Abbreviations & Acronyms

BCR Benefit-cost ratio

BEIS Department for Business, Energy & Industrial Strategy

Defra Department for Environment, Food and Rural Affairs

DLUHC Department for Levelling Up, Housing and Communities

DRN Detailed River Network

ERDF European Regional Development Fund

IEA Independent Economic Assessment

FRIC PLACE HOLDER

INNS Invasive Non-Native Species

MHCLG Ministry of Housing, Communities & Local Government

NPV Net Present value

NWEBS National Water Environment Benefits Survey

PES Payment for Ecosystem Services

PVB Present value of benefits

PVC Present value of costs

SMART Specific, measurable, achievable, realistic, and time-limited

WAP Westcountry Angling Passport

W4G Water for Growth

WFD Water Framework Directive

WRT Westcountry Rivers Trust

1. Introduction

This is the final report of the independent economic assessment (IEA) of the Water for Growth (W4G) project. It reports the work undertaken to measure and value the impact of the project, accounting for the ecological, economic, and social uplifts arising from improved fish passage in the River Camel and River Fowey and benefits to anglers from modernisation of the payment mechanism for accessing fishing beats These findings are used to assess whether W4G has delivered its objectives as planned and assess the benefits to society realised in return for the project costs

1.1 Background

The Westcountry Rivers Trust (WRT) is an environmental charity that aims to protect and restore inland waterways and waterbodies in the Westcountry, for the benefit of the surrounding natural environment and people. The Trust educates local communities on water use and value and implement programmes and/or projects to enhance rivers, lakes, and estuary ecosystems.

The Water for Growth (W4G)2 project aims to improve fish passage for migratory fish species and improve river habitats in the River Camel and River Fowey. Cornwall’s river natural capital has been degrading over time, due to well-known drivers such as weirs and habitat loss. The result has impacted the stocks and flows of migratory fish species - salmon and sea trout – and without intervention could result in a decrease in angling and ultimately impacting local Cornish businesses over the longer term. The link between the river’s natural capital and local business activity establishes the importance of restoring and maintaining fish stocks in the local area.

Box 1.1: Overview of the Camel and Fowey Catchments

River Camel3: River Camel drains a 413km2 area between Bodmin Moor and Padstow and encompasses a diverse range of farming landscapes. The Camel Valley and its major tributaries are designated as Special Site of Scientific Interest (SSSI) and Special Area of Conservation (SAC) status under the EU Habitats Directive, due to the presence of otters and bullheads. Further designations include Area of Outstanding Natural Beauty (AONB) status for the Camel estuary and Area of Great Landscape Value (AGLV) status for the Camel and Allen valleys.

River Fowey4: One of the largest river catchments in south Cornwall, draining an area of approximately 177.5km² from central and southern Bodmin Moor. The river rises on Bodmin Moor at a height of 290m, flowing in a southerly direction for approximately 35km before reaching the tidal limit at Lostwithiel. The estuary continues for a further 9km before reaching the coast at Fowey town. The catchment includes two strategic reservoirs, supplying water to the majority of Cornwall’s population.

Source: Cornwall Rivers Project

2 For further information see: https://wrt.org.uk/project/water-for-growth/

3 For further information see: http://www.cornwallriversproject.org.uk/geography/camel.htm

4 For further information see: http://www.cornwallriversproject.org.uk/geography/fowey.htm

Implemented over a 5-year period from 2017 – 2022, the project has received £2.5 million of funding from the England European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme (2014 – 2020) alongside match funding inputs from Natural England, the Environment Agency, South West Water and WRT of £700,000. The W4G project overall goals are to: (i) restore aquatic natural assets; (ii) support sustainable economic growth of local businesses (including angling and tourism); and (iii) modernise and develop angling payment for ecosystem services (PES) market mechanisms to ensure maximum sustainable economic benefit.

The review and evaluation of the W4G project is timely. There is increasing public awareness and media attention on the quality of the water environment and the long-term health of rivers due to pressures and stresses from pollution, abstraction, habitat degradation as well changing weather patterns and climateas exemplified by the Summer 2022 drought. Reliable ex-post evidence from projects like W4G – showing both successes and lessons learnt – is scarce but vital to bring such approaches to the attention of a wider set of decision-makers. There is considerable opportunity to learn from past experiences about what works and why, in order to improve the effectiveness and efficiency of future projects and programmes

Moreover, the financial and human resources that are available to restore rivers are limited, and value for money (VfM) is a key consideration not only for public funding, but also for private investment that is expected to fill gaps in the overall funding requirement.

1.2 Objectives of this study

The purpose of this study is to provide an independent economic assessment (IEA) of the W4G project. It is an ex-post analysis to estimate the economic, ecological, and social impacts of the W4G project outcomes. The evaluation questions to answer are:

1. What has been achieved? Determine if the W4G project deliverables have been met (e.g., targets for restoration)

2. How has this been achieved? Evaluate whether the W4G logic-model framework has been realised (i.e., have intended impacts been realised and also have impacts arisen through the logic chain envisaged).

3. What is the value for money of the W4G project? Estimate the value of the economic, ecological, and social uplifts of the project to compare its benefits to the costs and calculate the benefit-cost ratio (BCR) at the local scale (Cornwall).

• The assessment considers both the short-term (project timescale) and longer-term outcomes of the W4G project. The principal question to answer with respect to the longer-term perspective is the extent to which the improved fish habitat and fish stock sustainability achieved by the project impacts the socio-economic sustainability of migratory salmonid angling on the Camel and Fowey.

The results and findings from this assessment supports WRT’s reporting to ERDF. It will provide evidence and interpretation on the VfM and estimated benefit-cost ratio (BCR) of the project, along with observations on the delivery of the project’s four deliverables, drivers of the results and lessons learned that can inform future projects aiming to improve design and delivery of similar projects both for WRT and a wider audience

1.3 Report structure

The remainder of this report is structured as follows:

• Section 2 – Describes the approach to the economic assessment.

• Section 3 – Presents the economic assessment results, including the quantified costs and benefits.

• Section 4 – Provides discussion of findings and addresses the key evaluation questions project

• Section 5 – Provides conclusions, discusses limitations of the assessment and recommendations.

• Appendix 1 – Provides a brief description of the Fish Pass App.

• Appendix 2 – Mapping of W4G activities.

