Accounting Environmental Impacts

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Accounting forenvironmental impacts:

February 2012

Supplementary Green Book guidance

Author: Helen Dunn

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Accounting forenvironmental impacts:

February 2012

Supplementary Green Book guidance

Author: Helen Dunn

Editors: Victoria Harrison,Joanna Konings

Series Editor: Joseph Lowe

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Ofcial versions of this document are printed on100% recycled paper. When you have nishedwith it please recycle it again.

If using an electronic version of the document, pleaseconsider the environment and only print the pages whichyou need and recycle them when you have nished.

Crown copyright 2012

You may re-use this information (not including logos)free of charge in any format or medium, under the termsof the Open Government Licence. To view this licence,visit http://www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information PolicyTeam, The National Archives, Kew, London TW9 4DU, ore-mail: [email protected].

Any queries regarding this publication should be sent tous at: [email protected].

ISBN 978-1-84532-942-6PU1264

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ContentsPage

Chapter 1 Introduction 3

Chapter 2 Identifying environmental effects 5

Chapter 3 Valuing non-market impacts on the environment 7

Chapter 4 Step by step guide to valuing environmental effects 13

Annex A Sources for further information 21

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1 IntroductionBackground

1.1HM Treasurys Green Book recommends Social Cost Benefit Analysis (SCBA) as a way ofexpressing the value of a proposal to UK society for policy appraisal purposes.

1.2SCBA seeks to express the full costs and benefits of a proposal in monetary terms. However,it is not always straightforward to include effects on the environment within Cost Benefit

Analysis because of the widespread absence of market prices.

1.3The Green Book outlines techniques for valuing non-market effects1

1.4An important recommendation in this guidance is the use of the ecosystem servicesframework, which is outlined in more detail in the next chapter. Using this framework ensures

that the full range of environmental impacts from a proposed policy or project is included in

policy appraisal.

and this supplementary

guidance covers the practical application of these techniques, specifically for valuation ofenvironmental effects.

How to use this guidance

1.5This guidance should be used for policies that are designed to have one or more specificenvironmental effects as well as policies with a different focus that may have impacts on the

environment.

1.6Chapter 2 is guidance on the ecosystem services framework and using this framework toidentify environmental effects that need to be included in policy appraisal.

1.7Chapter 3 is guidance on techniques for valuation of environmental effects including non-market approaches.

1.8Chapter 4 is a step by step guide to using the principles in Chapters 2 and 3, as well as otherresources, for valuing environmental effects in policy appraisal. This part of the guidance should

be followed for all policies, using Chapters 2 and 3 as a reference.

1.9The key steps are: Identifying the aspects of the natural environment that will be affected by your

policy or project and the changes in environmental effects or ecosystem services

that could arise;

Identifying legal and biophysical constraints, risks and opportunities to achievepositive outcomes for the natural environment alongside the meeting of policy aims;

Taking forward a qualitative assessment to determine the range and nature of theenvironmental effects. Using an ecosystem services framework for assessment

where there are multiple environmental effects; and

1 See annex 2 of the Green Book itself, or additional supplementary guidance on Stated Preference and other non market valuation techniques.

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Quantifying and valuing the changes in ecosystem services: putting a monetary orother value on the costs and benefits of environmental effects focusing exclusively

on the changes brought about by a policy or project.

1.10For certain environmental effects, further guidance is available, including specific values foruse in policy appraisal.

Greenhouse gaseshttp://www.decc.gov.uk/en/content/cms/emissions/valuation/valuation.aspx

Air qualityhttp://www.defra.gov.uk/environment/quality/air/air-quality/economic/1.11Further sources of information are also provided in Annex A.

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2 Identifying environmentaleffectsImportance of accounting for environmental effects

2.1The publication of the UK National Ecosystem Assessment (NEA) in June 2011 has provideda robust case for accounting for the environment in decision making1

2.2Policies designed to deliver environmental improvements have been able to reduce levels ofenvironmental pollution in air and water and provide important protection for wildlife sites. But

these are not the only policies that effect on the environment, and despite significant statutory

protection, environmental degradation of our natural environment is continuing. Opportunities

for enhancement of the natural environment are being missed.

