overview of ecosystem services quantification and ... · overview of ecosystem services...

Gretchen Greene, Ph.D. and Mark Rockel, Ph.D.

Senior Natural Resource Economists, ENVIRON

Overview of Ecosystem

Services Quantification and

Valuation Approaches

Overview of Ecosystem Services

Quantification and Valuation Approaches

• Bringing the quantitative value of ecosystem

service changes into economic decision-making

• Separate Three Types of Activities:

– Taking Stock: Estimating Values for Entire Natural

Capital Stock – Environmental Accounting

– Creating Markets: Bringing more “nonmarket” goods

and services into the market system

– Evaluating Tradeoffs: Strategies that consider

marginal changes, and employ interdisciplinary teams

using a variety of different tools to make decisions that

impact the natural environment



• Introduction

•Overview of Approach

•Examples

•Summary



Introduction

• Framework

• Pros and Cons

• History

Economic

valuation

function

Ecological

production

function

Ecosystem

structure

& function

Values

Ecosystem

goods and

services

Human actions

(policy

environment)

from National Research Council 2005

Introduction

Framework

Introduction:

Framework – Economic Value Types

• Market Values

– Timber

– Commercial Fishing

– Agriculture

• Emerging Ecosystem

Service Markets

– Wetland Banks

– Carbon Markets

– Water Quality Trading

– Air Quality Markets

• Non-Market Values

– Direct Use

• Recreation

• Education

• Subsistence

– Indirect Use Value

• Habitat

• Flood Projection

– Passive Use Value

• Religious/Cultural

• Nonuse/Existence

Value

• Option

Introduction:

Framework – MEA Service Types

Introduction:

Framework – Valuation Techniques

• Travel cost method

• Hedonic pricing

• Contingent value/

choice/conjoint analysis

• Benefit transfer

• Averting behavior/

avoided cost

• Ecosystem service market

prices

Introduction

Pros and Cons of Valuing Ecosystem Services

• Case for

– Stewardship

– Manage assets/liabilities

– Public planning/investing

– Prevent damage/degradation

– Environmental accounting

– Establish payments for ecological services

• Case against

– Commodification of nature

– Difficult, lack of agreement

– May not work (may do more harm than good)

– Free market environmentalism

Introduction:

Economic Value History

• Travel cost suggested late 1940s

– Harold Hotelling recommends federal government use travel

costs as a proxy for the value of national parks to the nation

• Methods evolve through 1970s

– Travel Cost Method (TCM)

– Contingent Valuation Method (CVM)

– Hedonic Property Values

• Benefit cost analysis

(Principles & Guidelines) 1983

– Public decision making including values for improving/degrading

environmental quality

– Framework still used today (baseline, change from, monetary

value estimate for nonmarket goods)

• Free market environmentalism 1991

Introduction:

Economic Value History

• Environmental accounting 1990s

– Wasting Assets (Repetto et al., 1989)

– U.N. Recognizes need for “satellite”

system to the System of National

Accounts (SNA), 1993

• Valdez “blue ribbon panel” 1995

– Panel defines protocols for use and

application of different methodologies

like CVM

• Ecosystem services 2000 - ?

• Millennium assessment 2003

• Geo Spatial Modeling

Valuation of Ecosystem Services to Support

Decision-Making

Overview of Approach

Overview of Approach:

Ask Key Questions

• Goal of analysis

• Scale

– Geographic

– Demographic

– Temporal

• Gains, losses or status quo?

• Economic, ecologic or both?

• Ex-ante or ex-post?

Services (%

)

0%

100%

Pristine condition service level

Time →

Baseline service level given

anthropogenic sources/industrialization

Adverse impact

Net change in ecosystem services with

decline and rebound over time


Establish Baseline


Understand changes from baseline


Evaluate with/without change

Figure 1. Three different payments for

environmental services scenarios: (a) static,

(b) deteriorating, and (c) improving service-

delivery baseline. Dotted lines show de facto

service delivered “with ES”; solid lines show

counterfactual baseline “without ES.”

Additionality is the incremental service

delivered through PES vis-`a-vis the

counterfactual baseline.

