Providing Independent Economic Analysis and Advice
What does sustainability mean to Frontier Economics?
Sustainability is the concept of doing more with less which fundamentally aligns to good economic principles. At Frontier Economics we are increasingly seeing the assessment of sustainability initiatives featuring in the economic advice that we give our clients.
We want our clients to have the best and most relevant advice on how they can make better investment choices. When it comes to sustainability this means that we can provide our clients with advice that uses a triple bottom line (economic, environmental and social) framework. In particular, we seek to robustly value impacts that may be challenging to value such as externalities or liveability impacts.
Why did you become an ISCA member?
We became a member because we saw that ISCA were good at pushing the envelope of sustainability within the infrastructure sector. A lot of the clients that we work with are similar to the organisations that ISCA work with on their sustainability ratings, so it was quite a logical decision for us to become members. We see clear opportunities to better value both the costs and benefits of sustainability, so we wanted to make sure that we work closely with a peak body that looks to improve the practice around making better infrastructure investments.
How have you benefited from being part of the IS Community?
Businesses who are undertaking the IS Rating Scheme don’t get rewarded for business as usual. We see this as a great incentive to push industry to go further and continue to improve. We have seen the obvious benefits that the IS V1.1 and V1.2 have had on the IS community with the rating scheme now being widely mandated on state level infrastructure projects. This has allowed ISCA to really push the IS community and we are excited the inclusion of both a planning phase and economic theme in V2.0.
What notable projects are you currently working on?
The Western Parkland City: As the third city of Sydney, over one million additional people are expected to move into the Western Parkland City (the South Creek Catchment) over the next forty years. This urbanisation will place major pressure on the health of the local environment and waterways. It will pose significant challenges in meeting a much higher community demand for water services in one of the hottest, driest and flattest parts of Greater Sydney. In the face of challenges such as climate change, increased community expectation around liveability and concerns around affordability, the challenge is to ensure the provision of key services in a way that generates the greatest benefit to the community.
Against this backdrop, Frontier Economics was engaged by Infrastructure NSW to develop a strategic options business case that considers the value of integrating land use and water cycle management in achieving the NSW Government’s economic, social and environmental objectives for the Western Parkland City. This landmark piece of work found that adopting integrated land use and water cycle management strategies would best deliver the Government’s vision and provided significant economic value to the community in the form of reduced future costs of water, wastewater and energy infrastructure, improved health outcomes from access to open space and reduced urban heat, and improved environmental outcomes. The study involved innovative techniques to value reduced burden of heat and inactivity-related disease and mortality, increased access to active and passive recreation opportunities, reduced upstream bulk water and downstream wastewater costs and improved waterway health.
However, unlocking these benefits requires significant infrastructure investment. To ensure a set of efficient, equitable, dependable and transparent mechanisms are available to fund the investments integral to the vision for a cool, green and liveable Western Parkland City, Frontier Economics is undertaking an analysis of funding options and enablers for investment in water, open space, urban canopy and other related aspects of urban design. This review involved assessing which parties contribute to the need for and benefit from these investments in the Western Parkland City and the resulting distribution of the costs and benefits across the local, State and Australian communities.
Resilience Guidelines: We have been working on a project with Infrastructure NSW to embed resilience to natural hazards in the planning of infrastructure. One lesson learnt from this project is the benefit we have seen from being clear early in the project as to whether certain resilience issues are a primary problem for the investment being considered, or, are they problems that need to be monitored over time with solutions potentially found at a later date. This relates to the idea of moving our perception of infrastructure investment as being a binary, one shot decision to invest or not invest. Instead, making a series of staged investment choices over time can be a much better strategy in the face of uncertainty.
Through our work with Infrastructure NSW on this project, we have found that considerations of climate risks need to be made at appropriate points during the project development if you are going to adequately incorporate resilience into your solution. We worked alongside NSW Treasury to develop a scheme similar to the IS guidelines with a focus on being both practical and project specific.
Liveability and water: We have been working with Water Services Association of Australia to look at valuing the health benefits of creating more liveable communities through the process of water investments. Some questions we have been asking during this project have been:
- What are the benefits of creating water-centric communities?
- How can we value impacts such as increased access to green space, better air quality, increased active recreation, potentially improved productivity.
- Going beyond quantification to consider practical approaches to reducing the funding gap in integrated water catchment management.
This report can be accessed here.
What does the future hold for Frontier Economics?
In the last month we turned 20 years old. A key factor in reaching this milestone has been consistency over time. Every client we had in our first year who still exist are still our clients today. The foundational value that underpins this is that we want to continue to provide robust independent economic analysis for our clients. This increasingly means working on projects which we refer to as “urban economics” – where multiple sectors are considered holistically.
Going forward, we are keen to be involved in a range of infrastructure projects and hope to work closely with clients, and ISCA, to use economics to inform better investments.
At Frontier Economics we believe that good economics underpins good infrastructure investment. The fact ISCA have included an economic theme in the IS rating v2.0 illustrates that they too desire for infrastructure investment to be underpinned by a clear economic rationale.
If you think that Frontier Economics can assist you then please contact Ben Mason (firstname.lastname@example.org) or Elly Davis (email@example.com).