. The NEA is the first

independent analysis of the UKs natural environment in terms of the benefits it provides to

society and continuing economic prosperity.

2.3As well as the immediate direct and indirect effects of the policy or project on theenvironment, it is also important to understand the environmental effects over the lifetime of

the policy or project. In extreme cases, a policy or project may not be able to achieve its aims

due to environmental pressures worsening over the lifetime of the project.

2.4The starting point when designing policies should therefore be to identify the full range ofeffects on the environment, so that these can be taken into account when comparing different

options.

Taking an ecosystems approach

The natural environment

2.5Although many aspects of our environment (air, water, landscape and marine) are protectedfrom direct harm through regulation, growing pressures increase the need consider the

environment as a functioning system and that provides the essential services that underpin the

economic, social and personal well-being.

2.6Apart from the things which we can sell (e.g. food and timber), the value of natural systemsto society is largely unregistered by the free market, it is what economists refer to as an

externality which means it may of ignored be unvalued in decision making and so be vulnerableto loss and degradation.

2.7Social value will be better reflected in decision making by considering environmental serviceprovision as an interconnected system.By looking at the natural environment as a system which

provides services, it is easier to identify the full range of benefits the natural environment

provides.

2.8An ecosystems approach can, importantly, also lead to decisions which are better in terms ofenvironmental sustainability by ensuring that our stocks of environmental assets and the services

they provide are appropriately valued.

1http://uknea.unep-wcmc.org/

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2.9Further resources for using an ecosystems approach in policy making can be found at:http://archive.defra.gov.uk/environment/policy/natural-environ/documents/nature-do-for-you.pdf

2.10The use of an ecosystem services framework helps to incorporate in a systematic mannerthe value of services from our natural system into policy and decision-making.

2.11Ecosystem services can be categorised as:

Provisioning: such as supply of food and fibre;

Regulating: such as water and climate regulation; Cultural: such as landscapes and recreation, and Supporting: such as soil formation and habitats.

2.12This framework offers a more comprehensive approach to understanding how policieseffect on the wider environment.

Box 2.A:Ecosystem ServicesEcosystem services can be defined as services provided by the natural environment thatbenefit people. These benefits include:

Resources for basic survival, such as clean air and water; Contribution to good physical and mental health, for example through access to

green spaces, both urban and rural, and genetic resources for medicines;

Protection from hazards, through the regulation of our climate and water cycle; Support for a strong and healthy economy, through raw materials for industry

and agriculture, or through tourism and recreation; and

Social, cultural and educational benefits, and wellbeing and inspiration frominteraction with nature.

2.13For further information see Chapter 1 of An introductory guide to valuing ecosystemservices at:http://archive.defra.gov.uk/environment/policy/natural-environ/documents/eco-

valuing.pdf

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3Valuing non-marketimpacts on the

environmentIntroduction

3.1This chapter is designed to be used as a reference alongside Annex 2 of the Green Book,providing supplementary guidance on the techniques that are specifically relevant to valuing

non-market environmental effects.

3.2As shown in more detail in Chapter 4, valuation is the final stage in any detailed assessmentof the non-market effects of a policy, after describing effects in qualitative terms, and

quantifying impacts where possible.

3.3It is not always possible or proportionate to value every environmental effect in monetaryterms. Where this is not feasible, these effects should be presented in quantified terms; and if

this is not possible, there should be a qualitative assessment of the potential effects.

Total Economic Value (TEV) Framework

3.4The value that we are trying to capture for the purposes of a policy appraisal is the totalvalue of a marginal change in environmental effects or the underlying ecosystem services.

