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Ecosystem Services Valuation Workshop

Ecosystem Services Valuation: Opportunities, Obstacles, and Appropriate Application – a Path Forward

Portland State University
Portland, Oregon

This workshop, held on July 8-9, 2013, engaged scientists, policy makers, and practitioners from a diverse range of backgrounds. See below for more information on the workshop particpants, content, and selected reading material.

Workshop participant list

Principles to Guide Assessments of Ecosystem Service Values

A collaborative process produced remarkable agreement on principles that should guide robust, comprehensive assessments of the social, economic and ecological benefits derived from ecosystem services. The draft principles document arising from that workshop can be accessed by clicking the link below.

The 10 guiding principles in this document encourage interdisciplinary approaches to assessing the social, ecological, and economic benefits of ecosystems and biodiversity, and their interdependent relationships. Practitioners, resource managers, academics, policy makers, local communities and other stakeholders—including the environment—stand to benefit from a set of principles guiding the emerging approaches to assessments of ecosystem service values. Following these principles will lead to more comprehensive and credible assessments that can improve public and private decisions and the well-being of current and future generations.

Principles Document (PDF)

Two-Page Principles Flier (PDF)

Briefings on the Principles

In November 2013, Portland State University and Defenders of Wildlife traveled to Washington DC to jointly brief federal agencies, congressional staff, nonprofit and other audiences on the principles. PDF Presentation

Over January and Feburary 2014, briefings were held in Oregon and Washington ('Cascadia') with academic, community and local and federal government audiences.

The principles received encouraging responses from the agencies and non-profits present at the briefing sessions. Notes were recorded for each of the briefings and the highlights of the discussion were summarized.

DC Briefing discussion notes

Cascadia briefing discussion notes

If you have any comments on the principles document or would like to discuss them further, please write to Dave Ervin at dervin@pdx.edu

July Workshop Presentations

  • Frank Casey, US Geological Survey

Federal Activities on Valuation of Ecosystem Services

This presentation provided a very general overview of the recent and near future Federal government research and policy activities with respect to the incorporation of ecosystem services value information in Federal resource management and decision-making. An up-date was given regarding the Federal agency response to the 2011 PCAST report: “Sustaining Environmental Capital: Protecting Society and The Economy.”  In addition, other Federal and private sector efforts to include ecosystem services valuation into Federal resource decision-making and management was described.

  • John Loomis, Colorado State University

A Few Basic Principles of Economic Valuation of Ecosystem Services

The total economic value of ecosystem services is defined as the public’s net willingness to pay for these final services. The total economic value consists of use and non-use values. Economic analyses of ecosystems services are most useful when comparing some “with” management/restoration versus without management/restoration rather than an “all or no” ecosystem services perspective. Economists have several techniques that can empirically measure willingness to pay. These include those based on people’s actual behavior (revealed preference) and those based on people’s intended behavior (stated preference). When original revealed and stated preference studies cannot be performed, economists rely on economic value estimates from previous stated and revealed preference studies. This approach is known as benefit transfer. All these methods when taken as a whole provide a theoretically defensible foundation for valuation of ecosystem services and practical empirical techniques to monetize those values.

  • Paul Thompson, Michigan State University

Social Values/Ecosystem Services

Conceptions of value are derived from preferences that are derived from behavior. Non-behavioral approaches to valuation posit that values play a role in reasoning, and can be inferred from the study of artifacts (observable results of that reasoning). A lot of our behavior is not reasoned (e.g. habit, impulse), but reasoned behavior comes as a direct result of a felt need that someone is trying to fulfill. Such approaches include: Instrumental value – something that is valuable because it will bring about some other, further purpose/benefit; Intrinsic value – something that has value in itself; and ‘Constituitive value’–values functioning to mark and protect the values of 
a particular community. The potential range of ‘constituitive values’ is as diverse as the range of communities.

  • Tom Spies, USDA Forest Service Pacific Northwest Research Station

An Ecologist's Perspective on Valuing Nature

Ecologists are interested in instrumental values and intrinsic values. Many ecologists got into ecology because they see intrinsic value in nature. Many ecologists would value scarce or at risk species over common, diversity over homogeneity, native species over non-native. There are two tensions regarding valuation: whether to value the state of an ecosystem or the processes that produce the various states; and whether to take a system perspective or a single species perspective: Agency policy structures are a big influencer of the tension between these schools of thought. Stability is a key principle of economics (i.e. equilibrium), and a key driver in the maintenance of ecosystems, and therefore their valuation. Variability in natural systems (e.g. the amount of carbon a particular stand of trees holds varies from one stand to another) is a challenge for any standardized valuation framework.

