Global Environmental Change 17 (2007) 397407

A costbenefit appraisal of coastal managed realignment policy

R.K. Turnera,!, D. Burgessb,1, D. Hadleya, E. Coombesa,1, N. Jacksonc1

aCSERGE, School of Environmental Sciences, University of East Anglia, Norwich NR4 7TJ, UKbAgri-Food and Bioscience Institute Belfast, Belfast BT9 5PX, UK

cUpstream, London WC2A 1HR, UK

Received 25 July 2006; received in revised form 25 May 2007; accepted 28 May 2007

Abstract

European coasts are coming under increasing threat as a result of climate change from erosion and flooding. While coastal defencessuch as sea walls have been constructed since Roman times to protect human settlements from the sea, it is now increasingly recognisedthat these defences are unsustainable. The security provided by hard engineered defences has encouraged development on the coast, andthe defences themselves have led to the loss of intertidal habitat and the natural protection it provides.An alternative to maintaining hard defences (hold-the-line) to protect land from increasing sea levels is managed realignment, where

the engineered defences are deliberately breached. By allowing the coastline to recede to a new line of defence further inland, intertidalhabitat is created providing natural protection from flooding and erosion.The study evaluates the economic efficiencyusing costbenefit analysisof various managed realignment scenarios compared to a

strategy of holding-the-line within the Humber estuary in North-east England. The results of this analysis show that managedrealignment can be more economically efficient than holding-the-line over a sufficiently long time periodgenerally greater than 25years. Sensitivity analysis demonstrates that results are more sensitive to the amount and value of intertidal habitat generated than theyare to the amount and value of carbon stored by this habitat. Costbenefit analysis is viewed as one component of a wider policyappraisal process within integrated coastal management.r 2007 Elsevier Ltd. All rights reserved.

Keywords: Costbenefit analysis; Managed realignment; Coastal zone management; Ecosystem services; Flood defence

1. Introduction

Traditional sea defence and coastal erosion strategies inEngland and Wales have sought to provide long-runengineered hold-the-line fixed protection for people,property and other assets against the vagaries of dynamiccoastal environments. Since at least Roman times theBritish coast has been heavily modified by flood andcoastal defences (Davidson et al., 1991) to protect existinghuman activities on coastal land and to claim land foragricultural, industrial, port and residential development(Doody, 2004; French, 1997). Currently, the Englishcoastline is protected by over 2000 km of flood defences;

860 km protect the coast from erosion while 2347 km2 offormer coastal floodplains are protected from flooding by1259 km of sea defences (Barne et al., 1995; Crooks, 2004).Many of these structures are now reaching the end of theirdesign lives. The expenditure of public funds on theimplementation of this approach has been justified byreference to a rank ordering system underpinned bystandard economic costbenefit analysis (CBA) appliedon a project by project basis (Penning-Rowsell et al., 2005).However, set against a contemporary and likely futurecontext of increasing sea levels and increasing severity andfrequency of storm conditions (Nicholls and Klein, 2005),both the cost and the effectiveness of traditional coastalmanagement must be seriously questioned. This line ofargument is further strengthened by growing evidence ofthe current unsustainability of coastal management prac-tice such as beach denudation and coastal steepening(Taylor et al., 2004).

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0959-3780/$ - see front matter r 2007 Elsevier Ltd. All rights reserved.doi:10.1016/j.gloenvcha.2007.05.006

!Corresponding author. Tel.: +441603 592551; fax: +44 1603 593739.E-mail address: r.k.turner@uea.ac.uk (R.K. Turner).

1Formerly at CSERGE, School of Environmental Sciences, Universityof East Anglia, Norwich NR4 7TJ, UK.

As our knowledge of coastal dynamics and climatechange improves it has become increasingly apparent thatsole reliance on engineered hard defences is unlikely to besustainable. Instead emphasis is switching to a copingstrategy based on a mixed approach, with protectionfocused on strategic and high-value areas and the rest ofthe coastline left to adapt to change more naturally.Measures such as managed realignment which involvesthe deliberate breaching of engineered defences to allowcoastal migration with the creation of extended intertidalmarshes and mudbanks is typical of this new approach(Reed et al., 1999; Andrews et al., 2000; Pethick, 2001,2002; Winn et al., 2003; French, 2006).This re-orientation towards a more flexible management

process will not be a straightforward transition. Inprinciple, future management should be better able tocope with changing circumstances, changing social tastes,improvements in knowledge about coastal processes, hu-man behaviour and ecosystem values, as well as changingtechnology, factor prices and political ideology (Bower andTurner, 1998). In practice because of the range ofstakeholders and competing resource usages typical ofcoastal areas a number of challenges need to be urgentlyaddressed. The politics of coastal management has becomeincreasingly polarised and contested (Fletcher, 2003).Consultation processes seeking to take forward newshoreline management plans in England, for example, havestalled and controversy surrounding compensation, plan-ning and development and equity and natural justice hasintensified (ORiordan et al., 2005). The new coastalstrategy will also serve to expose and re-ignite a long-standing debate about the appropriateness of a decisionsupport system anchored to economic CBA and rela-ted appraisal methods. It is the latter problem which isexamined in this paper. The next section will look brieflyat the evolution and current standing of project andpolicy appraisal methodology and practice and assess itsrole in the new approach to coastal management. A casestudy of managed realignment in the Humber estuary inEngland will then be presented to illustrate the advan-tages and limitations of CBA. In the final section, someconcluding comments on future ways forward will beset out.