3.5The Total Economic Value (TEV) framework is of use as it measures the total gain or loss inwellbeing from marginal changes in environmental effects, taking into account both use and

non-use values. TEV is measured by the willingness to pay (WTP) for a marginal gain orwillingness to accept (WTA) for a marginal loss, aggregated across the affected population. See

Annex 2 of the Green Book for more on WTP and WTA.

3.6The TEV framework set out in Chart 3.A shows the types of environmental values relevant topolicy or project appraisal.

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Chart 3.A:Total Economic Value (TEV) Framework

Source: Defra

3.7Use value includes direct use, indirect use and option value. Non-use value comprises ofbequest value, altruistic value and existence value. Consideration of all types of value in

economic valuation techniques should ensure a more complete valuation.

TEV and valuation techniques

3.8The Green Book outlines two main approaches to valuing non-market effects: statedpreference and revealed preference1

Revealed Preference methods

. Below, some of the main methodologies are outlined, with

examples of the type of environmental effect they can be used to value.

3.8.1Revealed preference (RP) methods rely on data regarding individuals preferences for amarketable good which includes environmental attributes. These techniques rely on actual

markets. Included in this approach are: market prices, averting behaviour, hedonic pricing, and

travel cost method, and random utility modelling.Market prices

3.8.2These can be used to capture the value of goods and services that are traded e.g. themarket value of forest products. Even where market prices are available, they may need to be

adjusted to take account of distortions such as subsidies. Market prices can act as proxies for

direct and indirect use values but do not capture non-use values; the price will be a minimum

expression of the willingness to pay.

1 A GES discussion paper published in July 2011, Valuation techniques for social cost-benefit analysis also highlights subjective well-being

approaches which attempt to measure peoples experiences rather than expose their preferences. Seehttp://www.hm-

treasury.gov.uk/d/green_book_valuationtechniques_250711.pdffor more detail.

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Averting behaviour

3.8.3This approach focuses on the price paid by individuals to mitigate against environmentaleffects. For instance, the cost of water filtration may be used as a proxy for the value of water

pollution damages; or costs of buying pollution masks to protect against urban air pollution

(although this will only represent part of the damage value).

Hedonic pricing

3.8.4This assumes that environmental characteristics (e.g. a pleasant view or the negativeamenity value of a nearby landfill site), as well as other property features, are reflected in

property prices. The value of the environmental component can therefore be captured by

modelling the effect of all possible influencing factors on the price of the property. Hedonic

pricing can capture direct and indirect use value.

Travel cost method

3.8.5This is a survey-based technique that uses the costs incurred by individuals taking a trip toa recreation site (e.g. travel costs, entry fees, opportunity cost of time) as a proxy for the

recreational value of that site. It captures use value; visitors to the site may hold non-use values,

but these cannot be assessed using this valuation method.

Random utility models

3.8.6This is an extension of the travel cost method and is used to test the effect of changing thequality or quantity of an environmental characteristic at a particular site. Again, only direct use

value can be captured.

Production function approach

3.8.7This focuses on the relationship that may exist between a particular ecosystem service andthe production of a market good. Environmental goods and services are considered as inputs to

the production process and their value is inferred by considering the changes in productionprocess of market goods that result from an environmental change. This approach is capable of

capturing indirect use value.

Stated Preference methods

3.8.8Stated preference (SP) methods use carefully structured questionnaires to elicit individualspreferences for a given change in a natural resource or environmental attribute. In principle, SP

methods can be applied in a wide range of contexts and are the only methods that can estimate

non-use values which can be a significant component of overall TEV for some natural resources.

The main options in this approach are: contingent valuation and choice modelling.

Contingent valuation

3.8.9This is a survey-style approach that constructs a hypothetical market via a questionnaire.Respondents answer questions regarding what they are willing to pay for a particular

environmental change. Theoretically, contingent valuation can capture all elements of Total

Economic Value, but in practice it may be very difficult to assess many different use and non-use

values.Choice modelling

3.8.10This is a survey-style approach that focuses on the individual attributes of the ecosystemin question. For example, a lake may be described in terms of water quality, number of speciesetc. Participants are presented with different combinations of attributes and asked to choose

their preferred combination or to rank the alternative combinations. Each combination of

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attributes has a price associated with it and therefore the respondents reveal their WTP/WTA for

each attribute. As with contingent valuation, choice modelling can capture all elements of TEV.

