Indices of biotic integrity in stated preference valuation of aquatic ecosystem services

Stated preference surveys often give minimal attention to distinctions between intermediate and final ecosystem services, leading to the potential for welfare estimates that overlook, misrepresent or double count associated values. This paper illustrates potential mechanisms through which multimetric indexes of the type developed in the ecological literature, here an index of biotic integrity, can be used within stated preference survey scenarios to both improve the validity of survey responses and provide otherwise unavailable information on willingness to pay for intermediate and final ecosystem services. We illustrate the approach using a choice experiment application to the restoration of migratory fish in a Rhode Island watershed. Where assumptions of the model hold, results can allow transparent disentanglement and estimation of marginal values for both intermediate and final ecosystem services.     

An operational structure for clarity in ecosystem service values

Analyses used to value ecosystem services often confuse final ecosystem services with ecological functions that provide indirect benefit. Typologies of ecosystem services, such as that developed by the Millennium Ecosystem Assessment, do not ameliorate these challenges. Among the causes of ambiguity in classifying values associated with intermediate versus final ecosystem services are (1) the lack of simple, broadly applicable guidelines to assist natural and social scientists in deriving consistent and replicable classifications, and (2) attempts to define universal typologies of final services that apply to all beneficiaries. This paper presents an operational mechanism for determining whether a biophysical feature, quantity, or quality represents a final ecosystem service for an inclusive suite of beneficiaries. It is designed for straightforward application by those without expertise in natural or social sciences, and can be used within existing typologies. Illustrations of the structure demonstrate how the resulting classifications avert double counting and other ambiguities.     

The value of ecosystem services provided by the U.S. National Wildlife Refuge System in the contiguous U.S.

Studies that demonstrate the economic value of the ecosystem services provided by public conservation lands can contribute to a more accurate appraisal of the benefit of these lands. The objective of this study was to estimate the economic value, in real (2004) dollars, of the ecosystem services provided by the U.S. National Wildlife Refuge System (Refuge System) in the contiguous U.S. In order to estimate this value, we determined the ecosystems present on the Refuge System in the contiguous 48 states, the proportion in which they are represented, and the dollar value of services provided by each. We used land cover classes as an approximation of ecosystems present in the Refuge System. In a geographic information system (GIS), we combined land cover geospatial data with a map of the Refuge System boundaries to calculate the number of acres for each refuge and land cover class within the Refuge System. We transferred values for the following ecosystem services: climate and atmospheric gas regulation; disturbance prevention; freshwater regulation and supply; waste assimilation and nutrient regulation; and habitat provision. We conducted a central tendency value transfer by transferring averaged values taken from primarily original site studies to the Refuge System based on the ecoregion in which each study site and refuge was located and the ecoregion's relative net primary productivity (NPP). NPP is a parameter used to quantify the net carbon absorption rate by living plants, and has been shown to be correlated with spatially fungible ecosystem services. The methodologies used in the site studies included direct market valuation, indirect market valuation and contingent valuation. We estimated the total value of ecosystem services provided by the Refuge System in the contiguous U.S. to be approximately $26.9 billion/year. This estimate is a first cut attempt to demonstrate that the value of the Refuge System likely exceeds the value derived purely from recreational activities. Due to limitations of current understanding, methods and data, there is a potentially large margin of error associated with the estimate.     

The quantification and valuation of ecosystem services

This paper explores differences between economic and ecological criteria for identifying, measuring, and evaluating ecosystem services. It argues that economic stakeholders (user groups) generally do well in identifying these services and assigning prices to them. These prices arise spontaneously in—and serve to coordinate—market activity related to the environment. The relevant ecological information which markets gather and apply tends to be dispersed, contingent, particular, local, transitory, and embedded in institutions and practices. Ecologists and other scientists, in contrast, often seek to understand how ecosystems work and which populations and processes provide ecosystem services. The knowledge science seeks, unlike the information markets gather, tends to be centralized, collaborative, collective, and consensus-based; science pursues concepts and principles that are timeless and general rather than ephemeral and site-specific. The paper contrasts the dispersed and decentralized information organized by markets with the collective and centralized knowledge characteristic of science. The paper argues that the conceptual distance between market-based and science-based methods of assembling information and applying knowledge defeats efforts to determine the “value” of ecosystem services in any integrated sense.     

