Environmental Impact

Assessment of Capital Projects

Environmental Impact

• Chapter 7 of the Manual

Content1. Template Requirements

2. EIA processes

3. Incorporating environmental issues in CBA

Environmental Impact: Template

Environmental Impacts

Description Positive Negative (State Mitigation Measures)

A statement setting out the environmental impact of the project and the basis on which it was established

EIA Process

• Screening: • Influenced by size and impact

• Scoping: • Key environmental issues related to the

project.• Stakeholders consultation

• Prediction & Mitigation: • Impacts modelling and costing• Mitigation measures costing

• Management & Monitoring: • Implementation and institutional support

• Audit: • Post project review and QA

Environmental Impact: CBA

• Environmental impacts may have implications for CBA

• Both costs and benefits• Economic costs:

• Market costed impacts

• Non-market: Health, welfare, environmental

• Costs of risk mitigation

• Economic benefits: • Health, welfare, environmental

• Eco-system services

Techniques for evaluation

• Market prices• Where environmental damage has productivity impacts

• Soil erosion, deforestation, and air and water pollution. • Impact on output (yields per ha) or health (income foregone)

• Income losses only – not more systemic impacts

• Cost of replacement• Avert damage or deal with consequences• Cost of private wells (water pollution), cost of fertiliser (soil degradation)

• Surrogate markets• Environmental premium, e.g. property, wages

• Surveys• Willingness to pay to avoid cost

Greenhouse gas emissions

• Commitment to reduce GHG intensity of economy and improve resilience to climate change

• High contribution from energy sector

• Transport emissions to double between 2000-2020

Techniques for valuation: Greenhouse gas

• Projects that reduce emissions of CO2• Power, Transport, Industry

• Assign monetary value to each tCO2e avoided

• Benefits measured against best available technology on market (replacement)

UK CO2e prices for project appraisal modelling

Examples: Sustainable Transport

Benefit transfer method

• Use of existing third party research

• Identify economic assessment of similar projects in similar sectors

• Range of values

• Validation and adjustment to project circumstances

• Monitoring programmes can validate and build evidence base

Impact of climate change

• North gets hotter and driver

• South gets warmer and wetter

• More extreme heat events

Impact of climate change

• Energy sector: • Hydropower: Reduced flow rates• Thermal generation (cooling, water availability)• Transmission efficiency• Increased electricity demand for a/c

• Transport sector: • Design standards, Increased flood risk, extreme events

• Water sector• Availability of water, storage considerations

• Industry• Climate sensitive inputs (food processing)• Extreme weather events, coastal zones

• Health: • Disease migration, heat effects