Spackman M (2021) - Commercial Financing, Social Discounting and the Cost of Public Funding

‌Working Paper 01/2021

Several, mutually inconsistent approaches are promoted by respected economists for handling, in government project and policy analysis, the cost of public funds and society’s time preference.  This has arisen mainly from the problem being often too narrowly framed, making any meeting of minds all but impossible.  There may however be scope for progress in handling the cost of public funds in STP discounting regimes. 

Working Paper 01/2020

This report provides a summary of the technical workings of the Natural Environment Valuation (NEV) modelling suite identifying its assumptions, and its strengths and weaknesses with regards to its core purpose of simulating the multiple outcomes of land use policy.

‌Bateman I (2019) - Building a better society: Net environmental gain from building as a driver for improved social wellbeing

Working Paper 01/2019

The poorest in UK society almost invariably suffer the most degraded environments. Yet environmental enhancement both directly improves wellbeing and regenerates local economies. However, plans for enhancing social wellbeing via environmental improvement suffer from a chronic lack of funding. Recent proposals to require that housing and infrastructure developments deliver net environmental gain clearly offer the potential for restoring the UKs degraded natural assets. However, by applying a number of straightforward principles such policy could also deliver substantial improvements in the wellbeing of those who currently suffer the poorest environments in the country. The paper outlines these principles, thereby providing a route for enhancing both the environment and social wellbeing.

‌Bateman I, Wheeler B (2018) Bringing health and the environment into decision making: A natural capital framework

Working Paper 01/2018

The aim of this paper is to present a concise overview of the variety of measures, or ‘metrics’, available for understanding the consequences of change in the environment. That change might be driven either by natural causes or, as is more frequently the case, as a result of human decisions and behaviour.
This paper is primarily provided as a briefing to The Rockefeller Foundation Economic Council on Planetary Health. Given the emphasis upon human health within the remit of the Council, we open with a review of metrics of human health and wellbeing. From an initial focus on the assessment of physical health status, the discussion expands to consider mental health and wider measures of wellbeing.

Faccioli M, Czajkowski M, Glenk K, Martin-Ortega J (2018) Environmental attitudes and place identity as simultaneous determinants of preferences for environmental goods 

Working Paper 02/2018

Economic valuation is frequently employed to provide evidence of people's preferences for environmental goods. However, it is also often criticised for providing a simplified representation of preferences, with many factors that affect value formation not accounted for. This is the case of environmental attitudes and especially place identity perceptions, which have been largely overlooked in economic valuation, despite representing amongst the most important drivers of people's behaviour towards the environment, according to the environmental psychology and sociology literature. To address this gap, we designed and conducted a choice experiment where we explored the simultaneous role of environmental attitudes and place identity perceptions on willingness to pay (WTP), taking peatland restoration in Scotland as a case study. This study adds to the existing literature in that no valuation study to date has simultaneously integrated both aspects in preference modelling. Given that both factors are potentially strong drivers of preferences, focusing only on one or the other provides a partial picture of the determinants of WTP. Moreover, we do not just look at 'generic' environmental attitudes, but also at 'specific' environmental attitudes. Our results, estimated through a novel and econometrically robust approach based on the hybrid choice model, show that people with more positive environmental attitudes and those who feel attached to Scotland and think that peatlands are an important part of Scotland's identity and landscape tend to display higher WTP. These findings are important to provide a richer understanding of the determinants of preferences for environmental goods. Our results also open up new insights to the discipline in relation to the spatial heterogeneity of preferences: we have shown that people do not only relate with the space around them by focusing on the distance to the improvement site, as most frequently postulated in valuation studies. The idea that place can be understood as a space with emotional and cultural meanings also plays a critical role in shaping preferences. All these are critical elements to better inform policy-makers in the design of more socially acceptable and effective environmental policies.

Bateman I, Balmford B (2018) Public Funding for Public Goods: A Post-Brexit Perspective on Principles for Agricultural Policy                   

Working Paper 03/2018

In early 2019 the United Kingdom is due to leave the European Union and with it the Common Agricultural Policy. The UK Government has announced its intentions to formulate a novel agricultural policy following the principle that public funding should be restricted to the provision of public goods. However, the acceptance, interpretation and application of this principle is the subject of intense debate. We overview the background to this debate, reveal the major flaws in present policy and identify and provide our answers to three key questions which future policy much address: (1) What are the farm related public goods that public money should support?; (2) How should that spending be allocated?; (3) How much should be spent? We believe that both these questions and their answers will be of general interest beyond the UK.

