Highly Protected Marine Areas - policy framework and site selection guidelines: socio-economic impact assessment – methodology

3 Approach to the Assessment

3.1 Introduction

3.1.1 The methodology to be applied builds on previous marine socio-economic assessments for MPAs, particularly the assessment of Scottish Nature Conservation MPAs^[12], the draft assessment of phase 2 fisheries management measures in Nature Conservation MPAs^[13], the assessment of four new Nature Conservation MPAs^[14], the assessment of a proposed deep sea marine reserve^[15] and the assessment of fisheries management measures in offshore MPAs^[16]. It is consistent with Better Regulation Executive guidance on impact assessment, the Green Book methodology^[17] for economic assessment and Scottish Government guidance on Business and Regulatory Impact Assessment (BRIA)^[18] and seeks to incorporate forthcoming guidance on SEIA for inshore MPAs proportionately. An overview of the approach is shown in Figure 1.

3.1.2 The designation of HPMAs requires an adjustment to the process for identifying the impacts of MPAs. For most other MPAs, designation takes place and then management measures are considered, allowing them to take into account stakeholder and community evidence and views. For HPMAs, management measures (to be ‘Highly Protected’) are part of the designation, so the impacts of designation and management are being considered in one step.

3.1.3 Therefore, the analysis and discussions that would normally occur between designation and implementation of management measures, need to happen in the pre-designation process for HPMAs. However, the identification of the impacts of HPMAs will still be an iterative process involving several sources of evidence, including, but not limited to:

• Data on activities within and adjacent to the sites, such as fisheries, fish farming, and energy sectors (Section 5.2);
• Assessment of social impacts and views of communities affected by the expected impacts (Section 5.3);
• Impacts on the public sector (Section 5.4); and
• Evidence on potential benefits of designation (Section 5.5).

3.1.4 This document describes the proposed methods for gathering these different sources of evidence, and the process for using them to produce an SEIA for the proposed HPMAs.

3.1.5 It should be noted that prior to undertaking the SEIA, Marine Scotland are planning to consult with affected communities on the HPMA policy through a series of themed workshops. These will work with stakeholders on the approach to identifying HPMAs, including considering their potential socio-economic impacts. Information from this consultation process will inform the SEIA in an iterative manner, helping to identify issues of concern to communities that may be affected and supporting the assessment of social impacts.

3.1.6 Following this, Marine Scotland will then identify the possible HPMA sites, which will be subject to SEIA.

3.1.7 The starting point for the SEIA will be to gather relevant data on activities and evidence of potential benefits. This information is an important part of the SEIA, and helps identify communities affected. However, further social research will be undertaken to ensure relevant communities affected are identified, and their views are included in the SEIA. This is important to ensure that the way Government makes policies takes on board the views of people affected. This social research is described in Section 5.3.

3.1.8 In translating the evidence gathered from sectors and communities into the SEIA, two factors should be borne in mind. Firstly, it is easier to identify, ex-ante, costs to particular activities, than it is to identify potential benefits, including to activities that may not yet exist (e.g. new recreation activities). Secondly, the primary purpose of the SEIA is to identify the scale and distribution of impacts at a Scotland scale. Where the distribution of those impacts is significant for particular interest groups, this supports consideration of mitigation or other measures to complement the sites management, but developing those is beyond the purpose of the SEIA.

3.1.9 Finally, it is good practice to follow-up on the impacts identified in the SEIA through post-designation analysis. This can inform the need to change management or mitigation measures for sites.

3.1.10 The following sections provide further detail on overarching approaches to the assessment, specifically:

• General assumptions;
• Identifying the impact area, stakeholders affected and scoping; and
• Establishing a baseline against which impacts can be assessed.

3.1.11 Section 4 sets out an initial scoping of potential impacts of HPMAs, and section 5 sets out more detail on the approach to assessment of costs and benefits for each site, including:

• Economic impacts to marine activities;
• Social impacts on individuals, communities and society;
• Impacts on the public sector;
• Potential benefits (ecosystem services and natural capital); and
• Cumulative and combined assessment.

Figure 1. Economic and social analysis process

Site analysis is conducted by looking at the following aspects of a site -

• Site features and status
• Activities present and baseline
• Pressures, analysed by sector (the fisheries sector is divided into mini-sectors by gear type and vessel size)
• Management measure

The site analysis informs the site socio-economic analysis. This looks at the economic, social and environmental costs and benefits of each site to identify the discounted economic, social and environmental impacts.

