Module 4: defining invasive-related costs & benefits Economic Analysis of Invasive Species

Module 4:

defining invasive-related costs & benefits

Economic Analysisof Invasive Species

Economic Analysis of Invasive Species2

what this module covers

1. looking at the impact of invasives in economic terms

2. defining the benefits and costs of invasives

3. categorising invasive costs and benefits in terms of ecosystem values

4. using a checklist for identifying the costs and benefits of invasives

5. recognising the complexity of invasive costs and benefits

about invasive species

about invasive species Module 1Module 1

understanding the economic causes of invasions

understanding the economic causes of invasions Module 2Module 2

impacts of invasive species and ways to address them

impacts of invasive species and ways to address them Module 3Module 3

defining invasive-relatedcosts & benefits

defining invasive-relatedcosts & benefits Module 4Module 4

valuing ecosystem impacts

valuing ecosystem impacts Module 5Module 5

informing actionsto address invasives

informing actionsto address invasives Module 6Module 6


looking at impacts in economic terms

• invasives occupy a particular “space” (changing the ecosystem and its component species)

• they alter the economically valuable goods and services it yields

• these economic impacts are typically both positive and negative

• economic analysis involves identifying and weighing up these costs and benefits for different groups



y types and z levelsof ecosystem goods

and services


and services

a types and b levels of ecosystem goods

and services


and services


direct & indirect economic impacts

direct economic impacts

indirect economic impacts

on-site production impacts arising from the effects of the invasive on the host

habitat or ecosystem

secondary and tertiary effects on other sites,

sectors and times in terms of markets, prices, health,

nutrition, trade, environment, public and

private spending


direct & indirect economic impacts

direct economic impacts

indirect economic impacts

• $1.8 mill wildlife-related recreation

• $0.5 mill soil & water conservation

• $39.3 mill changes in business volume, personal income, retail sales and other linked economic activities

• $4.98 mill livestock carrying capacity

• $11.74 farm production expenditures

leafy spurge in Montana, South Dakota and Wyoming

(Bangsund et al 1991, 1993, 1999)


linking biophysical impacts to economic change

• biophysical changes = changes in ecology, hydrology, biodiversity, etc.

• extremely challenging to translate biophysical changes into economic impacts

• usually involves specifying a series of dose-response relationships between a given biophysical change and a given change in production, consumption, income or expenditures


linking biophysical impacts to economic changeeconomic impacts of alien invasive plants on South African ecosystems

(various authors, cited in van Wilgen et al 2001)

topictopic biophysical impacts &economic indicators

biophysical impacts &economic indicators

Impacts of alien plant invasions on water yield

Impacts of alien plant invasions on water yield

Reduced water yield from invaded watersheds, prevention of water losses through clearing programmes

Reduced water yield from invaded watersheds, prevention of water losses through clearing programmes

Ecological-economic simulation model of mountain fynbos

Ecological-economic simulation model of mountain fynbos

Consequences of invasion for water production, wildflower harvest, hiker and ecotourist visitation, endemic species and genetic storage

Consequences of invasion for water production, wildflower harvest, hiker and ecotourist visitation, endemic species and genetic storage

Cost-benefit analysis of black wattle

Cost-benefit analysis of black wattle

Benefits of commercial crop values and other products, impacts from reduced water yield, increased fire risk and biodiversity loss

Benefits of commercial crop values and other products, impacts from reduced water yield, increased fire risk and biodiversity loss

Cost benefit analysis of biological control of red water fern

Cost benefit analysis of biological control of red water fern Loss of water resources and livestock for agricultural sector Loss of water resources and livestock for agricultural sector


linking biophysical impacts to economic change

European green crab in the USA

(Hoagland and Jin 2006)

• estimates of crab’s economic impact have been used to justify US Government funding for control

• based on data taken from wrong geographic location

• incorrect predictions of ecological effects

• economic methods misapplied


defining benefits and costs

COSTSCOSTS BENEFITSBENEFITS

management costs

management costs

direct physical expenditures on

controlling invasion:

wages, equipment,

infrastructure, transport,

research, etc

direct physical expenditures on

controlling invasion:

wages, equipment,

infrastructure, transport,

research, etc

on-site production

benefits

on-site production

benefits

benefits of invasive to on-site production:

income, employment, food, fuel, etc

benefits of invasive to on-site production:

income, employment, food, fuel, etc

benefits to other sectors & activities

benefits to other sectors & activities

knock-on impacts on other

enterprises, sectors and sites that depend on

invasive for:

income, employment,

inputs, commodities, etc

knock-on impacts on other

enterprises, sectors and sites that depend on

invasive for:

income, employment,

inputs, commodities, etc

opportunity costs(benefits foregone)

opportunity costs(benefits foregone)

congestion and

crowding in uninvaded systems:

rising production

costs, increased

travel costs, disruption, crowding,

etc

congestion and

crowding in uninvaded systems:

rising production

costs, increased

travel costs, disruption, crowding,

etc

losses to other

sectors and

activities:

higher prices, loss of goods, more

floods, less water,

etc

losses to other

sectors and

activities:

higher prices, loss of goods, more

floods, less water,

etc

on-site production

losses:

declining yield,

increased pest

damage, water

shortage, flooding, etc

on-site production

losses:

declining yield,

increased pest

damage, water

shortage, flooding, etc




and services


and services

x benefits ofinvasive species

w costs of

invasives control


and services


and services


categorising costs and benefits through ecosystem values

• primary concern in economic analysis is assessing incremental costs and benefits that occur when:

