvement.

If we want to acquire a higher transparency level in the water body then total cost would be higher _{FHWHULVSDULEXV}

and

TI= f (NR) (2)

Where NR denotes the total amount of nutrient reduction especially nitrogen and phosphorus by the HELCOM contracting parties

If a higher amount of nutrients are reduced by the contracting parties then the transparency level would be higher in the Baltic water body FHWHULVSDULEXV

Finally We can write

NR= f (lu, NOx r, ¨1VWOUIXZUUVU (3) Where

lu denote the land use

NOx r denote the NOx (NO2=nitrite and NO3=nitrate) reduction ¨1VWGHQRWH the change in N spreading time

lr denote the livestock reduction fu denote the fertilizer use

sr denote sewage reduction

Considering the all above, the equations, can be written as

TC = f (lu, NOx r, ¨1VWOUIXZUU, sr) (4)

From equation (4), we see that all measurements have an effect on the total cost for nutrient reduction, which is done in the NEST cost calculation model. Abatement measures are assumed to have negative or zero marginal impact on each of the nutrient loads (Elofsson, 2002; eq. 3) and positive or zero marginal impact on cost (eq. 4). It indicates that if we want to reduce a higher amount of nutrient then total cost would be higher and cost for nutrient reduction would be increased at an increasing rate (Gren HWDO, 2000). The contracting parties can reduce their nutrient loads by changing their land use pattern, reduce of nitrite and nitrite, and change in nitrogen spreading time, livestock reduction, changes in fertilizer use, wetland restoration and sewage treatment.

Effectiveness of these actions depends on reduction of nutrient loads as well as cost of these actions. The cost for action in these sectors differs between regions. Some action is effective for some reason and some are not. For these reasons the most important for policy making is that action would be cost effective for nutrient reduction in their region.

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Sweden, the largest country in Northwestern Europe, lies west of the Baltic Sea. It has a 449,964 km2 territory with a population at 9.1 million (The World Bank, 2006). There is a low population density (20/km2) except in its metropolitan areas where over 80% population lives (Partanen-Hertell HWDO, 1999). The Swedish coastline 2150 km length extends all the way from the northernmost part of Bothnian Bay to the Skagerrak. Almost 85% of population is living in the southern half of the country (Löwgren HWDO, 1994). Sweden has a 440,040 km2 total catchment area in the Baltic region (Table 1), where 40% of the total catchment area belongs to Bothnian Sea, ~ 26% to the Bothnian Bay, ~14% to Kattegat, and only about 0.6% of Swedish territory belongs to the catchment area of the Sound (HELCOM, 2004). There are ~70 major rivers included in the Swedish national monitoring programme. Of these, 10 rivers drain into the Bothnian Bay, 17 to the Bothnian Sea, 15 to the Baltic Proper and rest of them are in the Sound and KattegatStålnacke, 1996). Most of the part of these drainage areas is covered by forest. There are 35000 and 1150 tons of nitrogen and phosphorus discharged per year, respectively, by these rivers to the Baltic Sea (Nilsson, 2006).

Swedish economy and the political situation are relatively liberal. In 1980’s and 1990’s Swedish economy has been more liberalized than previous time and it has continued in the beginning of the 21st centaury (Henrekson HWDO, 2003). From 1960-1994 it was a member of the European Free Trade Association and in 1995, Sweden joined the European Union. It is a highly industrialized country with one of the highest living standards in the world (The World Bank, 2006). It is mainly an export oriented market economy featuring a modern distribution system, excellent internal and external communications, and a skilled labour force (OECD, 2005). Present Swedish GPD is 359 billion US dollars, and GDP growth is 3.3% (2005, IMF). The inflation has been very low in last few decades and it is a welfare state with the economic liberalization is more similar to other European countries with comparatively high tax rates (The World Bank, 2006).

As stated in the major Government Bill from 1991, the main goal of the Swedish environmental policy is “To protect people’s health and to preserve the biological diversity, to manage the extraction of natural resources so that they can be used in the future, and to protect the natural and cultural landscape” (Szrubka, 1999). Sweden has a highest Environmental Quality (EQ) index, i.e. ~78 in the EU (Giannias, HWDO., 2003). It has already taken some steps to improve the Baltic situation (Gren, 1994).

