Comprehensive economic evaluation framework (IRP2)

Overview

IRP2 developed an economic evaluation framework and associated tools to identify and quantify economic, environmental and community values of investments in water sensitive systems and practices. They can be applied to business case development and decision making at multiple levels in public and private sector organisations, and contribute towards achieving water sensitive, liveable and resilient cities.

The framework was developed over four years by researchers at the University of Western Australia, and is underpinned by a strong strategy for stakeholder engagement, and overseen by an end-user-driven steering committee (see membership below).  The team closely engaged with 100+  stakeholders including participant organisations of the CRC for Water Sensitive Cities (CRCWSC) and other strategically important industry groups, such as water utilities, government agencies, local councils, peak bodies and networks, consultants and state-based regulators and treasuries. Through regular and wide communication and adoption activities, the CRCWSC is helping industry to adopt this standardised economic evaluation framework and improve capacity for economic analysis in decision making.

The major outputs from the IRP2 project are described below, and all published documents are located at the end of this webpage.

INFFEWS

As part of the evaluation framework, IRP2 developed a set of tools and resources referred to as the Investment Framework For Economics of Water-Sensitive Cities (INFFEWS), including a Benefit Cost Analysis Tool, a Value Tool, and detailed resources to guide their application and decision making processes.  The team, led by Professor David Pannell and Dr Sayed Iftekhar, designed the economic tools after conducting reviews and undertaking a series of engagements with project steering committee, experts, relevant committees and interested members of the CRCWSC Participant organisations.  The beta version of INFFEWS was released in 2018, and was available for 12 months for CRCWSC Participant organisations to trial. Feedback was received through interviews, teleconferences, meetings, national training tours, workshops and direct communications. The feedback informed further development of the framework, and the updated version was released in 2019 followed by a final version in 2020. The tools and resources associated with INFFEWS will continue to be maintained and updated by Water Sensitive Cities Australia.

For detailed information and access to the tools and resources, see:

• INFFEWS BCA Tool webpage
• INFFEWS Value Tool website
• Overview of INFFEWS

There is an increasing interest in economic evaluation of water and environmental projects to strengthen business cases for investment. Over 120 organisations have requested access to INFFEWS, and the CRCWSC decided to make the BCA tool and resources freely available to all organisations.

Champion user groups are forming around the country providing evidence that it is becoming an accepted and well-aligned evaluation framework (see presentation slides on INFFEWS: Adoption and Impact).  For example, Centre for Advanced Analytics and Economics (CAAE) at the NSW Department of Planning, Industry and Environment (DPIE) is applying INFFEWS on initial in-house projects as a precursor to further roll out of the tool, and a recommendation that economic practitioners also use it for DPIE contract work. The first project will be to assess the impact of interventions on species numbers under the $100 million Save our Species program. They will also use the tool for ex-post evaluations of their climate change initiatives.

An online user-based INFFEWS Forum has been set up to facilitate a community of practice amongst current and potential users of INFFEWS to discuss applications and ask economic evaluation questions.  To join, please request access at admin@crcwsc.org.au.

For further information or to provide feedback on INFFEWS, please contact admin@crcwsc.org.au

CRCWSC recommended service providers 

The CRCWSC has reviewed a number of potential providers who have the capacity and experience to offer training and support services to assist industry practitioners in conducting economic evaluation of IWCM/WSUD investments applying INFFEWS.  Should you wish to engage the services of a recommended provider, we suggest the following businesses who have applied INFFEWS and/or can provide economic evaluation services relevant to INFFEWS:

• Advanced Choice Economics
• Natural Decisions
• NCEconomics
• GHD
• E2Designlab
• Water Technology

Contact Details of INFFEWS Providers

At a recent webinar on industry-based INFFEWS applications, E2DesignLab and Urbaqua presented their experience applying INFFEWS on a case study and shared some tips and lessons for other industry users.

Economic value of urban heat mitigation

The IRP2 team completed a discrete project on the economic value of urban heat mitigation. Led by Professor Nigel Tapper (Monash University), this project explored the UHI mitigation produced from different scales of investment in urban greening, combining expertise in economic assessment (UWA and RMCG), UHI modelling (Monash University) and urban design response (E2DESIGNLAB).

Four landscape scenarios were developed, involving the derivation of a range of physical variables critical for modelling (e.g. plan area fraction of paved area, buildings, trees, grass, open water bodies, etc.).  CRCWSC’s TARGET was used to model street level air temperature and to provide the UTCI (Universal Thermal Climate Index) outputs to measure thermal comfort.  Climate modelling was then undertaken to produce daily average minimum (overnight) and maximum (midday) temperatures for each scenario, and three summer climate condition (cool, mild, and extreme). A report on this biophysical aspects was published in early 2019.

In additional, a benefit cost analysis was used to determine dollar value estimates of the urban heat mitigation benefits produced under the different scenarios. Costs were attributed to different temperatures identified in the biophysical modelling work, and where a scenario produced daily temperature reductions compared to baseline, the reduction in heat-related cost reflects a benefit of that scenario.  The benefits were related to reduced mortality / morbidity, reduced energy demand and increased productivity. A report on the economic value was published in 2019.

For further information on the research and outputs of this project, please visit the WP6 webpage or contact Prof Nigel Tapper

Financing models

Led by Dr James Fogarty, and in close collaboration with industry representatives and Project Steering Committee members, IRP2 has reviewed existing finance model, policies and mechanisms (such as financial incentives) and critically examined their suitability to foster public and private investment in water sensitive cities. The IRP2 team, including Dr James Fogarty (UWA), Dr Martin van Bueren (Synergies) and Dr Sayed Iftekhar (Griffith University), conducted a desktop review and a series of engagements with project steering committee, economic regulators, water utility Regulation Managers, Treasuries, and relevant committees (including UDIA).

The results of the review and discussions was put forward in a Discussion Paper after testing with an initial group of economic regulators and policy makers in early 2020.  The potential reforms and how they could be applied using two case study examples were presented and discussed in a second workshop involving a broader group of industry representatives across government agencies and water retailers/suppliers from various jurisdictions. This collaborative workshop aimed to strengthen the proposed framework to ensure it would be effective in the context of water sensitive cities.

The final framework is currently being drafted into a final report, which will include the case study applications, and available at the end of 2020.

For further information, visit the Finance Models and Policies webpage

Case Studies

Local government and industry practitioners are directly involved in developing key inputs and testing INFFEWS to support the acceptance and ongoing adoption from all key stakeholders across Australia.

There are currently five funded case studies being undertaken by the IRP2 team members in Western Australia, Victoria, and South Australia, which are all due to be completed by the end of 2020.

For details on each case study and access to the reports and Industry Notes, visit the Case Studies webpage (WP5) or contact Dr Sayed Iftekhar.

Further Information

Scroll down to view further information, including the list of team members, Project Steering Committee members, “Latest Update” section, and access to all events and publications.

Work Packages