2. CBA: decision rule or heuristic aid

Simplifying matters, CBA can be utilised as a method foridentifying a decision rule for choosing a preferredalternative, or as a component of a comprehensive policyanalysis with an heuristic purpose. In the former role,economic CBA has been directly deployed in order toindicate which option is welfare maximising according to autilitarian social welfare function and hence prescribingthat option choice. The options assessed must have welldefined outputs that are quantifiable and reducible to asingle money metric, as costs or benefits. Individual floodprotection and/or coastal erosion protection schemes fit

this reference frame quite well. It is also possible to perceiveof CBA in terms of an indirect deployment, with theanalysis reflecting rational choice theory outcomes andoffering a sounding board against which other forms ofappraisal and outcomes can be compared. CBA is based ona particular utilitarian (economic efficiency) social welfarefunction but as there are no meta ethical rules for selectingsocial welfare functions then a sounding board compara-tive evaluation against alternative social welfare functionsmight be beneficial. The choice will then turn on criteriasuch as, among others, ethical reasonableness andconsensus achievement potential.In the latter heuristic role, the art of policy analysis is a

set of procedures for inventing, exploring and comparingthe alternatives available for achieving certain socialendsand for inventing, exploring and comparing thealternative ends themselvesin a world limited in knowl-edge, in resources and in rationality (Rowan, 1976, p. 137).The concept of integrated coastal management (ICM)seems to require this wider policy appraisal approach.Individual UK government ministries/departments such asthose concerned with transport policy and flooding andcoastal protection and defence policy have a long trackrecord in project-based CBA going back to the 1960s/1970s. The then Ministry of Agriculture Fisheries andFood (MAFF) which also had responsibility for aspects offlooding and sea defence policy rank ordered projects usinga CBA methodology which was continually updated andmade more extensive in its impacts coverage. Guidanceevolved from depthdamage property calculations tohuman health and environmental intangibles valuation(Penning-Rowsell and Chatterton, 1977; Parker et al.,1987; Penning-Rowsell et al., 1992, 2005). The first crudeapplication, in 1986, of a prototype environmentalcontingent valuation study within a public sector project(a sea defence project), for example, was funded within thiscontext (Turner et al., 1992). Critics of land drainage andflood protection appraisals conducted during the 1970s and1980s correctly highlighted the importance of the politicaland institutional framework and warned that this couldeasily lead to regulatory or institutional capture of CBA(Bowers, 1988). In the last few years, the government hassought to re-orientate its coastal change strategy and toadopt both the principles and practice of integrated coastalzone management (ICZM) (Bower and Turner, 1998).Much greater stakeholder inclusion and participation isthe avowed aim (Evans et al., 2004; Defra, 2005; EnglishNature, 2005) but the implications for technical deci-sion support systems have yet to be clarified. In this paper,we focus particular attention on the future role of CBAas the decision support system for coastal managementevolves.The implementation of ICZM across extensive stretches

of coastline will highlight a range of concerns, including theefficient use of scarce resources but also social justice,equity and compensation. Adaptive coastal managementinevitably involves winners and losers, for example, the

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deliberate removal of erosion protection on one stretch ofcoast to allow an accretion of beach material further along;or the realignment of defences to allow extended intertidalmarshes at the expense of, for example, agricultural land.Compensation/reimbursement measures are not currentlyin place, although both monetary e.g. agri-environmentalscheme payments, developer compensation funding,environmental taxation (carbon etc.) and non-monetary(like-for-like habitat creation/restoration schemes, etc.)mechanisms are possibilities.Realignment policy needs to be appraised across a more

extensive spatial and temporal scale than has been the casein the past. Aggregation and boundary issues will becomeincreasingly important in coastal CBA. The old scheme-by-scheme approach is not suitable in the context of coastalmanagement where the spatial scales involved are often atestuary or multiple coastal cell level and encompass a seriesof sites. The whole estuary strategy, for example, needs tobe appraised as a single project. Environmental changeimpacts such as climate change and biodiversity loss oftencarry with them long term consequences and so policyresponses need to be flexible and adapted to long timehorizons and future surprises. The standard CBA practiceof positive, fixed and short term (o25 years) discountingdoes not sit easily with these contexts but is critical indetermining whether a project/policy passes a CBA test(Lind, 1982). What is indisputable is that discounting at aconstant positive social rate of discount is problematic(increasingly so the higher the rate) over a time horizon of100 years or more. The effect is to make even large costs/benefits incurred in the distant future seem inconsequentialand this intuitively feels wrong (Weitzman, 1998). Groomet al. (2005) comment that contemporary decisions takenon the basis of standard CBA appear to tyrannise futuregenerations and in some cases impose future risk becausefuture costs carry no weight (due to positive discounting)e.g. nuclear decommissioning, or when current inactioninhibited by cost considerations neglects low weightedfuture benefits e.g. climate change.There is now a growing consensus on the adoption of a