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The Republic of Poland is the official name of Poland which is situated in Central Europe. It has border with Germany, Russia and also shares a maritime border with Denmark and Sweden. Nowadays, it is a liberal democracy with a parliamentary republic government system. After the fall of communism, Poland has steadfastly followed a liberalising economic policy and today stands out as an example of the transition from a state-directed economy to a primarily private owned market economy (OECD, 2000). Current Polish GDP is ~303 billion US dollars, but it is higher in PPP (purchasing power parity) term which is ~567 billion US dollars (IMF, 2006). Polish GDP growth rate has 6.1% in last year and the government set a target GDP growth at 6.5-7% for this year (OECD, 2006).

Poland is in the southern part of the Baltic Sea and it is the most populated country within the Baltic catchment area. More than 60% of the population live in urban areas (HELCOM, 2004; Granstedt HWDO., 2004). Almost all of Poland’s territory belongs to the catchment area of the Baltic Proper. Over 38 million people live in this catchment area (313.103), with 123 inhabitants per km2. Poland has almost 50% of the total agricultural area in the Baltic Sea region, intensification of Polish agriculture with increased livestock density and the use of nitrogen fertilizer will undoubtedly aggravate nutrient leakage and eutrophication (Bolin HW DO., 2005). There are 2,900 industrial plants discharging their wastewater is directly into surface water and the most sever industrial polluters of the Baltic catchment area are located in Poland (Löwgren, 1994; Partanen-Hertell HWDO., 1999).They are discharging 233.2 & 18.4 thousand tons of nitrogen and phosphorus, respectively, per year which is 28.5% of total loads in the case of nitrogen and 50% of total loads in the case of phosphorus (GrenHWDO, 2000; Table 4).



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The Russian Federation, the present name of Russia, is the largest country in the world. It is a transcontinental country in Asia and Europe with an area of 17 million km2 and shares land borders with all of the Baltic States, Poland and Finland. It has a very low population density (8.3/ km2) with a total of 142 million people (http://en.wikipedia.org/wiki/Russia). 

During nearly three-quarters of a century, communist ideology, the Communist Party and the Communist direction constituted the outstanding characteristics of Soviet Russia, that is, of the Union of Soviet Socialist Republics. In the communism period they had their own policy about the Baltic Sea which was different from other countries of the Baltic catchment area. Economical restructure started in 1985 when President Gorbachev came to power, though it was too late to restructure the system without financial support from West. At midsummer in 1988 he told a specially convened party conference in Moscow that he sought ‘a new image of socialism’ through ‘democratizing our government’ (Palmer, 2005). In July 1991, the Communist Party had lost its legal claim to its monopoly of power, dropped

Marxism-Leninism as its official ideology and transformed itself into a party committed to a market economy and multi-party politics (Riasanovsky HW DO, 2005). Now Russia is a semi-presidential federal republic country. After the breakup of the Soviet Union, Russia faced a financial crisis due to their change of economic system from centrally planned economy to market economy. After 1998 their economy started to recover and from 1999 Russian economy has had a rapid expansion. Due to increasing service production and industrial output, the Russian GDP grow by an average of 6.7% annually from 1999-2005. Now Russian GDP is 763 billion US dollars and per capita GDD is 6856 US dollars (The World Bank, 2006). Russia is a permanent member of the United Nations Security Council. The condition of the agricultural sector in this Baltic Region is far from an EU “standard”. This is to some extent because of the after effects of the devastating system of huge collective farms in the former Soviet Union (Bolin HWDO, 2005).

The Kaliningrad region of the Russian territory belongs to the Baltic Proper catchment area, with 200 km length of coastline (Wulff HWDO, 2001; HELCOM, 2004). The Saint Petersburg District area of Russian territory is included in the Gulf of Finland catchment area and around 80% of this total area is drained by river Neva (UNEP, 2005). Neva and Narva are the two largest river basins within the Russian territory. There are 52.5 and 2.4 ktons of nitrogen and phosphorus load, respectively, per year via Neva, 6.5 and 0.53 ktons of nitrogen and phosphorus load, respectively, per year via Narva (Nilsson, 2006). Total nitrogen loads to the Baltic Sea are 79 ktons per year by Russia where 77 ktons are discharged to the Gulf of Finland. For total phosphorus the load is 4.6 ktons per year to the Baltic Sea, whereas 4.5 ktons are to the Gulf of Finland (HELCOM, 2004)

