Memorandum submitted by Friends of the Earth (England, Wales and Northern Ireland) (AQ 27)

 

Introduction

 

In this submission, Friends of the Earth picks up and develops two statements made by the Environment Agency in its own submission of evidence:

 

that there have been considerable reductions in emissions of the key air pollutants through the Environment Agency's regulation of installations under IPPC/EPR

that there is currently no method to cost the effects of poor air quality on the natural environment

 

Both statements are correct as far as they go, but equally, neither tells the full story. This submission is therefore intended to give a wider perspective on these two issues.

 

Summary

 

The first part of this submission therefore addresses the fact that the UK dominates the EU-27 tables of large point sources of NOx emissions. This very poor performance is further underlined by the fact that it does so alongside new Member States that have much lower GDP per capita incomes than does the UK.

 

This is shown to be due to poor implementation of IPPC. In particular, whilst complying with the letter of the law, the UK fails to make proper use of the flexibility contained within IPPC. Used properly, this flexibility allows account to be taken of local factors, but the UK used it to ignore the international benchmark BAT standards on several counts and without proper justification.

 

One of these counts involved ignoring international advice that assessments should be made in terms of cost per tonne of pollutant abated rather than in terms of a full cost-benefit analysis. This advice is given to avoid a situation whereby the full costs of pollution abatement techniques are set against only the partial benefits of avoiding that pollution, due to the current inability to place a monetary value on ecosystem damage.

 

However, work is underway at both EU and UK levels to develop a methodology for financially valuing ecosystems, and the second part of this submission focuses on this. Strong correlation between the UK and EU approaches to the basic framework methodology suggest that, to the best of current knowledge, the UK is going broadly in the right direction.

 

However, much additional research and development work is necessary at both UK and EU levels to reach the point where this methodology can be used to value ecosystems to a satisfactory standard. As currently available to the public, the elaboration of this emerging methodology is less detailed in the UK than in the wider EU. This means that there is a less clearly defined basis for identifying the various steps and actions involved, and therefore a less structured roadmap for relating the implementation of those steps and actions into a coherent body of work to achieve the overall objective of being able to financially value the impact of different policy scenarios on ecosystems.

 

Friends of the Earth is therefore of the view that the UK should develop a more detailed framework for its work in this field, using the EU work as a prototype, but amending this if it is thought to be more appropriate to the UK situation.

 

Point source NOx emissions

 

The issue

 

In 2008, EU-wide data was published showing that the UK dominated tables of the largest point sources of NOx emissions in the EU-27. Of the top 20 largest emitters, 8 were UK plants.

 

Top 20 NOx producing point sources in the EU-27 Member States

 

 

 

Country

 

 

Site

 

Capacity (MWe)

Current emissions estimate

(kilotonnes)

Emissions estimate using BAT

(kt)

UK

Drax

3960

58

7

Poland

Belchatow

4,340

40

2

Bulgaria

Maritsa II

1,450

39

2

Spain

Compostilla

1,312

35

2

Spain

Teruel

1,050

31

2

UK

Aberthaw

1,425

24

1

Portugal

Sines

1,256

23

2

UK

Ratcliffe

2,000

23

3

UK

West Burton

2,000

23

2

Bulgaria

Maritsa III

840

23

2

Spain

La Robla

620

23

1

UK

Cottam

2,008

22

3

Greece

Dimitrios

1,570

22

3

Spain

Velilla

-

21

-

UK

Kingsnorth

1,455

20

2

Ireland

Moneypoint

915

20

2

Greece

Kardia

1,200

20

1

UK

Ferrybridge

1,470

20

2

Romania

Turceni

2,310

20

1

UK

Longannet

2,400

19

2

 

Source: The Swedish NGO Secretariat on Acid Rain/European Environmental Bureau

 

This dominance of UK plants amongst the largest point sources of NOx was also found to be the case in European Environment Agency data produced around the same time.

 

However, this dominance is even less to the credit of the UK in light of the fact that the other countries featuring in this table had much lower GDPs per capita. The UK had a GDP per capita income over 16% above the average for the EU-27 in 2007. However, it featured alongside other MSs in this table, all of which have GDP per capita incomes lower than the UK, and most of which are below the EU-27 average - the lowest being only 40% of the EU-27 average.

