Ecosystem Service Valuation 14Feb2023 PDF

Valuation of Ecosystem Services Climate Change Mitigation (BIOS3103 UNUK) (SPR1 22-23) Dalton Baltazar Name one general type of ecosystem service. Write one word. Millennium Ecosystem Assessment (MA) Findings • Over the past 50 years, humans have changed ecosystems more rapidly and extensively...

Valuation of Ecosystem Services Climate Change Mitigation (BIOS3103 UNUK) (SPR1 22-23) Dalton Baltazar Name one general type of ecosystem service. Write one word. Millennium Ecosystem Assessment (MA) Findings • Over the past 50 years, humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history, largely to meet rapidly growing demands for food, fresh water, timber, fiber and fuel • The changes that have been made to ecosystems have contributed to substantial net gains in human well-being and economic development, but these gains have been achieved at growing costs in the form of the degradation of many ecosystem services, increased risks of nonlinear changes, and the exacerbation of poverty for some groups of people • The challenge of reversing the degradation of ecosystems while meeting increasing demands for their services can be partially met under some scenarios that the MA has considered but these involve significant changes in policies, institutions and practices, that are not currently under way https://www.millenniumassessment.org/en/SlidePresentations.html Largest assessment of the health of Earth’s ecosystems • Experts and Review Process • Prepared by 1360 experts from 95 countries • 80-person independent board of review editors • Review comments from 850 experts and governments • Governance • Called for by UN Secretary General in 2000 • Authorized by governments through 4 conventions • Partnership of UN agencies, conventions, business, non-governmental organizations with a multi-stakeholder board of directors Defining Features • Demand-driven • Providing information requested by governments, business, civil society • Assessment of current state of knowledge • A critical evaluation of information concerning the consequences of ecosystem changes for human well-being • Intended to be used to guide decisions on complex public issues • Authoritative information • Clarifies where there is broad consensus within the scientific community and where issues remain unresolved • Policy relevant not policy prescriptive Defining Features •Multi-scale assessment • Includes information from 33 sub-global assessments Different ways to use MA Findings • Decision-making and Management • The framework used – particularly the focus on ecosystem services – helps in incorporating the environmental dimension into sustainable development policy and planning • Provides planning and management tools • Serves as a benchmark • Provides foresight concerning consequences of decisions affecting ecosystems • Identifies response options • Identifies priorities • Assessment, Capacity, and Research • Provides a framework and tools for assessment • Helps build capacity • Guides future research Focus: Ecosystem Services The benefits people obtain from ecosystems Provisioning services: The products obtained from ecosystems. - food, fibre, fresh water, genetic resources Regulating services: The benefits obtained from the regulation of ecosystem processes. - climate regulation, hazard regulation, noise regulation, pollination disease and pest regulation, regulation of water, air and soil quality Cultural services: The non-material benefits people obtain from ecosystems. - spiritual or religious enrichment, cultural heritage, recreation and tourism, aesthetic experience Supporting services: Ecosystem services that are necessary for the production of all other ecosystem services. - soil formation nutrient cycling water cycling primary production Focus: Consequences of Ecosystem Change for Human Wellbeing MA Framework Human Well-being and Poverty Reduction ▪ ▪ ▪ ▪ ▪ Basic material for a good life Health Good Social Relations Human Security Freedom of choiceWell-being and action Indirect Drivers of Change ▪ Demographic ▪ Economic (globalization, trade, market and policy framework) ▪ Sociopolitical (governance and Indirect framework) institutional ▪ Science and Technology Drivers ▪ Cultural and Religious Direct Drivers of Change Ecosystem Services ▪ ▪ ▪ ▪ ▪ ▪ ▪ Changes in land use Species introduction or removal Direct Technology adaptation and use Drivers External inputs (e.g., irrigation) Resource consumption Climate change Natural physical and biological drivers (e.g., volcanoes) The Economics of Ecosystems and Biodiversity (TEEB): Origins and Genesis ❑ Founded on the (MA) concept of ecosystem services for human well-being, under-pinned by biodiversity ❑ Focus on underlying economic drivers of ecosystem decline and mainstreaming into economic decisions ❑ Fill gap in economic evidence provided by the MA ❑ Inspired by the Stern Review’s economic arguments for action on climate change https://teebweb.org/news-and-training/training-resources/training-package-national/ TEEB’s Origins and Genesis “Potsdam Initiative – Biological Diversity 2010” ……the economic significance of the global loss of biological diversity…. TEEB Interim Report CBD COP-9, Bonn, TEEB Climate Issues May 2008 Update Strömstad September 2009. TEEB Main Reports Nov. 2009 – Oct. 2010 Why valuation makes sense ❑ Existing market signals often lack appropriate consideration of the value of, the damage to, and incentives for, the sustainable use of biodiversity and ecosystem services