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NEST is a Decision Support System that can be used for scenario analysis of transparency improvement in the Baltic Sea. Thus, it gives the scenario on the cost for transparency improvement via nutrient reduction for each country and how much transparency would be improved in each basin. This should only be interpreted as an indication of which countries should eventually bear the costs (Schou HW DO, 2006). This system is designed as a system distributed on the web and uses JavaTM2 web stat technology (Savchuk, 2006). It was developed within the MARE (Marine Research on Eutrophication- A Scientific Base for Cost-Effective Measures for the Baltic Sea) research programme as a tool aimed at searching cost-effective nutrient reductions necessary to improve the state of the Baltic Sea (Wulff HWDO, 2001, http://www.mare.su.se). The MARE program uses a holistic approach to combine ecological, biogeochemical, physical and economic models.

Different models are used to compute the level of local eutrophication, essential for evaluations of water quality and ecological state in inshore regions where the most cost efficient measure might be realised (Wulff HWDO., 2001). The web based NEST model is the main feature for the result analysis method of this thesis paper. It has four sub-models: cost calculation model, marine/nutrient model, watershed model and fish model (Fig. 2). Cost calculation model provides tools to calculate minimum cost solutions to achieve a specific improvement in water quality in any of the seven major Baltic sub-basins. The cost calculation model is the main point of this paper for observing the scenario of the transparency improvement in the Baltic Proper.

The impact for each transparency level has an effect on the total cost where the total cost should be increased with the transparency improvement. Presently, the NEST scenarios would give the total cost for 1, 1.5 and 2 meter transparency improvement in the Baltic Proper. Nutrient reduction has an effect on the transparency improvement; the NEST model gives the scenarios that high level of nutrient reduction implies the higher level of transparency in the Baltic SeaFHWHULVSDULEXV. NEST cost calculation model is related to the watershed and marine model

for the nutrient loads and other supporting data. For the source estimation of nutrient loads,

specification of the basins and catchment area, all three models are related to each other. HELCOM

suggested the contracting countries to reduce their nutrients loads to the Baltic Sea to a certain level. For this purpose it is well known that all countries have taken different measures. According to the NEST model all measures have an effect for nutrient reduction.

Total cost depends on the respective measures of each country. In the cost model seven measures for each country are given: land use changes, NOx reduction, change of nitrogen spreading time, livestock reduction, reduction of fertilizer use, wetland restoration and sewage reduction (Fig. 3). Each measure has a different effect on the total nutrient load, total and individual cost of the countries. NEST scenarios would give the effect on the cost for the measurements.

Marine model includes tools that can be used to estimate loads of nutrients to the Baltic Sea basins from a variety of sources and different drainage basins. We can also see the concentration of nutrients in the sea. Watershed model is a model of detailed description of the drainages basin characteristics, in terms of land use, population, nutrient load etc.

In the cost calculation model, it is possible to set the mode of this model, according to the user aim. In the tools panel, one can select the expert mode and functional rules of transparency as nitrogen and phosphorus for the seven sub-basins. In the standard mode, when running the NEST cost calculation model, by default transparency rule has selected the following: transparency as function of phosphorus in Bothnian Bay, and in all other basins it has a function of nitrogen. For this paper the general mode has worked where targets and measurements could be selected for the different scenarios. For this purpose first chose the targets for different sub-basins in the Baltic. Start by selecting a desired improvement in water transparency in one or several of the Baltic Sea basins, here Baltic Proper basin. Costs and policy design are different for the different target as 1 meter, 1.5 meter; 2 meter transparency improvement cost is different in the Baltic Proper (Table 9 and Appendix Table 1 & 2). The cost of transparency improvement of a basin not only depends on nutrient abatement measures but also depends on nutrient transports.

ig 2 : C o st ca lc ul at io n m o d el of t h e N E ST prog ram (Source: NEST us er’s ma nua l)

