Rethinking Value

How do values, and concepts of value, underpin and enable Water Smart Communities?

Words by Arup | published in Rethinking Current Practices

Rethinking Value. Illustration by Arup for the EWSC project.

1. Introduction

Enabling Water Smart Communities (WSCs) requires action across multiple systems and scales. Across water and housing stakeholders there are many perspectives, aspirations, priorities, obligations, capacities and capabilities that inform how individuals, communities and organisations act.

The embedded problems and possible solutions for enabling WSCs will need to combine technology with regulation, institutional and social practices, and new ways of imagining society and systems, now and in the future. Early in the project the EWSC team identified three themes as critical enablers: value, assets and stewardship. These concepts align with themes and areas of focus emerging across water and housing sectors. They have been used by the EWSC teams as a starting point to define areas of research during Discovery Phase:

• Value: understanding the values that shape, motivate and drive individuals and organisations to act, align and collaborate. Appreciating the value, both monetary and non-monetary, that supports the case for individual and collective action.
• Assets: Stretching conventional definitions of assets across water and housing (both physical and non-physical assets) and rethinking asset design, delivery and management in the context of whole-life stewardship.
• Stewardship: Building new models for asset stewardship. Supporting resilient long-term governance, investment and legacy creation. Building agency and capacity, underpinned by mechanisms for sharing duties, risks, liabilities and value.

The three concepts are highly interdependent. When considered together they can help to identify and unlock enabling actions within a complex and constantly shifting delivery environment. They have formed the basis of the EWSC Model.

This article gives a high level overview of some of the concepts, challenges and opportunities relating to rethinking aspects of value within the context of enabling WSCs.

EWSC Model. Illustration by Arup for the EWSC project.

2. Towards outcomes-led approaches

The EWSC project is exploring the different drivers, motivations and frameworks for the delivery of wider outcomes alongside a review of core integrated water management actions. Delivery of wider outcomes is enshrined within the EWSC stewardship principles and is strongly linked to value(s).

In an increasingly complex delivery environment with multiple competing demands and accelerating pace of change, aligning around clear values and outcomes can sometimes be the hardest and most crucial first step. This is the case when shaping the direction and priorities for individual people and organisations, and for partnerships between multiple actors.

A holistic outcomes framework covering environmental, economic and social aspects — such as the example shown below — is key to situating individual and collective actions within a complex system. What matters most to people and organisations, how these priorities influence action and how different perspectives and priorities are balanced is shaped heavily by values and the concepts of value explored here. Rethinking value, in its broadest sense is key to delivering and evaluating shared place-based outcomes.

Design with Water 2.0: a whole-systems framework and collaborative process for outcomes-led design and delivery. Image Source: Design with Water, Arup.

Various frameworks exist for exploring outcomes and value(s) linked to Integrated Water Management (IWM) and WSCs . In this document we have drawn on the above diagram to illustrate some of these concepts. It frames the place-based outcomes and wider benefits that can be supported through protection and enhancement of the integrated water cycle. See also article Making the value case for action towards wider outcomes and the EWSC resources for other examples of frameworks for articulating outcomes and value(s).

2.1 Defining value(s)

Motivations and drivers for action are complex and the lines between values- and value-driven activity are often blurred, as is the interpretation of these terms. In the EWSC project we have used the hybrid term value(s), to represent these concepts in their broadest sense, and, where possible recognising the fluidity of these ideas, we have used the terms values and value in more specific contexts. For other definitions see the EWSC Glossary.

2.2 Defining the action space

The remainder of this article touches first on the significance of the ‘must-do and ‘can’t-do’ before exploring of the value case and how this might support ‘should do- and could-do’.

The diagram summarises the types of actions for an individual person or organisation. The overall space of action is defined by the ‘can’t do’ boundary. At the core are the ‘must do’ actions, shown in blue. The area between ‘must do’ and can’t do’ — shown in green — represents a space of choices and possibilities, in which action is more strongly linked to value(s). Illustration by Arup for the EWSC project.

3. Boundaries and obligations: the significance of ‘can’t do’ and ‘must do’

‘Can’t-do’ actions set the boundaries of what is currently possible for a particular actor. These are usually defined by systemic factors, such a legal or regulatory instruments, restricting certain actions and defining a ‘can’t do’ space. Whilst such boundaries are usually set for positive reasons, such as protection of public health and safety, they can occasionally have unintended consequences, such as preventing or slowing innovation.

