National Assessment of Defence Needs and Costs for flood and coastal erosion management (NADNAC) Summary Report

National Assessment of Defence Needs and Costs for flood and coastal erosion management (NADNAC) Summary Report Flood Management Division June 2004

Contents Contents, Abbreviations and Glossary...1 1 Introduction...2 2 Approach...4 3 Results...7 4 Discussion of results...13 5 Conclusions...15 References...16 Appendix A: Detailed methodology...18 Abbreviations and Glossary AAD Average annual damages - equal to the area under a loss-probability curve and derived from damages assessed for a range of flood event events CFMP Catchment Flood Management Plan COWs Critical Ordinary Watercourses CPSE Coast Protection Survey of England (see Halcrow 1994) Defra Department for the Environment Food and Rural Affairs EA Environment Agency FDIS Flood Defence Investment Strategy (see Halcrow 2000) FM Flood Management Division, Defra IFM Indicative Floodplain Map potential areas at risk from flooding ignoring the presence of defences (nominally to 1 per cent annual probability for inland areas and 0.5 percent annual probability for coastal / tidal flooding) IPA Integrated Policy Appraisal (see Defra 2003b) MDSF Modelling Decision Support Framework (see HR Wallingford 2003a) NAAR National Assessment of Assets at Risk from Flooding and Coastal Erosion (see Defra 2001) NFCDD National Flood and Coast Defence Database Option standard of defence for a particular area under a given scenario. Where cost benefit ratios have been used to determine justification, options demonstrating ratios exceeding 1 have been considered justified. PAMS Performance-based Asset Management System (see EA 2003a) PV Present Value - the value of future sums over a defined period converted to common date using discount rates so that they can be compared RASP HLM Risk Assessment for Strategic Planning for flood and coastal defence High Level Methodology (see Hall et al 2003) Scenario levels of national investment (through maximum standards of protection) SAC Special Area of Conservation as designated under the EC Habitats and Species Directive for the protection of habitats and (non-bird) species SMP Shoreline Management Plan SoP Standard of Protection SPA Special Protection Areas as designated under the EC Directive on the Conservation of Wild Birds WLMP Water Level Management Plan NADNAC Summary Report 1 June 2004

1 Introduction This report summarises analysis undertaken by a team comprising staff from Halcrow, HR Wallingford and John Chatterton Associates, working with officials from Defra s Flood Management Division to appraise flood and coastal defence needs and costs. The study aims to provide a rigorous estimate of the costs and benefits associated with investment in flood and coastal defence infrastructure in England. 1.1 Overall investment requirement The figures presented in this report relate only to flood and coastal defence infrastructure, for which a total of approximately 320 million will be invested in 2005/06 (identified by the arrows in Figure 1b). Whilst this forms more than half of the total expenditure, other activities such as flood warning and strategic planning are also significant. These other costs have been estimated independently and combined with the results of this study to enable consideration of appropriate levels of investment for the 2004 Spending Review and new Strategy for Flood & Coastal Erosion Risk Management. Other EA FD income ODPM LA levies to EA Def ra activities Grant & SCA to LAs & IDBs ODPM LA & IDB spend EA FD regulation, planning and warning EA FD other Defra activities LAs & IDBs Defence infrastructure Figure 1 Defra Grant in Aid to EA EA FD infrastructure Breakdown of total funding by (a) income sources and (b) expenditure This report provides an overview of the approach adopted and results obtained, giving a logical basis to the conclusions reached. The analytical procedures used in the study are summarised in Section 2 and methodology and data sources are described in greater detail in Appendix A and the Technical Report (Halcrow 2004). 1.2 Other studies This is the latest in a series of national assessments, building on the earlier National Assessment of Assets at Risk of Flooding and Coastal Erosion (NAAR Defra 2001) which informed the 2002 spending review. This study has used improved data and methodologies, which have only recently become available, to quantify current risk levels, explore some of the assumptions made in earlier studies and improve on the analysis. As such it has focussed on quantifying funding requirements for defence infrastructure rather than repeating the assessment of assets at risk; it is, however, still a national top-down approach based on the situation as it was in the year 2000. NADNAC Summary Report 2 June 2004

The Medium Term Plan based on responses from Operating Authorities at an individual project scale provides a complimentary bottom up approach which has also informed the Spending Review. The Foresight Flood and Coastal Defence study (OST 2004) used the same RASP High Level Methodology for assessing average annual flood damages. However, there are key differences in the range of assumptions which are discussed in Section 4. 1.3 Fitness for purpose The results from this study are considered to be sufficiently robust to inform the general trajectory of investment requirements, although it is important to note that there is considerable uncertainty inherent in the underlying data, assessment methodology and assumptions. Advances expected over the next few years will provide significant scope for further reduction of the uncertainty in the projections and refinement of the long term funding requirements. These advances include improved flood risk mapping that takes account of severe flood events, probability of inundation and flood plain topography; an improved methodology for coastal erosion risk assessment and improved national data on defence infrastructure and costs. It is hoped that these will be available in time to inform future spending reviews. It should be noted that the selection of options for individual flood cells or coastal units within this study is purely indicative, as the analysis has only used data available at the national scale. This information will not be used for individual investment decisions and may not be representative at greater levels of detail than presented within this report. NADNAC Summary Report 3 June 2004