– invasive species interfere with the functioning of a natural or human-modified ecosystem which yields a flow of economically valuable goods and services

– invasive species displace native species or biological associations that are economically valuable

• thus, when we are looking at opportunity costs or benefits foregone as a result of invasives, we are valuing the impacts of changes in ecosystem services on the economy


the problem of undervaluation

• ecosystem goods and services are persistently undervalued:

– in economic statistics and indicators

– in prices and markets people face

– in economic policies and instruments

– in calculations of profit and loss


the problem of undervaluation

• given this undervaluation, is unsurprising that ecosystems are allowed to be modified, converted and taken over by invasives

• these land and resource uses seen as being more “productive” and “profitable”

• there are seen to be few economic costs or losses to ecosystem degradation


total economic value

DIRECT VALUESproduction and

consumption goods such as:

food, fish, fuel, building materials, medicines, fodder,

recreation, etc.

DIRECT VALUESproduction and

consumption goods such as:

food, fish, fuel, building materials, medicines, fodder,

recreation, etc.

EXISTENCE VALUESintrinsic significance of

species and ecosystems in terms

of:cultural, aesthetic,

heritage, bequest, etc.

EXISTENCE VALUESintrinsic significance of

species and ecosystems in terms

of:cultural, aesthetic,

heritage, bequest, etc.

INDIRECT VALUESecosystem functions and services such as:watershed protection, nutrient cycling, flood

attenuation, pollination, climate regulation, etc.

INDIRECT VALUESecosystem functions and services such as:watershed protection, nutrient cycling, flood

attenuation, pollination, climate regulation, etc.

OPTION VALUESpremium placed on

possible future uses or applications, such as:industrial, agricultural,

pharmaceutical, leisure, etc.

OPTION VALUESpremium placed on

possible future uses or applications, such as:industrial, agricultural,

pharmaceutical, leisure, etc.

USE VALUES

NON-USE VALUES


total economic value

ECOSYSTEM SERVICES

Supporting• Nutrient cycling• Soil formation• Primary production• …

Provisioning• Food• Fresh water• Wood and fiber• Fuel• …

Regulating• Climate regulation• Flood regulation• Disease prevention• Water purification• …

Cultural• Aesthetic• Spiritual• Educational• Recreational• …

Security• Personal safety• Secure resource access• Security from disasters

Basic material for good life• Adequate livelihoods• Sufficient nutritious food• Shelter• Access to goods

Health• Strength• Feeling well• Access to clean air & water

Good social relations• Social cohesion• Mutual respect• Ability to help others

Freedom of choice and action

Opportunity to be able to achieve what an individual values

being and doing

CONSTITUENTS OF WELL-BEING

optio

n va

lues

direct values

indirect values

existence values

TOTAL ECONOMIC

VALUE

Adapted from Millennium Ecosystem Assessment 2005, Emerton and Bos 2004


checklist for identifying invasive costs and benefits (on-site)


checklist for identifying invasive costs and benefits (off-site)


checklist for identifying invasive costs and benefits (congestion)


checklist for identifying invasive costs and benefits (management)


marginal costs and benefits

the change in value resulting from one more

unit of a good or service produced

or consumed

marginal value

marginal value

the change in benefit

associated with consuming one additional unit of a good or service

marginal benefit

marginal benefit

the change in cost associated with producing one additional

unit of a good or service

marginal cost

marginal cost

economic analysis addresses levels and degrees of invasion and control, and incremental changes in the quality and quantity of provision

of ecosystem services and in associated economic indicators


uncertainty and time

• invasives have special characteristics which mean that dealing with the time dimension is more difficult than would normally be the case

• timing of impacts is highly context-specific (may be short-term and temporary, may be permanent and irreversible)

• manifestations of costs and benefits varies over time, for different groups, different places and at different steps in the progression to invasion

• high levels of uncertainties in biophysical and economic estimates: trajectories and impacts are hard to predict


distributional aspects

• key need to differentiate between economic impacts of invasives on different groups

• distributional analysis important from both equity and efficiency perspectives

• what management responses are required depends on who is bearing the benefits and costs

• identifying and avoiding/mitigating the impact of invasives on poor and vulnerable groups particularly important


distributional aspects

economic costs and benefits of invasive species in Africa

(Wise et al 2007)

Invasive species CountryEconomic impacts per unit

area or per capita (US$/year)

Nile tilapia(Oreochromis niloticus)

Uganda -$0.57 to +$3.4 per fisher

Water hyacinth(Eichhornia crassipes)

Central African Republic

-$429 per gill net fisher, -$127 per palm wine collector, +$351 per spear

fisher

South Africa -$159 per fisher

Larger grain borer(Prostephanus truncatus)

Benin -$18 to -$350 per farmer

Ghana -$28 to -$124 per farmer

Parthenium weed(Parthenium hysterophorus)

South Africa-$13.5 per small-scale farmer, -$27.1 per commercial farmer

Triffid weed(Chromolaena odorata)

South Africa -$59.3 per hectare


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Documents

Module 4: defining invasive-related costs & benefits Economic Analysis of Invasive Species