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Economic valuation of Economic valuation of biodiversity in a policy biodiversity in a policy context: problems and context: problems and

best practicebest practiceDr Mike ChristieDr Mike Christie

Institute of Rural SciencesInstitute of Rural SciencesUniversity of Wales AberystwythUniversity of Wales Aberystwyth

Paper presented to the EEA workshop on ‘Biodiversity Paper presented to the EEA workshop on ‘Biodiversity and Economics’ and Economics’ 5 October 20065 October 2006

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OverviewOverview

TEV and TSVTEV and TSV MethodsMethods Case study: valuing biodiversity in Case study: valuing biodiversity in

the UKthe UK ProblemsProblems Best practiceBest practice Future research needsFuture research needs

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Total Total Economic Economic

ValueValue& &

Total Total Systems Systems

ValueValue

Source: Bateman and Adger (2001)

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Valuation methodsValuation methods Market prices:Market prices:

Observed market value; productivity approaches; cost-Observed market value; productivity approaches; cost-based methods (replacement costs).based methods (replacement costs).

Revealed preference: Revealed preference: Travel cost; Hedonic pricing.Travel cost; Hedonic pricing.

Stated preference: Stated preference: Contingent valuation; Choice experimentsContingent valuation; Choice experiments

SP-RP approaches: SP-RP approaches: Contingent behaviour; RUM TCMContingent behaviour; RUM TCM

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Case study: Valuing Case study: Valuing biodiversity on UK farmlandbiodiversity on UK farmland Methods: Methods: Choice experimentsChoice experiments, contingent , contingent

valuation, valuation workshops & benefits valuation, valuation workshops & benefits transfer.transfer.

Sample: 800 residents – Cambridgeshire and Sample: 800 residents – Cambridgeshire and Northumberland.Northumberland.

Innovative features:Innovative features: Use ecologists to help define biodiversity Use ecologists to help define biodiversity

attributes + generate scenarios;attributes + generate scenarios; 20 minute PowerPoint presentation to inform 20 minute PowerPoint presentation to inform

public.public.

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How do ecologist view How do ecologist view biodiversity?biodiversity?

BIODIVERSITY CONCEPTS BIODIVERSITY CONCEPTS

ECOLOGICAL CONCEPTSECOLOGICAL CONCEPTS ANTHROPOCENTRIC CONCEPTSANTHROPOCENTRIC CONCEPTS

KeystonKeystone e

speciesspecies

UmbrelUmbrella la

speciesspecies

FlagshiFlagship p

speciesspecies

EcosysteEcosystem m

functionfunction

EcosysteEcosystem Healthm Health

EndangereEndangered speciesd species

Rare Rare speciespecie

ss

CharismatCharismatic speciesic species

CutenesCutenesss

FamiliFamiliar ar

speciespeciess

Locally Locally importaimporta

nt nt speciesspecies

HabitatHabitat(species (species

interactions)interactions)

Ecosystem Ecosystem processesprocesses

Rare, Rare, unfamiliar unfamiliar species of species of wildlifewildlife

Familiar species of wildlife Familiar species of wildlife

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Choice experiment Choice experiment attributes and levelsattributes and levels

Familiar species of wildlifeFamiliar species of wildlife Continued decline (SQ)Continued decline (SQ) RareRare Rare and CommonRare and Common

Rare, unfamiliar species of wildlifeRare, unfamiliar species of wildlife Continued decline (SQ)Continued decline (SQ) Slow down declineSlow down decline Recover to stable populationsRecover to stable populations

Habitat (species interactions)Habitat (species interactions) Continued decline (SQ)Continued decline (SQ) RestorationRestoration CreationCreation

Ecosystem servicesEcosystem services Continued decline (SQ)Continued decline (SQ) With human impactWith human impact All servicesAll services

Tax (7 levels)Tax (7 levels)

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Example of choice taskExample of choice taskPOLICY POLICY OPTION OPTION

AA

POLICY POLICY OPTION OPTION

BB

DO NOTHINGDO NOTHING(Biodiversity (Biodiversity

degradation will degradation will continue)continue)

Familiar species Familiar species of wildlifeof wildlife

Rare familiar species Rare familiar species protectedprotected

Rare familiar species Rare familiar species protectedprotected

Continued decline in Continued decline in the populations of the populations of familiar speciesfamiliar species

Rare, unfamiliar Rare, unfamiliar species of wildlifespecies of wildlife

Recovery of rare species Recovery of rare species to non-threatened statusto non-threatened status

