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Sustainable Asset Valuation Model (SAVi):
Transparency for Decision-Makers
and Investors
Method and Insights
November 2018
Andrea M. Bassi
Georg Pallaske
Madeline Stanley
Oshani Perera
Infrastructure projects must consider carbon
and environmental footprints, social
cohesion, stewardship of natural ecosystems
and the financial viability of projects.
Infrastructure is an enabler, and hence it
has to be sustainable.
The Sustainable Asset Valuation (SAVi) tool assesses:
• environmental, social and economic risks and
externalities.
• socio-economic benefits, such as employment,
income generation and contributions to GDP.
Investors use a SAVianalysis to assess the impacts of improved
sustainability on future cash flows and
financial returns.
Disclosure
statements
(e.g. carbon)
Environmental, social and
economic co-benefits.
CSR, impact
investing
Governments use a SAVi analysis to assess
value for money for public investments, and determine changes in
government revenues and
expenditure.
How does ESG
performance increase value
for money for tax payers?
Do sustainable assets trigger positive
externalities? (e.g. higher GDP)
Can sustainable infrastructure
increase fiscal sustainability?
SAVi puts a financial value on
risks and externalities that
are not well understood and
therefore ignored in traditional investment
assessments.
SAVi calculates the impacts of
various risks and externalities on
levelized costs, gross margins, net
present value, internal rates of
return and credit risk ratios.
Potential risks and
externalities
Physical/Environmental
Higher global temperatures, rising sea levels, water shortages,
water and air pollution, land degradation, extreme weather,
biodiversity.
Social/Political
Currency inconvertibility, wage fluctuations, industrial action, war,
terrorism, civil disturbance.
Technological/Legal
Environmental and social safeguards, troubleshooting experimental
or emerging technologies.
Consumer/Reputational
Changing public opinion, industrial action, environmental disasters,
human rights abuses.
Economic
Contribution to GDP, household incomes, carbon taxes, changes in
feed-in tariffs, fluctuations in resources, access to land.
SAViinfrastructure
asset types
SAVi can currently be applied to energy, roads,
buildings,
water infrastructure,
nature-based infrastructure. Waste
infrastructure will be developed in 2019.
We customize SAVi to our
clients’ needs
Each analysis is custom tailored, whether clients
are looking at a single project, a portfolio of
projects, or an economic or industrial policy.
Together with the client, we identify
externalities and risks on a case-by-
case basis.
Current applications
Clients include:
The Ministry of Infrastructure and Water Management
of the Netherlands, the Directorate of Tourism of
Jammu & Kashmir in India, UN Environment, WWF, the
Moroccan Road Agency, and the Senegalese
Government Agency for the Implementation of the
Plan for an Emerging Senegal.
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
Fishing
Water quality
Forest
Agriculture
Population
Tourism
Biodiversity
Employment
Culture, education
GDP
Population
80,000
60,000
40,000
20,000
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Per
son
Population : Bita 28Aug - BAU
Population : Data
total value added
400 B
300 B
200 B
100 B
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Pes
os/
Yea
r
total value added : Bita 28Aug - BAU
total value added : Data
Biodiversity
1.098
1.023
.9489
.8744
.8
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Dm
nl
Biodiversity : Bita 28Aug - BAU
fallow / Forest Land
247,000
246,500
246,000
245,500
245,000
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Ha
"fallow / Forest Land" : Bita 28Aug - BAU
"fallow / Forest Land" : Data
water quality index
.9
.85
.8
.75
.7
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
water quality index : Bita 28Aug - BAU
Agriculture Land
3000
2250
1500
750
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Ha
Agriculture Land : Bita 28Aug - BAU
Agriculture Land : Data
Governance
0
-.075
-.15
-.225
-.3
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Dm
nl
Governance : Bita 28Aug - BAU
ornamental fishing
35.04
31.28
27.52
23.76
20
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Ton/Y
ear
ornamental fishing : Bita 28Aug - BAU
SAVi application to natural infrastructure
Fishing
Water quality
Forest
Agriculture
Population
Tourism
Biodiversity
Employment
Culture, education
GDP
SAVi application to natural infrastructure
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
A
B
Total avoided costs and benefits(A+B+C)
Societal avoided costs and benefits
(B+C)
Firm avoided costs and benefits
C
Direct cost reduction for public budget
items (e.g. health)
Total investment
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
SAVi application to natural infrastructure
We assess impacts across:
- Dimensions of development
- Sectors
- Economic actors
- Over time
- In space
Method: integrated cost benefit analysis
SAVi application to Canada
There are growing concerns over irregular rainfall patters and floods,
water quality, irrigation and water needs.