 

GDP per capita for the EU-27 Member States (EU-27 average = 100)

 

 

EU-27

 

2005

 

2006

 

2007

 

Germany

115.0

114.0

113.2

Austria

128.7

127.4

128.2

Belgium

121.0

119.6

118.1

Bulgaria

35.3

36.7

38.1

Cyprus

92.5

91.8

92.7

Denmark

126.5

125.6

122.8

Slovakia

60.5

63.6

68.6

Slovenia

86.8

87.7

88.8

Spain

102.9

104.8

106.9

Estonia

62.8

68.3

72.1

Finland

115.1

116.8

116.2

France

112.3

11.8

111.3

Greece

96.1

97.2

97.9

Netherlands

131.0

130.4

130.9

Hungary

64.1

64.9

63.5

Ireland

143.6

145.3

146.3

Italy

105.1

103.2

101.4

Latvia

49.9

53.6

58.0

Lithuania

53.1

56.1

60.3

Luxembourg

264.0

278.9

276.4

Malta

77.4

76.9

77.1

Poland

51.2

52.4

53.6

Portugal

75.4

74.4

74.7

United Kingdom

119.1

117.8

116.2

Czech Republic

76.5

78.5

82.0

Romania

35.4

38.8

40.7

Sweden

123.6

124.4

126.2

 

Source: Eurostat and Eustat

 

It is ironic that these tables were being prepared at the same time as the UK was granting IPPC licences to its power sector that required none of them to fit the selective catalytic reduction (SCR) NOx abatement equipment that is commonplace in some other countries. At the same time, it was notifying the European Commission that it would not meet its 2010 ceiling for NOx. So whilst IPPC has led to significant reductions in air pollution, these should not overlook the fact that some very considerable problems remain.

 

NOx control technology for power plants

 

There are 2 types of NOx control technology - primary and secondary.

 

Primary NOx control technologies modify the boiler to prevent the NOx from being formed in the first place. During the combustion process, NOx is formed from the nitrogen content of the fuel (fuel NOx) and from the combustion process (thermal NOx). There is therefore a whole range of technologies that modify the combustion process to reduce the amount of NOx that is formed - eg by controlling the air flow and/or keeping the combustion To as low as possible whilst still achieving full combustion.

 

Secondary NOx control technology cleans up the NOx that is formed during the combustion process. For large plants, such as the power sector, the secondary technology is Selective Catalytic Reduction (SCR), which uses catalysts and ammonia/urea to clean the gas stream emerging from the boiler.

 

IPPC BAT for NOx from power plants

 

Integrated Pollution Prevention and Control (IPPC) is the key instrument of EU industrial policy relating to the environment, and it covers a wide range of industrial and agricultural processes. The IPPC Directive itself is a framework Directive in that it sets out the principles of applying IPPC, but does not actually set any controls. These are set at the very local level of each individual plant, where account can be taken of local technical, geographical and environmental conditions.

 

These local controls are set as Best Available Techniques (BAT) conditions which, put very simply, means that the operator has to use the best way of protecting the environment that can be economically justified. These BAT conditions are set out in legally binding permits for each individual installation. International guidance is provided by BAT Reference Documents (BREFs), which set benchmark BAT standards for each industrial sector and some cross-sector issues, eg. energy efficiency. However, the BREFs are not legally binding.

 

IPPC therefore represents a combination of EU controls and local flexibility, underpinned for some industrial sectors by legally binding emission limit values (ELVs) set out in the Sector Directives. These Sector Directive ELVs provide minimum standards below which the determination of site-specific BAT may not fall, and the power sector is covered by the LCP Directive (amongst others).

 

IPPC and LCP Directive NOx controls for existing UK coal-fired power plants

 

UK existing coal-fired power plants exceed a capacity of 500 MWth, placing them under the strictest controls set by the IPPC and LCP Directives. The NOx BREF BAT standard for existing coal-fired plants of this size is 90-200mg/Nm3, based on a combination of primary NOx controls and SCR. It is not technically possible to meet these emission levels without SCR.

 

The legally binding minimum emission limit value (ELV) set out in the existing LCP Directive for existing plants of this size is 500mg/Nm3 until 31st December 2015. After that, these plants have to meet a NOx ELV of 200 mg/Nm3, given that they are above the 500 MWth threshold for this requirement. This can only be met by fitting SCR.

