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EIA - A study  on costs and benefits
Summary

These publications (ISBN 92-828-3572-3 (Volume 1-Main report)
ISBN 92-828-3573-1 (Volume 2-Detailed case studies)) are unfortunately out-of-print

1. This report contains the findings of a research study which has examined the relative costs and benefits associated with implementation of Environmental Impact Assessment in selected countries within the European Union. The study has been undertaken in two parts; the first dealing with Project EIA and the second relating to Strategic Impact Assessment.

Aims of the Research

2. The primary aim of the research has been:

"to obtain more reliable estimates, than those which were previously available, of the likely range of both financial and time costs and benefits associated with implementation of Directive 85/337/EEC and to identify the principal causes of the cost and benefit."

3. The study has also explored in a less detailed way:

the likely effects on costs and benefits of the modifications proposed by the Commission to the Directive (in March 1994), and the likely effects on costs and benefits of the application of SEA requirements to certain policies, plans and programmes."

Conduct of the Studies

4. The research team comprised Land Use Consultants from the United Kingdom, supported by Eureco from Luxembourg, and Enviplan from Greece. A series of 18 case studies were examined over a six month period, based on project EIAs in Greece, the Netherlands, Spain and the United Kingdom. Twenty individual SEA initiatives were also considered from six Member States comprising Belgium, Denmark, the Netherlands, France, Germany , and the United Kingdom, although this part of the research was less intensive.

Findings Relating to Project EIA

Principal Cost Components

5. In considering both the costs of undertaking the EIA, and reviewing the documentation, it is important to bear in mind that a number of Member States required similar types of study before EIA was introduced, so that any increase in the cost, and time, for these countries has arisen largely from formalisation of the stages of assessment. Evidence from the Netherlands and United Kingdom suggests that this increase in cost and time is very limited. It is likely that the introduction of EIA procedures in Greece and Spain has increased the cost of environmental protection measures in those areas where there was little or no previous investigation.

6. Between 60 and 90% of the cost of Project EIA is incurred in carrying out environmental studies, and writing the Environmental Impact Statement. These costs are borne largely by the developer or project promoter.

7. Preliminary studies conducted in advance of the formal EIA are also a significant part of the developer's overall design costs, although these will usually be incurred whether or not EIA is required.

8. The cost of reviewing the EIA, and reaching a decision on whether or not the project should proceed, falls chiefly on the competent authority, with some input from statutory consultees.

Costs of EIA in relation to Overall Capital Costs

9. For 60% of the projects examined EIA costs amounted to less than 0.5 % of the overall capital cost. Costs in excess of 1% were the exception, and occurred in relation to particularly controversial projects in sensitive environments, or where good EIA practice had not been followed.

Actual costs of EIA tend to rise in direct relation to the capital cost of the project but, when considered as a percentage of total cost, the EIA component becomes smaller the larger the project. For projects with capital costs in excess of 100 million ECU, EIA costs may be as low as 0.2%.

Principal Time Components

10. The EIA process includes environmental studies, the preparation of the Environmental Impact Statement (EIS), consultation, public involvement, review and decision-making. Based on the case study findings Project EIA's are usually completed in under 2 years in the Netherlands and United Kingdom. This timescale is also achieved in Greece and Spain, although there appear to be more exceptions to the rule.

11. EIA studies are usually conducted in 6-12 months. Where the proposed development is located in an environmentally sensitive area, data for a full year of should normally be provided, but this process can be shortened if the information is already to hand.

12. Preparation of the EIS typically takes 2-3 months. The subsequent stages of consultation, review and decision-making may take 3-6 months, depending upon the complexity of the issues raised.

13. These timescales are indicative, and there is considerable variation from project to project in all countries. The sample of case studies is too small to allow any detailed comparison of performance between Member States. There is, however, some indication that in the Netherlands, the operation of strict timetables for each stage of the process and formalised inputs from the various participants achieves a shorter timescale than elsewhere

14. In considering the amount of time required for the full EIA process it is important to note that delays can occur for many reasons unrelated to the EIA process itself. Such reasons include modifications proposed by the promoter of the project on technical or economic grounds, and changes in local or national government.

Main causes of any significant costs and time delays

15. Where delays have occurred in the individual case studies the reasons can usually be traced back to one or more of the following factors:

• lack of a proper scoping exercise to determine the direction and focus of the EIA.

• failure on the part of the developer, or consultants to undertake a systematic study, and provide relevant, or sufficient, data resulting in the need for supplementary information

Principal Benefits

16. In the majority of the case studies, all the participants confirmed that the EIA process had assisted decision-making, in one or more of the following ways:

• key environmental issues had been identified in 94% of cases
• the quality of the project design had been improved in 83% of the case studies
• higher standards of mitigation had been achieved than would otherwise have been expected in 83% of cases
• a better framework for preparing conditions and legal agreements to govern future operation of the project had been provided in 72% of cases
• environmental concerns had been incorporated from an earlier stage in the design process in 61 % of cases
• better decision- making had been achieved in 61% or more of the case studies due to :
  • a more systematic and structured framework for analysis,
  • more objective and credible information,
  • increased rigour in evaluating environmental information,
• the environmental credibility of the developer had been enhanced in 61% of cases,

• environmentally sensitive areas had been avoided through project re-siting or re-design in 56% of cases

Ways of improving EIA Performance

17. One of the most important changes proposed in Directive 85/337/EEC is considered to be the introduction of formal scoping. The research shows that where scoping has been employed from the start of the EIA process, and has been carried out jointly by the developer and competent authority, greater co-operation has been achieved and delays have been reduced.

