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DOI: 10.1177/0042098012452321

2013 50: 169 originally published online 27 July 2012Urban StudPeter Tyler, Colin Warnock, Allan Provins and Bruno Lanz

Valuing the Benefits of Urban Regeneration

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Valuing the Benefits of Urban RegenerationPeter Tyler, Colin Warnock, Allan Provins and Bruno Lanz

[Paper first received, April 2011; in final form, March 2012]

Abstract

Although there have been many initiatives designed to regenerate relatively run-down and deprived parts of major urban areas, there have been surprisingly few

attempts to value their benefits. This article presents the findings of research that hassought to value the benefits of urban regeneration policies. The focus has been ondevising an approach that can build on the evidence provided from urban evalua-tions undertaken in many countries at the present time. It uses established tech-niques and statistical data sources that are fairly readily available. The evaluation ofurban policy is subject to substantial conceptual and measurement problems andthis should be recognised in interpreting valuation results and thus benefitcostratios. The article shows how the approach can be applied by drawing on recent UKevaluation evidence and data for England. It concludes by discussing where future

research might be directed.

1. Introduction

In recent years, many countries have sought

to regenerate the relatively depressed partsof their urban areas through a wide range of

policy initiatives. Regeneration interventionhas typically involved a series of discretion-

ary funding programmes, operating in par-allel to, although often seeking to influence,

the activities of mainstream public service

delivery. The type and scale of the interven-

tion have varied significantly.The experience in England is illustrative

with a rich array of initiatives particularly

in the inner cities where the consequences

of rapid and prolonged economic restruc-turing have been felt particularly severely.

Table 1 shows where mainly urban

Peter Tyler is in the Department of Land Economy, University of Cambridge, 19 Silver Street,Cambridge, CB3 9EP, UK. E-mail: [email protected].

Colin Warnock is with Cambridge Economic Associates, Cambridge, UK. E-mail: [email protected].

Allan Provins is with the Economics for the Environment Consultancy (eftec), 7375 MortimerStreet, London, W1W 7SQ, UK. E-mail: [email protected].

Bruno Lanz is in the Centre for Energy Policy and Economics, Zurich, Switzerland. E-mail:[email protected].

Urban Studiesat 5050(1) 169190, January 2013

0042-0980 Print/1360-063X Online 2012 Urban Studies Journal Limited

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regeneration expenditure was focused inEngland by the end of the past decade.Almost one-fifth was assigned to workless-ness, skills and development activities,

around 11 per cent went to improvingindustrial, commercial and infrastructureand the remainder to activities associatedwith homes, communities and the environ-

ment with the largest share assigned tohousing growth and improvement.

There has been much debate about whaturban regeneration initiatives have been

able to achieve. Views have varied signifi-cantly and some have questioned the effec-

tiveness of the measures adopted and, inthe most extreme cases, it has even been

argued that they do not provide a positive

rate of return to society and it might bebetter not to intervene at all. It is perhapsto state the obvious that the regenerationinitiatives deployed by governments should

be cost-effective and represent good valuefor money and for this reason there hasbeen widespread interest in evaluatingurban policy and addressing the conceptualand measurement problems that constrainevaluation (Nolan and Wong, 2004; Basle,

2006; Bartik, 2004). This article focuses onone such problem which appears to havereceived relatively little attention; namely,how the benefits of urban policy initiatives

that produce quite a diverse range of out-puts like jobs, training places and environ-

mental improvements can be valued and

Table 1. Estimate of core regeneration expenditure by activity, estimated average annualexpenditure in England (average spend over 2009/10 and 2010/11).

Regeneration activity million p.a. Percentage

Worklessness, skills and business development 1 949 19.2

Worklessness, skills and training (total) 629 6.2Helping employees and businesses with skills development in the workplace 259 2.6

Enterprise and business development (total) 1 320 13.0Promotion of business enterprise research and development 654 6.4

Industrial and commercial property and infrastructure 1 143 11.3Industrial and commercial property 761 7.5Infrastructure 382 3.8Homes, communities and the environment 7 052 69.5

Housing growth and improvement (total) 6 479 63.9New build 5 296 52.2Improving existing stock 1 017 10.0Demolition and new build 148 1.5Reducing homelessness 19 0.2

Community development 35 0.3Environmental improvement 430 4.2Neighbourhood renewal 109 1.1

Total 10 144 100

Sources: Authors analysis of expenditure data for 2009/10 and 2010/11 provided by Department forCommunities and Local Government; RDA Finance and Governance data published onDepartment for Business, Innovation and Skills website (February 2010) and Homes andCommunities Agency Corporate Plan (2009/10 to 2010/11).

170 PETER TYLERET AL.

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programme, which influence its success.Pawson and Tilley comment that

Programmes are thus shaped by a vision of

change and they succeed or fail according tothe veracity of that vision. Evaluation, by

these lights, has the task of testing out the

underlying programme theories. When one

evaluates realistically one always returns to

the core theories about how a programme is

supposed to work and then interrogates it

is that basic plan sound, plausible, durable,

practical and, above all, valid? (Pawson and

Tilley, 2004, p. 2).

Theory-based impact evaluation is also acentral part of the approach being adoptedby the European Commission to the eva-luation of the European Cohesion Policy inthe new programming round from 2014.Thus clearly

theory based evaluations can provide a pre-

cious and rare commodity, insights into whythings work, or dont. The main focus is not

a counterfactual (how things would have

been without) rather a theory of change

(how things should logically work to pro-

duce the desired change). The centrality of

the theory of change justifies calling this

approach theory-based impact evaluation

(European Commission, 2011, pp. 45).

