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The centre and oldest parts of Shepton Mallet are adjacent to the River Sheppey, and thus at the bottom of a valley, approximately above sea level.
The edges of the town lie about higher up.
The river has cut a narrow valley, and between Shepton Mallet and the village of Croscombe, to the west, it is bounded by steeply-sloping fields and woodland.
However the river flows through much of Shepton Mallet itself in underground culverts.
The river occasionally floods after heavy rain, such as on 20 October 2006, and again on 29 May 2008, when rainfall was so heavy that the culverts were unable to cope with the volume of water, resulting in the flooding of some of the lower-lying parts of the town.
Some houses around Leg Square, Lower Lane and Draycott Road were submerged to a depth of.
A study by the Environment Agency identified that the current standard of flood protection in those parts of the town was insufficient, being of a 5 – 10 year event standard ; current guidelines require protection of a 50 – 200 year standard.
The Agency began construction of a flood alleviation scheme, costing about £ 1. 3 million, in the summer of 2010.

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