time declining discount rate (DDR) procedure over at leasta 100 year time horizon. Official guidance on UK publicsector project/policy appraisal now advocates such anapproach (HMT, 2003). For some, the case for DDR is,however, still not proven beyond doubt (Groom et al.,2005). But given the underlying message in this paper, thatwhatever decision support system is eventually adopted itmust be suitable for utilisation by real policymakersoperating iteratively in the non-linear real-world politicaleconomy, then DDR has more advantages than limita-tions. Along similar lines, critics of CBA have questionedthe way in which standard CBA values the losses and gainsconnected to projects/policies. Knetch (2005) claims thatindividuals discount future losses at a lower rate than thevalue of future gains and that therefore rates reflectingobserved individual preferences would give more weightto future environmental losses, justify greater current

sacrifices to deal with them and support policies thatreduce the risk of future losses. We adopt a 100 year timehorizon for the managed realignment case study analysisand also highlight the influence of DDR in our sensitivityanalysis.As the process of environmental change across local to

regional and up to the global scale has intensified andincreased in pace, so the risks posed to the integrity andresilience of ecosystems, not least in coastal areas haveincreased in parallel. Unanticipated irreversible damage tocritical natural capital is a risk that not only impacts onenvironmental systems but also on their provision oflivelihood support. In the past, nature conservation andprotected area policy has been justified by a combination ofseparate scientific and ethical intrinsic value arguments.But in contemporary conditions where natural resourcesare under severe development pressures the traditionalarguments in support of ecosystem conservation may notbe sufficient to win political arguments. Rather, we requirethe additional support of what has been called theecosystem services methodology. This is based oninstrumental values in nature (expressed in monetaryterms and fitted into the CBA format) to support the casefor more protected areas or better management andsustainable use of ecosystems under threat of conversionor degradation from economic development (Costanzaet al., 1997; Daily, 1997; Daily and Ellison, 2002; Bockstaelet al., 2000; Balmford et al., 2002). Both the generalamenity value and the value of the carbon storage functionprovided by coastal wetlands (Turner et al., 2000) areinvestigated and included in the case study presented in thenext section.The individual ecosystem goods/service valuation

approach which fits most easily into the CBA approachcan, however, mislead policymakers (Turner et al., 2003a).The total system value is greater than the sum of its partsand threshold effects may lead to non-linear damageimpacts. The hierarchical and multifunctional character-istics of ecosystems also means that the double counting ofbenefits from individual services (some of which areintermediate and others final) during any valuationaggregation procedure is an ever present danger (Barbier,1994; Fisher et al., 2007). Again we highlight this problemin the case study.Given that the future political economy of coastal

realignment is likely to become even more contested andpotentially polarised a sequential approach to the policyappraisal process is recommended. Initially, all sites inwhich the opportunity costs of realignment do not involvecomplex social justice/nature conservation and ethicalconcerns should be identified. In such cases, the opportu-nity costs will largely involve the loss of lower qualityagricultural land and an efficiency-based CBA couldprovide decisive information (see case study). In otherinstances where people, property, cultural/historical assetsand even currently designated nature conservation areasare part of the opportunity cost calculation, CBA will not

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be as decisive and will need supplementation. In the nextsection, we present a case study of managed realignment inthe Humber estuary to illustrate how CBA could bedeployed within a wider policy analysis.

3. Managed realignment policy appraisal

The analysis presented below must be viewed aspreliminary and partial but as also providing onesignificant component of a more comprehensive coastalpolicy appraisal. The managed realignment example that isfocussed on has a number of particular characteristicswhich may not always be typical of a more extensivemanaged realignment strategy. People and property assetsas well as nature conservation designation sites, are notpart of the trade-off in this set of realignments. The siteshave been deliberately chosen, following a GIS-basedstudy, to avoid such conflicts and only involve the loss ofagricultural land for a compensating gain of saltmarsh andmudflat habitats. In the longer term future, a mixedapproach to coastal management may well have to face upto more politically sensitive and highly contested trade-offs, especially if the more severe climate change modellingpredictions are accurate. But this only serves to emphasisethe argument in favour of economic CBA as a comple-mentary component within a policy analysis-based decisionsupport system which will have to grapple with compensa-tion, planning law and regulations, public trust and socialnorms of fairness and accountability dimensions ofdecision making. With these caveats in mind we turn tothe application of the CBA model to managed realignmentpolicy.The construction of coastal defences effectively immo-