3.9Chart 3.B shows how the stated preference and revealed preference techniques describedabove relate to the components of total economic value.

Chart 3.B:Valuation techniques related to Total Economic Value framework

Source: Defra

Obtaining values

3.10The TEV framework above indicates the type of valuation approaches that are appropriatefor a range of different non-market environmental effects. This can be a good starting point for

consideration of how to obtain values for policy appraisal in practice.

3.11The values themselves may be obtained through the use of existing information fromprevious studies. This process is known as value transfer (also commonly referred to as benefits

transfer). Value transfer is the process by which economic values that have been generated in

one context (the study site) are applied to another context (the policy site). This is a cost effectiveway of making greater use of environmental values in policy-making.

3.12Defra has published guidelines designed to indicate whether value transfer is appropriateand to provide detailed support in selecting the most suitable evidence they are available at:

http://www.defra.gov.uk/environment/natural/ecosystems-services/valuing-ecosystem-services/.

3.13If it is not appropriate to perform value transfer, or if preliminary value transfer indicatesthat effects are substantial, then initiating a primary valuation may be required. Primary

valuation studies can be costly and time consuming so should only be undertaken when

proportionate.

3.14In order to ensure that any new primary valuation work has the most opportunity to beused in policy appraisal more widely (i.e. used in value transfer exercises in the future), we

recommend that the valuation work should take into account as part of the design, future uses.

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The Defra primary valuation protocol athttp://archive.defra.gov.uk/environment/policy/natural-

environ/using/valuation/documents/annex1.pdfshould be followed to contribute to the growing

valuation evidence base and ensure that all the right information is presented as part of the final

study report to maximise these opportunities.

Use of non-monetary and participatory techniques

3.15It may be difficult to value all of the changes to ecosystem services that may result from apolicy or project in monetary terms. Defra has published a guide on using participatory and

deliberative techniques to support both monetary and non-monetary valuation of ecosystem

services at:http://www.defra.gov.uk/environment/natural/ecosystems-services/valuing-

ecosystem-services/. The guide is intended to assist in deciding when and which technique is

most appropriate in particular circumstances. It also provides case study examples which show

what some of these techniques look like in practice.

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4Step by step guide tovaluing environmental

effectsIntroduction

4.1This step by step guide is designed to be used with the flowchart overleaf to identify andvalue non-market environmental effects from a programme or policy.

4.2This guide should be used in conjunction with the Green Book (in particular Chapter 5 onappraising the options and Annex 2 on valuing non-market effects). It should help you to

account for environmental effects in a policy appraisal and ensure the evidence base is fit for

purpose.

4.3Analysis of the costs of (or benefits of reductions in) carbon emissions are now routinelytaken into account in policy development, and included in cost-benefit analysis. Potential

significant costs and benefits can also arise from a wider set of environmental effects.

4.4As a starting point, the wider environmental effects to consider include: Vulnerability to the predicted effects of climate change; Environmental and health effects of waste management; Effects on air quality; Landscape or townscape effects; Water pollution, levels of abstraction of water and exposure to flood risk; Biodiversity (the amount or variety of living species) and ecosystem quality; and The number of people exposed to noise or the levels to which they are exposed.

4.5Where environmental effects could be significant and wide ranging, subsequent steps in theanalysis are recommended including the use of an ecosystem services framework: please refer to

Chapter 2 of this guidance.

Relevance to programmes, policies and projects4.6It is important to identify the environmental effects at an early stage of the policy or projectdevelopment. This provides time for further more detailed analysis as required if the effects are

considered significant (see detailed step by step guide below). It also allows consideration to be

given on how to adapt options to mitigate against environmental risks or to consider options

that might be able to enhance the environment alongside meeting the stated objectives.