Water transparency in the Baltic Sea has been measured from the early of 19th century (HELCOM, 1998), while reliable data of total nitrogen and total phosphorus concentrations are available only since the 1970’s (Sandén HWDO, 1996; Savchuk, 2006). For this reason the NEST program focuses for the period 1970-2000. The necessary forcing data are extracted from synoptic stations in the entire Baltic drainage area. Each catchment area supplied with data of land use, hydrology, soil type, erosion and sediment, nutrient concentrations in runoff, as well as daily temperature and precipitation data (Rahm HWDO., 2007). The total load of each nutrient to a marine basin is, in turn, determined by the emission from point and non-point sources in each catchment (Gren HWDO, 2003)

Data behind these calculations are primarily from official sources with HELCOM and EU. Baltic Environmental Database (BED) is the one on the major data source, and contains hydrographic data, river loads to the Baltic Sea from monitored and unmonitored sources, loads from point sources and atmospheric nitrogen deposition (Sokolov, 2003).

Fig 3: Measurements setting in the Cost Model (Source: NEST user’s manual)

After a target is set, measurements are selected for different countries in the case of different actions. The nutrient reduction costs are based on econometric estimates of costs for all possible measures (Gren HW DO., 1997; Elofsson, 2000). Thereafter, minimum costs are calculated for transparency improvement with both nitrogen and phosphorus reduction by using the above measures. NEST presents which measure is suitable for which region and the total and countrywise cost for a specific measure (Gren HWDO, 2000). Although overall cost for achieving predetermined water quality targets is reduced, single emission sources may face higher cost (Gren HWDO, 2003). Here we can choose a single or combinations of measures according to our goal. It could be possible also to choose whether these measures should be taken in all countries around the Baltic Sea or just in one or more countries. In present paper most of the case measurements are taken for all countries. This is a political discussion for all participating countries.



Fig 4: Abatement cost of different sectors in Expert Mode (Source: NEST user’s manual) The expert mode is a special form of NEST cost calculation model, where user has a more detailed choice of parameters used in various measures such as abatement costs and other parameters of the model also can be changed in this mode (Sokolov, 2002a). Within the model user can set targets in other way and also possible to set targets for a specific level of nutrient reduction in all sub-basins or a specific basin. Therefore, this mode gives the user to more control over the parameters. Figure 4 the third panel called Parameters in the input data panel is shown. The parameter panel gives the option to change number of parameters for all 23 sub drainage areas. If any of these are parameters selected such as Agriculture, Wetland restoration, PriceNOxReduction, PriceFertilizer, PriceSewageReduction, DrainageRetention and CostalRetention, it can be helpful for us to know the abetment cost for different countries in different measurements (Fig. 4).

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There are seven measures of transparency improvements in the Baltic Sea. Cost and nutrient load reduction by these measures differed in differ areas. The choice of measures for the calculation of cost-effective nutrient reductions is regulated by the possibility of obtaining data on costs and nutrient load impacts.



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It means that establishing efficient sewage treatment plants which will increase the nutrient cleaning capacity. By this treatment technology we can control the nutrient loads from the sewage. Large scale as well as small treatment plants should be built and the treatment should include the following purification processes: mechanical treatment, biological treatment, phosphorus and nitrogen reduction and filtration. Increased nutrient cleaning capacity at existing sewage treatment plants and/or constructing new sewage treatment plants it necessary is the cost for sewage reduction. Since the degree of connectivity varies sharply between the countries, large improvements can be achieved.



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Main source of nitrogen is via the agricultural use of fertilizers. Fertilizer should not be spread in amounts exceeding the crop’s nitrogen requirements for the growing season. In this aspect HELCOM recommend the following steps for fertilizer use: they should not be applied on water-saturated or flooded ground, nor should they be applied on snow-covered or deeply frozen ground which means that nitrogen containing commercial fertilizers should not be applied from 1st November to 15th February. Cost of fertilizer reductions are calculated as associated decreases in profits or producer surplus.



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It refers to number of cattle, pigs and poultry that may have a major effect of nutrient enrichments in the Baltic. Therefore reduction of theses livestock may be a major contribution of nutrient reduction. The cost of reducing livestock holdings, which are assumed to consist foregone profits from cattle, pigs and chicken respectively. Costs calculate as euro per head pigs, cattle and poultry.



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Reduction the nitrogen oxides especially nitric oxide (NO), nitrite (NO2) and nitrate (NO3)

from reduced use of gas and oil in ships, cars, power stations. The cost of catalysts in cars and ships and installation of cleaning technologies in stationary combustion sources are calculated as a cost of NOx reduction.

