Policy and Project Appraisal

April 2011 - Norwegian Use of Whales: Past, Present and Future Trends

eftec have recently completed a study on the economics of whaling in Norway for the World Society for the Protection of Animals (WSPA) and two of its Norwegian partners: Dyrebeskyttelsen Norge and NOAH – for Dyrs Rettigheter. The study looked at existing evidence from Norway’s whaling industry as well as public opinion on whale hunting and views on eating whale meat. The conclusion is that that while the Norwegian’s support for whaling and demand for whale meat are waning, the Norwegian whaling industry is kept afloat by financial support from the government that is greater than the revenue from whaling. NOAH – for Dyrs Rettigheter and Dyresbeskyttelsen Norge handed a copy of eftec’s report to the leader of the Trade and Industry Committee in the Norwegian parliament on Tuesday, 5th April.

For more information, please see WSPA's website, or a related article in the Ecologist

December 2010 - Economic Value Evidence for Implementing the Water Framework Directive across the EU

This study, commissioned by the European Commission, DG Environment, reviewed recent developments in economic valuation to help inform future implementation of the Directive. Recommendations from the study were presented at the Member State Common Implementation Strategy ‘Workshop on WFD economics: taking stock and looking’ in Liege, Brussels in October. They focus on the need for better multi-disciplinary input to valuation studies and include developments in valuation methods, as well as the use of ecosystem services approach, GIS, scientific data (including monitoring data) and value transfer.

The report can be downloaded directly here or from the WFD CIRCA website – click here

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

 

April 2010 - The use of Market-based Instruments for Biodiversity Protection – The case of Habitat Banking

The European Commission has recently published this study, led by eftec and IEEP, which examines the potential use of habitat banking in the EU. Habitat banking is similar to carbon trading whereby units of biodiversity credits are created and sold to compensate units of damage to biodiversity. The difference to carbon trading is that while for carbon, the unit of trade is uniform (a tonne of carbon), for biodiversity this unit is location, habitat, species and damage specific.

Again similar to carbon trading, regulatory incentives are required for habitat banking to be taken up by potential buyers and sellers. At present such incentives are not sufficient to support a viable market because: a) where regulation exists (e.g. under the Habitats Directive), requirements for compensation are very specific; and b) regulation does not require compensation for more widespread biodiversity which is lost at a high rate and can easily be traded.

While new policy, science and economic research will be required before habitat banking can be implemented, it remains an attractive policy instrument given the new 2020 target to halt biodiversity loss which cries out for new instruments following the failure to deliver the 2010 target.

Our study compares habitat banking to other policy instruments, gives examples of it in practice from around the world and describes how the system may work.

The study reports are available on the European Commission website: http://ec.europa.eu/environment/enveco/studies.htm#2

 

April 2009 - Valuing Transport’s Impact on the Natural Landscape

The Department for Transport has published the Phase 2 report of this research project aimed at estimating the monetary value of landscape impacts from proposed transport schemes.

The Phase 2 report and supporting annexes, along with the previously published Phase 1 report, are available for download from: http://www.dft.gov.uk/pgr/economics/rdg/landscape/

The research is being led by eftec in conjunction with Accent, ADAS and TRL. Building on the findings from Phase 1, the objective of Phase 2 was the development of a stated preference (SP) survey instrument. This includes establishing a formal framework for assessing the transferability of monetary values across different landscape and transport scheme types.

The report presents the results of a series of focus groups and cognitive interviews and a pilot survey where a split sample approach was used to trial a number of scenarios featuring different types of transport scheme in different locations in England. Findings indicate that ‘landscape values’ vary with transport scheme type, socio-economic characteristics, landscape perception and the individual’s interaction with affected site in terms of familiarity, distance and frequency of use.

The Phase 2 report concludes with recommendations for final phase of the research which comprises of the main survey and analysis stages of the study.

January 2009 - Marine Impact Assessments and Analysis

While the UK has a well-established network of terrestrial habitat designations, our marine environment, arguably our richest environmental asset, contains very few areas designated for the protection of biodiversity and ecosystems. This is now changing, with the application of the Birds and Habitats Directives to marine habitats, the presence of the Marine Bill in the Queens Speech in December 2008 and the implementation of the Marine Strategic Framework Directive. At the same time more attention is being paid to marine economics, with a special report in The Economist (3-9 Jan 2009) warning that “Man is assaulting the oceans. They will smite him if he does not take care”.

