Valuation of nature in political decision making

Experience in the Netherlands

Dr.ir. E.C.M. Ruijgrok, 09/2002

• Acidification abatement leads to increased nature quality

• To include this benefit in Cost Benefit Analysis:

Nature must be valued in monetary terms.

Nature and Acidification

Key questions

1. What is socio-economic valuation?- how do different views on nature determine valuation?

2. Why economic valuation of nature?- what is the role of valuation in political decisions?

3. How to determine the economic value of nature related to acidification abatement? - how much experience do we have in the Netherlands?

• Hands- off• Classical • Nature development• Co-evolution• Functional

What is the value of nature?

This depends on your view!

Do not value

Ecological Valuation

Both socio-economic and ecological valuation

Financial valuation

Views on nature: Valuation:

Financial value:Income for humans

Socio-economic value:Welfare for humans, by production-, regulation-, information- and non-use functions

Ecological value:Welfare for plants and animals

The financial value of not exploited nature areas is very small or even zero!

Why valuation of nature?

In general:

To make the trade off between economic and ecologicalinterests more balanced

In today’s political context:

To complete Cost Benefit Analyses in such a way that:• they can support investments in nature• they can prevent damage to nature

Cost Benefit Analyses

• Important role in national en regional infrastructural works

• The role of the Enviromental Impact Assessment is reduced

• Nature is not included in CBA’s

• The position of nature is deteriorating

Including nature in CBA

Some pitfalls:

• Is nature valued financially of socio-economically?

• Are all functions of nature included?

• Do not replace intrinsic valuation by economic valuation; make them complementary!

How to determine the economic value of nature related to acidification abatement?

Can unaffected nature performthis function better?

Overlap?Out: functions affectedby acidification

In: all kinds of ecosystem functions

Functions affected by acidification:

• CO2 fixation

• Nitrogen storage

• Aluminium binding

• Binding heavy metals

• Recreational perception

• Non-use

Different functions, different valuation methods

Total economic value

Non-use valueUse value

Option/Quasi-optionvalue

Bequestvalue

Existencevalue

Indirect usevalue

Direct usevalue

Productionvalue

Informationvalue

Regulationvalue Contingent Valuation

Market AnalysisContingent ValuationHedonic PricingTravel Cost

Damage cost avoidedAbatement costs

A combination of valuation methods:

Socio-economic valuation =

• Importance• Material and immaterial welfare• Representation of social preferences

Willingness to pay as measurement

Dutch experience with valuation (1973-2002)

53

14

6 1

transfersoriginal CVMoriginal HPMoriginal TCM

Source: Historical overview of Dutch valuation studies

Platform for Economic Valuation of Nature

Aim: to strengthen the position of nature, landscape, cultural heritage and environment in the public decision making process

http://www.fsd.nl/naturevaluation.

Network of specialistsLearn from experience in other countries