• Appendix 3 – Summary of businesses engaged with and beat ownership across angling schemes.

• Appendix 4 – Presents the W4G logic model inputs from Context to Rationale.

• Appendix 5 – Will describe the methods used to quantify costs and benefits.

• Appendix 6 – Outlines how the net present value (NPV) is calculated.

2. Approach and methodology

This section sets out the approach to the independent economic assessment. It summarises the W4G project outcomes that have been assessed, the principles for the analysis and methodological steps, along with the data collection process.

2.1 W4G project

2.1.1 Funding (inputs)

The W4G project received a total of £2.6 million of funding from the England ERDF and £713,000 in match funding from WRT and other stakeholders in the Westcountry. A breakdown of the funding is shown in Table 2 1

Source: Original from W4G logic model – ESIF form 1011, Revised breakdown provided by WRT Finance Team (pers. comm).

Table Notes:

1 Capital expenditure includes the following cost categories: land acquisition, building acquisition, site investigation, site preparation, building and construction, plant & machinery, fees, other capital (costs inappropriate for other capital cost categories).

2 Revenue is defined as the following cost categories: salaries (including salary/wage costs, staff travel and expenses and staff training), overheads (including direct overheads and indirect overheads), premises (including rent, rates, heat & light), fees (including consultants fees, evaluation, accounting and audit), other revenue (including depreciation, marketing & publicity, irrecoverable VAT and other costs).

The profile of actual expenditure (including both ERDF and match funding) over the project timescale is summarised in Table 2.2, based on regular reporting to ERDF by WRT. A summary of expenditure by deliverable over time is shown in Table 2.3. With respect to the match funding received, it is understood that the Environment Agency in particular were interested in supporting activities related to weir removals (C23), whilst South West Water and Natural England have supported habitat improvement works (C22) and maintenance activities.

Table notes: From WRT Finance Team (November 2022).

Table

Table notes: From WRT Finance Team (November 2022).

2.1.2 Project outcomes

The W4G project comprises of a set of activities that have specific target outputs and outcomes, which are defined according to four main deliverables5:

• Multiple small-scale habitat restoration works (C22): River habitat improvements such as woody debris dams’ manipulation, invasive flora removal and gravel cleaning, along with daylighting and removing abandoned coppice to improve habitat for juvenile salmonoids. This deliverable is measured as the hectares (ha) of river habitat improved.

• Infrastructure capital works and delivery of weir improvements (C23): Improved fish habitat connectivity in the River Camel and River Fowey by the removal of man-made barriers to migratory fish. Where the complete removal of useful infrastructure has not been possible, partial removal or construction of a fish bypass has been implemented. This deliverable is measured as the hectares (ha) of river area with better conservation status, determined by the change in width of upstream and downstream measurement between two barriers.

• Creation of new angling mobile application (C29): Development of the Fish Pass App – formerly Westcountry Angling Passport (WAP)6 – a bespoke mobile app that allows anglers to buy and exchange tokens7 for fishing. The aim for the app is to improve the WAP scheme by removing inefficiencies of its paper-based token system and benefit local businesses and communities. This deliverable is measured as the number of enterprises that have been added to the Fish Pass app (i.e., successful engagement).

5 Note that C29 was originally one deliverable but has been divided into two.

6 Description of the Fish Pass app is in Appendix 1.

7 'Tokens’ is the Fish Pass app term and refers to a fishing permit that anglers pre-pay for to have access to private rivers for angling.

• Business support to angling businesses (C1): The businesses engaged with as part of C29 (i.e., businesses added to the app) were offered 12-hours of business support relevant to the W4G project, including how to manage the restored habitats on their fishing beats, support to develop marketing and promotional materials and other customer-based activities/assistance. This deliverable is measured as the number of businesses added to the app that have accepted the 12-hours of businesses support offered.

Locations of habitat restoration (C22) and infrastructure capital works (C23) that have been undertaken are shown in Appendix 2. The capital works targeted weirs that were an obstruction for fish passage. Identification and selection of these weirs across the Camel and Fowey was informed by discussions with the W4G project partners (Environment Agency, Natural England) and other stakeholders to ensure that all fish passage blockers were identified within these project river areas. Note that the mapped areas for C23 capital works in Appendix 2 shows weirs that were deemed relevant for the W4G project, with other weirs (i.e., those that are not a barrier to fish passage) beyond the W4G project scope and therefore not included.

Over the course of the project two proposal revisions were submitted by WRT to increase the W4G project outputs (Table 2 4) The difference between achieved outcomes and contracted targets is informed by data and information provided by WRT. Note that verification of the achievement of the outcomes as measured (e.g., through site visit by external third party) is beyond the scope of this assessment.

Table 2.4: W4G project deliverable targets and achievements

Table notes:

1. Revision submitted in 2019 and correspond to “Contracted ER/C/O/ 22 or 23 or 29 or 01” reported under physical progress in the latest Quarterly Report (1st October 2022 to 31st December 2022).

2. W4G outputs and target log provided December 2022 (pers. comm, WRT)

2.1.3 Timing of outcomes

The timing of deliverable outcomes – i.e., when they were achieved - is shown in Table 2.5 as reported by WRT to the ERDF. Note that by 2019, the initial contracted targets for C22 and C23 had been achieved indicating that areas of river habitat rehabilitated, and further weir removals undertaken go above and beyond the initial W4G project proposal. The revised contracted targets were achieved by the end of 2022.

Table 2.5: Profile of W4G achieved outcomes

Sources:

1 W4G outputs and target log provided December 2022 (pers. comm, WRT).

2 Summary of W4G C1 Support provided November 2022 (pers. comm, WRT).

Table 2.6 shows quantified measures of the W4G project outcomes that provide the basis for the economic assessment. Note that Fish Pass App figures are assessed based on transactions that have been recorded in the App, as this is the minimum input required by all app users. As part of App use, users are prompted to record catches (length and weight), as well as report no catch visits.

Table 2.6: Quantified W4G project outcomes of App and Paper-token transactions provided November 2022 and January 2023 (pers. comm, WRT). List of beats owners and beat names in Appendix 3

1 Counts of beats, visits (i.e., trips) and unique users are limited to beats in Cornwall (i.e., not the whole Fish Pass App).

