COAST-BENEFITEcosystem Service Valuation For Coastal

Zone Management: From Promise to Practice

Northern Lights Economics, December 6-8, 2017 Project overviewGorm Kipperberg

(On behalf of Core Team)

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Personal background

Associate Professor, University of Stavanger Business School (2008-now)

Assistant Professor, Colorado State University(2006-2008)

MSC & PHD in Agricultural & Resource Economics(University of California-Davis, 2006

Junior Economist @ Seattle Public Utilities (1995-1999)

BBA (Finance) & BA Economics (Pacific LutheranUniversity, 1995)

Born & raised in Stavanger-area, Norway

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Environmental Challenges in Norway

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Pressure on «untouched areas» (challenging Norwegian traditions)

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THE COAST-BENEFIT PROJECT: Scientific positioning

Environmental Economics

Environmental valuation, benefit-cost analysis

Ecosystem services perspectives, coastal

Multi-disciplinary support (biology, geology, geography, sociology, political science etc.)

Relevance: Resource management, environmental regulations, industrial policies

Timeline: 3-year budget (about NOK 8 million); 5 years (design, implementation, publication «harvesting»); official end date: October 2019

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COAST-BENEFIT: ParticipantsCore team

HHUiS (Gorm Kipperberg, Ana Faria Lopes, Julide Ceren Ahi), Handelshøyskolen på NMBU (Ståle Navrud), Menon (Henrik Lindhjem& Kristin Magnussen)

National natural science expertsNorsk institutt for naturforskning, Havforskningsinstituttet, DetNorske Veritas

International valuation expertsMaria Loureiro (Spain), Nick Hanley (UK), Richard Carson (USA), John Loomis (USA), John Rolfe (Australia), Daniel Lew (USA), Richard Ready (USA)

Users & public sector Kystverket, Blue Planet, NORWEA, Miljødirektoratet

Master studentsUiS, UiO, NMBU

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COAST-BENEFIT: Objectives

Investigate how values of ecosystem services (ES) can be reliably estimated and combined in amended benefit-cost (BC) framework to inform decision-relevant trade-offs on different spatial and temporal scales in the coastal zone.

1. Refine, test, and triangulate various methods for valuing coastal ecosystem services. (VALUATION METHODS)

2. Amend standard BC framework to incorporate non-monetary values and equity/stakeholder concerns. (BENEFIT-COST)

3. Demonstrate valuation methods in current place-based case studies. (APPLIED VALUATION)

4. Investigate how value information can be used for analysis of trade-offs for spatial planning and policy development. (DISSEMINATION & APPLICATIONS)

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COAST-BENEFIT: WP Overview

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COAST-BENEFIT: Case studies (WP3)

Four case studies positioned against industrial sectors that simultaneously rely on and negatively impact coastal ecosystem services:1. Aquaculture (discrete choice experiment)

Large industry with growing commercial values (provisioning services); multiple negative environmental impacts (lice issue, mixing with wild salmon, waste sediments, visual dis-amenities). Will be integrated into MARES PROJECT

2. Tourism/recreation (TCM + stated preferences) Tourism is growing sector of Norwegian economy, conflicting interests with other industries

(aquaculture & renewables) as well as traditional recreation (cultural services).

3. Sea transportation (existing CV data + BT analysis) Increasing ship traffic along the entire Norwegian coast; cargos often unknown; pose a

continuous treat of chemical/oils spills with multiple negative impacts on coastal ecosystems.

4. Renewable energy (choice experiment) Licenses to initiate new renewable investment projects (wind power & small/medium scale)

are rapidly granted along the Norwegian coast. Wind power and associated infrastructure can have negative effects coastal areas. Offshore wind has also being considered. Will be intergrated into WINDLAND PROJECT.

