Economics and business cases
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Introduction
We have produced several economics and business case tools to help practitioners identify and quantify benefits, and include them in analysis to improve decision making about water sensitive investments.
Research findings and reports
Our research on the benefits of water sensitive investments has identified some interesting findings:
- This thought piece sets out the agenda for transformative cities, and advocates using hybrid systems to drive this transformation. These hybrid systems combine critical existing infrastructure with flexible decentralised local solutions as part of their urban renewal program. (Harnessing hybrid systems for transformative cities)
- A study in Perth (WA) found that installing rainwater tanks can increase a home's sale value by up to $18,000. (The capitalized value of rainwater tanks in the property market of Perth, Australia)
- A study of amenity benefits of restoring Bannister Creek (Perth, WA) found restoring this urban waterway increased local house values (by between $17,000 and $26,000). (The value of restoring urban drains to living streams)
- A study in Melbourne found that maximising green space to mitigate urban heat could generate annual savings of between $490 and $1,540 per household over a 50 year period. (Estimating the economic benefits of Urban Heat Island mitigation - economic evaluation; Economic value of Urban Heat Island (UHI) mitigation - a case study)
- This study used a hedonic pricing model to determine how much people are willing to pay for a home in greener suburbs. The study found Australia houses in green suburbs can achieve a house value uplift of up to 16%. (How much do we value green spaces?)
- A study of 3 local government areas in Adelaide found higher levels of local government involvement in the early stages of residential infill planning (e.g. rezoning to guide development outcomes or development of design guidelines for infill) is associated with higher house prices. (Capitalised non-market benefits of local council involvement in the planning of residential developments)
You will find a range of research reports on economics and business cases under the categories below.
Non-market valuation
- Capitalised non-market benefits of local council involvement in the planning of residential developments
- Review of non-market values of water sensitive systems and practices: An update
- Review of existing Benefit: Cost Analysis (BCA) tools relevant to water-sensitive cities: IRP2 Comprehensive Economic Evaluation Framework (2017 – 2019)
- Non-market Valuation of Water Sensitive Cities: Current Knowledge and Issues
- Non-market value of Singapore’s ABC Waters Program
- Stakeholder Engagement Strategy: IRP2 Comprehensive Economic Evaluation Framework (2017 – 2019)
- Quantifying intangible benefits of water sensitive urban systems and practices
Willingness to pay
- The value of restoring urban drains to living streams
- The capitalized value of rainwater tanks in the property market of Perth
- Estimating the economic benefits of Urban Heat Island mitigation – Biophysical Aspects
- Estimating the economic benefits of Urban Heat Island mitigation– Economic Analysis
- Valuing Environmental Services Provided by Local Stormwater Management
- Putting One’s Money Where One’s Mouth is: Increasing Saliency in the Field
- Valuing stormwater management: Who is willing to pay? (summary)
Social preferences
- Understanding social preferences for land use in wastewater treatment plant buffer zones (and summary)
- Eliciting risk preferences for intrinsic attributes
Cost-effectiveness
- Cost-effective Strategies to Reduce Nitrogen and Phosphorus Emissions in an Urban River Catchment
- The most cost-effective ways to maintain public open space with less water: Perth case study
- Saving a creek one bid at a time: a uniform price auction for urban stormwater retention
Economics and flood risk management
- Resilience approach to urban flood risk management systems using real in options – a review
- Structuring Climate Adaptation through Multiple Perspectives: Framework and Case Study on Flood Risk Management
- Using the multiple benefits of SuDS tool (BeST) to deliver long-term benefits
- Value of SuDS beyond urban flood management: The ecosystem services value of green/blue solutions
Other
Research application
Our research on economics and business cases has been applied to a range of projects, including:
- The Townsville, Brisbane, Knutsford and Salisbury integrated case studies demonstrate how to use the suite of CRCWSC tools to assess water sensitive options for infill developments.
- A worked example of the BCA Tool and the Value Tool related the Princes Park Stormwater Harvesting project in Melbourne, Victoria.
- A case study about Belle View Estate (a proposed residential development east of Perth, WA) demonstrated how to identify and monetise non-market values from water sensitive urban design (WSUD).
- The report about transforming the Subiaco Wastewater Treatment Plant (Perth, WA) into the Subiaco Strategic Resource Precinct demonstrated how to use non-market valuation techniques (such as stated preferences) to estimate people's willingness to pay for recycled water. For a representative organisation, the estimated willingness to pay for recycled water for outdoor use was $112 per megalitre. The report also examined demand for recycled water.
