Evolution or Revolution? Integrating ecosystem services into water industry cost-benefit analysis

Last updated: 28th September 2012

The language of ecosystem services (ES) pervades the government's recent Natural Environment White Paper, and is used to describe the benefits we derive from nature. But although ES concepts are starting to be applied in other areas, to date they have not been widely adopted by the water industry. Cost-benefit assessment (CBA) is widely used by the industry to value the impact of proposed investments, taking account of environmental and social costs and benefits. Given the increasing focus on assessing non-financial impacts of schemes (catchment management for example), should and does an understanding of ES change the way the water industry undertakes CBA? From a practitioner's perspective, does the consideration of ES mean evolution or revolution? Environmental Policy Consulting has worked with WRc and water companies to develop a comprehensive framework for integrating ES into CBA. The framework is based on a matrix, which maps investment planning measures proposed by water companies onto the range of ES. The framework then allows the full impact of measures to be assessed in qualitative and, where significant, quantitative and monetary terms. The framework is applied to a number of case studies to ascertain the difference, if any, it makes to the outcome of a CBA. The approach could be used to identify potential beneficiaries (and potential funding sources) from water industry investments. It is designed to support the application of ES to future investment planning in the water industry.

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