2 Approach The approach developed for this study is generally consistent with guidance on economic appraisal published by both HM Treasury (2003) and Defra s Flood Management Division (MAFF 1999 and Defra 2003a). Throughout this document scenario has been used to refer to levels of national investment (through a proxy of maximum standards of protection) and option to describe standards of defence for a particular area under a given scenario. 2.1 Key assumptions All of the economic analysis is based on the current conditions and policy framework; it does not make any allowance for increases in population and wealth, development within risk areas, or potential changes in public expectation. Many data sets used in the study were originally referenced to 2000. Where appropriate, inflation has been applied at 2.5% per year and all values quoted in this paper are at nominal 2004 prices. The current precautionary approach to climate change is built into the cost assumptions which include provision for sea level rise and potential adaptation to future changes in river flood risk. However, the damage estimates do not include the impacts of climate change. Distributional impacts for residential property are broadly taken into account through use of average property damage values. The main change in analysis from earlier work has been the comparison of costs and benefits to determine the justification of defences for individual flood areas. Where benefits exceed costs (i.e. a benefit / cost ratio greater than 1) the option has been considered justified. This has allowed the identification of a range of different options of protection within a single funding scenario and justified rather than the universal results produced from blanket application of indicative standards of protection. It is, however, reliant on the identification of discrete areas in which the benefits result directly from the defence infrastructure. For the purposes of this analysis approximately 8,000 areas (based on river reaches and coastal management units) were used. Costs relating to statutory obligations to maintain Natura 2000 habitats (designated under the Birds and Habitats directives) have also been included in this assessment for the first time. Whilst there is still considerable uncertainty regarding the cost and standard of defences required this is clearly an obligation which cannot be ignored. The analyses for flooding, coastal erosion and Natura 2000 areas were undertaken separately and care was taken to avoid significant overlaps. The analytical approach for each is described briefly in the following sections and more detail is available from Appendix A and the Technical Report (Halcrow 2004). 2.2 Analytical process for flooding The analysis comprised the following main steps: 1. Collate information on current flood and coastal defence infrastructure to enable an assessment of current (i.e. nominally year 2000) average annual damages and define flood areas NADNAC Summary Report 4 June 2004

2. Estimate changes in defence performance after 15 year period under different funding scenarios, assess average annual damages and estimate present value damages over 100 year appraisal period 3. Estimate defence costs under different funding scenarios to give present value costs over 100 year period 4. Compare present values of costs and benefits over the 100 year appraisal period for each flood cell and identify preferred option (using incremental benefit : cost ratios) for each flood cell under each scenario 5. Sum costs and damages for preferred options under each scenario and identify funding scenario providing lowest total cost (i.e. defence cost plus damage cost) 6. Assess any wider consequences, sensitivity and 15 year implementation costs for preferred scenario The funding scenarios related to current and indicative standards of protection which are summarised in Table 1 and included: Do Nothing Do Minimum Maintain Current Standard of Protection Improve Defences to Lower Indicative Standard of Protection Improve Defences to Higher Indicative Standard of Protection Table 1 Land use band A B C D E Indicative standards of protection Typical characteristics Intensively developed urban areas at risk from flooding and / or erosion Less intensively developed urban areas with some high grade agricultural land Large areas of high grade agricultural land and / or assets of national significance requiring protection with some properties also at risk, including caravans and temporary structures Mixed agricultural land with occasional, often agriculturally related, properties at risk. Agricultural land may be prone to flooding, water-logging or coastal erosion Low-grade agricultural land, often grass, at risk from flooding, impeded land drainage or coastal erosion, with isolated agricultural or seasonally occupied properties at risk Fluvial annual probability of failure (return period in years) Coastal / saline annual probability of failure (return period in years) Lower Higher Lower Higher 0.02 0.005 0.01 0.003 (50) (200) (100) (300) 0.04 0.01 0.02 0.005 (25) (100) (50) (200) 0.2 (5) 0.8 (1.25) 0.02 (50) 0.1 (10) >0.4 (<2.5) 0.1 (10) 0.4 (2.5) 0.01 (100) 0.05 (20) >0.2 (<5) The initial analysis indicated that continued maintenance and / or replacement of the defences did not appear to be justified in a significant number of areas. However, on further inspection it became apparent that in many of these areas there was either missing NADNAC Summary Report 5 June 2004