Accounting for the ecosystem services of migratory species: Quantifying migration support and spatial subsidies

Migratory species support ecosystem process and function in multiple areas, establishing ecological linkages between their different habitats. As they travel, migratory species also provide ecosystem services to people in many different locations. Previous research suggests there may be spatial mismatches between locations where humans use services and the ecosystems that produce them. This occurs with migratory species, between the areas that most support the species' population viability - and hence their long-term ability to provide services - and the locations where species provide the most ecosystem services. This paper presents a conceptual framework for estimating how much a particular location supports the provision of ecosystem services in other locations, and for estimating the extent to which local benefits are dependent upon other locations. We also describe a method for estimating the net payment, or subsidy, owed by or to a location that balances benefits received and support provided by locations throughout the migratory range of multiple species. The ability to quantify these spatial subsidies could provide a foundation for the establishment of markets that incentivize cross-jurisdictional cooperative management of migratory species. It could also provide a mechanism for resolving conflicts over the sustainable and equitable allocation of exploited migratory species.     

Jointness in production and farmers' willingness to supply non-marketed ecosystem services

This paper highlights how farmers' willingness to supply non-marketed ecosystem services (ES) is influenced by whether or not the non-marketed ES are produced jointly with agricultural products. When marketed products and non-marketed ES share some production inputs the production relationships between the two may be complementary, competitive or substitutive. Using a cost minimization framework, it is shown how complementary relationships lead to costless voluntary provision of non-marketed ES (typically the case for ES that are supportive of provisioning ES for marketed farm products). It is also shown how competitive production relationships lead to provision of non-marketed ES at lower cost than when non-marketed ES are direct substitutes for farm products or are produced outside of agriculture. The paper closes by showing how the minimum willingness to accept (WTA) payment for ES that are complementary/competitive is less than or equal to the minimum WTA for the same ES produced in substitute or independent production relationships.     

Valuation of the ecosystem services: A psycho-cultural perspective

Valuation of ecosystems services has been a challenging issue for economists. There is a growing concern to capture the total and incremental changes in services of different types of ecosystems, mainly, due to perturbations arising from anthropogenic activities. Market-based valuation techniques have long been declared inadequate and a constructed market method such as the contingent valuation method albeit a robust tool does not seem to capture the expanse, nuances, and intricacies of many of the ecosystem services. The paper attempts to address the lacunae in valuation of ecosystem services from a psychological perspective by arguing that the common person's perception of the ecosystem is quite different from what is conceptualized by conventional economists. The paper shows how the ecological identity of individuals is revealed at various levels of the decision-making hierarchy that is, from local to regional and further onto a global level. The paper builds upon insights from psychoanalytic psychology and environmental-psychology. Further, it outlines recent research findings from experimental psychology to redefine concepts such as ecological identity, self-other dichotomy, and the fostering of identification with nature, as issues that must be embraced in the valuation of ecosystem services. Extending the idea of relational goods and reciprocity, the paper offers a deconstructed view of market forces and furthers the idea of interdisciplinary collaboration and cooperation in the valuation of ecosystem services. In this perspective the dichotomy and schism between markets, missing markets and non-markets, gets renovated and reconstructed beyond a utilitarian discourse.     

Choice experiments,site similarity and benefits transfer

Choice experiments are designed to account for variations in environmental resources and site characteristics, as well as potential implications of these variations for willingness to pay. As a result, choice experiment results may be well suited for benefits transfer. It is unclear, however, whether the flexibility of choice experiments renders the similarity of study and transfer sites less critical for transfer validity. Drawing from identical choice experiments conducted in different Rhode Island communities, this model assesses the extent to which error in function-based benefits transfer is related to the similarity of communities across a variety of observable dimensions. Results suggest that site similarity, at least across some dimensions, influences the validity of choice experiment benefits transfers. However, the use of some measures of similarity as indicators of transfer error may provide misleading results.     

