Ecosystem Services - Defined & In
Transcript Of Ecosystem Services - Defined & In
August 18, 2011
What are Ecosystem Services Worth? Valuation Methods and Applications
Jessica Musengezi Defenders of Wildlife
Frank Casey Center for Science, Decisions, and Resource Management, USGS
North Bay Ecosystem Services Conference San Raphael, California, August 18, 2011
Topics
– Definition and Types of Ecosystem Services – Types of Economic Benefits Valuation – Valuation Examples – Resources for Benefits Estimation
Ecosystem Services Definition: economic perspective
• Direct and indirect benefits people obtain from ecological systems (Millennium Ecosystem Assessment, 2003)
• Ecosystems are natural assets that provide a flow of goods and services valuable to individuals and society collectively (Daily et al.,2000; Turner, 2008)
Types of Ecosystem Services
• Climate, water, and gas regulation • Water supply, nutrient supply • Soil formation, nutrient cycling • Waste management, biological control • Wildlife habitat, food production • Recreation, cultural and scenic values
Ecosystem Functions vs. Ecosystem Services vs. Ecosystem Service Values
• Ecosystem Functions: Biophysical processes in an ecosystem
• Ecosystem Services: Outputs of ecosystem functions that directly or indirectly benefit humans
• Ecosystem Service Values: the benefits humans receive from ecosystem services
Ecosystem service valuation dilemma
• Market Failure - Many ecosystem services are public goods - Their value cannot be captured by providers in free markets - Few created markets for public goods (e.g., wetlands)
Ecosystem Services - Defined & In Practice
Pricing of Ecosystem Services
Identify economic values of ecosystem service… Valuation is often difficult and complex
Total Economic Value = Use Value
+ Passive-use Value
Direct Use Value +
Option Value +
Indirect Use Value
Existence Value +
Stewardship Value +
Bequest Value
August 18, 2011
Quantify values: no lack of methods, but often complex and costly
Total Economic Value =
Use value
Direct use value
+
Quantification approaches:
Indirect use value
+
(“Ecosystem functional value”)
Travel Cost Method Surrogate market valuation Hedonic prices Contingent Valuation Methods
Production function approach Damage costs avoided Preventive expenditures Travel Cost Method Surrogate market valuation Contingent Valuation Methods [Replacement cost]
+
Passive use value
Option value
Contingent Valuation Conjoint Analysis Individual Choice models
Existence value Quantification approaches:
+ Intrinsic value + Bequest/Stewardship value
Contingent Valuation Methods
Source: Barbier (2000)
Valuation approaches
• Original valuation study OR
Benefits transfer: using results from original studies for similar sites
Preferred approach depends on cost of original research and the potential opportunity cost of using benefit transfer (Bryon and Loomis, 2008)
Economic valuation of ecosystem services
Steps: 1) Identify the ecosystem (land area and land use)Identify services (human uses) provided by system
2) Quantify service flows in physical terms
Biologists Ecologists Hydrologists Recreation planners
3) Identify unit values ($) for individual flows
Economic values are always context-specific!
Example: The economic value of a wetland’s removal of 100 kg of nitrogen per year from surface waters depends on whether the water is used by humans, the marginal value of the removal for those uses, and on the cost of alternative removal options.
Applications of ES Valuation
• Cost/Benefit Analysis of projects • Level of return on an investment • Damage Assessments/Compensation • Evaluating Regulatory Programs • Fundamental Recognition Tool
Some valuation examples…
Ecosystem Services - Defined & In Practice
August 18, 2011
An Economic Analysis of the Benefits of Habitat Conservation on California Rangelands (2009).
• Applies cost benefit analysis. • California rangelands generate a wide range of
valuable services. • Ranchers are unable to prevent others from enjoying
the benefits from their management and do not have an incentive to take full benefits into account. • Without cost share programs or ES markets, highest benefits will not be produced.
A California Rancher Survey on Payments for Ecosystem Services (2010)
• Survey of California ranchers 2009 – Rancher Background – Participation in conservation programs – Perspectives on payments for ecosystem services
• 158 responses
Survey Results
• Very little familiarity with terms Ecosystem Services or Payments for Ecosystem Services (PES). BUT
• Familiar with terms such as wildlife habitat management, water quality improvement, vegetation management, invasive species control.
• Ranchers are strongly interested in PES programs, particularly those tied to wildlife habitat.
• 77% were willing to participate in a PES program.
Rancher Interest in Selected Ecosystem Service Related Activities
Conjoint Analysis choice experiment:
PES program attributes:
Attributes Contract Length Program Administration
Payment Level
Description Amount of time that land can be enrolled in a conservation program Organization that would administer the program
Rental payment (per acre, per year) for enrolling land in a program
Levels 5, 15, 30 years
Federal Agency State Agency Non-profit Organization Private Company $5, $10, $20, $50
Ecosystem Services - Defined & In Practice
• All program attributes have significant impact on decision to participate in PES program.