Wunder 2007


Aggregate through time

Year Value

Compound/

Discount

Factor

Adjusted

Value

1997 $515,712 1.47 $757,341

1998 $537,844 1.43 $766,837

1999 $537,979 1.38 $744,689

2000 $548,262 1.34 $736,818

2001 $550,289 1.30 $718,002

2002 $104,743 1.27 $132,686

2003 $102,233 1.23 $125,733

2004 $102,233 1.19 $122,071

2005 $102,233 1.16 $118,516

2006 $102,233 1.13 $115,064

2007 $102,233 1.09 $111,713

2008 $102,233 1.06 $108,459

2009 $102,233 1.03 $105,300

2010 $102,233 1.00 $102,233

2011 $102,233 0.97 $99,166

2012 $102,233 0.94 $96,191

2013 $102,233 0.91 $93,305

2014 $102,233 0.89 $90,506

2015 $102,233 0.86 $87,791

Total Value in 2010 $ $5,232,420

• Present value (PV) of the stream of net social

benefits over the relevant time horizon:

PVNB

= Σi (B

i – C

i)/(1+r)

i

i = 1, 2, …, n.

• (Bi – C

i) = net social benefit “i” years from

present

• “r” = discount rate (see next slide)

• PV = (future value)/(1+r)i

• “n” = end period of total time horizon

(years from present)


Benefit Cost Analysis

• Would you rather have $10,000 now or in

1 year? (Raise hands for now)

• Would you rather have $9,900 now or $10,000

in 1 year? (Raise hands)





• $9,000 now ?

• $8,500 now?

• $7,500 now?



Methods:


PV is inversely related to discount rate

Discount rate (%) Present value of $100 to be

received in 50 years

0.5 $77.93

1 $60.80

2 $37.15

5 $8.72

10 $0.85

20 $0.01

• Habitat Equivalency Analysis (HEA)

– Decision Making without Monetary Units

• Payments for Ecosystem Services (PES)

– Services of Floodplain

• Shellfish Aquaculture

– Working toward Nutrient Trading Market

• Traditional Use Study

– Subsistence Use

– Traditional Ecological Knowledge (TEK)

– Lost Income

Valuation of Ecosystem Services to Support

Decision-Making

Examples

Example 1:

HEA (Draft)

Acres Lost to

Terminal

Footprint

Baseline

Quality of

Acres Lost

Enhanced (+) Restored (+) Created (+) Converted (-) Enhanced (+) Restored (+) Created (+) Converted (-)

149.8 67% 236.9 0 0 9.9 243.2 0 56.8 1.9

123.4 15% 65.7 0.6 0 6.9 0 0 0 73.7

7.3 33% 0 0 0 0.3 0 0 0 1.4

3.6 67% 1.2 2.2 1.5 1.2 0.5 4.7 0 0

4.9 33% 4.3 2.3 5.1 4.3 2.2 10.7 0 0

3.4 67% 0.5 2.2 5.1 0.5 1.4 4.8 0 0

0.8 79% 2 0 4.1 0 5.1 0 0 0

0.01 67% 1.2 0 0 0 0.5 0 3.4 0

0 50% 4.3 0 2 0 2.2 0 3.4 0

0 67% 0.5 0 0 0 0.5 0 3.4 0

0.3 82% 2.2 0 2.1 0 2 0 3.4 0

Wetland Herbaceous

Wetland Scrub/Shrub

Open Water (Ponds)

Shallow Water

Conifer/Hardwood

Table 1: Acres of Habitat and Baseline Quality

Mitigation Plan A1 (ACRES) Mitigation Plan A2 (ACRES)Footprint

Habitat

Upland

Conifer/Hardwood

Upland Herbaceous

Upland Scrub/Shrub

Shallow Water

Herbaceous

Shallow Water

Shrub/Scrub

Shallow Water

(River/Beach)

Wetland

Conifer/Hardwood

Example 1:

HEA (Draft)