2 Active beats refer to those where a transaction using the Fish Pass App has been recorded.

3 W4G outputs and target log provided December 2022 (pers. comm, WRT)

4 Summary of W4G C1 Support provided November 2022 (pers. comm, WRT).

5 Maps provided by WRT GIS Team (see Appendix 2)

2.2 Economic assessment requirement

2.2.1 Summative assessment

The ERDF grant funding agreement for the W4G project requires that a summative assessment is undertaken. In broad terms the summative assessment is required to provide insights on the experience of implementing the project, the difference it has made, and lessons learnt (MHCLG et al., 2020a, 2020b) The specific objective for this study to determine the VfM of the W4G project is a supplementary requirement of summative assessment guidance.

The IEA provides: (i) evidence that will support and input to WRT’s final reporting for the summative assessment; and (ii) broader economic analysis and insight that will support WRT’s continuing work to improve the water environment in the Westcountry. With respect to (i), the reporting requirement for the IEA includes details on the approach to the impact evaluation, along with the analysis and results and interpretations that will help answer the question whether the project has achieved its objectives. The IEA does not, however, provide supporting evidence to answer summative assessment questions concerning project delivery and management.

As part of the funding application, WRT completed the summative assessment logic model for the W4G project (Figure 2 1). Further detail is provided in Appendix 48. The logic model is the foundation of the project and a key mechanism for: (1) describing what has been achieved in terms of outputs and impacts;

(2) assessing how this has been achieved by tracing the logic pathway from inputs through activities and outputs to outcomes; and (3) determining the VfM of the project in terms of the value of economic, ecological, and social uplifts (impacts) arising from the project outcomes. Potential impacts include full-time equivalent (FTE) jobs secured (economic), rehabilitated riparian habitats (ecological) and improved wellbeing of local residents (social).

2.2.2 Evaluation framing

The basis for the economic analysis is a “with” and “without” assessment of the W4G project, providing a comparative view between two scenarios for the project. The “with” scenario is defined according to the W4G project outcomes achieved, which is informed by the project monitoring and reporting and data collated through the implementation period. The “without” scenario is constructed as a counterfactual forecasting the expected outcomes for the project areas – the rivers Camel and Fowey in the absence of the W4G project implementation. The counterfactual is constructed according to pre-intervention baseline data and supporting assumptions and wider data. The impact of the project is assessed as the (net) difference in outcomes between the two scenarios.

2.2.3 Practical steps

The method for the assessment is intended to ensure a systematic and transparent approach to defining the boundaries of the evaluation and assumptions used. This includes defining the assessment scope, geographic boundary and stating any key non-monetary costs and benefits. The IEA is based around the analytical steps for evidencing the summative assessment logic model for the W4G project and, ultimately, the valuation of the project impacts in terms of the economic, ecological, and social uplifts:

1. Define the scope and counterfactual: the boundary of the assessment is explicitly defined, and various considerations are taken into account to ensure that the counterfactual for the assessment is a credible representation of what would have occurred in the absence of the implementation of the W4G project.

2. Identify costs and benefits: the assessment identifies a long list of potential costs and benefits related to the delivery of the W4G project activities. This determines the scope of costs and benefit uplifts to be included in the economic analysis based on materiality of the impact.

3. Quantification and valuation of costs and benefits: where possible, material costs and benefits are quantified and valued in monetary terms. This allows for their direct comparison in the same unit of measure. Material non-monetised impacts are also identified and either assessed in qualitative or quantitative terms to ensure that all material impacts of the W4G project are captured within this assessment.

4. Compare costs and benefits: the quantified and valued costs and benefits are aggregated to give an overall assessment of the (net) impact of the W4G project and its deliverables. The distribution of costs and benefits over specific groups, time and space is assessed as far as practically possible (e.g., distinction between Camel and Fowey, uplift by beneficiary groups).

5. Sensitivity analysis: key assumptions and parameters for the calculation of the most significant costs and benefits are subject to sensitivity testing to address areas of uncertainty and understand their influence on the study’s results.

6. Results and interpretation: the primary study results will establish whether the W4G project has resulted in a net benefit to society, meaning the beneficial outcomes outweigh the costs, and the value for money of the project.

2.2.4 Assessment scope and limitations

The assessment scope is limited to the local scale (Cornwall). Impacts on marine and estuary environments, adult fish populations (and food supply – e.g., commercial fishing), and climate change impacts are outside the W4G project scope (see Appendix 4 - market failure description) and hence beyond the scope of the IEA.

The W4G project delivery is limited to river sections that are on average, no narrower than 4 metres in the detailed river network (DRN). Therefore, reported outputs reflect where works were undertaken, but does not necessarily reflect the full upstream impacts (i.e., potential improvements in connectivity within the catchments). As such, the W4G project outcomes do not double-count with agri-environmental schemes

It should also be noted that the areas measured as part of C22 (habitat improvements) and C23 (weir removal) do not overlap (i.e., no double-counting of outcome hectare area)9. The achievement of both these deliverables, however, is critical to the overall goal to restore aquatic natural assets – i.e., they are complementary, and isolation of the individual outputs would be less effective in achieving the project outcomes. Therefore, the assessment attributes outcomes and impact to the combination of these deliverables; the analysis does not attempt to differentiate the impact from habitat restoration versus weir removals.

From a practical perspective, the robustness of the assessment - as with any analysis - is only as good as the data and assumptions that feed into it. The results must therefore be interpreted with an understanding of the confidence and limitations of the outputs produced. According to a series of sensitivity analyses, various data and assumption inputs are tested to ensure greater understanding and confidence in the reported results.

2.3 Economic assessment

The assessment is underpinned by economic analysis principles outlined in the HM Treasury Green Book (HM Treasury, 2022a) and HM Treasury Magenta Book (HM Treasury, 2020), and the natural capital approach (Defra, 2021), which has become the conventional perspective for assessing the impact of natural environment interventions.

2.3.1 Conceptual overview

Natural capital is “the stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people” (Natural Capital Coalition, 2016). A natural capital approach can be defined as distinguishing between the natural capital stocks and the flows of benefits they provide; projecting benefits into the future and linking the provision of benefits to the extent and condition of assets. The intention is to ensure that interventions and business decisions prioritise maintaining the assets to sustain benefits, and not to maximise one of the benefits at the expense of others or the extent and condition of the natural capital asset itself. The Green Book (HM Treasury, 2022a) provides a higher-level view of the impact pathway(s) linking changes in the natural environment to changes in value to society. The impact pathway described in the Green Book (ibid.) is shown in Figure 2 2 and adapted to align with the W4G project context.

