The Benefits of Inland Waterways Final Report Defra and the Inland Waterways Advisory Council Second Edition - March 2010 Project Reference Number: WY0101 This page has been left blank Document control sheet Form IP180/B Client: Defra / IWAC Project: Inland waterways Job No: B1148700 Title: The Benefits of Inland Waterways in England and Wales – Second Edition Originator Checked by Reviewed by Approved by First Edition NAME NAME NAME NAME Stefanie O’Gorman Camille Bann Camille Bann Camille Bann Camille Bann Valerie Caldwell DATE SIGNATURE SIGNATURE SIGNATURE SIGNATURE July 2009 Document Status Second NAME NAME NAME NAME Edition Stefanie O’Gorman Camille Bann Camille Bann Nigel Widgery DATE SIGNATURE SIGNATURE SIGNATURE SIGNATURE March 2010 approved by email Document Status Jacobs Engineering U.K. Limited This document has been prepared by a division, subsidiary or affiliate of Jacobs Engineering U.K. Limited (“Jacobs”) in its professional capacity as consultants in accordance with the terms and conditions of Jacobs’ contract with the commissioning party (the “Client”). 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Contents Executive Summary (i) 1 Introduction 1 1.1 Background 1 1.2 Objectives and Scope of Study 3 1.3 Report Outline 6 2 Methodology 7 2.1 Study Approach 7 2.2 Approach to Benefit Categorisation 8 2.3 Literature Review and Evaluation 9 2.4 Benefits Transfer Methodology 10 3 The Benefits of Inland Waterways 14 3.1 Benefit Categories 14 4 Literature Evaluation 17 4.1 Introduction 17 4.2 General Findings 17 4.3 Provisioning Services 24 4.4 Regulating Services 26 4.5 Cultural Services 29 5 The Benefits Transfer Framework and Guidance for Use 33 5.1 Introduction 33 5.2 Benefits Transfer Process 34 5.3 How to value the benefits of a waterway 35 5.4 Generic Adjustments 36 5.5 The Benefits Transfer Framework 39 6 Transfer Values and Guidance for Application 42 6.1 Welfare Values 42 6.2 Economic Impact Values – employment creation 89 7 Key Issues 92 7.1 Introduction 92 7.2 Methodological Issues 92 7.3 Data Gaps and Limitations 94 8 Recommendations for Further Work 97 8.1 Introduction 97 8.2 Recommendations 101 9 List of Acronyms 106 10 Glossary 108 11 References 112 Appendix A – Map of Inland Waterways in England and Wales 119 Appendix B – Literature Review Table 120 Appendix C – Literature Review 121 C.1 Introduction 121 C.2 Benefits Transfer Literature 121 C.3 The Literature Matrix 125 C.4 Valuation Literature (welfare and economic impact) 126 Appendix D – Benefits Transfer Framework 171 Appendix E – VIVA Methodology 172 Appendix F – Drainage Function Assessment 173 Acknowledgements The authors would like to thank the Project Steering Group, which comprised representatives from The Department for Environment, Food and Rural Affairs (Defra), Inland Waterways Advisory Council (IWAC), British Waterways (BW), the Environment Agency and Michael Whitbread (Independent Consultant). Further thanks go to the participants of the online seminars: Andrew Stumpf (BW), Glenn Millar (BW), John Packman (Broads Authority), Phillip Burgess (Association of Inland Navigation Authorities), Pam Gilder (Environment Agency), Georgina Walters McLeod (East Midlands Development Agency), and Fiona Mannion (The Town and County Planning Association). Please quote this report as follows: O’Gorman, Stefanie; Bann, Camille and Caldwell, Valerie (2010). The Benefits of Inland Waterways (2nd Edition). A report to Defra and IWAC. Reference number, WY0101. Executive Summary The Executive Summary presents the key messages and finding of this study first, along with the recommendations made as a result of these findings. It then provides the background to the study, the benefits of inland waterways which were identified, the literature reviewed, the valuation framework developed and the gaps and limitations encountered. Results and key messages There are a wide range of benefits provided by inland waterways. These are both private benefits, realised through the creation of business opportunities and jobs, and public benefits, provided for instance by recreation or education opportunities. Table A below summarises the results of this study; noting for each benefit whether benefit transfer values are available; the level of confidence in the available values for the use specified, the context in which their use is recommended, and the remaining gaps in the quantitative data where possible. Monetary estimates are available to value many of these benefits using the benefits transfer valuation approach. The inclusion of these benefits within the decision making processes should result in more socially beneficial decisions being made and assist in the identification of the beneficiaries of these decisions. The most significant benefits for which values are available are the premium on properties close to the waterways and recreation benefits. However there are gaps. These gaps come in two forms; the first relates to limited information on and understanding of how to quantify some benefits – for instance community benefits; the second relates to there being no suitable monetary valuation data available for example in the case of the ‘well-being’ benefits from volunteering. The monetary units provided for the benefits need to be combined with appropriate physical units to complete the valuation exercise (for example, the value of informal recreation is multiplied by the appropriate number of visitors). In many cases better scientific evidence of the bio-physical relationships between the ecosystem service and related benefit provided is required. A physical or quantitative assessment of inland waterways benefits was outside the scope of this study; therefore it is not always clear to what extent the physical information is available to complete the valuation. However, a key gap is considered to be a clear definition and quantification of the benefits provided by the drainage and water conveyance