Within these boundaries, the primary driver for action for an individual person or organisation, will be to discharge their core ‘must-do’ obligations. ‘Must-do’ actions are significant because the commitment to undertake them cannot be withdrawn. As with ‘can’t-do’ actions, ‘must-do’ actions are often defined by some form of regulation or legislation and may be linked to an established funding mechanism. For individuals ‘must -do’ actions in relation to water include fundamental public health needs such as drinking, cooking, personal hygiene and cleaning clothes.

For individual citizens or organisations ‘must-do’ actions — mandatory obligations and duties — will often be strongly linked to values, and the value created. Undertaking these actions may also create ‘wider value’ within the system. Whilst desirable, this is generally not a necessary condition, however, since these are not optional actions.

The boundaries around these mandatory duties and defined roles are often slow to move but they can and do change. There are examples of shifts in mandatory roles having a major positive impact. Equally, removal of duties or lowering of standards and regulations can delay the transition towards more sustainable futures.

Pricing, incentives and ‘nudges’ can shape action, but some outcomes might be best achieved by changing ‘should do’ actions to ‘must do’ and reviewing ‘can’t do’ boundaries. Reviewing these should be a primary focus.

Acknowledging these different boundaries and the reasons behind them is crucial, particularly when working with others and defining roles and responsibilities within partnerships. They shape expectations about how each actor will behave within the system. Clarity and honesty is key to building the trust necessary for a transition towards better partnerships and new shared value models. These themes are discussed in more detail in our article Actors, roles and value(s).

4. Navigating choices and possibilities: exploring ‘should do’ and ‘could do’

For any actor within the system, choosing to go beyond ‘must do’ activities towards ‘should-do’ and ‘could-do’ can be driven by a number of factors. For individual people, examples of motivations towards positive water-smart action may include:

• Saving money by reducing utility bills through water smart behaviours
• Managing risk, for example by maintenance of household appliances, plumbing and drains
• Preserving/increasing property value by increasing water and energy efficiency or improving design
• Compliance with shared cultural norms and expectations
• Personal beliefs and values linked to wider social and environmental concerns

An organisation may choose to act based on a similarly complex set of motivations, such as:

• Reducing operational and maintenance costs
• Increasing organisational/ operational resilience
• Accessing finance and funding linked to wider outcomes
• Meeting procurement or tendering requirements
• Responding to incentives and market conditions
• Customer/consumer expectations
• Core culture, vision, values and purpose
• Responding to wider cultural expectations and trends

In some of these examples values shape the direction and priorities for action beyond core obligations towards voluntary, ‘should-do’ and ‘could-do’, actions. These values will vary depending on the individual person or organisation. However, in practice a strong individual value case, either monetary or non-monetary, is the primary driver and enabler for action and investment beyond ‘must-do’ activities. Indeed it is normally a necessary pre-condition for taking action.

The following sections focus on aspects of delivering a value case. Reflecting the EWSC Framework we look first at the individual value case, then at building a shared value case and finally at some of the system level, changes that might support new approaches.

4.1 The place of ‘values’ and ‘value’ in shaping and supporting action

Values play a crucial role in decision-making through influencing visions, missions, principles, agreeing outcomes and shaping direction. Within the context of EWSC this is strongly linked to the EWSC stewardship principles. However, sometimes it can be possible to overstate the extent to which actions are driven by values — a set of principles — rather than the by the specific value (monetary or non-monetary) returned to an individual or organisation.

In practice much non-mandatory action is driven, in the first instance, by an understanding that some form of value will be returned to the investor. Thus, where there are different choices to be made, values set the framework for individual and collective actions, and they inform and support subsequent development of a tangible value case for carrying them out. How that case is made and value defined may will look different for each actor and will be informed by their individual context and values.

The rest of this article focuses on making the value case to enable action, drawing on key insights emerging from the EWSC discovery phase.

4.2 Making the individual value case

For values and ‘purpose’ driven activity to be deliverable it normally needs to be supported by a strong individual value case, this is likely to be a pre-condition for action even if that individual person or organisation plans to act in partnership with others.