  • Noelwah Netusil, Reed College

Ecosystem Valuation Workshop: Revealed Preference Approaches

There are four methods of valuation based on Revealed Preferences approaches:  Damage Cost Method, Defensive Behavior Method, Hedonic Price Method, and the Travel Cost Method. An approach commonly used in ecosystem valuation is avoided or replacement costs.  These costs express a willingness-to-pay if they are a result of a regulatory mandate, but they likely represent a lower-bound estimate.  These studies should use excellent data obtained through surveys or market transactions, use representative samples, capture the temporal and spatial nature of the ecosystem service being evaluated, and rely on the most appropriate statistical techniques.  Strengths and limitations of the approach should be discussed, upper- and lower-bound estimates should be included, and results should be placed into the context of the existing literature.

  • Sahan Dissanayake, Colby College

Stated Preference Methods

Stated preference (SP) methods are used to assess individuals’ preferences for specific environmental goods, services or policies. SP methods rely on answers to carefully worded survey questions. There are two main methods of SP valuation: contingent valuation (CV) asks either for a monetary value or if the respondent is willing to pay a certain amount; discrete choice experiment (DCE) surveys ask the respondent to choose between different bundles of attributes that have varying values for the characteristics of the good. The answers are analyzed using statistical methods to elicit the willingness to pay for the good or service and preferences towards different characteristics. SP methods can accommodate new goods or services, introduce hypothetical scenarios and identify passive (non-use) values. This can also be a downside as there can be concerns about validity since the decision-making context is hypothetical. It is important to note that SP values can yield more than just values; it is possible to analyze the trade-offs and the structure of respondent preferences using SP surveys.

  • David Batker, Earth Economics

Case Studies in Ecosystem Service Valuation

Storm Sandy, 2012. New York’s drinking water was unaffected because of the  natural gravity-fed water storage system it had invested in. New Jersey had a drinking water catastrophe that cost $2.6B. It is a change of paradigm to posit the economy as a system within the natural environmental system. Natural disasters is one area where this position can have traction, and we are undervaluing the value of ecosystem services for cost avoidance. The Federal Emergency Management Agency (FEMA)'s total allocation to Sandy relief costs: $60B. Earth Economics worked with FEMA to incorporate ecosystem services into its benefit cost analysis mitigation tool. FEMA is the first federal agency to implement systematic ecosystem services valuation concepts. Our tools use the benefit transfer method, which has holes and pitfalls, but also has strengths. 

  • Mark Buckley, ECONorthwest

Identifying Real Avoided Costs to Key Stakeholders: Beavers and Farmers

Oftentimes, communities feel they must weigh ecosystem service restoration and conservation against other resource uses that more directly factor into economic activities that provide income, jobs, and livelihood. Farmers and ranchers had extirpated beaver from the Escalante River Basin in Utah because they believed the beaver were taking water the farmers and ranchers needed downstream. Their support would be crucial for any large-scale reintroduction success. We calculated the avoided sediment loading to their irrigation reservoir, and the potential volume of water stored upstream of the reservoir by beaver, calculating avoided sediment dredging costs and avoided costs of purchasing new water rights for increased storage. We also identified potential reductions in required investments to achieve temperature goals for the Escalante River.

  • Kevin Halsey, Parametrix

EIA Pilot Study:Project Background

Parametrix was asked to test the integration of ecosystem services into a corporate environmental impacts assessment (EIA). The promise was that the analysis would factor in ecological, social and economic values. The challenge lay in ensuring that the three areas, and subsets of within those three areas, didn’t get locked up into silos and compartments. An ecosystem services approach forces us to break the silos and think systemically to understand the full suite of consequences (and opportunities). In this project, the trade-off was “do we impact the wetland or the forest?” In terms of values to the local communities, the wetland supported multiple benefits, including local drinking water, irrigation for livestock pasture, as well as religious practice.