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COAST-BENEFIT: Timeline 2016

o Fall 2015 application

o Dec. 2015/Jan. 2016 acceptance

o UiS upstart meeting March 30

o Contracts finalized in May/June

o Core team upstart meeting May 27

o PhD candidate recruitment Spring

o PhD candidate start October 1

o NFR upstart meeting September 20

o First annual NFR report October 30

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COAST-BENEFIT: Timeline 2017

o Core team work meeting & presentations at the annual meeting of Norwegian economists (January 3-4)

o Users & natural science experts meeting (March 20)

o International valuation experts seminar (March 21)

o Core team/international expert workshop (March 22-25)

o Participation & presentations at NAERE (April)

o Participation & presentations at EAERE (July)

o Case 2: Pilot beach recreation study (January - June)

o Case 3: Analysis of existing contingent valuation data on sea transportation and oil spill prevention (January-December)

o Second annual NFR report October 30

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COAST-BENEFIT: Revised milestones

Nr. Main activities / milestones* From To1 Recruit PhD scholar for UiS 2016 1 2016 32 WP1: Mapping ES & industrial activities 2016 1 2016 43 WP1: National expert and user workshop 2017 1 2017 14 WP2, A1: Primary valuation method testing 2016 4 2017 45 WP2, A2: Benefit transfer method testing 2016 4 2017 46 WP2, A3: Non-market valuation & stakeholders 2016 4 2017 47 WP2: International method workshop 2017 1 2017 18 WP3, A1: Fish farming valuation case 2017 1 2018 49 WP3, A2: Tourism / recreation valuation case 2017 1 2018 410 WP3, A3: Coastal wind power valuation case 2017 1 2018 411 WP3, A4: Sea transport valuation case 2017 1 2018 412 WP3: National case study workshop 2019 2 2019 213 Peer-review publications 2017 1 2019 314 WP3: International case study workshop 2019 2 2019 215 WP4, A1: Spatial value maps 2018 3 2019 316 WP4, A2: CBA & stakeholder analysis 2018 3 2019 317 WP4, A3: Implications for coastal mgmt 2018 3 2019 318 Dissemination to users 2018 3 2019 319 Final research and user conference 2019 3 2019 3

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COAST-BENEFIT Case 2: Beach recreation

o Hypothesis: Jæren Beaches have significant («hidden») economic values (both use & non-use components)

o Triple threat Emissions (from land & sea)

Climate change (erosion, ocean rise, changing biological conditions to plants & animals)

Industrial/commercial development (land & sea)

o What are the beaches’ current non-market value?

o How could/will values be affected in the future?

o Main method: Travel cost method (TCM), supplemented by stated preference/contingent behavior approaches

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Testing the TCM locally: Dalsnuten recreation area

References:

Lohaugen Marthe, Refsdal Greta (2016): Estimating the non-market value of single site: The Case of Dalsnuten RecreationArea. UiS Business School Master Thesis.

Lohaugen M, Refsdal G, Kipperberg G, Onozaka Y (2017): En reisekostnadsstudie av Dalsnuten-området i Sandnes, Rogaland. Samfunnsøkonomen 131: 51-66.

Kipperberg G, Lohaugen M, Onozaka Y, Refsdal G (2017): The impact of a wind farm on the use-values from a localrecreational area. Presentation at the NAERE workshop in Helsinki, Finland April 20-22.

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Dalsnuten recreation area:Wind park scenario

Se for deg at det hadde kommet en vindmøllepark som du kan se fra Dalsnuten-området.Vindmølleparken består av 25 vindmøller som er omtrent 75 – 90 meter høye. Hvordan den villepåvirke utsikten er illustrert i bildet under.

S23: Dersom det hadde kommet en vindmøllepark som illustrert, omtrent hvor mange flere ellerfærre turer ville du tatt hit årlig? [Kryss av for ett av alternativene og oppgi hvor mange flere/færreturer du ville tatt.]

Jeg ville tatt like mange turer hit årlig. Jeg ville tatt _____ flere turer hit årlig. Jeg ville tatt _____ færre turer hit årlig.

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Dalsnuten recreation area:Main findings

Mean consumer surplus: NOK 57-115 per person per visit.

Annual recreational value: NOK 11-23 million per year (based on 200 000 person visits in 2015).

Wind park: significant reduction in recreational visits & values (minus NOK 2-5 million annually).

Option values, conservation values, and any other passive-use/non-use values are excluded.

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Jæren Beaches: Pilot study of Sola beach & Orre beach

TCM survey developed withbasis in Dalsnuten study.

Hypothetical scenarios: Offshore wind park & dog-walking prohibition.

Onsite sampling at fourbeaches in March-April 2017.

About 100 respondents for each.

Bui, Linh T. & Sandra Sæland (2017): Verdsetting av et gode uten markedsverdi: Tilfellet rekreasjon på Jærstrendene. Masteroppgave på Handelshøgskolen ved UiS.