Measures of the effects of agricultural practices on ecosystem services

Agriculture produces more than just crops. Agricultural practices have environmental impacts that affect a wide range of ecosystem services, including water quality, pollination, nutrient cycling, soil retention, carbon sequestration, and biodiversity conservation. In turn, ecosystem services affect agricultural productivity. Understanding the contribution of various agricultural practices to the range of ecosystem services would help inform choices about the most beneficial agricultural practices. To accomplish this, however, we must overcome a big challenge in measuring the impact of alternative agricultural practices on ecosystem services and of ecosystem services on agricultural production. A framework is presented in which such indicators can be interpreted as well as the criteria for selection of indicators. The relationship between agricultural practices and land-use change and erosion impact on chemical use is also discussed. Together these ideas form the basis for identifying useful indicators for quantifying the costs and benefits of agricultural systems for the range of ecosystem services interrelated to agriculture.     

An assessment of market-based approaches to providing ecosystem services on agricultural lands

Market-based approaches are increasingly being advocated as tools for achieving the conservation of ecosystem services. We examine the reasons why markets so far appear to have failed to provide an efficient allocation of many ecosystem services, and identify the conditions under which markets deliver efficient resource allocation. We discuss different forms of market-based approaches to ecosystem services and identify the characteristics of services that make them better suited to one or another of these approaches. We find that lack of low-cost measurability and valuation currently precludes efficient allocation of many ecosystem services through market-based approaches. Still, some forms of market-based approaches hold promise for cost-effectively managing some ecosystem services provided by and to agricultural lands. In many cases some form of well-designed government involvement will be required to seek outcomes that protect the public interest.     

Valuing ecosystem and economic services across land-use scenarios in the Prairie Pothole Region of the Dakotas, USA

This study uses biophysical values derived for the Prairie Pothole Region (PPR) of North and South Dakota, in conjunction with value transfer methods, to assess environmental and economic tradeoffs under different policy-relevant land-use scenarios over a 20-year period. The ecosystem service valuation is carried out by comparing the biophysical and economic values of three focal services (i.e. carbon sequestration, reduction in sedimentation, and waterfowl production) across three focal land uses in the region [i.e. native prairie grasslands, lands enrolled in the Conservation Reserve and Wetlands Reserve Programs (CRP/WRP), and cropland]. This study finds that CRP/WRP lands cannot mitigate (hectare for hectare) the loss of native prairie from a social welfare standpoint. Land use scenarios where native prairie loss was minimized, and CRP/WRP lands were increased, provided the most societal benefit. The scenario modeling projected native prairie conversion to cropland over the next 20 years would result in a social welfare loss valued at over $4 billion when considering the study's three ecosystem services, and a net loss of about $3.4 billion when reductions in commodity production are accounted for.     

Contracts payments for ecosystem services: the case of bio-pospecting

We examine the economics of royalties in bioprospecting contracts between a pharmaceutical and genetic resource supplier (local), with an eye to understanding the relative advantages of indexing royalty payments to gross revenue or net revenue. We show a risk-averse firm facing only production or only cost risks will index royalties to net revenue. When facing both types of risk, the choice of royalty type depends on the relative magnitudes of the production and cost risk. In each case, the risk-averse firm chooses the royalty type that shifts as much risk as possible to the local. When the local is risk neutral, the pharmaceutical's and local's preferences are compatible. If the local is risk averse and there is only one type of risk, it will prefer a gross revenue royalty, and shift as much risk as possible to the firm: here the local and firm preferences are compatible only if the firm is risk-neutral, Lastly, we show if the firm sets the terms of the contract, and both agents are risk averse, the firm will not likely volunteer to implement the socially optimal royalty arrangement as it prefers to shift as much risk to the local, who now also prefers a more certain return. This last outcome is at the heart of the benefit sharing discussion and suggests if risk sharing and equity are a concern in benefit sharing, then the choice of royalty type can be an important part of negotiations between pharmaceuticals and locals for the phytochemical from nature for new drug discovery.     