9 The primary area of C22 improved is deducted from C23 area.

The W4G project deliverables will be assessed in terms of economic, ecological, and social uplifts. By utilising a natural capital perspective, the assessment takes a more holistic basis for determining and measuring impacts, resulting from changes in stocks and/or flows of natural assets. The resulting approach to the assessment is illustrated in Figure 2 3, where the natural capital impact pathway (Figure 2 2) is mapped to the W4G logic model (Figure 2.1). The W4G logic model functions as an input to the IEA whilst the natural capital impact pathway sets the assessment approach, linking the project outcomes to impacts that are measured in economic terms as benefits, and the associated beneficiaries (i.e., effects on local economy and/or social welfare).

This approach allows for synergies between economic, ecological, and social uplifts to be clearly established. Therefore, the BCR and accompanying reporting outputs will capture a wider view of benefits and values.

2.3.2 Measuring costs and benefits

The IEA measures and values benefits in terms of uplifts in economic, ecological, or social indicators. Where relevant this requires estimating the value of an uplift (e.g., increased number of fishing beats) and aggregating it over the spatial scale for the assessment (e.g., fish pass anglers). For the purposes of the assessment, an ‘uplift’ due to the W4G project is defined as the provision of an additional outcome and associated benefit (i.e., something that would not have occurred otherwise) and/or bringing forward an outcome/benefit in time (i.e., something that would have occurred eventually, but has been delivered earlier).

The additionality of an outcome is assessed as the difference between the “with” and “without” scenarios as described in Section 2.2.2 – i.e., what has occurred over and above the counterfactual projection (see below). To practically measure the project uplifts, therefore, both the timing and magnitude of changes in outcomes associated with the W4G deliverables needs to be determined. For all benefits and costs identified as material the following questions are considered:

• How have deliverables been achieved (i.e., specific actions and/or activities)?

• What is the change in outcome?

• What is the timing of these changes (both activities and outcomes)?

• Who are the beneficiaries (i.e., direct, indirect)?

Information on unsuccessful actions (e.g., number of businesses that WRT reached out to versus number of businesses participating in the W4G project) has also been collected to establish what has been achieved relative to what could have been achieved.

Costs and benefits will be assessed in qualitative, quantitative, and/or monetary terms. In some cases, it may not be possible to fully quantify outcomes and value them in monetary terms. Those that are considered material to the IEA (i.e., they can change the net cost and benefit positions) are listed as ‘key non-monetised impacts’. They are assessed as appropriate in qualitative and quantitative terms.

2.3.3 Defining the counterfactual

High-level guiding principles for specifying the counterfactual for the assessment are provided in the summative assessment guidance (MHCLG et al., 2020c)10 Box 2 1 lists the key considerations for appropriate specification of the counterfactual.

Box 2.1: Factors of a high-quality counterfactual impact evaluation

Under the ERDF guidance a high-quality counterfactual for an impact evaluation should:

• Accurately measure the change that occurs across relevant indicators of outcome or impact after a project has been implemented

• Indicate the measure that will be used and the baseline against which they will be judged.

• Include the rough estimates of the number or proportion of beneficiaries that will be contacted.

• Construct a counterfactual which can disentangle the influence of other factors on the impact indicators and allow the impacts of the project to be isolated.

Source: MHCLG et al. (2020c), p. 21

The summative assessment guidance highlights that the approach to defining and specifying the counterfactual cannot be generalised. Rather it should be determined on a case-by-case basis, reflecting the type of project, range of impacts and their beneficiary groups. Wider guidance (European Commission, 2013; HM Treasury, 2022a, 2020) echoes this and provides minimal practical steer on what to explicitly consider in developing a counterfactual. There are, though, some over-arching and consistent principles that are identified to help ensure that the counterfactual that is defined supports the evaluation of a given policy or project intervention. These include:

• From the Magenta Book (HM Treasury, 2020): Key considerations in defining the counterfactual are the quality and quantity of data, the comparability of the counterfactual to the intervention and that the intervention effect can be clearly identified (i.e., sufficiently large). The latter has implications for interpretation of the results.

10 As defined in Summative Assessment Guidance “Uses comparison group or areas to isolate the difference which an intervention makes to the beneficiaries or treatment areas” (MHCLG et al., 2020b, p. 20).

• From the Green Book (HM Treasury, 2022a): Intervention objectives are specific, measurable, achievable, realistic and time-limited (SMART), and that they are objectively observable and measurable.

• From EVALSED (European Commission, 2013):The counterfactual is hypothetical (i.e., unobserved) so effects and impacts are possible to identify if the data inputs are robust. And where data quality or inference is a problem, these biases should be caveated and made clear.

A common point across all these sources of guidance is that plausibility of the counterfactual needs to be demonstrated within the assessment, based on appropriate evidence sources (e.g., pre-intervention data, an appropriate reference case). In the context of the W4G project and its implementation timescale, particular aspects to consider for the specification of the counterfactual are: (a) natural processes (e.g., factors affecting fish stocks); (b) other actors’ behaviour (e.g., levels of public investment in habitat restoration, and weir removal); and (c) treatment of other exogenous shocks and changes in ‘state of the world’ (particularly COVID-19).

2.4 Data collection

A total of 75 documents have been reviewed for the economic assessment, of which 28 have been provided by WRT. The other evidence reviewed are sources listed in the study specification (the IEA Proposal) and documents identified by desk-based searches. All data and evidence collected from wider research is limited by accessibility (i.e., open-access and public). As part of the initial research for the assessment, a number of documents were reviewed as part of the scoping exercise to identify potential costs and benefits, as well as the data and evidence to quantify them.

The evidence collected relates to three key categories:

1. W4G project: Includes a description of activities undertaken for each deliverable, expenditure, contracted targets and achieved outcomes, as well as contextual documents such as strategy documents. This will support the quantification and valuation of W4G uplifts from the project outcomes, and the general understanding of what the W4G project has achieved to date and at what cost. This information is provided by WRT and includes reporting to ERDF.

