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Swedish Environmental Protection Agency Conference on environmental - - PowerPoint PPT Presentation
Swedish Environmental Protection Agency Conference on environmental - - PowerPoint PPT Presentation
Swedish Environmental Protection Agency Conference on environmental economics: Practical Application of Economics in the Environment Agency in England Dr Jonathan Fisher Economics Manager, Evidence Directorate, Environment Agency England and
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Environment Agency in England and Wales
Budget: £1.1bn pa
£0.7bn from central Govt; £0.4bn charges on regulated businesses.
11,000 Staff. Our work includes:
Regulation of major industry Regulation of waste management Illegal wastes control Contaminated land investigation and remediation
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Environment Agency in England and Wales: Work continued Competent Authority for implementing Water Framework Directive
- Water resources
- Water quality (Surface, ground, bathing)
- Water related conservation and ecology
- Fresh water fisheries and angling
Flood and coastal risk management Navigation – asset mgt
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Economics team’s priority work plan subjects:
(12- 16 FTEs + £300k pa consultancy framework)
Economic
- utput
Environment Agency Activity Water Framework Directive Water industry Water Resources mgt Flood risk mgt Climate change adaptation Corporate plan State of the Environment Regulation Illegal wastes Problem analysis
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New approaches economic instruments √
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Economic analysis
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Economic appraisal guidance
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Scrutinise contentious cases
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Research √
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EA capacity building
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Selected economic outputs
European Association of Environmental and Resource Economists: 2007 Gothenburg: How improve work between practitioners and academics Principles for economics to aid environmental decision-making A strategy for a sustainable economic recovery in a decade of difficulty Flood risk management:
£3.5bn costs of 2007 floods Long term Investment strategy Strategy for Thames Estuary up to 2100
Applicability of Real Options Analysis for appraising flood risk management and water resources investments
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Selected economic outputs
2004 & 2006: Business as usual projections for agriculture I and II
Challenges for applying CBA and environmental valuation to aid environmental decision-making in practice: review in 2008
Water
2004: 437 CBAs of water company environmental improvement schemes; and overall benefits assessment of water industry environment programme WFD: EU Wateco Guidance: Ribble Virtual case study on integrated appraisal
2010 Corporate plan and spending review analysis
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Practical Application of economics: Key issues
Prioritise resources vs high and growing demand Need first secure defence vs strong pressure on economic qus from business groups Timeliness – Long lead time for delivery Fit for purpose: Aid decision-making
Focus on options and trade offs
Proportionality Need proactively to seek efficient short cuts Consistency and coherence across activities Focused improvements in economic analysis Link with technical assessments
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Figure 1: Building Blocks of Economic Analysis to deliver outcomes
Benefits: £ and non-£
Costs of measures Quantify outcomes of options Qualitative description of problem and impacts of options
Institutional (Decision- making, Governance, competition/ markets, market failures); economic instruments and behaviour change
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Costs and trade offs = Most important
Big concern over costs of regulations to business
Pressure for de-regulation - or rather better regulation Government initiatives: Red Tape challenge => need greater justification Environment Agency initiatives How costs of env regs compare with other regs?
Calls for clear long run environmental signals
What does this mean in practice? How achieve? Evidence base for this (eg state of the environment)
Water Framework Directive: Disproportionate Cost assessment:
focus on measures of costs and affordability esp for water industry and agriculture
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Analysing Costs and trade offs: Key issues
Robust costing of options = key first priority Need technical scrutiny of industry claims about costs esp where over-estimation by pressure
groups and monopoly water companies
Highlight high and rising marginal costs
Focus on key trade offs and choices between options
=> Benefits qu “Is an option worth the extra costs”?