It should also be recognised that the logicchain described earlier should considerboth the direct effects and indirect effectsof urban policy. The pathways and extentto which these indirect effects arise areoften not well understood and may be diffi-cult to quantify. Thus, by way of example,the provision of better work opportunitiesand associated higher incomes may havedirect effects in the labour market, but they

may also improve health and reduce crime(Thomson, 2008; Fujiwara, 2010; Dolanand Peasgood, 2007).

Having conceptualised how urban policesare expected to bring about change, the nextstep is to identify a research methodologythat can measure change and establish the

additionality of the outputs and outcomesproduced by the policy and, wherever possi-ble, place a value on them.

The starting point in most evaluations ofurban policy is to identify those economic,physical, social and environmental indica-tors that it is believed will be affected bypolicy and produce a baseline position thatcan help to establish a counterfactual posi-tion from which to measure change.

Estimating what has been the additionalityassociated with urban policy presents con-siderable challenges and it is wise not tounderstate them. Our understanding ofhow the urban system works is imperfect;there are many other factors that bringabout change besides the urban policyincluding the mainstream government poli-cies and it is difficult to disentangle these

effects from those of the policy. As onecommentator has remarked recently

There are daunting methodological problems

in identifying robust causal links between

interventions, programmes and policies and

desired outcomes. . The processes linking

funding allocations, policy priorities,

mechanisms and effects are likely to be indi-

rect, hard to identify and even harder to

measure. Hence the problem of attribu-tioni.e. the difficulty in identifying the

extent to which a particular intervention has

created a specific outcome (Saunders, 2011,

p. 89).

We can also expect that policy effects willtake time to emerge and there will be dis-continuities such that certain thresholds ofactivity may have to be reached before sig-

nificant impacts may occur. It is also diffi-cult to be clear as to what are the precisespatial boundaries of impact and the extent



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of interactions with other surroundingareas.

A common approach is to establish the

value of variables that are expected to be

affected by the policy in a policy off-periodand then monitor how their behaviourchanges relatively in the policy on-period.In the ideal case, nothing else would changebetween the two periods but the urbanpolicy. In practice, a number of both policy-and market-related influences do changeand some evaluators use formal econo-metric modelling to try and disentangle theeffects of these. Examples relating to theassessment of EU Structural and Cohesion

Funds include the Hermin model and theREMI policy insight model (Treyz andTreyz, 2004; Bradley et al., 2004; Bradley,

2007; and Leonardi, 2006).The evaluation of urban policy based

on formal model building is constrainedby many conceptual and measurementproblems and in some cases evaluators

have used survey-based approaches totarget carefully constructed question-naires on the people and businesses that it

is believed that the policy should impact,with a variety of control procedures inplace to avoid selection bias (Bartik,2004). Such approaches are underpinnedby strong monitoring frameworks(Edwardset al., 2007). Household surveyshave also been used to assess the compen-

sating change in income that equates tothe improvement in quality of life that apolicy produces drawing on techniques

like shadow pricing. A recent example isthe evaluation of the New Deal for

Communities programme in England(Lawlesset al., 2010).

2.1 Valuing the Benefits

The problems associated with evaluatingthe impacts of urban policies are clearly

very significant. In this study, we have

sought to build on the evidence currentlycommonly provided by evaluations of

urban policy in developing the valuationmethodology and we have also ensured that

findings are capable of being subject torobust and rigorous sensitivity analysis. Our

research suggests that, in seeking to valuethe benefits of urban policy and derive

aggregate summary benefitcost ratios, it is

perhaps best to focus on the additional out-puts produced by regeneration activityi.e.

job, training place, house, etc. Estimates ofthese are provided in most evaluations of

urban policy. Thus, by way of example, it isvery difficult to assess how a labour market

initiative has reduced worklessness (anoutcome) but we may, subject to the limita-

tions of evaluation research described ear-

lier, be able to establish some broad orderof magnitude as to the number of jobs it

has created (an output). On this basis, away forward is to establish the volume of

additional outputs that a unit of public

expenditure on urban regeneration initia-tives produces in the urban area by mainoutput type and then assign a value to these

additional outputs, recognising the time it

may take for them to build up and theirdurability.1 In the next section, we show

how the approach can be applied to Englishurban policy by drawing on evaluation evi-

dence and data for the UK over the period200009.

3. Applying the Approach toEngland

In order to demonstrate the approach, weobtained evaluation evidence for economic

development and regeneration programmes

undertaken in the UK over the period 2000to 2009. We also obtained data on wages,

GVA (gross value added) and land andproperty prices from a number of sources

identified in this article. The Appendix

VALUING REGENERATION BENEFITS 173


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describes the characteristics of the data thatwere assembled.

The data from evaluations in the UnitedKingdom in recent years enabled estimates

of the public-sector cost per additionaloutput from mainly urban regenerationpolicy expenditure over the period 200109. The evidence is categorised by themeand activity type, showing the mean as wellas a range based on the 95 per cent confi-dence interval in Table 2. By presenting thelow, average and high estimates, we canallow for a considerable possible variationin the potential reliability of the estimates.