Marine impact assessments……Offshore:

eftec, has commenced work for the Joint Nature Conservation Committee (JNCC) to produce impact assessments (IAs) to accompany the intended designation of two Special Areas of Conservation (SACs) in UK offshore waters (beyond 12 nautical miles). The draft IAs will accompany JNCC’s public consultation on the sites in 2009 and will appear alongside the relevant consultation documents on the JNCC website in due course. IAs for marine protected areas are complicated by many factors such as the limited knowledge of marine ecosystems and the impact of current human activities on them, and uncertainty over future exploitation of marine resources such as energy and aggregates. To handle these uncertainties, eftec has applied the methodology for marine IAs that we developed for JNCC in relation to the first UK SACs, which were designated in 2008.

Marine impact assessments……Inshore:

eftec has also started work for Natural England on IAs for the UK’s first proposed marine inshore Special Protection Areas (SPAs) and SACs. Inshore sites are inevitably accessed by a wider range of marine interests, including local stakeholders as well as the larger interests who dominate activities at offshore sites. As a result eftec’s team, which includes ABPmer and other marine experts, will be undertaking a consultation process covering local and national issues relating to all the proposed sites. This will result in the further development of our IA approach for marine protected areas.

And more marine analysis:

eftec completed analysis of the Costs of Illegal, Unreported and Unregulated (IUU) Fishing in Europe for The Pew Charitable Trusts in November 2008. The study reviewed evidence on the rates of IUU fishing in European waters, and on the costs associated with it, developing a surplus production model applied at the level of key commercial groups in five Large Marine Ecosystems (LME), covering 46% of the value of European fishing. Using best estimates of actual IUU rates for different commercial groups in different areas, the study estimates the cost of IUU fishing in terms of lost catches from 2008 to 2020, lost end stock in 2020 and lost jobs in the fishing sector, by comparing the baseline case with a zero-IUU scenario. For more details of The Pew Charitable Trusts lobbying work click here.

eftec is also a partner to ABPmer working to prepare the Productive Seas Evidence Group (PSEG) feeder report for Charting Progress 2. This is the Government’s follow-up to its initial Charting Progress report on the state of the marine environment in the UK in 2005. The objective of the work is to identify and source economic data for industry sectors with a presence in the UK’s marine environment and undertake an assessment of the environmental costs of sectoral impacts.

 

December 2008 - The Wallasea Project and Habitat Banking

We have completed an assessment of the benefits of a proposed RSPB project at Wallasea Island on the Roach and Crouch Estuary in Essex for the East of England Development Agency (EEDA). The proposals are for the largest managed realignment site in the UK (over 500 ha). It includes substantial landraising within the realignment area, to allow optimal intertidal habitat development and to minimise disruption to the tidal cycle and adjacent flood defences. The assessment applied the approach set out in the handbook for economic valuation of environmental effects of flood defence options developed by eftec for the Environment Agency. If you are interested in further details on the handbook, please email us.

Major habitat creation opportunities such as Wallasea are challenging projects in terms of planning, engineering, ecology and finances. One option to help fund these projects is for a proportion of the area created to be “sold” as compensatory habitat through habitat banking. While habitat compensation already operates in limited circumstances through the Habitats Directive, its appeal as a conservation policy instrument is increasing with requirements for compensation also from the Environmental Liability Directive.

We are looking forward to starting a major DG Environment project (The use of market-based instruments for biodiversity protection – the case of habitat banking) from January to consider the ecological, legal, geo-political and conservation issues that must be tackled if habitat banking is to be effective. We will continue to share the publications from this and other studies in the new year.

October 2008 - Marine Impact Assessments

Our recently completed work for the Joint Nature Conservation Committee (JNCC) produced the first impact assessments (IAs) for seven marine Natura 2000 sites in the UK. Natura 2000 sites are those designated as Special Protection Areas (SPAs) or Special Areas of Conservation (SACs) under the European Wild Birds or Habitats Directives respectively.

The IAs are available here: www.jncc.gov.uk/marineconsult

We developed a methodology and framework for linking the application of the ecosystem services approach in the marine environment to the completion of IAs in accordance with Government guidance. Given the uncertainties about the exact management plans for the sites, analysis was based on two scenarios, representing the maximum and minimum likely extent of the measures that could be put in place to achieve the conservation objectives for a site.

The UK’s seas are arguably our richest biodiversity resource, so it is unsurprising that further potential Natura 2000 sites are being prepared for designation. In addition, new scientific information on the biodiversity value of areas of marine habitat is still emerging. There will doubtless be further developments in marine impact assessment approaches.

