A Tool for Economic Valuation of Ecosystem Services in Flanders

A Tool for Economic Valuation of Ecosystem Services in Flanders

Sara Ochelen – Flemish Ministry of Environment, Nature and Energy

European Environmental Evaluators Forum 9-10 February 2012

Outline

1. Introduction: what are Ecosystem Services and why economic valuation

2. How economic valuation works

3. Products available and planning

4. Results from a case study

5. Conclusions


1.1 Ecosystem services

Ecosystem services (ESS):

“all the goods and services that

ecosystems deliver to society”

•Nature and the ESS it delivers are not fully accounted for in decision making

Because many ESS are not known until they are lost: e.g. protection against floodings, regulation of the climate, pollination of crops by wild insects…

Because the value of ESS is not visible in prices.


1.2 Economic valuation

Economic value of nature = contribution to welfare Contribution to the utility of people, material and immaterial, via their use of nature (e.g. recreation of clean air), but also via so called non-

use (psychological value). Economische value ≠ financial value (cash flow yield).

Why economic valuation

•Trade-offs possible if impacts expressed in the same unit: € => Benefits versus costs in decisions with an impact on nature

•Value of ESS more visible, awareness raising.

•Payments for ESS.

•EU-biodiversity strategy ; UN The Economics of

Ecosystems and Biodiversity TEEB.

http://vimeo.com/16961590


• CBA = decision aid tool to describe and quantify all social costs and benefits of projects or measures (≠ scenarios), in € taking into account all welfare effects.

• Correct CBA =>• transparant trade-offs, better informed decisions.• IF also the impacts on ESS are included!

• Understand the full evaluation sequence, not only

result in €

• Very demanding to undertake complete analysis from scratch.

1.3 Better cost benefit analyses


1.4 Study and toolkit

• Team of economists and ecologists: VITO, University of Antwerp, Free University of Amsterdam: “Economic valuation of ESS for SCBA”.

• Toolkit: manual and webtool Nature Value Explorer.

• A range of ESS valued and quantified, ≠ methods used.

• Balance: easy to use vs. accuracy:

• Too complicated methods will not be used

• Too simple methods are not credible

Where possible: value function transfer methods: ready-to-use formula that need input of site specific values => applicable in many different cases and situations


2.1 Which Ecosystem Services studied?• Cultural services:

• Value of recreation /Amenity value (use);• Value of existence and preserving nature for future

generations (non-use).

• Regulating services:• Denitrification• N, P & C-sequestration in soils;• N, P & C-sequestration in forest biomass;

• Impact on air quality by capturing polluents like PM10;

• Noise mitigation/buffer function by forests.

• Lacuna:• Several reg. services like water retention• Production services


2.2 Value of cultural services

• No prices economic valuation techniques.• Expensive and time consuming.• We want ready-to-use formula for many cases.• Valuation function developed with empirical data.• Reveal value of people by asking them questions.• Choice experiment: sophisticated questionnaire:

multiple pretests, representative sample, rigourous statistical analysis of results…

• Interviewed 3000 people in Flanders with choice cards.


2.3 Choice cards to reveal WTP


2.4 Valuation function cultural ESS

• All answers pooled: empirical information about preferences for nature valuation function:

• Forest > heath land > grassland.• Available trails > no trails.• Members NGO > non members.• Close to home > far away.

0

40

80

120

160

200

0 10 20 30 40 50 60

afstand van de woning tot het gebied

WT

P in

€

WTP/hh/yr = a * pioneer vegetation + b * mudflats and marshes + c * natural grasslands + d * forests + e * open water, reed or swamps + f * heathland or land dunes + g * size in ha + h * biodiversity (no of species) – i * age if high biodiversity + j * availability of walking- and biking trails – k * distance in km + l * natural adjacent area + m * adjacent residential area – n * adjacent industrial area + o * income – p * % women + q * % membership


Value of regulating services

Change in quantity x price

Δ ton CO2 in soil

Δ kg PM in air

Δ decibel in houses

Δ kg N in water

…

50 €/ton CO2 (international literature)

30 €/kg PM (health costs)

1% house value/dB (house depreciation)

74 €/kg N (marginal abatement cost)

…


2.7 Avoided cost method nutrients

Broekx et al., 2011. Cools et al., 2011.