 

Due to the characteristics of its locally-sourced fuel, Aberthaw Power Station has a derogation under the LCPD that gives it a NOx ELV of 1200mg/Nm3 until 1st January 2018, when it will have to meet a NOx ELV of 200 mg/Nm3.

 

Implementing existing IPPC/LCPD for coal-fired power plants in the UK

 

(a) The general case

 

The UK required most of the UK power sector to meet a NOx ELV of only 500 mg/Nm3 i.e the legally binding minimum set under the LCPD. This was justified in terms of it only being reasonable to expect the existing coal-fired plants to fit Boosted over Fire Air (BOFA), an advanced primary NOx control measure.

 

On the face of it, a valid case could have been made for not requiring SCR, in that most plants could justifiably say that they do not yet know whether they will continue normal operation after 2015, as it is not reasonable to expect them to take a commercial decision on fitting SCR so far in advance. This would give them only 8 years of certain normal operation, which is a bit too short a period for reasonably amortising the debt of fitting SCR. Here, it could therefore be argued that local factors provided justification for derogating from the BREF BAT standards.

 

However, it would appear that there was more to the UK's decision than this. The operators' permit applications repeatedly referred to being easily able to meet a NOx ELV of 500 mg/Nm3 with BOFA, and Friends of the Earth submitted technical details showing that BOFA was achieving half those emissions. However, this was ignored.

 

Further, independent of the above, it would appear that SCR was never on the agenda for any UK power plants, due to an OXERA study[1] that the UK used (wrongly) to benchmark its BAT determinations for the power sector - see below.

 

(b) Aberthaw Power Station

 

The Aberthaw Power Station application was always going to be distinct from the rest of the UK power sector in that Aberthaw has a different boiler technology that means that it cannot fit BOFA. It was therefore a matter of whether Aberthaw was going to be required to meet a less strict NOx standard or fit SCR.

 

However, Aberthaw's application proved distinctive in another respect, in that it clearly stated that if it was required to fit SCR, then it would remain open beyond 2018 i.e. it would have sufficient remaining life to amortise the debt of fitting SCR, which forms the basis of the BREF NOx BAT standard for existing plants of this size. In addition, the station's own calculations showed that the costs per tonne of NOx abated via SCR were well within the figures set out in the Economic and Cross Media BREF as being entirely acceptable in other Member States.

 

Despite all of this, Aberthaw escaped any requirement to fit SCR, due partly to the UK's IPPC BAT assessment methodology. This determines BAT to be the point on the cost curve beyond which costs start to increase more rapidly. However, this is a relative measure, and it takes no account of whether in absolute terms, costs are still reasonable beyond that point.

 

Another reason was that the Aberthaw application amortised the debt of fitting SCR over only 10 years, thereby over-emphasising the costs. Friends of the Earth complained to the Environment Agency about this, but they benchmarked their decision not to require SCR with a study undertaken by OXERA that concluded that even if the debt was amortised over 15 years, there was no economic case for fitting SCR to any existing power plant in the UK. This ought to have alerted them to the fact that something was wrong, given that SCR is the basis of the BREF BAT standard for NOx controls on existing plants of this size. In fact, what was wrong was that the OXERA study used a methodology explicitly stated by the Economic and Cross media BREF as being inadequate for BAT assessments, and one that should therefore never be used.

 

This is because the OXERA study was based on a full cost-benefit analysis. However, the Economic and Cross Media BREF states that this methodology should not be used for BAT assessments because of the problems of costing ecological damage - CBA studies therefore overemphasise the costs of fitting a technology. The ECM BREF states that instead, a simple cost effectiveness study should be undertaken, giving a cost/tonne of pollutant abated.

 

However, despite all of this 'evidence', Friends of the Earth was unable to challenge the decision legally because the BREFs are not legally binding, and Member States are free to determine their own BAT assessment methodologies. This simply left us with a case of one technical opinion against another, which our lawyers advised is a type of case that does not play out all well in the English courts, quite apart from being potentially very expensive as each side proffers additional technical experts to counter the other's experts.

 

The Aberthaw case study

 

As Friends of the Earth had done a lot of work looking at the Aberthaw determination, we decided to use that work as a case study to inform the revision of IPPC into the new Industrial Emissions (IPPC) Directive that is currently going through the EU political process.

 

Before this case study was released, it was checked with Friends of the Earth's lawyers as being entirely compatible with the information that it had in its possession. This case study has been used at EU level, both within the political and legal arenas, and it has been published in the specialist press both within and outside the UK, along with data showing the UK dominating the tables of the EU largest point sources of NOx.

