Exeter research to inform £billions of government spending

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University of Exeter expertise has been extensively adopted by the government in creating new guidelines on how to evaluate how money is spent on new policies, projects and programmes.

HM Treasury has this week published an update to the ‘Green Book’, a guide that has been informing government investments for over forty years and provides the guidelines for billions of pounds of public investment in everything from building schools and roads to protecting the natural environment. Launched by Chief Secretary to the Treasury, Liz Truss, the document is also regarded as a template for good decision making internationally.

This latest update, the first since 2003, pushes the boundaries of policy and practice forward on many fronts, but perhaps most radically in the way that it incorporates into official decision making the environmental benefits and costs of government spending. Given that the guidance set out within the Green Book supports the assessment of billions of pounds of government expenditure each year, any changes to the way decisions are made will have a huge impact on shaping the nation’s future environmental health.

A team of academics from the Land, Environment, Economics and Policy Institute (LEEP) at the University of Exeter Business School have been working directly with HM Treasury as well as agencies such as Defra, the Department for Transport and the Natural Capital Committee, to provide knowledge and expertise that have directly contributed to the guidance now made standard. In particular, the guidance has fully accepted and incorporated their work on the concept of ‘natural capital’, recognising that the natural environment is a huge source of economic value and wellbeing, has been widely adopted.

Professors Ian Bateman and Brett Day from LEEP have led the work for HM Treasury which has included a number of reports and numerous meetings with senior Treasury officials. Speaking of the impact their work has had on this influential document, Professor Bateman said:

“The advice that we gave, which I am delighted HM Treasury has accepted, changes Government spending guidance in some key ways. For one thing, it emphasises the importance of considering the environmental impacts of public spending on, say, water quality, greenhouse gases, noise pollution and recreation. In particular, the Treasury has explicitly adopted our approach to bringing effects on wild species into decision-making.

“More fundamentally, it is a clear shift towards considering the long-term benefits of safeguarding the environmental underpinnings of the economy. It’s like thinking about savings in a bank; if each year we take out more than the interest we make, eventually our income will fall. The same thing applies to the environment; extracting too much, too fast, will cause collapse. But if we ensure our stock of ‘natural capital’ is healthy, then the planet will sustain us forever. The new Green Book incorporates our advice to ensure those natural capital stocks, and any cumulative effects on them, are considered when making decisions on future government projects and programmes.”

Other contributions from the LEEP team include the Outdoor Recreation Valuation Tool (ORVal), a Defra-funded project led by Professor Day and supported by Dr Greg Smith, also of LEEP. ORVal is an online map that allows people in England to view their local coastal and green spaces such as beaches, parks and nature reserves and recreational opportunities. Use of ORVal has been recommended for its ability to deal with the complex issue of attributing values based on habitat or location.

In addition, a Valuation Transfer Tool developed with environmental consultants, eftec, for Defra (Professor Bateman); a system for the valuation of noise (Professors Day and Bateman); studies for the Forestry Commission looking at best practice in valuing environmental costs and benefits (led by Dr Amy Binner, with Dr Smith, Professor Bateman, Professor Day, Matthew Agarwala and Amii Harwood); work on discounting (the treatment of delayed costs and benefits led by Professor Bateman); and work on the valuation of environmental impacts and how to deal with those that cannot be robustly valued have all been cited within the new revision.

The changes made to this Green Book are yet another illustration of the government’s new approach to business and governmental decision-making based on natural capital. It comes just weeks after the Prime Minister launched the Government’s 25 Year Environment Plan, which also incorporated very substantial advice from LEEP and other University of Exeter academics. Furthermore, promoting natural capital is also at the heart of The South West Partnership for Environment & Economic Prosperity (SWEEP), a project led by the University of Exeter with the University of Plymouth and Plymouth Marine Laboratory, to help protect the beautiful natural resources, and the jobs dependent on them, in the South West.

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