Ecosystem Service

Valuation: Tools for Decision Makers

Margrethe Winslow, Ph.D., University of San Francisco

Jennifer Sant’Anna, MPA, Urban Innovation Exchange

Importance of ES for Municipal/Regional Decision Makers

• Ecosystems and their services are inextricably tied to the public domain due in part to the public goods nature of many ecosystem services.

• Ecosystems are being degraded at a high rate – climate change exacerbating this ES are growing scarcer

• Demand for ecosystem services is increasing– Population growth – Improvement in living standards

Multiple Purposes for ESV in Relation to Policy Making

Monitor changes in natural capital and the impact of this on human welfare ex. Natural Capital Accounting

Natural Resource Damage Assessment

Evaluation of proposed policies/projects

Cost-Benefit Analysis

Cost-Effectiveness

Analysis

Multi-criteria Analysis

PES

Multi-Step Process in Ecosystem Service Valuation Related to Policy Changes

Economic Value of Changes

Impact on Human Welfare

Changes in Ecosystem Services

Ecosystem Impacts

Policy Change

Challenging

Ecosystem Services can have Multiple Functions

Obstacles and Limitations• Difficult to circumscribe and isolate ES at local level.

• Provisioning and flow of ES cut across policy-relevant boundaries.

• Challenging to conduct ES research that is applicable in policy contexts. – Requires integration of multiple disciplines– Methodology issues can affect credibility of valuation estimates

• Full CBA is sometimes precluded by legislative standards.

• Lack of consensus on goals in environmental regulation: efficiency? justice? job creation? etc.

Data Collection Costs• Decision makers need to compare the cost of collecting

ecosystem service data relative to the increased efficiency of the program due to this data.

– A South African based study by Grantham et al. (2008) found that a small investment in ecosystem data for conservation planning can improve project performance, there is a diminishing return to investment.

– Other South African studies supported these findings and also suggested that the way information is shared can be as important as the amount of information collected. (Tallis and Polansky, 2011)

• Farber et al (2006): “Full modeling is costly in terms of data and measurability requirements. A practical alternative is to consider service changes, or gradients, from the status quo provided by a finite set of options. This may not provide for the global optimum, but may result in the choice of superior management options within a viable set of those options”(p.118).

Methods for Assigning Monetary Value to Ecosystem ServicesRevealed-preference Stated-preference Cost-based

Market methods: Valuations are directly obtained from what people must be willing to pay for the service or good.

Contingent valuation: People are directly asked their willingness to pay or accept compensation for some change in ecological service.

Replacement costs: The loss of a natural system service is evaluated in terms of what it would cost to replace that service.

Production approaches: Service values are assigned from the impacts of those services on economic out-puts (e.g., increased shrimp yields from increased area of wetlands).

Conjoint analysis: People are asked to choose or rank different service scenarios or ecological conditions that differ in the mix of those conditions.

Avoidance or Damage costs: A service is valued on the basis of costs avoided, or of the extent to which it allows the avoidance of costly averting behaviors, including mitigation.

Travel cost: Valuations of site-based amenities are implied by the costs people incur to enjoy them

Hedonic methods: The value of a service is implied by what people will be willing to pay for the service through purchases in related markets, such as housing markets. (from Farber et al. 2006, pg. 120)

Benefits or Value Transfer

Use the ecosystem

service values from one or a

series of studies

to estimate the values in a similar area or situation

Better: Benefit Function Transfer

Databases for Benefit Transfer

• EVRI: Environmental Valuation Reference Inventory (Environment Canada with support from USEPA)– Searchable database of

~2400 studies with summaries included.

• EarthEconomics, non-profit, Tacoma WA– Researches Library

Current Web-based Tools• InVEST: Integrated Valuation of Environmental

Services and Tradeoffs

• ARIES: Artificial Intelligence for Ecosystem Services

Current Web-based Tools Cont. • EarthEconomics:

– EVT: Ecosystem Valuation Toolkit– SERVES: Simple and Effective Resource for

Valuing Ecosystem Services

• Others – regionally focused or – cover just one or two ecosystem services

• Consulting firms have proprietary tools – ex. EcoMetrix, EcoAim, ESValue

EPA’s EnviroAtlas

• Web-based mapping application that allows users to view and analyze multiple ecosystem services in a specific area

• EnviroAtlas can be used to forecast impacts on natural resources due to future population growth and climate change

ESV tools are under development but are still not ready for off-the-shelf use for more than single ecosystem service valuation.

Federal agencies are investing in developing better metrics, tools, and decision guidelines.

These improvements could trickle down to the local level.

USGS/BLM Pilot of Tools 2012: “Ecosystem Services Valuation to Support Decisionmaking on Public

Lands—A Case Study of the San Pedro River Watershed, Arizona” (Ken Bagstad et al.)

Broad Conclusions

USGS/BLM Pilot of Tools 2012 (Ken Bagstad et al.)

To help solidify the field, decision makers need:

1. Development and support of data archives

2. Agreement on metrics

3. Training and education on understanding and accepting uncertainty in relation to ESV

4. Training on tools and valuation and coordination with tool developers

5. Policy guidance on when to use ESV tools and tool choice

6. Credible, Replicable and Legally defensible ESV tools

ESV Federal Focus in the Future

SUSTAINING ENVIRONMENTAL CAPITAL: PROTECTING SOCIETY AND THE

ECONOMYExecutive Office of the President

President’s Council of Advisors on Science and Technology (PCAST)

JULY 2011

WRI Survey: Are Ecosystem Services Being Addressed in Environmental Decision Making?

A 2010 online survey by WRI of 171 environmental consultants, government employees, NGOs found:

• 79% of respondents knew about ecosystem services

• 40% have seen ecosystem services addressed in environmental assessment– Freshwater is the main service that is addressed

• Main perceived barrier is lack of guidance on how to address ecosystem services

Broader Debate Over Using ESV

• Practical: Is some number better than no number? How to deal with uncertainty?– How much accuracy is needed?– What are costs of incorrect decision? – ESV helps inform decisions but does not make

decisions.

• Philosophical: Don’t ecosystems have untold value? – But will these be included if no number is

attached?

Primary References

Bagstad, K.J., Semmens, D., Winthrop, R., Jaworski, D., and Larson, J. (2012). Ecosystem Services Valuation to Support Decisionmaking on Public Lands — A Case Study of the San Pedro River Watershed , Arizona Scientific Investigations Report 2012 − 5251. Arizona.

Barbier, E. B. (2011b). Challenges in valuing ecosystem services. World Forum 2011.

Daily, G. C., Polasky, S., Goldstein, J., Kareiva, P. M., Mooney, H. a, Pejchar, L., Ricketts, T. H., et al. (2009). Ecosystem services in decision making: time to deliver. Frontiers in Ecology and the Environment, 7(1), 21–28.

Iovanna, R., & Griffiths, C. (2006). Clean water, ecological benefits, and benefits transfer: A work in progress at the U.S. EPA. Ecological Economics, 60(2), 473–482. doi:10.1016/j.ecolecon.2006.06.012

Liu, S., Costanza, R., Farber, S., & Troy, A. (2010). Valuing ecosystem services: theory, practice, and the need for a transdisciplinary synthesis. Annals of the New York Academy of Sciences, 1185, 54–78.

Scarlett, L., & Boyd, J. (2011). Ecosystem Services : Capabilities, (March).

Tallis, H., & Polasky, S. (2009). Mapping and valuing ecosystem services as an approach for conservation and natural-resource management. Annals of the New York Academy of Sciences, 1162, 265–83.