 

SCR in 2016?

 

As stated earlier, the existing Large Combustion Plant Directive requires that all existing coal-fired plants larger than 500 MWth have to meet a NOx ELV of 200mg/Nm3 after 31st December 2015. This can only be met by SCR, and it applies to all UK power plants.

 

The UK is trying to reduce the risk of plants closing rather than fitting SCR by pushing hard for derogations from the provisions in the new Industrial Emissions Directive. The European Parliament's 1st Plenary vote in March 2009 narrowly voted against anything much more than the (necessary) peak load derogations, but the Council position contains derogations aimed at protecting existing plants from having to fit SCR. In these negotiations, the UK aligned with Poland, Bulgaria and Romania, other (much poorer) countries that featured alongside the UK in the EU-27's table of the largest point sources of NOx emissions.

 

The relationship with the National Emission Ceilings Directive and air quality

 

In October 2007, most of the UK coal-fired power plants received their IPPC permits, none of them requiring the fitting of SCR. In December 2007, Aberthaw received its permit, again not requiring the fitting of SCR. At exactly the same time, the UK notified the European Commission that it would not meet its 2010 NOx emission ceiling. It was therefore clear that there had been no integrated implementation of the IPPC and National Emission Ceilings Directive.

 

As a result, in January 2008, the operators were notified that their newly received permits might need to be reviewed and consultations were held as to how to bridge the gap. However, DEFRA now says that new modelling had determined that the shortfall would be smaller than had been previously thought, and as the 2010 data would not be available until 2011, the UK would be in compliance by the time that the previous non-compliance was confirmed.

 

With regards to local air quality, there is a legal requirement under IPPC to apply stricter standards than Best Available Techniques if these are needed to meet an EU Environmental Quality Standard. Applications therefore need to show that their installation would not exceed any of these standards, and generally, although not always, the local situation is reasonably well addressed.

 

However, beyond that, the decision that SCR could not be justified at any UK coal-fired power plant has two implications:

 

It judges that it is acceptable to 'fill up' to those environmental quality standards, rather than achieve the full technological potential for emissions reduction

 

It allows additional NOx pollution to travel away from the immediate vicinity and to contribute to the background levels elsewhere. NOx is a trans-boundary pollutant that can travel long distances from the source, and this is facilitated by the tall chimneys at industrial installations, designed to disperse the plume away from the immediate vicinity. It therefore forms part of the background levels at locations a long way from the plant.

 

In terms of air quality, whilst in most localities, traffic is a larger source of local NOx pollution, attention must be paid to all sources if local air quality is to be reduced to acceptable levels. And beyond the health effects of NOx pollution, it is a direct cause of acidification and eutrophication damage to ecosystems and, as a precursor gas to the formation of ground-level ozone, it is an indirect cause of health and ecosystem damage.

 

Conclusion

 

The fact that Friends of the Earth was unable to take legal action over the apparently obvious breach of IPPC in the NOx determination at Aberthaw Power Station underlines the fact that the UK did not act in breach of the letter of the law with regards to its implementation of IPPC.

 

However, it is the view of Friends of the Earth that it did breach the spirit of that law. IPPC contains flexibility to allow for a proper implementation to take account of all relevant local factors. However, it was not intended that a Member State should be able to disregard the BREFs on multiple counts on a justification that itself breaches a clear requirement of the Economic and Cross Media BREF. It was also not intended that Member States should so design their BAT assessment methodology that it ensures that it will only address what amounts to the 'low hung fruit' at any particular time.

 

It is worth noting that some other Member States do require SCR to be fitted to all their existing coal-fired plants, including those older than 1987. For example, the Netherlands requires all its existing plants to comply with a NOx ELV of 100 mg/Nm3. It is therefore unsurprising that the Dutch authorities are resentful about what they perceive the UK to be 'getting away with'.

 

However, in reality, the UK is only 'getting away with' this in terms of the letter of the law. In terms of background air quality and ecosystem damage, we are not 'getting away with' it, and the whole issue of NOx pollution from industrial installations, especially the UK's coal-fired power sector, should be addressed in the way that IPPC intended i.e. ' ... to achieve a high level of protection for the environment taken as a whole ... '. [Article 1, Scope and Purpose of the IPPC Directive].