2. State of rivers and fisheries: This includes fish stock assessments (electrofishing reports from WRT (Environment Agency, 2016) and latest catchment assessments (Environment Agency, 2022a, 2022b). It also includes historical evidence to support the characterisation of the pre-intervention condition of the River Camel and River Fowey (i.e., pre-2017) and the specification of the counterfactual scenario for the assessment.

3. Economic valuation evidence: A selection of appropriate sources of economic valuation evidence to support the quantification and monetisation of the ecological, economic, and social uplifts. It includes published research and metrics used in government guidance (Defra, 2021; Environment Agency, 2022c) and approaches used by other published studies (eftec, 2014; Le Quesne, 2005;

Mawle and Peirson, 2009; Vardakoulias and Arnold, 2015)

3. Economic assessment

This section describes the economic assessment, following the practical steps outlined in Section 2 to identify, measure and compare the W4G project costs and benefits.

3.1 Scope and counterfactual

3.1.1 Economic assessment parameters

The scope of the assessment is defined according to the following key parameters:

• Geographic boundary: Rivers Camel and Fowey, economic and ecological uplifts to Cornwall. Some uplifts can have broader geography (e.g., tourists).

• Price base for valuing impacts/uplifts: 2022

• Pre-intervention period: 2016 or average over 3-years (2014-2016)

• Time period for W4G project implementation: 2016–202211

• Timing of interventions: Launch year 2017, with three delivery windows (2017, 2018, 2019), plus a 12month extension.

• Timing of impacts: Informed by data collected by WRT and wider evidence sources to reflect aspects such as potential lags in impacts (i.e., where impacts are not assumed to be realised immediately).

• Assessment time horizon: 15-year assessment period, which is the minimum recommended by the Green Book (HM Treasury, 2022a). The W4G project implementation is profiled in the first seven years (Year 0 to 6) and impacts forecasted and profiled for an additional eight years (Year 7 to 14).

• Discount rate: Follows HMT Green Book guidance (2022) using the standard discount rate (3.5%). Discounting is applied to future flows (i.e., from Year 7 onwards), with benefits and costs incurred during the project period treated as realised (and therefore left undiscounted).

Note that benefits from weir removals and easements (i.e., C23) are permanent, whilst habitat rehabilitation and improvement activities will require maintenance to ensure that benefits are sustained. This is factored into the projection of costs, the considered future resource needs to maintain the impacts of W4G.

A 15-year assessment period is judged to be appropriate for the assessment based on the activities undertaken within the W4G project. The lifecycle of salmonoid species has also been considered, given project outcomes concerning improved fish stocks (i.e., support juvenile salmon to adulthood). Generally, juvenile salmon will remain in freshwater river systems for about four years, before swimming out to sea to mature (The Tweed Foundation, n.d.). Salmon return to the river to spawn after one to two years (maximum four years) at sea (AST and IFM, n.d.). Hence 15 years is deemed sufficient as it covers multiple fisheries lifecycles within which to expect impacts on salmonid populations.

The assessment also needs to, as far possible, account for changes to the project context during delivery, and the implications of these changes in the analysis and reporting of results. This includes exogenous shocks (e.g., collapse in fish stocks, COVID-19) as well as changes in environmental policy in the UK (e.g., The UK’s EU exit, Defra’s 25 Year Environment Plan, the Environment Bill). For the W4G project, a key consideration is how the project’s impacts are likely to be maintained after the project ends (e.g., habitat restoration and modifications, business support). Establishing this means assessing whether these impacts are likely to remain and understanding plans to maintain them and who is responsible for this into the future. Based on answers to these questions, the associated costs and benefits can be projected forward where possible (See approach in Appendix 4 for details).

3.1.2 Pre-intervention

The W4G logic model reflects the policy and wider context under which the project was proposed to operate (as described in Appendix 4). This includes the policy context at the time (e.g., 2011 Environmental White Paper), but also actions by other actors in the catchments (e.g., Natural England and the Environment Agency’s priorities) and the condition of the Camel and Fowey as described in the W4G logic model’s ‘market failure’ explanation. In combination, this sets the scene in which the W4G project was intended to be implemented and provides the basis for specifying the counterfactual for the assessment

Prior to the W4G project, the defining characteristics of the River Camel and River Fowey include:

• State of nature: Declining condition of habitats, limiting the spawning areas for juvenile salmon and sea trout. Fish stocks in the Camel experienced a significant collapse in 2016, with levels in the Fowey remaining stable.

• Physical infrastructure: Total of 27 weirs impeding fish passage across the two catchments (17 in the Camel and 10 in the Fowey)12

• Accessibility of fishing beats: Information concerning accessible beats was not centrally organised.

• Resources to manage angling passport scheme: Westcountry angling passport (WAP) scheme as a paper-token system was costly for WRT to maintain (i.e., collection and processing of tokens). The number of beats included in the scheme was reduced to remove those that were un-economical to service through consultation with beat owners.

• Business engagement: Local businesses not consistently contributing to management of riparian habitat, nor coordination across catchment to benefit of fish stocks.

Note that data on the resources needed to manage the scheme pre-intervention, in terms of operational costs (e.g., staff time) and capital costs (e.g., replacing token boxes), is not available for this assessment. Historic data on tokens, payments, and visits to Cornish fishing beats included in the scheme preintervention is available to quantify angler use for pre-intervention period.

Table 3.1 summarises the pre-intervention context for the W4G project outcomes. Where measures related to the previous angling scheme are primarily based on data provided by WRT (pers. comm) and understanding that business engagement related to the scheme was low following reduction in the number of active beats included. In addition, the scale and extent of habitat improvements that would have occurred in the absence of the W4G project are unknown, although it is understood that WRT and other stakeholders in the River Camel and River Fowey were delivering some level of improvements as part of their regular delivery procedures. These outcomes are therefore estimated for the counterfactual to enable comparison to the W4G project.

Table 3.1: W4G project outcomes pre-intervention

1 Summary of WAP Scheme Beats data from 2013-2017 provided by WRT January 2023 Counts of beats, visits (i.e., trips) are limited to beats in Cornwall (i.e., not all beats in the scheme). List of beats owners and beat names in Appendix 3

2 Maps provided by WRT GIS Team (see Appendix 2)

3.1.3 Counterfactual

The definition of the counterfactual has been informed by discussions with WRT, as well as historical and baseline data collected on the River Camel and Fowey prior to the intervention.