Continued decline in Continued decline in the populations of the populations of rare, unfamiliar rare, unfamiliar

speciesspecies

Continued decline in Continued decline in the populations of the populations of rare, unfamiliar rare, unfamiliar

speciesspecies

Habitat (species Habitat (species interaction)interaction)

Habitat restorationHabitat restorationWildlife habitats will Wildlife habitats will

continue to be continue to be degraded and lostdegraded and lost

Wildlife habitats will Wildlife habitats will continue to be continue to be

degraded and lostdegraded and lost

Ecosystem Ecosystem processprocess

Continued decline in the Continued decline in the functioning of ecosystem functioning of ecosystem

processesprocesses

Only ecosystem Only ecosystem services that have a services that have a

direct impact on direct impact on humans, e.g. flood humans, e.g. flood

defence are restored.defence are restored.

Continued decline in Continued decline in the functioning of the functioning of

ecosystem processesecosystem processes

Annual tax Annual tax increaseincrease

You will pay an extra You will pay an extra £80.00 £80.00

tax annually over a 5 year tax annually over a 5 year periodperiod

You will pay an extra You will pay an extra £20.00 £20.00

tax annually over a 5 tax annually over a 5 year periodyear period

Your tax billYour tax bill will not be will not be increasedincreased

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Research conclusionsResearch conclusions

Is there evidence that people value Is there evidence that people value biodiversity?biodiversity? Only 15% of CE respondent chose ‘Do nothing’ Only 15% of CE respondent chose ‘Do nothing’

What aspects of biodiversity do people most What aspects of biodiversity do people most value?value? CE provides evidence that people care about:CE provides evidence that people care about:

Common and rare familiar species, Common and rare familiar species, Rare unfamiliar species (but not a ‘slow down in decline’), Rare unfamiliar species (but not a ‘slow down in decline’), Habitat restoration and re-creation, Habitat restoration and re-creation, Ecosystem services which have direct impact on humans (but Ecosystem services which have direct impact on humans (but

not those which do not affect humans)not those which do not affect humans)

People care about biodiversity, but are largely People care about biodiversity, but are largely indifferent about how biodiversity outcomes indifferent about how biodiversity outcomes are achieved!are achieved!

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Research conclusionsResearch conclusions

Is it possible to value complex goods Is it possible to value complex goods such as biodiversity?such as biodiversity? Yes, but is challengingYes, but is challenging Requires careful design (expert Requires careful design (expert

reviews, public FG) and information reviews, public FG) and information presentation presentation

The way experts and the public view The way experts and the public view biodiversity is different, therefore need biodiversity is different, therefore need to ‘translate’ expert views for study.to ‘translate’ expert views for study.

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Problems for biodiversity Problems for biodiversity valuationvaluation

Ecologists don’t fully understand the Ecologists don’t fully understand the complexities of biodiversity / complexities of biodiversity / ecosystems;ecosystems;

Poor public understanding of Poor public understanding of biodiversity concepts;biodiversity concepts;

‘‘Constructed’ preferencesConstructed’ preferences Public versus expert preferencesPublic versus expert preferences

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Problems for biodiversity Problems for biodiversity valuationvaluation

Aggregation:Aggregation: Distance decay;Distance decay; Double counting;Double counting; Passive use values.Passive use values.

CostCost Good studies require significant Good studies require significant

resourcesresources Benefits transfer?Benefits transfer?

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Best practiceBest practice

Incorporate sound ecological knowledge Incorporate sound ecological knowledge into design;into design;

Extensive piloting to ensure biodiversity Extensive piloting to ensure biodiversity descriptions are meaningfully to public; descriptions are meaningfully to public;

Respondents need to be fully informed Respondents need to be fully informed and reflective – requires adequate and reflective – requires adequate funding;funding;

Use of workshops to help validate results;Use of workshops to help validate results; Explore heterogeneity of values;Explore heterogeneity of values;

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Future research needsFuture research needs Aspects of biodiversity requiring more Aspects of biodiversity requiring more

attentionattention Total systems valuesTotal systems values

Social, cultural valuesSocial, cultural values Infrastructure ‘glue’ valuesInfrastructure ‘glue’ values

Scope / scarcity / extinction (irreversibility) issuesScope / scarcity / extinction (irreversibility) issues Passive use valuesPassive use values Biodiversity components: Biodiversity components:

protected areas-, farmland-, urban- biodiversityprotected areas-, farmland-, urban- biodiversity Landscape levelLandscape level Genetic levelGenetic level

Aggregation issuesAggregation issues Benefits transferBenefits transfer