Davis K, Binner A, Bell A, Day B, Poate T, Rees S, Smith G, Wilson K, Bateman I (2018) A Generalizable Integrated Natural Capital Methodology for Targeting Investment in Coastal Defence       

Working Paper 04/2018

Coastal ecosystems, such as saltmarsh, produce a range of ecosystem services that underpin human well-being. In the UK, and globally, saltmarsh extent and quality is declining due to coastal squeeze, deteriorating water quality, and agricultural activities. Here, we develop a general framework to evaluate changes in coastal defence. Using this framework, we identify priority areas for saltmarsh re-alignment: re-creation of saltmarsh in areas that have been saltmarsh in the past – but that have been claimed for other land uses. Through analysing spatially-explicit costs and benefits we identify a number of priority areas for managed re-alignment. These areas would generate high recreational values in areas where properties would not be damaged.

Bateman I, Binner A, Day B, Fezzi C, Rusby A, Smith G, Welters R (2018) A natural capital approach to integrating science, economics and policy within decision making: Public and private sector payments for ecosystem services

Working Paper 05/2018

We demonstrate how different payment mechanisms can stimulate the efficient delivery of key, high- value ecosystem services which are either not produced, or are under-produced, by the normal operation of the market. Two payment mechanisms are considered: payments from the public sector to private businesses; and payments between private businesses. Public to private funding provides the most common Payments for Ecosystem Services (PES) mechanism in the UK and most other countries. By contrast private to private (i.e. business to business) PES mechanisms remain relatively novel yet, because they tap into private sector funds, they have great potential for incentivising environmental improvements, particularly in cases where there is a profit opportunity arising from such improvements.
Permutations of these mechanisms are illustrated through three case studies: Public to private funding of natural capital improvements for national level decision making (referred to as the “national level case study”); Public to private funding of natural capital improvements at catchment level (the “catchment level case study”) and; Business to business funding of natural capital improvements again at a catchment level (the ‘business to business’ case study). Together these form a matrix of decision level and funding source exemplars which provide should have wide applicability.

Bateman I (2018) Net environmental gain: A note on principles and practical challenges

Working Paper 06/2018

In January 2018 the UK Government launched its 25 Year Environment Plan (H.M. Government, 2018). This stated that “We want to put the environment at the heart of planning and development to create better places for people to live and work” (p. 32). The approach to delivering this aim was also specified: “We will seek to embed a ‘net environmental gain’ principle for development to deliver environmental improvements locally and nationally” (p.33). This initiative sought to move from the status quo that “Current policy is that the planning system should provide biodiversity net gains where possible” (p.33) and expand policy such that “In future, we want to expand the net gain approaches used for biodiversity to include wider natural capital benefits, such as flood protection, recreation and improved water and air quality” (p.33).
This note seeks to set out the principles and practical challenges that a net environmental gain initiative should adopt and address.

Balmford B, Bateman I, Bolt K, Day B, Ferrini S (2018) The Value of Statistical Life for Adults and Children: Empirical and Methodological Investigations

Working Paper 07/2018

Estimates of the Value of Statistical Life (VSL) provide a vital input to a variety of policy decisions ranging from health provision to transportation planning. However, the bulk of VSL research has focussed on estimating average values rather than taking account of the potential variation in VSL across groups. Policymakers are particularly concerned that using estimates based on data concerning adults might provide poor proxies of the values associated with preventing child fatalities. We investigate this empirical problem while also addressing methodological critiques of standard contingent valuation (CV) approaches to VSL estimation which asks survey respondents to value an outcome described in terms of both the probability of occurrence and the health impact of an event. A prior lab experiment confirms fundamental problems in subjects’ abilities to provide internally consistent valuations of such compound goods. Given this we compare CV approaches with the ‘chaining method’ of Carthy et al. (1999) which splits the valuation task in two, assessing the probability of an event and the disutility of that event separately and then ‘chaining’ responses together to obtain a VSL estimate. Results confirm prior expectations that VSL values for preventing child fatalities significantly exceed those for adults. However, while we identify many advantages of chaining over CV approaches, through a novel variant of a validation test suggested by Carthy et al. we reveal anomalies in the estimates produced by the chaining method suggesting that a robust method for VSL calculation is yet to be refined.