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It means that the cultivation of so called catch crops, energy forests, grass land in the available land. Catch crops refer to certain grass crops, which are sown at the same time as the ordinary spring crop but start to grow, and thereby make use of eventual remaining nutrient in the soil, when the ordinary crop is harvested. Green cover is one way to reduce nutrient losses from arable land during autumn and winter particularly in areas with light soils and mild

climate (HELCOM, 2003). Besides this it includes the change of drainage systems from open ditches to piped system. Opportunity cost of a specified land is calculated as cost of land use changes.



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It refers to changes in spreading time from autumn to spring which implies that less leaching. This due to the fact that in spring there are growing crops which can make use of the nutrients.



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It means creation of wetlands around the agricultural or other lands where nonpoint nutrient sources are located. HELCOM (1998) suggested that the maximum area converted into wetlands should be 5% of the total agricultural area. Nutrient sinks are created by constructing wetlands downstream in the drainage basin, close to the coast. Cost of creating these nutrient sinks is calculated as cost of wetland restoration. Here costs are calculated as million euros per thousand square kilometer area.

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The cost calculation model is used to determine cost-effective nutrient reductions in the Baltic Sea. In the standard form of the model, it will set targets for the Bothnian Bay, Bothnian Sea, Baltic Proper, Gulf of Finland, Gulf of Riga, Danish Straits and Kattegat and specify a set of possible measures for each country, which can be taken into consideration by the model. During the last few years, the Baltic Sea situation is quite stable nevertheless it have been taking some effective steps by the HELCOM and other international organizations, especially the EU to improve the water quality of the Baltic Sea (Gren, HW DO., 2000). Water Transparency of Baltic Proper, Bothnian Sea, Bothnian Bay and Danish Straits are about 6 m (Table 7). The nutrient concentrations affect the transparency level of water such as high concentration of nutrients indicate low levels of water transparency (Table 7).

By improving transparency in the Baltic Proper with one meter, it has an effect on all basins in the Baltic Sea (Table 7). Most of the effect is seen in Bothnian Sea, Gulf of Finland and Gulf of Riga basins which are directly connected to the Baltic proper. These inter-linked coastal basins have separate measures and loads. Dominating water circulation between these four basins affects the water clarities of each others (Elofsson, 2002; Kautsky HWDO., 2000). There is a significant effect in nitrogen concentration of all sub-basins while it does not change the phosphors concentration by the 1 meter transparency improvement in the Baltic proper (Table 7). Because of all basins are assumed nitrogen limited, except the Bothnian Bay and Gulf of Riga (Elofsson, 2002) and in the NEST cost calculation model choose the transparency rule, i.e. transparency as function of nitrogen for the most of sub-basins. Hence, very little reduction in phosphorus compared to nitrogen will occur (Table 8).

  

7 DE OH  6 LWXD WLR Q RI WK H % DO WLF 6 HD E HI RUH DQ G DI WHU WUDQVS DU HQF\ LPSU RYHPHQW LQWKH % DO WLF 3 UR SH U    Init ial s it u at io n of the Ba lt ic Se a Baltic situation af te r 1 m et er t rans p ar enc y improvem en t in t h e Baltic P rope r  al Nitrog en (S ur face M ea n concentr ation ) (µ mol/ l) Tot al Phos phorus (S ur face M ea n concentration) (µ mol/ l) T ra n sp ar en cy ( m ) T o tal Nit rog en (S ur fa ce M ean conc ent ra tion ) (µ mol /l) T o tal Phosphorus (S ur fac e M ean conc ent ra ti on) (µ mol /l) Improv em ent (m) hnian Bay 21. 43 0. 23 5. 58 19. 02 0. 23 0. 07 hnian S ea 19. 35 0. 45 5. 89 17. 69 0. 45 0. 85 ti c Proper 21. 53 1. 04 6. 32 19. 59 1. 04 0. 96 Finland 25. 57 0. 74 3. 88 21. 80 0. 74 1. 05 Riga 35. 08 0. 97 3. 04 29. 56 0. 97 0. 89 sh S trait s 21. 53 0. 89 6. 32 20. 13 0. 89 0. 67 at teg at 18. 14 0. 72 8. 17 17. 62 0. 72 0. 36

