a future task in good hands methodological aspects of natural capital accounting burkhard...

A future task in good hands

Methodological Aspects of Natural Capital Accounting

Burkhard Schweppe-Kraft

Unit I 2.1: Legal Affairs, Economics and Ecologically Sound Regional Development

Features of Natural Capital

Adelivers future benefits or avoids future costs

or

provides options for future benefits or options for the avoidance of future cost

or

maintenance of existence is part of individual preferences (there is a willingness to pay)

B restoration takes considerable time and/or „money“

C all or a considerable part of it is not man-made

Note: Because of „B“ the -change from cropland to grassland is no change of natural capital, regarding the provisioning of agricultural products. -Urban or industrial land take, however, should be regarded as a loss

What is Natural Capital

Expert workshop on key issues in Natural Capital Accounting, 19 September 20014, IEEP, Brussels

Different kinds of natural capital

Valuation (of changes) inExamples

CBA GDP Cap. Ac.

delivers future benefits

private bene-fits

contributing to additional (amounts) of products

consumer surplus +producer/land owner surplus/rent

additional value added

effects on price-level

consumer rents excluded ?

price of land (and stocks on it) ?

land/soil for agr. production

timber stock

reducing cost of production

none ?water resources (incl. quality)

public benefitswillingness to pay (stated and revealed)

(if existing:) maintenance cost

none landscape (beauty)

noneflood regulation by floodplains

provides options for future benefits or avoidance of future cost

changes in price if traded or tradable

prices (if traded) ?

genetic resources, e.g. bio-prospecting areas

willingness to pay or to accept/sell (stated)

(if existing:) maintenance cost

nonebiodiversity (species, habitats, genetic diversity)

maintenance of existence is part of individual preferences

Monetary Valutation of Natural Capital and its Benefits in CBA, GDP

and Capital Accounts


SNA – Rules for monetary accounting


Transactions must show that the prices are real

Consumer surplus is not taken into account

These are reasonable rules for the economy (cautiosness)

But lead to shortcomings when accounting for national capital

Measuring Natural Capital: Extent and Condition

versus Expected Flows of Services

Two approaches for the measurement of ecosystem assets mentioned in SEEA / EEA:

•First, ecosystem assets are considered in terms of ecosystem condition and ecosystem extent.

•Second, ecosystem assets are considered as the estimated stock of (aggregated) expected ecosystem service flows. “There will not be a simple relationship between these two perspectives, rather the relationship is likely to be non-linear and variable over time.”

http://unstats.un.org/unsd/statcom/doc13/BG-SEEA-Ecosystem.pdf

Due to future changes in technology and demand very hard to assess

1

2

What to do with assets that are not yet used?

What to do with assets of same capacity but in regions with different demand?

Has an ecosystem one condition or different conditions for different services?

3

better use this approach?


Different Specific or One General Natural Capital

► Different specific capital accounts for different kinds of ecosystem services:

contribution of ecosystems to: different criteria for good condition :

e.g.: agricultural production natural soil fertility

freshwater supplyfiltration rate, absence of pollutants in soils and geological layers, bufffering capacity against pollutants

flood protectionwater retention capacity in alluvial floodplains

recreationkind of land-use, diversity of land-uses, landscape elements

biodiversitynaturalness, contribution to the protection of endangered species


► One account for „one“ Natural Capital („Natural Capital“ regarded as one additional economic sector)

two possible solutions

A B

aggregation of different criteria for condition for the above mentioned different „specific“ natural capitals

one unifying criterion for condition

e.g. reversibility

resilience

of ecosystem functions?

of ecosystem services?

with regard to welfare?

naturalness

absence of pollution / anthropogenic stress

Different Specific or One General Natural Capital


Examples for Specific Natural Capitals:Natural Soil Fertility

Agricultural yield potential according to Muencheberg Soil Quality Rating - raw data

National physical indicator:Sum of area sizes multiplied by the value of fertility according to the SQR

Possible monetary value: Sum of discounted future agricultural land rents on the basis of current prices

Source: © Bundesanstalt für Geowissenschaften und Rohstoffe 2013

Geoinformation: DTK 1000; © Vermessungsverwaltungen der Länder und BKG 2004

Ground Water

Chemical condition of groundwater sources

Possible national physical indicator:Capacity of groundwater sources with a good chemical condition

Possible monetary value for “degradation” /capital loss: Sum of discounted future additional cost for ground water purification


Reference: Wasserwirtschaft in Deutschland (Arle et al. 2013)

Source: Umweltbundesamt, Daten der Bund/Länderarbeitsgemeinschaft Wasser (LAWA), Berichtsportal WasserBLIcK/BfG, 01.22.2010

Flood Mitigation

Surface of available, submersible floodplain, not separated by dams, outside of settlement areas

Values in % of currently free submersible floodplain outside of settlement areas (absolute instead of % values are recommended)

Possible national physical indicator:Floodable plains outside residential areas, not separated by dams

Possible monetary value for “degradation”: Sum of discounted future additional damage cost


Source: Ifuplan / ETH-Zürich 2014

Biodiversity / Habitats(Biotope Values - example from Berlin)

value class

biotope valuefrom - to

Possible national physical indicator:Sum of area sizes multiplied with biotovalue

Biotop values are used as exchange rates in offsetting schemes


Source: Senatsverwaltung für Stadtentwicklung und Umwelt, Berlin

„Capital stock“ of

high-nature-value

ecosystems in

Germany

High-Nature-Value Habitat / Ecosystem Area (ha)% of land-cover

Euro / m2

Value (Mio. €)

Dwarf shrub heathlands 83,170 0.22 41.83 34,790.01

Natural and semi-natural dry grasslands 99,720 0.27 8.06 8,037.43

Molinea meadows 14,000 0.04 18.51 2,591.40

Riparian grasslands and tall herbaceous perennial vegetation of moist to wet sites