3.1 Applying Unit Costs to GenerateAdditional Outputs

Evidence on the public-sector cost of anadditional output can then be applied to theamount of expenditure committed to pro-vide an indication of the amount of regen-eration outputs generated in the urban areasthat have been the focus of urban policy. Inprinciple, this procedure could be applied toany country in the world where the requiredurban evaluation evidence is available.

To show in the rest of this article howthese output data can be valued, we tookthe average annual expenditure in Englandover the period 200911 shown in Table 1and estimated the net additional outputsfrom one year of regeneration expenditure

in England, based on the low, average andhigh unit costs presented in Table 2. Table 3shows the estimated additional outputsfrom one year of recent expenditure byactivity type in England. The rest of thisarticle shows how it is possible to valuethese outputs and produce overall aggregatebenefitcost ratios for urban policy.

4. Assigning ValuesThe second part of the framework requireda monetary value to be assigned to each

additional output that was produced by theurban regeneration expenditure. Each of theregeneration activity types was examined toascertain how a value could be placed on

the outputs associated with the expenditureunder that category.

In relation to worklessness, skills andtraining, the approach was to consider thebenefits provided by urban regenerationinitiatives as they get people into work andenhance their skills. The evidence from areview of what is quite an extensive litera-ture points to the benefits being reflected inincreased likelihood of an individual gain-

ing employment and higher earnings. Somework (Mcintosh and Vignoles, 2000;Powdthavee and Vignoles, 2006; McIntosh,2004; Felstead et al., 2007; Dickerson andVignoles, 2007) has been able to relate skillenhancement to the probability of employ-ment and how progressions through skilllevels enhance earnings. Research has beenundertaken by the Department of Work

and Pensions in England on how the labourmarket benefits that arise from policymight be valued (DWP, 2010; Greenbergand Knight, 2007; Adam et al., 2008)including any indirect effects that may arisefrom getting people into work most notablyin the areas of reduced crime and enhancedhealth. The recent work of Fujiwara (2010;DWP, 2010) is of great value in this respectand the present research was able to draw

on this research.When it comes to enterprise and busi-

ness development, there are perhaps fewerconceptual problems in valuing benefitswith the focus being on helping businessesto start up or expand in terms of turnover,leading to the creation of employment and,in some cases, enhanced productivity. Manyevaluations measure these principal out-puts. Employment and productivity gains

can be valued through gross value added(GVA), or economic output, with ratios ofGVA per employee derived from published



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Table 2. Public-sector cost per additional output for urban regeneration in England, 2001/09(2009/10 prices)

Activity type Unit cost measure Low()

Average()

High()

Theme 1. Worklessness, skills and business developmentTackling worklessness Public-sector cost per net additional

positive outcome into employment7 230 13 098 18 965

Skills and training Public-sector cost per net skills assistleading to NVQ Level 2 +

5 175 8 690 12 204

General business support Public-sector cost per net additional job 5 873 12 329 18 785Start-up and spin-outs Public-sector cost per net additional job 1 849 9 664 17 479Promotion of businessenterprise research anddevelopment

Public-sector cost per net additional job 34 029 54 802 75 574

Theme 2. Industrial and commercial propertyIndustrial and commercialproperty

Public-sector cost per net additional job 18 981 31 788 48 024

Theme 3. Homes, communities and environmentNew build Public-sector cost per net additional

dwelling57 276 74 113 90 949

Improving existing housingstock

Public-sector cost per net additionaldwelling refurbished

8 800 17 750 26 699

Acquisition, demolition andnew build

Public-sector cost per net additionaldwelling replaced

93 479 110 316 127 152

Communities: volunteering Public-sector cost per net additionalvolunteer

299 929 1 558

Communities: investing incommunity organisations(existing enterprises)

Public-sector cost per net additionalsocial enterprise assist

7 659 12 924 18 188

Communities: investing incommunity organisations(new enterprises)

5 019 14 322 23 624

Environmental: open spaceimproved (hectares)

Public-sector cost per net additionalhectare of open space improved

71 302 117 085 188 387

Environmental: new public

realm (hectares)

Public-sector cost per net additional

hectare of new public realm provided

600 000 1 500 000 3 000 000

Neighbourhood renewal It is not possible to suggest a single unitcost measure given the breadth of thisactivity

Note: The table represents the authors analysis of published and unpublished evaluations commis-sioned between 2000 and 2009 by Englands Regional Development Agencies, Scottish Enterprise,the Department for Communities and Local Government and the Department for Business,Innovation and Skills; open space and public realm unit costs informed by discussions with land-scape architects and published data on local authority planning contributions requirements. Pleasesee the appendix.Source: http://www.communities.gov.uk/documents/regeneration/pdf/1795633.pdf.



8/10/2019 Urban Stud 2013 Tyler 169 90

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data (for example, Regional Accounts, the

Annual Business Inquiry and the Business

Register and Employment Survey in the

UK).

