Scottish Government

Costs

Annual costs

Description and scale of key monetised costs by 'main affected group'

• Significant: A significant (>35%) share of the costs for this option will be incurred by the following sectors:Agriculture - Compliance with General Binding Rules to address diffuse pollution. Application and annual fees relating to registration and licensing of activities under the Water Environment (Controlled Activities) Regulations (2005) ( CAR).Water Industry - Capital works for agreed RBMP measures under the Quality and Standards programme of improvements. Application and annual fees under CAR.
• Moderate: A moderate (>5%) share of the costs for this option will be incurred by the following sectors:Manufacturing Sector - Implementation of additional treatment to meet increased discharge standards. Application and annual fees under CAR.Energy - Measures to address morphological pressures in the hydropower industry. Application and annual fees under CAR.Recreation and other sectors - Application and annual fees under CAR. SEPA costs for implementation (administration and enforcement) of CAR and the RBMP.
• Minor: Minor costs will fall to:Forestry and aquaculture - application and annual fees under CAR.Urban development and water transport - historical restoration of morphology and application and annual fees under CAR.Responsible authority costs for development of RBMP policies, training, monitoring and enforcement.

Average annual
(excluding one-off)

NPV

(range)

£1,242 m

(£1,051m-£1,422m)

Undiscounted one-off cost

(range)

£236 m

(£226 m - £247m)

Other key non-monetised costs by 'main affected groups'

Costs associated with local measures or measures implemented through voluntary agreements remain un-costed due to data limitations.

Any impacts of options that generate negative market or non market effects, are defined as disbenefits and are handled qualitatively under the discussion of benefits. This is to clearly delineate costs associated with delivery of the options and impacts on existing activities, groups or individuals.

Benefits

Annual benefits

Description and scale of key monetised benefits by 'main affected group'

Benefits are described qualitatively within the report and have not been monetised.

One-off

£-m

over 43 years

Average annual cost (excluding one-off)

£-m

Other key non-monetised benefits by 'main affected groups'

Benefits of draft RBMP implementation include improved quality of the water environment, recreational opportunities, increased aesthetic value, biodiversity benefits (environmental), and health and recreation (from a social perspective). It also minimises risk of infraction associated with non- WFD implementation. Use of water as a resource will be sustainable into the future. These benefits are felt across the whole of Scottish society.

Under this policy option, 1633 surface water bodies (58%) and 222 groundwater bodies (81%) are expected to reach 'Good Status' in Scotland RBD by 2015.

Potential market benefits associated with the improvement and maintenance of the water environment relate to four key areas:

• businesses abstracting water where quantity and quality are an issue, for instance the water industry, food and drink manufacturing industries;
• commercial fisheries or shellfisheries where there is an increase in the market value of the catch;
• businesses providing goods and services to recreational water users, including the tourism industry; and
• local communities where proximity to water bodies can affect property values.

The significance of these potential benefits is unknown at present.

Market values do not represent all economic benefits to society, as many environmental attributes are not paid for by individuals, but still deliver significant social benefits. Non-market benefits include both use values (such as improved recreation) and non-use values (such as the aesthetic appearance and existence of an improved water environment). These benefits link to :

• Human health impacts from improved bathing and drinking water quality; and
• Human health and material asset impacts from improved resilience to flooding and climate change.

The significant environment effects due to the measures in the Reference/Baseline case, the Draft RBMP and Closing the Gap are broadly similar. All the options produce significant positive effects for biodiversity, flora and fauna and for water (quality and quantity). The benefits are likely to be greater for the Draft RBMP than for the Reference/baseline and would be enhanced further by the measures in Closing the Gap.

