The Yarra River is an iconic natural asset, providing a wide range of benefits to many Victorians. Melbourne Water engaged Alluvium to help improve its understanding of those benefits economic values, and to assist decision makers improve long-term management of the Yarra and its surrounding land use.

An ecosystem services framework was used to identify and categorise the range of benefits (direct and indirect) experienced by the community. Analysis of survey responses from the Yarra Strategic Plan community consultation was undertaken to confirm the range of these benefits, and was further supplemented by interviews with key experts from within Melbourne Water.

A rapid review of literature was then undertaken to identify potential unit values for the identified ecosystem services. These values were used in economic modelling, which we applied to provide aggregate estimates of the benefits associated with the value of the Yarra River.

It is estimated that the annual benefits are around $730 million. However, given the inherent variability and uncertainty in the data sources we have used, the range of our estimates is between $420 to $1,050 million.  Benefits derived by the community and that were estimated include: recreation, aesthetic, carbon sequestration, avoided desalination costs, water supply and horticultural use.

The economic values are largely driven by non-market observed and cultural values which require non-market valuation approaches to estimate.  We found the  benefits are influenced by land use around the river. For example, there are large aesthetic and recreational benefits in urban areas where the waterway and its surrounds are used for recreational and residential purposes. These benefits are reflected by willingness of people to access recreation and to be located to more natural environment.

In the upper reaches, the riparian zones of the Yarra play an important role in reducing sediment and nutrients load runoff into the river and eventually Port Phillip Bay. These benefits would ultimately be valued as marginal reductions in water treatment costs and maintenance dredging costs.