Valuing ecosystem services

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  • Clean water, clean air, climate regulation, pollination, nitrogen for growing crops…But we keep doing things to mess them up! Because they are so difficult to quantify in value
  • BOTH ARE EXTREMELY DIFFICULT TO DO
  • COMPARE THE OPTIONSDETERMINING VALUE IS IMPORTANT – DETERMINES FUTURE
  • No single viewpoint is enough
  • How a monetary value is calculated
  • price sets itself
  • 3 pencils in pocket
  • Also called the Water-Diamond Paradox. Why do people see diamonds as more valuable than water?
  • Utility = doing whats best for the most people
  • If something doesn’t do humans good, it isnt of value and thusisnt worth any type of sacrifice
  • Define their environmental values
  • Provisioning, regulating, cultural = embedded. Direct can be consumptive or nonconsumptiveOnly products are easy to $$
  • PES – org pays to protect costa rican deforestationCapital = manmade, already produced durable goods that are part of goods/services in market
  • Risk is not assessed in a comparable way – econ is measured $Loss of biodiversity and ecosystem services is permanent – Daily2/3 eco services are declining – millennium ecosystem Assessment
  • Helps fix problems that policy doesn’t
  • Valuing ecosystem services

    1. 1. Valuing Ecosystem Services Melissa Kullman | BIO 104K | 10-17-12
    2. 2. Ecosystem Services • Natural resources and processes that humankind benefits from • Vital to human survival, but we overuse them
    3. 3. • How can we determine the value of an ecosystem service? • Definition and measurement
    4. 4. Implications of Assigning Value • Preserve, harvest products, or develop?
    5. 5. Differing Viewpoints • Economics: placing a monetary value on a good/service • Moral Philosophy: a basis for making the best, most ethical decision • Environmental economics: information about ecosystem services and their importance to various ways of life
    6. 6. Classical Economics • Value is monetary • Harvest until develop, or develop • Progress is key
    7. 7. Classical Economics: The Basics • “Invisible Hand” • Demand • Supply • Equilibrium price • Externality • Subsidy • Marginal cost • Marginal benefit/value • Cost/benefit analysis
    8. 8. Demand • Law of Demand: when price decreases, quantity demanded increases (nonlinear)
    9. 9. Supply • Law of Supply: when price increases, quantity supplied increases (nonlinear)
    10. 10. Equilibrium Price • Where supply and demand curves meet • Market price will adjust until it settles here
    11. 11. Externality • A cost borne by someone not involved in a transaction, essentially a side effect • Can be positive or negative • Ecosystem services fall here – sold too cheaply
    12. 12. Subsidy • The government partially pays a supplier • Significantly influences market behavior
    13. 13. Marginal Cost & Value • The cost or benefit of producing another single item • Value decreases, cost increases • Answers: how much can we afford to lose? • Most applicable tool for measuring ecosystem service value – Big changes in an ecosystem service don’t happen until ¼ to ½ of the area is lost – Species lost earlier more valuable than species lost later
    14. 14. Paradox of Value • Water is essential for survival, but diamonds regarded as more valuable • The more you have, the less you need – marginal value (scarcity)
    15. 15. Economists’ Value of Ecosystems ($) • Avoided cost • Replacement cost • Factor income – enhancement of incomes • Travel cost • Hedonic pricing – associated goods • Contingent valuation – compare to hypothetical
    16. 16. Cost/Benefit Analysis • Calculate total value ($) based on weighing costs and benefits against each other • Easy to calculate and understand
    17. 17. Cost/Benefit Analysis • Based on the assumption that all decision making is rational – In accordance with reason/logic – Willingness to pay • Uses our decisions to illustrate how we value things
    18. 18. Cost/Benefit Analysis • Ignores what effects a small change will have (why marginal value is better for ecosystem services) • Risk-based • Non-discriminating
    19. 19. Philosophical Basis for Value • 4 moral principles – Justice – Autonomy – Beneficence – Non-maleficence Utility = justice + beneficence + non- maleficence
