Capacity Building

October 2011 - Revealed preference methods are likely to be used more by water companies in England and Wales

Ofwat (the Water Services Regulation Authority) has published two reports prepared by eftec in association with Cascade Consulting on the role of revealed customer behaviour in providing evidence to support water companies’ business plans. The reports cover both conventional economic methods and more general customer behaviours, such as complaints, that can be observed in relation to water, wastewater and environmental services.

There are a number of opportunities for using the information revealed by actual customer behaviour. The reports can be downloaded from:


December 2010 - Review of Cost Benefit Analysis and Benefit Valuation as Used in the Price Review 2009 of the Water Industry

UK Water Industry Research (UKWIR) has published the outputs from this study which was undertaken by eftec, ICS Consulting and Cascade Consulting and examined the use of CBA and benefits valuation in investment planning for the 2009 water industry Price Review (PR09). The findings from the research address four key questions:

  1. What happened at PR09;
  2. What can be learnt from the PR09 experience;
  3. What is the future role for CBA in business planning in the water industry; and
  4. How can the future role for CBA be developed?

The final report is also accompanied by a ‘Practitioners Guide’ to assist water companies and other stakeholders in the use of benefit valuation and CBA for future price setting exercises.

The report can be purchased from UKWIR – click here


September 2010 - Valuing Water and the Environment in Practice

This conference explored the emerging lessons from the recent water planning cycle (Periodic Review 2009 & Water Framework Directive) on the use of economic decision support tools and to consider this in the light of the emerging practice from projects using ecosystem services. Its aim was to identify and clarify important issues in order to inform the development of these tools for future project and planning appraisal.

Both Allan Provins and Ece Ozdemiroglu of eftec spoke at the conference. They shared their experiences with regards to the use of ecosystem services, economic valuation and cost benefit analysis in the water sector in the UK, renewable energy and forestry. They also contributed to the identification of lessons from practical application.

The seminar was organised for CIWEM by CMS.

For details and registration please visit:


Socio-Economics in the Marine Environment

This meeting explored how social and economic information is being used in practice to reconcile environmental programmes and to understand the range of issues that this is raising and highlight possible solutions; the meeting focused on practical delivery issues.

Ian Dickie of eftec spoke at the conference. He provided an introduction to the way socio-economic considerations were being routinely applied to marine policy and projects, outlining the purpose of and relationships between different tools, including: social analysis (and what this means), an ecosystems services approach, cost-benefit analysis and impact assessments.

The seminar was organised for CIWEM by CMS.

For details please visit:


April 2010 - Flood and Coastal Erosion Risk Management: Economic Valuation of Environmental Effects

The Environment Agency for England and Wales has published the recently revised Economic Valuation of Environmental Effects Handbook. Originally completed by eftec in 2007 and updated in 2010, the Handbook supports the Agency’s new Flood and Coastal Erosion Risk Management Appraisal Guidance (FCERM-AG). Its purpose is to help appraisal practitioners estimate the value of environmental costs and benefits of FCERM schemes. The Handbook sets out a value (benefits) transfer methodology that draws on evidence from recent studies and incorporates an ecosystem services framework.

The Handbook is available from the Environment Agency website:

Or can be directly downloaded via this link:

February 2010 - Valuing Environmental Impacts: Practical Guidelines for the Use of Value Transfer Policy and Project Appraisal

Defra has recently published the outputs from this eftec project which provide practical guidelines for valuing environmental impacts via ‘value transfer’. The guidelines augment Defra’s An introductory guide to valuing ecosystem services , which seeks to ensure that the true value of ecosystems and the services they provide are taken into account in policy decision-making. Value transfer (VT) utilises existing economic valuation evidence in a new appraisal context. Its advantages are that it is typically quicker and lower cost compared to primary valuation studies. The guidelines are intended to assist economists, policy analysts and scientists in all aspects of undertaking value transfer including determining the level of detail in analysis and methods, selecting the most suitable economic value evidence from available studies and presenting results for decision-making.

The guidelines and documents for download can be accessed here:

Upland Ecosystem Services: Valuation Methods

Natural England has recently published the final report from this research project, in which the total economic value and ecosystem services associated with different land use scenarios due to upland management interventions and policies at a wide range of scales are presented. The study applies a value transfer approach to six case studies of upland management. The results offer interesting conclusions regarding the economic value of ecosystem services under different management approaches and offer recommendations about where and how to apply economic valuation techniques for uplands ecosystem services, and point to where further research is most needed.

