ARCHIVE: How are investment decisions made?
The costs and benefits of each potential risk management project (such as a new or improved community defence) in England are assessed by operating authorities using a standard appraisal methodology. This is based on HM Treasury’s Green Book that sets common principles and approaches for all Government investment. The appraisal process results in the selection of a preferred risk management option in each case, in close consultation with interested parties including the local community.
The Environment Agency then collates information together on the costs and benefits of each potential project across England, and how each would contribute towards achieving the outcome targets set for the current spending period.
In general, the Environment Agency allocates Government funding to those projects that deliver the greatest contribution towards the outcome targets for each £1 of investment, although in some cases funding is provided to meet legal requirements or to fund emergency works.
Other than through the setting of outcome targets, Defra ministers do not influence individual investment decisions unless the whole-life value of the project or area strategy exceeds £100m.
As Government funding is paid for by taxpayers across the country, we have a responsibility to taxpayers to ensure maximum benefit is achieved with the funding available.
What if funding is turned down?
Where otherwise viable projects are turned down for Government funding by the Environment Agency it means there are projects in other areas of the country that would deliver greater benefit, or contribute more towards the outcome targets, per £1 of investment. However, local communities and authorities have the discretion to fund these projects either themselves or through payments to the local Regional Flood Defence Committee.
Sir Michael Pitt recommended that Government develop a scheme that allows and encourages local communities to invest in flood risk management measures (recommendation 24). Government supports this, and set out in its response (page 58) the ways in which local communities and local authorities can already choose to invest in additional risk management measures and defences that they will benefit from.
Further information
For more information on the prioritisation of Government investment please contact the Environment Agency or your Regional Flood Defence Committee.
Page last modified: 22 April 2009
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published: 22 April 2009