Building a compelling business case to secure partnership funding. Today s presenters. Aaron Burton, Principal Consultant - Water Ricardo-AEA

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1 1 Building a compelling business case to secure partnership funding Today s presenters Nicole Shamier Senior Environmental Economist Ricardo-AEA +44 (0) Nicole.Shamier@ricardo-aea.com Aaron Burton, Principal Consultant - Water Ricardo-AEA +44 (0) Aaron.Burton@ricardo-aea.com Nicole Shamier provides economic appraisal and funding support to Lead Local Flood Authorities. She has carried out flood appraisal studies for Local Enterprise Partnerships and the Environment Agency to obtain funding from a range of sources including Flood Defence Grant in Aid, the Community Infrastructure Levy and Growth Deal. Aaron Burton has over 10 years experience working across consulting, water companies, regulators, government and academia. He leads Ricardo-AEAs work on integrated water management including developing business cases for flood risk management, water sensitive urban design, as well as drought and water efficiency research. He previously led partnerships on surface water management and WSUD in Environment Agency Wales.

2 2 Submitting your questions during the webinar Attendee control panel If your panel is minimised, click the orange button to expand it. Welcome to the Webinar Webinar

3 3 Agenda Introduction to webinar 2.00pm Building business cases for funding Nicole Shamier, Ricardo-AEA 2.05pm Water management business case for Greater Lincolnshire Questions and answers Aaron Burton, Ricardo-AEA 2.35pm 2.45pm

4 Ricardo-AEA Building business cases for funding Nicole Shamier Senior Environmental Economist

5 5 What have you told us that you d like us to cover today? The presentation and structure of a business case General tips on successful applications. Skills required for securing funding and the sources of funding available. Potential sources of funding for FCERM schemes over & above FDGiA and Local Levy

6 6 What we will cover News the 2.3bn funding announcement Selecting a funding mechanism What to cover in your business case What else is required to achieve partnership funding Challenges The future of partnership funding Source stgeorges.co.uk

7 million, all figures in 2010 prices / / / / / / / / / / /21 Investment Current and future spending on flood and coastal defence against the assessment of need published in the 2010 Environment Agency's long-term investment strategy Additional funding post 2013/14 winter storms Target efficiencies in the capital programme, Target contribution levels, Expected contributions, up to and including 2014/15 Revenue grants to EA from 2016/17 (flat real assumed) Revenue grants to EA (announced) Capital grants to EA (announced) Source: Committee on Climate Change; ASC based on Defra (2014a) and Environment Agency (2009). LTIS scenario 1-2: ~250,000 more households at significant risk by 2035 LTIS scenario 4: Avoid increase in households at significant risk

8 Cash / / / / / / / / / / /21 Investment (updated in 2014) Current and future spending on flood and coastal defence against the latest assessment of need published in the Environment Agency's long-term investment strategy Extra funding post 2013/14 winter storms External contributions RFCC Local Levy Revenue grants to EA from 2016/17 (2015/16 budget assumed) Revenue grants to EA (announced) Capital grants to EA (announced) LTIS2 optimum scenario (upper) Source: ASC based on Defra funding factsheet and Environment Agency 2014 LTIS. LTIS2 optimum scenario (lower)

9 9 How do I identify funding sources? Beneficiary pays principle: the principle that a user pays for the provision of a service or resource Solent 2026 project (Environment Agency, 2011)

10 10 How do I identify funding sources? Boston beneficiaries, Greater Lincolnshire Local Enterprise Partnership project (Ricardo-AEA, 2014)

11 What types of funding are available? Grants Pros and cons Existing residential properties: Flood defence grant in aid Existing properties: Local levy Agricultural beneficiaries: Drainage rates via Internal Drainage Boards Existing and new business: European Agricultural Fund for Rural Development (EAFRD) / Local Growth Deal - No pay back - Long application process Development New properties: Mitigation through the Environmental Impact Assessment (EIA) process New properties: Section 106 agreement New properties: Community infrastructure levy New properties and existing business: Biodiversity offsetting and carbon offsetting - No pay back - Like for like - Opportunistic Private investment Business beneficiaries: All beneficiaries: Visitor beneficiaries: Business beneficiaries: Business beneficiaries: Corporate social responsibility Charitable donations or crowdfunding Visitor contributions Green Investment Bank Private investors - Require pay back/return on investment or community willingness to pay 11

12 12 Successful business cases outline Objectives Framing your appraisal (time frame and boundaries) Baseline Choosing options (long list or short list) Costs (quantify) Benefits (describe, quantify and value) Adjustments optimism bias, discounting Compare costs and benefits Sensitivity/scenario tests Recommendation Have all benefits been counted? Transport, risk to life, ecosystems? Jobs

13 13 What s required Evidence Business case Leadership Budgets Engaged community Willingness to pay

14 14 Challenges Capacity and capability to deliver evidence Risks and uncertainty Complexity Time consumption Differences on emphasis Commercial return Several agencies with many objectives Evidence Business case Leadership Limited government budgets Timing of funds Allocation/outcomes Reaching the right people Public opinion Finding partners willing to contribute Free riding Contracts Budgets Engaged community Willingness to pay

