Benefits Transfer and Low Flow Alleviation: What Lessons for Environmental Valuation in the UK?

Use of environmental valuation and benefits transfer in a recent legal ruling in the UK between Thames Water Utilities and the Environment Agency over water abstraction costs appeared to set an unfortunate precedent. In the first attempt to fulfil its statutory duties, the Agency was thwarted in its use and interpretation of non-market valuation techniques, in particular, the vexed issue of how to aggregate the results of valuation studies in original sites or those to where values might be transferred. The ruling has broader implications for water pricing and resource development by the industry. Far from being a blow for either cost-benefit analysis or environmental valuation, the decision highlights some of the research imperatives for the derivation of non-market values by economists and their translation for use in government decisions.     

Sustainability at the Local Scale: Defining Highly Aggregated Indices for Assessing Environmental Performance. The Province of Reggio Emilia (Italy) as a Case Study

In order to achieve improved sustainability, local authorities need to use tools that adequately describe and synthesize environmental information. This article illustrates a methodological approach that organizes a wide suite of environmental indicators into few aggregated indices, making use of correlation, principal component analysis, and fuzzy sets. Furthermore, a weighting system, which includes stakeholders’ priorities and ambitions, is applied. As a case study, the described methodology is applied to the Reggio Emilia Province in Italy, by considering environmental information from 45 municipalities. Principal component analysis is used to condense an initial set of 19 indicators into 6 fundamental dimensions that highlight patterns of environmental conditions at the provincial scale. These dimensions are further aggregated in two indices of environmental performance through fuzzy sets. The simple form of these indices makes them particularly suitable for public communication, as they condensate a wide set of heterogeneous indicators. The main outcomes of the analysis and the potential applications of the method are discussed.     

Environmental Assessment Framework for Policy Applications: Life Cycle Assessment,External Costs and Multi-criteria Analysis

The paper presents a framework for the analysis of external costs of environmental burdens, namely an impact pathway analysis, often coupled with the inventory stage of life cycle assessment (LCA). The ground rule is: quantify as much as possible in terms of burdens (pollutant emissions, etc.), impacts, and their monetary equivalent, then use multi-criteria analysis (MCA) for any remaining impacts that are considered to be too uncertain or defy quantification through to monetization. Although MCA could be used directly on estimates of burdens or impacts, monetary valuation provides a mechanism for consistent weighting of impacts categories based on assessment of public preference. Further advantages of extending LCA through detailed impact assessment combined with monetary valuation are that it greatly simplifies MCA by combining a large number of different environmental impact categories, thereby avoiding an unmanageably large number of criteria, and also facilitates cost benefit analysis (CBA). The risks are noted of inappropriate use of the tools or interpretation/use of the results, and recommendations are made for improved practice. These points are illustrated with examples. The key messages are: (1) that policies should be targeted correctly to give a clear signal which source of a burden should be reduced by how much; (2) that analysts should take into account the needs of policy makers and the link between the analysis and possible policy applications; and (3) that current LCA practice gives limited guidance in both areas, largely through a lack of consideration of the relative and absolute importance of different types of impact. However, this is precisely the strength of external costs analysis, particularly when used with MCA.     

Valuing uncertain asset cash flows when there are no options: A real options approach

The real option valuation method is often presented as an alternative to the traditional discounted cash flow (DCF) approach because it is able to quantify the additional asset value arising from flexible asset management. However, these two valuation methods differ on a more fundamental level: their approach to determining the effects of cash flow uncertainty on asset value. Real option valuation adjusts for risk within the cash flow components while the DCF method discounts for risk at the aggregate net cash flow. This seemingly small difference allows the real option method to differentiate assets according to their unique risk characteristics, while the conventional DCF approach cannot.This paper presents an overview of the real options and conventional DCF frameworks for valuing uncertain cash flows. To emphasize the approaches' different treatment of risk we assume an absence of managerial flexibility. Using simple algebra, this paper demonstrates that the traditional DCF method fails to adequately discount net cash flow risk, no matter what discount rate is used. Finally, in a stylized mining example we show that DCF rules would lead a developer to forego $24.5 million in value creation, at a profitability index of 1.49, by making a poor investment decision.     