 

 

Financially valuing ecosystems

 

The issue

 

The fact that there is currently no robust system for financially valuing ecosystems means that they are being omitted from cost-benefit analyses (CBAs). However, such valuation methodologies are in the process of being developed, both in the UK and at EU level. The UK therefore needs an ongoing programme of work that builds upon current research and development to achieve the crucial goal of a valuation system that is sufficiently robust to enable the impact of air pollution on ecosystems to be included in CBAs.

 

UK work to date on financially evaluating ecosystem damage

 

The UK has produced two particularly important documents on financially valuing ecosystems, looking respectively at developing a methodology for such valuations and at embedding an ecosystems approach (including financial evaluation) in government policy:

 

DEFRA's 'Introductory guide to valuing ecosystem services' (December 2007) looks at a comprehensive and systematic means of valuing ecosystems and the services that they provide, to ensure that proper account is taken of those ecosystems and services in policy appraisal. It is described as 'introductory' in recognition of the fact that further testing and development is needed to operationalise the approach in policy appraisal across government.

 

The methodology is basically an impact pathway approach that looks at the links between ecosystems and the provision of services and how these services contribute to human welfare. It presents 5 key steps:

 

o Policy change

o Impacts on ecosystem

o Changes in ecosystem services

o Impacts on human welfare

o Economic value of changes in ecosystem services

 

DEFRA's 'Securing a healthy natural environment' [2007] sets out an action plan for embedding an ecosystems approach in government policy. Within this plan, Priority Area 4 looks at developing ways of valuing ecosystem services. In practical terms, this Priority Area is developed in terms of:

 

o Piloting the valuation of ecosystem services in a range of policy areas, including valuing the benefits of the UK Biodiversity Action Plan and impact assessment for the Marine Bill

o Developing a long-term strategy for environmental valuation in transport appraisal, including the valuation of ecosystem services

o Developing a benefits transfer strategy[2] to facilitate the valuation of ecosystem services

 

After initial scoping studies, the latest second phase of research - commissioned in 2007 - has built on these. Many of those specifically relating to valuing ecosystems have a target date of the end of 2008, although some are open-ended.

 

The UK's impact pathway methodology in principle

 

Although the methodology of valuing ecosystems is still at a developmental stage, Friends of the Earth is satisfied that - to the best of current knowledge - the UK is going broadly in the right direction. We say this on the basis of the strong similarities between the approaches being taken by the UK and the EU.[3] For example:

 

Both take an impact pathway approach

Although the EU approach has only 3 steps, compared to DEFRA's 5, closer examination shows this to be simply due to the EU combining steps that are treated separately by DEFRA

Both take a marginal value of change as the basis of calculations

Both are based on Total Economic Value (TEV), which ensures that all values get due recognition, not just those of tradable commodities

Both recognise that whilst valuing ecosystems is not a new subject, it remains a developing area with much complexity, integrating as it does the two disciplines of ecology and economics

Both underline the importance of case studies in developing the methodology[4] [5]

Both have the longer-term aim of mainstreaming this approach in existing policy and project appraisal tools and guidance

 

The UK's impact pathway methodology in practice

 

In practice, though, a key point from the above consensus is that much remains to be done to convert the impact pathway methodology from its current form to one where it provides a practical framework for the execution of individual/national valuation studies. Further, where individual studies focus on part of the UK, it is necessary to ensure that these can contribute to the sort of UK-wide studies that are often required to establish the overall impact of particular policy measures.

 

This process of practical development and refinement can be greatly assisted by converting the broad, key steps of the impact pathway methodology into a series of smaller steps. This enables the highlighting of those areas where specific research efforts, refinement of methodology and co-ordination are required.

 

A start has been made on this in the UK, where DEFRA's Guidance Document discusses what is involved in each of the 5 key steps in its impact pathway methodology. However, the EU's approach has taken this significantly further,[6] operationalising its 3 key steps into a total of 8 steps and converting these into a total of 20 clearly stated main actions.

 

It is Friends of the Earth's view that an expansion of the UK's approach along these lines will help ensure that the ultimate objective of financially valuing ecosystems is achieved as effectively, as economically and as timeously as possible. Further, if this adoption is formal and public, it will help ensure transparency, and confidence that this issue of valuing ecosystems if being addressed.