bilises a naturally dynamic and adaptive ecosystem at thelandsea interface. In response to rising sea levels, amodified coast is unable to adapt by migrating landwardswith the result that valuable intertidal habitats areeventually lost through inundation and erosion (coastalsqueeze) (English Nature, 1992). There are two mainconsequences of this squeeze effect. It can be argued thatthe ability of the intertidal zone to absorb energy and waterand thereby contribute to sea defence will be diminished.The loss of a first line of defence against waves and tides,especially during storm conditions, can result in increasedcapital and maintenance costs for engineered defences(Reed et al., 1999; Dixon et al., 1998). Secondly, squeezeresults in degraded or destroyed mudflats, sandflat andsaltmarsh habitats. These habitats provide a number ofecosystem services, they are significant reservoirs ofbiodiversity (Boorman, 2003), and have attracted a rangeof conservation designations. Under the EU Water Frame-work Directive, loss of conservation area must becompensated for on a like-for-like basis. Managed retreatseems to offer a way of mitigating this problem bydeliberately breaking defences, allowing the coastline torecede and the intertidal zone to expand. However, thesituation is further complicated because many freshwater

coastal sites protected by coastal defences are alsodesignated as protected areas on nature conservationgrounds. Pethick (2002) has claimed that a stalemate mightdevelop between the requirements of freshwater andintertidal habitats conservation. If sea defences areremoved the freshwater habitat is compromised, if thedefences are maintained then the intertidal habitat isreduced.While managed realignment seems to provide a number

of benefits the realignment process also incurs engineeringcosts and other opportunity costs (e.g. the unsubsidisedvalue of any land lost which was previously protected). UKgovernment guidance on CBA now emphasises, whereappropriate, the need to use a DDR over a long run timehorizon and to include as many benefits and costs (marketand non-market) as is feasible with a money metric andexisting knowledge (HMT, 2003). The CBA then becomesone component of an overall policy analysis which itself isa three-stage process (Turner et al., 2003b). Fig. 1 sets outthe scoping, analysis and evaluation stages of the decisionsupport system.

4. Managed realignment in the Humber estuary, England

Cave et al. (2003) have undertaken a scoping study(Stage 1 in Fig. 1) to examine the complex interplay offactors in the Humber estuary and catchment. The macro-tidal Humber estuary is one of the largest in the UK, fed bytwo principal river systems, the Ouse and the Trent. With amaximum tidal length of 147 km from Cromwell Weir onthe Trent to the Humbers mouth, and maximum width of15 km, it is comparable with the Thames and Severnestuaries (Andrews et al., 2000). Draining over a fifth of theland area of England (24,000 km2), the Humber estuary isthe largest source of freshwater (approximately 250m3 s!1)into the North Sea from all the British rivers (Jarvie et al.,1997). Much of the land surrounding the estuary is the

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1. Scoping Stage

Assessment of the environmental change process - Driving Forces

PressureSate-ChangesImpactsResponses (DP-S-I-R framework)

Institutional and Stakeholder mapping and analysis

2. Analysis Stage

Scenario setting and Management options analysis

Data-collection and initial Monitoring (including Geographical

Information Systems (GIS) data)

Ecosystem functioning and valuation analysis

3. Evaluation Stage

Cost-benefit modelling and valuation

Multi-Criteria Assessment

Adapted from: OECD, 1993 and Turner et al., 1998

Fig. 1. Decision support system for the socio-economic analysis of coastaland flood defences (OECD, 1993; Turner et al., 1998).

R.K. Turner et al. / Global Environmental Change 17 (2007) 397407400

result of historical land reclamation, created from theenclosure of saltmarshes and mudflats (Davidson et al.,1991). Consequently, approximately 90,000 ha of landsurrounding the Humber estuary is below high spring tidelevel and is currently protected by 235 km of flood andcoastal defences (405 km including those defences alongthe tidal reaches of the rivers Trent and Ouse) (Winnet al., 2003). This area is comprised of agricultural land(85%), housing (8%) and commercial or industrialactivities (3%).The Humber estuary is of international importance for

wildlife, particularly birds, with a large area of intertidalhabitat of between 10,000 and 11,000 ha (Andrews et al.,2000; Environment Agency, 1998) of which around 90%consists of mudflats and sandflats with the remainder beingmainly saltmarsh (Winn et al., 2003). This intertidal habitatplays an important role within the estuary, through therecycling of nutrients within the estuary, and their role assoft sea defences, dissipating wave energy. They are highlyproductive biologically in terms of bird speciestheHumber is recognised internationally for its breeding,passage and wintering birds. The entire estuary has beenproposed as a marine Special Area of Conservation(SAC) while the Humber flats are designated a SpecialProtection Area (SPA), Site of Special Scientific Interest(SSSI) and Ramsar site.However, through land-claim, the Humber estuary has

an uncharacteristically low extent of saltmarsh for anEnglish estuary (Davidson and Buck, 1997). Jickells et al.(2000) have estimated that more than 90% of the intertidalarea and sediment accumulation capacity of the Humberestuary has been lost over the last 300 years with protectedareas becoming threatened. In areas with extensive sea-walls and commercial development, such as aroundGrimsby and Hull, tidal flats are narrow (o100m wide)or absent. The natural succession of marine to terrestrialenvironments has been truncated by the construction ofseawalls. Before extensive human involvement the vege-tation succession probably incorporated much wider tractsof saltmarsh, progressing to less saline fen and carrenvironments, it now ends at mature saltmarsh. Thesetypes of marginal marineterrestrial environments are nolonger present in the Humber system (Andrews et al.,2000).In addition to the loss of intertidal habitats through