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Pilot study of Sola beach & Orre beach: Offshore wind farm scenario

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Pilot study of Sola beach & Orre beach: Master thesis results

Consumer surplus of about NOK 83-143 per person per visit.

Wind park is estimated with statistically insignificant impact (preliminary) for Sola beach and Orre beach.

Dog-walking prohibition on Sola beach has predicted negative welfare effect.

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CASE 2: Beach recreationWhat’s next?

o More pilot-testing & new master thesis early parts of 2018. Activity restrictions (sand dunes) & oil spill scenarios.

o Design & test a state-of-the-art discrete choice TCM survey with stated preference scenarios.

o Carry out general population (Rogaland) survey (potentially supplemented with more onsite sampling).

o Data analysis & dissertation chapters/articles.

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CASE 3 (Sea transportation): Oil spill outside Lofoten/Vesterålen

Multiple analyses on multiple existing CV data sources. One survey was executed by UiS researchers in April 2013:

o Objective: determine the loss of non-market values (use- and non-use) associated with potential oil spills in the area. Policy challenge: current debate to lift the ban imposed on

oil exploration in the area.

o Representative internet sample (N = 1000) of Norwegian households (NORSTAT).

o 4 different sizes of potential oil spills: Small, medium, large, extra large.

o The survey also included a set of visitation and travel cost questions...

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Lofoten/Vesterålen: WTP for Oil Spill Prevention

o Strong preferences to protect Lofoten• Mean WTP to pay to prevent any oil spill is 1300 NOK per

household per year (for 10 years). About 30% use value; 70% non-use (Egeland & Frøyland, 2016).

• WTP to prevent an oil spill ranges from 1085 NOK per household per year (for 10 years) for a small oil spill to 1869 NOK to prevent a very large oil spill (Lopes & Kipperberg, 2017).

o Pristine place: even a small oil spill would cause sufficiently large damages - diminishing marginal utility!

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Lopes & Kipperberg (2017):Baseline results (probit model)

500

1000

1500

2000

2500

WT

P es

tim

ates

(NO

K p

er h

ouse

hold

)

Small Medium Large Very Large

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Lopes & Kipperberg (2017):WTP & scope sensitivity explorations

Factors Suggested byImpact on

WTP(p-value)

Partial scope test

(Convolutions p-value)

Monotonically increasing

trend

Total scope Convolutions

test (p-value)

Baseline (direct WTP) 0.23% Yes 14.46%

Amenity Misspecification

Testing for probability of provision bias

(subjective oil spill probabilities)

Carson (1997);

Carson and Mitchell (1995)

6.78% 1.74% / 0.002% Yes / Yes 19.39% / 9.21%

Experience, knowledge and

use of the environmental

good

Previous experience with oil

spills

Suggested by Heberlein et

al. (2005) 14.10% 0.58% / 6.24% Yes / No 19.79% / 26.83%

Experience, knowledge and

use of the environmental

good

“Users” (visitors or locals) versus “non-users” (non-visitors

or non-locals)

Mentioned in Whitehead et

al. (1997)0.46% 3.17% / 3.18% No / No 22.29% / 22.55%

Preference Heterogeneity

Failure to account for Preference heterogeneity

Siikamaki & Larson (2015) 0% 0.23% / 0% Yes / Yes 14.46% / 4.32%

More tests to come!… … … … … … …

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Lofoten/Vesterålen: A travel costmethod approach (Lopes, 2017)

Aim: determining the consumer surplus of a trip to the Lofoten islands in Norway using the Single site travel cost model

Accounting for trip duration Visits to Lofoten are generally multiple day trips Onsite Time (i.e. Days or hours) is endogenous

On-site time both increases utility and represents a cost

Zero-inflated count data model shows that patterns between participation and number of hours onsite are clearly different: Younger and female respondents are more likely to visit Lofoten, whereas having a cabin

elsewhere in Norway results in lower probability of visiting Lofoten Having a cabin in Lofoten increases time onsite.

The travel cost variable is both significant and positive for the truncated and zero-inflated models Visitors travelling greater distances trade-off visits for days on-site (Bell and Leeworthy, 1990).

Consumer surplus of a trip to Lofoten is around 3800 NOK per household

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COAST-BENEFIT: Project Page & Facebook

https://www.forskningsradet.no/prosjektbanken/#!/project/255777/no

https://www.facebook.com/Coast-Benefit-620758514761920/

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Thanks for your attention!