The economic costs are –

• GVA impacts (direct and indirect)
• Employment impacts (direct, indirect and induced)
• Turnover
• Industry costs
• Public sector costs (eg. surveys, actions for industry)

The economic benefits are –

• Marine tourism
• Recreation

The social costs are –

• Employment impacts
• Local expenditure
• Social welfare of communities

The social benefits are –

• Social welfare impacts (eg. recreation)

The environmental costs are –

• Displacement of activities

The environmental benefits are –

• Changes in pressures
• Changes to ecosystem services

The total socio-economic analysis for all sites provides overall cumulative impacts –

Total network socio-economic analysis –

• Discounted economic costs
• Environmental / ecosystem service impacts

Context information –

• Scottish economic data
• Network effects

3.2 General Project Assumptions

3.2.1 A number of key assumptions will be needed to undertake the study. Current assumptions are set out in this report and accompanying appendices to inform the progression of the study.

3.2.2 A range of assumptions will be developed assess the potential range of impacts (e.g. lower, intermediate and upper estimates), which reflect uncertainties in the scale of costs and benefits. The assumptions for the estimates will be developed for the purposes of the assessment by Marine Scotland Directorate based on advice from NatureScot, JNCC and other sources. They take into account the scale and intensity of pressures associated with human activities, but do not anticipate final advice on management measures, nor do they reflect the management measures that may be adopted by the Scottish Government for HPMAs. The assumptions proposed for the assessment of impacts on each sector are documented in Appendix B. Impacts will be assessed for the lower, intermediate and upper estimates compared to the ‘do nothing’ option, i.e. not to proceed with proposed HPMA designations.

3.2.3 It is assumed that sites will be designated in 2026 and costs will be first experienced in 2026, with the exception of costs associated with additional licensing requirements which will apply from 2025 (when pHPMAs are identified, and will need to be taken into account in licensing decisions). Costs and GVA impacts are expressed in current prices (depending on when the assessment is undertaken) using the latest Gross Domestic Product (GDP) deflator data^[19].

3.2.4 The assessment period for considering the impacts of designation is 60 years, in line with HM Treasury Green Book guidance. Within this timeframe, costs to industry are quantified and valued over a period of 20 years. This is regarded as providing a reasonable time period within which the main impacts are likely to occur. Present values will be calculated as the sum of discounted impacts over 20 years. For the quantification of impacts, the 20-year time period is suggested because:

• Over a period of 20 years, all sectors will have time to adjust to management measures, and this will lower longer-term costs. For example, sectors need to reinvest in capital (e.g. repair and replace fishing boats), and this will enable different technologies and activities to be adopted over time, such that after 20 years, the costs of the management measures will reduce.
• In the fishing sector, habitat and fish stock recovery (and alterations due to climate change) would be expected to occur over 20 years, such that beyond 20 years the fishing sector could have different fishing opportunities.
• In general, uncertainty of impacts increases over time, and unanticipated changes could arise that alter the costs and benefits of the policy.
• Consistency with previous policy appraisals (a 20-year time period has been used in previous socio-economic appraisals for Marine Scotland Directorate, dating back to at least 2014).

3.2.5 Longer-term impacts, beyond this time period (i.e. from 20 to 60 years), socio-economic effects and environmental impacts become less certain. Although they are quantified where possible, they are mainly assessed in qualitative terms. For socio-economic effects, this is due to technological changes and the ability of industries to adapt (e.g. as capital depreciates and is replaced), amongst other things. For environmental impacts, environmental responses are harder to predict based on current knowledge and due to external influences (e.g. climate change). Monetary impacts are discounted over the assessment period using a 3.5% discount rate in line with the Green Book. Employment impacts are not discounted so that the full impact on employment is clear.

3.2.6 The assessment will seek to ensure consistency between the lower, intermediate and upper estimates used in the SEIA, and the reasonable alternatives assessed in the SEA.

3.3 Identifying the impact area, stakeholders affected and scoping

3.3.1 Based on the potential HPMA sites, the potential impact area will be identified. Initially this will be broad-based and generic, and will be refined as the assessment progresses and potential impacts are able to be more clearly identified or scoped out. For some sectors, this is likely to be place-based, using proximity or spatial overlap with pHPMA sites. For other sectors and interest groups, the spatial and geographic linkages may be less well defined, particularly for those marine users and industries that have social and economic ties to settlements potentially at some distance from the site itself. This is particularly the case for the fisheries sector, and analysis of fisheries data (see section 5.2 and Appendix B) can help to define potential ports and communities likely to be affected. Defining the impact area will be closely linked to the stakeholder mapping, as different stakeholder groups may have interests at different geographic levels (local, regional, Scotland, UK, beyond UK).

3.3.2 A stakeholder mapping exercise will be undertaken to identify groups and individuals who may be affected or have an interest in the proposed HPMAs. Initially this will identify generic stakeholder types (e.g. commercial fishers, aquaculture, tourism operators, port operators, seafood processors, wider community living near the pHPMA, interest groups such as environmental NGOs) at different geographic levels. This iwill be informed by early consultation and engagement with affected communities by Marine Scotland Directorate on the HPMA policy. Once potential impacts have been assessed for the proposed sites, and areas likely to experience greater impacts identified, more refined and detailed stakeholder mapping can be undertaken to identify specific groups and individuals for further engagement and discussion on the significance of the impacts and potential mitigation.

