Livermouth, a large and fast growing city in Deeland, is desperately in need of additional supplies of clean water to meet the increasing demand from its growing population. So, following extensive investigation by the Livermouth Water Authority (LWA), a suitable location near to the village of Housewater, a site less than 20 kilometres from the city, with a substantial underground reserve of natural water, has been identified. This land is owned by Roger Capstone, a prominent local businessman with powerful connections and influence over some of the key ministers in the national government. He has been effectively lobbying government to ensure that the construction of the necessary water pipe channels from his land to the city of Livermouth will not happen, even though it would have a minimal adverse effect on the local natural environment and people; furthermore it would create more jobs in this economically challenged region.
An alternative proposal from the LWA is to build a huge dam at the bottom of the Coombe Valley, which is in the neighbouring administrative region of Lambria about 60 kilometres from Livermouth. The effect would be to create a large reservoir from which water could be diverted to Livermouth. The cost of this proposal is five times greater than the original Housewater option, and would also lead to hundreds of people being relocated to a town to the east of the new dam construction due to their homes being submerged. In addition, the dam project would include major tunnel building and blasting to channel the water from the newly created reservoir to the city of Livermouth. This would be through a series of mountains and valleys, many of which lie in an area of outstanding natural beauty and contain many species of protected animals and birds. The Deeland government has stipulated that the total cost of the Coombe Valley project is to be recovered through a special water services tax on Livermouth’s householders and the population of Lambria, which already has access to more water than it requires. By contrast the Housewater solution would not require extra taxes to be paid; on a positive note, the Coombe Valley project will create many more construction jobs than the Housewater option would require and is located in the relatively much poorer region of Lambria.
When the national government of Deeland finally decided on the costlier Coombe Valley proposal, there were large demonstrations in Lambria. The demonstrators comprised many disparate groups objecting to the forced relocation of the population, damage to the natural environment and more generally about the additional costs to taxpayers of this much more expensive and disruptive project.
Required:
Explain the importance of the 3Es (value for money) criteria in the evaluation of a public sector investment proposal and use these criteria to evaluate the water diversion project proposals for Housewater and the Coombe Valley, Lambria.
When evaluating any public sector investment proposal, it is essential that value for money can be proven so that good stewardship of public finances can be displayed. This is because the public sector differs from the private sector in many ways, but primarily in terms of aims and purpose, sources of finance and accountability. For the Livermouth Water Authority, value for money assesses whether it has obtained the maximum benefit from the chosen water supply and distribution project from the resources available to it.
The purpose of the value for money assessment is to develop a better understanding of costs and results so that public officials can make more informed, evidence-based choices. It does not mean always going for the cheapest option, but instead ensuring that the Livermouth Water Authority gets the required quality of provision at the lowest price. To achieve this, value for money is evaluated using three criteria:
Efficiency, a measure of productivity which numerically determines the conversion of resources used (inputs) into the results achieved (outputs). To provide water to Livermouth, the Housewater proposal would have only required the transfer of the groundwater over less than 20 kilometres, whereas the Coombe Valley is located 60 kilometres away and separated from Livermouth by mountains and valleys. It is therefore apparent that the Housewater site would be a more efficient source of water for Livermouth.
Effectiveness is the impact of obtaining value for money and can be both quantitative and qualitative in nature; but can perhaps be best described as delivering the best result from the investment. The purpose of the scheme is to meet the growing demand for clean water from the Livermouth population, but using the limited information provided one is unable to determine the amount of additional water available from either source.
Economic is the price paid (the impact on people as well as actual money spent) for providing a service at best value, taking price and quality into account. The scenario states that the cost of the Coombe Valley project is five times more than the Housewater scheme, so on purely economic grounds it is hard to justify the damming of the Coombe Valley. This is further compounded by the government decision to levy this cost on to both the Livermouth population and the people of the Lambria region, who do not themselves benefit from the scheme, while hundreds are inconvenienced by it.
Using Tucker’s 5-question model, evaluate the moral case for or against obtaining the water from the Coombe Valley in Lambria, rather than from Housewater.
The decision to obtain water from Lambria rather than the Housewater site also presents the Livermouth Water Authority with an ethical dilemma. The Tucker 5-question model could be used to examine this decision in both business and ethical terms by asking the following sequence of questions:
Is it profitable?
This question seems only appropriate to a profit seeking company and not a public sector organisation. However, if one considers the economic aspect of value for money and compares the money to be spent on the Coombe Valley project to the on-going costs of transporting water from the Housewater site, one will be able to determine the least expensive (so most profitable) option.
Although the scenario does not supply financial data about each proposal, the cost of transporting groundwater only 20 kilometres from Housewater to Livermouth is likely to be the least costly option. Consequently, it is reasonable to conclude that the answer to this question is no, the Coombe Valley project is less profitable when compared to the alternative.
Is it legal?
When determining the answer to this question, it must be made regarding the legal jurisdiction in which the decision is taking place. It is evident from the scenario that the government of Deeland, which has jurisdiction in Lambria where the Coombe Valley dam will be built, is supportive of the proposal, indeed they decided that it should proceed. So, the answer to this question is yes, because the Deeland government has the right to make laws and would have duly amended relevant legislation if this project breached any aspect of the law before considering the proposal.