We use SAVi to:
• Identify, quantify and carry out an economic valuation of the assets and
the services provided by natural infrastructure.
• Estimate the potential cost of generating these same services with new,
built infrastructure.
• How much savings has natural infrastructure allowed to accrue?
• Is it worth conserving, restoring natural infrastructure or building
new infrastructure?
Stephenfield Reservoir and Pelly’s Lake
1
Scope of the analysis
What are the services
provided?
Stephenfield Reservoir and Pelly’s lake
1. Water supply2. Scenic beauty3. Nitrogen and Phosphorous uptake 4. Carbon sequestration5. Economic activity
1. Maintenance2. Water provisioning3. Cattail production
1. Water provisioning2. Tourism
1. Water supply2. Irrigation3. Water (nutrient) treatment4. Carbon sequestration
What is the cost of
providing these services?
What are the revenues
generated from the provision of
these services?
What is the cost of building alternative
(built) infrastructure to provide the same
services?
2 3
4
Results of the analysis
– Stephenfield ReservoirServices provided
stranded land
70,000
52,500
35,000
17,500
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Ha
stranded land : BAU 2018 11 07 AB7 CC
stranded land : BAU 2018 11 07 AB7 no CC
Water Stock Stephensfield
4000
3500
3000
2500
2000
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
Acr
eft
Water Stock Stephensfield : BAU 2018 11 07 AB7 CC
Water Stock Stephensfield : BAU 2018 11 07 AB7 no CC
Results of the analysis
– Stephenfield ReservoirServices provided
total annual n loadings
1.624 M
1.351 M
1.078 M
805,900
533,300
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Time (Year)
total annual n loadings : BAU 2018 11 07 AB7 CC
total annual n loadings : BAU 2018 11 07 AB7 no CC
total annual n loadings
N Loadings From Nonurban Atmospheric Deposition Rate
agricultural fertilizer total annual n loadings
n loadings from manure on pasture (no manure storage system)
n loadings from stormwater
n loadings in treated wastewater
urban indirect n loading from atmospheric deposition
Results of the analysis – Pelly’s LakeEconomic assessment
$0
$40,000
$80,000
$120,000
$160,000
$200,000
Cattail value added Basin maintenance
CA
D (
dis
cou
nte
d)
CBA item
Results of the analysis – Pelly’s LakeEconomic assessment
$-
$5
$10
$15
$20
$25
Cattail valueadded
Basinmaintenance
Irrigation Wastewater Carbonabatement
CA
D (
dis
cou
nte
d)
Mill
ion
s
CBA item
Results of the analysis – Pelly’s LakeEconomic assessment
$-
$10
$20
$30
$40
$50
$60
$70
$80C
AD
(d
isco
un
ted
)
Mill
ion
s
Revenues
Basin maintenance
Total O&M costs
Total capital costs of builtinfrastructure
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
Water licenses Tourism Reservoir O&M Wastewater Irrigation Water storage Carbon
CA
D (
un
dis
cou
nte
d)
Mill
ion
s
Results of the analysis
– Stephenfield Reservoir Economic assessment
Existing reservoir New built infrastructure
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
Water licenses Tourism Reservoir O&M Wastewater Irrigation Water storage Carbon
CA
D (
un
dis
cou
nte
d)
Mill
ion
s
Results of the analysis
– Stephenfield Reservoir Economic assessment
Total revenues (not profit)
Profit?
$16,000 / year
Capital and O&M: 50/50.
Likely higher –location!
Advanced options are
expensive and more capital
intensive
What storage buffer?
Carbon sequestration or emission
rductionExisting reservoir New built infrastructure
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Mill
ion
s
Reservoir O&M
Total O&M costs of builtinfrastructure (replacement)
Total capital cost of builtinfrastructure (replacement)
Results of the analysis
– Stephenfield Reservoir Economic assessment
The O&M cost of built infrastructure would be higher than the current O&M cost of
the reservoir and related natural infrastructure
The capital cost of built infrastructure, and the
resulting cost of financing, impact financial
considerations for new infrastructure projects
Interested in alternative scenario?
Interested in alternative scenario?
Conclusions
• Should we use the results presented, as is?
• Are the models, and results perfect?
• Does the approach support changing perspective?
• Does it stimulate more discussion?
• Does it help ask the right questions?
At this stage we aim at being “somewhat right” and inform the
debate than “being wrong with a high degree of
precision”!
Contact us today to find
out more about how SAVi can
help you
Oshani Perera, [email protected]
Madeline Stanley, [email protected]
Andrea Bassi, [email protected]
Georg Pallaske, [email protected]