Cor de Jong WaterLand International, Wageningen

Functions and values of water

Cor de JongWaterLand International, Wageningen

Water

• In this presentation ‘water’ means:– water in the landscape– water as an integral part of nature– water as a complex of ecosystems

Functions and values of water (1)

• Water fulfils a great number of functions• All of them have a value• Most people have only a very limited

awareness of the total economic value of water, let alone of the total value of water, which includes its intrinsic value

• The same applies to many economists


• In most water development projects even the economic value of water is only partly taken into account

• Nature values are generally completely neglected

• To reverse this adverse practise, some ecologists, engineers, and economists have joint to develop methodologies to assess the value of water in a more holistic way


As a result of this co-operation, presently, cost-benefit analyses of small-scale nature development projects, and large-scale water development projects as well, are economically evaluated with the help of a function–value matrix, wherein all relevant functions of the waters concerned are valued, either in a direct, or in an indirectway

Functions of water

• Water fulfils a great number of functions, providing goods and services

• These functions are generally clustered into four groups:– Regulation functions;– Habitat functions;– Production functions; and– Information functions.

Regulation functions

Some regulation functions are:• Influence on the climate (Gulf Stream)• ‘Managing’ the environment in a basin• Supply of water to the soil• Regulation of groundwater level• Soil formation (erosion, sedimentation)• Nutrient cycling• Waste treatment (partial)

Habitat functions

Some habitat functions are:• Human habitation• Refugium function for delicate species• Nursery function for fish and water fowls

Production functions

Some production (and carrier) functions are:• Food (agriculture, fisheries, aquaculture)• Reed• Facilitating industrial processes• Domestic use• Hydroelectric power (potential energy)• Navigation

Information functions

Some information functions are:• Esthetical information (beauty of the

landscape)• Recreation (eco-tourism)• Spiritual and historical information• Cultural and artistic information• Scientific and educational information

The economic value of water

Total economic

value

Non use values Use values

Production value

Regulationvalue

Informa-tion value

Existencevalue

Optional value

Bequest value

Valuation of water (1)

• In all its functions, water has an economic value

• This value has two major components:– Use value– Non-use, or ‘intrinsic’ value

These values indicate the wellbeing that man derives from the awareness of the existence of nature (water) and from the use of (nature) water, respectively


• The use value of water consists of:– Production (and carrier) value– Regulation (and habitat) value– Information value

• The above use values can be expressed in monetary terms an can be used as ‘benefits’ in cost-benefit analyses of nature (water) development projects


• The non-use value of water consists of the following components:– the existence value– the optional value– the bequest value


• The existence value is the value that the present generation attaches to the existence of water, apart from its actual use

• The optional value is the value that man attaches to the possibility of future use by the present generation

• The bequest value is the value that man attaches to the possibility of future use by future generations


• The economic value of water is basically an anthropocentric measure

• Income or welfare of man is at the centre of the valuation

• To determine the intrinsic value of water, the value of water (ecosystems) as such, an eco-centric approach by ecologists is required

Intrinsic value of water

• The intrinsic value of water ecosystems can be determined on the basis of criteria such as biotic and abiotic diversity, biotic and abiotic rarity, ‘replacibility’, etc.(Scoring the number of specific species)

• The intrinsic value of an ecosystem reflects the importance of the ecosystem for the preservation of specific species and the importance of the ecosystem for the functioning of other ecosystems

Techniques for nature valuation (1)

• 1. Direct valuation– Market prices of marketable goods (fish, reed)

and services (recreation, energy, shipping)

Until the Eighties of the last Century, so called ‘intangibles’ could not be valued and were not properly taken into accountThis has changed, after the ‘development’ of several indirect valuation methods

Techniques for nature valuation (2)• 2.1. Indirect valuation methods

– a) Damage Costs Avoided (Example: water buffering through wetlands along a river)

– b) Restoration Costs (Example: restoration of lost ecological functions: fish ladders)

– c) Replacement Costs (Example: WWTP, in stead of natural helophyte vegetation, or construction and maintenance of a dike, in stead of a natural flood plain)

– d) Private investments in nature preservation– e) Similar investment by Public Bodies


• 2.2. Derived market value (Hedonic pricing)– a)Travel Cost Method (Travelling cost spent to

visit the Balaton Lake, or the Gabcikovo Dam)– b) The ‘extra value’ of houses along a

beautiful lake)


• 2.3. Contingent Valuation (Hypothetical valuation) (Example: Ask to a statistically sound sample of Slovak people how much they would be willing to pay for the preservation of the Sirava Lake?)