Proportionality and transparency in analysis

4.7The effort undertaken to value any effect on the natural environment should beproportionate to the level of costs and benefits being considered. The emphasis is placed on

having a staged and proportionate approach. Hence the early stages focus on scoping work toidentify what options have the potential to give rise to significant environmental effects. Where

options are not expected to lead to significant environmental effects then further stages of

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analysis may not be appropriate. On the other hand, where environmental effects could be

significant and wide ranging, further analysis is required.

4.8The assessment of environmental effects should be presented in the main policy appraisal sothat environmental costs and benefits can be compared to all the other costs and benefits of a

policy option. Where possible, both qualitative and quantitative assessment should also be

presented to provide evidence that underpins estimated environmental costs and benefits.

Sensitivity analysis should also be presented that help to demonstrate the key assumptions anduncertainties that might affect the analysis of wider environmental effects. It is important to be

clear and transparent about risks and evidence gaps.

Who needs to be involved in the assessment of environmentaleffects?

4.9The linkages between a policy or project and the effects on the environment can becomplex. Policy appraisal needs to develop the scientific evidence which forms the basis for

valuing environmental effects in monetary terms. In practice, this may require integrated

working between policy, science, economists and social research disciplines.

Detailed step by step guide

Step 1 Basic Scoping stage: Using the checklist, consider if the policy proposal hassignificant environmental effects

4.10It is important to consider the effect of policy options on the environment from the outset.At an early stage in the policy appraisal process, make a preliminary assessment of the main

environmental aspects that are likely to be affected using the wider environmental issues

checklist (see Chart 4.A overleaf).

4.11The checklist of questions will help you decide if your policy option will effect on theenvironment. Further information on this wider environmental issues checklist can be found athttp://www.defra.gov.uk/corporate/about/how/policy-guidance/env-effect-guide/. By clicking on

each question you can access further guidance that will help you appraise specific environmental

effects and provide guidance for subsequent steps including valuing these effects, where

possible. By following this process, you will have performed a preliminary assessment of the

potential wider environmental effects. This information will help you to decide if the

environmental effects are potentially significant.

4.12If significant environmental effects are identified, further work is required to identify theimportance to the overall policy decision, quantify and value the environmental effects and

highlight key uncertainties and evidence gaps that require further investigation.

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Chart 4.A:Wider Environmental Checklist and Flow Chart

Source: Defra

Step 2: Detailed qualitative assessment to determine the range and nature of theenvironmental effects identified

4.13Where the potential for significant environmental effects have been identified, this stagerequires taking forward a more detailed qualitative assessment, building on the evidence

collected in the scoping stage.

4.14At this stage you should be able to identify the nature (quality or quantity) and direction ofthe change in the relevant environmental effects and identify the key uncertainties and evidence

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gaps see box below for an overview of what a detailed qualitative assessment might include.

For each part of the qualitative assessment, uncertainties and gaps in knowledge should be

identified.

4.15When assessing wider environmental effects you should take a sufficiently broad view of thespatial scale and temporal nature of those effects. It is possible that the appropriate scale may

differ from that first implied by the policy change. For example, the effect of a policy option on

the environment may be at a local, national or international level or may be relevant across anentire ecosystem such as a watershed which does not conform to administrative boundaries.

Box 4.A:Qualitative assessment of the changeA qualitative assessment of the change will typically:

Describe the nature of the change change in quantity (e.g. emissions ofparticulate matter) or quality (e.g. river water quality);

Describe the direction of the change an increase or decrease (quantity) orimprovement or deterioration (quality);

Describe the temporal nature of the change - a change that will occurimmediately or gradually over time, for a limited period of time (e.g. effects

during the construction phase of a project) or permanent;

Describe the spatial nature of the change location(s) as to where the change willoccur; and

Describe the scale of the change an assessment of the significance of thechange based on scientific and technical understanding of the policy good and

the expected policy or project outcomes (e.g. whether marginal or non-marginal

compared to baseline).