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For policy purpose it is interesting to know which measures should receive highest priority, i.e. the cost effectiveness of the measures. For a cost-effective solution, it is important to evaluate the all polluting countries and sources simultaneously. Also inter-regional pollutant transports need to be included (Elofsson, 2002). However, a cost-effective allocation of abatement between regions is likely to imply different reduction targets and cost for different regions. The present paper has investigated how the different measures affect the total costs of transparency improvement of Baltic and how the cost distribution changes between countries for those measures. Here the scenario is illustrated for minimum costs of transparency improvement in the Baltic Proper. The cost concept only refers to improved water quality by nutrient reduction. Total cost would be increased with a higher respective transparency level. It is assumed that reductions of nutrients can be continuous and increasing associated with the total cost (Gren HWDO, 1997; Gren HWDO, 2000; Gren HWDO, 2003; Elofsson, 2000; Elofsson, 2002). In this work set the target as water transparency improvement of the Baltic Proper to 1, 1.5 and a 2 meter. For example total cost would be around 57 million euro for 1 meter transparency improvement in the Baltic Proper and about 104 and 172 million euro cost for 1.5 and 2 meters, respectively (Table 8 and appendix Table 1 & 2).



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Cost (M¼\U N Reduction (%) P Reduction (%) Total Country 56.98 8.99 0.72 Sweden 5.1 3.90 0.11 Finland 0.42 4.01 3.74 Russia 18.94 27.68 0.88 Estonia 5.82 18.54 0.89 Latvia 9.06 19.51 1.13 Lithuania 11.62 23.83 2.29 Poland 5.98 2.70 0.0

Total cost for one meter transparency improvement in the Baltic Proper is around 57 millions euro if all contracting countries contribute to nutrient reduction. In this aspect total nitrogen and phosphorus are reduced by 9% and 0.7%, respectively (Table 8). Russia has the highest individual cost (~19 million euro) for their 27.7% and 0.9% nitrogen and phosphorus reduction respectively. Lithuania has to spend 11.6 million euro within their territory. In Latvia the cost is 9 million and in Poland has a 6 million euro. The cost is 5.8 million euro in

Estonia and 5.1 million euro in Sweden (Table 8). Finland has lower costs than other countries which is 0.4 million euro. Germany and Denmark cannot give a contribution for this transparency improvement in the Baltic Proper.

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Polish nutrient emissions are undoubtedly the most important ones and correspond to one-third of total nitrogen and one-half of the phosphorus load to the Baltic Sea (Gren HW DO, 1997). Here is considered how Poland affects the total cost and cost distribution of all other countries due to their specific measures. To find out this effect, the NEST cost calculation scenarios for all seven measurements in the case of Poland are tested (Table 12). By this procedure it is sorted out that only sewage reduction and fertilizer use of Poland has an effect on the cost of transparency improvement. In the following a discussion about these two measurements, how they affect the total cost and why one should these measurements is made.

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If Poland does not take any action about Sewage reduction

If Poland does not take any action about Fertilizer use (other thing same)

 Cost (M¼\U N Reduction (%) Cost (M¼\U N Reduction (%)

Total Country 60.11 9.09 58.72 8.99 Sweden 12.1 7.17 5.1 3.9 Finland 0.46 4.05 0.42 4.01 Poland 1.94 0.95 7.72 2.7 6HZDJH5HGXFWLRQLQ3RODQG

If Poland does not take any measure in sewage reduction then the total cost would be increased by 5.5% or 3.13 million euro (Table 9). For Poland the cost would be reduced by ~ 4 million euro. This will have an effect on the costs also for other countries. In this case Sweden has to increase their expense by 7 million euro. Also the costs of Finland and Lithuania increased to some extent.

Almost all of Polish territory belongs to the catchment area of the Baltic Proper basin and more than 60% of the population is concentrated in urban areas (Table 3). Poland is a significant contributor of nutrient loads by direct discharge mainly from sewage (HELCOM, 2004). From the sewage of Poland the yearly nitrogen load is about 103 ktons (Gren HWDO, 2000). If the sewage treatment plants are established at the coast it implies lower marginal cost of nitrogen reduction (0.8-4.1 euro/kg) in Poland than in other countries. Further, the large share provided by Polish nutrient loads implies that the implementation of abatement