data or a combination of defence systems protecting different asset areas, some of which would have been justified and others not. Therefore the methodology was refined to allow some costs to be allocated where a proportion of the defences within a single area were likely to be justified. This further option, Improve Selected Areas, has only been considered in the Justified Improve Higher Standard scenario. 2.3 Analytical process for coastal erosion The assessment of coastal erosion followed a similar process with the collation of information on defences and division the coastline into representative lengths. Potential rates of erosion were identified from Futurecoast (see Halcrow 2002) and likely property losses were estimated from average property densities and values. This exercise is considered to provide a more objective result than the NAAR analysis which was based on estimates of vulnerable properties prepared for the Coast Protection Survey of England in the mid 1990s. It has not, however, been possible to include the full range of benefits (such as recreation or amenity) since these require detailed local level assessment. It is therefore expected that the benefits presented are underestimates. The analysis was largely deterministic and as such the concept of standards of protection could not be used, but different cost / benefit ratio thresholds and division between new and existing defences were used to represent increasing levels of investment. 2.4 Assessment of coasts associated with Natura 2000 sites The potential economic commitment associated with statutory obligations for Natura 2000 sites was also estimated. This will occur where either: or Designated sites are located behind defence infrastructure where maintenance or replacement would not otherwise be justified Designated sites are located in front of coastal defences that are economically justified and compensatory habitat to is required to replace that lost to coastal squeeze. Designated sites spanning defences were sub-divided with areas in front and behind the defences considered separately. In calculating these costs where the existing standard of protection is maintained and the main analysis indicates a lower option is justified, the economically justified defence costs have been subtracted from those for defending the Natura 2000 area. Similarly where the main analysis indicates that maintained or improved standards of defence are justified no additional costs have been considered for protecting the areas behind the defences. NADNAC Summary Report 6 June 2004

3 Results The results of the assessment of costs and damages are summarised in the following sections. 3.1 Assets at risk of flooding and coastal erosion The capital values of assets at risk of flooding were increased to allow for inflation but are otherwise unchanged from NAAR and are summarised in Table 2. Table 2 Value of assets at risk from flooding Asset type Value at risk ( billion) Agricultural land 7 Residential property 198 Commercial property 32 Total 237 The change in methodology and data for coastal erosion resulted in a reduction in the number of properties identified as at risk (approximately 92 thousand compared with a total of 122 thousand previously). This reduction is partly offset by the assumed inflation and the reduction in the total value of assets is relatively modest, from 7.7 billion to approximately 7.5 billion. 3.2 Flood defence investment costs and expected flood damages Central estimates of present values for defence infrastructure costs and flood damages over the 100 year appraisal period are summarised in Table 3 and Figure 2. It is readily apparent that the Justified Improve Higher (& Select) scenario provides the lowest total cost. Table 3 PV100 flood defence cost PV100 flood damages Total PV100 flood costs Expected costs and damages ( billion) for different investment scenarios Do Nothing Justified Do Minimum Justified Maintain Current Justified Improve Lower Justified Improve Higher Universal Improve Higher - 0.4 3.1 6.7 7.9 13.0 82.7 68.9 35.2 27.2 22.1 21.8 82.7 69.3 38.3 33.9 30.0 34.8 It should be noted that the standard of protection for the selected options is related to the land use in the area. Thus areas where the selected option is Improve Higher will not necessarily receive a higher standard of protection than areas of Improve Lower. Similarly not all assets within the Improve Select areas will in practice be protected on grounds of feasibility or economic viability. NADNAC Summary Report 7 June 2004

100,000 80,000 expected damages defence costs Cost ( millions) 60,000 40,000 20,000 0 Do Nothing Justified Do Minimum Justified Maintain Standard Justified Improve Low er Justified Improve Higher (& Select) Universal Improve Higher Investment scenario Figure 2 Total expected PV100 costs for different investment scenarios The quantified costs and damages do not, by themselves, provide a full understanding of the consequences of adopting such a scenario. Estimates of houses and agricultural land protected by each of the different options help understanding of wider impacts and are summarised in Table 4. Table 4 Number of houses (thousand) Agricultural areas (thousand Ha) Estimated numbers of houses by selected option for the preferred scenario Do Nothing Do Minimum Maintain Current Improve Select Improve Lower Improve Higher 12.0 1.7 7.3 305.1 2.2 1,399.3 113.8 3.4 14.5 665.5 0.3 543.6 As noted previously the level of risk for houses within the different categories may overlap depending on land use bands. Indeed some of the houses within Do Nothing areas will be at lower risk than those in the Improve Higher category. 3.3 Coast protection costs and expected erosion damage The damages and defence costs associated with coastal erosion are summarised in Table 5 and Figure 3. Table 5 PV100 defence costs PV100 erosion damages Total PV 100 erosion costs Expected coastal protection costs ( billions) for different scenarios Do nothing Maintain if BCR>3 Maintain if BCR>1 Improve and maintain if BCR>1 Maintain all existing - 0.1 0.9 1.2 2.9 2.5 2.1 1.0 0.7 0.6 2.5 2.2 1.9 1.9 3.5 NADNAC Summary Report 8 June 2004