How value cases are shaped will be a significant factor in the transition towards WSCs and delivery of wider outcomes. This has been a key focus of the EWSC discovery phase and is integral to the enabling actions being taken forward. Some of the emerging insights around building individual and collective value cases to enable actions towards WSCs are summarised below.

• A wide range of different outcomes frameworks exist to explore value(s) and support the value cases. We are gathering examples in our EWSC Resources. These often have sector-specific lens but cover similar themes.
• Within housing and planning sectors for example, models might be framed around themes such as around ‘Place’, ‘Quality of Life’, ‘Social Value’ and ‘Health and Wellbeing’. Other sectors may begin with a more environmental focus. From different starting points, most tend towards a holistic consideration of economic, social and environmental outcomes.
• There is a need and an opportunity to better reflect integrated water systems within wider industry valuation and assessment frameworks, especially the less visible networks and systems such as water supply and sanitation.
• Definitions of assets can have a significant impact on the articulation of a value case and can impact where and how organisations can invest. Indeed definitions of assets are typically framed in relation to the value they return to an individual or organisation. Stewardship models can also have an impact on the value case. Rethinking assets and stewardship are therefore fundamental to underpinning new approaches to valuation. These aspects are discussed further in the articles Rethinking Assets and Rethinking Stewardship.
• These value models can be effective in driving outcomes-led actions and ‘capturing’ the value created by individual people or organisations., both for themselves and across the wider system
• Six-capitals accounting and other valuation methods such as ESG and other ‘Total Value’ models are increasingly being adopted for valuation of outcomes to inform decision-making.
• It is important to remember that even where there is a strong value case, non-mandatory actions remain essentially optional and therefore are subject to being withdrawn if the individual value case changes or comes under pressure due to changing circumstances.
• Translating this value into investment and action can be challenging within a complex system where holistic outcomes require cross-sector collaboration.
• Maximising the potential for wider value creation by individual actors highlights the benefits, and the need, to engage across the wider systems moving from isolated to collective action.

Aspects of building individual value cases are discussed further in the article Making the value case for action towards wider outcomes.

4.3 From individuals to networks and partnerships — towards a shared value case

Within a complex system, thinking more expansively about value in order to justify their own actions tends to push individual actors towards the space of collaborative working and increasing system complexity. Some considerations are:

• Making the value case for WSCs increasingly requires moving from the individual to the collective, the forming of communities and partnerships, across wider networks of actors.
• Values don’t always align between individuals, organisations or sectors, so moving towards a shared value case often depends on first aligning value(s) across different organisations. Values and outcome frameworks are important to explore, align and prioritise between multiple actors and be clear on individual roles and expectations.
• Partnerships may emerge at a range of scales that are able to create a more complex shared value case and collaborate to co-invest and act towards shared outcomes.
• Within the water and environment sector there are established examples of partnerships aligning around shared missions, such as co-investing in local flood risk interventions based on a shared business case. Within housing, groups forming to collectively initiate and co-invest in community-led housing is another example.
• Anchor institution networks are a good example of multiple organisations aligning around place-based value(s). These could potentially act more specifically to create shared value cases around ‘missions’ such as EWSC. There are opportunities also for other types of place-based special purpose vehicles to be considered.
• As with individual value cases, value cases and action plans created in partnership — even where they may appear as if ‘must-do’ for the different parties — often remain optional and subject to change.
• Partnership actions based on aligned value(s) are therefore subject to being revised, paused or commitments withdrawn if the individual or collective value case changes, for example through a shock or stress.
• Accounting standards and business case guidance often require a degree of control over ownership and operation of an asset to be able to account for investment based on secure future value return.
• This emphasises the importance of long-term resilient governance underpinned by the EWSC stewardship principles, especially when moving towards partnership.

Diagram showing the move from individual value case towards articulation of more shared value, This is in line with the EWSC Framework that recognises the need for action across multiple systems and scales to deliver the necessary transition. Illustration by Arup for the EWSC project.

5. Value across different scales and systems

In the same way that addressing EWSC tends to move towards working with others and cross-sector collaboration, constructing a value case requires working across multiple different scales. The image below illustrates how the building of stronger value cases for delivery of WSCs and associated wider benefits may need to be made at different scales.

Working across different scales and systems is also a fundamental part of our work in the article Rethinking Assets.

