Including NRM and environmentalimpacts within ACIAR impactassessmentsMethodological issuesSeptember 2012David PearceWorldF...
Themes     Concerned with incorporating NRM/environment     within extended BCA framework, as used for     ACIAR IAS     M...
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Channels of impact                                                  R&D OUTCOMES                                          ...
Agricultural ecosystem inputs and                                                                       1    outputs      ...
Final ecosystem services      Final ecosystem servicea                                                               Princ...
Total economic value (TEV) and its    components                                      TOTAL ECONOMIC VALUE                ...
Overview of the sort of estimation    that may be required                                 ON-FARM                        ...
Geographic scope of effects                              Local                                                            ...
Valuation techniques                                Valuation where direct market transactions cannot be                  ...
From ecosystem processes to human     values      ECOSYSTEMS                                  ECOSYSTEMS SERVICES         ...
How R&D may impact ecosystem     services                  1                                         3                    ...
Categories of R&D impact for     ecosystem services        1. Direct impact on   2. Change in                3. Change in ...
Output related               Input related            Knowledge or policy     Impact 1.                  Decrease in emiss...
Frequency of impact categories for ACIAR      projects                                                        41%         ...
Testing which ecosystem services to     use           Ecosystem                                   Contribute to goods     ...
A structure for identifying ecosystem     service value                    UTILITY FUNCTION                               ...
Levels of benefit transfer      How many differences between situations are controlled for:       1. No differences       ...
Environmental values from forestry     research        Type of value                        Indirect use value            ...
Information collection and analysis:     proposed steps               1                                                   ...
David PearceExecutive Director+61 2 6245 7800dpearce@TheCIE.com.au                        www.TheCIE.com.au
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Including NRM and environmental impacts within ACIAR impact assessments - Methodological Issues

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Including NRM and environmental impacts within ACIAR impact assessments - Methodological Issues

  1. 1. Including NRM and environmentalimpacts within ACIAR impactassessmentsMethodological issuesSeptember 2012David PearceWorldFish NRM Workshop, Penang www.TheCIE.com.au
  2. 2. Themes Concerned with incorporating NRM/environment within extended BCA framework, as used for ACIAR IAS MDB Plan major influence on thinking Maintain consistency with surplus measures ■ But not precluding other measures2
  3. 3. 3
  4. 4. 4
  5. 5. Channels of impact R&D OUTCOMES (Assuming adoption etc) Environmental effects Mediated through farm FARM ENVIRONMENT behaviour (Or processor etc) Environmental benefits Feed back to farm Ecosystem services OTHER USERS INCREASE PRODUCTIVITY, REDUCE COSTS etc NON MARKET MARKET MARKET OUTCOMES Valuation Market methods models ECONOMIC SURPLUS ECONOMIC SURPLUS BENEFIT COST ANALYSIS5
  6. 6. Agricultural ecosystem inputs and 1 outputs Ecosystem service inputs • Biological pest control • Pollination • Water (quantity and quality) • Soil structure and fertility • Nutrients INPUTS Agricultural systems OUT PUTS Ecosystem dis-services Ecosystem services • Loss of biodiversity and habitat • Mitigation of greenhouse gases • Chemical contamination • Carbon sequestration • Pesticides poisoning • Landscape management • Greenhouse gas emissions • Salinity • Watershed effects6
  7. 7. Final ecosystem services Final ecosystem servicea Principal related goodsProduction of crops, plants, livestock, fish, etc (wild and Food, fibre, energy, genetic resources, industrial inputs, fertiliser, avoidance of climate stress,domesticated) b recreation and tourism, physical and mental health, ecological knowledge, etcProduction of trees, standing vegetation and peatb Timber, avoidance of climate stress, energy, noise regulation, recreation and tourism, etcProduction of wild species diversity including microbes b,c Natural medicine, disease and pest control, genetic resources, wild food, bio-prospecting, recreation and tourism, physical health, ecological knowledge, etcProduction of water quantityb,c Potable water, industrial use of water, flood protection, energy, recreation and tourism, physical health, ecological knowledge, etcRegulation of the climatec Avoidance of climate stress, physical and mental health, ecological knowledge, etcRegulation of hazards; related vegetation and Coastal protection, erosion protection, flood protection, avoidance of climate stress, physicalother habitatsc and mental health, ecological knowledge, etcBreakdown and detoxification of wastec Pollution control, waste removal, waste degradation, physical and mental health, ecological knowledge, etcPurification processesc Clean air, clean water, clean soils, physical health, ecological knowledge, etcGeneration and maintenance of meaningful places; socially Recreation and tourism, physical and mental health, ecological knowledge, etcvalued landscapes and waterscapesd a As noted previously, other inputs (for example manufactured capital) may in some occasions be required to combine with final ecosystem services in the production of goods. Relating the final ecosystem services to the MA (2005) nomenclature b ‘Provisioning’ services. c ‘Regulating’. d Cultural services. ‘Supporting’ services relate to primary ecological services. Source: I. J. Bateman et al, Economic Analysis for Ecosystem Service Assessments, Springer Press, p.185 7
