Publication - Advice and guidance
Flood protection schemes - assessment of economic, environmental and social impacts: guidance
Guidance for local authorities on chapter 5 project appraisal of flood protection schemes under the Flood Risk Management (Scotland) Act 2009.
10. Glossary of Terms
| Above-design-standard benefits | The benefits from reductions in flood losses from events which exceed the design standard of protection, expressed as an annual average benefit. |
|---|---|
| Annual Exceedence Probability ( AEP) | Probability that an event of specified magnitude will be equalled or exceeded in any year |
| Appraisal | The process of defining objectives, examining options and weighing up the costs, benefits, risks and uncertainties before a decision is made. |
| Benefits | Those positive quantifiable and unquantifiable changes that a project will produce. |
| Cost-benefit ratio | The ratio of the present value of benefits to the present value of the costs. |
| Contingent valuation method | A valuation methodology which uses questionnaire techniques to elicit valuations using respondents' willingness to pay for an environmental improvement. |
| Discounting | The procedure used to arrive at the sum of either costs or benefits over the lifetime of a project using a discount rate to scale down future benefits and costs. The effect of using a discount rate is to reduce the value of projected future costs or benefits to their values as seen from the present day. |
| Economic appraisal | An appraisal that takes into account a wide range of costs and benefits, generally those which can be valued in money terms. |
| Incremental cost-benefit ratio | The ratio of the additional benefit to the additional cost, when 2 options are compared. |
| Intangibles | Those costs, benefits and risks that are difficult to quantify but which are nevertheless relevant for the decision making process. Usually applied to non-monetary impacts. |
| Market price | The price for which a good is bought and sold in a market. If restrictive conditions are satisfied, this price may be used to estimate the economic value of the good. Otherwise, the market price may need to be corrected, and a 'shadow price' derived, in order to estimate the economic value of the good. |
| Net present value ( NPV) | The stream of all benefits net of all costs for each year of the project's life discounted back to the present date. |
| Non-monetary impacts | Used to describe those impacts of flooding on households which do not have direct financial impacts. |
| Non-use value | The value that people hold for an environmental resource which is not attributable to their direct use of the resource for commercial or recreational purposes. Otherwise known as intrinsic value. |
| Post project evaluation | A procedure to review the performance of a project with respect to its original objectives and the manner in which the project was carried out. |
| Present value | The value of a stream of benefits or costs when discounted back to the present time. |
| Ramsar site | Internationally important wetland, designated under the Convention on Wetlands of International Importance (Ramsar, Iran, 1971). |
| Return period | The average length of time separating flood events of a similar magnitude: a 100-year flood will occur on average once in every 100 years. |
| Risk assessment | Consideration of the risks inherent in a project, leading to the development of actions to control them (see Chapter 6). |
| Special Area of Conservation | An internationally important habitat or species |
| ( SAC) | designated under the EC Habitats Directive. |
| Sensitivity analysis | Analysis of the effects on an appraisal of varying the projected values of important variables. |
| Special Protection Area ( SPA) | Internationally important site designated under the EC Wild Birds Directive. |
| Sunk costs | A cost incurred in the past and which cannot be recovered whatever decision is taken now. Consequently, sunk costs are omitted in cost-benefit analyses. |
| Sustainability | The degree to which flood defence solutions avoid tying future generations into inflexible and/or expensive or environmentally damaging options for defence. This will usually include consideration of interrelationships with other defences and likely developments and processes within a catchment. It will also take account of long-term demands for non-renewable materials. |
| Transfer payment | A payment which has no impact in terms of an economic analysis (see Annex A for a full definition). Examples are most tax payments and general subsidies. |
| Whole-life costs | The total costs associated with a scheme for its full design and potential residual life span, taking proper account of all aspects of design, construction, maintenance and external impacts. A particularly useful approach in helping to determine economic sustainability when used to compare the relative costs of long-life schemes such as flood defences, and where decisions need to be made between short-term capital costs and long-term maintenance costs. |
| Willingness to pay | The amount an individual is prepared to pay in order to obtain a given improvement in utility, expressed through the contingent valuation method. |
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