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VALUING ECOSYSTEM SERVICES:
ADVANTAGES & DISADVANTAGES OF EXISTING METHODOLOGIES
AND APPLICATION TO PES
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Ecosystems products and services
Products
FoodFuel wood
Non-timber forest products Fisheries products Marine products
Wetlands productsMedicinal and biomedical products
Forage and agricultural productsWater Reeds
Building material
Functions/Services
Hydrological services• Purification of water• Capture, storage and release of surface and
groundwater• Mitigation of floods and droughts
Biodiversity• Maintenance of biodiversity (plants and
animals)
Climate• Partial stabilization of climate through carbon
sequestration• Moderation of temperature extremes and the
force of winds and waves
Source: Adapted from Simpson (2001)
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Existence valuesIntrinsic value of resources and landscapes,
irrespective of its use such as cultural, aesthetic, bequest significance, etc.
Direct valuesOutputs that can be consumed or processed directly,
such as timber, fodder, fuel, non-timber forest products, meat, medicines, wild foods, etc.
Indirect valuesEcological services, such as flood control, regulation of water flows and supplies, nutrient retention, climate
regulation, etc.
Option valuesPremium placed on maintaining resources and
landscapes for future possible direct and indirect uses, some of which may not be known now.
USE VALUES
NON-USE VALUES
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Why value?
1. Understand how much an ecosystem contributes to economic activity or society. For example, on average forests benefits in the Med region amount to about 1% of GDP. Indirect use value such as
watershed protection contributes about 35% of total estimated value.
2. Understand what are the benefits and costs of an intervention that alters the ecosystem (conservation investment, development
project, regulation or incentive) and make ecosystem gods and services comparable with other investments
3. How are costs and benefits of a change in ecosystem distributed?
4. How to make conservation financially sustainable?
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Surrogate Market
Approaches
TravelCosts
HedonicPricing
Effect on Production
Productivity Approach
Replacement Costs
Cost of providing substitute services
Damage cost avoided
Market Price Method
MarketPrices
Contingent Valuation
Conjoint Analysis
Choice Experiments
Cost-Based
Methods
Cost-Based
Methods
RevealedPreferenceMethods
RevealedPreferenceMethods
Stated Preference Methods
Stated Preference Methods
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Market PricesDirect valuesGoods and products
Indirect values
Ecosystem services
Option values
Existence values
Direct valuesNature tourism
Effect on Production
Replacement Costs
Cost of Providing Substitutes
Cost of Avoided Damage
Productivity &cost-based approaches
Travel Costs
Contingent Valuation
Surrogate market & stated preference approaches
Surrogate Market
Approaches
TravelCosts
HedonicPricing
Effect on Production
Production Function
ApproachesReplacemen
t Costs
Cost pf providing substitute Services
Damage Cost
Avoided
Market Prices
MarketPrices
Contingent Valuation
Conjoint Analysis
Choice Experiments
Cost-Based
Methods
Cost-Based
Methods
RevealedPreferenceMethods
RevealedPreferenceMethods
Stated Preference Methods
Stated Preference Methods
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
MARKET PRICES
What it costs to buy or sell a good
or productPeople’s actual
willingness to pay
E.g. Nam Et & Phou Loei NBCA, Lao PDR:Value of NTFP use for Viengthong District villages
Cash income $634,000 Plant foods $45,000 Wild meats $476,000 Fuel and housing $480,000 Crop consumption $241,000
TOTAL VALUE $1,876,000
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Advantages and Limitations of the Market Price Method
+Use if primary resource or ecosystem affected has a commercial market (for ex. benefits of cleanup and closure of commercial fishing on fisheries). Prices, quantities
and cost are easy to obtain.
+The method uses observed data of actual preferences
+The method uses standard, accepted economic techniques (consumer and producer surplus based on supply and demand curves) and is relatively easy to apply
–Seasonal variations and other effects on price have to be considered–Usually the costs of transport to bring goods to the markets not included and
benefits may be overstated –Many ecosystem goods and services do not have markets or markets are distorted
or not well developed and market prices do not always fully reflect the value of ecosystem services to society (WTP)
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
METODE PRODUKTIVITAS
The economic contribution of
ecosystems to other production and
consumption activities
Market value as an input
Flood attenuation benefits from forests, Madagascar
Value of flood damage to paddy production
NPV for forest watershed protection benefits: $126,700.