The specification of the counterfactual for the assessment and comparison to the intervention case (the W4G project) is outlined in Table 3 2. A relatively simple set of assumptions are applied, where most preintervention factors are assumed to remain the same over the project period (i.e., first six years). The forward-looking projection of outcomes in the absence of the W4G project follows a general understanding that natural recovery of natural capital assets (e.g., habitats and fish stocks) and interventions to remove fish barriers will occur at some point. However, without the W4G project weir removals or modifications would occur in fewer locations, and there is significant uncertainty around the timing and coordination of habitat restoration alongside weir removals, leading to a lower level of outcome.

Development of the Fish Pass App would probably have also happened eventually. Schemes in other catchments and regions in England and Wales are understood to have faced similar pressures from administrative burden of paper/physical token-based systems and it is therefore not unreasonable to assume that modernisation via digitisation would occur at some stage, either due to WRT investment, or another parties (pers. comm, WRT). The counterfactual therefore represents a slower pace and timing to modernisation of the previous paper token mechanism. This is quantified based on historical data from WRT on the WAP scheme, where in 2014 the WAP scheme had 19 beats in Cornwall, of which 10 beats were retained for 2015 and decreased to 9 in 2017 (pers. comm, WRT)13 Business engagement and overall behaviour is assumed to probably remain unchanged without the W4G project (pers. comm, WRT).

Table 3.2: Descriptions of W4G project and counterfactual

Counterfactual (without intervention)

W4G project does not occur:

• Investment in fisheries assets (both public and private) remains the same as per pre-intervention.

• C22: In-river habitat restoration work undertaken at same rate as per pre-intervention.

• C23: Some removal or modification would have occurred.

• Combined effect of C22 and C23: Recovery of fish stocks would have occurred naturally (i.e., slower)

• C29: PES market continues, but number of beats included in the Fish Pass app is reduced as per preintervention, modernisation is slower.

• C1: Businesses behaviour likely to have remained the same as pre-intervention.

Other interventions in the Camel and Fowey (as planned) still occurred, however these remain unobserved.

In conclusion, it is assumed that given the policy context and other exogenous changes (e.g., collapse in fish stocks, COVID-19), some of the improvements delivered as part of the W4G would have been less well targeted and occurred at a slower rate and therefore across a smaller scale during the project duration.

W4G project (with intervention)

W4G project occurs:

• Funding received to invest in resilience and accessibility of fisheries.

• C22: Range of in-river habitat restoration work undertaken at a faster rate than under counterfactual, to address multiple issues.

• C23: Removal of manmade passage barriers at a faster rate and better targeted, with flexibility to modify where necessary.

• Combined effect of C22 and C23: Supported faster recovery of fish stocks in Camel following collapse.

• C29: Modernisation of the Fish Pass app and PES market (i.e., digitisation), increasing beats included

• C1: Businesses engage more with the Fish Pass app and customers.

Other interventions in the Camel and Fowey (as planned) still occurred, however these remain unobserved.

In conclusion, the W4G project delivers economic, ecological, and social uplifts.

Treatment of the effect of the COVID-19 pandemic in the counterfactual has been considered in the scoping of the assessment. It is reasonable to assume that the impacts of the COVID-19 are likely to feature in the data collected to inform the assessment (for example, angling visit numbers during 2020 and 2021). However, recent studies on the physical, economic, and social repercussions of COVID-19 (Chudik et al., 2021; Eriksson et al., 2022) do not provide useful insight on how to treat effects in an economic analysis for an impact evaluation. Given this, a reasonable approach is to apply observed trends for the project intervention scenario to the counterfactual scenario.

Table 3 3 summarises the counterfactual for the W4G project outcomes, aligned to the description provided in Table 3.2. The quantified outcomes related to the Fish Pass App, reflect the number of beats retained in post-2014 and thus the associated visits to these Cornish beats (pers. comm WRT). Outcomes related to the C1 and C29 W4G deliverables are assumed to not occur under the counterfactual, in part because the paper-token scheme is expected to still be used (therefore no new businesses added to the App), and business behaviour is not expected to change from the pre-intervention period.

With respect to habitat improvements (C22) and weir removals (C23), the pre-intervention context is unknown. It is expected, however, that some level of improvement or removals would be delivered under the counterfactual (Table 3.2). Therefore, to quantify this it is assumed that the counterfactual would result in 10-20% of achieved W4G outcomes for these deliverables (i.e., 10% of quantified outcome delivered as stated in Table 2.6).

Table 3.3: W4G project outcomes - counterfactual (“without” intervention) - estimated

1 Summary of WAP Scheme Beats retained after 2014 provided by WRT November 2022 and January 2023 Counts of beats, visits (i.e., trips) are limited to beats in Cornwall (i.e., not all beats in the scheme). List of beats owners and beat names in Appendix 3.

2 Estimates based on assumed reduction (i.e., 10 – 20%) from achieved W4G project outcomes stated in Table 2 6

3 Maps provided by WRT GIS Team (see Appendix 2).

3.2 Identify costs and benefits

The relevant costs and benefits for each W4G project deliverable are identified in this section. Not all costs and benefits can be quantified and valued in monetary terms. Those that are considered material to the economic assessment results (i.e., they could change the net cost and benefit positions) are listed as ‘key non-monetised effects’.

3.2.1 Costs

Costs of The W4G project accrue primarily to WRT through: (1) capital expenditure on restoration or removal activities; (2) operating costs (e.g., maintenance and employee time); and (3) overhead costs such as administration time. Other costs accrue to the other beneficiaries and/or actors such as the anglers using the Fish Pass app and businesses that have been engaged with the W4G project.

Table 3 4 provides a list of the cost typology and with material costs by deliverable shaded green Costs that accrue to actors outside of WRT will be difficult to quantify without further engagement (e.g., discussion with businesses), which is beyond the scope of this IEA. Volunteer effort can be treated as a cost to reflect the contribution of volunteers as part of the resources required to carry out project activities, and hence deliver the outputs that outcomes are dependent on. It is also recognised that there is a private benefit received by volunteers from the activity as a whole (i.e., the enjoyment from what they are doing).

