Choices(and(Tradeoffs( Quan1fying(the(Economic(Value(of(Natural( - PDF document

Choices(and(Tradeoffs( Quan1fying(the(Economic(Value(of(Natural( Resources(and(Services( ( Robert(J.(Johnston( Clark(University( ( Symposium)on)C/N)Cycling)and)Ecosystem)Valua7on)of)Tidal)Wetlands)in)the) Northeast .(Waquoit(Bay(Reserve,(Falmouth(MA.(January(24,(2013( Markets(and(Economic(Value( • Human(produc1on(provides(market(goods(and( services(that(enhance(quality(of(life.( • We(observe(people(purchasing(these(products( at(known(prices.(This(provides(insight(into( economic( market (value.( – The(most(that(people(would(be( willing,to,pay, to( obtain(a(market(product,(rather(than(go(without.( (

Ecosystem(Service(Values( • Natural(ecosystems(also(provide(goods(and( services(that(enhance(quality(of(life.( – These(are(oRen(grouped(under(the(heading(of( “ ecosystem,services ”( – Examples:((The(sa1sfac1on(I(receive(from(catching(a( fish(in(a(local(river(or(benefit(of(clean(water(from( nutrient(processing(in(a(coastal(marsh.(( • Ecosystem(services(cannot((oRen)(be(purchased( directly(in(markets.(( • The(value(of(these(services(is(oRen(overlooked.( The(Economic(Benefit(of(Ecosystems( • Ecosystem(service(values(are(economic( benefits(provided(by(ecosystems.(( • Quan1fying(the(benefits(of(natural(systems( prevents(policy(from(ignoring(them(and( enables(informed(policy(choices.(( • But(what(is(an(economic(benefit((or(value)?(

The(Economic(Benefit(of(Ecosystems( • Ques5on: ((Which(of(the(following(is(an(example( of(a(valid(economic(benefit(resul1ng(from(an( improvement(in(water(quality(at(a(beach?( a. The(extra(money(that(visitors(spend(at(local(hotels.( b. The(addi1onal(sa1sfac1on(gained(by(beach(visitors.( c. The(addi1onal(jobs(created(in(the(affected(area.( d. The(addi1onal(tax(revenues(generated.( e. The(cost(of(restoring(the(beach(if(it(is(damaged.( f. All(of(the(above.( The(Economic(Benefit(of(Ecosystems( • Answer:, Only( (b), is(a(valid(measure(of(economic( value(or(benefit.( • Most(people(answer(incorrectly.((( • This(is(based(on(the(mispercep1on(that(market( ac1vity,(money(flows(or(replacement(costs(are(a( the(same(as(economic(benefits.(( • Thought(experiment:((Take(a($1(bill(and(pass(it( from(hand(to(hand(around(a(room.((Has(any(net( value(been(created?( • This(is(the(difference(between(a(transfer(and(a( benefit.(

For(something(to(have(value…( • It(must(be(valued(either(directly(or(indirectly( by(humans,(because(it(enhances(quality(of(life( – NO:(Whales(value(Stellwagen(Bank(as(an( important(feeding(area( – YES:((Humans(value(Stellwagen(( Bank(because(it’s(an(important(( feeding(ground(for(whales(and(( we(like(to(observe(them(there(( or(just(know(that(the(ecosystem(( is(healthy.( For(something(to(have(value…( • It(must(be(measured(in(terms(of( tradeoffs —(what( is(the(maximum(one(would(be(willing(to(give(up( in(terms(of(( – other(goods(and(services((I’ll(would(be(willing(to(give( up(my(sandwich(for(a(chocolate(bar)( – 1me((the(scenic(route(takes(me(an(extra(hour,(but(I( prefer(it)( – money((I’m(willing(to(pay($50(a(night(more(for(the( room(with(the(ocean(view)( • Values(do(not(need(to(be(denominated(in(money( terms,(nor(to(they(require(money(transac1ons.(

For(something(to(have(value…( • It(must(be(measured(in(terms(of(a( marginal, quan5ty (of(a(good(or(service,(from(a(known( baseline.(( – NO:((The(total(value(of(Narragansee(Bay(is($X.( – YES:((The(value(of(a(5%(increase(in(whale(sigh1ngs(in( the(Gulf(of(Maine,(from(the(current(level,(would(be( $Y.((( • Example—it(is(possible,(in(principle,(to(es1mate( the(economic(value(of(an(addi1onal(X(acres(of( coastal(wetland(in(a(specific(area.((( – It(is(not(possible(to(es1mate(the(value(of(all(wetlands( in(the(world.(( Willingness(to(Pay( • Economists(oRen(measure(economic(value(of( ecosystems(in(terms(of(willingness(to(pay.( • Defined(as(the(maximum(amount(of(money(or( some(other(good(a(person(would(be(willing(to( give(up(in(exchange(for(a(good(or(service,( rather(than(go(without.( • What’s(the(most(a(person(would(pay(for(a( marginal(change(in(an(ecosystem(service,( rather(than(go(without?((if(they(could)((

