A Tool for Economic Valuation of Ecosystem Services

A Tool for Economic Valuation of Ecosystem Services in Flanders Sara Ochelen – Flemish Ministry of Environment, Nature and Energy

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 European Environmental Evaluators Forum 9 -10 February 2012

1. 1 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. European Environmental Evaluators Forum 9 -10 February 2012

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. Environmental Evaluators Forum European http: //vimeo. com/16961590 9 -10 February 2012

1. 3 Better cost benefit analyses • 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. European Environmental Evaluators Forum 9 -10 February 2012

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 European Environmental Evaluators Forum 9 -10 February 2012

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 PM 10; Noise mitigation/buffer function by forests. • Lacuna: • Several reg. services like water retention • Production services European Environmental Evaluators Forum 9 -10 February 2012

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. European Environmental Evaluators Forum 9 -10 February 2012

2. 3 Choice cards to reveal WTP European Environmental Evaluators Forum 9 -10 February 2012

2. 4 Valuation function cultural ESS • All answers pooled: empirical information about preferences for nature valuation function: 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 • • Forest > heath land > grassland. Available trails > no trails. Members NGO > non members. Close to home > far away. European Environmental Evaluators Forum 9 -10 February 2012

Value of regulating services Change in quantity x price Δ ton CO 2 in soil 50 €/ton CO 2 (international literature) Δ kg PM in air 30 €/kg PM (health costs) Δ decibel in houses 1% house value/d. B (house depreciation) Δ kg N in water 74 €/kg N (marginal abatement cost) … … European Environmental Evaluators Forum 9 -10 February 2012

2. 7 Avoided cost method nutrients • Based on cost effectiveness analysis to set up river basin management plan for Water Framework Directive: 74€/kg N Broekx et al. , 2011. Cools et al. , 2011. European Environmental Evaluators Forum 9 -10 February 2012

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 €) Þ 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 European Environmental Evaluators Forum 9 -10 February 2012

3. 2 Available: online tool: version 1. 0 European Environmental Evaluators Forum 9 -10 February 2012

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 European Environmental Evaluators Forum 9 -10 February 2012

4. 1 case Hoegaardse Vallei Value of 210 ha nature in the valley of Hoegaarden = ? Meldert Hoegaarden European Environmental Evaluators Forum 9 -10 February 2012

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 European Environmental Evaluators Forum 9 -10 February 2012

4. 3 data input in tool European Environmental Evaluators Forum 9 -10 February 2012

4. 4 Ingegeven locatie: nauwkeurig doen! European Environmental Evaluators Forum 9 -10 February 2012

4. 5 Results from the tool Culturele waarde ∑ Reg. Diensten (N óf P) European Environmental Evaluators Forum Totaal 9 -10 February 2012

4. 6 Value ESS Hoegaarden Valley Area • Cultural value: 850. 000 families: • Removal nutrients from water system: 8, 6 million €/y 4, 6 million €/y § Denitrification § N and P- sequestration • Climate regulation: 800 ton carbon • Air quality: 1800 kg PM Total value computed ESD or 65. 000 euro/hectare/year 0, 15 million €/y 0, 05 million €/y 13 à 14 million €/y Attention: make the baseline explicit: which situation are we comparing with: here assumption agricultural area (fields and meadows)! European Environmental Evaluators Forum 9 -10 February 2012

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 followup study and further development (crowd coding). • Step forward for better informed decisions on measures and projects with impacts on ecosystems. European Environmental Evaluators Forum 9 -10 February 2012

Thank you for your attention! for more information, please contact Tanya. Cerulus@lne. vlaanderen. be http: //milieueconomie. lne. be European Environmental Evaluators Forum 9 -10 February 2012