Costs must rise to £1B mark to protect against flood risk

Investment in flood defences needs to double by 2035 to cope with global warming. As a result, contractors will see plenty of opportunities to maintain and build flood defences. Dean Stiles reports.

Spending on flood defences must double to £1B a year to ensure protection for homes at risk of flooding in England.

Two new reports from the Environment Agency (EA) show that one in six homes in England is at risk of flooding, and that - as climate change increases the risk of coastal erosion and flooding from rivers and the sea - investment in building and maintaining flood defences needs to almost double to £1B a year by 2035.

Spending on asset maintenance and construction must rise from the £570M allocated in 2010/11 to around £1.04B by 2035, before taking inflation into account, the EA says. This equates to an increase in asset construction and maintenance spending of around £20M a year, with a total spend of £20B over 25 years.

Matthew Nott, managing director at Black & Veatch, UK government and industry, says: "There will be good opportunities for those contractors with the prerequisite skills, able to work collaboratively, who are committed to finding new ways to deliver more for less."

He continues: "The Environment Agency is to be commended for its long term investment strategy; it provides an evidence-based plan for increasing investment in flood risk management across England."

Publication of EA spending demands coincides with its revised climate change forecasts and will be the agency's key weapon to lobby for future funding. Its current funding settlement runs until March 2011 and future government spending in the sector will decrease.

According to Hilary Benn, environment secretary: "In the short-term, we should realise that tough economic conditions may constrain what is affordable to government."

Benn continues: "Looking beyond the current spending period, my department will need to consider how to allocate its resources between all the important environmental issues that affect our quality of life."

Although government spending had increased in the short term, more will be needed to meet future flood prevention needs.

Benn explains: "Government will spend more than £2.1B on managing flood and coastal erosion risk in England over the three years to March 2011. With this, operating authorities are on course to exceed targets and provide better protection for 160,000 homes - 15,000 more than I asked for. But the analysis in this report shows that there is much more to do if, as a country, we are to successfully adapt to the long-term impacts of climate change."

Prime sites
The scope of work required is extensive and opportunities for contractors and suppliers considerable. Nott says: "Work is required to protect homes and communities. In addition, national infrastructure - power stations, water treatment works, railways, major roads - and public services such as police and ambulance stations, caravan parks and schools will all need additional protection from flooding."

Mike Norton, technical director at Kingspan Environmental, welcomes the report, saying: "As prime development sites on well-drained land run out, building is extending on to marginal areas around river valleys where more hard surface areas (roofed areas, paths and roads) cause higher volumes of rainwater to flow into the watercourses.

"Allied to this, global warming is changing weather patterns, causing increased rainfall and raised sea levels. All this adds up to one depressing fact: flood risks continue to rise for millions of properties."

Norton wants more widespread use of rainwater harvesting systems. "Probably the best known measure to prevent flooding from urbanisation in recent years has been the introduction of the strategy of Sustainable Urban Drainage Systems (SUDS), a major part of which is attenuation, which controls storm water run-off and pollution as close to the source as possible," he says.

Planning policy statement PPS25, which requires planning authorities to undertake strategic flood risk assessments as part of their development planning, has been another welcome step forward, he says. "But I believe we should go further, and that the inclusion of SUDS, rainwater harvesting and grey-water recycling should be mandatory in order to achieve planning permission for any building development on flood plains.

"Rainwater recycling systems can reduce surface run-off during heavy rainfall and pass the recycled water indirectly via reuse applications to the foul system rather than the storm drains, so that it poses a reduced flood risk."

Norton continues: "But it won't have much impact if it's installed in just a few houses on an estate built on a flood plain: every house in that development will need an individual system, which is why I believe their inclusion should be compulsory at the planning stage."

Real choice
The EA report envisions priorities being set more locally in future, with the agency continuing to set out what it can afford in each region with government funding. The government also believes those at risk should have a real choice in what gets done, and a say if they want to do more than the government can justify from a national perspective.

The EA estimates that the annual cost of flood damage to residential and commercial property in England, plus the cost of further disruption, damage to infrastructure and loss of business, could rise from £2.5B to £4B by 2035 unless flood defence funding increases.

The agency believes its investment proposals could save England £180B in avoided damage and disruption costs over the next 100 years, but it accepts that alternatives to central government funding for flood defences will have to be considered.

Robert Runcie, EA director of flood and coastal risk, comments: "The insurance industry paid out £3.5B in insured losses in the summer 2007 floods.

"When you offset our £25B spend against the £180B in losses it will save, the benefit to cost ratio exceeds eight-to-one."

Runcie continues: "So there is a debate to be had, and that is what we'll enter into now. Should finances come from the Exchequer or should there be some contribution from the beneficiaries?"

Most of the EA's budget is spent on dealing with flood risk from rivers and the coast, but Nott believes funding will come from a number of sources.

He says: "The EA will set out what it can afford using central government funds. Over the next few years the tough economic conditions may well constrain what government can afford. Additional, local funding is anticipated from county councils, unitary authorities, and the private sector."

He adds that over coming years private finance is likely to have a bigger part to play. "Environment Agency research shows that about two thirds of the benefits of flood risk management assets accrue to private beneficiaries, such as homeowners and businesses."

In 2008, the government and the Association of British Insurers (ABI) agreed a revised statement of principles that states that owners of properties built in areas of significant flood risk after January 2009 can no longer assume they will receive cover under their domestic insurance policies, necessitating more costly stand-alone insurance cover.

Also, in developing its long-term investment strategy, the EA has assumed the cost of protecting any new properties built in areas at flood risk will fall to the developer. The EA is revising its external contributions policy so developers pay the full cost of any risk mitigation measures necessary for their projects.

In addition, 55% of water treatment works and pumping stations, 14% of electricity infrastructure, 2,358 schools and 2,363 doctors' surgeries in England are in flood risk areas, along with 4,000km of roads and 2,500km of railway.

Owners of major pieces of national infrastructure now must carry out risk assessments to see how climate change affects them.

Runcie says: "Big providers of infrastructure, which we need to be functioning for the economy to work now, have to undertake risk assessments of how climate change will affect them and report this to the government."

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