While this basic conceptual approach isgenerally accepted (DTI, 2006; BIS, 2009b,2009c), and ratios of GVA per employee are

published at different spatial levels and for

different sectors, there remain challenging

measurement issues. First, ideally one would

approach the valuation process through a

detailed analysis of the particular sectorswhich benefit. Advanced manufacturing sec-

tors will have a much higher ratio of GVA

Table 3. Estimated additional outputs from one year of mainly urban regeneration expenditurein England

Activity type Output measure Net additional outputs

Low unitcost Averageunit cost Highunit cost

Worklessness, skills and business developmentTackling worklessness Net additional positive

outcomes into employment48 200 26 600 18 400

Skills and training Net skills assists leading toNVQ Level 2 +

50 000 29 800 21 200

General business support Net additional jobs 70 600 33 600 22 000Start-up and spin-outs Net additional jobs 106 200 20 300 11 200Business enterprise research &

development

Net additional jobs 19 200 11 900 8 600

Industrial and commercial propertyIndustrial and commercialproperty

Net additional jobs 40 100 23 900 15 800

Homes, communities and environmentNew build Net additional dwellings 92 400 71 400 58 200

Net additional jobs enabled bynew housing

24 400 18 800 15 300

Housing improvement Net additional dwellingsrefurbished

115 500 57 200 38 000

Acquisition, demolition andnew build Net additional dwellings(following acquisition anddemolition)

1 500 1 300 1 100

Communities: volunteering Net additional volunteers 11 700 3 700 2 200Communities: investing incommunity organisations

Net additional social enterpriseassists

1 600 800 500

Environmental: open spaceimproved (hectares)

Net additional hectares of openspace improved

1 400 800 500

Environmental: new publicrealm (hectares)

Net additional hectares of newpublic realm provided

470 190 90

Neighbourhood renewal It is not possible to suggest a

single output measure giventhe breadth of this activity

N/A N/A N/A

Source: http://www.communities.gov.uk/documents/regeneration/pdf/1795633.pdf.



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per employee than, for example, retailing.Where the sectors of employment cannot beascertained, the use of the average ratio isunderstandable, but at the level of individual

projects and programmes, sector data enablea more sophisticated analysis.

Secondly, even within a given sector,there is a legitimate question about whetherit is appropriate to take the average ratio ofGVA per employee when the jobs created orsafeguarded through intervention may be inrelatively low-skilled occupations withinthat sector. This is where more in-depthevaluation work pays dividends in providing

clear evidence which can be used to refinethe valuation approach.

The valuation of regeneration activityrelating to industrial and commercial prop-erty and infrastructure has tended to drawupon two different approaches. The firstconsiders the production benefits associatedwith the end use of industrial and commer-cial property linked to employment and

gross value added. The second uses theincrease in value associated with the regen-eration activity using techniques like hedo-nic pricing on which there is a substantialliterature. The former approach was used inour research and estimated the total employ-ment accommodated in the industrial andcommercial property that was regarded asadditional as a result of the urban regenera-tion activity and then assigning GVA

employment ratios in the same way asdescribed earlier for enterprise and businessdevelopment.

The valuation of urban housing growthand improvement has been one of the morechallenging areas of the research because ofthe diversity of activity and the fact that, invaluation terms, different activities have thepotential to generate production benefits forthe economy as well as consumption bene-

fits. Table 4 summarises the diversity of ben-efit types and valuation approaches adoptedfor different housing interventions.

The valuation approach recognised thepossibility that there should be an explicitrecognition of the production benefits ofnew housing which arise through its role in

supporting wider economic growth(Munro, 1993). While a proportion of newhousing provision is planned in response tochanges in household composition, a pro-portion will enable net in-migration to anarea. Not all of these households will workin the regeneration target area (a propor-tion will out-commute), but the residualwill facilitate economic growth. It is possi-ble to estimate the scale of these effects and

then use data on household size, working-age population, employment rates and theGVAemployee ratios (Regeneris andOxford Economics, 2010). Clearly thekey variables involved are highly sensitiveto the local context, including housingmarket and labour market characteristics,and the valuation approach can adopt abespoke approach to estimation drawing

on local data that reflect the characteristicsof individual projects or programmes andthe spatial areas that they are intended tobenefit.

There has been a considerable amountof research into how to value communitydevelopment activity (Gaskin and Dobson,1997; Gaskin, 1999; Mayer, 2003; Handyand Srinivasan, 2004; Egerton and Killian,2006; Mook et al., 2007; Pho, 2008;

Bowman, 2009; Brown, 1999). For commu-nity development, our preferred approachto valuation has been to use shadow pricingand volunteer time has been valued usingthe English minimum wage as a proxy forthe value of the input. This has been trans-lated into gross value added (GVA) usingestablished ratios for employment costs toGVA for sectors that accord with activitiesdelivered by many social enterprises. For

investment in community organisations,estimates of the social GVA arising frominvestment in community organisations



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Table

4.

Housinggrowthandimprovement:maintypesofbenefit

anddisbenefit A

ctivitytype

Newbuild

A

cquisition,d

emolitionandnewbuild

Housingimprovement

(existingstock)

Keyconsu

mptionbenefits

Valueup

lift(private

consump

tionbenefits)from

neworim

provedhousing

Planningpermissionfornewhousingincreaseslandvaluesthestream

ofprivateconsumptionbenefitsfrom

housing(shelter,warmth,etc.)are

capitalisedintheassetvalue

Improvementtohouseswilltendto

increasetheassetvaluereflectinga

gaininprivateconsum

ptionbenefits

Consumptionbenefitsor

disbenefits(society)fromgain

orlossofamenity

Chan

geinlanduse(for

exam

ple,fromgreenfieldto

housing)resultsinalossof

amen

ityvaluetosocietyasa

whole

R

emovalofderelictpropertiesresults

inanamenitygaintosocietyasa

w

hole

N/A

Consumptionbenefits(society)

fromreducedcarbonemissions

Regenerationinterventions

maysupportnewhomeswith

reducedlevelofCO

2

emissions

comparedwithmarketdelivery

P

otentialenergyefficiencygains

for

r

eplacementstockifthisismore

e

nergyefficientthanthestockit

r

eplaces

Potentialreductionin

CO

2

emissions

fromimprovedenergyefficiencyif

thisisacomponentofthe

refurbishmentactivity

Consumptionbenefits

(private)

fromimproved

security,healthandwarmth

N/A:

nomaterialgain,except

wherematerialdifferences

throu

ghadditionalityrelating

tosecurity(andpotentially

long-termcareviaLifetime

Hom

es)

