Well-being and the water environment: An econometric investigation 13 th March 2015 Steve Arnold Environment Agency Bruce Morley University of Bath

Subjective Well-being Measures people’s experiences rather than exposing their preferences British Household Panel Survey (scale of 1 (dissatisfied) to 7 (satisfied)). “How dissatisfied or satisfied are you with your life overall?” ONS questions in Annual Population Survey (Scale of 0 (not at all) to 10 (completely)). “Overall, how satisfied are you with your life nowadays?” “Overall, to what extent do you feel the things you do in your life are worthwhile?” “Overall, how happy did you feel yesterday?” “Overall, how anxious did you feel yesterday?”

Life Satisfaction Approach A way of generating valuation estimates using SWB data Compares a given change in SWB from the environmental change to the equivalent income change that would give the same change in SWB Has been used for air quality, health, climate amongst others Not a replacement for, but complement to revealed preference and stated preference valuation methods Does not require a cognitive recognition by individuals of the impact of the change, but cannot pick up on non-use values.

Background SWB is attracting an increasing amount of positive attention as a robust and informative indicator We can build on a wide range of reports, from within the UK government such as Fujiwara and Campbell 2011 for HM Treasury and DWP, and beyond, for example the Stiglitz-Sen-Fitoussi 2009 report and the Layard-O’Donnell 2014 commission on wellbeing and policy.

Hypothetical example of use in Environment Agency A small river runs through a park next to a housing estate. The Environment Agency is looking into restoring the waterway and would like to estimate the social benefits from the project. If we look to a value transfer situation: Hedonic pricing may not be appropriate as a lot of the local houses are not owner-occupied; travel cost method would not work as few people travel from beyond the local population to the park. Stated preference may not work as people living nearby tend to have low disposable incomes. This also relies on people being able to predict how their preferences change as the local park changes. LSA may work if we have SWB data from people living near similar parks but where the conditions of the parks vary.

Possible use in Environment Agency Other possible uses: Wider water environment Monitor of Engagement with the Natural Environment (MENE) Can be used a local or national scale, and for long- or short-term projects

Preliminary research Generally speaking, how satisfied or dissatisfied are you with your life? (from 1=completely dissatisfied to 7 = completely satisfied). How often, if at all, do you visit any part of the water environment around England? (from “at least a few times a week” to “never”) Overall, how would you rate the quality of England’s water environment? (from “very good” to “very poor” and “not applicable- I’ve never visited any water environments in England”) 867 respondents giving 612 usable observations Used Ordinary Least Squares, controlling for heteroskedacity using White’s method

Results No statistically significant correlation between people’s use of the water environment to their subjective well being (coefficient: -0.04, p: 0.43) Perception of quality was statistically significant at the 10% level (coefficient: -0.16, p: -0.08)* Other variables are as would be expected from other studies: Age: SWB declines at first, then rises Average household income (coefficient: 0.12; income was coded in income bands) Number of children Marital status Overall r-squared was 0.19 * note: negative coefficient because perception of water quality was coded as 1= very good and 4=very poor

Next steps Results are tentatively positive so suggest further work is needed but would be useful Wider interest within Defra Network Looking for opportunities to investigate further Links to GIS data