Ecosystem services from a socioeconomic perspective How we value the natural environment

1. Ecosystem services from a socioeconomic perspectiveHow we value the natural environment • Dr James Turner • Royal Society of New Zealand Workshop • 9th August 2011

2. contributors • Estelle Dominati • Bruce Small • Oscar Montes de Oca Munguia • Femi Olubode-Awosola • Paula Blackett • Alec Mackay • Upananda Paragahawewa • Liz Wedderburn • Melissa Robson

3. outline • What are the types of economic value and how are they measured? • What are the challenges with economic valuation? • Wicked problems and wider concepts of value

4. ecosystem services to meet human needs1 Natural Capital Ecosystem Services Soil Degradation Cultural Services Recreation, aesthetics, spiritual Inherent Properties Regulating Services Flood mitigation, nutrient filtering, pest control, waste removal Degradation Processes Human Needs Supporting Processes Manageable Properties Provisioning Services Food, water, timber, fibre Soil formation and maintenance External Drivers Natural & Anthropogenic 1 Dominati et al. 2010. A framework for classifying and quantifying the natural capital and ecosystem services of soils. Ecological Economics 69: 1858-1868

5. Types of economic values1 Total economic value Non-use value Use value For others Option value Existence Actual use Direct Indirect Bequest Altruism Consumptive Non-consumptive 1 Modified from DEFRA. 2007. An Introductory Guide to Valuing Ecosystem Services

6. Forest Edge Falcon Nest Measuring Total economic value1 • Value based on concept of substitutability • “if quantity of one good is reduced, the quantity of another good can be increased so the individual is no worse off” • Willingness to pay – “maximum sum of money an individual would be willing to pay rather than do without an ecosystem service” We would now like to know if you prefer to pay an additional amount in your income tax to support the programme to increase and sustain the bush falcon population in Kaingaroa Forest. Please respond just exactly as you would if you were really going to commit an additional amount in your income tax over the next five years. Now, would you be willing to pay $20per year for five years?2 □Yes □ No 1 Freeman 2003. The Measurement of Environmental and Resource Values: Theory and Methods. 2 Yao. 2011. The Non-market value of biodiversity enhancement in New Zealand’s planted forests. PhD thesis

7. Economic Valuation techniques1 1 Freeman 2003. The Measurement of Environmental and Resource Values: Theory and Methods.

8. Challenges with economic valuation1,2 • Biophysical • Marginal analysis • non-linearities • thresholds – scarcity or tipping points • Jointness in production • High uncertainty • Social • Marginal analysis – substitutability • Weak comparability • Multiple and competing social values • Changing social preferences • Intrinsic values 1 Freeman 2003. The Measurement of Environmental and Resource Values: Theory and Methods. 2 Martinez-Alier et al.. 1998. Weak comparability of values as a foundation for ecological economics. Ecological Economics 26: 277-286

9. Challenges with economic valuation: intrinsic values1 Multiple values Economic value Intrinsic value biocentricecocentric deep ecology 1 Pojman. 2001. Environmental Ethics: Readings in Theory and Application

10. challenges with valuation: Wicked problems1,2 Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them. --Laurence J. Peter • Complex biophysical, social, and political systems • Highly uncertain outcomes, causes and effects • Multiple criteria for evaluation of solutions • Multiple stakeholders with radically different views and values • What is? (and what if?) • What ought to be? 1 Rittel & Webber. 1973. Dilemmas in a general theory of planning. Policy Sciences 4(2): 155-169 2 Battie, S.S. 2008. Wicked problems and applied economics. American Journal of Agricultural Economics 90(5): 1176-1191

11. a wicked problem How should the effects of land use on water quality in the Hurunui catchment be managed? • Sheep & beef, dairying, forestry, recreation, conservation • Environmental, economic, social and cultural values • Tension among stakeholders • Science uncertainty • water quality outcomes • land use impacts

12. Scenarios Status quo Intensification Destocking Intensification + irrigation Stakeholders Iwi Farmers Recreationists Energy generators Tourism operators Ecosystem Service Values Recreation, water quality, biodiversity, profitability, intrinsic Multicriteria evaluation: Capturing multiple & intrinsic Values1 1 Martinez-Alier et al. 1998. Weak comparability of values as a foundation for ecological economics. Ecological Economics 26: 277-286

13. Deliberation Matrix Including multiple values in decision making1 Establish: r e 1) Decisions or policies and strategies to address d r l e o y problem h a l e k a a s t s a h 2) What stakeholders are involved h c p a u E o r g 3) The stakeholder values Policy & strategies Conduct the deliberation - evaluate status quo and various management options Stakeholder values Values a combination of ecosystem All the groups share their assessment and services, types of value and indicators - look for commonality in assessment - trade-offs between stakeholder groups transparent Ecosystem services that are valued Score Water quantity Indicators Water quality Clarity Bacterial count Recreation 1 O’Connor, M. 2006. KerDST, Indicators & Deliberation. Centre d’Economie, Universite de Versailles

14. summary • Ecosystem service values • valued for meeting human needs • links economy and environment • Economic valuation to estimate values • revealed preference • stated preference • Challenges with economic valuation • biophysical complexity and uncertainty • multiple competing social values and intrinsic values • Wicked problems • biophysical and social complexity • multiple and competing values • Including multiple values in decision making