Measuring benefits from spatially-explicit surface water quality improvements: The roles of distance,scope, scale,and size

Programs to improve water quality do not improve all water bodies equally. Evaluation of the benefits of such programs must account for where improvements occur and the relative magnitude of improvements that occur in different places. This study uses a choice experiment survey to explore how the value to a household of a surface water quality improvement varies as a function of (i) the distance between the household and the affected streams and rivers, (ii) the degree to which the quality of the water has been improved, (iii) how many stream and river miles have been improved, and (iv) the sizes of the affected streams and rivers. Results show evidence that value declines with distance in an approximately linear way, weak evidence that large rivers are worth more than small rivers, and no evidence that willingness-to-pay is nonlinear in either the degree of water quality improvement or the number of stream miles improved. These results indicate that it may be defensible in applied work to value small, spatially-explicit water quality improvement projects independently and then sum over projects.     

Valuation of ecosystem services from rural landscapes using agricultural land prices

Agricultural lands, primarily managed for crops and livestock production, provide various ecosystem services (ES) to people. In theory, the economic value of the service flows that can be captured privately is capitalized into land prices. This study proposes an integrative framework to characterize the ecosystem services associated with agricultural lands. Using that framework, we demonstrate how hedonic analysis of agricultural land prices can be used to estimate the private values of land-based ES. The model is estimated with data from southwestern Michigan, USA. Results suggest that ES values are associated with lakes, rivers, wetlands, forests and conservation lands in rural landscapes. Ecosystem services that support direct use values, such as recreational and aesthetic services, are likely to be perceived by land owners and capitalized in land prices. Some regulating services that provide indirect use values may be partially capitalized in a land parcel's relationship to natural resources and landscapes. Other ES from the land parcel and its surroundings are unlikely to be capitalized due to lack of private incentives, unawareness, or small perceived value. The private ES values measured in this study highlight opportunities to design cost-effective public policies that factor in the value of private benefits from agricultural lands.     

Contracts in the payments for ecosystem services： the case of bioprospecting

We examine the economics of royalties in bioprospecting contracts between a pharmaceutical and genetic resource supplier （local）, with an eve to understanding the relative advantages of indexing royalty, payments to gross revenue or net revenue. We show a risk-averse firm facing only production or only cost risks will index royalties to net revenue. When facing both types of risk the choice of royalty type depends on the relative magnitudes of the production and cost risk. In each case, the risk-averse firm chooses the royalty-type that shifts as much risk as possible to the local. Wheat the local is risk neutral the pharmaceutical＇s and local＇s preferences are compatible.If the local is risk averse and there is only one type of risk, it will prefer a gross revenue royalty, and shift as much risk as possible to the firm： here the local and firm preferences are compatible only ifthe firm is risk-neutral. Lastly we show if the firm sets the terms of the contract and both agents are risk averse, the.firm will not likely volunteer to implement the socially optimal royalty arrangement as it prefers to shift as much risk to the loeal, who now also prefers a more certain return, This last outcome is at the heart of the benefit sharing discussionand suggests if risk sharing and equity are a concern in benefit sharing, then the choice of rcyalty type can be an important part of negotiations between pharmaceuticals and locals for the phytochemical from nature for new drug discovery.     

Institutional incentives for managing the landscape: Inducing cooperation for the production of ecosystem services

Agricultural landscapes hold tremendous potential for producing a diverse stream of ecosystem services. Yet, because the spatial configuration of particular ecosystems is critical to the supply of many services, realizing this potential requires that farms be managed in a coordinated way across landscapes rather than as independent units. Under existing incentive programs, this level of coordination is typically neither required nor encouraged.Here we explore how to achieve such coordination from an institutional perspective using voluntary incentives rather than regulation. We focus on three services operating at contrasting scales, from local to global: pollination, hydrologic services, and carbon sequestration. First, we briefly illustrate how agricultural practices can diminish or enhance their provision. Next, we show how all three services require coordinated, landscape-scale management because provision depends upon particular spatial configurations, of which we provide several stylized examples. Finally, based on these stylized configurations, we evaluate the relative merits of three incentive designs-the “cooperation bonus,” the “entrepreneur,” and the “ecosystem service district”-to promote cross-farm cooperation to enhance service provision.All three incentive systems rely on rational self-interest, have cooperative configurations to promote ecosystem services across different scales, use tiered reward systems, and have a major voluntary element. They are distinct in certain key features. The cooperation bonus system rewards conservation even without cooperation but adds a bonus for cooperation. In the entrepreneur incentive, all tiers of reward are contingent upon cooperation. The ecosystem service district scheme is only partially voluntary and forces cooperation of all landowners once the district is formed. Our analysis of these heuristic alternatives integrates biophysical, economic, and institutional factors with the aim of addressing the suite of institutional barriers for landscape-scale management.     