The final report is available for download from:


December 2008 - Ecosystem Services Guide

Defra has just published an ‘Introductory Guide to Valuing Ecosystem Services’ at The aim of this Guide is to ensure that the true value of ecosystems and the services provided are taken into account in policy decision-making. It builds on previous approaches to valuing the environment but takes a more systematic approach to the assessment of impacts.

The Guide includes one major case study, prepared by eftec for Defra. It originates from eftec’s work for the Environment Agency to develop a guide for valuing the environmental effects of flood risk management schemes. The case study involves the application of the guide, combining ecosystem services and economic valuation approaches, to the assessment of flood risk management options in Wareham.

Alongside the guide, Defra has also published the natural environment action plan: ‘Securing a healthy natural environment: an action plan for embedding an ecosystems approach’ at The action plan sets a new strategic direction for government policy on the natural environment. Defra has identified 37 actions that will be delivered mainly over the next two years and which include many actions relating to valuation.

May 2006 - Valuing Our Natural Environment

Defra has just published ‘Valuing Our Natural Environment’, a report prepared by eftec in association with Environmental Futures Ltd, which is downloadable from:

The report is a compendium of economic and non-economic (participatory / deliberative) valuation methods, decision-support methods and alternative measures of prosperity. The main report rehearses the rationale for gathering value evidence, summarises experience of working with such evidence, details some of the expressed requirements and problems of policy advisors, and finally provides recommendations. Annexes contain references, consultation with policy makers and valuation experts and detailed fiches of each valuation method covering the conceptual basis, objectives, conflicts and complementarities. The following methods are explored in the report:

Economic valuation methods Deliberative and participatory valuation methods
  • Market price approaches
  • Production function approach
  • Hedonic property pricing
  • Travel cost method
  • Random utility models
  • Contingent valuation method
  • Choice modelling
  • Benefits transfer
  • Questionnaires and interviews
  • Focus groups, in-depth groups
  • Citizen’s juries and consensus conferences
  • Health-based valuation approaches
  • Q-methodology
  • Delphi surveys, systematic reviews
Decision support measures Alternative measures of prosperity
  • Cost benefit analysis
  • Cost effectiveness analysis
  • Multi criteria analysis
  • Life cycle analysis
  • Human development index
  • Index of sustainable economic welfare
  • Green national product and genuine savings
  • UK sustainable development indicators


May 2005 - The Economic, Social and Ecological Value of Ecosystem Services: A Literature Review

If you are avid readers of the ENDS Environment Daily newsletter, you may already be aware that eftec’s report on the value of ecosystem services for the UK Department of Environment, Food and Rural Affairs (Defra) was published on the internet last week: The Economic, Social and Ecological Value of Ecosystem Services: A Literature Review

The report was presented at the International Conference on Biodiversity in Paris in January of this year. It aims to provide policy-makers with a better understanding of the extent of human dependence on ecosystem services and the vulnerability of human welfare to ecosystem change. The dependence of the poor in developing countries on ecosystem services is specifically addressed.

The main report presents a 30 page summary, based on a longer version of the report found in Annex 2. Three ecosystem types are examined in a mainly developing country context: tropical forests, wetlands and agro ecosystems. A framework for analysis, integrating the disciplines of ecology and economics, is developed and applied throughout the report and to a case study presented in Annex 1. Examples and evidence from the literature are used to illustrate methods for estimating the value of ecosystem services and provide a snapshot of the state of knowledge in the field.

In the words of ENDS daily, this is a field enjoying increasing attention. Even the Economist newspaper gave the topic several pages recently. However, there is still a long way to go in convincing policy makers. Demonstrating the value of healthy ecosystems is an important first step. But, as the defra report points out, the solutions lie in the ability to design mechanisms for ‘capturing’ that value and correcting the well-known failures that lead to over-exploitation and ecosystem decline.

Work in this field requires interdisciplinary expertise, and this project benefited from collaboration with ecologists from Imperial College London and economists at the University of East Anglia and Oxford University. Enthusiasm for the work has led to a follow-on project for English Nature. In that project eftec, in collaboration with Just Ecology, is detailing the services of key UK ecosystems with a view to advise economists on the most appropriate methods for economic evaluation.


April 2003 - Environmental Impacts and Parameters for Inclusion in the Economic Valuation of Road Schemes

The Irish Environmental Protection Agency has recently published a briefing paper we wrote for them entitled: Environmental Impacts and Parameters for inclusion in the Economic Valuation of Road Schemes which is downloadable at:

The study aimed to present different ways of expressing environmental impacts in monetary terms and including them within the conventional cost-benefit analysis of road schemes. These impacts included noise, vibration, local air quality, regional air quality, global air quality, recreation, visual intrusion, biodiversity, cultural heritage and water quality.