April 2008 - Demand for Cars and Their Attributes

Our recent study for the Department for Transport considers how changes in the cost of motoring affect demand in the market for new cars. The report is available here: http://www.dft.gov.uk/pgr/economics/rdg/cardemand/

The analysis, which was led by eftec associate Dr. Brett Day (University of East Anglia), estimates own and cross price elasticities for new cars models, informing on how different attributes of a vehicle (e.g. body style, engine and performance specifications, number of doors and seats, equipment, etc.), price and running cost influence households’ new car purchasing decisions.

The report sets out the data collection, model specification, estimation and analysis stages of the research. For illustrative purposes, the model is used to forecast how demand for new cars changes in response to changes in the fixed and variable costs of driving and to predict how those changes might impact on the CO2 emissions profile of the new car market.

Valuing Transport’s Impact on the Natural Landscape

The Department for Transport has recently published the Phase 1 report of this three phase research project. The report is available here: ttp://www.dft.gov.uk/pgr/economics/rdg/landscape/

The study aims to estimate transferable monetary values for the impacts individual transport schemes have on the natural landscape in England. The monetary values will be used to augment the New Approach to Transport Appraisal (NATA) methodology developed by the DfT.

The Phase 1 report details the initial stages of research including exploring the context for economic valuation and method selection and defining the basis of the good to be valued in terms of a typology of transport schemes and landscape types. The presently ongoing second phase of the project is testing the stated preference survey instrument. Phase 3, planned for later this year, will implement the stated preference questionnaire, analyse the data and set out the transfer model.

January 2006 - Economic Valuation of Environmental Impacts in the Severely Disadvantaged Areas

eftec has recently completed a study on the Economic Valuation of Environmental Impacts in the Severely Disadvantaged Areas for the Department for Environment, Food and Rural Affairs, in association with Professor Nick Hanley and other researchers from the University of Stirling. It is now available from the Defra website: http://archive.defra.gov.uk/evidence/economics/foodfarm/reports/documents/sda.pdf

The objectives of this study were to value the possible environmental and landscape impacts in Severely Disadvantaged Areas (SDAs) arising from the redesign of the Less Favoured Areas policy. SDAs are upland areas where farming is more difficult because of higher production and transportation costs, such as the Lake District and Exmoor. The study used a stated preference study to elicit the willingness to pay in seven English regions for five attributes associated with the landscape: heather moorland and bog, rough grassland, broadleaved and mixed woodland, field boundaries (dry stone walls and hedgerows) and cultural heritage. A choice experiment approach was used to estimate welfare changes within each region relating to three scenarios relating to possible different hill-farming subsidy regimes (net of a “business-as-usual” baseline). The study which provided the predictions on the environmental changes was prepared by Cumulus Consultants.

The results show that, on the whole, people are willing to contribute to improvements in Severely Disadvantaged Areas and upland attributes associated with them. However, there are large variations in the values individuals place on landscape features across different regions that are not possible to explain fully on the basis of socio-economic differences between populations. There is also evidence that respondents hold non-use values for SDAs which they do not visit themselves.

 

December 2004 - Economics of Sustained Marine Measurements and Valuation of the External Costs and Benefits to Health and the Environment of Waste Management Options

The first report is Economics of Sustained Marine Measurements prepared for Inter Agency Committee on Marine Science and Technology which sets out a methodology for estimating the economic value of the marine data in its various uses and applies the methodology to two case studies: Jason-2 altimetry satellite and Liverpool Bay coastal monitoring observatory. The hard copies of the full and colourful report can be obtained for free by sending an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The second report is Valuation of the External Costs and Benefits to Health and the Environment of Waste Management Options for Defra to which we contributed the review of economic valuation literature on the environmental and health impacts associated with different waste management options. The report is available to download from http://archive.defra.gov.uk/environment/waste/statistics/documents/costbenefit-valuation.pdf

 

August 2004 - A Framework for Environmental Accounts for Agriculture

eftec recently completed with IEEP (The Institute for European Environmental Policy) a report on green accounting for the UK agricultural sector. The report: A Framework for Environmental Accounts for Agriculture is now available for download at http://archive.defra.gov.uk/evidence/economics/foodfarm/reports/envacc/documents/Eftec-execsumm.pdf

This project was commissioned by Defra, the Department of Agriculture and Rural Development (Northern Ireland), the Scottish Executive and the Welsh Assembly Government to develop a framework showing the impacts, positive and negative, of agriculture on the environment in monetary terms in the sectoral accounts.