  • Jeff Kline, USDA Forest Service Pacific Northwest Research Station

Perspectives on "Value"

Valuation metrics can be anything so long as they accurately and adequately value things that matter to people, and are sensitive enough to account for changes in circumstances or preferences. People value ecosystem services but some frown upon monetary valuation. There are ways to measure intangible benefits empirically, albeit indirectly, by measuring the cost or benefit of the linked functions or services derived from them or leading to them. We need to make a more serious attempt at public engagement. In the past, you made a decision and then went to the community to convince people that it's the right way to do things. We need more input and participation (and early buy in) from the public.

  • Barbara Wyse, Cardno ENTRIX

Expert Elicitation and the Value of Natural Systems in Florida

The Southwest Florida Water Management District (SWFWMD) is estimating the economic value of its land holdings.  These estimates will help the SWFWMD prioritize its future land acquisition and disposition programs and enable the SWFWMD to effectively communicate with the public about the value of the land it manages. We asked our survey respondents, all natural resource professionals, to express trade-offs among natural systems attributes. Rather than use dollars in the survey, we valued natural systems based on expressed tradeoffs between natural systems and water supply.  Based on the expressed tradeoff, and the value of water supply, we then estimate the value of natural systems. We believe our approach provides more reliable value estimates than surveying the general public, as, asking the general public how much they are hypothetically willing to pay for poorly-understood ecosystem services may not provide reliable or easy to interpret values. 

 

Reading Materials

 

Reyers et al explore the science of biodiversity and ecosystem services, the relationship between them and how they respond to management interventions. They argue for the conservation community to move beyond the either biodiversity or ecosystem services debate to one that acknowledges that both biodiversity and ecosystem services are important for reducing biodiversity loss

Boyd’s paper provides a summary of the methods in which ecological values are calculated, applied, and interpreted. It also discusses the philosophical and strategic implications of ecological valuation. The arguments in favor of assigning value to ecosystems and services are summarized, along with some common criticisms.

This article clarifies the meaning of the term “ecosystem service,” summarizes methods for valuation of ecosystem goods and services, and assesses varying approaches for their provision and financing.

The ecosystem services that could be provided by increased dam-building beaver populations in the Escalante Basin would provide benefits in the form of avoided costs for water storage, habitat restoration, and water quality treatment. Based on beaver population densities observed elsewhere in Utah under similar conditions, beaver could provide benefits to local residents and visitors well into the millions of dollars per year.

In this book chapter the authors provide an overview of selected CV and DCE issues which appear the most relevant to environmental economics starting with a brief history of CV and DCE and ending with discussion of a range of applications.

  • Dissanayake, Sahan T.M. and Amy W. Ando. (In review) Valuing grassland restoration: proximity to substitutes and tradeoffs among conservation attributes.

The authors demonstrate how choice experiment survey methods can be used to guide ecosystem restoration efforts by using a choice experiment survey to estimate willingness to pay (WTP) for different attributes of restored grassland ecosystems. The results reveal several interesting patterns of consumer preferences and choice and provide a guide to restoration ecologists engaged in restoring grasslands.

This chapter in Natural Capital examines the philosophical basis of ecosystem service value, contrasting different approaches and identifying potential ethical issues. It also describes various methods for ecosystem service valuation, including discussion around strengths and limitations of each.

  • Haines-Young, Roy and Marion Potschin. 2010. Proposal for a Common International Classification of Ecosystem Goods and Services for Integrated Environmental and Economic Accounting (V1). Prepared by Centre for Environmental Management for European Environment Agency, Contract No: No. EEA/BSS/07/007.

The aim of this document is to propose a Common International Classification for
Ecosystem Services (CICES). The need for CICES arises because despite recent efforts, there is no accepted definition or classification of ecosystem goods and services and as a result it is difficult to integrate and compare different data sources.

The aim of this discussion paper is to review the proposal for a Common International Standard for Ecosystem Services (CICES) made to the United Nations Statistical Division (UNSD) to the in 2010, as part of the revision of the System of Environmental-Economic Accounting (SEEA).

This paper describes common misconceptions around ecosystem services valuation, as well as challenges in communicating these concepts. It also details a framework created by Parametrix for understanding and measuring ecosystem services. The author also discusses the importance of scale in these processes, and poses questions to help understand the landscape context.

This paper examines the challenges and opportunities involved in applying ecosystem services concepts to public lands, with an emphasis on Forest Service. The authors suggest that economists can make their work more relevant to mangers by broadening their focus to include qualitative approaches and collaborating more with mangers and natural scientists. They propose a slightly different definition of eco services:  In the context of public land management, ecosystem services are beneficial outcomes that derive from landscape conditions and ecological processes as they are altered by natural disturbance and management activities.           

