Preliminary Cost Effectiveness Analysis and WFD economics update Kevin Andrews

pCEA - Aim To minimise the amount of new cost- effectiveness analysis that is needed by drawing on existing information, expertise and processes, To maximise the amount of analysis done at the national level

pCEA - scope Scale and nature of problem Quantum of costs Affordability Sectoral shares Phasing Uncertainty Simplification/guidance

Governance Policy Team

Working Groups Sector working groups –Water industry (Ofwat) –Industry (DTI) –Non-Ag-Diffuse (Defra) –Flood management and planning (Defra) –Navigation and Ports Cross sector groups –Water resources (EA) –Nutrients (Defra) –Groundwater quality (Defra)

Progress All sector groups are up and running Key inputs to information notes drafted –Strategic assessment –Reference cases –Scenarios –Standards First round of supporting research commissioned

WFD Economics Update

CRP projects status Project 1 – scoping – completed. Now being operationalised within the EA Project 2a/b – CEA methodology – completed. Projects 2c/e - CEA guidance – completed – database and guidance – Being used in pCEA Project 2d – Cost proformas - completed but untested in E&W – Being used in pCEA Project 3 – Evidence for DC – DFR – expected to complete in March – still problems

Ongoing work Project 4 benefits – appointed project manager - agreed strategic approach Estimate overall benefits for first plan (envelope) + tools for prioritisation + limited empirical work where needed Improve science/economics for 2 nd RBP: –Water body use an access –Integration of science and economics

Choice experiment Large sample, face to face Series of survey questions, prompts, reminders, background facts Choice cards showing different combinations of: –Objective achievement for different water bodies, timings, certainty –Costs Econometrics can tell you how much people on average are willing to pay for different improvement scenarios

Progress so far Completed literature review – few previous examples – but very useful Completed first round of deliberative research groups Supporting science work underway – draft descriptors developed Options for survey design being discussed

Expected use of results Revision of the overall RIA (summer) Input into SWMI consultation Guidance for the EA on CEA and DCA