 

Operationalising the EU's impact pathway methodology

 

The EU's approach is made up of 3 key steps, which are themselves made up of a total of 8 subsidiary steps, which are then converted into 20 main actions:

 

KEY STEP 1: Exposure assessment: exposure modelling

 

1. Develop maps of critical loads and levels of exceedances for the relevant scenarios and pollutants. This builds upon existing quantification of emissions and pollution dispersion.

 

Action 1: Critically assess the possibilities of ecosystem exposure modelling to better serve and suit the needs of the next steps in the assessment framework (e.g. providing deposition maps on a more detailed scale, extending endpoints for acidification and eutrophication to include biodiversity, effects of enhanced N deposition, increased focus on the implications of and interaction with climate change effects etc)

Action 2: Determine research priorities on the basis of the results of the critical assessment (action 1) and direct resources accordingly.

 

2. Develop and ecosystem map distinguishing between ecosystem types

 

Action 3: Develop an ecosystem map. The major issue is to decide which ecosystem classification and how many ecosystem types to use.

 

3. Project maps of critical loads and exceedances of step 1 on the ecosystem map of step 2. Determine what ecosystems (areas and types), being exposed to critical loads and/or levels of exceedances, are confronted with changes in critical loads and/or levels when comparing the baseline scenario with each of the policy scenarios

 

Action 4: Provide an integrated map and database, combining the change of critical loads and levels exceedance and the corresponding ecosystem types.

 

KEY STEP 2: Ecological response assessment: dose-effect modelling and assessment

 

4. Develop a comprehensive overview of those ecosystem services that may benefit from reduced acidification, eutrophication and ground-level ozone for each ecosystem type. Define those ecosystem services in an unequivocal way.

 

Action 5: Develop a comprehensive overview of the ecosystem services that may benefit from acidification, eutrophication and/or ground-level ozone reduction for each ecosystem type. These ecosystem services have to be defined in an unequivocal way (e.g. by indicating potential overlaps, the way it is valuable to people, assessment guidelines etc). The selection of the ecosystem services potentially benefitting from air pollution abatement requires thorough co-operation with the actions under steps 5 and 6.

 

Action 6: Have a regular updating of the crucial knowledge on ecosystem service provision in place.

5. Predict the biological and chemical changes in ecosystems as a response to the changes in air pollution exposure between the baseline scenario and each of the policy scenarios. By definition, effects will only occur in those areas where critical loads or levels have been exceeded.

 

Action 7: Determine the appropriate ecological endpoints of the different ecosystem services provided by each ecosystem type likely to be affected by acidification, eutrophication and ground-level ozone. This requires cooperation with actions under step 4.

 

Action 8: Organise existing information concerning dose-effect relationships, documenting boundary conditions, spatial coverage and uncertainties.

 

Action 9: Identify research priorities and define a strategy to direct research efforts to other organisations to reduce uncertainties in dose-effect relationships.

 

Action 10: Investigate the possibilities of spatially transferring dose-effect relationships. An important condition is that doing so should not add to existing uncertainty, thereby possibly undermining the fragile consensus for the monetary assessment of ecosystem benefits of air pollution abatement.

 

6. Determine what ecosystem services are likely to be affected by the implementation of the policy scenarios under consideration.

 

Action 11: Determine the relationship between ecological benefit endpoints and ecosystem service provision. Select indicators and/or develop indices for linking ecological benefit endpoints and ecosystem service flows. This has to be done in close collaboration with actions under steps 4 and 5.

 

Action 12: Indicate which ecosystem services are meaningfully affected by air pollution abatement scenarios under consideration. This is done by linking information about emission reductions (step 3), dose-effect relationships (step 5) and relationships between ecological benefit endpoints and ecosystem service provision (step 6, action 12) in order to find out about the likely changes in ecosystem service provision.

 

KEY STEP 3: Economic evaluation: monetary benefit evaluation

 

7. Determine the likely changes in the quality and/or quantity of ecosystem service provision, comparing ecosystem service provision under the baseline scenario with ecosystem service provision under each of the policy scenarios.

 

Action 13: Draw up indicators for expressing the change in the quality and/or quantity of ecosystem service provision. The quality of the indicators relates to the ease with which one can determine the changes in ecosystem service flows on the one hand and to their suitability for supporting the actual monetary benefit estimation under step 8 on the other hand.

 

Action 14: Draw up assessment guidelines for determining indicator values for expressing the change in the quality and/or the quantity of ecosystem services.

