Table of Contents

Environmental Valuation in Developed Countries

Environmental Valuation in Developed Countries

Case Studies

Edited by David Pearce

This is the second of two volumes of case studies that illustrate how environmental economists place values on environmental assets and on the flows of goods and services generated by those assets. This important book assembles studies that discuss broad areas of application of economic valuation – from amenity and pollution through to water and health risks, from forestry to green urban space. In this, his last book, the late David Pearce brought together leading European experts, contributors to some two dozen case studies exploring the frontiers of economic valuation of natural resources and environmental amenity in the developed world.

Chapter 12: Valuing the Environmental Benefits of Water Industry Investment in England and Wales

Bruce Horton and Jonathan Fisher

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation

Extract

Bruce Horton and Jonathan Fisher1 INTRODUCTION The Environment Agency, the main environmental regulator in England and Wales, has undertaken assessments of the benefits of water quality and water resource improvements in order to identify what action might be required by the UK private water companies to address environmental problems. The purpose was to inform UK government ministers on environmental requirements for the 4th Periodic Review of the water industry. This chapter outlines the benefit assessment work undertaken. The next section provides some policy background and introduction to the process, outlining the economic appraisal approach adopted for different types of schemes. The third section details the methodologies employed to assess the environmental benefits associated with 1. the overall environment programme, and 2. a subsection of discretionary schemes that were subject to a detailed cost–benefit analysis. The common and consistent methodology was based on applied benefit transfer techniques. The fourth section presents the main results of the different types of assessment. The fifth section reflects on what went well and what problems were encountered during what was a complex process, the like of which had not been attempted on such a scale in the UK before. Section six then takes forward some of the key lessons learnt for the future.2 POLICY BACKGROUND Every five years, the Office of Water Services (OFWAT), which regulates the private water sector, reviews the business plans and assesses the future revenue needs of water and sewerage companies in England and...

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