• Ranchers prefer flexible program structures that are built on shorter contracts, higher payments and minimal administrative burden.
– Contract Length:
• An additional year would cost an extra $ 0.81/acre
– Program administrator:
• Conservation organization is the preferred administrator • Private company costs additional $ 2.28 • Federal agency costs additional $ 11.50 • State agency costs additional $ 25.22
Policy Implications
• PES outcomes must result in win-wins
– Conservation happens but also improves financial and productive health of the operation
– Conservation of wildlife habitat is shared interest
• Implementation of a PES program more likely to succeed using conservation partners.
• Payment levels will have to be higher for long term conservation contracts.
• Low familiarity with PES terminology will require substantial outreach, education, and pilot testing using traditional media.
August 18, 2011
Valuation Tools
BLM/USGS Ecosystem Services Valuation Pilot (San Pedro River) Artificial Intelligence for Ecosystem Services (ARIES) Integrated Valuation of Ecosystem Services and Tradeoffs (InVest) Defenders of Wildlife: Habitat Benefits Toolbox
Valuation Tools
Multiscale Integrated Models of Ecosystem Services (MIMES)
Santa Cruz Watershed Ecosystem Portfolio Model
Business for Social Responsibility (BSR) Corporate Ecosystem Services Review (WRI) Eco-Metrix (Parametrix) EcoAim (Exponent) ESValue (Entrix) Management-Scale Ecosystem Assessment using Remote Sensing (MEASURES-V Tech)
Valuation Tools
Ecosystem Service Market Establishment: Negotiations between buyers and sellers
Social Values for Ecosystem Services (SolVES)
Ecosystem Portfolio Model (South Florida, Puget Sound)
Valuation going forward
• Growing body of literature • Expanding Valuation Tools • Potential Ecosystem Service Markets • Increased Recognition
Jessica Musengezi [email protected]
Ecosystem Services - Defined & In Practice
August 18, 2011
Conclusions on Ecosystem Service Markets
Promises
– Attract more financing and increase private incentives for protection of ecosystems and their services
– Make conservation more competitive with alternative land uses
– One more tool in the tool box for conservation
Valuation approaches: - Original valuation study - Benefits transfer: using results from original studies for similar sites
- Preferred approach depends on cost of original research and the potential opportunity cost of using benefit transfer (Bryon and Loomis, 2008)
Ecosystem Services - Defined & In Practice
What are Ecosystem Services Worth? Valuation Methods and Applications
Jessica Musengezi Defenders of Wildlife
Frank Casey Center for Science, Decisions, and Resource Management, USGS
North Bay Ecosystem Services Conference San Raphael, California, August 18, 2011
Topics
– Definition and Types of Ecosystem Services – Types of Economic Benefits Valuation – Valuation Examples – Resources for Benefits Estimation
Ecosystem Services Definition: economic perspective
• Direct and indirect benefits people obtain from ecological systems (Millennium Ecosystem Assessment, 2003)
• Ecosystems are natural assets that provide a flow of goods and services valuable to individuals and society collectively (Daily et al.,2000; Turner, 2008)
Types of Ecosystem Services
• Climate, water, and gas regulation • Water supply, nutrient supply • Soil formation, nutrient cycling • Waste management, biological control • Wildlife habitat, food production • Recreation, cultural and scenic values
Ecosystem Functions vs. Ecosystem Services vs. Ecosystem Service Values
• Ecosystem Functions: Biophysical processes in an ecosystem
• Ecosystem Services: Outputs of ecosystem functions that directly or indirectly benefit humans
• Ecosystem Service Values: the benefits humans receive from ecosystem services
Ecosystem service valuation dilemma
• Market Failure - Many ecosystem services are public goods - Their value cannot be captured by providers in free markets - Few created markets for public goods (e.g., wetlands)
Ecosystem Services - Defined & In Practice
Pricing of Ecosystem Services
Identify economic values of ecosystem service… Valuation is often difficult and complex
Total Economic Value = Use Value
+ Passive-use Value
Direct Use Value +
Option Value +
Indirect Use Value
Existence Value +
Stewardship Value +
Bequest Value
August 18, 2011
Quantify values: no lack of methods, but often complex and costly
Total Economic Value =
Use value
Direct use value
+
Quantification approaches:
Indirect use value
+
(“Ecosystem functional value”)
Travel Cost Method Surrogate market valuation Hedonic prices Contingent Valuation Methods
Production function approach Damage costs avoided Preventive expenditures Travel Cost Method Surrogate market valuation Contingent Valuation Methods [Replacement cost]
+
Passive use value
Option value
Contingent Valuation Conjoint Analysis Individual Choice models
Existence value Quantification approaches:
+ Intrinsic value + Bequest/Stewardship value
Contingent Valuation Methods
Source: Barbier (2000)
Valuation approaches
• Original valuation study OR
Benefits transfer: using results from original studies for similar sites
Preferred approach depends on cost of original research and the potential opportunity cost of using benefit transfer (Bryon and Loomis, 2008)
Economic valuation of ecosystem services
Steps: 1) Identify the ecosystem (land area and land use)Identify services (human uses) provided by system
2) Quantify service flows in physical terms
Biologists Ecologists Hydrologists Recreation planners
3) Identify unit values ($) for individual flows
Economic values are always context-specific!
