Development in the last few decades has often treated water as a decorative asset, its value associated with the opportunity to increase sale prices. Today, practitioners know water creates value beyond this, but evidence and guidance for valuing urban waterways is limited.
As part of FoL’s Making the Most of London’s Waterways project, cross-sector practitioners gathered at host Avison Young to discuss how different stakeholders value water; what’s missing from valuation processes; implications for long-term funding; and issues relating to cross-border, multi-stakeholder working. A Chatham House summary of the event is below.
The current valuation landscape
Research & guidance
Academic research has attempted to quantify the effect of waterways on property values. One literature review, of research which used a hedonic pricing method, found that impacts on property values vary depending on the city and type of waterway. Globally the uplift is <1% to 28%, though in Europe this decreases to 2% to 5%. A recent UK-specific study based on a willingness to pay method suggests that London’s canalside price premium is 2.8%, but generally it only applies within 100m.
Organisations with a remit over London’s waterways have carried out research beyond property values, but more work is needed to corroborate findings:
- The Canal & River Trust commissioned research into the wellbeing value of its network, finding that frequent waterway visitors are more satisfied with their lives than infrequent users, and that the average trip to a waterway had benefit worth £6.63.
- The Environment Agency estimates that navigational and recreational assets on the Thames have a combined maintenance cost of £3.4m annually. Using a willingness to pay model, the EA found Thames users would pay £133m per year to maintain assets and £96m per year to improve them to the best possible condition. Qualitative elements of the study found that respondents most valued access to the riverbank.
- An Oxford Economics study for the Port of London Authority gave a ‘conservative estimate’ of £132m for the value of sports and recreation associated with the Thames. Another PLA study to calculate the economic value of the Thames suggests the river yields 30,500 jobs and has a £2.727bn GVA annually.
Natural Capital Accounting (or the ‘ecosystem services approach’) offers a standardised method for valuing aspects like biodiversity and oxygen production, but it hasn’t been widely applied to waterways. An Arup study using this approach on Liverpool’s Mersey found the river’s value to be £348m to £400m annually across the city-region.
National vs local discrepancies
Treasury guidance for valuation and other national standards don’t always work in the local context, where local authorities, developers and other stakeholders may be seeking value that goes beyond central government considerations.
One participant gave an example of a major regeneration scheme bidding for Housing Infrastructure Funding. HIF applications require bidders to show land value uplift so the Treasury can determine value for money of its investment. The bidders demonstrated how improving local waterways to mitigate flood risk would unlock housing, which would in turn raise land values. The bidders knew further interventions to naturalise waterways could bring wider benefits for wellbeing, biodiversity, and climate change adaptation, but because central government doesn’t factor these things into bid assessments they were left out.
It falls to forward-thinking local authorities and their delivery partners to push for additional benefits through other funding means.
Within cities, across boroughs, and locally, there are vast numbers of stakeholders for any given waterway with different or even conflicting priorities and conceptions of value. Aligning interests is important on any scheme, but projects involving water have an extra urgency because of the interconnected nature of waterways: what happens in one area will have impacts elsewhere. One participant cited an example of a river cleaning project which removed downstream silt, but the benefit was reduced because the same didn’t happen in an upstream borough.
Water as an asset vs liability
Several participants expressed concern that, without better understanding of the value and wider benefits of water, waterways are too often treated as a liability rather than an asset. For example, one participant has encountered a major stakeholder who refuses to open a culverted town centre waterway. They worry it will reduce land available for development, drive up costs, and result in controversial tall buildings – even though improving the river would reduce flood risk downstream, provide much-needed green/blue space, and offer health benefits.
The liability vs asset dichotomy is particularly challenging when it comes to long-term maintenance. Initial capital injections can do wonders for waterways, but without funding for ongoing maintenance and clarity of management responsibility the waterway risks becoming a liability or falling into disrepair altogether.
Landowner service charges, mooring fees, Section 106 contributions and volunteer programmes can help, but come with their own challenges and are insufficient on their own. Overloaded service charges and mooring fees will get pushback or put off buyers/occupiers; Section 106 money isn’t always put to use; and volunteers need coordination.
Existing policy is inadequate to help fill the gap. “Conventional wisdom on land doesn’t apply [to water],” said one participant. For example, projects like floating homes and lidos, which could raise income, aren’t covered by planning guidance.
…For better valuation processes
There’s an obvious need for more London-specific evidence of the social, environmental and economic value of waterways. Participants identified several areas lacking guidance or examples of good valuation practice:
- Valuing indirect impacts (e.g. if a towpath is accessible, there are benefits of being near water as well as not being near roads with freight movements and pollution)
- The ‘proximity value’ for people who appreciate having a waterway nearby, even if they aren’t regular users
- Value of community amenities and business use on/near water
- Valuing potential use for thermal energy
- Understanding predicted vs actual impact/value
- Using qualitative feedback to get buy-in
- Understanding how valuation approaches could account for different types of waterways or characteristics (e.g. river vs canal; quiet section of canal vs in an urbanised area)
…For more joined-up working
Participants suggested several options for more effective multi-stakeholder working:
- Having a project champion makes a huge difference to success. This could be a driven individual or an organization. Orgs with a border-spanning remit are especially valuable.
- Local champions could work even more effectively if central government had a dedicated champion at the political level (e.g. a Minister for Parks).
- For projects on rivers, Catchment Partnerships should be a first point of contact as they’ll have overview of a river and access to a broad range of stakeholders.
- Even if the water is owned/managed by a single entity, all stakeholders have a role to play in contributing to ongoing maintenance and vitality.
- Local Plans and other strategies should set out ambitions and requirements for waterways, including options for funding.
- CIL could go towards long-term maintenance – but local authorities with projects on borough fringes or across borders need to find a way of sharing CIL.
Michael Auger, Board Director, Muse & Director, Waterside Places
Andrew Beharrell, Senior Partner, Pollard Thomas Edwards
Dan Bridge, Programme Director. GLA/Royal Docks Team
Steve Craddock, Strategic Planning Manager, Canal & River Trust
Ruth Holmes, Design Principal, London Legacy Development Corporation
Mark Job, Associate Director, Arup
Nicola Mathers, Chief Executive, Future of London
Sue Morgan, Director of Architecture & Built Environment, Design Council
Toussainte Reba, Head of Area Regeneration. LB Haringey
Amanda Robinson, Head of Knowledge, Future of London
Martyn Saunders, Director, Avison Young
Steve Skuse, Managing Director, New Homes London, Catalyst Housing Group
Nathan Smith, Senior Project Manager – Regeneration, Barratt London
Dominic Spray, Design Director, Hadley Property Group
Lisa Woo, Design and Planning Lead – Meridian Water, LB Enfield
 S. Nicholls, J.L. Crompton (2017) The effect of rivers, streams, and canals on property values
 LSE Centre for Economic Performance (2019) Valuing environmental benefits of canals using house prices
 Canal & River Trust / Simetrica (2018) Assessing the wellbeing impacts of waterways usage in England and Wales (PDF)
 Environment Agency (2014) Estimating the Impact on Public Benefits from Changes in Investment in the Environment Agency Waterways
 Port of London Authority (2015) Adding Value: The River Thames Public Amenity
 Port of London Authority (2015) River Thames Economic Prosperity. Number calculated by adding up London borough data on p. 6-7.
 Arup (2016) The Value of the River Mersey