services provided by inland waterways. i Table A Overview table Ecosystem Benefit Values in Confidence Context for use and Gaps Service Framework (H,M,L) Category Provisioning Creation of GAP N / A The indicator ‘job creation arising from expenditure’ is used to value this benefit. Useful Services business multipliers are identified, but not captured in the framework explicitly as it is focused on welfare opportunities values only. These multipliers are not specific to expenditures on inland waterways. Property premium Yes M / H The premiums presented have been developed for properties in or adjacent to waterside locations. A range of premiums have been provided depending on the type and exact location of the property. Renewable energy GAP N / A Only anecdotal evidence of these benefits is available. The associated carbon savings from (financial gains) the generation of renewable energy is addressed separately, see below. Transport Yes H Values are provided for the combined benefits (environmental, financial cost savings etc) of commuters changing transport modes from road to bicycles or walking, and for freight movement from road to rail or water. These values are applied to cycling or walking along waterways, or the movement of freight along waterways, however they can also be applied to commuter movements in other locations (e.g. through parks) or freight movements via rail. The values are therefore not restricted in application to inland waterways. Physical data is required on the miles displaced from car journeys to walking and cycling for commuter purposes or freight transport and the level of congestion on the route. Depending on the scale of the assessment it may be difficult to estimate the volume of displaced road journeys, especially in the case of commuters, as there may be a large number of variables to consider. Provision of water Yes H These values are based on the value of the water abstracted directly from British Waterways managed waters. It is assumed that the value of this water to other navigation authorities is likely to be similar and therefore these values are applicable across all navigable waterways. Confidence in the market value data is high; but low in relation to the consumer surplus (CS) values presented due to a lack of information into how this value was estimated. Volunteering Yes H These values were developed specifically for inland waterways by British Waterways, but are also applicable to non-navigation authority organisations. They represent the cost savings to the organisation benefiting from volunteer work. The number of labour hours worked by volunteers is required in order to estimate the full value of these benefits. These data are not necessarily collated by all navigation authorities so gaps may exist in the physical data. ii Regulating Carbon savings Yes H The valuation data came from Government Guidance and confidence in these estimates is Services (renewable energy therefore high. and transport) The values can be applied to carbon savings associated with navigable and non-navigable waterways. Aggregation is dependant on the savings in energy or tonne kilometres and the value of those savings in terms of carbon reductions. Some evidence of the associated carbon reductions savings in energy or tonne kilometres is provided, however this is largely site specific so gaps still exist. Drainage, water Partial L / M The values presented are associated with the flood protection benefits provided by wetland conveyance, flood habitats. These benefits may in reality be only partially provided by inland waterways and so protection and they are only applicable where a habitat along the waterway is providing a flood protection alleviation benefit to adjacent properties and environments or where a scheme will provide such a habitat. The significance of these benefits for England and Wales’ inland waterways is likely to be low. The most significant gap relates to the lack of any clear understanding of the benefits provided by drainage and water conveyance service and the extent to which these are currently provided. Water regulation Yes M Value loss due to eutrophication of the water course is used as proxy for the benefit of and pollution reversing this process. The values presented can only be applied where the value-lost from dilution eutrophication, or the reduction in value-lost (e.g. the benefits resulting from a reduction in eutrophication) can be shown to result from a scheme or project. A significant gap therefore remains in estimating the value of water quality services provided by inland waterways. The values presented can be applied to both navigable and non-navigable waterways where eutrophication is a significant problem. Water quality Yes M The values presented are thought to be broadly attributable to the protection of the water environment and associated range of regulating services. While the quality of this study is considered to be high, the overall confidence in using these values in the framework is medium (or possibly medium to high) due to the uncertainly around what exactly the respondent is providing a willingness-to-pay for. The values can be applied to value benefits from both navigable and non-navigable waterways. The physical data is required on the number of beneficiaries. The study found that the population living within a 17-36 mile radius were the relevant population to consider. iii Cultural Recreation (all Yes M Estimates are provided for the CS and expenditure value for a range of recreational activities Services forms) undertaken in or along waterways. There is a mixture in the primary studies between those specifically considering inland waterways and those applicable to all types of waterways. The data is old and public preferences are likely to have changed significantly since the early nineties when some of these studies were published. Physical data required to aggregate these benefits