  8. 8. Total economic value (TEV) and its components TOTAL ECONOMIC VALUE Use values Option values Non-use value Direct use Indirect use Future New info Bequest Existence direct and from value value indirect use avoiding irreversible loss8
  9. 9. Overview of the sort of estimation that may be required ON-FARM OFF-FARM MARKETED • Can use conventional surplus • Observe outcomes where markets techniques exist for environmental ‘goods’ • Likely to be rare for most • Likely to increasingly be the case for environmental effects carbon sequestration NON-MARKETED • Use production function type • Revealed preference techniques approach where environmental goods can be linked to other marketed goods (e.g. • Need to understand the production travel cost method, hedonic pricing) relationship between environmental ‘good’ and farm output • Stated preference techniques in cases where no market information is available (e.g. contingent valuation, choice modelling)9
  10. 10. Geographic scope of effects Local Global Change in Within farming Within neaby Broadly within Ecosystem service system farming systems regional economy Nationally Globally Carbon storage X Biodiversity X X Water quality X X X Soil quality X X Salinity X X Air quality X X10
  11. 11. Valuation techniques Valuation where direct market transactions cannot be Valuation where direct market transactions cannot be observed (or may be highly distorted) observed (or may be highly distorted) Revealed preference technique Stated preference technique Non-market environmental characteristics implicit Direct questioning of values in market transaction ‘Use’ values Includes ‘non-use’ values Travel Hedonic Production Contingent Choice Contingent costs pricing function valuation modelling behaviour11
  12. 12. From ecosystem processes to human values ECOSYSTEMS ECOSYSTEMS SERVICES HUMAN WELLBEING Non-use • Biophysical structures and • Provisioning • Values derived from processes • Regulating ecosystem services Use (Alone or in combination • Habitat with other inputs) • Ecosystem functions • Cultural Other human generated inputs (for example labour, produced capital) and institutions12
  13. 13. How R&D may impact ecosystem services 1 3 6 ECOSYSTEMS ECOSYSTEMS SERVICES HUMAN WELLBEING Non-use • Biophysical structures and 2 • Provisioning • Values derived from processes • Regulating 5 ecosystem services • Habitat (Alone or in combination Use with other inputs) • Ecosystem functions • Cultural 4 7 Other human generated inputs (for example labour, produced capital) and institutions13
  14. 14. Categories of R&D impact for ecosystem services 1. Direct impact on 2. Change in 3. Change in volume 4. Improved ecosystems knowledge of link ecosystem productivity in use between ecosystem services of ecosystem and service services as a productive input Ecosystems Ecosystem services Human wellbeing 5. Increased understanding 6. Direct increase in of the relationship human wellbeing between ecosystem services and human wellbeing 7. Changes in policy related to ecosystems14
  15. 15. Output related Input related Knowledge or policy Impact 1. Decrease in emissions of Reduced withdrawal of various kinds (smoke, resources from Impact of changes chemicals, processing ecosystems (water, for induced by R&D on effluent) may directly example) will affect underlying ecosystems impact functioning of ecosystem function. themselves. ecosystems. Impact 2. The relationship between ecosystems and potential Change in knowledge ecosystem services is about the relationship complex. R&D may between underlying improve basic scientific ecology and potential understanding of these ecosystem services relationships. Impact 3. Increase in the volume of the ecosystem service Change in the ‘volume’ (such as increased or ‘quality’ of carbon sequestration) ecosystem services. may result from production changes related to R&D. Impact 4. Increased production efficiency in the use of ecosystem services may result in releasing Improved productivity in environmental resources for other uses the combination of capital and other inputs with ecosystem services Impact 5. The link between ecosystem services and Increased human wellbeing is an understanding of the issue of ongoing scientific relationship between exploration. ecosystem services and human wellbeing. Impact 6. Reduced emissions of various kinds may directly Direct increases in improve human well being human well being (reduced smoke for example). Impact 7. Institutional structures and policies have a direct Changes in policy influence on the full broadly relating to ecosystem service chain.15 ecosystems.
