1. eftec Economics for the Environment Consultancy Catchment Management in the UK: The Role of Arguments for Biodiversity envecon 2015: Applied Environmental Economics Conference The Royal Society, London 13 th March 2015 Laurence Mathieu 1, Rob Tinch 1, Allan Provins 1 1 eftec

2. eftec  The BESAFE project  Case study: UK water industry  Conclusions for catchment management in the UK  Key messages Outline

3. eftec  Biodiversity and Ecosystem Services: Arguments for the Environment - http://www.besafe-project.nethttp://www.besafe-project.net  FP7, Collaborative Project coordinated by Alterra  eftec co-leading synthesis  4 years from September 2011  WHY: To help policy-makers understand the effectiveness of various types of arguments for biodiversity protection under varying circumstances  Arguments for biodiversity conservation  Effectiveness of arguments  Importance people attribute to arguments The BESAFE project

4. eftec  BESAFE uses case studies  Outcomes of case studies summarised into a database  Database looks at each case study as consisting of a series of events  At each event one or more stakeholders will use one or more arguments  The database breaks arguments down into:  Biodiversity  Beneficiaries  Benefits  Value  An argument is a reason used to show the importance of biodiversity and justify its protection and restoration BESAFE method

5. eftec  Privatisation (1989) - 10 water authorities  Regulation:  Environment Agency (environmental regulator)  Drinking Water Inspectorate (drinking water quality regulator)  Ofwat (economic regulator)  Today:  10 water and sewerage companies  13 water only companies The water industry in the U.K.

6. eftec  Bills paid by customers reflect costs of services, including treatment of raw water  Ofwat needs to be persuaded of validity of investments in catchment management schemes  Catchment management approaches:  better raw water quality  water companies and customers  secondary benefits  other stakeholders Case study: UK water industry

7. eftec  Remit: to protect consumers’ interests  Price reviews (PRs) - 5-yearly process:  set limits for the prices water companies can charge their customers  review water company business plans and proposed investments  Attention given to environmental improvement within PRs has increased Ofwat

8. eftec  “An area of land through which water from any form of precipitation drains into a body of water”  Quality of water bodies affected by management activities  Impact on the ecosystem service potential for provision of clean water  Increase in catchment management schemes and investigations Case study: UK water industry

9. eftec

10.  Describes arguments used and the regulatory context  Focuses on arguments for biodiversity in the context of catchment management  Looks at the 'coevolution' of arguments and context over the past 15 years Arguments for catchment management

11. eftec  Review of literature: Ofwat, water industry, Defra  Information from literature review recorded in database  Interviews conducted with Environment Agency, water companies, Ofwat, consultant, policy adviser for the UK water industry  Information from interviews used to verify the findings of the literature review Method and data collection

12. eftec  Enhancement of water quality (inc. treatment cost savings)  Increasing water storage  Improving carbon storage  Improving human health  Improving visitor’s experience (heritage)  Support to recreational activities  Enhancing and protecting the natural environment  Improving wildlife  Reducing the risk of flooding Arguments identified in the case study

13. eftec Important changes over the last 10 years 2004 2014 CBA of CM Ofwat CM Defra Water Strat. UU SCaMP 1 Totex Ofwat social value SWW UTI 09 Ofwat PR09 CCG

14. eftec Effectiveness: High; Moderate Evolution of arguments over time Event PR04 Implementation of SCaMP 1 (2005-2010) Government’s water strategy PR09 Upstream Thinking Initiative From catchment to customer PR14 StakeholderOfwatUnited UtilitiesDefraOfwatSW WaterOfwat Date2004200520082009 20112014 Water quality Water storage Carbon storage Health Heritage Recreation Natural environment Wildlife Flood protection

15. eftec  “beneficiary pays” as well as “polluter pays”  Requirement to set up customer challenge groups  Interest in future generations and customers  Mention of environment quality and climate regulation  Requirement to propose ‘outcomes’ that are valued by customer and the environment  Requirements to conduct CBA of catchment management schemes  Requirement to provide evidence of customer support  Require approaches for dealing with risk and uncertainty in decision-making Shift in Ofwat’s perspective

16. eftec  Novel approach but increasing practice across the industry  Uncertainty as to whether water companies picked the best opportunities or implemented schemes as opportunities became available, at the relevant time  Increasing use and effectiveness of arguments  Ofwat position has changed: more flexible approach to regulation  Arguments contributed to those regulatory changes  Shift in arguments follows shift at EU levels  ES arguments  play a central role in UK water policy  played key role in enabling a shift in regulatory focus Conclusions for catchment management in the UK

17. eftec  Uncertainty use to be an obstacle to the implementation of catchment management schemes  now more accepted  Arguments are multi-faceted  several benefits and beneficiaries  Arguments that reflect this are more effective  “Argument” is a scientific term. For general use, ‘communication’ may be a better term. Key messages

18. eftec Thank you Contact Laurence Mathieu laurence@eftec.co.uk www.eftec.co.uk 18