Cost assessment and water environment improvements

Overview

The disproportionate cost assessment for derogations to improvements to the water environment

SEPA's regulatory method (WAT-RM-41) and its accompanying supporting guidance (WAT-SG-67 and WAT-SG-68) are used when SEPA or an operator is proposing to vary an authorisation under the Water Environment (Controlled Activities) (Scotland) Regulations 2011 (CAR). These regulations aim to improve the status of the water environment and contribute to the achievement of one or more of the Water Framework Directive's objectives.

An operator may claim an exemption when they consider that the improvements being proposed by SEPA are:

• technically infeasible;
• disproportionately expensive; or
• with respect to improvements to the hydromorphological characteristics of water bodies designated as heavily modified or artificial, likely to have significant adverse effects on the use for which the water body has been designated or have significant adverse impacts on the wider environment.

Disproportionate Expenses Test

The Disproportionate Expenses Test (also known as disproportionate cost) is an exemption assessment found in Annex C of WAT-RM-41.  

Before considering a claim for exemption on the grounds of disproportionate expense, SEPA will require operators to demonstrate that they have:

1. considered the potential options available to them for making the improvements;
2. identified which of the options would be the most cost-effective and why; 
3. estimated the costs associated with the option referred to in point (2).

The current method uses environmental benefit values in the range of £25,000/km/year to £400,000/km/year to compare against the improvement costs in question.

This range is based on Scottish Water improvement costs approved for funding by Scottish Ministers. 

Issues with the current approach

The existing exemption assessment does not include all the relevant ecosystem service categories and/or the latest valuation studies, and can be difficult to determine if a proposal was proportionate or disproportionate.  

The revised approach seeks to remedy this by providing a transparent process that both the applicant and SEPA can follow to make determinations.

Our proposed new approach

We are proposing to change the way in which we calculate the Disproportionately Expenses Test. The new approach uses environmental benefit values derived from a national economic valuation study developed by the Environment Agency, which has been applied to water bodies in Scotland.

These monetised values have been produced for each water body in Scotland and are based on improving water body status.  

How are the new values calculated?

The values for benefits associated with water body improvements are dependent on the resident population density in a water body location, along with “willingness to pay” values for fish, invertebrates, plant communities and water clarity.  

We consider the proposed values to be preferable to the current method for the following reasons:

• They reflect a wider range of benefits associated with water environment improvements including water quality, flows and levels and physical condition.
   
• The values are weighted depending on the population of the catchment – the more people living in a catchment, the more use of the water environment is likely and thus the higher the value.
   
• The values also include a national component to acknowledge that people are willing to pay for improvements (fish, other invertebrates, plant communities and water clarity) not necessarily in close proximity to where they live.
   
• Overall water body status improvement is considered i.e. water quality, flows, morphology, fish barrier improvements. Therefore, all measures required to achieve Good Ecological Status or Potential are considered in the assessment.

The new values will be used as a screening approach and are designed to screen out improvements which are clearly disproportionate, or clearly result in a proportionate benefit.

It is this new approach and values that we are consulting on.

Why your views matter

We welcome feedback from any interested parties on our proposed changes to the values we use to calculate disproportionate costs.

Please refer to document WAT-RM-41, in particular Annex C, which explains the proposed value changes, as well as how they will be calculated. 

We have also included a number of relevant background documents and data tables as part of this consultation that explains the rationale behind our proposals. These can be found in our Related documents section.