10,000 8,000 expected damages defence costs Cost ( millions) 6,000 4,000 2,000 0 Do nothing Maintain if BCR>3 Maintain if BCR>1 Improve and maintain if BCR>1 Investment scenario Maintain all existing Figure 3 Total expected PV costs for different investment scenarios An initial estimate of the preferred level of investment in reducing the risk of coastal erosion can be obtained by selecting the lowest total cost from Table 4 and Figure 3. These suggest that the total costs associated with the Maintain BCR>1 and Improve / maintain BCR>1 scenarios are broadly comparable and that either one of these options might be preferred. However, if the numbers of properties remaining at risk of erosion under the different scenarios, as presented in Table 6, are considered it is clear that both options would result in considerable numbers of properties being lost over the 100 year period. Table 6 Thousands of houses lost Estimated number of houses (thousands) lost to erosion by 2100 under different investment scenarios Do nothing Maintain if BCR>3 Maintain if BCR>1 Improve / maintain if BCR>1 Maintain all existing 92 74 39 28 22 It is not possible to conclusively select an optimal scenario within the bounds of the methodology but, in view of the likely underestimation of benefits and large numbers of properties lost in the Improve / maintain BCR>1 option, it is likely that a higher level of investment would be justified. However, there is almost certainly not scope to maintain all existing defences. A more likely upper estimate of appropriate expenditure may be obtained by considering the 28,300 properties still at risk. Over the 100-year period this is equivalent to an average of about 300 houses per year, so if average expenditure of 100,000 per property to significantly delay erosion could be justified this would imply an increase in total costs of approximately 30 million per year. Adding this to the 40 million from the Improve / maintain BCR>1 scenario of Table 12 gives a total of 70 million per annum. However, since such measures are unlikely to be feasible or possible to justify for all houses the optimal level of investment should probably lie between 40 and 70million and a value of 50 million per year has been taken forward. NADNAC Summary Report 9 June 2004

3.4 Costs associated with the protection of Natura 2000 sites The defence costs to continue the protection of Natura 2000 sites are summarised in Table 7. Table 7 Costs to maintain defences ( million) protecting Natura 2000 sites Existing standard of protection Do minimum Flood Defence (PV100) 1,527 80 Coast Protection (PV100) 480 480 Table 8 provides a summary of the estimated costs of providing compensatory habitat where the Natura 2000 site is in front of defences indicated as justified by the main analysis. Where the option is Improve Select such costs have been factored by 0.5 since it is unlikely that all of the defences in these areas would be maintained. Table 8 Costs of compensatory habitat ( million) for Natura 2000 sites Site in front of economically justified defences Sites partially in front of economically justified defence Flood Defence 4 12 Coast Protection 1 14 Whilst coast protection costs have been presented in Table 7, it is assumed that most Natura 2000 areas will not suffer significant adverse impacts from ongoing erosion and costs for maintenance of coast protection have not been carried forward. Discussions with English Nature have suggested that the required standard of protection against flooding required for Natura 2000 areas is likely to be significantly lower than that for properties. Therefore costs for the maintenance of existing standards are thought to represent an upper bound and those for do minimum probably represent a lower bound. A central estimate, the average of the two, has been used giving a total present value for the 100 year appraisal period of 804 million, which is equivalent to an annual average of 27 million. From Table 8 total costs for compensatory habitat provision are approximately 31 million over the 100 year period. However, to avoid delays to implementation of schemes and facilitate economies of scale through land banking this is likely to be weighted towards the remaining part of the initial 15 year period and an average of 3 million per year has been assumed. 3.5 Long term investment requirements Indications of annual investment requirements can be obtained by dividing the 100 year present value defence costs by the sum of discount factors for years 0 to 100 (i.e. 29.8 for current discount rates). These values represent the long term average investment required if assets remain constant at year 2000 levels, and are summarised in Table 9. The Foresight Study suggests that considerably higher levels of investment are likely to be required in the longer term as a result of climate and socio economic changes. NADNAC Summary Report 10 June 2004

Table 9 Typical annual flood and coastal defence investment requirements Item Budget annual cost ( million) Flood defence maintenance, replacement and improvement 264 Maintenance and operation of the Thames Barrier, other major barriers and pumping stations 26 Provision, maintenance and replacement of coast protection 50 Protection of Natura 2000 areas 27 Compensation for Natura 2000 areas 3 Total 370 In addition to the above items the Flood Management budget includes sums relating to activities such as regulation (to prevent inappropriate development in the floodplain), flood warning and emergency response (both reduce loss of life and property damages in the event of a flood occurring), strategic planning (necessary for the efficient targeting of defence expenditure) and administration. Since Critical Ordinary Watercourses are presently being transferred to the Environment Agency some of the aspects of their management are unlikely to be fully reflected in the above costs. In order to demonstrate the robustness of the proposed programme it is useful to calculate the ratio of benefits to costs. This has been undertaken for the flood and coastal defence measures for which benefits and costs are clearly quantified in the earlier sections of this paper. The overall benefit cost ratio for flood defences (including capital, maintenance improvements and operations) under the preferred (Justified Improve Higher) scenario is approximately 7:1 although there is considerable variation between different flood areas. Although the comparable ratio for coast protection is only 1.5:1 the average for the overall flood and coastal protection infrastructure programme is over 6:1. 3.6 Funding requirements over the 15 year period In addition to the long term average needs summarised in Table 9, flood defence and coast protection investment requirements were considered over the initial 15-year period starting in 2000. Total investment requirements for flood defences have been estimated for the period 2000 2015 based on recorded condition grades and standards of protection. The cash investment required over this period is some 5 billion (at 2004 prices). This would enable implementation of improvements to flood defences, where these are justified but currently below the indicative Standard of Protection and continued maintenance and replacement of other defences. This equates to an average investment of 333 million per year, but funding levels at the start of the 15 year period were much lower than this. The total of 5 billion could be achieved through a wide range of different investment profiles. However, if real terms funding continues at the levels expected for 2005/06 (i.e. assuming funding or efficiency savings keep pace with inflation) the total spending over the period will fall short of the required sum by nearly 700 million. To achieve the total investment at a constant rate of increase will require year on year growth of more than 15 million in real terms, with total annual investment in 2015 approaching 50% more than current levels as shown in Figure 4. However it is interesting to note that the growth suggested is the same order of magnitude as the long term year on year increase NADNAC Summary Report 11 June 2004