  • Kumar, Pushpam; Verma, Madhu; Wood, Michael D. and Dhaval Negandhi. 2010. Guidance Manual for the Valuation of Regulating Services. United Nations Environment Programme.

This manual contains methods and tools for valuing regulating ecosystem services. It also provides background on the relevant concepts and methodology involved, and a glossary of key terms. The paper also details each of the regulating ecosystem services being considered for valuation, describing their ecological role as well as any value estimates that have been produced. Finally, the authors compare the strengths and limitations of different valuation methods, and discuss the applications to communication and decision-making.

This study used contingent valuation to assess household willingness to pay for restored ecosystem services along the Platte River through an increased water bill. They found that households would pay an average of $21 per month or $252 annually for restoration of dilution of wastewater, natural purification of water, erosion control, habitat for fish and wildlife, and recreation.

  • Netusil, Noelwah R.; Kincaid, Michael and Heejun Chang. 2013. Valuing Water Quality in Urban Watersheds: A Comparative Analysis of Johnson Creek, Oregon and Burnt Bridge Creek, Washington (under review).

This study uses the hedonic price method to investigate the effect of five water quality parameters on the sale price of single-family residential properties in two urbanized watersheds in the Portland-Vancouver metropolitan area.

This paper discusses some of the controversies in valuing the cost and benefits of long-lived environmental changes like climate change and biodiversity loss, as exposing serious flaws in standard welfare economics. Authors challenge the assumption that social value can be calculated on the basis of individual choices. New findings in behavioral psychology, neuroscience  and social anthropology have shown that human decision-making is also a social process. Deliberative valuation offers a way out of the trap of valuing eco services only for their commodity values.

In this article the authors review the representation of ecological outcomes in SP studies with a focus on studies analyzing values for restoration of aquatic ecosystems. The authors identify four standards: indicators should be measurable, interpretable, applicable, and comprehensive to analyze the validity of ecological indicators used in SP valuation. The authors then evaluate the use of ecological indicators in 54 research papers.

The Economics of Ecosystems and Biodiversity (TEEB) is in two phases and this interim report summarizes the results of Phase I. It demonstrates the huge significance of ecosystems and biodiversity and the threats to human welfare if no action is taken to reverse current damage and losses. Phase II will expand on this and show how to use this knowledge to design the right tools and policies.

This Instruction Memorandum transmits guidance describing when and how to consider nonmarket environmental values when preparing National Environmental Policy Act (NEPA) analyses for the Bureau of Land Management's (BLM) resource management planning and other decisionmaking.

This report describes and illustrates how EPA can use an “expanded and integrated approach” to ecological valuation. The proposed approach is “expanded” in seeking to assess and quantify a broader range of values than EPA has historically addressed and through consideration of a larger suite of valuation methods. The proposed approach is “integrated” in encouraging greater collaboration among a wide range of disciplines, including ecologists, economists, and other social and behavioral scientists, at each step of the valuation process. It also addresses the need for  regional scale analyses, as they  hold great potential to inform decision makers and the public about the value of protecting ecosystems and services. This potential is at present largely unrealized. The general recommendations of this report provide a guide for regional valuations. The report is long (100+ pages) but has a useful summary and table of contents. It also contains several case studies.

This article describes a step-by-step framework for producing ecological models and metrics that can effectively serve an economic-benefits assessment of a proposed change in policy or management. This framework is intended to support efforts to evaluate the equivalency of ecosystem service offsets and trades, establish restoration and preservation priorities, and develop environmental policy that effectively balances multiple perspectives.

This manual provides a methodology for performing cultural resource assessment as part of a watershed analysis, and discusses the steps, techniques and methods for carrying out such a study.  The manual can also be used as a reference guide for research, inventory or assessment of cultural resources outside of a formal watershed analysis. Available online: http://www.dnr.wa.gov/Publications/fp_wsa_manual_appj.pdf

This report presents ECONorthwest’s findings of the benefits that would accrue to communities in the Skagit River Delta with the Fisher Slough Tidal Marsh Restoration Project, completed in the fall of 2011. ECONorthwest’s analysis focused on the project’s socioeconomic benefits.