P

otentialgainwhereinferiorstockis

r

eplacedwithmodernhousingstock

Gainforrefurbishedstock(for

example,DecentHom

esorother

retrofitactivity)

Keyproductionbenefits

Productionbenefittothe

economy

:employmentenabled

bynewhousingandassociated

transportinfrastructure

Particularlyinhousinggrowth

areas

(butalsoapplicabletoall

newhousingactivity)

supportingemployment

grow

ththroughincreasein

labou

rsupply

P

otentialgainwherereplacemen

t

s

tockseeksdeliberatelytoreprofile

h

ousingchoice(quality,type,tenure)

tosupporteconomicdevelopment

Lesslikely,butpotentialgainwhere

materialimprovementinquality,

typeortenureexplicit

lytosupport

economicdevelopmen

t

Source:http://www.communities.gov.uk/documents/regeneration/pdf/17

95633.pdf.



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has been based on the level of local incomegenerated and regarded as turnover.

Urban regeneration enhances environ-mental amenity through open space and

enhancements to the public realm and canbe valued using a revealed preferenceapproach. In the case of urban regenera-tion, hedonic pricing has found commonuse since property prices are influenced bychanges to local amenity and the publicrealm. Stated preference methods such ascontingent valuation and choice experi-ments have in fact tended also to be usedwidely since they can provide valuations for

outcomes that are not well represented byproperty markets or recreation demandbehaviour (in the case of travel cost meth-ods). In this research, the valuation of thebenefits of open space and public realmwas approached by using an experimentalhousehold stated preference survey admi-nistered in Seaham, a town in north-eastEngland.2

Valuing the benefits associated withneighbourhood improvement has presentedparticular challenges. A review of existingresearch showed that probably the besttechnique available with which to monetisethe impact of neighbourhood renewal onresidents is to use shadow pricing. Thereare only a limited number of exampleswhere shadow pricing has been used tovalue such outcomes. Moore (2006) used

data for 2003 to estimate the value of feelingvery or fairly unsafe walking alone in thelocal area after dark to be approximately9400 in household income.3 Powdthavee(2008) found that an increase in the level ofsocial involvements is worth up to an extra85 000 per year in per capita householdincome. A third approach is adopted in therecent national evaluation of the New Dealfor Communities (DCLG, 2010) which is

the most recent and extensive example ofthe application of the technique at theneighbourhood level in England. To

illustrate the broad approach, we appliedfindings from the recent national evaluationof NDC which used shadow pricing tech-niques to monetise selected outcomes.

Table 5 summarises the valuationapproach and key data sources used in theresearch to value the benefits of urbanregeneration in England.

4.1 Allowing for Build-up of Benefit andDuration

To value the benefits associated with urbanregeneration, it was also necessary to allow

for the time it takes for them to build upand how long they last. The review of UK-based evaluation evidence described in theAppendix provided some valuable insightand Table 6 shows the values that emerged.

5. BenefitCost Ratios for UrbanRegeneration in England

To illustrate how the valuation approachesdescribed in the previous section could beused, we applied them to the evidence onnet additional outputs associated with themainly urban regeneration expenditure inEngland identified in Table 1. In practice,the valuation approaches could be appliedto similar data from any country that hasevaluated their urban policies and producedquantitative estimates of net outputs as we

discussed in section 2. Because the expendi-ture on urban policy generates a stream ofbenefits over time we discounted to a pres-ent value (PV) using HM Treasurys SocialTime Preference Rate of 3.5 per cent (HMTreasury, 2008). The PV of benefits wasthen divided by the annual public expendi-ture that generated the benefits to calculatea benefitcost ratio (BCR).

Table 7 brings together the BCRs for

each of the activities, drawing on the meth-ods and evidence set out in section 4. Thecentral results are based on average unit



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Table

5.

Valuationapproachanddatasources

Activitytypes

Whatprincipaloutputs

andoutcomeswillbe

valued?

Valuationapproach

Whatdatasourc

esarebeing

usedtoderiveregeneration

outputsando

utcomes?

Whatdatasourcesarebeing

usedtoderivevalues?

Worklessn

ess,skillsandtraining

Helpingpeopleto

becomew

ork-ready

andhelpingpeopleinto

work(including

re-entran

ts)

Netindividualsinto

work

Useofmarket-base

ddata

throughrevealedpreference

techniques

Primarydatafrom

existing

evaluationsshowing:unitcost

whichenablesthe

numberof

beneficiariestobe

derived;net

positiveoutcomesinto

employment

Dataonaverage

earnings

(entrantsintowork)from:the

AnnualSurveyo

fHoursand

Earnings;theLabourForce

Survey/AnnualP

opulation

Survey

Helpingemployeesand

businesse

swithskills

developm

entinthe

workplac

e

Netimprovem

entsin

qualificationb

yNVQ

Level

Useofmarket-base

ddata


techniques

Primarydatafrom

existing

evaluationsshowing:unitcost

whichenablesthe

numberof

beneficiariestobe

derived;net

improvementsin

qualifications

Dataonearningsimprovement

relatedtoqualifications:Centre

forEconomicsin

Education

(LSE)