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Water Benefits Strategy
Short run (2012/13):
Make best use of available benefits estimates Research to fill gaps where quickly possible
Medium term (by 2014/15):
Apply flexibly our benefits evidence and assess conflicting evidence from 3rd parties
Long term (from 2016 – 2019):
evaluate experience develop new tailored studies for next round of River Basin Management Planning
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Proposed Framework for Use of Comprehensive Assessment of water benefits
For each Water body category
Options
Changes in pressures
Changes in water body state Environmental Outcomes Ecosystems Services Latest thinking Available evidence
- Guidance
- Valuations
- Beneficiary estimation
Draft comprehensive framework for Catchment appraisals – Next Steps
- Appraisal Summary Table (Qualitative – Quantitative – Monetary) + Guidance + Illustrations
- Trial in pilot catchments for various water bodies by types (rural/urban) + review
- Fit for purpose user friendly terminology
Basic Appraisal
In-depth review: contentious cases
3rd Party Evidence: Options, issues/problems Benefits, costs + affordability
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Developing a Comprehensive Assessment of water benefits: Specifying outcomes and aligning with available evidence
Environmental outcomes (from latest thinking + Ecosystems services)
Crops/ commercial fisheries + shellfisheries Abstracted water/value of water Property prices/economic development/tourism Greenhouse gases and Air pollutants remediation Health Flood risks Sewer flooding Angling/ Contact recreation/boating Informal bankside recreation Low flow alleviation Natural habitats, wildlife, inverts, fish Cultural Heritage Aesthetic Spiritual Folklore Education Altruism Distributional issues
Market Benefits:
- Water and waste water treatment costs
- Other market benefits
- Bathing waters (tourism and economic development)
Benefit Categories
Health benefits Bathing waters illness; chemicals
Greenhouse gas values and air pollution costs
Flood risk impacts
Other Non-market Use benefits
Non-Market Non-use Water Benefits
Disaggregated benefits for specific target groups
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Monetised Non-market Benefit values: Initial DRAFT work in progress
Table 1. Rivers – WTP (£/km/year) by River Basin District and status change, 2012 prices River Basin District Bad to Poor Poor to Moderate Moderate to Good Lower Central Upper Lower Central Upper Lower Central Upper Anglian 14.1 17.2 20.3 16.2 19.8 23.3 18.8 23.0 27.1 Dee 12.7 15.4 18.2 14.5 17.7 20.8 16.7 20.4 24.1 Humber 14.5 17.7 20.9 16.7 20.4 24.1 19.5 23.7 28.0 North West 15.3 18.6 22.0 17.6 21.5 25.4 20.6 25.1 29.6 Northumbria 12.0 14.7 17.4 13.7 16.8 19.8 15.8 19.3 22.8 Severn 13.0 15.8 18.7 14.8 18.1 21.3 17.2 20.9 24.7 Solway Tweed 8.9 10.9 12.9 9.9 12.1 14.3 11.3 13.7 16.2 South East 17.7 21.5 25.4 20.5 25.0 29.5 24.0 29.3 34.5 South West 11.2 13.6 16.1 12.7 15.5 18.2 14.6 17.8 20.9 Thames 25.0 30.4 35.8 29.4 35.8 42.2 34.7 42.3 49.8 Western Wales 10.3 12.6 14.9 11.7 14.2 16.8 13.3 16.3 19.2 E&W 14.3 17.4 20.5 16.4 20.0 23.6 19.1 23.2 27.4
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Handling conflicting 3rd party evidence
Our ‘balanced’ CBA and Draft RBMP2 Vs Env NGOs re Other fuller benefits and non-£ items and considerations More ambitious measures Bullish assessment of market benefits Demand open slate reallocation of existing funds Vs Business re High costs and economic and social impacts of the controls (eg for farmers) and affordability Lower benefits estimates and concerns about customers’ affordability and income constraints Need means to reconcile differences to support balanced decisions
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Costs & Benefits of Environment Agency Activities in 2010
Total benefits for Environment and Regulated Business (E&B) and Flood risk mgt (FCRM): £ 6.2bn pa 83% of benefits from Flood risk mgt
- mostly (£3.3bn) from asset investments
Benefit Cost Ratios* : EA: 5-6 (FCRM: 8, E&B: 1.7) These benefits estimates give valuable supplementary evidence on the VFM of our activities, but as yet they are not sufficiently comprehensive or robust to use directly for decision-making.
* Includes support services
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FCRM Total Annual Expenditure and Benefits
500 1000 1500 2000 2500 3000
Planning and development control Capital Expenditure on Asset Management Asset Maintenance Mapping and data Flood Forecasting Incident Management Habitats
Expenditure & Benefits £m
2 4 6 8 10 12 14
Benefit Cost Ratio (BCR)
Expenditure Benefits BCR
Non-monetised env benefits
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FCRM better VFM than Transport
Environment Agency FCRM National Priority Programme (EANPP) vs Department for Transport (DfT)
0% 5% 10% 15% 20% 25% Poor Low Med 2-3 3-4 4-5 5-6 6-7 7-8 8-10 10-15 15-20 >20
Benefit Cost Ratio Proportion of Programmes
DfT EA NPP
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2 4 6 8 10 12 14 16 18 100 200 300 400 500 600 700 800 900
Benefit Cost Ratio (BCR) £ milion Funding Stream
E&B cost benefit ratios
Expenditure Benefits BCR
Non monetised
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Robustness of benefit values
Least Robust Most Robust
£160m £561m £307m £26m 100 200 300 400 500 600
Benefits in £m
Level 1 Level 2 Level 3 Level 4 £211m £1411m £276m £3284m 500 1000 1500 2000 2500 3000 3500 Benefits in £m Level 1 Level 2 Level 3 Level 4
E&B FCRM
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