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ABSTRACT Recent debate following the rejection of the Environment Agency case regarding an application for water abstraction at Axford on the River Kennet has focused upon the benefits procedure employed for aggregating non-user benefits which underpinned the economic case put forward by the Agency (although this was not the reason cited by the inquiry for rejection of the case). Commentators have seen this case as setting an unfortunate precedent for the use of economic assessments in such resource management issues. The paper presents a number of highly tractable alternative methods for the aggregation of benefits estimates designed to address the central problems of the definition of a relevant aggregation population and a potential decay of values with increasing distance from a given valuation site. These methods are tested using data obtained from a national survey of non-users of a specific natural area. Results from this application indicate that simpler approaches such as that used at the Axford inquiry may result in aggregate benefits estimates which are very substantially larger than those produced by our proposed alternative approaches to aggregation.
Introduction
In 1995 Thames Water Utilities Limited (TWUL) applied for a variation to their abstraction license at Axford on the River Kennet near to Marlborough. Initially the Environment Agency (EA) as the relevant licensing authority allowed abstraction volumes to increase but subsequently introduced a new set of prescribed flow levels aiming to progressively reduce abstraction to levels lower than those allowed prior to the application (National Rivers Authority (NRA), 1995). These prescriptions were based upon the EA's own assessment of the likely physical and economic impact of such abstraction, the latter including a value transfer exercise examining the benefits of preventing such abstractions occurring (Postle, 1996). In January 1996, TWUL appealed to the Secretary of State of the Department of Environment, claiming the new imposition was "ultra vire, unjustified and unreasonable" (TWUL, 1996) citing objections to both the physical and economic assessments carried out by the EA.
A public inquiry was held in late 1996 with a decision being announced in early 1998. The inspector accepted TWUL's claim that certain of the EA's physical modelling was unreliable and it was principally upon issues to do with these assessments that the EA's proposed new flow level...