The aims of the project were to develop a framework for valuing the impacts, both positive and negative, of agriculture on the environment. Existing data sources were identified for both the physical impacts of agriculture on the environment and the economic value of these impacts, both in terms of welfare gains and losses to society and reductions or gains in productivity to other sectors.

The report begins with a discussion of green accounting theory and the rationale for developing environmental accounts for agriculture. A framework consisting of environmental adjustments to the accounts is then laid out, including both negative and positive adjustments to income to the sector for impacts on air, water and the provision of land-based environmental services. The report then presents physical environmental impacts and the key data sources selected for use in the environmental accounting exercise. These data are then matched with economic data to allow estimation of monetary values for each of the accounting adjustments. Finally, the report provides an analysis of the gaps in both physical and economic data.

This project is an important first step in a long term development process of the Environmental Accounts for Agriculture, bringing together relevant information currently available, into an accounting framework and helping to identify areas for further investigation and analysis. It is anticipated that this project will enhance the evidence base on the environmental impact of agriculture to allow improved appraisal and evaluation of agri-enviromental policies, to assess the relative importance of environmental impacts and to better understand the tensions between the economic and environmental dimension of sustainability.

 

May 2004 - Study into the Environmental Impacts of Increasing the Supply of Housing in the UK

One of our joint recent with entec and Richard Hodkins Consultancy for Defra, Study into the Environmental Impacts of Increasing the Supply of Housing in the UK is now available at http://archive.defra.gov.uk/evidence/economics/foodfarm/reports/documents/Housing.pdf

This study examines the environmental impacts of increasing the supply of housing in the UK. The context for the study is set by the Sustainable Communities Plan, launched by the Deputy Prime Minister in February 2003, and the Barker Review (Final Report published in March 2004).

The study explores the potential environmental implications of increasing housing supply under a number of different growth scenarios. As well as identifying some of the adverse environmental impacts associated with the growth, the study explores possibilities for minimising these, and maximising social and environmental sustainability. In that context, the potential role of policy instruments, such as taxes and regulation, is also considered.

The housing demand scenarios and impacts were developed by our project partners Entec and Richard Hodkinson Consultancy, while eftec undertook the quantification of costs and benefit in monetary terms and the commentary on the use of economic instruments in this context. The report has recently been submitted as evidence to the Common’s Environment Audit Committee.

October 2003 - The Economics of Sustained Marine Measurements – case study of Jason 2 satellite

Over the last few months we continued to apply economic analysis not only to environmental policy issues but also to other related areas. This newsletter contains an example of how economic appraisal tools can be applied to estimate the economic value of information in general and marine data in particular.

In a project funded by IACMST (Inter-Agency Committee on Marine Science and Technology), eftec is developing an appraisal framework to identify and quantify the economic benefits of marine data as realised by a multitude of users. Benefits are measured in terms of (i) the cost of acquiring the data when a price is charged; (ii) the cost savings afforded by better data; (iii) the contribution of marine data to a user corporation’s turnover; (iv) the cost of alternative sources of data and (v) willingness to pay for the data, where it is provided for free.

We have so far completed a case study using this framework. The case study involved estimating the economic benefits of altimetry data to be collected by the Jason 2 satellite. Altimetry, in this context, measures sea-surface heights and altimetry data are used in designing oil drilling operations, climate change modeling, meteorological predictions and so on.

The case study report provided an input to the business case prepared by the Met Office. The UK Government subsequently decided to sponsor the Jason 2 satellite given the strong scientific and economic case put forward.

The case study report is now available for downloading at

We hope you’ll find this application interesting and would be happy to receive comments on this ongoing study.

 

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: http://www.epa.ie/downloads/pubs/research/land/epa_economic_valuations_from_road_schemes.pdf

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.

 

July 2002 - Benefits of the Revised EU Bathing Water Directive

As many of you know, the EU Bathing Water Directive is currently being revised. The implications of the revised Directive are likely to be significant for local authorities (the beach operators), water companies and of course the central Governments in Member States and applicant countries.

In the UK, Defra (Department for Environment, Food and Rural Affairs) commissioned two studies, one into the costs and the other into the benefits of adopting the broad principles set out in the Commission's Communication on a revised Bathing Water Directive.

eftec has undertaken the benefits study, which is now available on the Defra website: http://archive.defra.gov.uk/environment/quality/water/waterquality/bathing/history.htm

The objectives of the benefit study were to assess people's willingness to pay for various beach characteristics (for example bathing water quality improvements, public information systems, absence of litter and dog mess and the presence of amenities), and from this produce an estimate of total benefits to England and Wales from the revision of the Bathing Water Directive.