Diagram exploring how the value case for enabling local action can be made at different scales. This is in line with the EWSC Framework that recognises the need for innovative action across multiple systems and scales to deliver the necessary transition. Illustration by Arup for the EWSC project.

A hypothesis emerging from the of the EWSC discovery phase which will be tested further through the project is that the value case for a particular intervention or outcomes may need to be made at a different scale to the particular intervention or development site being enabled. For example unlocking and scaling community-scale innovation such as that being delivered across the Community Land Trust Network, may depend on a value case created across portfolios of similar assets at place or bioregional scale, as well as system scale support. The emergence of biodiversity, carbon and water trading and offsetting and the concept of the Catchment Market Place are already linking investment and value exchange at regional scale to enable local developments. Within this context, the role of local government and place-based anchor institutions is emerging as a key are of focus in facilitating such approaches. This scale and geography naturally aligns with local administrative boundaries, democratic process, strategic plan-making, including planning for housing delivery, the local economy, health and wellbeing, flood risk and a wide range of others services and outcomes across multiple different sectors and systems.

6. System change: enabling new shared value models

There is clearly a need for system transformation towards new models for assessing, pooling and distributing value across different organisations, sectors and organisational boundaries.

• Partnerships often depend on each individual actors having a strong value case for action and in turn this depends on there being potential for leveraging individual value from partnership actions.
• There is often a misalignment between ‘who benefits and who pays/invests’, meaning that there are limitations to existing value models enabling action within the current system.
• The value returned directly to an individual actor may be a small fraction of the ‘wider value’ created. An example would be health and wellbeing benefits through green infrastructure (or other assets) delivered by a water company. The water-related benefits would be returned as value to the water company but the health benefits create value elsewhere within the system, for the community, the local authority, the NHS. Even though this wider value may be captured and reported within a social value, ESG or six capitals report, in practice the water company may only be able partially to invest in such actions because value is created outside of their organisational boundary and formal business case.
• Thus within the current system, outcomes and value created ‘for the community’, ‘for society’, ‘for the common good’, do not necessarily translate into a value case for direct action by an individual organisations.
• New models of shared value creation and exchange are required to enable place-based outcomes, capture ‘total’ system value, avoid double-counting and ensure long-term accountability and evidence for outcomes.
• This may require rethinking of assets definitions and rules around accounting, value cases and business cases which influence how and where organisations can invest within a partnership/ place-based context
• New system-wide institutions, delivery mechanisms and public value models will be required to underpin this shift.
• Mechanisms such as multi-value flow models could enable inter-connected outcomes for a wide range of beneficiaries and risk holders, with comprehensive bundles of long-term benefits captured across the actors involved.
• Emerging insights from EWSC suggest that such models may be most effectively implemented at local government scale, led by those with a strong civic mandate and direct accountability to local people and places, supported by anchor institutions with a focus on building local community wealth. Learning is also being gathered from a range of innovative models of place-based ownership and stewardship being implemented across different sectors and geographies.

Some of the themes summarised in this article are being carried forwards by the EWSC project enabling actions workstreams. Some will form part of wider transition pathways. They are closely related to the other building blocks of the EWSC model, namely Assets and Stewardship and should be considered within this context.

Read more on value in the following related articles:

• Actors, roles and value(s) — the significance of ’must-do’ and ’can’t do’ for EWSC
• Making the value case for action towards wider outcomes — how value(s) shape and enable ‘should-do’ and ‘could-do’ actions
• A number of other articles relating to value(s) have been linked throughout this document — browse all our insight articles for emerging perspectives, further case studies and deep dives linked to this theme.

This article is written by Arup, a collective of designers, architects, engineering and sustainability consultants, and experts dedicated to sustainable development. Arup brought water and housing specialisms together with strategic design capabilities to rethink how we define values, assets and stewardship to unlock opportunities for enabling Water Smart Communities (EWSC). This is one of three on the topic: see Rethinking Assets; and Rethinking Stewardship, for more.

As Discovery research lead and series editor, Arup’s Transformation & Design Studio led the multi-partner research effort contributing public innovation and strategic design expertise.

This is one of a series of insight articles produced as part of the EWSC innovation programme, exploring how integrated water management can be delivered through innovative housing and stewardship models. To explore related articles and reflections browse our publication. For an overview of the project, latest news or to get in touch visit https://www.ewsc.org.uk/.