supported by the Foresight project based on very different assumptions. It has been assumed that coast protection requirements are similar to the long term average. Annual Investment ( million cash). 600 400 200 SR2004 continue @ 2005/6 constant growth total Defra FCM fundng SR2002 0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Financial year Figure 4 Possible flood and coastal defence investment profiles to 2015 It should be noted that as stated in Section 1.1 these sums relate only to expenditure on defences and do not include other operational and management requirements. NADNAC Summary Report 12 June 2004

4 Discussion of results Due to the nature of assumptions and inherent uncertainties associated with the analysis it is important to consider the results in a wider context. 4.1 Issues not fully addressed There are several issues that have not been fully addressed within the analysis undertaken. A number of these issues are described elsewhere within this report and summarised, with others below: Increasing damages due to socio economic development and climate change are not considered within the analysis whilst climate change is unlikely to be discernable from natural variability before 2015, the Foresight study showed that both climate and socio economic changes will be significant over the medium to longer term. Impacts on major transport and social infrastructure have not been assessed although impacts are unlikely to be significant at current levels of funding, it is likely that such damages would be considerable at lower levels of investment. Standards of protection above the indicative values were not considered but are already present (and allowed for in established guidance) at locations where robust benefits can be demonstrated this could significantly increase investment requirements for major urban development. Replacement of major items of defence infrastructure (notably the Thames Barrier) has not been allowed for within the assessment of costs it is very unlikely that this will be required before 2015, but clearly there will need to be significant investment at some point in the future. Defence information is improving, but is not yet complete and minimal information is available for critical ordinary watercourses which will be transferred to the Environment Agency over the coming years. Changes from current practice (including withdrawal from uneconomic defences or changes in maintenance practices) are likely to take some time to implement. The net impact of these issues is that the assessment of funding requirements is more likely to be too low than too high. 4.2 Comparison with other recent studies The DTI sponsored Foresight project on Flood and Coastal Defence has made some longterm estimates using the same base data and methodologies. However, the focus on a longer timescale and consideration of a wide range of socio-political as well as climate change scenarios has produced some difference in the assessment of defence costs. The two analyses are contrasted in Table 10. The Environment Agency have recently commissioned the preparation of a revised (High Level Plus) methodology and implementation as NaFRA2004. This will use updated data including improved defence details and comprehensive data on floodplain topography, but the results are unlikely to be available until the second half of 2004. NADNAC Summary Report 13 June 2004

Table 10 Summary comparison of NADNAC and Foresight Issue NADNAC Foresight Change in asset / damage values Assets and value of damage at 2000 levels Increasing real value in floodplain and development Targeting of No consideration of where defences Effective targeting of investment investment are justified or investment targeted Climate change Indicative standards of protection Current climate change allowances included in costs, no additional damages Current Indicative standards of protection Additional damages attributable to climate change Increases in indicative standards dependent on scenario 4.3 Further analysis Further qualitative analysis has been prepared relating specifically to the sustainability and rural proofing of the proposed programme. An IPA screening assessment has been prepared for this programme, but because the process is not sensitive to minor changes application to all the scenarios has not been attempted and this covers only do nothing, maintain current investment levels or a higher investment level. It is intended to cover only the SR2004 period. The results generally reinforce the need to maintain and, where justified, improve defence infrastructure, whilst flagging the concerns regarding the likely withdrawal, due to improved targeting, from some rural agricultural defences. The rural proofing checklist was applied to the same scenarios as the IPA assessment. This does not raise any particular issues except the withdrawal from some rural agricultural defences. This does not mean that such actions cannot be carried out but there will clearly need to be appropriate consideration of the wider impacts of all such decisions. In general reduced investment in agricultural defences will have a negative impact on returns from farming but the assumed gains from more natural floodplains and wetlands should create additional revenue for the rural economy through additional visitors and related activities. Nevertheless, it should be noted that there are differences in the assumed standards of defence related to land use (as set out in Table 1) and the costs estimated in this study do not include any allowance for policy change or additional costs of, for example, promoting otherwise uneconomic defences for reasons of rural equity. NADNAC Summary Report 14 June 2004

