Valuing Ecosystems Can it help business make better decisions?

1. Crépieux-Charmy catchment field CEV Valuing EcosystemsCan it help business make better decisions? Mathieu TOLIAN – CSR Department September 9th, 2012

2. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 Contents Background – Karolinenhöhe CEV Roadtest Veolia Water’s Ecosystem Valuation Program Screening Case study: Crépieux-Charmy catchment field CEV Scoping Planning Valuation Application Embedding

3. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 Background – Karolinenhöhe CEV Roadtest (2010) How to optimize the financial & societal benefits of land and water use? Q° Irrigate the site and grow energy crops ? Inform an “option appraisal” Ensure greater shared value creation Explore potential for PES

4. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 Veolia’s Ecosystem Valuation Program (since 2011) Objectives: Develop expertise on ES and Water Activities Concentrate efforts where the biggest potential values are and where our influence is the more significant (criteria of choice) Choose site and make valuation study (apply) Use the values to Help decision making at site level Investigate the potential of PES at corporate level

5. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 As the site of Crépieux-Charmy answers most of the criteria, it has been identified as relevant to conduct a CEV Screening • Based on the first Ecosystem Valuation Program outputs, the main criteria for drinking water production activities are : • Protection scope of the site > 40ha which includes an ecological management and: • Concerns important water resources • Is associated with recreational activities • The catchments field is part of a floodplain or close to an urban area liable to flooding

6. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 Water case study: Crépieux-Charmy Context CEV : ES produced, maintained or enhanced by the ecological management in place at Crépieux-Charmy • Located east of Lyon (France) • Largest catchments' field in Europe (375 ha) • Provide drinking water to 90% of the Grand Lyon population (1.3M inhabitants) • 5 years ecological management plan • No public access

7. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 1 - Scoping ES and Other Environmental Externalities of interests: • Water purification service (regulation) • Natural Heritage of the site (cultural) • Recreational services (cultural) • Carbon sequestration (regulation) Business case: • Assess the positive externalities linked to the ES of the site Stakeholders: • The Grand Lyon, Regional conservatory of natural areas, National Forest Office and naturalist association

8. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 2 - Planning Information gathering: On-site meetings, Public statistic databases, Interview, phone call and mail with Veolia partners and local experts Team: • Veolia Water: 1 project manager • Crépieux-Charmy: 1 project coordinator • Ecowhat (consultancy): 1 environmental economics expert & 1 project assistant • Time frame: • ~40 days over ~6 months

9. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 50:50 ECO Let’s play!

10. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 ECO CEV Stage 3 – Valuation (1) Water purification service Choose your valuation technique: Valuation technique used by Veolia: Productions costs avoided Net benefits value of the catchments' protection vs. traditional water treatment Because : we had the chance to have an existing emergency plant available near by the studied production site

11. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 ECO CEV Stage 3 – Valuation (2) Natural Heritage of the site Choose your valuation technique: Valuation technique used by Veolia: Value transfer Because : time & resource constraints!

12. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 ECO CEV Stage 3 – Valuation (3) Carbon sequestration Choose your valuation technique: Valuation technique used by Veolia: Market prices Because : common and easy

13. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 ECO CEV Stage 3 – Valuation (4) Recreational services (hunting, fishing near-by) Choose your valuation technique: Valuation technique used by Veolia: Qualitative valuation only Because : due to the lack of data and political problems But initially planning to use market price value transfer

14. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 3 – Valuation Results (1) Financial benefits (internal) Societal benefits (external) Tangibility

15. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 3 – Valuation Results (2) Financial X 2 80% X 16 Benefits associated with the water purification service (avoided treatment costs) representbetween 0.8 and 16times the costs of Crépieux-Charmy

16. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 3 – Valuation Results (3) Economic X 45 X 5 X 2,3 Total benefits associated with the ecosystem services of the site (including carbon sequestration and non use values associated with the natural heritage), represent between 2.3 and 45 times the management costs of Crépieux-Charmy

17. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 4 - Application • Awareness raising: • Employees and other stakeholders • Improve decision making: • Use in discussions with the Grand Lyon on the occasion of the contract renewal • Improve Crépieux-Charmy management: • Favor actions that enhance benefits brought to light • Integrate ES benefits in long term management choices

18. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 CEV Stage 5 - Embedding Promote the CEV approach • Use of the case study as an example Investigate the potential of ES to renew our business model • Internalization of our positive externalities • True Value of Water • Payment for Ecosystem Services

19. VW CSR Department – MT – WBCSD FLT 2012 Veolia’s CEV Experience Washington – June 11, 2012 THANK YOU