reclamation and coastal squeeze, there is also concernregarding the state of traditional sea defences within theHumber estuary (Ledoux et al., 2005). As many of thedefences in the estuary were built following the 1953flooding disaster on the East Coast, they are now reachingthe end of their design life and are currently unsatisfactoryand in need of repair or replacing (Environment Agency,2000). Both of these problems are likely to be exacerbatedby climate change related sea level rise and increased stormconditions (Evans et al., 2004). With the reduction ofintertidal habitats and increasing costs of maintainingdefences, the flood defence strategies for the Humber

estuary are being reassessed and a limited amount ofrealignment work has begun. In 2003, the EA undertookthe first realignment of the flood and coastal defences in theHumber, by breeching the defences at Thorngumbald, onthe north bank of the Humber, east of Hull creating 80 haof intertidal habitat, having identified a further 11 potentialsites (Environment Agency, 2000; Pilcher et al., 2002).Ledoux et al. (2005) have applied futures scenario ana-

lysis (Stage 2 in Fig. 1) to help scope possible managementstrategies for the Humber estuary. The case study presen-ted here builds on this existing body of work and adoptsthe five scenarios (a hold-the-line approach versus fourother possible states of the world with increasing relianceon managed realignment measures) of possible futuresset out by Ledoux et al. (2005). It then combines a GIS-based analysis with a costbenefit economic valuationmodel to assess the management options (Stages 2 and 3 inFig. 1).

5. Managed realignment scenarios

The five scenarios are based on the following assump-tions:

1. Hold-the-line (HTL): The existing defences are main-tained to a satisfactory standard, but intertidal habitatwill be lost due to continued development and coastalsqueeze.

2. Business-as-usual (BAU): This option takes into ac-count existing realignment schemes; however compli-ance with the Habitats Directive is lax, with continuedeconomic development possibly leading to a loss ofhabitat due to coastal squeeze.

3. Policy targets (PT): Economic growth is combined withenvironmental protection, with realignment undertakento reduce flood defence expenditure and compensate forpast and future intertidal habitat loss in compliance withthe Habitats Directive.

4. Deep green (DG): Environmental protection takespriority over economic growth, while developmentcontinues; the maximum feasible area of intertidalhabitat is created.

5. Extended deep green (EDG): A greater emphasis isplaced on habitat creation, with less restrictive criteriabeing used to identify suitable areas for realignment.

To identify areas suitable for future possible realign-ment in the Humber for each of the scenarios outlinedin above section, five key criteria were considered in theGIS mappingsee Fig. 2 and Coombes (2003) for moredetail.Details of the areas that were identified as suitable for

realignment, for each of the scenarios, are illustrated inTable 1. The table shows the implications of realign-ment on defence length, the amount of habitat thatcould be created and the subsequent impacts oncarbon sequestration. Fig. 3 illustrates the extent of

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the area of habitat that could be created under each of thescenarios.

6. Realignment costbenefit model

The elements of the analysis are summarised in the threeequations and Table 2 and follow the standard with andwithout procedure which in this case sets the netdiscounted costs and benefits of each realignment scenarioagainst the net discounted costs of the hold-the-linetraditional sea defence strategy.

6.1. Hold-the-line status quo defences

Csqt XTt0

1

l rt lsqCsqr;t Csqm;t Csqbr;t

h i,

where Csqt is the present value of total cost of status quodefences at time t (million), r the discount rate, lsq thelength of the status quo defences (km), Csqr;t the replacementcost of the unsatisfactory status quo defences at time t (/k)(these are identified in Environment Agency (2000) and forthis example we assume that unsatisfactory defences are all

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Criterion 1 The Area below the High Spring Tide LevelThe high spring tide level is the highest point at the coastline that is reached by the sea during aspring tide. The area below this represents the maximum area of intertidal habitat that could becreated, before other factors are considered.Criterion 2 The Present Land Use of the AreaIn all the managed realignment scenarios, i.e. BAU, PT, DG and EDG, Sites of Special ScientificInterest (SSSI), Special Areas of Conservation (SAC) and other similarly protected areastogether with historically significant buildings were excluded from the realignment areas.Criterion 3 The Infrastructure of the AreaFor all of the scenarios, the transport network including roads, railway lines and canals wasassumed to be protected and therefore precluded from realignment.Criterion 4 The Historical Context of the AreaIn the BAU, PT and DG scenarios only areas that had been previously reclaimed from theestuary were considered for realignment. This constraint is dropped for the EDG scenario.Criterion 5 The Spatial Context of the AreasSIZE: The BAU, PT and DG scenarios assumed that only areas greater than 5 ha in size couldbe realigned (following Pilcher et al., 2002), while in the EDG scenario it was assumed thatintertidal habitat of any size could be created.SHAPE: The BAU, PT and DG scenarios considered that the optimum shape for realignmentareas was a trade-off between creating a wide intertidal area to maximise benefits, whileensuring that the length of realigned defences to protect the surrounding land was no greater thanthose which already exist (Pilcher et al., 2002). This limitation was relaxed in the EDG scenario.ELEVATION: All of the scenarios assumed setback to an elevation above the high spring tidelevel where possible.PROXIMITY TO EXISTING INTERTIDAL HABITATS: All of the scenarios created intertidalhabitats where they fitted in with the overall vegetation succession to facilitate the movement ofspecies between habitats (Bergstrom et al., 1996).