Is it fair?
This question considers the varied impacts which the decision has on affected stakeholders, who may be harmed by, or benefit from it. The building of the Coombe Valley dam will affect the following groups of stakeholders:
（i）Several hundred local inhabitants will be displaced and forced to relocate to an area to the east of the construction for their safety.
（ii）Animals currently living in the valley may perish when their natural habitat is flooded to form the reservoir.
（iii）The Lambrian population must financially contribute to a dam which will supply water which they do not need.
（iv）The Livermouth population will be provided with a plentiful supply of clean water to meet the demands of its growing population.
（v）Employment in Lambria will be increased as the project will inevitably draw on local and regional labour within Lambria. From the above, the balance seems to be heavily towards harming more of the stakeholder groups, so perhaps it would be correct to answer this question as no.
Is it right?
The answer to this question depends on the ethical stance adopted by the decision maker, whether they adopt a deontological or teleological approach. The deontologist would be able to judge the righteousness of a decision in advance by basing it on pre-determined criteria, and providing these were universally and consistently applied, the decision could be justified on ethical grounds. A teleologist would be more concerned with cause and effect and how a decision will have consequences on others, so it may base it on which outcome is best for the greatest number of people.
Using the information provided, it would be reasonable to consider the decision as unfair from both ethical perspectives. Deontologists would question the moral right of the Livermouth Water Authority to select the most distant site, disrupting the lives of residents, damaging the environment and taxing them rather than choosing the Housewater option. Teleologists would weigh up the merits of the argument and consequential outcomes, and might find in favour of the Coombe Valley project because of what it will do for the depressed region in terms of employment, but this would depend on whether the benefit of additional employment outweighs the disadvantages of re-locating people, causing damage to wildlife and to the natural environment and raising more taxation from Lambrian residents.
Is it sustainable or environmentally sound?
This question requires the decision maker to consider the environmental and social impacts which the decision will have, both positively and negatively. To some extent the environmental and social footprints are being determined, and these are particularly pertinent to this decision.
The Coombe Valley dam project will require an extensive amount of tunnelling and excavation work so that the water from the reservoir can be piped to the Livermouth population, and this is in an area designated as of outstanding natural beauty. The flooding of the valley will also harm the indigenous fauna and flora, some of which is rare and protected. However, it will provide employment opportunities during the construction works, and provide a plentiful supply of clean water to the population of the growing city of Livermouth.
However, on balance from an environmental perspective, the greater disruption and engineering works required would mean that the Coombe Valley dam project would be the least environmentally sustainable option.
In conclusion, Tucker’s 5-question model would appear to not be supportive of the ethical case for obtaining water from Lambria rather than the Housewater site.
Discuss the contestable nature of public sector policy in Deeland, and how supplying drinking water to Livermouth should be decided.
The Livermouth Water Authority, as a public sector organisation, has an agency relationship with its principals, who in this situation are both the elected government of Deeland and the taxpayers of Deeland. Because the taxpayers, who are also the electors of the government, may have their own specific demands, it can be very difficult to reconcile a public policy position which meets the needs of competing groups. Noticeably the public demonstrations in Lambria were in direct opposition to the Deeland government’s decision to build the dam in the Coombe Valley. However, the public outcry arose from the forced relocation of the population, the damage to the natural environment and the additional costs to Lambrian taxpayers. By proceeding with the project, the action of the Livermouth Water Authority conflicts with the wishes of one its principals to satisfy the demands of the other for a clean supply of water.
However, as a public sector organisation whose prime purpose is to provide a public service, its performance is centrally regulated and it is directly accountable to the government. It must demonstrate that public money is being used appropriately and that stated objectives are being met in the provision of its public service. The government in turn is answerable to the electorate, so if public policy is widely opposed, then the elected representatives and government ministers can be periodically voted out of office. In a democracy, like Deeland, political parties argue over the nature of public policy and they do so from a set of underlying assumptions which support outcomes.
The government has a duty to ensure that an adequate supply drinking water is available to the population of Livermouth, and it ultimately decides on how this is to be delivered and funded. The Coombe Valley decision is, therefore, contestable on two levels:
（i）els: – Proceeding with the project against the will of the people, when a suitable and less costly and environmentally less damaging alternative at Housewater had been identified. The lobbying by the powerful and influential stakeholder, the local landowner Roger Capstone, may have directly influenced the decision. In a democracy, it is vital that government decisions are taken in the wider public interest rather than protecting the vested interests of a rich and powerful minority.
（ii）Financing the project through a local tax, not only levied on the population of Livermouth who benefit directly from the new water supply, but also the people of Lambria who receive no marginal benefit from the project only a loss of land, can be perceived as unfair. It is the government’s responsibility to determine how public projects are to be funded and it could have decided to finance the Coombe Valley programme from general taxation, thus avoiding some of the controversy and apparent unfairness. Another alternative would be for the government to encourage private investment utilities companies, who then recover their costs from their future customers.