Key assumptions/ sensitivities/ risks

• There are significant uncertainties regarding the accuracy of some of the costs applied in this Impact Assessment. The layers of uncertainty are: The accuracy of unit costs which themselves have often involved significant assumptions.The applicability of unit costs developed in other contexts to the water bodies within the Scotland RBD.The assumptions used to describe the physical extent of measures' application within the Scotland RBD, for example, numbers of water bodies requiring control and/or eradication of an invasive species.Temporal uncertainty around the need to maintain specific measures or delivery mechanisms further into the future, when overall risk levels may have changed and/or different technologies may have emerged.In some cases, uncertainty exists around which sector will finance a measure. Many of the pressures do not have measures identified. Those that do are high-level and often lacking a description, making it difficult to infer how measures translate into defined actions. The approach in the Scotland RBD Impact Assessment and in the Scottish part of the Solway Tweed Impact Assessment has been to adopt planning assumptions where possible to get compliance costs.Evidence base - in the second and third RBMP cycles, it is currently difficult to estimate compliance costs accurately. Actions in the first RBMP will define the most cost-effective and appropriate course of action. Where data are available and/or planning assumptions have been provided this is to provide an indication of the costs but should be viewed as potentially underestimated or overestimated.

Price base year: 2009

Time period years: 43

43 years is consistent with HMT guidance as it reflects the life of the longest lived asset (25 years) created at the end of the third RBMP (2027- giving an appraisal period of 2009 to 2052 = 43 years). Capital is assumed to be reinvested after the lifetime of capital assets has expired in order to maintain required levels of environmental protection. This could result in capital investments being made up to the end of the appraisal period.

What is the geographic coverage of the policy/ option?

Scotland RBD

On what date will the policy be implemented?

December 2009

Which organisation(s) will enforce the policy?

Scottish Environment Protection Agency

What is the total annual cost of enforcement for these organisations?

N/A

Does enforcement comply with Hampton principles?

Yes

Will implementation go beyond minimum EU requirements?

No

What is the value of the proposed offsetting measure per year?

N/A

What is the significance of changes in greenhouse gas emissions?

Considered to be Low

Will the proposal have a significant impact on competition?

No

Annual cost (£-£) per organisation (excluding one-off)

Micro:
Low-Med

Small:
Low-Med

Medium:
Low-Med

Large:
Med-High

Are any of these organisations exempt?

No

No

No

No

Impact on admin burdens baseline (2009 prices)

Increase of £ 1.235m
(Competent Authority and Responsible Authority Costs)

Decrease of £-m

Net impact of increase of £ 1.235m

Costs

Estimated Annual costs

Description and scale of key monetised costs by 'main affected group'

The costs described for the 'Closing the Gap' option, include all costs for the 'draft RBMP' option plus costs for the additional measures in the 'Closing the Gap' option.

• Significant: A significant share of the costs for this option will be incurred by the following sectors:Agriculture - Implementation of additional CMP measures for diffuse pollution and morphological restoration (+110% cost increase from d RBMP option).Responsible Authorities and other sectors - implementation of additional measures for historical restoration of morphological alterations and for eradication and prevention measures for Invasive Non-native species ( INNS) (+600% increase from d RBMP option).

Moderate: A moderate share of the costs for this option will be incurred by the manufacturing sector for the implementation of low phosphate detergents (+19% increase in cost).

Minor: No 'main affected groups' are expected to bear minor costs for this option.

It should be noted that estimated costs cover a wide application of measures under the 'Closing the Gap' option which do not yet have approval for funding and/or mechanisms in place to formally implement. Government decisions are required as to the appropriateness of longer term courses of action or investment over the first and successive river basin planning cycles. As a result, cost estimations are based on cost ranges (upper and lower limits), best costs and possible extent of application - therefore costs are indicative. These will be reviewed as part of the formal consideration of the options by relevant governments as part of policy or investment programmes or under the first RBMP cycle as part of the definition of cost-effective actions.