Adapting auctions for the provision of ecosystem services at the landscape scale

Auctions, or competitive tenders, can overcome information asymmetries to efficiently allocate limited funding for ecosystem services. Most auctions focus on ecosystem services on individual properties to maximise the total amount provided. However, for many services it is not just the total quantity but their location in the landscape relative to other sites that matters. For example, biodiversity conservation may be much more effective if conserved sites are connected. Adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition. Multi-round auctions, in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape, offer an approach to cost effectively deliver landscape-scale ecosystem services. Experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance, which minimises rent-seeking behaviour. It also shows that a form of bid-improvement rule facilitates coordination and reduces rent seeking. Where the biophysical science is well developed, such auctions should be relatively straightforward to implement and participate in, and have the potential to provide significantly better outcomes than standard ‘one-shot’ tenders.     

In search of marginal environmental valuations — ecosystem services in Finnish forest accounting

There is currently substantial interest in valuing various services provided by different ecosystems. Concurrently economists have ascribed substantial effort on expanding traditional forest accounting systems by environmental services. This paper contributes to curtailing the existing gap between green accounting theory and applications for valuing forest ecosystem services. The multitude of links between forest ecosystem services and economy are characterized by the theoretical model for forest-economy interactions. By utilizing recently updated data we also incorporate empirical value estimates of these services comparable to other goods into Finnish forest accounting system. Finally, we discuss some problems encountered and clarify the interpretation of some value estimates incorporated to national forest account.     

Modification of Costanza's model of valuing ecosystem services and its application in China

In the past, evaluations of ecosystem functions were mostly based on Costanza's model, whereas the spatial, quality and temporal characteristics of regional ecosystems were not considered in the model.Focusing on these Issues, coefficients of regional difference, spatial heterogeneity and willingness-to-pay (WTP) were established to modify Costanza's model, and a new comprehensive valuation model of ecosystem functions is proposed.The analytical results indicate that the comprehensive model could evaluate regional ecosystem functions in China accurately and provide more helpful information for decision-making.The empirical study on Zhangbei County in Hebei Province shows that the intensive human activities could limit the provision of ecosystem functions while the planned ecological programs might promote the restoration of ecosystem functions.     

The working for water programme: Evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa

A payments for ecosystem services (PES) system came about in South Africa with the establishment of the government-funded Working for Water (WfW) programme that clears mountain catchments and riparian zones of invasive alien plants to restore natural fire regimes, the productive potential of land, biodiversity, and hydrological functioning. The success of the programme is largely attributed to it being mainly funded as a poverty-relief initiative, although water users also contribute through their water fees. Nevertheless, as the hydrological benefits have become apparent, water utilities and municipalities have begun to contract WfW to restore catchments that affect their water supplies. This emerging PES system differs from others in that the service providers are previously unemployed individuals that tender for contracts to restore public or private lands, rather than the landowners themselves. The model has since expanded into other types of ecosystem restoration and these have the potential to merge into a general programme of ecosystem service provision within a broader public works programme. There is a strong case for concentrating on the most valuable services provided by ecosystems, such as water supply, carbon sequestration, and fire protection, and using these as ‘umbrella services’ to achieve a range of conservation goals. The future prospects for expansion of PES for hydrological services are further strengthened by the legal requirement that Catchment Management Agencies be established. These authorities will have an incentive to purchase hydrological services through organisations such as WfW so as to be able to supply more water to their users.