Enterpriseandbusinessdevelopment

Generals

upportfor

businessgrowthand

competitiveness

Netemployment

creation

Useofmarket-base

ddata


techniques

Primarydatafrom

existing

evaluationsshowingnet

additionalfull-tim

eequivalent

(FTE)jobscreated/safeguarded

GVAperemployeedatafrom

AnnualBusiness

Inquiry

Industrialandcommercialproperty

Industria

land

commerc

ialproperty

developm

ent

Netemployment

creation

Useofmarket-base

ddata


techniques

Primarydatafrom

existing

evaluationsshowingnet

additionalfull-tim

eequivalent

(FTE)jobscreated/safeguarded

GVAperemployeedatafrom

AnnualBusiness

Inquiry

(continued)



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Table

5.

(Continued)

Activitytypes

Whatprincip

aloutputs

andoutcomeswillbe

value

d?

Valuationapproach



outputsando

utcomes?


usedtoderivevalues?

Housinggrowthandimprovement

Newbuild

Netnewdwellings

Useofmarket-baseddata

throughrevealedp

reference

techniques

Adjustingforlossofamenity

valuederivedusingstated

preferencetechniques

Costtosocietyofc

arbon

emissionsrevealed

through

tradedanduntradedpriceof

carbon(tCO

2)

Primarydatafrom

appraisals

(HCA)andexistingevaluations

(forexample,HM

R)on

relationshipbetween

expenditureand:netadditional

dwellings;netadd

itional

reductionsincarb

onsavings

(whereknown);n

etadditional

FTEjobsenabled

throughthe

creationofnewhousing

ValuationOffice

Agency

(VOA)dataonlandprices;

amenityvaluesb

ylandtype

fromEntec/eftec

studyfor

ODPM/Defra;tradedand

untradedpriceo

fcarbon

(DECC);GVA/e

mployee

(AnnualBusinessInquiry)

ImprovingexistingstockNetimprove-mentsto

existingdwellings


throughrevealedp

reference

techniques




Costtosocietyofc

arbon

emissionsrevealed

through


carbon(tCO

2)

Primarydatafrom

appraisals


(forexample,HM

R)on

relationshipbetween

expenditureandn

etadditional

dwellingsrefurbis

hedandnet

additionalreductionsin

carbonsavings(w

hereknown)

ValuationOffice

Agency

(VOA)dataonlandprices:

amenityvaluesb

ylandtype

fromEntec/eftec

studyfor

ODPM/Defra;tradedand

untradedpriceo

fcarbon

(DECC)

Demolition/newbuild

Netnewdwellings


throughrevealedp

reference

techniques




Costtosocietyofc

arbon

emissionsrevealed

through


carbon(tCO

2)

Primarydatafrom

appraisals


(forexample,HM

R)on

relationshipbetween

expenditureandn

etadditional

dwellingsfollowin

gacquisition

anddemolition

ValuationOffice

Agency

(VOA)dataonlandprices;

amenityvaluesb

ylandtype

fromEntec/eftec

studyfor

ODPM/Defra

(continued)



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Table

5.

(Continued)

Activityt

ypes

Whatprincip

aloutputs

andoutcom

eswillbe

value

d?

Valuationapproach



outputsandoutcomes?

Whatdatasou

rcesarebeing

usedtoderivevalues?

Commun

itydevelopment

Volunteering

Netadditiona

l

volunteers

Shadowpricingtechniques,

usingwagesaspro

xyfor

benefits

InstituteforVolu

nteering

Researchongrosscostper

grossvolunteer;e

valuation

evidenceonadditionality;

CitizenshipSurve

yonhoursof

volunteering

Minimumhourlywagex1.21

fornon-wagelabourcosts;

employmentcoststoGVAvia

GVA/employeeforhealthand

socialcareactivities(Annual

BusinessInquiry)

Investmentin

commun

ity

organisations

Netadditiona

lsocial

enterpriseassists

Shadowpricingtechniques,

usinglocalincome

generated

asproxyforturnover

OfficeforThirdS

ectordataon

averageturnover,supportfor

newstartsvsexisting

enterprisesandevaluation

evidenceonaverageadditional

benefitstoturnover

TurnovertoGV

AviaGVA/

turnoverratiosforhealth,

socialcare,educ

ationand

otherserviceac

tivities

Openspa

ceandpublicrealm

Openspace

Netadditiona

lhectares

ofopenspace

orpublic

realmprovide

d

Applicationofvalu

esderived

usingstatedpreference

techniquescontingent

valuationandchoice

experiments

Rangeofmonitoringand

evaluationeviden

ceonunit

costsperhectare;

all

improvementsco

nsidered

whollyadditional,sincethey

representpublicgoods

Statedpreferenc

epilotsurvey

undertakenaspartofthis

research

Publicre

alm

Source:h

ttp://www.communities.gov.uk/documents/regeneration/pdf/1795633.pdf.



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Table

6.

Valuespernetadditionaloutputperannum

andbuild-up

anddurationofbenefits

ActivityT

ype

Valuationbasis

Outputmeasurethat

valuesareappliedto

Centralview

Cautious

view

Value

pernet

additional

outputp.a.

