Valuing Biodiversity

Professor Caroline SaundersAERU

Lincoln University

NZ: young isolated country

• Large part of NZ economy is related to land (1/3 GDP are exports, 70% from land)

• 1/3 of the land is under conservation estate• Emphasis is on indigenous biodiversity and

protecting this from exotic species• Understanding of multifunctionality low• No subsidies for agriculture

What is Biodiversity?- Indigenous versus exotic

• In NZ debate around indigenous biodiversity• Controversy that any biodiversity is of value on

and around farm land – under 20% of area• Concern re impact of agriculture on water

biodiversity and loss of remnant ‘bush’• How to measure – biodiversity footprinting in

infancy – number of species, land area…• Weeds and pests main issue eg: possums, pines

Policies for biodiversity protection

• Public ownership - conservation estate (1/3 land)• Recent land tenure reform• QE II covenants – voluntary removal of land in

perpetuity from production (small areas)• NPS on protecting biodiversity on private land –

voluntary with very limited funds• Pest free NZ – removal of possums, rats, mice,

stoats and cats!!! – philanthropy

Value proposition for biodiversity

• Citizens - total value - non market valuation (Tbfree, DoC)

• Right to operate (Dairy, mining)• Market positioning and premiums (AirNZ,

Icebreaker, Zespri)• Eco System services – beneficial planting

(erosion control)

Methods to value biodiversity – vary

• Reduction in operating expenses – ecosystem services

• Saved costs from extreme events• Benefits from increased productivity• Improved market returns from premiums • Non- market valuation techniques

Market access – labelling schemes

• Global G.A.P. – conservation management plan• Leaf – Farm Environmental Policy• Zespri – Environmentally friendly production, fantailsin orchards are encouraged

• Hard to calculate value of these eg ; leaf waitrose

Importance of attributes of NZ food productsUK

Indi

a

Chin

a

UK

Indi

a

Chin

a

UK

Indi

a

Chin

a

UK

Indi

a

Chin

a

UK

Indi

a

Chin

a

Certified Food Safety Country of Origin Recyclable Certified Animal Wel-fare

Certified Environ. Quality

0%

20%

40%

60%

80%

100%

Don't Know

Not Important At All

Somewhat Important

Neither Important Nor Unimportant

Somewhat Important

Very Important

WTP of attribute as % of product price in China, India and the UK

China India UK

Dairy Lamb Dairy Lamb Dairy Lamb

Safety 74% 44% 73% 77% 16% 18%

Welfare 26% 13% 42% 41% 17% 22%

Water 16% 12% 19% 26% 3% 7%

GHG 25% 14% 38% 39% 7% 7%

Biodiversity 22% 15% 27% 42% 6% 6%

Foreign Origin 26% 10% -20% - -4% -5%

NZ Origin 49% 24% 10% 21% 3% 6%

Notes: WTP derived using Krinsky and Robb method.

Biodiversity as ecosystem service• Greening Waipara- 50 wineries in N Canterbury (Pegasus pay and Torlesse vineyards) – financial benefits currently low

• Shelterbelts in native species(3% increase in dairy production)

• Riparian panting for water quality• Tree planting reduces erosion

(NZ$100m + per year)

How to value total benefits - WTP

• History of this in policy making and legislation• Used to be contingent valuation now cutting

edge is choice modelling• Has had a mixed history especially with

contingent valuation but non-market valuation now established technique

• Used across range of areas from transport; markets; and environmental valuation

Policy Relevance

• First study in the UK on ESA south downs and Somerset levels by MAF to aid funding

• Few studies in NZ to inform policy and nervous re large estimates which do not suit policy environment

• Working with MPI, DoC Treasury re use of technique especially embedded in policy alternatives

Choice modelling

• Looks at a range of ‘attributes’ or outcomes• Elicit WTP by respondents trading off between

these outcomes• This improves the accuracy by embedding

attributes alongside other outcomes• It gives more detail of preferences

Choice modelling of impacts of irrigation

• Assessing WTP for cultural; environmental; social and economic impacts of irrigation

