ON THE VALUE TO SOCIETY OF
ECOSYSTEMS SERVICES VALUATION (A SHORT TUTORIAL)
Introduction
by Arthur R. Marshall to an AIAA Conference, 1972: I have
to believe, as all scientists should, that the more exactly we define
realities, the closer society will adhere to them. If this is not true, many of our careers are
personal opiates rather than contributions to hope for the world.
Here
is a brief and simplified case for incorporating realistic Ecosystem Service Valuation (ESV) as policy
for Federal-State-Local environmental decision-support, CERP(+) being one
example. The (+) after CERP(+) is notation that total ecosystem valuation
should include adds to CERP 1999 such as the Central Everglades project,
Everglades Headwaters NWR, non-CERP projects, etc. Reasons for ESV policy
follow:
·
A
Report to the President – Sustaining
National Capital – Protecting Society and the Economy – Tells the Federal
Govt to go in this direction for projects like CERP(+); the title implies the
level of need.
·
In
the Water Resources Advisory Commission meeting 3 Nov 11, there was much
rumination about the value of various ecosystems and water delivery to sustain
same, as well as water availability value in terms of benefits and costs for
urban systems; however there was no specific methodology referenced to get to benefits
in terms of a dollar value, such that it can be related to costs. ESV is it.
·
Per
the Costanza Synthesis [Google Nature 387 for the 8 page paper], the 17
characteristics of 18 Planetary Biomes (Ecosystems) have much greater value
than is widely understood and measured for society’s benefit; for example the
value of wetlands exceed $10,000 per acre per year in 2011 dollars; estuaries
are declared to have the highest value owing to their diversity of flora and
fauna.
1. The Costanza Synthesis is the most wildly
referenced peer reviewed paper in the environmental economics literature. Since all local ecosystems are unique
relative to the Costanza Synthesis, detailed ESV of the local ecosystem
provides a more accurate picture than using the Benefits Transfer Approach
(BTA) of the local ecosystem based on the Costanza Synthesis.
2. Critics also note that unique ESV analysis can take
one to three years of intense data gathering and analysis, which can cost 10 to
20 times more than a quick BTA calculation using the Costanza Synthesis
equivalent biomes, which is usually within 10%-20% of an on-site
analysis.
3. Whatever approach is taken, most agree that ESV is
usually underestimated due to complexities; the real value of ESV is its use in
an analysis of alternatives as the resulting Benefit-to-cost (B/C = B:C) ratio
provides a clear and convincing basis for evaluating return on investment (ROI)
4. For the usually unachievable quicker, better, cheaper
approach, BTA using the Costanza Synthesis should be a primary
preference as an environmental decision-making tool.
5. Point 4 is especially true when a number of
alternatives are presented to
decision-makers, necessitating less than a life-long study on the relative
merit of alternatives providing the best ROI.
6. Footnotes: The
Costanza Synthesis serves as a reality check when other approaches are
taken. When other approaches are
taken, modeling to get there may use
more BTA than suggested above
·
Total
Economic Valuation (TEV) of CERP(+) benefits forces long-term strategic
thinking in terms of life-cycle benefits and costs; note that CERP(+) is a
40-50 year life cycle.
o
The notional benefits
equation is: ESV = $$$
per Acre per Year
ESV = $10,000 x Acres x 40 yrs
o
Note
that when acres restored/conserved are big, ESV is big, e.g., benefits are BIG
relative to costs; B:C provides a realistic, understandable ROI, and that this
is a selling point for program.
·
Many
involved in CERP(+) are calling for synthesis.
o
The quintessential synthesis is
given by the B:C ratio; TEV puts a dollar value on the benefits, which can then
be compared with the costs of restoration/conservation.
o
References indicate the Benefits:Costs
(B/C = B:C) are most always greater than 10:1.
o
The
B:C = 10:1, i.e., $10 of benefits for every $1 dollar invested becomes a great
way to sell a program, in a manner understandable by Congress, OMB and the
pubic
·
CERP(+)
Applications that demonstrate the value of ESV:
o
Everglades
Foundation – Measuring the Economic Benefits of Everglades Restoration, with a
result that B:C = 4:1, i.e., $4 returned for every $1 invested, and this is
conservative
o
Florida
Ranchlands Payment For Ecosystem Services – More of a market based approach,
with PES for a specific service of one of the 17 services called out in the
Costanza Synthesis.
·
Potential
General Applications in the form of tradeoffs that consider all positive and
negative externalities:
o
Development
of Regional Impact (DRI) when destruction of wetlands are proposed
o
Benefits
and costs of mitigation of destroyed wetlands, rivers estuaries to ensure the
national policy of no net loss of wetlands and the ESV of same.
o
Benefits
and Costs of EPA/FDEP pollution rule-making
·
Failure
to place a value on wetlands results in a default value of zero; one result
appears to be a failure of the national policy of “no net loss of wetlands”.
o
The
National Research Council 2005 Study – Valuing
Ecosystem Services – Towards better Environmental Decision Making – Tells
us to go in this direction.
·
The
NRC Study makes a big point that when no value is placed on an ecosystem, the
ecosystem is given a default value of zero.
·
A Report to the President – Sustaining National Capital – Protecting
Society and the Economy – Tells the Federal Govt to go in this direction
for projects like CERP(+)
·
The recommendations
herein amount to the needed paradigm shift required to move bureaucracy to
better environmental decision making.
·
This
is the way for selling CERP(+) to Congress, OMB and the Public.
·
There
is an annual conference called ACES (A Conference on Ecosystem Services)
sponsored by Federal-State-Local govt and non-profit entities that address
going in this direction. It is a waste
of money not to move in this direction.
·
Using
ESV as a means to calculate the benefits & costs to counter sea level rise,
global warming, and drought management provide an economic basis for taking
action, or not.
·
It is
fairly clear that all that are pushing CERP(+) intuitively recognize the intrinsic
value of restoring and preserving wetlands.
Who are we if we can’t or won’t put a dollar value on our work?
Conclusions:
·
The
18 biomes called out in the Costanza Synthesis represent our planetary total national
capital
·
The
best road to sustainability is to use the ESV approach to put an economic value on natural capital and
related ecosystem services.
·
Failure
to put an economic value on ecosystems services results in a default value of
zero, leading to loss of natural capital in an unsustainable manner. Biomes (ecosystems) are victims of the
current paradigm of zeroing out ecosystems for the sake of growth and
development.
·
Use
of the Costanza Synthesis and benefits transfer approach provides the cheaper-quicker-better
approach for understandable return on investment analysis of alternatives
and a means to sell billion dollar restoration programs to Congress, Office of
Management & Budget, and the public.
·
CERP(+)
implementers have the opportunity to set the example in a paradigm shift toward
better environmental decision making by using ESV in CERP(+) analysis of
alternatives.
“If you don’t synthesize
knowledge, scientific journals become spare-parts catalogues for machines that
are never built. Until isolated and separated pieces of information are
assimilated by the human mind, we will continue to rattle around aimlessly.” --- Arthur R. Marshall, quoted in ”Anatomy of a
Man-made Drought,” Sports Illustrated, March 15, 1982
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