Understanding the value of ecosystem services can help to: ❑Generate better information about the ‘value’ of nature’s services ❑Identify ‘true’ costs of business as usual ❑Improve decision-making when tradeoffs are necessary and useful information is lacking ❑Provide a basis for policy formation and analysis ❑Set incentives and regulating use Importance (and costs) of maintaining natural capital Value of services often taken for granted: ❑ Water supply/regulation: Catskills Mountains $2bn natural capital solution vs $7bn technological solution (pre-treatment plant) ❑ Pollination: 30% of 1,500 crop plant species depend on bee and other insect pollination. Value of bees for pollination ~ Eur29 billion to EUR 70 billion worldwide per annum ❑ Fish stock existence/productivity: Global market $80bn, 1.2 billion people reliant, stock collapses have major (local/national) implications ❑ Flood control services of floodplain: eg River Bassee floodplain: ~ 91.5 – 305 million EUR / year Recognize, Demonstrate, Capture ❑TEEB follows a three-tiered approach towards ecosystem valuation by recognizing, demonstrating and capturing value. ❑This approach helps to make nature more economically visible and ultimately influence key actors to change their decisions and behaviors THE TEEB APPROACH RECOGNIZING VALUE: Step 1: Clearly identify the problem and key stakeholders Step 2: Clearly identify the ecosystem services to be included in the assessment This means that society clearly acknowledges and understands the range of benefits, goods and services provided by ecosystems. The simple fact of recognizing is sometimes sufficient to ensure conservation and sustainable use. This may be the case especially where the spiritual or cultural values of nature are strong. THE TEEB APPROACH DEMONSTRATING VALUE: In economic terms to support decision making, to consider the full costs and benefits of a proposed use of an ecosystem. Step 3: Select methodology and indicators Step 4: Conduct valuation assessment Step 5: Analyze the distribution of costs and benefits THE TEEB APPROACH CAPTURING VALUE: Step 6: Communicate the results to key stakeholders and build societal support Step 7: Screen, prioritize, select and implement the economic and policy instruments Final tier of the economic approach involves the introduction of mechanisms that incorporate values of ecosystems into decision-making, through incentives and price signals (this can include payments for ecosystem services, reforming environmentally harmful subsidies, introducing tax breaks for conservation, creating new market for sustainably produced goods) Valuation vs. Monetization TEEB is not: ❑A narrow, market-centric view of nature which just focuses on monetization of nature ❑A mechanism that puts a price tag on nature to sell mother Earth ❑Nature commoditization ❑About private profits TEEB is: ❑ Both market AND non-market valuation which expands beyond monetary valuation methodologies using also quantitative and qualitative methodologies ❑ A holistic view of valuing nature which takes into account environmental and social values and not just the market values of nature. Why TEEB? ❑ Because the economic invisibility of nature is a problem. ❑ Because addressing losses requires knowledge from many disciplines (ecology, economics, policy..) to be synthesized, integrated and acted upon ❑ Because different decision making groups (policy-makers, local managers down to citizens) need different types of information & guidance ❑ Because successes need be understood, broadcast, replicated and scaled.. Ecosystem services Category Provisioning Regulating Service Direct Use Food; fibre; fuel; bio chemicals; natural medicines; pharmaceuticals; fresh water supply ✓✓✓ Air-quality; climate; water; natural hazard; carbon storage; nutrient cycling; micro-climate functions Cultural Cultural heritage; recreation and tourism; aesthetic values Habitat/ supporting Primary production; nutrient cycling; soil formation Indirect Use ✓✓✓ ✓✓✓ Option Value Non-use Value ✓✓ ✓ ✓ ✓✓ Valued through other ES categories ✓✓ Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) • Ecosystem Services to Nature’s Contributions to People (2019) • Nature’s Benefits to People changed to Nature’s Contributions to People • word “benefits” wrongly conveyed the idea that negative contributions from nature towards peoples’ good quality of life would be excluded • different meanings of the word “benefits” in common speech in different languages as well as in the social sciences and the valuation literature represented potential sources of confusion https://seea.un.org/file/14990/download?token=i_tmbqw9 https://ipbes.net/sites/default/files/inline/files/ipbes_global_assessment_report_summary_for_policymakers.pdf Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) Global trends in the capacity of nature to sustain contributions to good quality of life from 1970 to the present, which show a decline for 14 of the 18 categories of nature’s contributions to people analysed. Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) Global trends in the capacity of nature to sustain contributions to good quality of life from 1970 to the present, which show a decline for 14 of the 18 categories of nature’s contributions to people analysed. Common International Classification of Ecosystem Services (CICES) • European Environment Agency • not to replace other classifications of ecosystem services but to enable people to move more easily between them • recognises that the main categories of ecosystem outputs to be provisioning, regulating and cultural services • does not cover the so-called ‘supporting services’ • these supporting services are treated as part of the underlying structures, process and functions that characterise ecosystems https://cices.eu/cices-structure/ https://cices.eu/content/uploads/sites/8/2018/01/Guidance-V51-01012018.pdf Common International Classification of Ecosystem Services (CICES) • Five-level hierarchical structure • Each level is progressively more detailed and specific Common International Classification of Ecosystem Services (CICES) • structure of CICES V5.1 for the upper three tiers in the part of the classification that covers biotic ecosystem outputs (i.e. those dependent on living organisms Common International Classification of Ecosystem Services (CICES) • has been extended to more formally cover aboitic ecosystem outputs Critiques of the concept of ES • Anthropocentric focus and exclusion of the intrinsic value of different entities in nature • ES concept is not meant to replace biocentric arguments, but bundles a broad variety of anthropocentric arguments for protection and sustainable human use of ecosystems • Cultural ES category shows overlaps between pure anthropocentric and intrinsic values Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Critiques of the concept of ES • Economic production metaphor of ES could promote an exploitative human-nature relationship • ES concept can be used to reconnect society and nature and can challenge dominant “exploitative” practices • Potential to build bridges across the modernization gap between consumers and ecosystems • Offers a way to reconceptualize humanity’s relationship with nature Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Critiques of the concept of ES • ES are used as a conservation goal at the expense of biodiversity-based conservation. • planning and executing conservation strategies that are based on ES provision might not safeguard biodiversity, but only divert attention and interest • The frameworks by the MA and TEEB have been influential in ES science and communicating to policy-makers • Both frameworks have acknowledged overlaps between biodiversity and ES by including biodiversity within the habitat, supporting, and cultural • ES-based initiatives aim to broaden biodiversity conservation practices, which can help strengthen arguments and tools for protecting ecosystems Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Critiques of the concept of ES • ES concept is contested because it comprises economic framing, and ES assessments often involve economic valuation • Valuation of ES leads to more informed decisions • It helps to raise awareness about the relative importance of ES compared to man-made services • Misconception that monetary valuation is the only method to compare ES, and that monetization is included in each ES assessment Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Critiques of the concept of ES • Although many authors have proposed ways to define ES more consistently, these attempts have been criticised for being impractical, open to interpretation, and inconsistent. • ambiguity around the concept, the term ES has become a popular “catch-all” phrase • Definitions tend to continuously improve – TEEB, CICES • Flexibility inspires transdisciplinary communication Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Critiques of the concept of ES • Concept for implying that all outcomes of ecosystem processes are good or desirable • masks the fact that some ecosystems provide “disservices” to humans, such as an increased risk of diseases • “Services” are the research interest Schröter, M., van der Zanden, E.H., van Oudenhoven, A.P.E., Remme, R.P., Serna-Chavez, H.M., de Groot, R.S. and Opdam, P. (2014). Ecosystem Services as a Contested Concept: a Synthesis of Critique and Counter-Arguments. Conservation Letters, 7(6), pp.514–523. doi:https://doi.org/10.1111/conl.12091. Break How much are you willing to pay per month to keep this view in your window? Is there a problem with the question? Valuation of Ecosystem Services/disservices • Estimating the monetary or non-monetary value of the ES and EDS • Costanza (2014) - raising awareness and interest for a specific ecosystem, accounting for national income and well-being contribution of ecosystems, detailed policy analyses (i.e., to decide on management options), urban and regional land use planning, and payment for ecosystem services • Economic (TEEB), Ecological, Socio-cultural Costanza, R., de Groot, R., Sutton, P., van der Ploeg, S., Anderson, S.J., Kubiszewski, I., Farber, S. and Turner, R.K. (2014). Changes in the global value of ecosystem services. Global Environmental Change, [online] 26(26), pp.152–158. doi:https://doi.org/10.1016/j.gloenvcha.2014.04.002. Ecosystem Valuation; The Challenges Moral/Ethical challenges: ❑ The idea of placing monetary value on ecosystems buys into the free-market system Technical challenges: ❑ The difficulty to account for inter-linkages between different ecosystem services ❑ Lack of information about the economic value of ecosystem functions and tools for cross-level valuation ❑ Dealing with incomplete, inaccurate and/or changing data https://teebweb.org/news-and-training/training-resources/training-package-national/ Ecosystem Valuation; The Challenges Systemic challenges can be: 1) Creating new notions of ownership and property rights 2) Lack of mechanisms to promote equity distribution and value aggregation to resources and