A1

Co

nve

rted

Years to

Recovery

Baseline

Quality

Endpoint

Quality

Percent

Success

Years to

Recovery

Baseline

Quality

Endpoint

Quality

Percent

Success

Years to

Recovery

Baseline

Quality

Endpoint

Quality

Percent

Success

Baseline

Quality

Upland

Conifer/Hardwood10 67% 100% 90% 9 0 100% 90% 9 0 100% 90% 73%

Upland Herbaceous 5 50% 100% 50% 8 0 100% 50% 8 0 100% 50% 79%

Upland Scrub/Shrub 3 33% 100% 90% 7 0 100% 90% 7 0 100% 90% 76%

Wetland

Conifer/Hardwood 10 67% 100% 90% 10 0 100% 90% 10 0 100% 90% 79%

Wetland

Herbaceous 5 33% 100% 50% 5 0 100% 50% 5 0 100% 50% 79%

Wetland

Scrub/Shrub3 67% 100% 90% 4 0 100% 90% 4 0 100% 90% 79%

Open Water (Ponds) 1 79% 100% 90% 9 0 100% 90% 9 0 100% 90% 79%

Shallow Water

Conifer/Hardwood10 67% 100% 90% 10 0 100% 90% 5 0 100% 90% 82%

Shallow Water

Herbaceous 5 50% 100% 50% 10 0 100% 50% 10 0 100% 50% 82%

Shallow Water

Shrub/Scrub 3 67% 100% 90% 9 0 100% 90% 9 0 100% 90% 82%

Shallow Water River1 82% 100% 82% 10 0 100% 82% 10 0 100% 82% 82%

Table 2: Assumptions for Mitigation Plan A1

Habitat

A1 Enhancement Assumptions A1 Restoration Assumptions A1 Creation Assumptions

Example 1:

HEA (Draft)

Example 2:

Payments for Ecosystem Services

• Carson River Watershed – payments to farmers

for floodplain preservation

– Simulated flooding with development (HEC-RAS)

– Estimated water quantity

savings (Attenuation)

– Estimated reduced speed

of flood event; increased

warning time

• Results:

– 13 AFY; 18 AFY

– 181 cfs; 319 cfs

– 1 – 2 hours

– $300 - $1900 per year

PES

Example 3:

Shellfish Aquaculture

• Excessive contributions of inorganic

nitrogen (ammonia and nitrate) is

recognized as the primary cause of

degraded water quality, hypoxia, habitat

loss and biodiversity in our nation’s coastal

ecosystems (NOAA 2009)

• Shellfish help to mitigate for these excessive

nutrient contributions through harvest

Oyster Restoration Is Worth Every Penny

Saturday, August 15, 2009, Washington Post Editorial Page

Excerpt:

For one acre, a restored wetland costs $55,000; sediment

remediation is over $1 million; and a 1 1/2 -foot oyster reef is

$40,000. Moreover, the secondary benefits of this investment include

foraging ground and nursery habitat for blue crab, the most

valuable fishery in the Chesapeake Bay; over 900 pounds per acre

annually of valuable fish such as sheepshead and black sea bass;

improved water quality; and, production of larvae that settle on

commercial and private fishing grounds. One waterman in the Great

Wicomico stated that he harvested 400 bushels of oysters from his

private lease in 2008, more than any other time over the past 30

years.

Example 3:


Example 3:


• Based on replacement cost, Burke (2009)

to estimates the value of nitrogen removal

resulting from oyster aquaculture. One annual

oyster harvest for 2010 totaled 5,400,000

oysters, estimated to sequester and remove

between 972 and 2,808 tons of nitrogen.

Using the value estimates from Burke, this

suggests that the value of removing nitrogen

from the farm water is between $8,916 and

$257,400 per year.

Example 3:


Example 4:

Traditional Use Study

• Analyzing the ES losses to Indigenous population from

the disruption of lands.

• Traditional use involves indigenous cultures using the

functions and processes of ecosystems. of natural

resources.

• Involves performing a

primary survey in order to

collect communities impact

of the impact related to the

road

• Mapping resources and

geospatial analysis

• Developing monetary value

estimate for settlement

purposes

Example 4:

Traditional Use Study

Summary of Economic Losses

Category Impact per

Unit

Total Historical

Losses

Total Future

Losses Total Losses

Passive and Non-Market Values

Traditional &

Community

Values

$4.21 per

hectare per

person per

year

$12,862,325 $2,738,140 $15,600,465

Subsistence

Value

$733 per

hectare $9,497,413 $2,018,611 $11,516,024

Lost Income

Non-Timber

Forest Products

$38.85 per

unit sold $896,982 $93,888 $990,870

Timber

Stumpage

$2.36 per

cubic meter $53,438 - $53,438

Total Economic Impact $23,310,158 $4,850,639 $28,160,797

Summary

• Appropriate ecosystem service

quantification tool depends on nature and

scale of problem

• Ecosystem Service Quantification Topics

Include

– Taking Stock – How much is it worth in $$?

– Creating Markets – Getting ecosystem services

into the traditional monetary economic system

– Evaluating Tradeoffs – Variety of tools using $$

and other metrics

• Need a big toolkit

• Quantification is interdisciplinary

overview of ecosystem services quantification and ... · overview of ecosystem services...

Documents