 

Action 15: Determine and describe the change in the quality and/or quantity of the ecosystem service flows that are meaningfully affected.

 

8. Monetise the likely changes in the quality and/or quantity of ecosystem service provision between the baseline scenario and each of the policy scenarios

 

Action 16: Identify potentially overlapping benefits that could lead to double counting when assessed independently. Determine a strategy to prevent double counting of benefits (e.g. more careful design of valuation studies, assessing the value of changes to several ecosystem services in one study etc).

 

Action 17: Document how changes in the quality and/or quantity of ecosystem service provision act upon the interaction between demand and supply. Identify existing market models that allow accounting for the supply and demand relationships and their resulting price effects. In case such models are not available for certain services, try to describe the likely price effects.

 

Action 18: Select valuation methods for translating changes in the quantity and/or quality of ecosystem service flows to corresponding welfare changes in monetary terms.

 

Action 19: Determine the study and reporting design of valuation studies to be carried out so as to allow the transfer or up-scaling of results to other areas.

 

Action 20: Seek ways to assess, design and communicate the multiple sources of uncertainty. The major aim is to inform decision makers about the uncertainties at hand.

 

The EU approach emphasises that the overall trajectory for the monetary assessment of ecosystem benefits will be one of step-wise improvements, and therefore not all of the actions identified above can be carried out immediately. Therefore it is necessary to prioritise actions and to gradually allocate resources accordingly.

 

In practice, this means developing the fundamentals set out in steps 1-6 in order to facilitate the monetary benefit estimation set out in steps 7 and 8. Peer reviewing methodology and the outputs of several key actions is important to build confidence into the assessment process. Regarding the monetary benefit estimation, it is advisable to focus on only a limited number of ecosystem services in the beginning - as knowledge and methodology develop and acceptance among scientists, policy makers and the public grows, more ecosystem services can be added to the benefit of the estimation process. This initial choice of ecosystem service focus will affect the development of steps 5, 7 and 8.

 

Conclusion

 

The methodology of the financial valuation of ecosystems is a complex issue that is only currently at the developmental stage. However, within this emerging field, the UK's impact pathway methodology shows a strong correlation in principle with EU approaches, and therefore Friends of the Earth is satisfied that - to the best of the limited knowledge currently available on this subject - the UK is going broadly in the right direction.

 

However, as currently available to the public, the elaboration of this emerging methodology is less detailed in the UK than in the wider EU. This means that there is a less clearly defined basis for identifying the various steps and actions involved, and therefore a less structured roadmap for relating the implementation of those steps and actions into a coherent body of work to achieve the overall objective of being able to financially value the impact of different policy scenarios on ecosystems.

 

Friends of the Earth is therefore of the view that the UK should develop a more detailed framework for its work in this field, using the EU work as a prototype, but amending this if it is thought to be more appropriate to the UK situation. Developing and implementing a sophisticated methodology will be demanding, and should proceed as a series of step-wise improvements. However, a more elaborated framework for this work - amended over time if necessary - will facilitate this and provide a coherent basis for the assessment of progress.

 

27 January 2010



[1] 'Best Available Techniques for Abating SO2 and NOx Emissions from Coal-fired Power Stations': OXERA for the Environment Agency; February 20th 2004

[2] Undertaking a full ecosystem valuation is a complex and costly exercise. A benefits transfer strategy aims to reduce this by maximising the extent to which the results of a full study for one ecosystem or group of ecosystems can be used to value a similar ecosystem or group of ecosystems.

[3] As set out in Valuation of air pollution, ecosystem damage, acid rain, ozone, nitrogen and biodiversity: Final Report; Arcadis Ecolas for the European Commission, DG Env; October 2007.

[4] Ibid -- Although some studies have been carried out in North America, Scandinavia and the Netherlands, these are thought to have very limited relevance to a comprehensive EU-wide assessment.

[5] The above conclusion was reinforced by MacMillan et al (2001) who conducted a scoping study of the valuation of air pollution effects on ecosystems for DEFRA. Several dozen valuation studies were reviewed, both terrestrial and freshwater. It was concluded that relatively few of these studies were applicable to current policy needs because of outdated valuation methodology and/or weak scientific underpinning.

[6] Valuation of air pollution, ecosystem damage, acid rain, ozone, nitrogen and biodiversity: Final Report; Arcadis Ecolas for the European Commission, DG Env; October 2007.