37,700 0.10 6.14 2,314.78

Low intensively used meadows 179,000 0.48 6.14 10,990.60

and swamps free of woodland 11,100 0.03 9.80 1,087.80

Other types of agricultural grasslands with a high species diversity

447,264 1.19 2.66 11,897.22

Arable land with threatened herbaceous vegetation communities

473,124 1.26 0.49 2,318.31

Low intensively managed vineyards 7,380 0.02 13.31 982.28

Traditionally managed orchards 350,000 0.93 9.75 34,125.00

Low intensively used ponds for fish farming 3,150 0.01 48.93 1,541.30

Copses, thickets, scrub, hedgerows and tree rows in agricultural used areas

750,000 2.00 16.28 122,100.00

Natural woods and low intensively used species-rich forests

734,438 1.96 18.44 135,430.28

Pasture woodland 31,950 0.09 20.64 6,594.48

Coppice and coppice with standard 182,813 0.49 4.47 8,171.72

Nature-like woodland edge communities 3,450 0.01 22.79 786.26

Species-rich herbaceous forest fringe communities 788 0.00 2.82 22.21

Raised bogs including less degraded restoreable forms 67,489 0.18195.4

6131,914.41

Transition mires and strongly degraded raised bogs 78,498 0.21127.4

2100,022.52

Nature-like running and standing surface waters 246,675 0.66 48.93 120,698.08

Total 3,555,033 9.48 736,416.07

Valuation Basis: Restoration costs and restoration time

Method: Habitat Equivalency Analysis used in off schemes

Result:80% of the value of Germany´s productive capital / equipment


Source: Schweppe-Kraft, Natural Capital in Germany 2009

A Pragmatic Way for Considering Site Specific Demand for Site Specific Services

Values in % of currently free submersible floodplain outside of settlement areas (absolute instead of % values are recommended)

Possible pragmatic solution:

Accounting of retention area separately for locations with influence on areas that are more or less threatened by flooding

Accounting of recreation areas separately for locations with high or low demand for recreation

Agricultural products and thus also the natural capital that contributes to agricultural production has (more or less) the same value regardless of where production takes place. With natural capital that prevents us e.g. from flood damages or for recreation areas, it is quite different.


A possible way towards one natural capital on the basis of an ecosystem ranking for different specific services

CLC-Ecosystem

Condition Water retentionErosion control

Pollination∑ / Rank /

Value

Wood

FFH high: █ (4) █ █ █ █ █ (12)

semi-natural high: █ (4) █ ▄ █ █ ▄ (11)

less intensive high: █ (4) █ ▄ █ █ ▄ (11)

intensive moderate: ▄ (3) ▄ ▄ ▄ ▄ ▄ (9)

Grassland

FFH low: ■ (2) ■ █ ■ ■ █ (8)

semi-natural low : ■ (2) ■ █ ■ ■ █ (8)

less intensive low: ■ (2) ■ ■ ■ ■ ■ (6)

intensive low: ■(2) ■ ▪ ■ ■ ▪ (5)

Cropland

HNV very low: ▪ (1) ▪ ■ ▪ ▪ ■ (4)

organic very low: ▪ (1) ■ ■ ▪ ■ ■ (5)

Soil conserving very low: ▪ (1) ■ ▪ ▪ ▪ ■ (4)

intensive very low: ▪ (1) ▪ ▪ ▪ ▪ ▪ (3)

Ranking of the capacity of ecosystems for different services of

Assumption: surrounding ecological and economic conditions being the same


Relevance of ecological and economic conditions of surrounding areas for

the relevance of / demand for services

CLC-Ecosystem

surrounding conditions

Erosion control

Woodlowlands ▪

highlands █

Grasslandlowlands ▪

highlands ■

Croplandlowlands ▪

highlands ▪

► The future value of services is highly dependent on where an ecosystem is situated

► The influence of place on the value of an ecosystem is much more relevant than the influence of the condition of the ecosystem on the service

► Neglecting the influence of place/location could lead to a misinterpretation of landuse changes

► Possible solution: Accounting for different types of locations

CLC-Ecosystem

surrounding conditions

Pollination

Woodwood, grassland ▪

insect pollinated crops, orchards

▄

GrasslandWood, grassland ▪


█

Croplandhighlands ▪


▪


A possible way towards one natural capital on the basis of a

naturalness/resilience ranking

CLC-Ecosystem

naturalness/resilience compared with other CLC-types

special sub-typenaturalness

within CLC-typeranking within all

sub-types

Wood high: █ (4)

FFH high: █ (4) 7 ?

semi-natural high: █ (4) 6 ?

less intensive high: █ (4) 4 ?

intensive moderate: ▄ (3) 3 ?

Grassland moderate: ▄ (3)

FFH low: ■ (2) 6 ?

semi-natural low : ■ (2) 4 ?

less intensive low: ■ (2) 3 ?

intensive low: ■(2) 2 ?

Cropland very low: ▪ (1)

HNV very low: ▪ (1) 5 ?

organic very low: ▪ (1) 3 ?

Soil conserving very low: ▪ (1) 2 ?

intensive very low: ▪ (1) 1 ?


Conclusions / Recommendations

Arguments drawn from the first approach (specific natural capitals according to different ecosystem services) would likely deliver the most convincing arguments in practical political debates

One overall indicator for natural capital, especially a kind of resilience indicator, would satisfy the ecologic community and may fit best for public communication as well as „high-level“ politics

All three ways of accounting have their own specific opportunities, shortcomings and risks

Try both ways!

A future task in good hands

Many thanks for your kind attention

a future task in good hands methodological aspects of natural capital accounting burkhard...

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