4.16In cases where there are multiple environmental effects, affecting market and non-marketvalues, the use of an ecosystem services framework is recommended (see step 3 below).

4.17In cases where the significant environmental effects are limited to only one aspect, such asair quality or water quality, specific related guidance should be used to quantify and monetise

the effect of that environmental effect where possible (go directly to step 4).

Step 3 Use of an ecosystem services framework: recommended where there are multipleenvironmental effects

4.18A key tool that analysts can use in defining wider environmental effects is the ecosystemservices framework. Use of this framework is particularly recommended where there are multipleenvironmental effects affecting both market and non market values. This can ensure that the

entire range of environmental effects from a proposed policy or project is taken into account.

4.19An initial checklist of ecosystem services can be seen overleaf. Policy options should beassessed against this initial checklist of ecosystem services. This methodology ensures that all

ecosystem services are considered from the outset and the whole ecosystem is considered. A

policy option may not affect the majority of ecosystem services and so the use of this framework

is to identify which specific services are affected to take forward in terms of further appraisal.

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Chart 4.B:Initial checklist of ecosystem services for consideration

Source: An introductory guide to valuing ecosystem services

4.20The preliminary qualitative assessment of the effects on ecosystem services should allowyou to now prioritise quantification of effects on specific ecosystem services. Having established

the spatial scale and nature of your project you need to consider if it effects on:

Protected habitat areas or species. Any existing environmental problems such as pollution, flooding, erosion. Any existing environmental commitments such as carbon or air pollution.

4.21Priority ecosystem services may be determined by existing environmental restrictions,additional pressure on environmental problems and environmental risks.

4.22Some relationships may be complex and scientific advice is likely to be required. Furtherdetail and information can be found in Chapter 3 of An introductory guide to valuing

ecosystem services at:http://archive.defra.gov.uk/environment/policy/natural-environ/documents/eco-valuing.pdf

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Step 4: Quantifying and valuing environmental/ecosystem service effects

4.23The previous steps have provided guidance on developing the qualitative assessment ofwider environmental effects of a policy option where significant wider environmental effects

have been identified then it is important to attempt to monetise these effects, where possible.

This next step looks at how to quantify and value these effects, where possible. Chart 4.C below

provides an illustration of the process to value environmental effects in policy appraisal.

4.24Quantification of the change should measure the direction and magnitude of the change(and the profile over time) or provide a proxy measure of it. This should be informed by available

scientific and technical evidence. This might include a measure of quantity change (e.g. change

in carbon emissions or change in PM10 emissions), quality change (e.g. change in river water

quality) or a probability of risk of occurrence (e.g. flood risk).

Chart 4.C:Valuation information required in policy appraisal

Source: Defra

4.25By quantifying the environmental effects, it may then be possible to value these effects inmonetary terms. Economic valuation is the process of ascertaining a value that people place on

the change in the environmental good.

4.26In many cases there is no market or price for that good. However, techniques for valuationof non market goods do exist for monetary valuation of changes in environmental/ecosystem

service effects. The Total Economic Valuation Framework provides a useful framework for

understanding whether values are use values (both direct and indirect) and non-use values. Refer

to Chapter 3 for more detailed information.

4.27It may not be possible to value all the changes to ecosystem services in monetary terms.Non-monetary and participatory valuation techniques can be used to contribute to a qualitative

assessment and may be used to quantify changes that cannot be monetised. Participatory

techniques such as Deliberative Monetary Valuation can also be used to determine monetaryvalues, and may be particularly helpful where various forms of group discussion would help

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respondents understanding of complex environmental effects which are being valued, and/or

the individual and societal choices to be made.

4.28Valuing the environmental/ecosystem services effects using value transfer is a proportionateand effective use of existing evidence. Value transfer, also known as benefits transfer, is the

process of taking evidence on economic values from one context (known as the study site) and

transferring it to another context (known as the policy site).

