The Definition & Value of Chesapeake Bay Environmental

Endpoints

James Boyd and Alan KrupnickResources for the Future

November 1, 2011

Ecological Endpoints

A special set of biophysical outputs Commodities that directly enter firm or

home production Akin to “final goods”

Commodities that require little subsequent biophysical translation to make clear their relevance to utility

“Endpoint Theory” Distinction between “inputs” and “final

goods” is fundamental to Benefit accounting (to avoid double counting) Benefit comprehension by respondents in stated

preference studies (to avoid confusion & error)

Production Theory

Key terms Inputs transformed into Outputs via Production functions

Qi = f (Ii1, Ii2, ...)

Same thing in natural systems except functions are ecological

Examples

InputBiophysical Process

Ecological Endpoint

Surface water pHHabitat and toxicity effects

Fish, bird abundance

Acres of habitatForage, reproduction, migration

Species abundance

Wetland acresHydrologic processes

Reductions in flood severity

Urban forest acresShading and sequestration

Air quality and temperature

Vegetated riparian border

Erosion processesSediment loadings to reservoirs

Commodities that require little subsequent biophysical translation

Note

Focus on endpoints leads to a smaller set of ecological commodities to be valued

The Problem With Non-Endpoint Commodities

• Requires respondent to understand and translate commodity’s role in subsequent ecological production

To value an “input” need to know The value of the output The production relationship between the input

and the output

Production Function Error

• What is the value of “more acres of eagle habitat?”

• Need to know two things(1) The value you place on eagle abundance

(2) The production function that translates eagle habitat into eagles

Respondents will intuit a + relationship

But don’t know its magnitude

Respondents will intuit a + relationship

But don’t know its magnitude

Principle 1

Commodities should be as close as possible to home production For accuracy and scenario acceptance*

Obvious? Perhaps, but often/usually not practiced in SP

literature

Note: “comprehension” alone is not the test

* A hypothesis to be tested empirically

Dual Commodities

Many ecological commodities are both input and output

In production theory, a given commodity can be both input and output Cars: output, but input when rented Lettuce: final good at Safeway, intermediate

good at McDonalds

Dual commodityProcess 1 output is Process 2 input

Examples

Endpoint Biophysical Process Different Endpoint

Trout abundanceForage and predation relationships

Bird abundance

Forest acresHydrological processes

Species abundance

Wetland acres Hydrologic processes Flood pulse regulation

Endpoints / final goods

But also inputs to production of these

Respondent Confusion

Am I being asked about the commodity as an “end in itself”?

Or its value as part of a larger system? Both?

Issues for Survey Treatments

Different degrees of subjects’ ecological intuition “Naïve” respondents:

Wetlands are open space, the value of open space to me is $X

“Sophisticated” respondents: The value of open space to me is $X but also

Wetlands support crabs, the value of crabs to me is $Y

Issue from above

What are the appropriate endpoints? Combination of theory and stakeholder

interactions

EPA Indicators Workshops RFF & EPA ORD (Corvallis) sponsored (Boyd & Ringold) Natural scientists, social scientists, policy offices Charge: Identify monitorable “final ecosystem commodities” for a

range of resource beneficiaries

To improve national stream monitoring programs (e.g., EMAP) or EPA OW programs (e.g., National Aquatic Resource Surveys)

Principles used in EPA Workshop to identifying indicators of final ecosystem

services

Strictly biophysical features, quantities or qualities that require little further translation to make clear their relevance to human well-being

Comprehensive identification requires identification of ecosystem beneficiaries

Exhaustive & non-duplicative, but clear desire for parsimony

A Group Process

Focus on types of users Industry, agriculture, recreation, aesthetics,

stewardship

Concretely, what do different users want more of or less of? No jargon! (the “next door neighbor test”)

Eco-check Index for the Bay(NOAA and UMCES)

The “iconic” Bay

Iconic is a stock concept; non-marginal Is “iconic” a word for “warm glow”? Resources that underlie being iconic

Cultural: the Watermen, Smith Island Biological: Bay oysters, blue crabs

Do changes in populations affect iconic status?

Future Baseline

Is sea level rise in the baseline? If so, Does this remove Smith Island and the

Watermen from further consideration?

Do crabs and oysters go (locally) extinct in the baseline? If not, Would increases in their population from

TMDLs affect their iconic status?

Conveying the hidden problems

Other endpoint (SP) issues Bundling (CV) vs attribute valuation (CE) Non-market endpoint proliferation

With our theory as a guide, are there that many? Bundling of correlated attributes Sample stratification approach Don’t use jobs, livelihood Focus groups help find indices

Boundaries

Ocean health: spawning success Groundwater Ancillary benefits/costs to BMPs, etc.

Increased trees in buffer zones – viewshed, but positive or negative?

Cultural losses: the Amish? Added urban green space from addressing

urban SWR

More Issues

Uncertainty: tough to address Timing

Design to impute discount rate Long-term benefits: tough issue. Most

analysts use shorter periods. Can do adjustments to values off-line

Interim benefits is latency. Not a big problem

Conclusion

Use theory to guide commodity definition Along with stakeholder process Determine future baseline (perhaps use

multiple treatments) Solve/make decisions on other issues

Valuation Research Issues• Confusion/scenario rejection rates comparing endpoint

Q’s to input, process or dual Q’s Validity test differences Test with and without “systems” information

treatments Effect of subject prior knowledge on the above

Approach

Develop mental models of nature (e.g., degree of decomposition into inputs, processes and outputs), compare to those of experts

Conduct focus groups to develop survey materials: information treatments, commodity descriptions

Conduct pilot studies: use sub-sampling to test treatment effects; develop measures of performance (effect on WTP; variance of WTP; answers to debriefs; passing scope tests)

Ecological science partnering to make necessary linkages and development of protocols for ecological science research and reporting

Metrics CategoriesI. Water Quantity (Amount and Timing, Depth, Width,

Velocity)II. Water Quality – Physical (Odor, temperature, clarity, bio-

fouling) III. Stream Bed Characteristics (Mud, rock, sand, sediment

accumulation)IV. Health risks from contact and drinking water; eating fishV. Species type, abundance, size, health, timing (flora and

fauna)VI. Riparian viewshed characteristicsVII. Intertemporal “naturalness” – to avoid undesirable

resource changes linked to sense of place, culture, history