Local environment quality: economic analysis
This guide explains how impacts on local environment should be incorporated into a cost benefit analysis.
Overview
The environment in which people live has a profound impact on their quality of life and wellbeing. In surveys, the public have consistently identified local environmental factors as being one of the most important factors in their wellbeing. As a result, English Local Authorities spent over £6 billion on environmental services in 2011.
It is therefore important that the impacts on the local environment of any proposed policy, programme or project are understood and fully reflected in decision making. This page provides support on how such impacts can be reflected.
The appropriate approach will depend upon the decision being made. These economic valuation tools provide a way to assess the scale of impact, but may not be representative at a local level. Defra recommends using the tool to support:
- prioritising between different aspects of local environment
- valuing small changes from relevant decisions
- producing indicative estimates for larger changes
Economic valuation tools
To enable the proportionate assessment, marginal values have been estimated to convert changes in local environmental quality to monetary values. Table 1 provides the marginal value placed on improvements in each aspect of the local environment.
These figures are presented in 2 ways:
- using a varying scale with each factor of between three and five levels (each of these levels relates to a description: )
- using a common ten point scale - this approach has been provided to better support prioritisation between factors based on a common number of levels
Table 1: Values of changes in local environmental quality (per person per month)
| Value of unit change | |||
| Original scale | 10 point scale | ||
| Scale | Value | ||
| Litter | 1 – 4 | £9.88 | £3.95 |
| Trees | 1 – 4 | £5.83 | £2.33 |
| Dog Fouling | 1 – 4 | £4.73 | £1.89 |
| Chewing Gum | 1 – 3 | £7.23 | £2.17 |
| Fly-tipping | 1 – 5 | £7.42 | £3.71 |
| Quiet Areas | 1 – 5 | £2.74 | £1.37 |
| Odour | 1 – 5 | £3.82 | £1.91 |
| Graffiti | 1 – 3 | £1.87 | £0.56 |
| Light Pollution | 1 – 5 | £1.26 | £0.63 |
| Light Intrusion | 1 – 4 | £0.85 | £0.34 |
The values presented above provide an indicative estimate of the value of the changes in the local environment. They do not comprehensively reflect the impacts and so where a decision is likely to have a substantial impact a more detailed assessment may be justified.
Information on these values is available from the underpinning research.