Francis Heil

London’s Future Drainage and Wastewater: Valuing Wider Benefits of Adaptation Options

Flooding due to heavy rainfall is recognised as London’s greatest short-term risk from climate change, placing the city’s drainage and wastewater systems under immense strain. Thames Water (TW), London’s sewerage company, therefore needs to develop adaptation options and make investment decisions which are resilient under future uncertainty. In evaluating options there is a need to go beyond conventional cost-benefit analyses to better capture the wider impacts on society and the environment. TW is seeking enhanced methods to justify investments and to articulate the wider benefits of adaptation options.

This research developed a framework and tool for valuing wider benefits and disbenefits of drainage and wastewater adaptation options, for use by TW during the options appraisal process. The research drew from international best-practice guidance and tools which are in their infancy in being applied to the UK water industry. The framework has six stages: 1. Understand context; 2. Define baseline; 3. Identify benefits; 4. Quantify benefits; 5. Value benefits; 6. Evaluate the distribution of benefits. Wider benefits and disbenefits were identified by considering the impact of the project on the company and society across the 5 Capitals: natural, human, social, manufactured, and financial capital. The tool developed also includes a method for comparing adaptation options, by weighting different benefits through the analytic hierarchy procedure (AHP) to reflect stakeholder preferences.

The framework is demonstrated through a case study in the Brent-Harrow catchment of London, considering two sustainable drainage options. Option 1 includes installation of bioretention ponds and a sacrificial sports ground in a park to alleviate flooding and deliver wider benefits including amenity and recreation. CIRIA’s B£ST tool, LEEP’s ORVal tool, and EA’s flooding grant-in-aid calculator where used to quantify and monetise benefits, totaling £13.7 million. The benefit-to-cost ratio (BCR) was 0.13 when considering only the benefit of flood alleviation, but 3.5 when wider benefits were included; highlighting the value delivered by multi-functional blue-green infrastructure and improving the business case of sustainable drainage systems. Option 2 includes installation of raingardens in 8000 properties to alleviate flooding, whilst also reducing wastewater service charges for customers and improving amenity of neighbourhoods. Benefits were calculated at £20.3 million with a BCR of 1.3. The two options were compared through AHP, where benefit types were used as comparison criteria. Results demonstrated that Option 1 was preferable to Option 2, depending on the weighting of benefits.

The work demonstrates that accounting for wider benefits enhances decision making and promotes co-funding and co-delivery of adaptation options. The research also identified recommendations for TW to consider, including the potential to develop natural capital accounts, the opportunity to increase incentives to drive customers to invest in managing surface-water on their sites, and the wide-scale benefits that can be delivered through catchment-wide integrated water management.