()

Build-

up(years)

Duration

(years)

Valuepernet

additional

output

p.a.()

Build-up

(years)

Duration

(years)

Theme1.W

orklessness,skillsandbusinessdevelopment

Tackling

worklessness

Directrealres

ourcebenefits

(earnings)plu

sindirect

shadowpricin

gofcrimeand

healthreducti

ons

Positiveoutc

omeinto

employment

13814

1

1

13814

1

1

Skillsandtraining

Productionbenefit:GVAuplift

arisingfromskills

enhancement

Skillsassistleadingto

NVQLevel2

+

5845

1

3

5845

1

2

GeneralbusinesssupportProductionbenefit:GVAper

employee

Full-timeequivalent

job(FTE)

35000

1

3

33000

1

2

Start-upsandspin-outs

Productionbenefit:GVAper

employee

Full-timeequivalent

job(FTE)

30000

1

3

30000

1

2

Business

enterprise

research&development


employee

Full-timeequivalent

job(FTE)

35000

3

3

33000

3

2

Theme2.I

ndustrialandcommercialproperty

Industria

land

commercialproperty


employee

Full-timeequivalent

job(FTE)

35000

3

10

33000

3

5

Theme3.H

omes,c

ommunitiesandenviro

nment

Newbuildhousing

Consumption

benefits:

bettermentin

privateasset

valueminusd

isamenityto

society

Dwelling

29159

0

1

29159

0

1

(continued)



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Table

6.

(Continued)

ActivityT

ype

Valuationbasis

Outputmeasurethat

valuesareappliedto

Centralview

Cautious

view

Value

pernet

additional

outputp.a.

()

Build-

up(years)

Duration

(years)

Valuepernet

additional

output

p.a.()

Build-up

(years)

Duration

(years)

Productionbenefitof

employmentfacilitatedbynew

housing:GVA

pernet

additionaldwelling

Dwelling

9249

3

30

8721

3

15

Housing

improvement

Consumption

benefits:

bettermentin

privateasset

valueminusd

isamenityto

society

Dwellingimproved

2916

0

1

2916

0

1

Consumption

benefits:social

benefitsofimproved

housingnot

expressedper

netoutputs

eebenefitcost

ratio

Source:http://www.communities.gov.uk/documents/regeneration/pdf/1795633.pdf.



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costsi.e. the average shown in Table 3

but there is clearly plenty of scope for aconsiderable amount of sensitivity analysis

by changing the average unit cost ratio and

we also show a cautious estimate.Taking the cautious estimate, the approach

suggests an overall benefitcost ratio associ-

ated with regeneration expenditure to be 2.4and thus a significant pay-back in realresource terms to society from urban

regeneration policy in England. The returns

from business development and land andproperty regeneration are particularly high. It

is possible to show how comparisons can be

made with other Government programmes

in England during the study period. Thus, by

way of example, the Welfare Programme

Pathways to Work, for incapacity benefit clai-mants, reports a benefitcost ratio of 1.55.

The Family Intervention Work Programme

Table 7. Benefitcost ratios by activity type: central and cautious valuation applied to outputsderived using average unit costs

Activity type Valuation basis Centralvaluation

Cautiousvaluation

Theme 1. Worklessness, skills and business developmentTackling worklessness Consumption benefits (earnings) plus

indirect crime and health benefits1.1 1.1

Skills and training Production benefit: earnings uplift arisingfrom skills enhancement

2.2 1.6

General business support Production benefit: GVA 9.4 6.4Start-ups and spin-outs Production benefit: GVA 10.2 7.4Business enterprise researchand development

Production benefit: GVA 2.6 1.9

Theme 2. Industrial and commercial propertyIndustrial and commercialproperty

Production benefit: GVA 7.9 5.9

Theme 3. Homes, communities and environmentNew-build housing Consumption (property betterment) and

production benefits (GVA)2.8 1.9

Housing improvement Consumption benefits: property bettermentand social benefits

2.0 1.3

Acquisition, demolition andnew build

Consumption benefits: property bettermentand visual amenity enhancement

5.7 3.9

Communities: volunteering Shadow price of volunteer inputs:

minimum wage

1.1 1.1

Communities: investing incommunity organisations

Shadow price of social enterprise GVA 1.9 1.3

Environmental: open space Consumption benefits: willingness to pay 2.8 1.8Environmental: public realm Consumption benefits: willingness to pay 1.5 1.0Neighbourhood renewal Consumption benefits: value transfer from

NDC evaluation which adopted shadowpricing approach

3.0 3.0

All activity types (real resource) 3.5 2.4

Source: http://www.communities.gov.uk/documents/regeneration/pdf/1795633.pdf.



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Tomorrows People had a benefitcost ratioin these terms of 1.32.

5.1 The Effect of Applying the Approach in

Different Spatial Contexts

Clearly, market values such as Averageearnings, GVA and land and propertyvalues which are assigned to net additionaloutputs will vary depending on the localevaluation context. In England, forexampleexcluding London, where highlevels of GVA per employee are dominatedby the financial services sectorthe

research found that GVA per employeeranged from just under 34 200 in theNorth East to approximately 42 500 in theSouth East (2007 prices). Variations in landand property values are even more extreme.House prices across the English regions(again outside London) in 2009 rangedfrom 140 000 in the North East to253 900 in the South East. These rangesdemonstrate the importance in costbenefitanalysis of using context-specific informa-tion wherever this is available. Thus, at thelocal or even neighbourhood level whereregeneration interventions are taking place,the market values (and thus the resultingbenefitcost ratios) will be highly sensitiveto factors such as supply, demand, scale,type and quality as well as (in the case ofearnings or GVA) the sectors and occupa-

tions in which employment opportunitiesare being created or taken up.