  16. 16. Frequency of impact categories for ACIAR projects 41% 24% 20% 11% 3% 2% 0% 1. Impact on 2. Change in 3. Change in 4. Improved 5. Increased 6. Direct 7. Changes in underlying knowledge: volume of productivity in understanding: increase in well policy ecosystem ecology to ecosystem use of ecosystem being ecosystem service ecosystem service to service services wellbeing Based on desktop analysis of 356 ACIAR projects considered to have some NRM impact Shares apply to 260 of these projects where extended BCA was considered necessary16
  17. 17. Testing which ecosystem services to use Ecosystem Contribute to goods Four tests to identify values services which people value and avoid double counting Provisioning • Production of crops, • Food and fibre, 1. Would beneficiary in services plants, livestock, fish, recreation, inputs principle be willing to etc pay for an increase in • Production of trees, the service rather than vegetation, peat go without? • Production of water • Water for household and quantity industrial use • Production of wild • Medicine, disease and species diversity pest control 2. Are the outputs of the ecosystem service prior to any combination with human labour, capital or technology? Regulating • Climate regulation • Avoid climate stress services • Hazard regulation • Coastal protection, erosion protection, flood prevention • Breakdown of waste • Pollution control, waste 3. Would the beneficiary be removal, clean air and willing to pay for an soils increase in the service assuming all other • Purification processes ecosystem services and outputs were held constant? Cultural • Generation of • Recreation, tourism, services meaningful places physical and mental health 4. Only benefits of final • Socially valued services (satisfying 1 to landscapes and 3) should be counted an waterscapes aggregated17
  18. 18. A structure for identifying ecosystem service value UTILITY FUNCTION PRODUCTION FUNCTION Ui (X, Y(X, Z)) Ecological P i (H, X, Y(X, Z)) outcome indirectly valued through a Ecological function Human m ade outcome (X) both inputs directly and indirectly valued h = {X, Y, Z } is a set of biophysical outcomes that may serve as ecosystem services if they satisfy four tests: Test 1: ‘It is valuable ?’ Is the beneficiary willing to pay for an increase in ‘h’ rather than go without? Is: dU dP >0 OR >0 dh dh Test 2: Is h the output of an ecological system prior to any combination with human labour, capital or technology? An output that combines biophysical outcomes with other factors of production is not an ecosystem service. Test 3: Is the bene ficiary wil ling to pay for increases in h assuming that all other ecosystem outputs are held constant? For example: dU dP > 0 for Y fixed and Z fixed AND > 0 for Y fixed and Z fixed dX dX BUT dU dP = 0 Y fixed and X fixed AND = 0 for Y fixed and X fixed dZ dZ SO Z is not a final ecosystem servic e Test 4: Are the ecosystem services to be counted and aggregated across beneficiaries all final services?18
  19. 19. Levels of benefit transfer How many differences between situations are controlled for: 1. No differences Single point For example, $X per person transferred (average) estimate to new situation 2 Single value Marginal value which varies in For example, site size, $X/ha/person difference one dimension transferred to new situation 3. Multi-value A value function with argument For example, Value = f (char1, char2, difference based on a number of situation …) transferred to create new values characteristics with arguments from new situation 4. Pooled information ‘Meta analysis’ to provide Values transferred according to statistical value function different characteristics19
  20. 20. Environmental values from forestry research Type of value Indirect use value Existence value Detail Water regulation Carbon sequestration Biodiversity Values adopted $30/ha 37 – 97 t/ha $30 – $50/ha (range $20 – $40 $5/t CO2 (range $25 – $75) Valuation approach Benefit transfer from Quantity basal on Benefit transfer from other studies biophysical studies other studies Price derived from market transactions and damage estimate20
  21. 21. Information collection and analysis: proposed steps 1 Understand biophysical impacts (the marginal impacts related to the successful adoption of the R&D, either on-farm or off-farm) 2 Identify changes in potential ecosystem services (marketed on non-marketed, on farm or off farm?) 3 Consider institutions and Look for Look for markets environmental payments related markets 4 Collect data on ecosystem values suitable for benefit transfer (meta-analysis where available, otherwise most suitable similar situation) 5 Apply values to biophysical impact from the R&D Assess magnitude of impact (relative to other economic impacts) 6 Decide on additional analysis (magnitude of effect, prospects for success non market studies) 7 Complete BCA21
  22. 22. David PearceExecutive Director+61 2 6245 7800dpearce@TheCIE.com.au www.TheCIE.com.au

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