Executive Summary Near East & North Africa Land and Water Days Majdi Gouja Amman, Jordan (15-18 December 2013)

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Economic valuation of wetland goods and services: an

approach for better management and decision making

processes For better understanding the interdependencies between natural resource

systems and human development and well-being, special attention should be paid to the challenging concept of Ecosystem Services and the importance of an

approach for their valuation. As defined by many scholars and by the Millennium Ecosystem Assessment,

ecosystem services are the benefits people obtain from nature (MEA 2005). Many of these benefits are quite easy to observe and quantify like production

services such as crops or livestock. Other ecosystem services such as climate change regulation, flood and erosion control or water regulation and purification

are difficult to detect and therefor they are undervalued or not considered in decision making processes or policy change.

The costs of losses in those ecosystem services can go mostly unnoticed because the missing awareness of decision makers and resource managers about the true value of natural capital and the lack of indicators and market prices.

When wetlands for example are drained, converted or degraded a cost can be incurred by society if the ecosystem services that were previously provided (at

no cost) by wetlands may be needed to be replaced by building infrastructures such as water treatment plants. Examples of increased cost are: illness and

health care costs (water contamination); infrastructure costs such as costs for construction, operation, maintenance, and monitoring; threats to biodiversity and

increased carbon emission in to the atmosphere; decreased property value of the land due to the degraded aesthetic qualities; decreased recreational

opportunities; increased insurance costs due to the high flooding risks; and the decreased income from tourism activities associated with healthy ecosystems.

Indeed identifying, understanding, and valuating these services provided by wetlands can lead to well sound decision making, and avoid unexpected or

unintended impacts from development decisions or policy changes. Many empirical studies on valuating different ecosystems services in different

regions in the world have been conducted. They helped revealing the relative

importance of several ecosystem services, especially those which are not traded in conventional market like the regulating services. For example the economic

assessment of the ecosystem services provided by a coastal wetland in North Sri Lanka (Emerton and Kekulandala 2003) revealed that the most substantial

benefits, which accrue to a wide group of the population as well as to economic actors, are related to the regulating services like the flood preventing capacity of

the native wetland (1907 US$ per hectare and year) and the industrial and domestic wastewater treatment (654 US$ per hectare and year), whereas the

Executive Summary Near East & North Africa Land and Water Days Majdi Gouja Amman, Jordan (15-18 December 2013)

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several provisioning services such as agriculture, fishing and firewood, which

directly contributed to the local income presented only 150 US$ per hectare and year.

Thus, recognizing the values of wetlands in the case study area, needs basically assessing the dependence on ecosystem services for social, economic

and human well-being, identifying the benefits received from the ecosystem services, determining where those services are generated on the landscape and

what are the main drivers that could impact them. The linkage between social, economic and environmental outcomes will help to demonstrate the society’s

dependence on the provided ecosystem services and to address trade-offs among current uses of wetland resources and between current and future uses.

Particularly important trade-offs involve those between agricultural production and water quality, land use and biodiversity, water use and aquatic biodiversity,

and current water use for irrigation and future agricultural production (Millennium Ecosystem Assessment 2005).

A challenging concept for identifying ecosystem service opportunities for

ecosystem management is the TEEB1 six-step approach, which focuses on: (1) specifying and agreeing with the stakeholders on the problem to be addressed,

which could emerge for example from a change in policy; (2) identifying the most relevant ecosystem services in relation to the decision to be made; (3)

identifying the needed information and selecting the appropriate methods, in accordance with the design of the case study; (4) assessing the expected changes

in availability and distribution of ecosystem services; (5) identifying and appraising policy options based on the analysis of expected changes in

ecosystem services; and (6) assessing social and environmental impacts of policy options, as changes in ecosystem services affect people differently

(TEEB 2013). An improved understanding of the ecosystem functions and the flow of

ecosystem services leads in general to a better management of water and

wetlands. This could be achieved through better hydrological, biophysical and socio-economic data that meet the requirements of stakeholders and decision

makers. Valuating ecosystem services in monetary form could significantly help demonstrate the important role of wetlands in society and economy and thereby

enhance their protection, restoration and sustainable use. Indeed, there is no single methodological approach that could reflect all values embedded in water

and wetland related ecosystem services. Therefore, combining different approaches such as bio-physical indicators, monetary valuation and participatory

methods like, travel cost method, contingent valuation or hedonic pricing is a precondition for getting representative results.

1 The Economics of Ecosystems and Biodiversity (TEEB) is an initiative inspired from ideas developed in the

Millennium Ecosystem Assessment (MEA 2005) and aims to promote a better understanding of the true economic value of ecosystem services and to offer economic tools that take proper account of this value (TEEB 2008).