- The water sensitive business case framework for the Fishermans Bend redevelopment highlighted the need for economic assessments to consider opportunity costs and non-market benefits.
- Development of an investment framework to re-framing the business case around investments with broader outcomes has been achieved in the Norman Creek catchment.
- The Greening the Pipeline project used two non-market valuation techniques to estimate the value of improving the Main Outfall Sewer reserve in Melbourne.
- We estimated the biophysical impacts and economic value produced by urban heat mitigation in a greenfield residential development in Melbourne's west. Urban greening and integrated water management could cool summer temperatures by 2oC, producing economic benefits per household of between $490 and $1,540.
- We tested South Australia’s Monetised Benefits of WSUD tool, to ensure it is robust and incorporates evidence-based values for WSUD benefits.
- We are using non-market valuation techniques to analyse the value of properties and understand community views on housing design options in two urban redevelopment areas, Arden Macauley (Vic) and Salisbury East Precinct (SA). We expect to release reports about these case studies in late 2020.
Assessment of Nonmarket Benefits of WSUD in a Residential Development: Belle View Case Study
Ideas for Fishermans Bend
Estimating the Economic Benefits of Urban Heat Island Mitigation– Economic Analysis
Value proposition for water sensitive development in Townsville
Subiaco Strategic Resource Precinct Case Study: Non-Market Valuation of Recycled Water – Final Report
Estimating the Economic Benefits of Urban Heat Island Mitigation – Biophysical Aspects
Planning for water sensitive infill development: case study of Salisbury East precinct
Tools and guidelines
Several tools and guidelines, informed by our economics and business case research, have been developed for use by practitioners including:
- INFFEWS tools, including the Value Tool and Benefit Cost Analysis Tool, can be used to monetise non-market costs and benefits relating to water sensitive cities.
- INFFEWS Benefit Cost Analysis Tool: Booklet of applied examples documents how the BCA Tool was applied to case studies by other practitioners.
- Constructing business cases for water sensitive investments: a handbook for local government translates valuation tools and outlines how local government officers can build strong and compelling business cases for water sensitive investments.
- INFFEWS Value tool: Guideline (Version 1) details how to use the Value Tool and how to transfer existing non-market values for application in a new context.
- Strategies for preparing robust business cases can be used as a guide to frame and build support for water sensitive projects and develop successful business cases.
- Ranking projects for water-sensitive cities: a practical guide presents ranking formulas to identify the best possible water sensitive projects in which to invest.
Infographics
Infographic 1
Building a business case for a water sensitive city. (CRC for Water Sensitive Cities, 2014. Strategies for preparing robust business cases. Melbourne, Australia: CRC for Water Sensitive Cities, p. 5.)
Infographic 2
Key willingness to pay values (CRC for Water Sensitive Cities, 2017. Valuing the benefits of local stormwater management. Melbourne, Australia: CRC for Water Sensitive Cities, p. 2.)
Infographic 3
Total Economic Value framework showing costs, benefits and examples of WSUD (CRC for Water Sensitive Cities, 2016. Enhancing the economic evaluation of WSUD. Melbourne, Australia: CRC for Water Sensitive Cities, p. 10.)
Infographic 4
Summary of benefits and valuations from CRCWSC research (CRC for Water Sensitive Cities, 2016. Enhancing the economic evaluation of WSUD. Melbourne, Australia: CRC for Water Sensitive Cities, p. 12.)
Infographic 5
Non-market valuation methods (Catchlove R, 2020. Constructing business cases for water sensitive investments: a handbook for local government. Melbourne, Australia: CRC for Water Sensitive Cities, p. 17.)
Infographic 6
Steps to include non-market outcomes in policy analysis (Iftekhar et al., 2020. INFFEWS Value tool: guideline (version 2). Melbourne, Australia: CRC for Water Sensitive Cities, p. 5.)
Infographic 7
Decision tree to use the Value Tool (Iftekhar et al., 2020. INFFEWS Value tool: guideline (version 2). Melbourne, Australia: CRC for Water Sensitive Cities, p. 34.)
Infographic 8
Comparison of benefits and costs for Taralla Creek (CRC for Water Sensitive Cities, 2020. INFFEWS benefit cost analysis tool: booklet of applied examples Melbourne. Melbourne, Australia: CRC for Water Sensitive Cities, p. 11.)