Scenario realism and welfare estimates in choice experiments--a non-market valuation study on the European water framework directive

Using choice experiment data for economic valuation we analyse how disbelief in survey information could affect the retrieved welfare estimates. We distinguish between two types of survey information to the respondents. The first type of information concerns the current environmental status of a water body. This information is provided prior to the valuation questions and the corresponding beliefs in the provided information are also elicited before valuation. The second type of information concerns the proposed improvements in the environmental status of the water body. We find that average welfare measures differ considerably according to whether respondents who disagree with the status quo levels and find proposed scenarios unlikely are included or not.     

Aggregating the benefits of environmental improvements: distance-decay functions for use and non-use values

One of the main problems in using environmental cost-benefit analysis is deciding on the relevant population: whose benefits should we count? This is important since aggregate benefits depend on both per-person benefit and the number of beneficiaries. Yet this latter term is often hard to evaluate. Distance-decay functions are one way of addressing this problem. In this paper, we present estimates of distance-decay functions for a particular environmental improvement, namely a reduction in low flow problems on the River Mimram in Southern England. We do this both for users and non-users, in the context of a contingent valuation study of the benefits of improving low flow conditions. We test whether distance-decay effects for mean Willingness to Pay are stronger for a single environmental good (the River Mimram, in this case) than for a more inclusive set (here, all rivers in Thames region which suffer from low flow problems). Finally, we explore the impact on part-whole bias, in terms of the relationship between WTP for an individual site and WTP for a more inclusive group of sites, of allowing for distance-decay effects.     

Public policy and the value of the environment: an alternative approach

There is a growing concern regarding the ‘true’ GNP. The claim is that the cost of environmental degradation should be taken into account when calculating welfare measures for society which can be derived from the system of national accounts (SNA). However, the reason that it has not been done is the difficulty of calculating the true ‘price of the environment’. The literature recognizes two types of measurements. One is based on indirect measures (e.g. hedonic methods) while the second is based on direct methods (e.g. contingent valuation methods). There is an alternative approach which is suggested in this paper. The new method relies on the assumption that what we see in reality is the outcome of a maximization process of some social welfare function which includes not only GNP but other elements of which environmental quality is one. By observing the reality, we can get some information on the implicit governmental weights and hence on the trade‐off between the GNP and the environment. This is a positive approach rather than a normative one, so future decisions can rely on this measurement as a guide for controversial decisions regarding development versus preservation. The theoretical model is then applied to the Israeli economy as an example in order to have some estimate on the price derived by this method.     

A Lifecycle Assessment and Economic Valuation of Recycling

The financial costs of recycling schemes fail to account for external costs and benefits such as environmental pollution, road congestion and accidents. This paper compares the environmental and social impacts of a kerbside collection scheme for recyclable household waste, with a bring scheme, using lifecycle assessment. Economic valuation is used to assign relative weights to these impacts. A second comparison examines the relative external costs of recycling and landfill disposal of waste. The results show that the kerbside collection scheme has a lower external cost than the bring scheme, but this is of less importance than the benefits to be gained within the manufacturing system by using secondary materials. It is concluded that the combination of lifecycle assessment and economic valuation is an effective means of evaluation to direct the sustainable development of waste management.     

Multiple criteria decision making: Facilitating a learning environment

Effective decision making for sustainability requires consideration of multiple evaluation criteria. A numerical weight, assigned to each criterion, is the most common tool used to formalize preferences in Multiple Criteria Decision Making (MCDM). However, there are methods other than applying weights, which can be used to explore and articulate preferences. Two such groups have been identified as aspirational and holistic methods. The authors are interested in establishing if the different approaches to MCDM vary in their ability to facilitate a learning environment. There has been little examination of how this might best be achieved. An attempt is made to set out some hypotheses about which characteristics of MCDM tools may best support such learning. Additionally, three MCDM tools, representing the weighting, aspirational and holistic methods, are evaluated through a workshop for their ability to support individual learning. This includes a new tool, referred to as Target Ordering, which explores preferences through criteria targets rather than applying a weight to the criteria themselves.     