ecosystem at the local level 3) Fear of having natural resources price tagged, commoditized and traded within a free market 4) Use of the economic value appropriately of ecosystems to readdress market and policy failures Ecosystem Valuation; The Opportunities ❑ Valuation creates a framework that can help nature’s values become more economically visible and accounted for in decision making ❑ If properly used, valuation can contribute to economic accounting and planning creating more effective strategies for natural resource management ❑ Valuation of biodiversity can contribute towards alleviating poverty ❑ Valuation does not always necessarily mean monetization and have to lead to marketization of nature. It relies heavily on what the policy is at hand Economic Approaches Total Economic Value (TEV) ❑ The TEV framework is concerned with the eventual impacts on human well-being ❑ Almost exclusively focuses more on economic endpoints that can if needed, be measured in monetary terms ❑ This framework presents categories of ecosystem benefits, which fit into a standard economic frame of reference ❑ Its strength is that all benefits that humans obtain from nature and even the value of nature in its own right (intrinsic value) can be captured by one of the subcategories used in this approach Economic Approaches TEV categories of value ❑ The TEV of an environmental asset is the sum of these different value categories: - Direct use value: the value derived from the direct extraction of resources or the direct interaction with the ecosystem - Indirect use values: values that support economic activity - Option use values: preserving biodiversity so that its direct and indirect use values can consumed in the future - Non-use values: values that refer to conservation for its own sake An example of the TEV Approach Value of Belize coastal ecosystems ❑TEV assessed the average annual contribution of reef-and mangrove-associated tourism to the national economy of Belize. ▪ Tourism Contributing an estimated US$150 million to US 196 $ million to Belize’s economy in 2007 ❑Reefs and mangroves have proven beneficial in protecting coastal properties from erosion, estimated around US$231 million to US$347 million in avoided costs per year ❑Belizean NGOs and local groups have now used these results to advocate tougher fishing regulations and pressure the government to change existing mangrove legislation ©Grida Arendal Value Types within the TEV Approach TEV and ecosystem services Category Provisioning Regulating Service Direct Use Food; fibre; fuel; bio chemicals; natural medicines; pharmaceuticals; fresh water supply ✓✓✓ Air-quality; climate; water; natural hazard; carbon storage; nutrient cycling; micro-climate functions Cultural Cultural heritage; recreation and tourism; aesthetic values Habitat/ supporting Primary production; nutrient cycling; soil formation Indirect Use ✓✓✓ ✓✓✓ Option Value Non-use Value ✓✓ ✓ ✓ ✓✓ Valued through other ES categories ✓✓ Economic Approaches • Direct market valuation approaches: use data from actual markets • Revealed preference approaches: economic agents or actual behaviour “reveal” their preferences through their choices • Stated preferences approaches: simulated markets where values are sought for changes in provision or policy Economic Approaches Direct market valuation: Market-based • Market price-based approaches • Most often used to obtain values for provisioning services • Preferences and marginal cost of production are reflected in market price • In well-functioning markets, price provides accurate information on value • Market is not ‘well-functioning’ if say, for instance, there are distortions caused by government intervention – say taxes or subsidies Economic Approaches Direct market valuation: Cost-based • Cost based approaches • Costs incurred in recreating an ecosystem service artificially ▪ Avoided cost method - costs incurred in the absence of the ecosystem service ▪ Replacement cost method - costs incurred by replacing ecosystem services with artificial technologies ▪ Mitigation or restoration cost – cost of mitigating effects of a loss of ecosystem services, or the cost of achieving their restoration • Appropriate for regulating services • cost of storm surge damage without coastal mangroves • cost of a wastewater treatment plant in place of wetlands • use of hard engineering for flood defence where flood attenuation services are lost due to land use change (e.g. deforestation) Economic Approaches Direct market valuation: Production function • Production function approaches • Estimates contribution of an ecosystem service to a final commodity • Improvement in resource base or environmental quality, i.e. enhanced ecosystem services, lowers costs and prices or increases quantity of goods • Requires knowledge of relationships between ecosystems services and valued end points • Applicable to regulating and supporting services Economic Approaches Direct market valuation: limitations • Lack of markets for ecosystem services • Markets are distorted • Replacement cost approach can overstate values • Production function approaches have specific problems: • Lack of data/knowledge of cause-effect relationships • Interactions across ecosystem services increases likelihood of double counting Economic Approaches Revealed preference • RP methods are based on observations of individual choices related to an ecosystem service • Appropriate for direct and indirect use goods • No direct market for a beach view, but there may be a premium in the housing market (or price of a hotel room) for this view • Stages 1. 