• 3. Benefit Transfer Method (Using the data of a similar lake for the valuation of an other one)

Economic evaluation of an intervention in a water system

• Step 1: Function analysis• Step 2: Function valuation (direct and/or

indirect)• Step 3: Assessment of costs• Step 4: Cost-benefit analysis

The Middelsgraaf (example) 1

• Lowland brook in the Province of Limburg• Intervention: Brook reconstruction• Conflict: Increase of nature values at the

cost of decreasing agricultural production• Two project variants:

– A. Meandering of the brook without increasing the water level

– B. Meandering plus increasing water level with 50 cm

The Middelsgraaf (example) 2Ecological evaluation of scenario A and B• Habitat quality (A +, B++)

– A: Diversity of habitats for aquatic invertebrates increases

– B: Idem plus the quality of created habitats for aquatic invertebrates increases (through better water quality and hydrological dynamics. Marshy bank zone functions as a corridor for rare amphibiansBetter conditions for groundwater-bound vegetation


Ecological evaluation of scenario A and B• Ecological potential (A+, B++)

– A: Morphology of Middelsgraaf more like that of a natural brook

– B: Hydrological dynamics more comparable to a natural lowland brook in Limburg


Socio–cultural evaluation of A and B• Esthetical value (A++,B+)

– A: Landscape looks more attractive– B: Landscape looks less attractive, because

of wet conditions


• Cultural-historic importance (A-, B+)– A: Decreases, because the brook was dug out

for draining the area– B: Idem, but better because of more natural

situation


• Economic evaluation of scenario A and B• Step 1: increase/decrease of value of

ecosystems under scenario A and B (with the help of a function-value matrix)

• Step 2: costs of scenario A and B• Step 3: Cost-benefit analysisPlan area 450 ha 40 ha agriculture nature areaCosts and benefits in Dfl

Function-value matrix 1

+ 240,600+ 230,4007. Recreation

+ 105,200+ 105,7006. Refugium function

+ 400+ 4005. Biological control

+ 97,500No change4. Recycling of nutrients

+ 6,800No change3. Water supply/storage

+ 47,500+ 47,5002. Water regulation

+ 30,000+ 30,0001. FixationCO2

Non-market

MarketNon-market

Market

Scenario BScenario AFunctions

Function-value matrix 2

+ 182,200+ 338,752+ 77,900+ 346,100Total net benefits

- 0+ 5,298+ 0+ 0Less drought damage

+ 0- 23,446- 0- 0Damage to agriculture through higher gwt

+182,200+356,900+77,900+346,100Total benefits nature

+10,600+ 10,6008. Science and education

Non-market

MarketNon-market

Market

Scenario BScenario AFunctions

Conclusions Pilot project (1)

• In both scenario’s, the benefits for nature –in market and non-market value- are higher than the loss of agricultural production

• The benefits for nature result from meandering of the brook (A) plus heightening of the water level (B)

• This has a positive effect on the ecological, socio-cultural, and economic functions

Conclusions Pilot project (2)• A higher water level produces 20 % more

benefits (mostly in non-market values)• In market values, the additional benefits

for nature are lower than the costs for agriculture

• Non-market values are still lower rated than market values

• The decision-makers have opted for scenario A

Foundation for sustainabledevelopment/FSD (1)

• The FSD ha four branches:– 1. Ecosystem Analysis– 2. Biodiversity and Global Change– 3. Integrated Environmental Assessment– 4. Integrated water management

Ecologists, economists, and engineers closely co-operate in complex nature development projects


• The main objectives of the FSD are:• Research on the practical implementation of the

concept ‘sustainable development’• Increase public awareness of nature values• Develop training programmes on sustainable

land use planning and ecosystem management• Information to planners and decision-makers• Advise on the application of principles and tools

of for sustainable development


• The FSD is a non-profit organization• The Foundation has established a platform

for Economic Valuation of Nature• The organization runs an open

international network of interested experts for the exchange of knowledge and experience

• Admission is free

Nature development and water plans• Projects like the Middelsgraaf are implemented

throughout the country by water boards, provinces, the State

• The projects are very costly• Per year 0.6 to 0.9 billion Euro is available to

finance nature (and water) development plans• The funds come from various sources: Water

boards, provinces, municipalities, the State, NGO’s, the EU (?)

• The stakeholders are generally involved in the planning of the projects

Nature development and water plans

• Large-scale projects are prepared and implemented in the framework of the programme: ‘Space for the river’

• Retention areas are selected• Resistance is sometimes strong• Communication is essential

• Other example: the Wadden Sea (exploitation of gas, or not?)

Thank you for your attention

Cor de Jong WaterLand International, Wageningen

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