5 Conclusions The following broad conclusions can be drawn from this study. A modest increase in spend from SR2002 levels will position the overall programme to deliver higher indicative standards of protection against flooding and provision/replacement of coast protection, where justified (based on year 2000 assets), within the next decade. The recent Foresight study used similar basic methodologies, but took account of the effects of increasing development pressure and public expectations as well as climate change 30-100 years in the future. The results obtained suggest that the increase in investment levels may need to continue in the medium and long term. These future needs will be the subject of further review over the next 2-10 years as more data and improved techniques, such as improved flood risk mapping, become available. More reliable long-term estimates should then be available to inform future spending reviews. This study demonstrates the importance of effective targeting of expenditure on both flood defences and coastal protection works. It is clear from the results presented that without effective prioritisation of both capital and maintenance works considerably greater investment will be needed to deliver the identified benefits. There is significant uncertainty associated with the value of both damages and defence costs but the estimated average benefit : cost ratio for the selected scenario of maintenance, replacement and new defences is robust at around 6:1. The study does not attempt to identify the most appropriate solutions that should be adopted as these will be highly location specific and can only be identified through more detailed study of each catchment or coastal area. This is the role of CFMPs, SMPs and targeted strategic studies. However, this high level methodology is considered to provide cost envelopes for the range of likely solutions and hence an appropriate basis on which to determine national investment levels. Because the methodology does not assess different solutions it must be recognised that it is not possible to quantify all potential impacts and benefits, for example those water quality or biodiversity benefits arising from particular forms of channel or floodplain management or recreational benefits associated with particular coastal protection solutions. These are thought unlikely to have a significant impact on overall investment requirements but may be important, and need further consideration, at more detailed levels of appraisal. NADNAC Summary Report 15 June 2004

References Countryside Agency 2002 Rural Proofing: Policy makers' checklist. Available from http://www.countryside.gov.uk/essentialservices/ruralproofing/index.asp Defra 2001 National Assessment of Assets at Risk from flooding and coastal erosion including the potential impact of climate change. Available from http://www.defra.gov.uk/environ/fcd/policy/naarmaps.htm Defra 2003a. Supplementary Guidance Note on Economic Appraisal. Available from http://www.defra.gov.uk/environ/fcd/pubs/pagn/default.htm Defra 2003b. Integrated Policy Appraisal: How to Use IPA. Available from http://www.sustainable-development.gov.uk/sdig/integrating/defra.htm EA 2003a Environment Agency Strategy for Flood Risk Management (2003/4-2007/8). Available from http://www.environmentagency.gov.uk/subjects/flood/573715/?version=1&lang=_e EA 2003b Establishing a Performance-based Asset Management System for Flood Defences - Technical Summary. Available from http://www.pamsproject.net/workshops.htm Halcrow 1994. Coast Protection Survey of England. Halcrow 2000. Flood defence investment strategy. March 2000. Halcrow 2001 National Appraisal of Assets at Risk from flooding and coastal erosion, including the potential for climate change: Technical Report (undertaken in association with HR Wallingford and John Chatterton Associates). November 2001. Halcrow 2002 Prediction of Future Coastal Evolution for SMP Review: Final Project Report FD2002. Available from http://www2.defra.gov.uk/research/project_data/more.asp?i=fd2002&m=kws&v=fd2002 &SCOPE=0 Halcrow 2004. National Assessment of Defence Needs and Costs: Technical report (undertaken in association with HR Wallingford and John Chatterton Associates). February 2004. Hall, J.H., Dawson R. J., Sayers P. B., Rosu C., Chatterton J. B and Deakin R. A methodology for national-scale flood risk assessment. Proceedings of the Institution of Civil Engineers: Water & Maritime Engineering 156 Issue WM3. September 2003. HM Treasury 2003. The Green Book: Appraisal and Evaluation in Central Government. Available from http://greenbook.treasury.gov.uk/ HR Wallingford 2003a. Catchment Flood Management Plans. Development of a Modelling and Decision Support Framework: Technical Annexes Version 2.0 (in association with NADNAC Summary Report 16 June 2004

Halcrow, the Centre for Ecology and Hydrology and the Flood Hazard Research Centre). Available from http://www.mdsf.co.uk/downloads.shtml HR Wallingford 2003b. National Flood Risk Assessment 2002 (undertaken in association with Halcrow, Bristol University and John Chatterton Associates). HR Wallingford Report EX 4722 October 2003. MAFF (now Defra) 1999. Flood and Coast Defence Project Appraisal Guidance 3 Economic appraisal. PB4650. MAFF (now Defra) 2000. Flood and Coast Defence Project Appraisal Guidance 5 Environmental appraisal. PB4915. Middlesex University Flood Hazard Research Centre 2003. The benefits of flood and coastal defence: techniques and data for 2003. Multicoloured manual. OST 2004. Foresight. Future Flooding. Office of Science and Technology London. Available from www.foresight.gov.uk NADNAC Summary Report 17 June 2004