2. 3. 4. 5. 6. Determine existence of surrogate market for ecosystem service Select appropriate RP method Collect market data to estimate demand function Infer value of change in quantity/quality from demand function Aggregate values Discount values where appropriate Economic Approaches Revealed preference: Travel Cost Method • Travel cost method (TCM) • The value of an environmental good is reflected in the time and money people spend getting to it e.g. forests, mountains, fishing sites • Based on actual behaviour, mostly used for recreation studies • Visitor surveys are used to determine distance travelled to site, values are estimated from cost per mile or per hour spent travelling • Travel costs are used to estimate the number of visits made • Only direct use values are estimated • Appropriate for cultural services Economic Approaches Revealed preference: Travel Cost Method • TCM practical issues • Multipurpose trips: • ‘Meanderers’ may visit several sites during a trip • ‘Purposeful visitors’ visit only one site • Holidaymakers and residents: • Holidaymakers may have high overall costs but low site visit costs • Residents have lower travel costs, but may in fact value the site highly • Some form of weighting required to account for these • What costs to include? • Total cost of travel, marginal cost of visit, value to time Travel cost method: example • Nam and Son (1991) • Recreational value of the Hon Mun Islands Vietnam • Marine Protected Area established in 2001 with US$2m funding over 4 years • Proposal to expand port at Nha Trang City with impacts on water quality and marine ecosystems Source: Google Maps Economic Approaches Travel cost method: example • The zonal travel cost model (ZTCM) estimates the annual recreational value of the islands at approximately US$17.9 million • 20% loss of the (ZTCM) recreational value that could be expected to result from the proposed port expansion • larger than the expanded port’s projected annual revenue of US$3.1 million • Port expansion proposal needs to be reconsidered. Khanh, P., Vo, T. and Son, H. (1991). WorldFish Center | Economic Valuation and Policy Priorities for Sustainable Management of Coral Reefs Recreational Value of the Coral Surrounding the Hon Mun Islands in Vietnam: A Travel Cost and Contingent Valuation Study 1. [online] Available at: https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=c97f9c35c2f73cf7a8b5670d4ac4f36d4594d0d7 [Accessed 13 Feb. 2023]. Economic Approaches Revealed preference: Hedonic pricing • Hedonic pricing (HP) • The value of a good is a function of its characteristics, e.g. house prices (or rents) are determined by a number of attributes: • Structural: number of rooms, garden size, garage size, central heating, double glazing… • Socio-economic: quality of schools, unemployment rate, local taxes… • Local amenities: access to services, transport links, environmental quality… Economic Approaches Revealed preference: Hedonic pricing • HP practical issues • Values of those not in property market • Large amounts of data are required to determine the values of individual attributes, and needs active market • Omitted variable bias: important explanatory variables may be missing from data • Housing markets tend to be segmented, i.e. several hedonic models may have to be estimated • Variables may be correlated, e.g. houses near quarries suffer from both noise and dust • Hedonic models often have very complex functional forms Economic Approaches Hedonic Pricing: example • UK Defra study on effects of proximity to landfill sites on house prices http://archive.defra.gov.uk/environment/waste/strategy /legislation/landfill/documents/landfill_disamenity.pdf Hedonic Pricing: example Hedonic Pricing: example • Average reduction in house prices of £5,500 within 0.25 miles of landfill and £1,600 between 0.25 and 0.5 miles • Average total UK disamenity = £2,483m • Between £334,350 and £478,990 per landfill site • Between £1.52 and £2.18 per tonne of waste Hedonic Pricing: example • How are these results used? • Inform landfill tax levels - initially £15/tonne for active waste • Inform planning decisions • Feed into CBA on landfill siting decisions • mitigation actions • financial costs of alternative sites • Potential for compensation? • Some evidence of reduction in dis-amenity effects over time Revealed preference: limitations • Market imperfections and policy failures • Large, good quality data sets required • Expensive and time consuming • Omits non-use values • Sensitive to assumptions made on relationship between ecosystem service and surrogate market Break Economic Approaches Stated preference • SP approaches use simulated markets to elicit willingness to pay (WTP) or accept (WTA) values for changes in ecosystem service provision • Appropriate for both use and non-use values • May be difficult to segregate these value motives from WTP • Survey based methods in which respondents are presented with a hypothetical market describing the change in service provision Economic Approaches Stated preference methods • Contingent valuation method − One policy-on scenario compared with Business As Usual (BAU) • Choice Experiments − Attributes are compared, e.g. ‘visibility in the sea’ − Some baseline BAU level for each attribute and this is compared with varying levels (with policy-on) • Group valuation − Less commonly applied – links valuation with deliberative methods Economic Approaches Stated preference: Contingent