Fig. 2. GIS-based realignment site location criteria.

Table 1Details of areas suitable for realignment

Scenarios

HTL BAU PT DG EDG

Length of defences before realignment (km) 405.3 405.3 405.3 405.3 405.3Length of defences after realignment (km) 405.3 396.8 361.6 318.2 284.5Length of realigned defences (km) 0.0 7.0 30.8 69.0 102.7Length of unsatisfactory defences after realignment (km) 64.6 61.9 42.2 38.2 34.0Amount of intertidal habitat created by realignment (ha)a 0.0 80.0 1320.9 2332.4 7493.6Estimated tonnes of Carbon stored each yearb,c 0 38.4 634.1 1119.4 3597.1

aDue to uncertainty over the loss of intertidal habitat due to coastal squeeze over the next 50 years, it is assumed that no further coastal squeeze takesplace. Therefore, the HTL scenario as the baseline scenario assumes no loss of intertidal habitat and no carbon sequestration, and that habitat creationand sequestration in the other scenarios are relative to this base.

bEstimates of the carbon storage capacity of newly created inter-tidal habitat are derived from Andrews et al. (2000).cIntensively managed arable land is a net source of carbon (Renwick et al., 2002) and we assume that the agricultural land that is sacrificed to

realignment is managed in this way. Note, however, that minimal, or no-till management practices can reduce carbon emissions from agricultural soils oreven convert them to carbon sinks on a scale that is equivalent to, or greater than, the carbon storage potential of intertidal habitat.

R.K. Turner et al. / Global Environmental Change 17 (2007) 397407402

replaced in year 0), Csqm;t the maintenance cost of the statusquo defences at time t (/km/yr), Csqbr;t the cost of repairingbreaches in the status quo defences at time t (/km) (inpractice an estimate of this cost is included in the overallmaintenance cost schedule, Csqm;t) and t the time.

6.2. Managed realignment

Cmrt XTt0

1

l rt lmrCmrk;t Cmrm;t amrLagragr;t ! Be;t',

where Cmrt is the present value of total cost of managedrealignment at time t (million), r the discount rate, lmr

the length of the managed realigned defences (km), Cmrk;t thecapital cost of realignment at time t (/km), Cmrm;t themaintenance cost of realignment at time t (/km/yr), amr

the area of intertidal habitat created by realignment (ha),Lagragr;t the forgone agricultural land value if realignmenttakes place (/ha) and Be,t the environmental value gainassociated with realignment e.g. habitat services, functionsand products (/ha).

6.3. Net present value

NPVmrt Cmrt ! Csqt ,where NPVmrt is the net present value (NPV) of managedrealignment in comparison to hold-the-line for a givenstretch of coastline at time t ( million).

7. CBA results and sensitivity analysis

To estimate the NPV of providing defence for each of thescenarios, the present value of all the costs were subtractedfrom the present value of all the benefits. The present valuefor the HTL scenario was then subtracted from the pre-sent values for the BAU, PT, DG and the EDG scenarios,respectively, to calculate the NPV of realignment foreach scenario. The results of this process are presented inTable 3 (using a DDR, following UK governmentguidanceHMT, 2003). This shows that whilst no scenarioNPVs are positive after 25 years, the PT and EDGmanaged realignment scenarios become more economicallyefficient the longer the time horizon over which the

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Fig. 3. Areas suitable for managed realignment in the Humber estuary under the various scenarios.

R.K. Turner et al. / Global Environmental Change 17 (2007) 397407 403

appraisal is undertaken. Neither the BAU nor the DGscenarios have positive NPVs over any period of appraisal.We explore the sensitivity of the results of the CBA to

changes in key parameters (type of discount rate, level ofmaintenance costs, the value of habitat and the value of

carbon) using the figures presented in Table 4 which showthe switching points, i.e. the year at which NPV becomespositive, for each scenario.

