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Economic Valuation

The economic component of the research will estimate values for selected market and nonmarket ecosystem services of relevance to the study area. The estimated values will be used to characterize the economic tradeoffs implied by alternative conservation strategies under assumed climate change and land conversion scenarios. The economic analysis builds on previous research for the study area, and will integrate the ecosystem service values within spatial models. Doing so will allow the comparison of findings from the landscape scale model InVEST output with observed net returns for agriculture in the area. It will also reveal changes in the portfolio of benefits from ecosystems that society receives from various land use scenarios and conservation strategies under assumed climate change effects.

We will replicate estimation methods from previous research using secondary data. Previous studies estimated the annual per-hectare market value for six commodity land-use categories: 1) orchard/vineyard agriculture; 2) grass seed agriculture; 3) pasture; 4) row crop agriculture; 5) managed forestry; and 6) rural-residential land use. Additionally, carbon sequestration was included based on the estimated social value of carbon sequestration. We will build upon this framework, updating value estimates and including additional estimates for water provision and water purification. Water purification values will be estimated using a benefit transfer database and valuation tool called SERVES that was developed by Earth Economics.

We recognize the need for further development of ecological production functions to improve the economic valuation of ecosystem services. Understanding how society captures economic benefits from ecosystem services, either in markets or by nonmarket processes should ideally account for where on the landscape people obtain the values and what portions of the service provision flow directly or indirectly to users. How people capture that value is critical to providing more accurate valuations and to designing institutions for making more informed decisions. We expect the findings of our analysis will highlight the need to further develop ecological productions functions, to explicate the interaction of different types of capital (natural, physical, human, cultural and institutional), and the resultant effects on the valuation of ecosystem services in general.