Environmental flows are difficult to value in economic terms. How do you put a price on flows in a river, fish spawning or a healthy platypus population? Previous methodologies have looked at the community’s willingness to pay for additional environmental entitlements in storages or improvements in overall river health, but these methodologies can’t be applied easily to IWM projects returning water to the environment.
The Economic Benefits of Flow (or EB Flow) methodology has been created to translate changes in flow into an economic value. This is done by first identifying the relationships between waterway values and key hydrological indices. Modelled flows from proposed projects are then analysed to generate changes to the same key hydrological indices. From this, changes to waterway values are generated. These changes to waterway values are then used as a relative representation of the changes to waterway health, which can then be used to generate the community’s willingness to pay for the environmental flow benefit.
This project has increased the value of environmental flow contributions, compared with previously available methodologies. This methodology also draws clear links between the flows provided to the waterway and the values that are benefiting from these flows. This improves the clarity and justification of the economic benefits attributed to flow improvements.
As the climate dries, waterway managers are looking for additional sources of water for the environment via substitution or direct supply of alternative water. Increasing the economic value of environmental flows will assist waterway managers to progress business cases for these projects and achieve improvements for local waterways.