WATER ECONOMICS DEVELOPS more and more into a new interdiscipli-nary research theme and as such also plays an increasingly important role in water policy in the Netherlands.Water policy is guided by economic principles such as cost recovery and the “polluter pays” principle, and economic instruments are commonplace in the institutional organization of Dutch water management. For example, charges are made for groundwater abstraction when threshold values are exceeded and for the discharge of pollutants into surface water, the latter going back to the Surface Water Pollution Act established in 1970. More recently, economic methods such as cost-benefit analysis (CBA) have become an integrated part of water policy decisions, such as those related to flood control policy and the implementation of the European Water Framework Directive (WFD) (EC 2000).