ESV (Ecological Services Valuation) for Dummies

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   Arthur Marshall Foundation:  Valuing Ecosystem Services of a Restored River of Grass, with a result of B:C ranging from 6:1 to 26:1:  See http://www.conference.ifas.ufl.edu/GEER2010/Poster%20PDFs/Marshall.pdf

o   Arthur R. Marshall Foundation:  Valuing Ecosystem Services of the proposed Everglades Headwaters NWR placed in public comment:  B:C could exceed 100:1.  For non-believers see:  http://www.uvm.edu/research/?Page=news&storyID=1153&category=uvmresearch

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.

·         Two page letter to the President and four page executive summary amplifies; See http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast_sustaining_environmental_capital_report.pdf

·         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