One-off (transition)
Additional cost

£ 27 m
£4m

over 43 years

Average annual cost (excluding one-off)

Additional Cost

£ 64 m
28 m

over 43 years

NPV

(range)

£1,867 m

(£1,509 m - £2,275m)

over 43 years

Additional Cost

(range)

£651 m

(£458m - £853m)

over 43 years

Undiscounted One-off Cost

(range)

£339m
(£324m-352m)

over 1 year

Additional one-off cost

(range)

£103m
(£98m - 107m)

over 1 year

Other key non-monetised costs by 'main affected groups'

Costs associated with local measures or measures implemented through voluntary agreements remain un-costed due to data limitations:

Any impacts of options that generate negative market or non market effects, are defined as disbenefits and are handled qualitatively under the discussion of benefits. This is to clearly delineate costs associated with delivery of the options and impacts on existing activities, groups or individuals.

Benefits

Annual benefits

Description and scale of key monetised benefits by 'main affected group'

Benefits have not been monetised.

One-off

£-m

over 43 years

Average annual cost (excluding one-off)

£-m

Other key non-monetised benefits by 'main affected groups'

Negative effects (market and non-market) are defined as disbenefits and are handled qualitatively under the discussion of benefits. This is to clearly delineate costs associated with delivery of the option and impacts on existing activities, groups or individuals.

Qualitative Description of Benefits

In addition to the benefits arising from the 'draft RBMP' option, 'Closing the Gap' generates additional benefits including:

• Improved catchment management and reduction in diffuse pollution resulting in additional water bodies achieving environmental improvements.
• Improved biodiversity from removal of invasive non-native species and restoration activity ( e.g. restoring natural riparian vegetation).
• Increased aesthetic value and recreational opportunities from morphological improvements.
• Human health benefits from improved drinking and bathing water quality.
• Additional human health and material asset benefits of increased flood protection arising from removal of invasive non-native species and morphological improvements

The number of water bodies improved specifically by the 'Closing the Gap' cannot be easily disaggregated from those under 'draft RBMP'. However, they can be inferred to some extent by the nature of the 'Closing the Gap' measures as follows: approximately 165 water bodies (145 river water bodies and 20 transitional water bodies) will be improved in regards to diffuse pollution; 53 water bodies from low phosphate detergents; 28 improved in regards to invasive non-native species and up to 227 improved in regards to morphological pressures in the Scotland RBD.

Key assumptions/ sensitivities/ risks

General assumptions, for example in support of NPV calculations, are the same as those applied under 'draft RBMP'. However the following specific assumptions have been made for the calculation of costs under 'Closing the Gap':

• Costing information from Entec (2008) has been used to calculate the CMP costs. These costs are from the DEFRA (2008) and Cuttle et al. (2007) reports and are considered to significantly over-estimate costs to the agricultural sector. The actual costs cannot be ascertained until SEPA work with farmers to define the most effective and technically appropriate measures over the cycle. Cost estimates for prevention and eradication of INNS have been based on limited experience and field trials. Additional research is proposed within the draft RBMP to identify suitable measures and these would be costed in the future.

Price base year: 2009

Time period years: 43

Net benefit range ( NPV): £-m - £-m

Net benefit ( NPV best estimate): £-m

What is the geographic coverage of the policy/ option?

Scotland RBD

On what date will the policy be implemented?

December 2009

Which organisation(s) will enforce the policy?

Scottish Ministers and the Scottish Environment Protection Agency

What is the total annual cost of enforcement for these organisations?

N/A

Does enforcement comply with Hampton principles?

Yes

Will implementation go beyond minimum EU requirements?

No

What is the value of the proposed offsetting measure per year?

N/A

What is the significance of changes in greenhouse gas emissions?

Cannot be calculated at present. It is considered to be low.

Will the proposal have a significant impact on competition?

No

Annual cost (£-£) per organisation (excluding one-off)

Micro:
Low-Med

Small:
Low-Med

Medium:
None

Large:
Med

Are any of these organisations exempt?

No

No

No

No

Impact on admin burdens baseline (2009 prices)

Increase of £ 1.235m
(Competent Authority and Responsible Authority Costs)

Decrease of £-m

Net impact of £-m: not significant over draft RBMP