3.2.2 Benefits

Table 3 5 lists benefit categories grouped by type of uplift, with attribution to the W4G project deliverable shaded green. The long-list of potential benefits has been compiled from review of wider literature and other strategic environment policy programs in the UK, such as the Water Industry National Environment Programme (Environment Agency, 2022c) and the Enabling a Natural Capital Approach (Defra, 2021), freshwater natural capital indicators (Lusardi et al., 2018) and other government guidance (e.g., Business Support Evaluation Framework (BEIS, 2019)

Note that ecological uplifts can directly or indirectly impact the economic and social uplifts, which determines the possibility of synergies between deliverables and their impacts. For example, the potential ecological benefits of reducing river flood damages directly influence the social uplift, providing benefits in well-being and improved health for nearby residents and visitors. Hence some proportion of the outcome is captured through the social uplift, and some proportion is captured through the ecological uplift. The risk of double counting benefits is addressed in the valuation of impacts.

Table 3.5: Uplifts and benefit typology

As highlighted in Box 1.1, the River Fowey is a key water resource for Cornwall, however water supply impacts are not included in this assessment. The scope of the W4G project does not include activities aimed at improving water supply within the catchment (i.e., there is no change from the baseline).

3.3 Quantify and value of costs and benefits

This section summarises the basis for quantifying and valuing the project impacts. A proportionate approach has been applied to focus on the material outcomes and target analytical effort to assessing the most significant impacts. The focus is on measuring impacts relative to the counterfactual defined in Section 3.1.

3.3.1 Costs

Table 3.6, summarises the breakdown of cost elements captured in the assessment. Capital costs include building and construction and other capital expenditures to support the delivery of the W4G project, whilst operating costs (or revenue) capture consultancy, staff salaries, FRIC and other revenue costs incurred throughout the project implementation period. These cost elements are all captured in Table 2.3 for the combination of C1/C29 deliverables and C22/C23 deliverables. Volunteer time has been used to deliver the W4G project, however a record of time and number of volunteers has not been made, and therefore it is not included in this analysis of costs Further detail on the calculation (or estimation) is provided in Appendix 5.

Table 3.6: List of cost items included in the IEA

3.3.2 Benefits

Table 3 7 summarises the breakdown of the benefits captured in the assessment, indicating whether or not they are calculated in monetary terms. Further detail on the approach to quantification and valuation is provided in Appendix 5

Table 3.7: List of benefit indicators included in the IEA

Fish stock Number of juvenile fish

Total area of rehabilitated river and bankside habitats

Extent of habitat

Total length of river improved by C22 and C23 activities

Total area with better conservation status

Hydrology & geomorphology

Invasive species

Total completed weir removals (full, easements and partial) area with reduced risk of invasive species

Total number of businesses adopting new technology

Total number of active businesses receiving training and support

Employment impact from angling activity (Fish Pass users and Other Anglers)

Number of active beats Cornish in Fish Pass App

Number of Fish Pass App angling visits to Cornish beats

Number of other anglers visits to Cornish beats

Number of active angling visits by anglers

Gross-value added from angling activity (Fish Pass users and other Anglers)

Trip-related angling expenditure (Fish Pass users and other anglers)

(tourists and local) Y

(tourists and local)

(tourists and local)

Health & wellbeing saving from use of the Fish Pass app WRT

Anglers’ consumer surplus (Fish Pass users and other anglers)

Improvements to recreational experience for non-anglers (e.g., other water-based activities)

Avoided medical treatment costs from angling

Physical health benefits from water-based activities (e.g., canoeing)

3.4 Compare costs and benefits

The estimated costs and benefits are aggregated and summed to give an overall assessment of the impacts of the W4G project in present value terms. Net impacts are calculated as the difference between the W4G project outcomes and assessed outcomes in the absence of the W4G project (the counterfactual).

The calculations use the parameters summarised in Section 3.1 (e.g., discount rate, time scales). Costs and benefits have been profiled to capture: (a) timing of impacts – e.g., immediacy of benefits/costs as well as any potential lags; and (b) forecast of impacts after the project period – e.g., constant, increasing, declining. For both the W4G project and counterfactual the timing of impacts is aligned with the profile of actual spend and achieved outcomes of the project as shown in Table 2 2 and Table 2 5

The assumptions used to project the monetised costs and benefits into the future (i.e., beyond the W4G project lifetime) are summarised in Table 3.8 for the W4G project and the counterfactual.

Table 3.8: Summary of future cost and benefit assumptions

Cost/Benefit

Costs

Capital costs - Business engagement and support

Quantity Monetary

W4G project: 2022 number of fishing beats is assumed constant.

Counterfactual: 2015 number of fishing beats retained is assumed constant.

W4G project: 2022 number of fishing beats is assumed constant.

W4G project: W4G average (2017-2022) costs are assumed constant.

Counterfactual: W4G average capital (2017-2022) and revenue costs per fishing beat are assumed constant.

W4G project: W4G average revenue costs (2017-2022) are assumed constant.

Revenue costs - Business engagement and support

Counterfactual: 2015 number of fishing beats retained is assumed constant.

Counterfactual: W4G average revenue costs per fishing beat (2017-2022) are assumed constant.

Cost/Benefit

Capital costs – Habitat improvements and weir removal

Quantity

W4G project: No further habitat improvement or weir removals.

Counterfactual: Estimated area improved is assumed to remain constant.

Monetary

W4G project: W4G average (2016-2022) costs are assumed constant.

Counterfactual: W4G average capital costs per hectare improved (2016-2022) are assumed constant.

Revenue costs – Habitat improvements and weir removal

Benefits

Trip-related angling expenditure (Fish Pass Anglers and Other Anglers)

Change in angler’s consumer surplus (Fish Pass Anglers and Other Anglers)

W4G project: Habitat improvements and weir removals in 2022 are maintained.

Counterfactual: Estimated area improved is assumed to remain constant.

W4G project: W4G average (2016-2022) costs are assumed constant.

Counterfactual: W4G average revenue costs per hectare improved (2016-2022) are assumed constant.

W4G Project: Five-year (2018-2022) average number of angling trips.

Counterfactual: 2014 number of angling trips to retained beats is assumed constant.

W4G Project: Five-year (2018-2022) average number of angling trips.

Counterfactual: 2014 number of angling trips to retained beats is assumed constant.

W4G Project: Proportion* of five-year (20182022) average number of angling trips.

