The green infrastructure valuation toolkit user guide

Building natural value for sustainable economic development: The green infrastructure valuation toolkit user guide
that can be monetised to the costs of implementation - both initial capital and
long-term maintenance. The cost benefit appraisal also describes the project
benefits in non monetised terms through compiling indicative non-monetary
quantitative outputs and short qualitative descriptions of applicable benefits.
Comparing the PVs of the benefits from green infrastructure assets or
improvements against associated capital and revenue costs and discounting on a
common basis, is particularly relevant given that the benefits of green
infrastructure investment can be long term. For example, a canal-side
improvement may create the setting for investment over a period of five to 10
years. Some of the benefit groups, such as carbon storage and flood protection,
may deliver benefits for periods of 50 years or longer.
‘Discounting’ is based on the premise that people prefer to receive benefits in the
present rather than in the future. The toolkit is designed to help its users express
the net present value* (NPV) of green infrastructure assets – that is their value
in present terms, accounting for all the net benefits the assets will bring over their
lifetime. In technical terms, the NPV is the sum of the present and discounted
future flows of net benefits associated with a green infrastructure asset. The
discount rate* is used to reduce future benefits and costs to their present-time
equivalent.
The challenge in arguing the value for money case of any public sector
investment is that usually the test is for the value of the benefits to equal at least
the value of the costs. Preferably, it should exceed this by some margin, although
not always, depending upon the wider case.
For green infrastructure projects, however, it is generally accepted that it is not
possible to monetise all their benefits. This means a compromise position is
needed. The judgement made within the toolkit is that three components are
required - reflecting the principle that the range of benefits resonate with different
parts of the public sector.
of a life, where it is perhaps not yet possible to directly relate green
infrastructure investment to health sector savings.
Non-monetiseable - at least at this point - typically environmental and
social benefits likely to result from a given green infrastructure
investment. In some instances those can still be expressed in
quantitative terms.
Figure 8 illustrates these components, which considered altogether build up an
estimate of total economic value* (TEV) to be used to write a return on
investment case.
Figure 8: Return on investment case: investment costs v. monetised and nonmonetised
benefits
Contribution to gross value added (GVA): ‘GVA’ or ‘market’ style
benefits are those that relate best to the contribution that green
infrastructure can make to a local economy in terms of the value of
goods, services, employment, measured either as production, income –
for example through jobs - or expenditure. ‘GVA’ benefits will be of
particular interest for economic development agencies, private investors
and so on.
Other economic benefits, additional or alternative to the ‘GVA’ benefits
and including ‘non-market’, but nevertheless monetisable benefits
perhaps more closely associated with social, environmental and welfare
economics. Examples include willingness to pay values associated with
recreation or leisure opportunities, habitat protection, the social value of
carbon reduction, or health benefits calculated using the statistical value
2 Impact of Oakland County’s Green Infrastructure on the Local Economy, Oakland County
Planning and Economic Development Services, August 2009
3 Defra, An introductory guide to valuing ecosystem services, 2007 and Eftec for Defra,
Valuing environmental impacts: guidelines for the use of value transfer, 2010.
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