4.29Defra published (February 2010) Valuing environmental effects: guidelines for the use ofvalue transfer at:http://www.defra.gov.uk/environment/natural/ecosystems-services/valuing-

ecosystem-services/which provides a step by step guide to valuing environmental effects using

value transfer approaches. These guidelines provide help in selecting the most appropriate

approach to value transfer and an appropriate level of effort. The guidelines also offer assistance

in selecting the most suitable economic value evidence from the literature and practical

assistance in applying the valuation evidence appropriately to the new policy appraisal context.

See Annex A for links to various environmental valuation sources

4.30Where there is no relevant valuation study available in the existing literature and the cost-benefit analysis is seen to depend significantly on the magnitude of the environmental/ecosystem

services effects, undertaking a primary valuation study may be justified. Primary valuation studiescan be costly and time consuming so it is something that should be undertaken only when it is

proportionate and appropriate.

4.31It is unlikely to be possible to estimate all the economic values associated with changes inenvironmental/ecosystem services effects. Qualitative and quantitative information will therefore

be required where there are valuation evidence gaps. You will need to consider how crucial

these evidence gaps are and if further work needs to be undertaken.

4.32The use of sensitivity analysis is an important part of the assessment to understand howestimated environmental costs and benefits are sensitive to different assumptions. As an aid in

determining the level of significance of the wider environmental effects, switching analysis ofa policy option could also be undertaken. This provides an indicator of the magnitude of the

wider net environmental effects required, in order to switch a policy from one yielding overall

net benefits to society to one yielding overall net costs to society (or vice versa).

Step 5: Reporting Stage

4.33Where an initial assessment has identified there are no significant environmental effects, nofurther steps may be required apart from providing suitable evidence in the policy appraisal.

4.34Where significant environmental effects are identified, further assessment using theecosystem services framework is recommended. As far as possible, these environmental/ecosystem

services effects should be quantified and valued. This assessment should be presented in the mainpolicy appraisal so that environmental costs and benefits can be compared to all the other costs

and benefits of a policy option.

4.35Where possible, both qualitative and quantitative assessment should also be presented toprovide evidence that underpins estimated environmental costs and benefits.

4.36Sensitivity analysis should also be presented that help to demonstrate the key assumptionsand uncertainties that might affect the analysis of wider environmental effects.

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Sources for furtherinformation

A.1UK National Ecosystem Assessment, June 2011 at:http://uknea.unep-wcmc.org/. The NEA isthe first independent analysis of the UKs natural environment in terms of the benefits it

provides to society and continuing economic prosperity. It includes a detailed evidence base on

economic values of different parts of the natural environment as well as evidence on other non

monetary values.

A.2Resources for using an ecosystems approach in policy making (What nature can do foryou?) at:

A.3An Introductory guide to valuing ecosystem services, Defra, December 2007 at:http://www.defra.gov.uk/environment/natural/ecosystems-services/

http://archive.defra.gov.uk/environment/policy/natural-environ/documents/eco-valuing.pdf

A.4Value transfer guidelines, Defra (February 2010) Valuing environmental effects: guidelinesfor the use of value transfer at:http://www.defra.gov.uk/environment/natural/ecosystems-

services/valuing-ecosystem-services/

A.5For a non technical summary of practical tools for environmental valuation, see:http://archive.defra.gov.uk/environment/policy/natural-environ/using/valuation/documents/non-

tech-summary.pdf

A.6Environmental Valuation Reference Inventory at:https://www.evri.ca/Global/Splash.aspxA.7

Guide on using participatory and deliberative techniques to support both monetary andnon-monetary valuation of ecosystem services, Defra (2011) at:

http://www.defra.gov.uk/environment/natural/ecosystems-services/valuing-ecosystem-services/