APPENDIX A : Detailed Methodology Flood Risk Flood risk within coastal and inland areas has been assessed using the High Level Methodology developed as part of the Risk Assessment for Strategic Planning (RASP) project (see Hall et al. 2003 for a full description) which has been undertaken within the joint Defra FM / Environment Agency research and development programme. The High Level Methodology was specifically developed for national assessments and has been previously applied in NaFRA2002 and the Foresight project. It is notable that whilst the central estimates of expected annual damage have been used throughout the analysis, upper and lower confidence limits (reflecting uncertainty in probability of failure, associated inundation volume and economic damages but nothing else) are approximately double and half this value respectively ( 950 million, 1,905 million and 541 million respectively were reported for the current situation in HR Wallingford 2003b). The current situation provides a snapshot of risk levels at the start of the appraisal period and was also used to represent the option to maintain standards of protection to 2015 since the impacts of climate change over the 15 year period 2000 2015 are assumed not to be readily discernible. The expected annual flood damages in 2015 for the other scenarios were assessed using the same basic data and methodology, but modified defence parameters. Principle data sets used in the assessment of flood risk are summarised in Table A1 and the methodologies used for aspects of the analysis are described in the following sections. Table A1 Key flood risk data sets Data Set Date Use NFCDD 2002 Definition of flood defence systems used in RASP analysis to calculate economic damages NFCDD 2003 Classification for flood defence types and calculation of lengths for use in maintenance and replacement cost calculations (with limited modification from other sources of information) Indicative Floodplain Map 2000 Definition of extent of flood risk areas OS AddressPoint / Definition of residential property numbers and the value, Valuation Office derived built property data set 1999 numbers and type of non-residential property at risk of flooding Defra Agricultural Land 1999 Definition of the value and grade of agricultural land for Classification Map Flood Areas (Halcrow 2001) Multi-coloured Manual (Middlesex University 2003) MDSF Technical Annexes (HR Wallingford 2003a) 2000 2003 use in damage and loss cost calculations Division of the indicative floodplain into reaches or coastal management units originally used in NAAR Definition of depth / damages information for use in RASP analysis 2002 Definition of agricultural damages due to flooding NADNAC Summary Report 18 June 2004

Assets at risk The RASP methodology assesses the probability of flooding within impact zones and provides a quantitative estimate of the resulting flood damages to the first two of the following asset groups, the others have been considered during the subsequent analysis. Residential and commercial property Property damages are assessed using the RASP methodology applied to AddressPoint residential property locations, supplemented by information on commercial property from the Focus database, in the Indicative Flood Plain. RASP HLM relies on a range of assumptions including a simplified distribution of flood depth and damage across the floodplain, for more details see Hall et al. (2003). It is recognised that there are inaccuracies in both the AddressPoint and valuation databases but whilst these will affect the evaluation of individual flood risk areas it should not unduly bias the overall result. Some properties will be missed because they lie outside the indicative flood plain, including those adjacent to minor watercourses and those affected by groundwater flooding remote from river locations. Damage values were based on the figures presented in the Multi-coloured Manual (Middlesex University 2003) adjusted for inflation to 2004. Agricultural land Assessment of damage to agricultural land in the RASP HLM is based on the method developed for use in Catchment Flood Management Plans as described in the Technical Report (Halcrow 2004). The decision process has assumed that there is an environmental benefit to the managed withdrawal of defences equivalent to 200 per hectare per year. This is based on Environmentally Sensitive Area payment rates, as set out in current Defra guidance (MAFF 2000) though clearly any such large scale change would merit more detailed investigation. This benefit has not been applied to the do nothing scenario since any gains could be offset by the considerable environmental damage that could result from uncontrolled or inappropriate inundation. Emergency services In accordance with the Multi-coloured manual an allowance of 10.7% of property damages was added as an estimate of emergency services costs. Whilst this is likely to be reasonable for most of the do something scenarios it may represent a considerable underestimate in the case of do nothing or do minimum. In these scenarios the risks of major flooding incidents are significantly greater and the standard assessments of damages may significantly underestimate the true cost of flooding. Human related intangible impacts Recent research has indicated that the health and stress impacts of flooding have a mean willingness to pay value of some 200 per household per year for those living in the higher risk areas. As the current model does not have area-averaged risk values, this value has been assigned to all households as a damage associated with the do minimum and do nothing scenarios. This will be an over-estimation but will compensate for other household-related intangible elements not included in the evaluation. For example, there is no information on which to estimate changes in loss of life or injury, though current research is aiming to provide the basis for estimating changes in such risks at the local and project level. In the last few years deaths directly attributable to flooding have fortunately been in low single figures. In the do-nothing scenario with no warnings then clearly this could increase substantially but the scope for reduction by increased investment is small. NADNAC Summary Report 19 June 2004

Transport - roads and railways The earlier NAAR study (Halcrow 2001) included an assessment of the increased travel costs due to disruption of road traffic by flooding. However the road traffic costs formed only 0.1% of the average annual damage for the do nothing option and damages to railways were estimated to be of a similar magnitude. Since such damages are unlikely to significantly affect the choice of scenario or magnitude of funding required they were not considered further within this study. Nationally important infrastructure Nationally important infrastructure (such as key transport corridors or power stations) has not been explicitly considered within this study, although most buildings will have been included. However the data available at the national scale is not sufficiently detailed to enable the consequential risks to be quantified. Such infrastructure will be identified during the preparation of Shoreline and Catchment Flood Management Plans and may be fed into any future national assessment once these plans have been completed. Defences This study does not consider different approaches to the way in which flood management might be carried out at individual locations. The aim is to determine a cost envelope which is representative at the regional and national scales and the results are intended to sit above the established hierarchy of flood and coastal management plans which comprise: Shoreline and Catchment Flood Management Plans set policy objectives in context of natural process, economic, engineering and social constraints Strategy Plans explore the full range of implementation options (including different approaches and defence types) for achieving policy objectives Scheme Appraisals refine and optimise options prior to implementation The analysis has been based on raised linear flood defence structures, which form the majority of flood protection, to determine the likely envelope of costs and damages. The influence of the Thames Barrier has been explicitly considered, but the impact of other types of flood protection (such as relief channels or storage areas) is assumed to be taken into account in the standard of protection assigned to the linear defences. Defence location and attributes Details of existing flood defences were originally obtained from the Environment Agency s National Flood and Coastal Defence Database (NFCDD) in 2002 and used both in the assessment of flood risk (RASP HLM uses the nominal standard of protection afforded by defences to quantify risk) and initial estimates of defence costs. There were a number of problems with this initial data set (including poor geo-referencing and limited coverage) and extensive processing was necessary before the data could be used for NaFRA2002. As there was insufficient resource available for processing of a new dataset within the present study and the RASP HLM assumes lengths of high ground (with a defined probability of failure) in front of potential flood areas between known defence lengths, flood damage was assessed on the basis of the 2002 NFCDD defence data. NADNAC Summary Report 20 June 2004