Understanding and actioning BRE environmental assessment method: a socio-technical approach

The following research applies a socio-technical approach to an original study of the role of BRE environmental assessment method (BREEAM) in sustainable building practice. The primary objective is to gain insight into what facilitates and what weakens professional associations to implement a sustainability agenda in a building project. It focuses on understanding different sets of meaning which underlie engagement with BREEAM and how BREEAM is actioned. To do this, the research framework draws on social network analysis. However, this research does not consider that sustainable building is merely an outcome of planned action. Instead, sustainable building is seen to involve processes of engagement amongst different groups, technologies, materials and methods. Therefore, the conceptual framework adopted incorporates consideration of the materiality of sustainable building engagements, highlighting the relations between actors. Interviews with project professionals involved in a case study of a BREEAM Outstanding development provide the empirical basis for this work. This research will be of interest to scholars interested in socio-technical approaches to building development, environmental building assessment methods and sustainable building.     

Sectoral sustainability and sustainability assessment methodologies: A review of methodology in light of collaboration with the UK oil and gas sector

This paper discusses methodologies that have been employed to give insights into business performance in relation to sustainable development, both at a sectoral and corporate level. From consideration of different sectoral sustainable development methodologies, some key issues and good practice related to their derivation are elaborated. These issues are then further illustrated by a detailed comparison between three sustainable development methodologies that have been used in the UK offshore oil and gas industry. The methodologies chiefly differ in terms of how they address the problem of comparing different impacts across potentially non-commensurable dimensions, one proceeding through explicit monetary valuation, another through implicit valuation of different options and another through presentation of an unaggregated framework of indicators. The paper concludes by identifying the different situations in which use of these different methodologies is appropriate.     

Policy And Practice Green Grass and Brown Roots: Understanding Environmental Problems in Deprived Neighbourhoods

Understanding neighbourhood conditions can play an important role in urban environmental management, especially when environmental services are lacking and new approachesare being debated. This paper describes and evaluates three research methods for assessing some of the environmentalproblems facing low income households and communities: (1) broad spectrum household surveys; (2) participatory rapid assessment; and (3) contingent valuation. As part of the study upon which this paper is based, the techniques were applied on a small scale in Jakarta. The paper finds that each technique can provide important and often complementaryinsights. The broad spectrum survey is particularly suitable to broad based planning, participatory appraisal to NGO initiatives and contingent valuation to utility pricing decisions.     

Fuzzy multiple-criteria decision-making approach for industrial green engineering

This paper describes a fuzzy hierarchical analytic approach to determine the weighting of subjective judgments. In addition, it presents a nonadditive fuzzy integral technique to evaluate a green engineering industry case as a fuzzy multicriteria decision-making (FMCDM) problem. When the investment strategies are evaluated from various aspects, such as economic effectiveness, technical feasibility, and environmental regulation, it can be regarded as an FMCDM problem. Since stakeholders cannot clearly estimate each considered criterion in terms of numerical values for the anticipated alternatives/strategies, fuzziness is considered to be applicable. Consequently, this paper uses triangular fuzzy numbers to establish weights and anticipated achievement values. By ranking fuzzy weights and fuzzy synthetic utility values, we can determine the relative importance of criteria and decide the best strategies. This paper applies what is called a λ fuzzy measure and nonadditive fuzzy integral technique to evaluate the synthetic performance of green engineering strategies for aquatic products processors in Taiwan. In addition, we demonstrate that the nonadditive fuzzy integral is an effective evaluation and appears to be appropriate, especially when the criteria are not independent.     