The study designed a choice modelling survey for a cross-section of the general public in England and Wales. The survey was implemented using face-to-face interviews and respondents were presented with a series of hypothetical beach scenarios and asked to choose their preferred one.

The report presents willingness to pay results for all of the above beach characteristics, aggregate benefits for various revision scenarios as well as summarising attitudinal and opinion responses. Statistical analysis shows that the willingness to pay results are significant and reliable.

 

March 2002 - The Potential Cost and Effectiveness of Voluntary Measures in Reducing the Environmental Impacts of Pesticides

The report - The Potential Cost and Effectiveness of Voluntary Measures in Reducing the Environmental Impacts of Pesticides - came after the Government's consideration of a pesticides tax proposal and during the initial stages of the negotiations with industry on designing a mutually agreeable voluntary agreement. Given the paucity of evidence of effectiveness from ongoing voluntary agreements in any sector,  the report provided useful information.

Hard copies of the report (ISBN 0-11-753621-0) are also available and can be obtained by visiting www.clicktso.com or www.thestationeryoffice.om or calling +44 (0)870 600 5522.

 

September 2001 - Study on Valuation and Restoration of Biodiversity Damage for the Purpose of Environmental Liability

The European Commission has been working on a draft Directive on the Liability for Damage to Biodiversity. The Directive, if and when it is finalised, has major implications for:

• potential polluters who will have to restore damage to biodiversity or pay for compensation (currently they do not pay for this)
• insurance industry who will have to provide coverage for potential damage compensation
• national authorities who will be charged with the duty of damage assessment and restoration
• lawyers who will prepare the cases should there be a dispute between the polluters and the national authorities.

eftec prepared one of the background studies for the Liability Directive: "Study on Valuation and Restoration of Biodiversity Damage for the Purpose of Environmental Liability" to answer three inter-related questions:

1. How to define ‘significant’ damage to natural resources and decide on the ‘minimum level of restoration’;
2. How, and to what extent, monetary valuation techniques can be used to estimate the economic value of damage to natural resources, and
3. How, and to what extent, cost-benefit analysis can be used to choose between restoration options.

Findings of the study have been used to prepare the EC's consultation document. It indicates the use of economic concepts for damage assessment, measurement and restoration.

The study reviews the relevant literature in Europe and the USA and the relevant aspects of the litigation experience in the USA, namely the Natural Resource Damage Assessment (NRDA) guidance. It also provides case studies to illustrate the framework recommended in the study and the issues raised.

The ToR of the study, main report and annexes are available at http://ec.europa.eu/environment/legal/liability/biodiversity.htm

 

February 2001 - European Environmental Priorities: An Integrated Economic and Environmental Assessment

The report European Environmental Priorities: An Integrated Economic and Environmental Assessment that we co-authored with RIVM (The Netherlands), NTUA (Greece), IIASA (Austria) and TME (The Netherlands) has been published on the web by the DG Environment of the European Commission.

The study consists of a cost-benefit analysis of a selection of policy options to tackle 13 environmental problems in Europe with the objective of informing the prioritisation process for the EC environmental policy. Although the results are for Europe, the methodology is of relevance for any region.

Below is an extract from ENDS Daily (13/02/2001) that announces this publication and the website address at which you can view and/or download the study.

Using cost-benefit analysis, this report identifies areas where measures can achieve what a Commission source called the biggest environmental bang for the buck. It also looks for cross-policy synergies, identifying several areas where action on one front could create a snowball effect of improvements in other areas.

The findings of the study have already fed into preparations for the Commission’s recent proposal for a sixth EU environmental action programme (ENDS Daily 24 January). According to the Commission source, the most innovative aspect of the study is its attempt to systematically quantify ancillary or snowball effects of individual environmental policies. Quantification is most advanced for air emissions-related policies, while efforts to quantify the ancillary effects of waste or biodiversity legislation are at a more basic stage. Despite the disparity, the course said, the study has shown that pursuing integrated policy analysis could lead to smarter legislation, with policies timed for maximum effect.

The Commission’s environment directorate has published the full text of the study on its web pages as a series of sectoral reports. Officials are expected to finalise a summary for policy makers soon.

The study can be downloaded from: http://www.rivm.nl/bibliotheek/rapporten/481505010.pdf

 

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