7.1. Discount rate

Results are calculated in Table 4 using differing types ofdiscount rate; a constant rate (3.5%), a declining rate(3.5% for years 130, 3% for years 3175, 2.5% for years7625, 2% for years 126200), and the hyperbolic gammadiscounting method following Weitzman (2001).The first set of results in Table 4 correspond to the

results presented in Table 3, directly for the DDR figuresand in terms of the values for the various aspects of theanalysis for the constant and gamma discount rates. For allthese sets of results the effect of the type of discount rate(as would be expected) is to shift the time at which NPVbecomes positive closer to the present as one moves fromthe constant rate, to the DDR and then to the gammadiscount rate.It is also notable that under all the changes (excepting

the habitat value change) set out in Table 4 the gamma

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Table 3Net present values ( million) at 25, 50 and 100 years for the BAU, PT,DG and EDG scenarios as compared to the HTL scenario using adeclining discount rate

Scenario 25 years 50 years 100 years

Business-as-usualNPV BAU !74.15 !89.33 !103.93NPV HTL !70.40 !86.01 !100.93NPV(BAU)NPV(HTL) !3.75 !3.32 !3.00Policy targetsNPV PT !73.23 !82.22 !92.27NPV HTL !70.40 !86.01 !100.93NPV(PT)NPV(HTL) !2.83 3.79 8.66Deep greenNPV DG !97.32 !101.42 !107.92NPV HTL !70.40 !86.01 !100.93NPV(DG)NPV(HTL) !26.92 !15.41 !6.99Extended deep greenNPV EDG !94.30 !74.48 !63.83NPV HTL !70.40 !86.01 !100.93NPV(EDG)NPV(HTL) !23.90 11.53 37.1

A declining discount rate is used following current HM treasury guidancefor project appraisal (HMT, 2003); 3.5% for years 130, 3% for years3175 and 2.5% for years 76100.

Table 2Values used to estimate the costs and benefits of realignment

Costs/benefits Value

Capital costs of realignmenta 878,159/kmOpportunity costs:Grades 1 and 2 agricultural landb 4790/haGrade 3 agricultural landb 5458/ha

Maintenance costs of defencesc 3560/km/yrReplacement costsd 668,441/kmGeneral habitat creation benefitse 621/ha/yrCarbon sequestration benefitsf 45/tC

All values are converted to 2005 prices using the GDP deflators publishedby HM treasury (http://www.hm-treasury.gov.uk/).

aCosts based on contemporary realignment schemes (Halcrow, 2000).bBased on sale prices (DEFRA, 2004) and adjusted downwards for the

effects of the single farm payment following Penning-Rowsell et al. (2005).cMaintenance costs are taken from Black and Veatch/Halcrow (2005).

These are assumed to increase in the future due to the effects of climatechange. Following current government guidance (Penning-Rowsell et al.,2005) maintenance costs are increased by a factor of 1.5 for the periodbetween 20 and 50 years into the future and by a factor of 2 for yearsfurther into the future.

dOnly the costs of replacing unsatisfactory defences (Defra, 2001) notaffected by realignment are included.

eAssumed to be gained immediately, although in practice habitatestablishment may take some time before maturity is achieved.

fSee costbenefit analysis results section.

Table 4Year in which NPV (scenario costs-HTL costs) becomes positive underalternative discount rates and alternative cost and benefit value scenarios

Scenario Discount rate type

Constanta Decliningb Gammac

1. Assuming equal maintenance costs non-realigned and realigned defencesBusiness-as-usual Never Never 228Policy targets 34 34 30Deep green Never Never 63Extended deep green 40 40 33

2. Assuming maintenance costs of realigned defences are 50% lowerBusiness-as-usual Never Never 147Policy targets 30 27 27Deep green Never 80 54Extended deep green 37 34 31

3. As 1+habitat creation benefits values reduced to 145 per haBusiness-as-usual Never Never NeverPolicy targets Never Never NeverDeep green Never Never NeverExtended deep green Never Never Never

4. As 1+carbon sequestration benefits increased to 222 per tonne carbonBusiness-as-usual Never Never 194Policy targets 28 28 25Deep green Never 114 53Extended deep green 32 32 28

5. As 1+carbon sequestration benefits reduced to 4 per tonne carbonBusiness-as-usual Never Never 237Policy targets 36 36 31Deep green Never Never 66Extended deep green 43 43 35

aDiscount rate constant at 3.5%.bSee note for Table 3.cThe hyperbolic gamma discounting method described by Weitzman

(2001) is used here.

R.K. Turner et al. / Global Environmental Change 17 (2007) 397407404

discount rate is the most stable, i.e. there is a relativelysmaller variation in switching values in response to thesechanges.

7.2. Maintenance costs

Edwards and Winn (2006) state that the intertidalhabitat created by managed realignment can producebenefits by dissipating wave energy and hence reducingthe estuarys erosive impact on flood defences. Main-tenance cost savings will vary from site to site according towave climate, coastal topography and consequent defenceworks. It therefore seems reasonable to assume that acrossan estuary or extensive stretches of coast, realignmentstrategies will yield significant maintenance cost savings.We take this possible effect into account within the analysisby comparing the situation where the costs of maintainingdefences are equal across non-realigned and realigneddefences (results set 1 in Table 4) with one where the costsof maintaining realigned defences are 50% lower (resultsset 2). Switching points for the PT and EDG scenarios areslightly lower with lower maintenance costs, but the DGswitching point is substantially lower under the DDRschedule, as is the BAU switching point for the gammadiscount rate.

