Economic valuation of biodiversity in a policy context: problems and best practice

1. Economic valuation of biodiversity in a policy context: problems and best practice Dr Mike Christie Institute of Rural Sciences University of Wales Aberystwyth Paper presented to the EEA workshop on ‘Biodiversity and Economics’ 5 October 2006

2. Overview • TEV and TSV • Methods • Case study: valuing biodiversity in the UK • Problems • Best practice • Future research needs

3. Total Economic Value& Total Systems Value Source: Bateman and Adger (2001)

4. Valuation methods • Market prices: • Observed market value; productivity approaches; cost-based methods (replacement costs). • Revealed preference: • Travel cost; Hedonic pricing. • Stated preference: • Contingent valuation; Choice experiments • SP-RP approaches: • Contingent behaviour; RUM TCM

5. Case study: Valuing biodiversity on UK farmland • Methods: Choice experiments, contingent valuation, valuation workshops & benefits transfer. • Sample: 800 residents – Cambridgeshire and Northumberland. • Innovative features: • Use ecologists to help define biodiversity attributes + generate scenarios; • 20 minute PowerPoint presentation to inform public.

6. How do ecologist view biodiversity?

7. Choice experiment attributes and levels • Familiar species of wildlife • Continued decline (SQ) • Rare • Rare and Common • Rare, unfamiliar species of wildlife • Continued decline (SQ) • Slow down decline • Recover to stable populations • Habitat (species interactions) • Continued decline (SQ) • Restoration • Creation • Ecosystem services • Continued decline (SQ) • With human impact • All services • Tax (7 levels)

8. Example of choice task

9. Research conclusions • Is there evidence that people value biodiversity? • Only 15% of CE respondent chose ‘Do nothing’ • What aspects of biodiversity do people most value? • CE provides evidence that people care about: • Common and rare familiar species, • Rare unfamiliar species (but not a ‘slow down in decline’), • Habitat restoration and re-creation, • Ecosystem services which have direct impact on humans (but not those which do not affect humans) • People care about biodiversity, but are largely indifferent about how biodiversity outcomes are achieved!

10. Research conclusions • Is it possible to value complex goods such as biodiversity? • Yes, but is challenging • Requires careful design (expert reviews, public FG) and information presentation • The way experts and the public view biodiversity is different, therefore need to ‘translate’ expert views for study.

11. Problems for biodiversity valuation • Ecologists don’t fully understand the complexities of biodiversity / ecosystems; • Poor public understanding of biodiversity concepts; • ‘Constructed’ preferences • Public versus expert preferences

12. Problems for biodiversity valuation • Aggregation: • Distance decay; • Double counting; • Passive use values. • Cost • Good studies require significant resources • Benefits transfer?

13. Best practice • Incorporate sound ecological knowledge into design; • Extensive piloting to ensure biodiversity descriptions are meaningfully to public; • Respondents need to be fully informed and reflective – requires adequate funding; • Use of workshops to help validate results; • Explore heterogeneity of values;

14. Future research needs • Aspects of biodiversity requiring more attention • Total systems values • Social, cultural values • Infrastructure ‘glue’ values • Scope / scarcity / extinction (irreversibility) issues • Passive use values • Biodiversity components: • protected areas-, farmland-, urban- biodiversity • Landscape level • Genetic level • Aggregation issues • Benefits transfer