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The European Union’s Water Framework Directive (WFD) has “the purpose to protect and preserve water resources across the European Union to ensure future sustainable use” but is likely to add to agricultural land losses, e.g. to infrastructure, industrial estates and housing. While the environmental as well as the micro-economic benefits of the Directive - e.g. for water producers and consumers - are well established, there is a lack of knowledge as to its regional economic effects. Based on a system dynamics approach incorporating an input-output table, a regional model (POEMS) has been developed for the Emsland region in Northern Germany. POEMS has been employed to capture the economic, ecological and social effects of three WFD scenarios which reduce nitrogen pollution in local groundwater, each involving a decrease in utilised agricultural area (UAA) and an increase in rural tourism. The results are discussed in terms of regional Gross Value Added (GVA), the labour market, and demographics. It is shown that tourism is able to compensate for the losses in GVA and employment in the farming sector, but that the decrease in UAA is likely to provoke significant population decreases. The paper also describes some modelling challenges that had to be overcome, and assesses the usefulness of this analytical approach.


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