Report No FR0353

ECONOMIC IMPACT OF CONTROL STRATEGIES

FR0353

Jun 1993

SUMMARY

I BENEFITS

The development of a methodology to determine the economic implications of possible changes in standards and legislations will provide the water industry with valuable information and allow it to take a proactive and influential role in determining environmental legislation.

II OBJECTIVES

The objectives of this study are :

  1. to identify potential changes in standards and legislation to be imposed upon the water industry,
  2. to develop a methodology for determining global cost estimates for each of the specified changes,
  3. to prepare a work programme for the application of the methodology in order to generate a cost estimate of the financial implications of a proposed change in standards or legislation.

III REASONS

Environmental pressures and public expectations have risen in the past few years and the likelihood of additional constraints being imposed upon the UK water industry has increased.

The water industry identified a need to assess the economic implications of possible changes in legislation and standards in order to take a more active and valued role in policy discussions.

IV CONCLUSIONS

A methodology to determine the economic implications of possible changes in standards and legislations has been identified.

Two types of cost models within the methodology have been identified, PACE and a statistically derived cost model. PACE has been reviewed and it is believed that the use of statistically derived cost models is the more suitable approach.

Suitable cost models for changes in standards relating to CSOs are not currently available.

The methodology outlined in this report depends on a relatively simple, but comprehensive database, providing national and regional coverage. Such a database does not exist.

V RECOMMENDATIONS

The methodology should be applied to a real case study in a large geographical area for a specific change in environmental standards and legislation.

Data should be collected to develop cost models for CSOs relating to the recent change in standards.

VI RESUME OF CONTENTS

The report explains the justification and reasoning for undertaking this study before addressing the objectives described in Section 2.

A shortlist of five possible changes in standards are described. These form the basis upon which the methodology is designed, which is explained in Section 3.

Sections 4 and 5 discuss the Database and Cost Models requirements of the Methodology. Section 6 describes an illustrative case study showing how the General Methodology outlined in Section 3 would be applied to a specific situation.

A suggested Work programme for Stage 1 of future work is given in Section 7 before the report's conclusions and recommendations.

Copies of the report are available from FWR, price 15.00, less 20% to FWR Members.