Osborne’s School Boy Error on ‘Growth Enabling’ Flood Defence Schemes

Buried deep within the Autumn Statement is a ring fencing of half of the the EA flood defense budget to ‘growth enabling’ projects.

This is a school boy CBA error as this is already fully accounted for in the EA CBA methodology and will simply lead to funding of sub-optimal schemes with lesser economic benefits whilst those living in flood prone already fully built up areas will have to wait far far longer.

The growth benefits of the multiplier effects of new building which becomes possible is already accounted for.

And if say a 1:20 year flood is prevented the growth destroying unnecessary expenditure of 1:20 of that benefit (discounted to NPV) is accounted for.  If the benefits of protecting existing housing outweigh the benefits of new housing so be it.  The 50% ring fending is arbitrary and totally without any economic justification.  Indeed it is double counting, it shows the ignorance of the spotty schoolboys at the Treasury.

Of course you could say the full benefits of new housing, including new publicly funded housing – such as reducing homelessness, should be accounted for in a cross government CBA methodology, but that would be reintroducing the dirty words infrastructure planning and spatial planning.