• Environmental attributes QMCI biotic index of macro invertebrates

• Cultural attribute – culture health index; presence of food; stream health and site status

• 3 scenarios modelled (Miller et al 2013)

Results

• For environment – WTP $25 in rates for improvement poor to good and $198 from poor to excellent

• For cultural WTP $57 to go from poor to above average

• To compensate for increase in irrigation $40 m $1364 per hectare (benefit from increased irrigation is around $4,000 per hectare)

NZ native and exotic trees and shrubs

Choice set

Results

• Planting Purely native (trees) $120 • Planting mixture of natives and non-

natives (trees) were valued $112

• Yao, R. and Kaval, P. (2009)

Value of possum control

• Observable market prices are not available that can reveal

what New Zealand farmers are willing to pay for many of

the types of benefits that flow from TB-vector control

• To estimate values we employed the non-market

valuation methodology of choice modeling

• This involved conducting an online survey of 6,000 New

Zealand farmers

• 1,021 responses (17%) with a good representation of farm

type, size and location

Choice Experiment

• Farmers presented with a series of choice tasks• For each choice task, famers choose between at least two

options• Each option is described by a number of characteristics or

attributes, which describe management outcomes• Statistical information derived from these choice tasks is

modeled to reveal the relative importance of each attribute• By including a monetary attribute in choice tasks, the

monetary value of other attributes can be calculated

Current Management

Situation

Management Alternative A

Management Alternative B

Long term (>20yr) TB infection rate per year in your

area

1 farm per 1‚000 No infections 1 farm per 1‚000

Current TB management levies

Same as now Increase by one

third Increase by two

thirds

Long term (>20yr) cost of TB testing

of livestock

40% less than current testing

cost

60% less than current testing cost

50% less than current testing cost

Presence of possums sighted or heard in VRA farms

Three to four times a year

Once a fortnight Almost Never

Possum threat to native plants‚ birds and animals on and

off farm in VRAs

Low threat on farms‚

improvement in most off-farm bush

areas

Substantial damage, increase in threats to pre-1990

levels

Low threat on farms‚ significant

widespread improvement in off-

farm bush areas

Possum damage on farm to pasture‚

crops‚ trees and gardens in VRAs

Same as now 20% increase Slight decrease

Selection >>

Key Findings

• Strong farmer support for the TbFree programme. Generally, farmers indicate a high level of satisfaction with the performance of the programme

• 80% of all farmers think that the value of the benefits of the TbFree programme equals or exceeds what they pay towards the programme

• Farmers in VFAs are still willing to pay for benefits that are only enjoyed by farmers in VRAs, but not by as much as VRA farmers

• The national value of benefits to farmers from reduction in threat to native plants, birds and animals on and off-farm in VRAs is approx. $1.46 to $3 million more than current levies annually (that is around $40 million)

Valuing conservation benefits from TB-vector control

• Pilot method in three habitat-strategic contexts

– Kahurangi

– Hauhugaroa / Pureroa

– Hawkes Bay farmland

• This is to be expanded in another study to all of NZ

• Survey under construction

Hawkes Bay

Issues with the technique

• Cost – and limited transfer of results• Biases – hypothetical, mental account…• Ensure comparison with real policy alternatives• Ensure payment vehicle realistic• Careful design reduces these biases• In fact some studies found people underestimate

what they are actually did pay• Complex survey technique

Issues in NZ

• How to characterise different biodiversity areas / types• What are the units to be valued (area v species)• The impact of distance to urban areas and size of areas • How to scale to the policy relevant area• How to ensure the outcomes are based on what is achievable• Science to provide relevant measures of the attributes• Complexity biological heterogeneity hard to capture

everything• Multi disciplinary research - can biophysical scientists

communicate with economists and then the general public

Future research

• Calculate and communicate the value proposition from biodiversity – market/ecosystem services/ NMB

• Represent ecological complexity in a manner that could enhance benefit transfer of valuation

• Research into the relative value of biodiversity compared to other goods and services

• Validate results linking with other disciplines and experimental and behavioural economics

• Valuation of biodiversity eco-system services• Assess consumer demand for biodiversity