18. Measures which are most likely to be helpful in reducing time and money costs in future include:

• introduction of strategic level assessments. to cover policies, plans and programmes for major infrastructure projects. ( It was discovered that for the majority of the 18 case studies, the most important decisions affecting the environment were dealt with during the initial feasibility studies and planning phase before individual development projects were defined);
• improvements to screening(planned for in the modified Directive);
• joint scopingof the terms of reference, and content, of the EIA;
• new guidance on standardsexpected for technical assessment of specific types of development, including ; waste disposal, water storage, mineral extraction, road development and tourism;
• greater public involvement at or after the scoping stage, and before the EIS is published;
• clearer definition of mitigation standards;
• a formal requirement to introduce monitoring The study concludes that a requirement to monitor the consequences of decisions, and the subsequent success or failure of mitigating measures would greatly enhance the effectiveness of the EIA process.

Findings related to SEA

19. The 20 case studies covered a variety of SEA initiatives, including the environmental appraisal of regional and land use plans, government policies and bills, flood defence strategies and major infrastructure programmes. These were examined in less detail than the equivalent project EIAs.

Costs of SEA

20. The main costs arise from use of internal staff time, payments for expert advice and consultancy time, and publicity and publications. Of these, the staff and consultancy costs typically account for over 90% of all SEA costs.

21. Few public authorities keep records of staff time, so it proved difficult to obtain comparative information on overall costs of SEA initiatives. Some respondents have argued that it is not practical to distinguish between work which forms part of an environmentally sensitive plan, and the process of SEA or environmental appraisal which accompanies it. If the plan is being prepared with full knowledge of Agenda 21 guidelines, principles of sustainability, and EC environmental Directives, most officers should be contributing to the SEA evaluation in the course of normal duties

22. Where costs were available, the evidence suggests that introduction of SEA to regional and local land use planning may increase the cost by 5-10% although examples of good SEAs were studied where costs were less than 5%. Some larger studies forming part of regional planning processes may incur higher costs. Overall costs are strongly influenced by:

• the extent to which the policy, plan or programme is itself pursuing sustainable environmental goals.
• the existence of supporting research / baseline information, which can significantly reduce production costs.

Time Inputs

Most time is committed by internal staff but other time costs which must be taken into consideration include the time of steering groups/expert panels; and the time inputs by consultees.

23. Internal inputs to SEAs vary from a few days to six person years with the average involvement being several months. As familiarisation with SEA techniques increases, less time will be required at the beginning of the process in identifying appropriate SEA methodologies.Conversely more time is likely to be spent on implementation and monitoring.

24. Given the labour intensive nature of policy, planning and programming activities, there is no need for SEA to add to the time required to complete the plan process, providing that it is allowed for from the outset

Benefits of SEA

25. The principal benefits identified by respondents to the study, included:

• providing a systematic review of relevant environmental issues;
• improving and refining the basic strategic concepts involved in the policy, plan or programme;
• achieving a clearer understanding of the potential environmental effects;
• enhancing the policy, plan or programmes' contribution to the overall goals of environmental sustainability;
• creating a better balance between environmental, social and economic factors (thus aiding the decision-making process);
• simplifying the process of environmental investigations at the individual project level, and thereby reducing or possibly avoiding the need for Project EIA while also accelerating the process of decision making.
• enhancing the transparency of the plan making process, and winning public support for preferred options or strategies.;
• providing guidance on the development of mitigation proposals;

• helping to define environmental targets for monitoring purposes;

Conclusions on SEA

26. SEA is already in widespread use throughout the European Community, and that many different forms of assessment fall within the definition of SEA.

27. The process of SEA is relevant at all levels of public decision making which precede the project level. As such the costs are generally borne by the public sector, in contrast to project EIA where the promoter (usually a private developer) is responsible for funding the assessment.

28. In considering the relationship between SEA and Project EIA a number of overlaps were identified, particularly in relationship to infrastructure projects. It was clear from the case studies of these project EIAs that some of the environmental constraints could have been avoided if alternative routes and alignments had been considered at the policy formulation stage..

29. The overriding impression gained from the review of the 20 case studies contained in this report, is that SEA is being used by the organisations in question as a logical extension to their existing strategic planning processes, and that increases in costs are regarded as marginal to the overall scale of investment in development of the respective policies, plans and programmes.

EIA costs for Projects with High Capital Costs

30. Larger projects understandably involve more extensive studies and the capital costs of the EIAs for 12 out of the 18 projects ranged from 80,000 to 1.83 million ECU.

Relationship between Project Capital Costs and the Cost of EIA

31. The amount of money spent on EIA represents only a small fraction of the capital cost of any major development. In the 18 examples EIA costs were found to range from 0.01% to 2.56% of the total development cost with the average being 0.5%. Use of the average is, however, rather misleading since the distribution is skewed, with two thirds of all EIAs costing less than 0.5% of the gross development cost.