3.3.3 Scoping will identify the potential impacts that require further in-depth assessment. This will be undertaken to identify the impact pathways where assessment of economic costs is required for marine sectors and activities. Further detail is provided in section 4. Potential impacts on natural capital and ecosystem services are scoped in to all assessments and considered for each site.

3.4 Establishing a Baseline

3.4.1 In order to undertake the socio-economic assessment, a range of baseline information is required. Given that the assessment relates to impacts over time, a dynamic baseline is needed which indicates how baseline conditions might change over the time period of the assessment.

3.4.2 The baseline builds on the work previously carried out for the Nature Conservation MPA assessment^[20], the assessment of four new Nature Conservation MPAs^[21], the assessment of a proposed deep sea marine reserve^[22], the SEIA for the Sectoral Marine Plan for offshore wind^[23], and forthcoming work on the Innovation and Targeted Oil and Gas (INTOG) plan^[24] in terms of the types of information required, but is focused on the specific geographical areas relating to the pHPMAs.

3.4.3 A range of baseline information will be collated, including:

• The distribution of ecosystem features within and adjacent to the pHPMAs and how this might change over the assessment period (in the absence of the intervention);
• The distribution and intensity (number of sites/volume/value) of human activities within and adjacent to the pHPMAs and how this might change over the assessment period (in the absence of the intervention); and
• Information on ecosystem service values associated with the marine environment, their current trends and how these may change over the assessment period (in the absence of the intervention).

3.4.4 These data will be used to assess the potential impacts of the proposed sites. For areas identified to be likely to experience greater impacts, additional contextual information on the social and economic profile of the area will be compiled, including where relevant the local industrial structure. This will help contextualise the potential impacts and their effect on the local community.

3.4.5 The baseline will be dynamic – it will take account of possible changes over time that would have occurred in the absence of HPMA designations. These possible changes will be considered for human activities and communities, and the state of the marine environment (natural capital) and the benefits it provides (ecosystem services).

3.4.6 For human activities, the dynamic baseline will consider changes in the distribution and intensity of human activity over the time period of the assessment. The dynamic baseline will be tailored to each sector and will be used to assess the potential scoped-in impacts (see section 4). This will draw on previous and forthcoming work to develop a dynamic baseline for the SEIA for the Sectoral Marine Plan for offshore wind^[25], and the Innovation and Targeted Oil and Gas Decarbonisation (INTOG) Initial Plan Framework^[26]. In considering potential future development activity, various assumptions will need to be made and will be documented.

3.4.7 Key data sources include:

• Marine Scotland Directorate (including data on the National Marine Plan Interactive, NMPi);
• Information from Crown Estate Scotland on Lease Areas, Lease Option Areas and Agreement-for-Lease locations where available;
• Kingfisher Cables;
• North Sea Transition Authority (NSTA) (previously Oil and Gas Authority, OGA) Oil and Gas licensing round awards, oil and gas pipeline data, CCUS appraisal and storage licences;
• British Geological Society CO₂ Stored database[27];
• Royal Yachting Association (RYA) Sailing/cruising routes;
• Coastal Protection and Flood Defence layers on NMPi;
• Eurosion Database;
• Automatic Identification System shipping data[28];
• Processed UK commercial fisheries vessel monitoring system (VMS) ping data for a five year period^[29] broken down by gear type and linked to estimated landings for vessels over 12m in length (provided by Marine Scotland Directorate);
• International Council for Exploration of the Sea (ICES) rectangle landings data for fishing vessels 12m and under broken down by gear type, for a five-year period (provided by Marine Scotland Directorate);
• Military practice and exercise areas (PEXA) and military establishments from Oceanwise (to be provided under Marine Scotland Directorate’s licence).

3.4.8 The dynamic baseline for natural capital and ecosystem services will draw on previous and forthcoming work to develop a dynamic baseline for the Nature Conservation MPA assessment^[30], the assessment of four new Nature Conservation MPAs^[31], the assessment of a proposed deep sea marine reserve^[32]. It will consider the expected effects of climate change on marine ecosystems (e.g. increasing water temperature) and other ongoing changes (e.g. related to changes in other pressures from human activities, such as coastal water pollution from land based sources),

3.5 Other Information Requirements

3.5.1 In addition to baseline data, a range of additional data and information informs the assessment. In particular, information on licensing costs and the cost of potential management measures is required to estimate cost impacts for activities, together with information on enforcement, surveillance and monitoring costs to estimate impacts on the public sector. Such information is obtained from the Nature Conservation MPA SEIA^[33], Defra’s Marine Conservation Zone Impact Assessment^[34], and the Impact Assessment of the Scottish Marine Bill^[35], and from consultation with specific marine sectors and regulators where required.