High levels of nitrogen and phosphorus in effluent water contribute to algal blooms and hypoxic dead zones, which negatively impact coastal waters by reducing water quality and killing fish stock and other coastal species.
In this example, a waste water treatment company is discharging its effluent water into nearby coastal waters. The company is under pressure to reduce its impact on the marine environment and wants a balanced view on the wider long term impacts of the options it could pursue to achieve these. Conducting an impact assessment can help the company understand the full breadth of impacts associated with the different options available to it. Whilst helping aid the company’s strategy, this method will also help manage stakeholder challenges and pressure by showing an informed decision has been made.
In this example, the TIMM framework is used to assess the total impact of the treatment plant’s activities on the local area under both options. Impacts are considered over the remaining operational lifetime of the plant including materials and construction, and by-products and co-products of the system.
Implementation of either option would lead to better outcomes for the local marine environment compared to the water treatment plant operating ‘business as usual’ (BAU).
TIMM can be used to value not only the business financial performance, but also the wider social, tax, economic and environmental implications. The TIMM wheel provides a simplified analysis of the results of the TIMM analysis for the two options. The inner circle shows the Financial Performance in terms of total upfront capital costs and ongoing expenditure, and overall net present value (NPV) for the road over the lifetime of the water treatment plant. Each bar represents a positive (green) or negative (red) impact. These different impacts can now be compared and aggregated.
As a result, both options in our hypothetical example have the same financial NPV.
Trade-off: Do the reduced GHGs and land use impacts in Option 2 outweigh the lower risk of ‘waste and water pollution’ in Option 1?
Trade-off: Which option will deliver the greater economic benefits during construction and after completion?
Trade-off: The social impacts seem higher for Option 2, but how do these weigh up against impacts in the economic, tax and environmental areas?
Trade-off: In the long term which option will generate greater positive tax impacts?
In the absence of total impact thinking, this kind of decision would generally be made using financial analysis, perhaps with some qualitative overlays. TIMM brings a new perspective that can be articulated to multiple stakeholders to have richer, more informed discussions.
Using TIMM to put a value on each impact, we see that both options lead to better outcomes for the local marine environment compared to the water treatment plant operating under BAU. The total impact of each decision becomes clear and the many trade-offs between Options 1 and 2 can be identified in a holistic manner.
TIMM gives management significantly more insight into how the water treatment plant operations impact external stakeholders. This allows decision-making to be undertaken on a more informed basis.