-100

0

100

200

300

400

500

600

700

0% 5% 10% 15% 20% 25% 30% 35% 40%

Reduction N losses to surface water (%)

Marginal cost (€/kg)

Tuned fertilisation

Households individual

Basic measures

Collectors

Industry standards UWWD

Feed efficiency pigs

Efficient dairy

WWTP

Winter cover crops

Reducing Poultry

Medium-cost sewage

Feed efficiency poultry

Excl. nitrates derogation reducing other livestock

High-cost sewage

Low-cost sewage

• Based on cost effectiveness analysis to set up river basin management plan for Water Framework Directive: 74€/kg N

Marginale kostencurve (Nt)

-100

0

100

200

300

400

500

600

700

0% 5% 10% 15% 20% 25% 30% 35% 40%

Reductie Nt emissies naar oppervlaktewater (%)

Mar

gin

ale

kost

pri

js

(€/k

g)

BasismaatregelenInzaaien wintergroenbedekker

Voederefficiëntie bij varkens

BemestingsadviesHoogproductieve melkkoeien

Verbeteren van rendement van RWZI's

Toepassen van ERSA normen voor bedrijfslozingen

Afbouw pluimvee

Verdere uitbouw van collectieve saneringsinfrastructuur in goedkope clusters van buitengebied

Verdere uitbouw van collectieve saneringsinfrastructuur in minder goedkope clusters van buitengebied

Voederefficiëntie overige veestapel

Verlagen van bemestingsnorm 170kg dierlijk N/ha + Afbouw overige veestapel

Aanleg van IBA's in buitengebied

Verdere uitbouw van collectieve saneringsinfrastructuur in dure clusters van buitengebied

Uitbouw van saneringsinfrastructuur door uitvoering van bijkomende opgedragen bovengemeentelijke projecten


3.1 Available: Manual

•Launched 1 year ago.•Updates in upcoming years•Proved to be a high workload to apply.•Room for interpretation can lead to mistakes. (ngo: 100 ha forest near Antwerp is 1 billion €)

Webtool Natuurwaardeverkenner: Nature Value Explorer

•The manual can be consulted on: http://www.lne.be/themas/beleid/milieueconomie/waardering-van-baten-en-schaden/literatuur-over-economische-waardering.•Short summary in English


3.2 Available: online tool: version 1.0


3.3 Planning: next steps

IT:• Reporting: more transparency in calculations and

uncertainty margins• Sharing results-discussions• Periodic estimates instead of single year

Methodological developments:• Include more services: production, pollination…• Location specific choice experiments to validate results

more abstract experiment• Use of recreation data for amenity values

April 2012: version 1.1

Spring 2013: version 2.0


4.1 case Hoegaardse Vallei

Value of 210 ha nature in the valley of Hoegaarden = ?

Meldert

Hoegaarden


4.2 ESS which could be computed

• Amenity and existence value

• Denitrification• C-N-P sequestration in soils• C-N-P sequestration in forest biomass• Air quality (particulate matter) • Noise mitigation: not applicable

Could not be computed, but nevertheless important:• Water retention: protection against floods• Erosion control• Pollination • Green corridors• High biodiversity as such


4.3 data input in tool


4.4 Ingegeven locatie: nauwkeurig doen!


4.5 Results from the tool

Culturele waarde

∑ Reg. Diensten (N óf P) Totaal


4.6 Value ESS Hoegaarden Valley Area

• Cultural value: 850.000 families: 8,6 million €/y• Removal nutrients from water system: 4,6 million €/y

Denitrification N and P- sequestration

• Climate regulation: 800 ton carbon 0,15 million €/y• Air quality: 1800 kg PM 0,05 million €/y

Total value computed ESD 13 à 14 million €/y

or 65.000 euro/hectare/year

Attention: make the baseline explicit: which situation are we comparing with: here assumption agricultural area (fields and meadows)!


Conclusions

• Tool available for Flanders to quantify multiple ecosystem benefits and to express them in money terms.

• Enables summing up and comparing value new nature or destroyed nature with other benefits and costs in CBA.

• Tool supplied to potential users (administrations, consultancies, ngo’s) on voluntary basis, spread by media, presentations and courses.

• Remaining challenges concerning quantification and data availability and quality, users of tool involved in the follow-up study and further development (crowd coding).

• Step forward for better informed decisions on measures and projects with impacts on ecosystems.


Thank you for your attention!

for more information, please contact

[email protected]

http://milieueconomie.lne.be

Documents

A Tool for Economic Valuation of Ecosystem Services in Flanders