How to evaluate raw material supply risks—an overview

Some strategic raw materials do have an extremely unsecure supply situation. Several working groups around the world have made criticality assessments for metallic raw materials to analyze the driving impact factors for this instability. However, the influences on raw material availability are manifold and therefore criticality assessment methods are very heterogeneous. Here we give an overview about the differences and similarities of supply risk evaluation in 15 criticality assessment methods. We take the example of Indium, which has been rated in 60% of these criticality studies, and show which data base is used for supply risk evaluation. Our results show a lack of consensus about which indicators give reliable information for raw material supply risk and how these indicators should be aggregated. We anticipate our essay to be a starting point for more justified indicator selection and weighting in criticality assessments.     

Public opinion and solid waste in Bangkok

The problems encountered when seeking suitable locations for landfill sites often include public concern over the potential visual, health and environmental impacts. There have been many attempts to predict the response of residents in an area to a proposed landfill site and suggestions of ways to adequately consult and include the local population in the decision-making process. An alternative approach is described in this article where the residents living in the vicinity of a landfill site in Bangkok were asked how much they would be willing to pay for the landfill site to be closed and the waste taken out of the city. The method used, the contingent valuation method, can provide information on how much people value environmental goods and services. The use of the technique in this instance provided an estimate of the costs of the disamenity effects of the landfill site to the local residents.     

Product quality-based eco-efficiency applied to digital cameras

When calculating eco-efficiency, there are considerable confusion and controversy about what the product value is and how it should be quantified. We have proposed here a quantification method for eco-efficiency that derives the ratio of the multiplication value of the product quality and the life span of a product to its whole environmental impact based on Life Cycle Assessment (LCA). In this study, product quality was used as the product value and quantified by the following three steps: (1) normalization based on a value function, (2) determination of the subjective weighting factors of the attributes, and (3) calculation of product quality of the chosen products. The applicability of the proposed method to an actual product was evaluated using digital cameras. The results show that the eco-efficiency values of products equipped with rechargeable batteries were higher than those products that use alkaline batteries, because of higher quality values and lower environmental impacts. The sensitivity analysis shows that the proposed method was superior to the existing methods, because it enables to identify the quality level of the chosen products by considering all products that have the same functions in the market and because, when adding a new product, the calculated quality values in the proposed method do not have to be changed.     

Assessing impacts on urban greenspace,waterways, and vegetation in urban planning

Parks, waterways, and vegetation enhance the well-being of urbanites and thus warrant consideration in planning and policy-making. It is, however, difficult to assess how land-use change may impact these features and how this in turn may impact well-being. I use a case-study approach to present a framework that combines geospatial and economic valuation techniques to generate indicators of the effects of land-use policies that alter these amenities on community well-being. This framework quantifies the impacts of land-use change on urban environmental amenities in a way that could help communities plan land use so as to maintain well-being as they urbanise.     

Multi-angle Indicators System of Non-point Pollution Source Assessment in Rural Areas: A Case Study Near Taihu Lake

This study aims to identify key environmental risk sources contributing to water eutrophication and to suggest certain risk management strategies for rural areas. The multi-angle indicators included in the risk source assessment system were non-point source pollution, deficient waste treatment, and public awareness of environmental risk, which combined psychometric paradigm methods, the contingent valuation method, and personal interviews to describe the environmental sensitivity of local residents. Total risk values of different villages near Taihu Lake were calculated in the case study, which resulted in a geographic risk map showing which village was the critical risk source of Taihu eutrophication. The increased application of phosphorus (P) and nitrogen (N), loss vulnerability of pollutant, and a lack of environmental risk awareness led to more serious non-point pollution, especially in rural China. Interesting results revealed by the quotient between the scores of objective risk sources and subjective risk sources showed what should be improved for each study village. More environmental investments, control of agricultural activities, and promotion of environmental education are critical considerations for rural environmental management. These findings are helpful for developing targeted and effective risk management strategies in rural areas.