valuation • Contingent valuation method (CVM) • A hypothetical market is described in which respondents either buy (WTP) or sell (WTA) a specified level of an environmental good or service • The values which are elicited are “contingent” on the hypothetical market with which respondents are presented Contingent valuation method: example • Bann (1999) • Survey of 300 households’ WTP for mangrove protection in Benut, Malaysia (243 useable responses) Source: Google Maps Contingent valuation method: example • 56% of respondents stated a positive WTP, of those who didn’t 49% gave protest responses, meaning that • Payment ladder and dichotomous choice elicitation methods were used • The payment ladder asked respondents to tick values they would pay and cross values they wouldn’t ✓  Mean US$18 US$61 Median US$10 US$30 Contingent valuation method: example • households in three cities adjacent to the PNYCH and assessed the willingness to pay (WTP) for preservation efforts • average WTP - US$0.695 per household annually; added to all households in Peru (9 million) 6.255 million dollars annually • influences decision-making and public policies focused on conserving forests and biodiversity https://www.emerald.com/insight/content/doi/10.1108/WJE-09-2020-0407/full/html Economic Approaches Stated preference: Choice modelling • Choice modelling (CM) • Also referred to as choice experiments (CE) • Type of conjoint analysis • Survey respondents make choices across environmental goods with varying bundles of attributes • Trade-offs between attributes reveals their values • Can combine qualitative and quantitative attributes Economic Approaches Stated preference: Choice modelling • CM issues: • Requires specialist statistical design (and software) and sampling resources • Choice tasks can be complex • Potentially complex analytical task • Inclusion of socio-economic and attitudinal variables is not straightforward Economic Approaches Choice Modelling: example ❑Valuing quality changes in Caribbean coastal waters for heterogeneous beach visitors (Beharry-Borg and Scarpa, 2010) ❑Most locals do not snorkel or dive. In order to ensure that the valuation captured both locals and non locals two groups were Identified snorkelers and non snorkelers. ❑Most valuation studies in the Caribbean have focussed on obtaining WTP values for attributes associated with snorkelling and scuba diving ❑There were 9 attributes in the snorkeler subsample and 6 in the non snorkeler subsample plus a cost attribute ❑Cost was described in terms of a contribution cost to an NGO https://econpapers.repec.org/article/eeeecolec/v_3a69_3ay_3a2010_3ai_3a5_3ap_3a1124-1139.htm Choice Modelling: example Attributes 1. Number of boats near the coastline 2. Presence of a marine protected area Nonsnorkelers 3. Level of coastline development 4. Average bathing water quality 5. Level of vertical visibility 6. Number of plastics per 30m 7. Contribution fee 8. Number of snorkelers per group 9. Level of coral cover 10. Number of fish seen while snorkelling Snorkelers Choice Modelling: example No Policy High Policy Low Policy Choice Modelling: example • 198 (snorkellers) and 86 (non-snorkellers) = 284 respondents Choice Modelling: example • Individual-specific WTP estimates (TT$ ~ 0.16US$) for snorkelers Class one (61%) Class two (39%) Up to 60 fishes 35 5 Up to 45 % coral cover 50 10 Vertical visibility of up to 10 m 40 10 Marine Protected Area which allows fishing 33 7 Marine Protected Area which prohibits fishing 34 10 Plastics of up to 5 pieces 15 50 Low chance of ear infection 22 25 Low level of development 15 40 1TT$ ~ 0.16US$ Economic Approaches Stated preference: Group valuation • Group valuation • Combination of stated preference techniques with deliberative techniques • Offer a deeper exploration of environmental information, values and preference formation • Trade-off of smaller groups versus survey approaches versus more precise values Economic Approaches Stated Preference: Limitations • Sometimes the only way to capture non-use values • Hypothetical nature of the markets: do the decisions correctly reflect real-life behaviour? • Divergence between WTP and WTA estimates (theoretically equal) • Insensitivity to scope and scale • Goods are complex – is there a need for pre-valuation workshops so that respondents can better understand their preferences? Comparisons between approaches: Market-based Advantages Market prices •Reflect private WTP •Construct financial accounts •Easy to obtain Disadvantages •Market imperfections and policy failures distort prices •Seasonal variations •Currency variations Shadow prices •Reflect true economic value or opportunity cost to society •Complex to derive •Require substantial data •Considered ‘artificial’ Production function •Links ecosystem functions to market values •Requires modelling of dose response relationships •Complex for multi-use systems •Potential double counting Comparisons between approach - cost-based Advantages Disadvantages Mitigation/ restoration costs •Useful when valuing particular ecosystem functions •Diminishing returns and difficulty in restoring functions Replacement costs •Estimates indirect benefits when ecological data not available for estimating damage functions •Net benefits of replacement may exceed original function •May overstate WTP Avoided damage cost •Precautionary principle applied •Data or resource limitations may rule out first-best valuation methods Comparisons between approach Revealed and stated preference Advantages Hedonic pricing •Reflects private WTP •Based on observed behaviour Disadvantages •Data intensive •Requires defined surrogate market Travel cost •WTP for recreational sites •Based on observed behaviour •Data intensive •Restrictive assumptions about behaviour •Sensitive to statistical methods Contingent valuation •Can measure non-use value and give estimate of TEV •Sensitive to biases in survey design and implementation Choice modelling •Simultaneously elicits values for a range of goods and services •Complex statistical design and analysis •Potential burden on respondents – choice heuristics What do the methods capture? TEV and valuation methods Use values Direct Non-use values Indirect Option Existence Production Function Revealed Preference Stated Preference Value? Confidence? Value? Confidence? Market Bequest Ecological valuation • Assesses an ecosystem's functional integrity, health, or resilience to sustain life, done by measuring biophysical indicators such as diversity or carbon stock • Examining the importance of an organism to an ecosystem or vice-versa and • Elucidating the benefits of an ecosystem to call for conservation efforts • Barlow et al. (2007) studied the importance of primary, secondary and plantation forests in the Brazilian Amazon for fruit-feeding butterflies • Barbier et al. (2011) summarised the benefits that people get from estuarine and coastal ecosystems Socio-cultural valuation • Emerging type of valuation that focuses on the non-monetary value of ES and EDS • Considers value as a social construction from the cultural contexts of a time and place • Brown (1984) - values can be categorised as "held" or "assigned“ • "Held values" - modes of conduct (e.g., generosity, courage, obedience) or end-states and qualities (e.g., wisdom, happiness, freedom) which serve as the basis for evaluative judgment • "Assigned values" express the importance of an object relative to other objects (Brown, 1984; Sánchez-Fernández & Iniesta-Bonillo, 2007). • Values are developed and how things are valued evolves • Groups of people share values, and these are often complex, overlapping, conflictual, and positive or negative (Kobryn et al., 2018) • Can be accomplished by asking about individual values or allowing people to deliberate and decide on the values (Bullock et al., 2018) Socio-cultural valuation • Conceptual realm - value can be considered as ideals or long-term viewpoints of the preferable that influence choice and action. A person’s held values represent this realm. • Relational - realm represents the preference relationship between a subject and an object • value is not an inherent quality of something and is not observable; it is only at the feeling level • Object realm - stated relative importance of an object to an individual or group in a specific context • not an attribute of the object but its standing relative to other objects • observable and can be represented by the assigned values Socio-cultural valuation • Percentage of applications of sociocultural valuation (N = 48) employing particular methods, formats of data collection and groups of participants for different decision contexts A. Walz et al., “Sociocultural valuation of ecosystem services for operational ecosystem management: mapping applications by decision contexts in Europe,” Reg. Environ. Chang., vol. 19, no. 8, pp. 2245–2259, 2019, doi: 10.1007/s10113-019-01506-7. Socio-cultural valuation • Awareness raising - knowledge of sociocultural values can inform and raise awareness of decision-makers and the public for varying perceptions of ES • Priority setting - knowledge of a preferred scenario or a vision for management informs priority setting of the future management; • Instrument development - knowledge on management priorities, willingness to pay, or willingness to accept limitations give indication for the feasibility of a new management regime (e.g. management actions, user fees, zoning); DOI: https://doi.org/10.1007/s43545-022-00511-8 Research Design Stakeholder identification and delineating boundaries of study sites Ecosystem services (ES)/ disservices (EDS) identification from stakeholders - Similarities and differences on ES/EDS identified by stakeholder groups - Comprehensive list of ES/EDS Individual ES/EDS valuation - Importance of ES/EDS to stakeholders - Factors affecting valuation Deliberative ES/EDS valuation - How values are changed by communication, future generations, and constituency Study Area Calamba City in the Laguna Province, Philippines Study Area Jose Rizal Plaza and its amenities as of January 2020 Satellite image (captured in March 2016) from Google Earth Version 3.3.3.7699 (2016) Study Area A B C D E F Pictures from the park showing the A: Jose Rizal monument; B: open field; C: activity area; D: lounge; E: gardens; and F: coliseum being constructed. Methods – Deliberative Valuation • Eight online focus groups; three participants - recruited through online valuation survey and social media posts • ES and EDS directly mentioned by the key informants • Distribute 100 “importance points” to ES; 100 “concern points” to EDS (Johnson et al., 2019; Schmidt et al., 2016) • Change in value source and constituency; interaction - discuss trade-offs and future generations (Brown, 1984) 1. 2. 3. 4. 5. 