15 15 Engagement challenge

16 16 The future of flood-risk funding Fill funding gaps Seesaw scenario - annual announcements of grant-in-aid top ups after spikes in emergency response Grant-in-aid scenario - we boost government funding in the long term Charitable scenario - voluntary contributions meet shortfall Local taxation scenario - enforced contributions meet shortfall Development scenario - high initial investment from new developments, high future burden on grant in aid Insurance scenario - insurance fund subsidises most crucial schemes Legal scenario - distribute ownership rights and encourage suing behaviour Natural processes Walk away scenario - movement away from flooded areas Compulsory purchase scenario - subsidised movement away from flooded areas...we need to know who pays, who wins and who loses under each scenario...we need an intelligent discussion with the public about the pros and cons of each and a consensus to be made

17 17 Conclusion Writing a good business case requires clear, transparent presentation of all of the appraisal steps, tailored to the funder requirements Organisations receiving funds linked to economic development will need to demonstrate the benefits in terms of job creation Private investors want to see a return on investment Collecting voluntary contributions need to go hand in hand with engagement and education campaigns There are many varied future funding scenarios possible A sensible plan for policy makers is to understand the pros and cons of each, where the costs fall and agree a consensus with an educated public I m happy to discuss your issues or explain any concepts in more detail outside of the webinar.

18 Nicole Shamier Ricardo-AEA Ltd Floor 14, Marble Arch Tower Bryanston Street London W1H 7AA T: E: W:

19 Ricardo-AEA Water management business case for Greater Lincolnshire Aaron Burton, Principal Consultant - Water Building a compelling business case to secure partnership funding 16 December

20 20 Outline Background and why Ricardo-AEA Approach Results from literature review and stakeholder engagement Example Lincshore Conclusions and future opportunities

21 21 Pressures on Water management Flooding Water Shortages Supporting growth Supporting liveable places Waterway health Affordability of water Biodiversity

22 Opportunities for multiple benefits and partnership funding Source: CIRIA (2013) Creating water sensitive places scoping the potential for Water Sensitive Urban Design in the UK 22

23 23 Local Enterprise Partnerships and funding 3.2 billion Regional Growth Fund (RGF) supports eligible projects and programmes that are also raising private sector investment to create economic growth and lasting employment 730 million Growing Places Fund supporting key infrastructure projects designed to unlock wider economic growth, create jobs and build houses in England EU funding distribution over 5 billion of European Structural and Investment Funds for England for the period

24 24 Greater Lincolnshire Local Enterprise Partnership

25 25 Why Ricardo-AEA? Traditional modelling doesn t cover broader economic benefits (i.e. jobs) and Ricardo- AEA have experience making business cases across Government Ricardo-AEA can bring in wider aspects of water resources, water quality, climate change adaptation Facilitation of discussion between stakeholders local authority/ LLFA, environment agency, drainage boards, water companies, industry sectors (from our resource efficiency work) Developed bespoke economic model to assess benefits for each project Experience of the team within Environment Agency and Government we know how to present the business case

26 26 Approach A review of the literature and stakeholder engagement covering flooding, water quality and the visitor economy, water availability, and key growth sectors. A beneficiary analysis with outputs from analysis displayed using geographic information systems (GIS) mapping. An economic analysis for the business case and its impacts. Funding opportunities and partnership options were identified. Task 1 Inception Task 2 Literature Review Task 3 Beneficiaries mapping Task 4 Business Case Task 5 Reporting

27 27 Results Literature review, Task & Finish Group and interviews with Environment Agency, local authorities and Anglian Water Flooding Water Quality and visitor economy Water availability Key growth sectors Identified 11 projects for growth funding support Lincshore Beach Nourishment Scheme ( ) (coastal flood risk) Horncastle (river and surface water flood risk) Witham catchment (river flooding and WFD) Boston (river and tidal flood risk) Ancolme valley improvements (river flooding) Fens waterways link opportunity study (WFD and visitor economy) The Fens and Spaldings projects

28 28 Example Lincshore beneficiaries mapping

29 29 Example Lincshore CBA Flood risk schemes can avoid economic shocks, create and maintain jobs Jobs created in the building of the scheme (direct) 30% assumed labour cost = 8,520,000 OR 316 FTE Jobs created once the scheme has been implemented (indirect) Assumed impacts on local economy = 78,365,932 per flood = 2,902 FTE

30 30 Results for all schemes

31 31 Growth Deal 2014 In July 2014 the Greater Lincolnshire LEP secured a 40 million funding boost for Greater Lincolnshire with a further 27.5m earmarked for the future. enable the LEP and local risk management authorities to determine local priorities and make decisions on the use of national and locally raised funding allocated to their area so as to give greater certainty and flexibility welcome any evidence the LEP can provide on a) the value agricultural land and the impacts that flood management investment could have on the national economy and b) innovative ways of securing local funding, and will discuss with the LEP[s]* any steps that might be taken by Government in the light of the evidence. (* ie Humber and Greater Lincolnshire).

32 32 Conclusions Important to assess benefits to business to enable wider access to funding enable growth funds and wider partnerships Business case provides opportunities for discussions with partners including business/ industry and water companies Approach can be readily applied to other LEPs and local authority areas Ricardo-AEA have economic benefit model Experience joining up GIS datasets from EA, Local Authorities, and LEPs Can facilitate discussions between stakeholders

33 Thank you! Aaron Burton Principal Consultant - Water Ricardo-AEA Ltd 14 th Floor, Marble Arch Tower 55 Bryanston Street London W1H T: E: W: +44 (0) aaron.burton@ricardo-aea.com

34 34 Questions and answers

35 35 Building a compelling business case to secure partnership funding Contact us for any questions after the webinar