Long term investment planning

Long term investment planning Developing practical strategic investment planning tools Paul Sayers (Sayers and Partners) Ian Meadowcroft and Adam Baylis (Environment Agency) Jaap Flikweert (Haskoning) Petra Neve and Rob Deakin (Halcrow) A CH2M HILL company

Outline • Looking beyond the UK Floods sector • Why a long term investment strategy • Providing evidence to support policy • Present day national scale risks • Exploring future investment priorities • Next generation supporting tools and data

Looking beyond the UK floods sector • Increasing interest in large scale, long term investment planning tools. • By countries • By sector

For example, different countries….. • Uni of South Carolina - Total Place Vulnerability Index Model • Uniof Dortmund -Integrated Risk Assessment of Multi Hazards Model • Dutch Ministry of Public Works- Planning Kit Decision Support System (Water Manager) • IHE-UNESCO – Gaming Simulation Tools for River and Floodplain Management • California – FloodSAFE • And many others…

And sectors….. • Water companies - Tools for Asset Management Plans • Insurance sectors – e.g. Munich Re Model - ‘probability of maximum losses’ (PML). • Floods – Gaming simulation, Flood Ranger (through Foresight)

A range of spatial and temporal scales of interest Why a long term investment strategy? What are the national… How will the system... How will an asset… Hot spots? Investment need? How might these change ? Perform now and in the future? Which assets contribute most to risk? Perform under load or on demand? Improve or deteriorate with/without action?

..and forms part of the cycle of asset management…

National Assessment of Flood Risk (NaFRA) Present day flood risks • Based on RASP methods (Hall et al, 2002, Sayers et al, 2005, Gouldby et al 2008) • Takes into account: • Location, type and condition of defences • Overtopping and breach • Results in • Depth probability relationship • Various risk metrics (incl. EAD)

2.4m Properties at risk of river and sea flooding in England • Excludes surface water risk, and the risk to static caravans Some results….

How exposed to flood is our essential transport and utilities infrastructure ? Some results….

Who benefits from flood defence assets? Some results….

Flood and coastal risk expenditure: £800m in 2010/11 But who spends what? Some results….

But what for the future? • How will the risks and investment needs change? • Climate change • Impacts of climate change using data from the UK climate projections, UKCP09. • We expect sea levels to rise – increasing overtopping and the chance of breach significantly • The frequency and severity of rainstorms will increase - increasing in river flows

But what for the future? • How will the risks and investment needs change? • Changing performance of the assets • If we do nothing - Deterioration in the absence or a reduced maintenance • If we do something - Improvement in condition or raising of crest level through investment

The analysis framework • FaCET - Flood and Coastal Erosion Tool Analysis (upto 2011) Set outs 8 national policy options (static in time) and the rules for implementing them as asset interventions

The analysis framework • FaCET - Flood and Coastal Erosion Tool Analysis (upto 2011) Includes a whole life analysis of costs associated with given policies options

The analysis framework • FaCET - Flood and Coastal Erosion Tool Analysis (upto 2011) Based NaFRA/RASP includes a NPV analysis of changes in risk based likely changes associated with a give policy option (deterioration, raising, climate change)

Future investment needs Given • Climate change data from the UKCP09. • Sea levels are expected to rise • Rivers are set to increase • Without investment • Increased risks – about 500,000 additional properties would be at ‘Significant’ risk of flooding by 2035 • 50% of this increase attributable to climate change • 50% to asset deterioration

Future investment needs Developed range of scenarios Increasing returns up to Scenario 4 Scenario 5 decreased risks but at much higher cost So how much should be spent nationally? Cumulative spend on assets: 2011 to 2035

What next…. • LTIS has made a significant step forward • A national scale investment strategy tool • But… Decision makers now what to: • Know more both the spatial and temporal variation in risks • Have greater flexibility to explore policy options that change over time • Include a more comprehensive range of asset intervention activities (pumps, channel maintenance etc) • Make robust choices, minimising regret • Understand the potential for wide spread flooding • Incorporate all sources of flooding

Scoping the next generation of FaCET tools A route map for the development of the FACET tools is currently being set out: • Version 1 (2011/12) • updates based on latest climate and cost information • Version 2 - Step change (application in 2013) • Static policy options replaced with Policy Sequences • Estimate of the potential third party funding contribution Spatially coherent events represented.

Scoping the next generation of FaCET tools • Version 3 – Step change (2014/15) • Recast as an “on the fly” process, where alternatives to the pre-set policy sequences can be provided by the user and analysed directly. • Provision of national scale automated optimization techniques • Version 4 - Step change (beyond 2014/15) • A move to a continuous simulation type approach enabling the impact of specific interventions to be more reliably represented

Conclusions • Providing quantified national scale investment strategies has had a significant impact • Supporting better targeting of resources • Promoting the need for better data • Underlying the need for better decisions, and making robust choices • A progressive programme of development is currently being scoped

Supporting funders Joint programme – Modelling and Risk TAG Funding and investment team Contact Paul SayersPaul.sayers@sayersandpartners.co.uk Ian Meadowcroft ian.meadowcroft@environment-agency.gov.uk

Long term investment planning