NERA Economic Consulting was commissioned by Thames Water to consider the question, “How should the appropriate time horizon for integrated water resource planning be ascertained?” The short answer is that the horizon should be chosen so that the projected effects (e.g., costs and benefits) beyond that time are unlikely to affect the decisions about what is best to do initially. This report draws on reviews of horizon-setting in other sectors and jurisdictions and on discussions in the academic literature to develop a framework that will aid the planner in ascertaining the appropriate horizon for a specific planning exercise.

Successful use of horizons longer than the current 25-year statutory minimum for water resources planning in England and Wales requires a set of challenges to be met. They include: the need to provide transparency for stakeholders about more distant effects and how they come to influence the best initial plans; the need to consider the legitimacy of plans from stakeholders’ points of view across a long time period and possibly multiple generations; the need for the organizations involved in the water planning to consider long term uncertainties about wider driving factors, including some where long term projections are not readily available from other sources currently; and the extra technical and modelling complexity that arises in considering water availability and demand over longer timescales.