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How Environment Agency flood schemes are funded and delivered

The development of flood and coastal risk management schemes can be a lengthy process taking between 2-6 years to complete, as it is important that Government money is spent a way that is consistent across the country and provides best value for money and the greatest benefits for society as a whole.

To do this there are 3 key stages of a scheme; appraisal, design and construction, with rules that must be followed throughout delivery of the scheme.

It is important to note that in the UK there is no right to protection from the effects of flooding and coastal erosion risk and no entitlement to a particular standard of defence as flood and coastal erosion risk management legislation is passive.


The appraisal stage

The appraisal process shows how value for money can be maximised through comparing and testing a range of options against their:

  • Economic viability (cost benefit ratio)
  • Technical feasibility (engineering difficultly)
  • Environmental impacts
  • Public acceptability

Starting with a ‘long list’ of simple summary level options which are narrowed down to a short list showing the options which have the best chance of attracting funding through modelling, mapping, assessments and consultation with partner organisations and the public.

The options usually fall into one or a combination of 4 themes:

  • Strengthening defences
  • Upstream management
  • Maintenance
  • Resilience


How damages are calculated

Damage costs are calculated to test economic viability using the economic damage to the nation per household and the annual probability of a flood happening. This means that making flood damages outweigh the scheme costs can be a very difficult task.

For example, for a 30cm flood the economic damage figure per household may be £20,000, even though the homeowner may incur £70,000 in actual costs. If there is then a 1.3% annual chance of this flood happening, only 1.3% of the £20,000 can be included resulting in a damage cost figure per household of £260.


How final options are selected

The damage cost figure is then used to identify the option with the highest benefit cost ratio; this is the cheapest scheme with the most benefit.

From this the incremental cost benefit ratio is calculated, to see if the additional costs of other options are outweighed by the additional benefits. For each standard of flood protection there is a minimum ratio to show best value to the government.

For example a 1.3% standard of protection must have a ratio of 3 or more.

Through this process of elimination the final preferred option which best balances all aspects is identified, with the economic case having the most weight.


Getting funding

At the end of the appraisal stage the Environment Agency are require to submit a business case report to an independent assurance board for approval to ensure it complies with quality standards and guidance set by government before it is recommended for final approval.

A partnership funding calculator is then used to calculate what percentage of total scheme costs the Government is prepared to pay. This includes considering how many homes the scheme will move from one flood risk band to another, with homes moving from very significant risk attracting the most funding.

 Very significant risk  5% and greater chance of flooding
 Significant risk  1.3-5% chance of flooding
 Moderate risk  0.5-1.3% chance of flooding


The calculator prioritises flood risk to residential properties, therefore businesses are not directly considered, however the benefit of protecting businesses can be considered in the overall benefit cost ratio.

The final output of the calculator is a percentage score below or above 100%. A score above 100% means that all the money can be provided by the Government, the higher the score the higher the chance of getting funding. If it is below 100% then the shortfall will be required to be found from elsewhere in order to receive any money from Government.


Design and construction

Once the business case is approved the Environment Agency can progress to the design and construction stages, this includes obtaining planning applications, permits and land owner agreements require delivering the scheme.



Sources: Environment Agency

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