6. Future Research

The overall objective of the research dis-cussed in this article has been to progressthinking on how the benefits of urbanregeneration can be valued and summed toproduce benefitcost ratios that can be

compared with similar ratios for other pro-grammes of government, as well as to allowdifferent approaches to urban intervention

to be compared and contrasted both withinand between countries. The emphasis hasbeen on devising an approach that canbuild on the evidence provided from urban

evaluations in many countries at the pres-ent time. We have deliberately sought touse fairly well established techniques likestated preference when it comes to valuingincreases in environmental amenity and usestatistical data sources that are frequentlyreadily available.

We should not lose sight of the consider-able conceptual and measurement problemsthat evaluations of urban policy are subject

to and thus the limitations of evaluationevidence that can only ever be regarded asproviding broad orders of magnitude. Wehave shown how the valuation estimatescan be subject to sensitivity analysis thatenables the effects of changes in core eva-luation evidence and contextual informa-tion on benefitcost ratios to be identifiedin a clear and transparent manner.

Our research suggests that in many casesit is possible to value the outputs from urbanregeneration using market-based data. Inother cases, such as in the valuation of envi-ronmental amenity, it is necessary to usevaluation techniques that are now becomingwell established.

Over the past 20 years, urban policy-makers have devised an increasinglysophisticated set of interventions with a

correspondingly diverse range of physical,economic and social outputs and outcomes.However, with increasing constraints onpublic expenditure, it would now seemmore important than ever that urbanpolicy-makers be able to fight their cornerin defending the value of urban interven-tions compared with other things that gov-ernment spends money on. In England, forexample, funding on urban regeneration

has now been reduced considerably(House of Commons Select Committee,2011).



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Against this background, it is important

to be able to demonstrate clearly the value tosociety from new initiatives and it is hoped

that the research presented in this article will

stimulate further research in this importantarea.

Notes

1. The outputs are jobs etc. generated by the

urban regeneration policy in the defined

urban area.

2. For a more detailed account, including the

experimental design, econometric analysis,

results and validity testing, see: http://www.communities.gov.uk/documents/regene

ration/pdf/1795702.pdf; and Provins and

Lanz (2011).

3. The study estimated the value at e13 538

which is approximately 9400 at 2003

exchange rates.

Funding Statement

The findings presented in this article have

been derived as part of a programme ofresearch designed to value the benefits of

regeneration and funded by the Department

for Communities and Local Government. The

views expressed in the article are those of the

authors alone.

Acknowledgements

The authors are grateful for the assistance of

other members of the research team thatincluded Peter Wells, Angela Brennan, Ian Cole,

Jan Gilbertson, Tony Gore, Richard Crisp, Anne

Green, Mike May-Gillings and Zara Phang.

They are also grateful to an Expert Advisory

Panel that comprised Professor Ken Willis

(Newcastle University), Professor Jennifer

Roberts (University of Sheffield), Professor

Roger Bowles (York University), Dr Daniel

Graham (Imperial College), Bobby Duffy

(NOP/MORI) and a large number of officers

from across UK government departments fortheir help, support and expertise throughout

the course of the work.

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AppendixEvaluation Evidence for the UK over

the Period 200010

Evaluation evidence for the UK was selected onthe basis of a number of key criteria that cap-tured the diversity of urban policy according todesired impacts in labour, land, property, hous-ing and environmental impacts. We also cate-gorised the evidence by evaluation methodologyand relevant geographies.

In total, a population of 649 UK evaluationswas identified. These were evaluations commis-sioned by the Department for Communities andLocal Government, the Department of Business,Innovation and Skills, the Regional DevelopmentAgencies in England and Scottish Enterprise. Wealso reviewed UK-wide evaluation evidence heldon an on-line library by the Office for

Programme and Project Advice and Training.The evaluations were undertaken by a wide anddiverse range of evaluators from across academiaand the private sector.

These evaluations were reviewed in terms oftheir ability to provide quantitative evaluationevidence on the net outputs generated by policybased on a consistent approach to the measure-ment of policy outputs and their additionality.Our review found much of the evidence to beeither qualitative in nature, such as processreviews, which did not provide sufficient quan-titative evidence on effectiveness and efficiency.Some 280 evaluations had adopted a broadlyconsistent approach to measurement. Thesegenerated a total of 300 complete observationsencompassing all elements of the measurementof additionality and the calculation of a netadditionality ratio and thus key data whichwould support the calculation of the public-sector cost per additional unit output. Theircharacteristics are presented at Table A1.

In order to progress the research, we utilisedall of the available quantitative observations fromthe evidence review and supplemented this withother data on unit cost from a range of sources,including other databases including a unit-costanalysis of housing investments undertaken bythe Homes and Communities Agency in Englandand a sample of evidence on unit costs associatedwith the provision of public open space directlysourced from seven local authorities in England.Further information on additionality parameterswas obtained from BIS (2009a).

Table A1. Characteristics of quantitative evaluation evidence reviewed by the authorsCharacteristic Number of quantitative net additionality

observations from the evidence review

Regional(n = 226)

Sub-regional(n = 74)

Activity categoryBusiness development and competitiveness 121 35Regeneration through physical infrastructure 66 18People and skills 66 22

Type of interventionProgramme 134 46Project 92 28


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Urban Stud 2013 Tyler 169 90