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The Benefits of
Ecosystem Services,
Environmental Economics and
Eco-Compensation Schemes

Christian Susan
UNIDO Water Mana...
Ecosystem Services

Provisioning Services
•
•
•
•
•

food (including seafood and game), fibre, crops
fresh water
genetic r...
Ecosystem Services

Cultural Services
•
•
•
•

spiritual enrichment
cognitive development
reflection
recreation, amenity a...
• efficiency
• growth
• stability

Sustainable Development

•i
nt

ra
• e •e gen
m qu era
pl it ti
oy y on
m
al
en
t

ECON...
Quantification of Total Economic Value
Quantification of Total Economic Value

Quantification of WTP/WTA through markets
• market price determined by supply and ...
Quantification of Total Economic Value

Environmental Valuation Methodologies
Quantification of Total Economic Value

Environmental Valuation Methodologies
Quantification of Total Economic Value

Environmental Valuation Methodologies
Eco-compensation, offsets, no net loss, net gain

Eco-compensation
• economic development => environmental damages, reduct...
Eco-compensation, offsets, no net loss, net gain

Eco-compensation
• economic development => environmental damages, reduct...
Habitat Hectare Assessment

• environmental proxy, value of habitats in non monetary units
• “currency” used: habitat hect...
Eco-compensation, offsets, no net loss, net gain

species composition to assure no net loss
• fores t s = c om plex ec os ...
Eco-compensation, offsets, no net loss, net gain

Eco-compensation ratio to assure no net loss
• forests take several deca...
Eco-compensation, offsets, no net loss, net gain

Eco-compensation ratio to assure no net loss
• equivalence:

0,8 ha*0, 5...
Eco-compensation, practical application

Baku-Tbilisi-Ceyhan (BTC) Pipeline
• BTC/SCP pipelines 248 km lengt h, average wi...
Eco-compensation, policy application

• logical extension of polluter pays principle
• healthy ecosystems have become scar...
gracias, thank you !!!
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From the rivers to Gulf of Mexico, Towards an ecosystem management approach

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7th GEF Biennial International Waters Conference in Barbados Presentation on Benefits of Ecosystem Services, Environmental Economics and Eco-Compensation Schemes by Christian Susan, UNIDO

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From the rivers to Gulf of Mexico, Towards an ecosystem management approach