is available from a number of sources however there appears to be no centralised point to access these data and collation of data is likely to be inconsistent across navigation authorities. Visual amenity Yes M Values reflect the marginal change (improvement or loss) in visual amenity as a result of increasing / decreasing the number of service structures around waterways. These values are specific to inland waterways as the original research was carried at five English canal sites. The values are not useful for estimating the current impacts of structures on the visual amenity provided by inland waterways and therefore, using the aggregate value of WTP to remove all services as a proxy for visual amenity may not be methodologically robust. Heritage aspects Yes L Values reflect the preservation value of canals for those who "view canals as a heritage resource" and represent respondents’ use value for the heritage benefits of the canals they live nearest to or visit. This use value may also contain some element of the user’s non-use value. The primary study is considered to be of good quality, however the sample size of the group responding to the question on heritage resources was very low and therefore the results are unlikely to be robust. Estimating the physical data requirements for aggregation requires an understanding of the heritage importance of the sites being assessed and any known data on visitors. Education GAP N / A Information is currently restricted to anecdotal evidence, no valuation data available. The key difficulty is on how to define and quantify the final benefits of education provided by inland waterways. Volunteering GAP N / A No valuation data available for the 'well being' benefit of volunteering. The cost saving benefits provided by volunteers is discussed above. Community benefits GAP N / A Information is currently restricted to anecdotal evidence, no valuation data available. It is clear however from the evidence presented that community improvement and cohesion benefits realised through the regeneration and restoration of inland waterways can be significant and often provide sufficient justification for investment in the waterways. Non-use values Yes M / H Non-use values are provided for the continued maintenance of the canal system for boating, heritage and towpaths; biodiversity improvements and water quality improvements. These values are all specific to inland waterways however they can be applied to both navigable and non-navigable waterways. Care is required in applying these values to ensure that they are appropriate to the policy site being assessed. iv Recommendations As a first step in the development of the evidence base on the benefits of inland waterways it is recommended to test the valuation framework developed here on a specific project. This would assess its usefulness as a tool - whether the benefits identified in the framework indeed match with those realised ‘on the ground’, the applicability of the values presented, suitable aggregation data and how user- friendly the framework and guidance are. Some of the key benefits provided by inland waterways may lie in those areas which are currently not quantified and valued, such as drainage and community benefits (including increased social capital and a sense of civic pride which may be wholly or partially attributed to the waterways). Further evidence on the benefits of green transport opportunities is also required as these may prove to play a significant role in reducing travel carbon emissions as well as increase physical activity – both of which are high on the Government’s agenda. Such impacts may be particularly important in terms of the benefits they provide to disadvantaged groups. Given the gaps, one of the key recommendations drawn out of this study is to conduct further primary valuation work in order to provide more up-to-date values for a selection of benefits. A primary valuation study could be designed to answer what are thought to be the most important questions with regard to how the public perceive and value the benefits of inland waterways. It is also recommended that a centralised collation point for physical data is designed and used, given the importance of the physical units to the accuracy of the valuation results. Background Inland waterways make a valuable contribution to peoples’ quality of life. The benefits they provide are diverse and include transport, recreation opportunities, drainage services, regeneration benefits and non-use values1. The full range of benefits is rarely considered in decisions over the use or development of inland waterways and their surrounding areas; this can result in incorrect or inappropriate decisions being made. Where the wider value of inland waterways is not fully appreciated there is a risk that opportunities to realise important benefits are missed and / or that other benefits provided by the waterways network are compromised. It is important therefore, that the benefits provided by inland waterways are identified so that they may be maximised. This study was undertaken to: (i) attempt to provide an indication of the value of inland waterways; (ii) provide evidence for future cost-benefit assessments of projects or proposals2; and (iii) aid in the assessment of the level of public sector funding. 1 Non-use values are values that are not associated with actual use, or even the option to use a good or service. They are made up of (a) altruistic value (derived from the knowledge that something exists for others to use), (b) existence value (derived from knowing that something exists) and (c) bequest value (knowing that future generations will have the option to enjoy something). 2 This study does not consider the environmental and social disbenefits arising from inland waterways, or the costs to society of maintaining them; that is the study only covers the benefit side of the cost- benefit equation. v