7.3. Habitat values

In order to avoid double counting problems theenvironmental benefits derived from realignment schemes,as intertidal habitats are created, were treated as onecomposite value. An estimate of 621/ha/yr was used basedon the results of a meta analysis of wetland values(Woodward and Wui, 2001). It is also the case thatecosystems such as saltmarshes act as sinks for organiccarbon (C) and nitrogen (N) and particle reactivephosphorus (P) (Andrews et al., 2000; Jickells et al.,2000). The nutrients (N and P) storage function has notbeen separately valued because its human welfare impact isfelt via better water quality and consequent amenity/recreational quality enhancement. This impact we haveassumed is already encompassed by our composite wetlandvalue. The same is not the case for carbon burial which wehave included as an independent and separately valuedbenefit of realignment.2

Results set 3 in Table 4 shows the effect on the analysisof the use of a lower value for wetland habitat. The value of145/ha/yr is drawn from the Brander et al. (2006) wetlandvalue meta analysis and is the median value for salt/brackish marsh (converted from 1995 US$). Table 4

demonstrates that results for all scenarios are very sensitiveto the value used for habitat creation since a positive NPVis not achieved under any discount rate type over any timeperiod. Note that this value is low compared to the meanvalue for salt/brackish marsh of about 2276/ha/yr takenfrom the same study. As such we would expect the value of145/ha/yr to represent a lower bound on the range ofpossible values.

7.4. Carbon values

Various approaches exist for estimating the monetaryvalue of carbon storage. In this study, we based themonetary estimate on the environmental damage done pertonne of carbon dioxide (or equivalent) emitted into theatmospherethe damage cost avoided by storing ratherthan releasing a given quantity of carbon dioxideequivalent units. A recent meta analysis undertaken byTol (2005), using only peer reviewed studies, estimated thatthe mean marginal damage cost of carbon dioxideemissions was $50/tC (in 1995 US$, equivalent to about45 in 2005) and this value is used in the CBA. We also usea value of 222/tC (again derived from Tol, 2005) torepresent an upper estimate of the value of carbon storage,and a lower value estimate of 4/tC (derived from Pearce,2003). Switching values results for these values are shownin result sets 4 and 5 in Table 4. These results indicate thatthe analysis is relatively insensitive to the value of carbonused with significant effects on the timing of NPVbecoming positive only occurring for the BAU and DGscenarios, under the DDR and gamma schedules.

8. Concluding comments

The CBA method which has traditionally been deployedon a single project-by-project basis in coastal zones is notappropriate in the emerging more flexible managementstrategy. Both the temporal and spatial scales over whichthe analysis is conducted impose constraints on CBA andconsequent modifications to the method. Further, managedrealignment policy must be assessed in a sequential fashion.Sites which involve relatively low and relatively politicallybenign opportunity costs can be considered first from aCBA economic efficiency stand point. More extensive useof realignment will inevitably raise, among others, complexsocial justice, trust and accountability concerns. A multi-criteria decision support system, including CBA, willtherefore be required. Given these caveats and using, forthe most part, conservative assumptions and estimates, theHumber CBA shows that limited managed realignmentassessed over an extensive spatial and temporal scale andwith non-constant discounting provides an economicefficiency gain. However, the critical importance of theestimated magnitude of the composite ecosystem/habitatvalue in the CBA outcomes serves to highlight the need forcareful scrutiny of the original research and benefitstransfer from which the estimates have been derived and

ARTICLE IN PRESS

2Note, however, that in a recent review of the long term impacts ofmanaged realignment French (2006) states that the establishment ofsaltmarsh is not inevitable following realignment. Even if saltmarsh is notcreated post realignment some kind of wetland (e.g. mudflats) will becreated and these will have associated amenity, and nutrient and carbonstorage functionsalbeit possibly at a lower level. For the purposes of thisstudy we assume that saltmarsh is created after realignment.

R.K. Turner et al. / Global Environmental Change 17 (2007) 397407 405

the importance of original site specific valuation studies.Only the latter can provide the full degree of confidencenecessary for actual policy implementation.The positive economic efficiency finding needs to be

evaluated alongside other considerations in a comprehen-sive coastal policy appraisal, underpinned by integratedcoastal management (ICM) principles and practice. Currentcoastal policy and institutions fall well short of ICM andissues of distributional equity, compensation and remu-neration, and inclusion, trust and accountability all remainto be satisfactorily resolved. In our sequential approach torealignment policy we have identified sites which have thelowest opportunity costs (i.e. lower quality agricultural landdisplacement). A more extensive realignment strategy willinevitably involve much higher opportunity costs andcomplex trade-offs. Setting out the CBA in a format whichhighlights the financial flows between stakeholders will be anecessary future requirement if the more flexible/adaptivecoastal management strategy is to become the norm.Greater stakeholder inclusion and more transparent tech-nical aids to decision making are also needed.

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A cost-benefit appraisal of coastal managed realignment policyIntroductionCBA: decision rule or heuristic aidManaged realignment policy appraisalManaged realignment in the Humber estuary, EnglandManaged realignment scenariosRealignment cost-benefit modelHold-the-line status quo defencesManaged realignmentNet present value

CBA results and sensitivity analysisDiscount rateMaintenance costsHabitat valuesCarbon values

Concluding commentsReferences