    20. 20. Philosophical Basis for Value • Utilitarianism – aligns with economics • As a species: anthropocentric • No comparable moral plane • Applies to all types of values
    21. 21. Types of Utilitarianism • Weak: value is based on acquirable satisfaction • Strong: value is sum of all values – More related to ecosystem services
    22. 22. Anthropocentric Utilitarianism • Can work backwards – It makes us happy to have cute animals around, so we make sacrifices
    23. 23. Views Against Utilitarianism • Intrinsic Rights View – Biocentric – Species and other natural things have intrinsic rights to exist and prosper, independent of whether human beings derive satisfaction from them
    24. 24. Views Against Utilitarianism • Kantian Justice – Only do things that you would commend others to do under similar circumstances, “the golden rule” – Anthropocentric • “Our duties toward animals are merely indirect duties toward humanity”
    25. 25. Environmental Economics • Air pollution, water quality, toxic substances, solid waste, and global warming • Distrust of economics alone, “invisible hand” is flawed • Market failure: externalities, non-rivalry + non-excludability (public goods) • Tragedy of the Commons
    26. 26. Environmental Economics • View ecosystem services as having infinite value • Certain properties of nature defy quantification • Environment has a carrying capacity (K), but economists focus on progress and short- term gains and losses (development and profit is end goal)
    27. 27. What Services Ecosystems Offer
    28. 28. Types of Ecosystem Values
    29. 29. Species Value • Taxonomic proximity • Rarity/scarcity • Genetic uniqueness • Importance to ecosystem function
    30. 30. Developing Ways to Value • Daily – InVEST and NatCap • InVEST – free software that maps and values nature’s goods and services that are essential for humans, models hypotheticals • NatCap – aims to transform traditional conservation methods by including the value of ecosystem services in business, community, and government decisions • PES – Payment for Environmental Services, 1990s
    31. 31. NatCap – Sierra Nevada Mts. • 650 kilometer region that includes Yosemite Valley, Lake Tahoe and Mt. Whitney • Provides $2.2 billion worth of commodities and services a year (water resources, timber, ranching, mining, recreation and tourism), with water comprising 60 percent of the total value, or over $1.32 billion • 65 percent of California’s urban and rural water supply, and almost all of the water for western Nevada • Supports 5th largest economy in the world (California) • By 2040, almost 20 percent of the region’s private forests and rangelands could be affected by development • Climate change could also be a threat as the snowpack could be reduced which would mean California and Nevada would have less of a water supply • The human population in the region has tripled since 1970
    32. 32. Sum of Viewpoints • Economics: can assign a monetary value to an ecosystem service, focus on progress and development – PRO: Easy to understand, well-established methods – CON: Doesn’t count for externalities or immeasurable values (enjoyment)
    33. 33. Sum of Viewpoints • Philosophy: value is measured by how humans are able to benefit, supports classical economics – PRO: Good for us! – CON: No comparable moral standing for plants/animals vs. humans • If we act for our short-term gain, we may rob ourselves in the long term  backfires
    34. 34. Sum of Viewpoints • Environmental economics: value measured by use for humans AND role in ecosystem, ecosystem services have undocumented/ immeasurable values – CON: No clear, concise way to measure and discuss even though they have the most knowledge – PRO: More holistic, realistic
    35. 35. Sum of Methods Human wants and needs = what is valuable Ecosystem services valuable for human use Ecosystem services valuable on their own Risk assessed Study ecosystem services Ability to assign quantified ($) value Ability to predict future gains/ losses ECON ✓ ✓ ✓ ✓ ECO ✓ ✓ ✓ ✓ PHL ✓ ✓
    36. 36. The Outcome • Environmentalists can study, not value • Economists can value, not study – Findings weighted more heavily in creating policy
    37. 37. Environmental Policy • Negative externality solutions – Regulations – Quotas – Taxes – Property rights
    38. 38. Discussion • Questions? • What is lost by quantifying the value of an ecosystem service? What is gained?
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