Methods for calculating economic benefits
Published 3 March 2026
Applies to England
© Crown copyright 2026
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/methods-for-calculating-economic-benefits/methods-for-calculating-economic-benefits
1. Methods for simple economic benefits calculations
You can use the Rapid Appraisal Tool for Economics (RATE) spreadsheet to perform simple economic benefits calculations. It applies if your project plans to:
- refurbish or replace existing assets
- build new assets
- reduce surface water flood risk through sustainable drainage
- reduce coastal erosion risk
- include natural flood management (NFM) alongside hard‑engineered flood or coastal defences
- install a standalone coastal NFM project under £3 million
The spreadsheet uses datasets from the Multi-Coloured Manual (MCM). This means you must have a valid MCM licence to use the tool.
If you already have an MCM licence, you should email evidence of this to: FCRM_Investment@environment-agency.gov.uk. We will then send you the tool and user guide.
The RATE tool calculates the economic benefits from reducing the risk of flooding to:
- residential and non-residential property
- mental health
- vehicle damages
- emergency services costs
- evacuation costs
- indirect business disruption costs
- intangible stress impacts
To calculate the wider benefits of your project you can use the Environment Historic Outcome Valuation Guidance (EHOV). The EHOV tool calculates the economic benefits of FCERM investment on the natural and historic environment.
This includes:
- regulating services, for example, air pollutant removal, carbon sequestration and biodiversity
- forestry and agriculture, for example, timber and food provision
- water quality
- recreation
The economic benefits of investment for agriculture can also be calculated using the method in chapter 9 of the Multi-Coloured Handbook.
The economic benefits from the RATE and EHOV tools include the range of benefits to people, property, businesses and infrastructure from increased resilience to flooding or erosion. The outputs from both tools can be added to any agricultural benefits to calculate the present value benefits for a project.
Economic benefits data may also be available from previous studies or strategy documents.
2. Methods for standalone NFM projects reducing the risk of flooding from rivers and surface water
Standalone NFM projects under £3 million that aim to reduce the risk of flooding from rivers and surface water should use the Environment Agency’s National NFM benefits method to calculate flood risk reduction and wider benefits. This already accounts for Environment Historic Outcome Valuation Guidance (EHOV) methods and therefore does not need to be included separately.
3. Methods for property flood resilience projects
The present value whole life benefits (PVB) per property of PFR on eligible residential properties are set out in table 1. These values are suitable for properties with:
- flooding frequency of 5% (1 in 20 each year) and more frequent
- flood depths less than 60 cm
Table 1: benefits per property of PFR
| House type | PVB for upland, steep river catchments or tidal flooding | PVB for lowland areas with wide floodplain or surface water flooding |
|---|---|---|
| Detached | £43,500 | £39,904 |
| Semi-detached | £33,924 | £33,068 |
| Terrace | £32,373 | £31,617 |
| Bungalow | £40,661 | £38,502 |
| Flat | £32,754 | £31,685 |
The numbers presented here have been uplifted to a 2026-27 price date using the GDP deflator.