Costs and benefits in Wonderland

I am still waiting for a copy of the letters that my MP, Louise Mensch, should by now have sent to the Treasury and Defra asking for the evidence from HMT that the Habitats Regulations are a brake on the UK economy (and Defra’s response to the fact that I intend to make a complaint to the EU about non-compliance of the Birds Directive).  They are probably stuck in the Christmas post.

But when the Treasury reply they will, presumably be able to provide details on why they are imposing the work on Defra and others to review the Habitats Regulations and why there is a prima facie case for imposing this extra work.

No doubt the reply from the Treasury will build significantly on this existing Defra report, under the imprimatur of Minister James Paice (he seems to be cropping up in this blog a lot at the moment).

You will have to read the report several times to begin to get your head around what it means – well, I can certainly say that I did, but maybe you will get it much quicker than I.

Table 1 is a good place to start to get a picture of the overall results except – big caveat – it is clear that many costs and even more benefits of Defra’s regulations are not yet included in Table 1.  And, some of us would have a problem with whether this approach, which attempts to ascribe monetary values to everything (what is the cost/benefit ratio of love? or fairness? or beauty?) can ever do more than inaccurately describe the inaccurate cost of some things and the value of nothing.

However, it’s not as though there is a lot of evidence in this table that the nature regulations are the place to start with any analysis of removing regulatory costs.  But review can often be valuable, even if it is a luxury which may be an unnacceptable burden in times of reduced resources and the need for more government focus, and there are some potential lessons from Table 1.

I was struck by the evidence for flood management. There is an enormous cost to business of flood management regulations – it amounts to £271m pa.  Surely it would be worth removing this brake on the UK economy?  But wait!  the benefit of those flood management measures to business are an even greater £1029m pa! So business benefits by c£700m pa from the flood management regulations. And the rest of society benefits to the tune of another £2bn pa from these regulations.

Let’s take a look at the animal health and welfare figures.  They impose a net cost of £300+m pa on the economy – but is that too much or too little for animal welfare? How do you put a price on animal (or human) suffering? Should we be spending twice as much or half as much? The table cannot tell you .  It is your values and beliefs that will tell you whether we should be spending more, doing more, doing better or not caring at all – so it is with nature.

I look forward to the Treasury’s response.


PS what does monetise mean? It seems to be used these days to mean ‘put a monetary value on something that has no market value’ but I can find no dictionary definition that even hints at that  (here, here, here, here) .  So maybe it means whatever you want it to mean.

This has to remind us of this passage from Alice in Wonderland – it could have been written to describe attempts to value the environment:

Come, we shall have some fun now!’ thought Alice. `I’m glad they’ve begun asking riddles.–I believe I can guess that,’ she added aloud.

`Do you mean that you think you can find out the answer to it?’ said the March Hare.

`Exactly so,’ said Alice.

`Then you should say what you mean,’ the March Hare went on.

`I do,’ Alice hastily replied; `at least–at least I mean what I say–that’s the same thing, you know.’

`Not the same thing a bit!’ said the Hatter. `You might just as well say that “I see what I eat” is the same thing as “I eat what I see”!’

`You might just as well say,’ added the March Hare, `that “I like what I get” is the same thing as “I get what I like”!’

`You might just as well say,’ added the Dormouse, who seemed to be talking in his sleep, `that “I breathe when I sleep” is the same thing as “I sleep when I breathe”!’


5 Replies to “Costs and benefits in Wonderland”

  1. I’ve been thinking about why the FC managed national forests are economically so valuable but make a cash loss. The answer is, simply, monetisation – and when you take it apart you realise its at the heart of a huge range of the problems the countryside faces. Put bluntly, urban dwellers are ripping off rural people. Water falling on a farm is worth nothing – but captured by a water company, suddenly you can charge for it. Dating back to post WW2, the one thing we are prepared to pay for is food – to such an extent that most famrland gets £200/per hectare per annum of taxpayers money before the farmer gets out of bed. Because he isn’t paid for water the farmer isn’t bothered about the nutrients, which the taxpayer has part funded, that run into drinking water and cost £800m pa to clean out. We hear lots about building on the floodplain but nothing about the £100s of millions we spent in the 60s and 70s draining the flood plain to get water to run off faster. But the farmer doesn’t get paid to check the flow which in the summer flood of 2007 cost the economy more than the total agricultural subsidy for the year. Nor doe he get paid for the landscape or for people walking on the land. He may get paid for conserving wildlife, increasingly successfully under HLS, which is described as a ‘subsidy’. It is not a subsidy it is ‘monetising’ goods that our largely urban society wants to buy. Foresters have it much harder – no £200/pa for them – which is why 500,000 + hectares aren’t in management and woodland wildlife is going down almost as fast as farmland. My back of the envelope sums suggest that if we simply bought what we really want from the countryside not only would rural people get a better, fairer deal but we could well save £1 billion per annum we spend clearing up the mess from our current approach.

  2. Mark

    Out of curiosity, I had a little explore of Louise Mensch’s website. I was particularly struck by her comments in her penultimate paragraph addressing the appeal to a planning decision at Kings Cliffe; see

    It would seem that she has gone ‘off message’ and is vigorously campaigning that the environmental concerns should take precedence over a company’s commercial interests…how interesting.


  3. Sometimes Mark you look into such complicated things that I can only smile and then smile more when you bring something like Alice in which sums it up really well,whether it was meant I have no idea but can only look on it as a very nice light hearted blog.

  4. It is certainly a useful argument to point out the cash value of ecosystem services as a reason for protecting wildlife. The financial value of natural coastal wetlands in the Gulf of Mexico in attenuating hurricane damage say, or the value to the tourist industry of sea eagles, otters and other charismatic species in Scotland, are strong reasons (amongst others) for trying to ensure that these things survive and flourish. Unfortunately, as you suggest, Mark, the argument can only be taken so far. It is doubtful that any significant cash benefit could ever be demonstrated from the presence of tree sparrows on farmland and still less for some obscure aquatic beetle in a drainage reen and yet most readers of this blog would passionately believe that they too should be protected. The utitilitarian approach implied by the Defra costings is therefore rather a dangerous road to go down as the gimlet-eyed accountant would simply say that our aquatic beetle is not paying its way and can be allowed to go to the wall. We should therefore resist attempts by Mr Osborne and the Treasury to reduce the arguments for and against wildlife legislation to such commercial terms.

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