Example: The economic value of a wetland’s removal of 100 kg of nitrogen per year from surface waters depends on whether the water is used by humans, the marginal value of the removal for those uses, and on the cost of alternative removal options.
Applications of ES Valuation
• Cost/Benefit Analysis of projects • Level of return on an investment • Damage Assessments/Compensation • Evaluating Regulatory Programs • Fundamental Recognition Tool
Some valuation examples…
Ecosystem Services - Defined & In Practice
August 18, 2011
An Economic Analysis of the Benefits of Habitat Conservation on California Rangelands (2009).
• Applies cost benefit analysis. • California rangelands generate a wide range of
valuable services. • Ranchers are unable to prevent others from enjoying
the benefits from their management and do not have an incentive to take full benefits into account. • Without cost share programs or ES markets, highest benefits will not be produced.
A California Rancher Survey on Payments for Ecosystem Services (2010)
• Survey of California ranchers 2009 – Rancher Background – Participation in conservation programs – Perspectives on payments for ecosystem services
• 158 responses
Survey Results
• Very little familiarity with terms Ecosystem Services or Payments for Ecosystem Services (PES). BUT
• Familiar with terms such as wildlife habitat management, water quality improvement, vegetation management, invasive species control.
• Ranchers are strongly interested in PES programs, particularly those tied to wildlife habitat.
• 77% were willing to participate in a PES program.
Rancher Interest in Selected Ecosystem Service Related Activities
Conjoint Analysis choice experiment:
PES program attributes:
Attributes Contract Length Program Administration
Payment Level
Description Amount of time that land can be enrolled in a conservation program Organization that would administer the program
Rental payment (per acre, per year) for enrolling land in a program
Levels 5, 15, 30 years
Federal Agency State Agency Non-profit Organization Private Company $5, $10, $20, $50
Ecosystem Services - Defined & In Practice
• All program attributes have significant impact on decision to participate in PES program.
• Ranchers prefer flexible program structures that are built on shorter contracts, higher payments and minimal administrative burden.
– Contract Length:
• An additional year would cost an extra $ 0.81/acre
– Program administrator:
• Conservation organization is the preferred administrator • Private company costs additional $ 2.28 • Federal agency costs additional $ 11.50 • State agency costs additional $ 25.22
Policy Implications
• PES outcomes must result in win-wins
– Conservation happens but also improves financial and productive health of the operation
– Conservation of wildlife habitat is shared interest
• Implementation of a PES program more likely to succeed using conservation partners.
• Payment levels will have to be higher for long term conservation contracts.
• Low familiarity with PES terminology will require substantial outreach, education, and pilot testing using traditional media.
August 18, 2011
Valuation Tools
BLM/USGS Ecosystem Services Valuation Pilot (San Pedro River) Artificial Intelligence for Ecosystem Services (ARIES) Integrated Valuation of Ecosystem Services and Tradeoffs (InVest) Defenders of Wildlife: Habitat Benefits Toolbox
Valuation Tools
Multiscale Integrated Models of Ecosystem Services (MIMES)
Santa Cruz Watershed Ecosystem Portfolio Model
Business for Social Responsibility (BSR) Corporate Ecosystem Services Review (WRI) Eco-Metrix (Parametrix) EcoAim (Exponent) ESValue (Entrix) Management-Scale Ecosystem Assessment using Remote Sensing (MEASURES-V Tech)
Valuation Tools
Ecosystem Service Market Establishment: Negotiations between buyers and sellers
Social Values for Ecosystem Services (SolVES)
Ecosystem Portfolio Model (South Florida, Puget Sound)
Valuation going forward
• Growing body of literature • Expanding Valuation Tools • Potential Ecosystem Service Markets • Increased Recognition
Jessica Musengezi [email protected]
Ecosystem Services - Defined & In Practice
August 18, 2011
Conclusions on Ecosystem Service Markets
Promises
– Attract more financing and increase private incentives for protection of ecosystems and their services
– Make conservation more competitive with alternative land uses
– One more tool in the tool box for conservation
Valuation approaches: - Original valuation study - Benefits transfer: using results from original studies for similar sites
- Preferred approach depends on cost of original research and the potential opportunity cost of using benefit transfer (Bryon and Loomis, 2008)
Ecosystem Services - Defined & In Practice