For both W4G Project and counterfactual, the average spend per angling trip in the South West River Basin District remains constant (Environment Agency, 2018a)

For both W4G Project and counterfactual, the determinants of angler welfare –measured by change in consumer surplus (£ per counterfactual visit) in the South West River Basin District - remains constant (Environment Agency, 2018a)

Avoided NHS medical treatment costs (Fish Pass Anglers)

Willingness to pay for avoided deterioration in rivers

Counterfactual: Proportion* of 2014 number of angling trips to retained beats is assumed constant.

For both W4G Project and Counterfactual, Length of river improved is assumed to remain constant.

For both W4G project and counterfactual, the unit avoided medical treatment costs remains constant (Claxton et al., 2015).

For both W4G project and counterfactual, the unit willingness to pay remains constant (Environment Agency, 2013)

Table note: * White et al. (2016) estimate that 92% of angling visits are active this proportion is assumed to remain constant and applied to the average number of Fish Pass angling visits in future years.

To compare the costs and benefits, the annual values are converted to the same price year (2022 prices) using the latest HM Treasury GDP deflators (HM Treasury, 2022b) and discounted in line with Green Book guidance (HM Treasury, 2022a), using the standard discount rate (3.5%). Individual costs and benefits are aggregated over time in present value (PV) terms and directly compared to generate a net present value (NPV)14, 15 and the benefit-cost ratio (BCR)16. Results are reported in Section 3.6.

14 The present value of benefits minus the present value of costs: NPV = PVB - PVC

15 Further details on how the NPV is calculated is shown in Appendix 6.

16 The present value of benefits divided by the present value of costs: BCR = PVB / PVC

3.5 Sensitivity analysis

Sensitivity analysis has been performed on key assumptions identified during the analysis based on the most significant costs and benefits or those with greater uncertainty. The two principal scenarios considered were:

• Sensitivity 1 – Water quality unit values: The NWEBS values provide low, central, and high estimates of average willingness to pay (WTP) for improvements in river quality (£/km). The assessment applies the central value to estimate the main results of the IEA, and it is assumed representative for improvements achieved under both the W4G project and the counterfactual. The sensitivity analysis examines an alternative set of assumptions based on the potential for a nonlinear relationship with the improvement profile – i.e. diminishing marginal benefit where the initial areas improved would have a higher value placed on them than the final improvements achieved. To test the variance in results and given the difference in scale of improvements between the W4G project and the counterfactual, the lower NWEBS unit values were applied to the W4G project (large improvement) and the higher NWEBS unit values were applied to the counterfactual (small improvement).

• Sensitivity 2 – Fish Pass App not developed without funding: The main results reflect a counterfactual scenario where fishing activity from the pre-intervention scheme continues. However, an alternative scenario was tested where it is assumed that all fishing activity on beats within the Fish App Pass would stop (i.e., app development and subsequent fishing activity is attributable to W4G).

The results of the sensitivity analysis are reported in Section 3.6.4

3.6 Results and interpretation

The results show the assessment of value for money for the W4G project, where benefits and costs associated with habitat restoration (C22) and weir removal (C23) have been aggregated together, and similarly business engagement deliverables and expenditure have also been aggregated (C29 and C1). This enables better understanding of how funding has been allocated to each W4G deliverable package. Key metrics (including BCR, NPV) have been produced for the W4G project17. Note that gross valued added (GVA) and employment impacts (full-time equivalent) are reported in line with ERDF Summative Assessment forms18 in Section 4.3

Where the quantified counterfactual estimates were presented as a range in Table 3.3, the values from the lower end of the range have been used to calculate the results below. Each monetised benefit and cost indicator is given a confidence rating, using the ratings described in Table 3 9

As previously stated, an ‘uplift’ due to the W4G project is defined as the provision of an additional outcome and associated benefit and/or bringing forward an outcome/benefit in time. In practical terms, the uplift percentage change that is reported throughout this section is calculated as the change between the gross W4G project and the Counterfactual estimates, relative to the gross counterfactual estimates (i.e., (W4G –

17 Note that these results will also be produced for each deliverable package if possible as part of final report.

18 ESI Form 1-014.

Counterfactual) / Counterfactual).

Table 3.9: Description of confidence rating

Level of confidence Description

Poor Evidence is partial and significant assumptions are made to attribute value to the W4G project. The data provides only order of magnitude estimates of value to inform the cost-benefit analysis.

Moderate Science-based assumptions and published data are used but there is some uncertainty in combining them and attributing values to the W4G project. There is reasonable confidence in using the data to inform the cost-benefit analysis.

Good Evidence is peer reviewed or based on published guidance, and values are clearly attributable to the W4G project. There is good confidence in using the data to inform the cost-benefit analysis.

3.6.1 Benefits

Table 3 10 presents the estimated uplifts of the W4G project in Year 6 (i.e., final year of the project). There is good to moderate confidence in the estimated uplifts. Note that the main driver for moderate confidence in the uplift is typically due to assumptions made in the counterfactual scenario. In particular, counterfactual estimates that are based on historical evidence result in a higher confidence in the estimated uplift.

Compared to the counterfactual, there are significant uplifts estimated for ecological and social impacts attributed to the W4G project. Most notable are the extent of changes in habitat condition as a result of activities undertaken as part of C22 and C23 delivery, including rehabilitated habitats, improved river lengths and completed weir removals.

At the end of the project (i.e., Year 6 in this IEA), angling visits are estimated to be marginally lower relative to the counterfactual (-2%), however this is not assumed to persist into the post-project period19 . Furthermore, the analysis shows that visits from other anglers remains unchanged. This results in the overall number of angling visits (trips) in Cornwall remaining the same in both the W4G project and counterfactual. The longer-term impact of W4G is that angling visits from other Cornish beats (i.e., non-Fish Pass App), will occur on fishing beats included in the Fish Pass App as the App user base grows

All of the uplift for outcome indicators for deliverables related to the Fish Pass App and business engagement (i.e., C29 and C1) is attributed to the W4G project (i.e., 100%). It is assumed under the counterfactual that without the W4G project, businesses engagement would not have changed. Furthermore, because of the W4G project, previously closed beats (as shown in Appendix 3) have been reintroduced into the Fish Pass App, resulting in an increased number of active fishing beats (uplift of 111% or increase of 1.1 times).

19 Based on assumptions in Table 3 8