6. Individual to self Group to individual Individual to group Individual to future generations (group) Group to future generations (group) Individual to future generations after discussions Methods – Deliberative Valuation Entry questionnaire ES and EDS concept Debriefing Individual to group Park ES and EDS Individual to future Individual to self Trade-offs Group to individual Group to future Individual to future Exit questionnaire Results - Deliberative Valuation (N = 24) Age Gender Marital status M = 28.25; SD = 8.48 Female: 13 (54.2%) Male: 11 (45.8%) Single: 17 (70.8%) Married: 7 (29.2%) Owned: 10 (41.7%) Rented: 8 (33.3%) House Shared : 3 (12.5%) Mortgaged: 2 ownership (8.3%) Others (not specified): 1 (4.2%) complete college : 10 (41.7%) graduate school: 9 (37.5%) complete Educational high school : 2 (8.3%) incomplete attainment college : 2 (8.3%) incomplete high school : 1 (4.2%) Migrant No: 18 (75%) Yes: 6 (25%) Participants by stakeholder group Results – Deliberative Valuation Individual to self - Mean points assigned to the park ES and EDS ES: 1 – ecotourism; 2- enjoyment and spending free time; 3 – sports and physical fitness; 4 – relaxation and mental recreation; 5 – aesthetic information; 6 – information for cognitive development; 7 – social relationships; 8 – local identity and cultural heritage; 9 – stimulate interest to history and culture; 10 – revenue for the city; 11 – revenue for locals; 12 – space for events; 13 – parking space; 14 – improve noneconomic quality of life; 15 – increasing green areas EDS: 1 – expensive maintenance; 2 – traffic; 3 – anti-social behaviour; 4 – conflict among users; 5 – waste of land; 6 – exposure to air pollution; 7 – incomplete features Results – Deliberative Valuation ES valuation results - second to the sixth valuation exercise Valuation Highly-valued ES Least-valued ES Group to individual Ecotourism, enjoyment and spending free time, sports and physical fitness Information for cognitive development, parking space, improve non-economic quality of life Individual to group Ecotourism, sports and physical fitness, relaxation and mental recreation Revenue for the city, parking space, improve non-economic quality of life Individual to future generations Ecotourism, enjoyment and spending free time, sports and physical fitness Revenue for the city, parking space, improve non-economic quality of life Group to future generations Ecotourism, sports and physical fitness, relaxation and mental recreation Revenue for the city, parking space, improve non-economic quality of life Individual to future Ecotourism, sports and physical fitness, generations (after discussions) relaxation and mental recreation Revenue for the city, parking space, improve non-economic quality of life • Kendall’s W - focus groups did not agree on how they assigned points to the different ES Results – Deliberative Valuation EDS valuation results - second to the sixth valuation exercise Valuation Highly-valued EDS Least-valued EDS Group to individual expensive maintenance, anti-social behaviour Waste of land, exposure to air pollution Individual to group Traffic, anti-social behaviour Waste of land, exposure to air pollution Individual to future generations Traffic, anti-social behaviour Conflict among users, waste of land Group to future generations Traffic, anti-social behaviour Conflict among users, waste of land Individual to future Traffic, anti-social behaviour generations (after discussions) Conflict among users, waste of land • Kendall’s W - focus groups did not agree on how they assigned points to the different EDS Results – Deliberative Valuation Value source and constituency • Friedman tests - differences in how participants assigned points to ES and EDS - first five valuation exercises: change in source and constituency • ES – ecotourism (χ2(2) = 12.455, p = .014), aesthetic information (χ2(2) = 15.038, p = .005), information for cognitive development (χ2(2) = 14.836, p < .005), revenue for locals (χ2(2) = 21.703, p < .001), parking space (χ2(2) = 21.4, p < .001), and increasing green areas (χ2(2) = 13.141, p = .011) • EDS – expensive maintenance (χ2(4) = 18.248, p = .001), traffic (χ2(4) = 14.688, p = .005), thought of the land being wasted (χ2(4) = 12.558, p = .014), exposure to pollution (χ2(4) = 16.223, p = .003) Results – Deliberative Valuation Discussions • Wilcoxon signed-rank tests - differences in the points assigned by the participants to the different park ES and EDS before and after deliberating - individual as the source and future generations as the constituency • No significant differences between the points that the participants assigned to the different park ES and EDS “They [other participants’ opinions] somehow affected me. We have different experiences, but when other participants give examples, you realise that they have a point.” “My perspective changed after [hearing other participants’ opinions]. At first, I was just considering my own perspective, but when I heard them [other participants], I realised that they have a point.” Results – Deliberative Valuation Future generations • Wilcoxon signed-rank tests - differences in the points assigned by the participants when asked to consider the other participants in the focus group and when they were asked to consider the future generations • ES - decrease in the points to ecotourism (z = -2.588, p = .010) and increase in the points to green areas (z = 2.165, p = .030) • EDS - increase in the points to traffic (z = 2.232, p = .026) exposure to air pollution (z = 2.666, p = .008) “I did not think about the people. I was more concerned with the maintenance, especially of the greens in the park... I wondered, ‘how can they [city office] be able to maintain them [the greens]’... I wish to see more greens in the park in the future.” End