Resulted in the establishment ofMantadia NP
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
+Methodology straightforward, data requirements are limited and relevant data may be readily available hence methiod relatively
inexpensive to apply–Only resources and services that are marketed can be valued–Most difficult aspect is to be able to quantify the biophysical
relationship that link changes in supply or quality of ecosystem services with environmental changes or management options. Often
use simplified assumptions.–If changes in ecosystem affects market price, then the method is
more complicated and difficult to apply–If changes are too drastic, users of ecosystem goods and services may
switch to other alternatives.
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
KEUNGGULAN & KELEMAHAN METODE PRODUKTIVITAS
TRAVEL COSTS
How much people spend to use or
benefit from using ecosystems for
recreational purposes
People’s impliedwillingness to pay
USA, Value impacts of improved environmental quality on freshwater recreation in the US
Combined benefit of all freshwater-basedrecreation: $37 billion/year
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Advantages and Limitations of the Travel Cost Method
+Limited to recreational values
–Requires complex statistical analysis, large and complex data sets, hence expensive and time
consuming
–Likely to estimate value of one factor because difficult to separate out effect of different factors
(lansdcape beauty and water)
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
REPLACEMENT COSTS
The costs of replacing an
environmental good or service
A minimum estimate of money
saved
E.g. Ream National Park, Cambodia:
Value of mangrove ecological services (flood barriers,
upstream erosion control)
Storm protection $60,000 Silt trapping $220,000
TOTAL VALUE $280,000
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
BIAYA MITIGASI KERUSAKAN EKOSISTEM
The costs of mitigating or averting the effects
of the loss of an environmental good or
service
A minimum estimate of money saved
E.g. Thua Thien Hue, Vietnam:Value of watershed catchment
protection for urban and rural water supplies (Infrastructure to mitigate
erosion, seasonal low water supplies and flooding)
Investment costs $27 million Recurrent costs $1.8 million
ANNUAL COST $2.88 million
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
DAMAGE COSTS AVOIDED
The costs avoided from the
destruction of ecosystem
A minimum estimate of money
saved
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Failure to invest in watershed management as a component of
dam maintenance could incur NPC of over $2million in terms of
power revenues foregone
E.g. Value of Phnom Bokor NP for watershed protection and
hydropower generation
Keunggulan Cost-Based Methods
1. Particularly useful for valuing ecosystem services2. Simple to apply and analyse (rely on 2dary data on
benefits from ecosystem services and cost of alternative). Easier to measure costs of producing
benefits than the benefits themselves when goods and services are not marketed.
3. Particularly useful if time and financial resources for the study are elimited or where it is not possible to carry out
detailed surveys4. Approaches are less data and resource intensive whereas
data or budget limitations may rule out valuation methods that estimate WTP
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
KETERBATASAN Cost-Based Methods–Provide only rough indicator of ecosystem value
–Replacement cost: often difficult to find perfect replacements for ecosystems goods and services, hence valuation results tend to
undervalue ecosystem value
–Mitigation expenditures: often people’s perception of the effect of ecosystem loss and what would be required to mitigate these effects
do not always match those of experts.
–Damage cost method: estimated damages avoided remain hypothetical in most cases. Often difficult to relate damages to
changes in ecosystems
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
CONTINGENT VALUATION (CV)
Sejumlah orang akan membayar/menerim
a (secara teoritis) bahwa biodiversitas
dapat dibeli atau dijual
People’s stated willingness to pay
E.g. Doi Inthanon and Suthep Pui National Parks, Thailand:Willingness to pay for park entry fees
Doi Inthanon 40 Baht per person Suthep Pui 20 Baht per person
TOTAL VALUE $1.2 million/year
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Keunggulan Metode CV1. Very flexible. Can be used to estimate economic value of
about anything but best to use it to estimate value of goods and services easily identified and understood by
users2. CV is the most widely accepted method for estimating
TEV including non use, option and bequest values (only method to estimate option or existence values)
3. CV has been widely used and a great deal of research is being conducted to improve the methodology, make
results more valid and reliable and understand strengths and limitations
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Keterbatasan Metode CV
1. Whether CV really measures WTP still controversial (most people unfamiliar making choices about ecosystem services)
2. Results highly sensitive to design of choice scenarios and how survey conducted (psychological aspects)
3. WTP sensitive to payment vehicle (WTA compensation)
4. Strategic bias to influence outcome
5. Non response bias
6. Many people including jurists, policy makers, economists and others do not believe the results of CV analysis
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
METODE YANG KURANG POPULER
HedonicPricing
Conjoint Analysis
Choice Experiments
Difference in (property or wage) prices that can be ascribed to the existence or level of nearby
environmental goods and services.