Table 4.A:Sources for economic value evidenceEnvironmentalEffect

Description and link to guidance

General UK National Environmental Assessment (UK NEA), UNEP-WCMC June2011provides a comprehensive overview of the state of the natural environmentin the UK and the benefits provided to the economy and society:http://uknea.unep-wcmc.org/The Environmental Valuation Reference Inventory (EVRI) is a comprehensivevalue transfer database supported by Defra and free to UK citizens (registrationrequired):https://www.evri.ca/Global/Splash.aspx

Air quality Interdepartmental Group on Costs and Benefits - Air Quality (IGCB(A))Guidance:Contains the outline of the methodologies developed by the IGCB(A) andprovision of the tools to aid their application. There are two broad approaches:the effect pathway approach including the use of damage costs for differentpollutants and the abatement cost approach which is used where legallybinding objectives are in danger of being breeched.http://www.defra.gov.uk/environment/quality/air/air-quality/economic/

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Noise Interdepartmental Group on Costs and Benefits Noise subject group (IGCB(N))identification of four groups of effects of noise amenity, health, productivityand ecosystems:http://archive.defra.gov.uk/environment/quality/noise/igcb/publications/noisehealthreport.htm

Climate ChangeAdaptation

Accounting for the Effects of Climate Change, HMT & Defra June 2009:http://archive.defra.gov.uk/environment/climate/documents/adaptation-guidance.pdf

Carbon Carbon Valuation in UK Policy Appraisal: a Revised Approach, DECC July 2009:http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/valuation/valuation.aspx

Biodiversity andecosystem services

Economic valuation of the benefits of ecosystem services delivered by the UKBiodiversity Action Plan:

A study commissioned by Defra on the benefits of Sites of Special ScientificInterest in England and Wales:

http://archive.defra.gov.uk/temp/sffsd0702-economic-valuation-uk-bap.pdf

http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=17005&FromSearch=Y&Publisher=1&SearchText=0768&SortString=ProjectCode&SortOrder=Asc&Paging=10#Description

Flood risk management Appraisal of Flood and Coastal Erosion Risk Management

Flood and Coastal Erosion Risk Management Appraisal Guidance, (FCERM-AG),Environment Agency, March 2010:

http://www.defra.gov.uk/publications/files/pb13278-erosion-manage-090619.pdf

http://www.environment-agency.gov.uk/research/planning/116705.aspx

Waste http://www.defra.gov.uk/environment/waste/review/

Water quality andQuantity

UK Collaborative Research Programme on River Basin Planning Economicsoutput: Report on guidance on the evidence required to justifydisproportionate cost decisions under the Water Framework Directive RevisedSummary Guidance, Jacobs, July 2007:

Environment Agency, Ofwat and Water Companies (UK Water IndustryResearch) maintain guidance related to the cost benefit analysis done tosupport the Periodic Review of Water Prices. See relevant websites for details.

http://www.wfdcrp.co.uk/pdf%5CP3%20revised%20final%20guidance.pdf

Green Infrastructure Synthesis of the evidence on the positive benefits which green infrastructurebrings to society, Forest Research, October 2010; and full critique of the currentevidence, alongside a series of supporting evidence notes, and case studies, thatdetail examples of where green infrastructure has been successfully used toprovide economic, social and environmental benefits Forest Research, October2010:http://www.forestresearch.gov.uk/fr/INFD-8A9A2W

Landscape andRecreation Scoping study on agricultural landscape valuation, Swanwick, C, Hanley, N. andTermansen, M. October 2007:

Scoping study into the use of recreational studies for economic valuation:

http://archive.defra.gov.uk/evidence/economics/foodfarm/reports/agrlandval/Mainrep.pdf

http://randd.defra.gov.uk/Document.aspx?Document=100805NEE0906FinalReport.pdf

Inland Waterways The Benefits of Inland Waterways, DEFRA and the Inland Waterways AdvisoryCouncil, March 2010http://www.iwac.org.uk/downloads/research/OGorman_et_al_2010_The_Benefits_of_Inland_Waterways_Phase_1_2nd_Edition_March2010.pdf

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This document can be found in full on ourwebsite: http://www.hm-treasury.gov.uk

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