  1. 1. The Benefits of Ecosystem Services, Environmental Economics and Eco-Compensation Schemes Christian Susan UNIDO Water Management Unit
  2. 2. Ecosystem Services Provisioning Services • • • • • food (including seafood and game), fibre, crops fresh water genetic resources, bio-chemicals natural medicines energy (hydropower, biomass) Regulating Services • • • • • • • climate regulation, carbon sequestration air quality regulation water regulation and purification erosion regulation disease regulation hazard regulation pollination, pest regulation
  3. 3. Ecosystem Services Cultural Services • • • • spiritual enrichment cognitive development reflection recreation, amenity and aesthetic experiences Supporting Services • • • • • • • soil formation photosynthesis primary production nutrient cycling water cycling provision of habitat soil formation and retention
  4. 4. • efficiency • growth • stability Sustainable Development •i nt ra • e •e gen m qu era pl it ti oy y on m al en t ECONOMIC •i •v nt al er ua na t i liz on at io n ENVIRON MENTAL SOCIAL • poverty • consultation/empowerment • culture/heritage • inter-generational equity • popular participation • biodiversity/resilience • natural resources • pollution
  5. 5. Quantification of Total Economic Value
  6. 6. Quantification of Total Economic Value Quantification of WTP/WTA through markets • market price determined by supply and demand • direct use value and to certain degree the indirect use value • private goods Quantification of WTP/WTA where markets fail • • • • most ecosystem services have public goods character no markets exists, not traded in markets “market failure” environmental valuation techniques to derive option and non-use value
  7. 7. Quantification of Total Economic Value Environmental Valuation Methodologies
  8. 8. Quantification of Total Economic Value Environmental Valuation Methodologies
  9. 9. Quantification of Total Economic Value Environmental Valuation Methodologies
  10. 10. Eco-compensation, offsets, no net loss, net gain Eco-compensation • economic development => environmental damages, reduction of natural capital stock • sustainable development: minimize detrimental environmental impacts, offset residual damage by eco-compensation No net loss • countries with abundant natural resources, natural capital stock still +/- intact, application of no net-loss => sustainable development Net gain • countries, where natural capital drastically reduced, application of net-gain principle => ‘re-balance’ accounts, sustainable development, net gain principle legally binding and transparent rules
  11. 11. Eco-compensation, offsets, no net loss, net gain Eco-compensation • economic development => environmental damages, reduction of natural capital stock • sustainable development: minimize detrimental environmental impacts, offset residual damage by eco-compensation No net loss • countries with abundant natural resources, natural capital stock still +/- intact, application of no net-loss => sustainable development Net gain • countries, where natural capital drastically reduced, application of net-gain principle => ‘re-balance’ accounts, sustainable development, net gain principle legally binding and transparent rules
  12. 12. Habitat Hectare Assessment • environmental proxy, value of habitats in non monetary units • “currency” used: habitat hectare habitat area [ha] x habitat score = habitat hectare • habitat score: comparing habitat and landscape component with a benchmark • benchmark: average characteristics of mature and apparently long undisturbed biodiversity and native vegetation • benchmarks for each Ecological Vegetation class (EVC) max habitat score = 1 or 100%
  13. 13. Eco-compensation, offsets, no net loss, net gain species composition to assure no net loss • fores t s = c om plex ec os ys tems , s ocially and ec onomic ally valued goods and environmental servic es • age + s pec ies c om pos it ion = c ruc ial determinants of habit at quality • to as s ure no net -los s t o overall habit at quality, ec o-c ompensat ion has to maint ain s pecies c om pos ition • affores t ation wit h fas t growing c oniferous s pecies c an res tore t he com merc ial t im ber value but not t he habitat qualit y • affores t ation wit h c oniferous s pec ies in Great Britain, increas e in fores t area, los s in biodivers it y and negative im pac t on real es tat e prices (revealed preference, Hedonic pric ing) ! !! c ruc ial t o as sure no net-los s of overall habitat qualit y: us e t he s pec ies felled for refores tat ion/affores tat ion!! !
  14. 14. Eco-compensation, offsets, no net loss, net gain Eco-compensation ratio to assure no net loss • forests take several decades to centuries to develop their full range of habitat functions • value of habitat (habitat score) increases over time habitat score habitat score hshs (t) (t) hs (tb)=1 hs (tb) hshs a) a) (t (t hshs x) x) (t (t tx tx ta ta tb tb age forest t age ofof forest t
  15. 15. Eco-compensation, offsets, no net loss, net gain Eco-compensation ratio to assure no net loss • equivalence: 0,8 ha*0, 5 habitat s c ore=0,4 habit at hec tares=0,4 ha*1, 0 habitat sc ore • habit at sc ore/value increas e over t ime !! ! t ime plays a cruc ial role in order to ass ure no net-los s in habit at value !! ! • if a party c aus ing des truc t ion of forest habitat is c ommit ted to t ake care of ref ores tation/aff ores tation unt il habit at s core of area c leared c an be achieved => compens ation rat io of 1:1 guarantees no net -loss • if a party c aus ing des truc t ion of forest habitat is only committ ed t o take c are of ref ores tation/aff ores tation for a shorter period => c ompens at ion ratio has t o be inc reas ed to guarant ee no net -loss • if habit at sc ore aft er 20 years (t20) is 0, 2; to c ompensate for a habitat des troyed (1ha) with a habitat s core of 0,8 => c ompensation rat io of 4:1 required for equivalenc e => 4 ha need to aff orest ed and looked af ter for 20 years
  16. 16. Eco-compensation, practical application Baku-Tbilisi-Ceyhan (BTC) Pipeline • BTC/SCP pipelines 248 km lengt h, average width of 53 m on Georgian t errit ory • route c haract eriz ed by very diverse ec ological condit ions and abundant biodivers ity • ESIA ac cepted on c onditional bas is only; impac ts on forest ecos ys tems have to be evaluated and off-set by adequate ec o-compens ation meas ures • Goal: res tore t he equivalent fores t habitat, no net loss • 141,8 ha fores t aff ec ted, t ot al value 80, 51 habitat hec tares • eco-c ompens ation ratio f or 20, 30,40 years c are taking period calc ulated • c ompens at ion ratio bet ween 1:2, 5 up t o 1:6, 8
  17. 17. Eco-compensation, policy application • logical extension of polluter pays principle • healthy ecosystems have become scarce • inclusion in regulatory framework = pre-requisite for sustainable development • EU Natura 2000 areas, Austria, Australia • obligation for developers to internalize cost of externalities in Cost-Benefit Analysis, reflection of true costs • precondition for future generations to benefit from extremely valuable ecosystem services
  18. 18. gracias, thank you !!!

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