Obtains information on preferences between various alternatives of environmental goods and services, at
different price or cost.
Present a series of alternative resource or use options, each of which are defined by various attributes
including price.
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
APPLICATION OF
ECONOMIC VALUATION
TO PES DESIGN
Watershed services: supply and demandSupply of services:
Upstream land uses affect the Quantity, Quality, and Timing of water flows
Demand for services:Possible downstream
beneficiaries:• Domestic water use• Irrigated agriculture• Hydroelectric power• Fisheries• Recreation• Downstream
ecosystems
Source: World Bank 2003
Jasa lingkungan Hidrologi DAS
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Applying ecosystem valuation to payment for ecosystem service: simple in theory
Benefits to producers
Costs to offsite populations
Conventional resource use:
no conservation
Conservation with payment
for service
Payment
Conservation without
payment
Minimum payment willing to receive to change damaging behaviour to ecosystem
Maximum paymentwilling to pay to reduceenvironmental damage
Source: Adapted from World Bank 2002Sumber: Danièle Perrot-Maître. 2005.
Seminar on environmental services and financing for the protection and sustainable use of ecosystemsGeneva, 10-11 October 2005
Dalam Praktek … tidak sederhana…
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
In practice not so simple…Komplek Keterkaitan Biofisik (Brand 2003)
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
In practice still not so simple…valuing effects of change in ecosystem conditions on agricultural production
Impact on ecological function & service
Physical impact of change in functions
Socio-economic effects of physical impact
Overall impact of Socio-economic effects
Intervention
Reduction in water: floods & drought
Increased erosion
Increase in crop damage (in kg)
Decrease in crop yield (in US$)
Increase use fertiliser & pesticides (in kg)
Increase productioncosts (in US$)
Increase in crop production (in kg)
Increase in crop yield (in US$)
Reduction of forest cover
Reduced pest-control &
pollination
DeforestationChange in Economic Value of Agriculture
(in US$)
Impact on ecological function & service
Physical impact of change in functions
Socio-economic effects of physical impact
Overall impact of Socio-economic effects
Intervention
Reduction in water: floods & drought
Increased erosion
Increase in crop damage (in kg)
Decrease in crop yield (in US$)
Increase use fertiliser & pesticides (in kg)
Increase productioncosts (in US$)
Increase in crop production (in kg)
Increase in crop yield (in US$)
Reduction of forest cover
Reduced pest-control &
pollination
DeforestationChange in Economic Value of Agriculture
(in US$)
Sumber: Danièle Perrot-Maître. 2005.Seminar on environmental services and financing for the protection and sustainable use of ecosystems
Geneva, 10-11 October 2005
Further reading
• USAID PES Sourcebookhttp://www.oired.vt.edu/sanremcrsp/menu_research/PES.Sourcebook.Contents.php
• World Bank - Introduction to PES http://siteresources.worldbank.org/EXTEEI/Resources/IntroToPES.pdf?&resourceurlname=IntroToPES.pdf
• CIFOR – PEShttp://www.cifor.cgiar.org/pes/_ref/home/index.htm
• Rewarding Upland Poor for Environmental Services http://www.worldagroforestrycentre.org/sea/Networks/RUPES/index.asp
• The Katoomba Group (Regional Network for China and East-Asia)http://www.katoombagroup.org/
• Ecosystem Marketplacehttp://www.ecosystemmarketplace.com/
SUMBER: ftp://ftp.cgiar.org/cifor/USAID/Topic%205-2.ppt
SELAMAT DATANG