However, since defence costs are more sensitive to the type and length of structures within each flood area, an updated NFCDD data set was obtained in the autumn of 2003. Whilst this was supplemented in some areas of missing data using other sources of information and represented an improvement on the previous data, it was by no means complete. The Environment Agency s recent strategy (EA 2003a) suggests that it has an asset base of some 24,000km of defences and 49,000 structures, and this is thought to represent a reasonable best estimate. However, when the 2003 NFCDD data was processed to distinguish between generic defence types listed in Table A2 only approximately 17,000km of defences were identified. Following consideration of alternative methods of representing the missing defences within the analysis, all maintenance and replacement costs were increased by 40%. Table A2 RASP defence class groupings Type Summary description Length identified in NFCDD2003 (km) 1 Fluvial defences - Vertical walls 464 2 Fluvial defences - Slopes or embankments 15,962 3 Fluvial defences - High Ground - 4 Fluvial defences - Culverts 237 5 Coastal defences - Vertical walls - 6 Coastal defences - Dykes or embankments 443 7 Coastal defences - Beaches 199 The defence types were further sub-divided by crest width (narrow or wide), degree of armouring (front, crest and back protection) and material type, to give a total of 25 classes for which defences were identified. Only some of the NFCDD defence records contained information on the standard of protection afforded by the defence, where this was not available the standard of protection used for the flood area in the NAAR study was assigned to the defence lengths. Defence deterioration Initial defence condition was obtained, where available, from NFCDD and deterioration of the defences was based on a standard table developed through discussion with experienced practitioners and initial work for the Performance Based Asset Management System (PAMS see Environment Agency 2003b). The rate of deterioration was assumed to vary with the class of defence and maintenance regime as shown in Table A3. NADNAC Summary Report 21 June 2004

Table A3 Flood defence deterioration Best estimate of years to reach condition from new with normal Defence Defence Description maintenance (do nothing) class Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 10 Type2, Front Protection, Turf 0 7 (3) 20 (10) 33 (17) 40 (20) 20 Type 3, High Ground not applicable to high ground cases 21 Type 4, Culverts 0 11 (6) 22 (13) 33 (19) 44 (26) 34 Type 6, Front Protection, 0 11 (8) 22 (13) 33 (19) 44 (26) Impermeable 37 Type 7, Dune 0 13 (8) 20 (13) 27 (18) 40 (26) 38 Type 7, Shingle 0 13 (8) 20 (13) 27 (18) 40 (26) 45 Type2, Wide, Front Protection, Turf 0 8 (6) 25 (17) 42 (28) 50 (34) Maintenance costs The cost of maintaining flood defences was estimated on the basis of unit rates obtained from analysis of the Flood Defence Investment Strategy prepared for the Environment Agency (Halcrow 2000). The original study comprised collection of estimates of spending and approximate lengths for different types of defences and was used as the basis for the capital and maintenance costs in the NAAR study. This was reanalysed using the RASP defence classification and revised estimates of defence lengths to estimate unit rates for maintenance in the current study. Since the results of this exhibited considerable regional variation, notional national costs developed from weighted averages of regional costs were used, consistent with the wider adoption of best practice. The unit cost rates were increased by an allowance of 10% to represent the additional costs for flood management structures (such as weirs, outfalls and gates) which are needed as well as the linear defences. The costs for key items of flood defence infrastructure such as the Thames Barrier, conveyance works and pumping stations is not amenable to detailed investigation at the current level of analysis. These costs were therefore established on the basis of recent expenditure levels. Replacement costs Replacement cost information was obtained from Arup who are developing a database of capital unit costs based on scheme out-turns for the Environment Agency. Whilst this work was not complete at the time of analysis they were able to provide indicative costs which are detailed in the Technical Report (Halcrow 2004). Because of the relatively small data set available, these costs were presented as national averages and adjustment factors for regional variation based on standard construction cost references were applied. In the absence of more detailed information a simple algorithm, similar to that used in the NAAR study, was used to adjust replacement costs where the standard of protection (SoP) afforded by defences is to be increased: If existing SoP < lower indicative standard, then increase replacement cost rates by 10% for Improve (lower) and by 20% for Improve (higher) NADNAC Summary Report 22 June 2004