The study distinguished between qualitative, quantitative (physical units) and monetary assessment of environmental impacts. Since there are no ‘off-the-shelf’ values for the economic costs and benefits of these impacts, the study recommended taking a three step approach involving benefits transfer, original economic valuation studies and non-monetary assessment of impacts. The summary report introduced these approaches and the associated selection criteria such as technical limitations of economic valuation techniques, current availability of data, significance of environmental impacts and scale of the road scheme.

The study also made recommendations about different considerations of environmental impacts and cost-benefit analysis for large and small road schemes. The current Irish approach to including environmental impacts in decision-making about road schemes was also discussed and assessed in light of international practice and trends and legislative requirements. The study concluded with an assessment of the potential for practical use of economic valuation techniques to quantify the environmental impacts of road schemes in Ireland based on the available data.


December 2002 - 10 years of Environmental Economics: Observations from the Frontlines

2002 was a special year for eftec – our 10th anniversary. We celebrated it with a seminar on the 26th of November titled: 10 years of environmental economics: observations from the frontlines.

Five leading practitioners in their fields imparted their observations of the last 10 years of environmental economics and their expectations for the next 10. The speakers were:

  • Professor David Pearce, Environmental Economics, University College London
  • Bob Davies, Head, Environmental Policy Economics, Department for Environment, Food and Rural Affairs
  • Dr.Paul Hardisty, Managing Director (Europe and Middle East), Komex
  • Paul Steele, Economic Advisor, Environmental Policy, Department for International Development, and
  • Calliope Webber, Director, Environmental Policy, BP Gas Power & Renewables

Ece Ozdemiroglu also provided an account of eftec’s journey over the last 10 years and the challenges we anticipate for the next 10.


October 2002 - Economic Valuation with Stated Preference Techniques: A Manual

In our April 2002 issue, we announced the publication of the Economic Valuation with Stated Preference Techniques: a summary guide at the then DTLR site. It is still available at

Now the main manual is also available, published by Edward Elgar with the title Economic Valuation with Stated Preference Techniques: A Manual (by Ian J. Bateman; Richard T. Carson; Brett Day; Michael Hanemann; Nick Hanley; Tannis Hett; Michael Jones-Lee; Graham Loomes; Susana Mourato; Ece Ozdemiroglu; David W. Pearce; Robert Sugden and John Swanson).

This manual offers a detailed, up-to-date explanation of how to carry out stated preference techniques. The techniques use surveys to ask individuals how much they would be willing to pay or willing to accept in compensation for gains or losses of non-market goods and services. Applicants of the technique include changes in air and water quality; noise nuisance; health care; risk; recorded heritage; cultural assets; habitats; landscape and so on. The resulting valuations can be used for a number of purposes including, but not limited to, demonstrating the economic value of environmental and cultural assets; cost-benefit analysis; setting priorities for environmental policy; design of economic instruments; green national/corporate accounting; and natural resource damage assessment.

Compiled by the leading experts in the field, this manual starts by explaining the concepts. It shows how to choose the most appropriate technique and how to design the questionnaires. Detailed advice on econometric analysis is provided, as well as explanation of the pitfalls that need to be avoided. The manual is essential reading for those who apply, commission, teach and study stated preference techniques.

Copies of this hardback publication can be obtained by:

  • visiting Edward Elgar Website at
  • calling Marston Book Services Ltd on 01235 465500, and
  • of course the good old way of visiting your bookshop. The book was distributed on 26 September in the UK and will be distributed in November 2002 in the USA.


April 2002 - Economic Valuation with Stated Preference Techniques:  A summary guide

An eftec collaboration for the UK Department for Transport, Local Government and the Regions (DTLR) has been published as Economic Valuation with Stated Preference Techniques: a summary guide.

The guide, which provides an up-to-date summary of the essential steps involved in conducting stated preference studies, is primarily intended for those who commission, manage and evaluate stated preference studies. It contains four parts:

Part 1 - the nature and significance of economic values;

Part 2 - the techniques available for estimating them;

Part 3 - how to choose the survey method, the population and the sample, and how to handle piloting/testing and revision of the questionnaire, and

Part 4 - the analysis of the data, testing the validity of the results, aggregating and reporting the results.

The summary guide is available as a series of pdf files from

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