Concept(of(Willingness(to(Pay( Management, Status,Quo,(No, Op5on,A, Outcome, Policy), Quan1ty(of( X 1( X 1( Ecosystem(Service( X( Quan1ty(of( Y 1( Y 1 +A ( Ecosystem(Service( Y( Change(in(Annual( $0( $10( Household(Taxes( HOW(WOULD( □, □, YOU(VOTE?( , Ecosystem(Service(Values( • Ecosystem(services(may(be(defined(as(the( outputs(of(natural(systems(that(benefit(society.( • These(values(are(some1mes(realized(in(markets —as(inputs(to(market(produc1on((e.g.,(fish(in(the( ocean(caught(and(sold).( • But(many(ecosystem(service(values(are( nonD market,values .((( • These(are(improvements(in(human(quality(of(life( that(are(not(related(directly(to(market(products.((

Conceptual(Model(of(Ecosystem( Service(Values( Examples(of(Ecosystem(Service(Values( • If(I(go(recrea1onal(fishing(in(a(pris1ne(lake,(it(improves( my(quality(of(life.((I(benefit(from(the(experience.( • If(I(know(that(threatened(wildlife(are(thriving(in(my( area,(it(improves(my(quality(of(life.((I(benefit(from(the( knowledge(that(these(wildlife(exist.( • If(riparian(buffers(protect(my(home(from(flooding,(it( improves(my(quality(of(life.((I(benefit(from(property( protec1on.( • None(of(these(can(be(directly(purchased(in(a(market,( but(all(provide(measurable(economic(benefits((my( sa1sfac1on(or(quality(of(life(is(improved).(

Types(of(Ecosystem(Service(Values( Total(Value( Market( NonnMarket( Market( Use( NonnUse( Consump1ve( NonnConsump1ve( Existence( Bequest( Other( Quan1fying(Ecosystem(Service(Value( • Requires(coordina1on(of(ecological(methods( that(quan1fy(the(“natural(produc1on”(of( services(with(economic(methods(that(quan1fy( the(value(of(this(produc1on.(( (

Common((Valid)(Valua1on(Methods( • Revealed,Preference, (Use(Value)—Quan1fy(values(based( on(observed(behavior( – Recrea1on(Demand(Models( – Hedonic(Property(Value(Methods( – Ecological(Produc1vity(Methods( – Defensive(Behavior(Methods( – Factor(Input(Methods( • Stated,Preference, (Use(+(Nonuse(Value)—Quan1fy(values( based(on(responses(to(carefully(designed(surveys( – Con1ngent((Valua1on( – Choice(Experiments(or(Models( • Benefit,Transfer —Use(results(from(a(study(elsewhere(to( quan1fy(values(for(a(site(where(no(results(are(available( Services(of(Coastal(Wetlands( • Ecosystem(services(of(coastal(wetlands(depend( on(both(natural(func1ons(and(affected(human( popula1ons.(Examples(include:( – Provision(of(habitat/nurseries(to(support(valued(birds,( fish,(shellfish,(etc.,(both(onn(and(offnsite( – Nutrient(processing,(water(filtra1on,(removal(of(toxics( and(pathogens((provision(of(clean(water)( – Coastal(erosion,(flood(and(hazard(protec1on.( – Recrea1onal(opportuni1es( – Aesthe1c(benefits( – Carbon(sequestra1on((climate(benefits).(

Validity( • In(all(cases,(quan1fying(ecosystem(service(values( requires(coordina1on(of(valid(ecology(&(economics.( • This(requires(exper1se(with(both(ecological(and( economic(methods.( • There(are(now(a(preponderance(of(analyses(using( inappropriate(ecological(or(economic(methods.(( • While(claiming(to(provide(“good(approxima1ons,”( many(of(these(analyses(provide(misleading(and( unhelpful(results.( • Results(from(invalid(analyses(can(lead(to(choices(that( reduce(sustainability(and(social(wellnbeing.( ( Common(Errors( • Measuring(the(“total(value”(of(natural(capital( or(services(from(en1re(ecosystems.( • Using(replacement(costs(to(measure(values.( • Using(jobs(and(revenues(to(measure(values( (e.g.,($(spent(at(local(businesses).( • Confusing(intermediate(and(final(services( (e.g.,(coun1ng(the(value(of(nutrient(processing( in(a(wetland(and(the(value(of(the(resul1ng( water(quality(changes).(

“Total(Values”(for(Ecosystems?(( • Values(are(only(meaningful(for(wellndefined(changes( from(an(exis1ng(baseline.( – Willingness(to(pay(for(a(gallon(of(milk( – Willingness(to(pay(to(preserve(50(acres(of(riparian(land( – Willingness(to(pay(to(increase(average(water(clarity((secchi( depth)(in(“Lake(X”(by(1(foot.( • “Total”(ecosystem(values(lack(baselines(and(changes.(( What(are(you(“buying”?( • Total(ecosystem(values(ignore(effects(of(scope(and( scale((diminishing(marginal(returns).( • Invalid(to(“scale(up”(based(on(ecosystem(size.( – If(one(Big(Mac(is(worth($1(to(me,(are(100(Big(Macs(worth( $100(to(me?( “Total(Values”(for(Ecosystems?( • Imagine(the(value(of(all(the(natural(capital(in( New(Jersey(is(claimed(to(be(worth($660(billion( (State(of(New(Jersey,(2007).( • What(does(this(mean?(What(is(the( measurable(change(we(are(valuing?( • What(does(it(mean(to(be(“without”(New( Jersey?((Is(this(meaningful?( • Would(we(do(anything(differently(if(the(“total( value”(was(reported(to(be($660(trillion?((