ABSTRACT
Most ecosystems are dependent on interactions between the natural
environment and man-made factor; hence the many...
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Valuing the montado natural externalities

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Most ecosystems are dependent on interactions between the natural environment and man-made factor; hence the many sub definitions of ecosystems which include urban ecosystems, grassland ecosystems, woodland ecosystem etc. Such is the case for managed forests, like the Cork Oak (Quercus suber) Montado, a ‘Directive habitat’ which forms its own unique ecosystem delivering many important ecological services.
Recent efforts to quantify and valuate Ecosystem Services (ES) have been seen as vital in order to conceive of appropriate conservation and protection strategies in the long-term. This is urgently needed given that many ES are public goods and common resources with no private ownership or management can be poorly visible and thus falsely assumed or have no market values and tend to be underprovided.
According to some reference authors, the Montado effectively exports a large number of ES to the public systems, both tangible and intangible. Especially in small areas like farms, parklands and estates, it is very important to link mechanisms like payment for ES and green EU agro-forestry subsidies or promote an extended environmental fiscal reform in order to provide non-market solutions.
The present work pretends to explore the state of the art in terms of externalities like biodiversity, ecosystem services and landscape valuation approaches and methods and explore possible pathways for solving market and non-market economic failures in terms of recognition of sustainable supply of public services.

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Valuing the montado natural externalities

  1. 1. ABSTRACT Most ecosystems are dependent on interactions between the natural environment and man-made factor; hence the many sub definitions of ecosystems which include urban ecosystems, grassland ecosystems, woodland ecosystem etc. Such is the case for managed forests, like the Cork Oak (Quercus suber) Montado, a ‘Directive habitat’ which forms its own unique ecosystem delivering many important ecological services. Recent efforts to quantify and valuate Ecosystem Services (ES) have been seen as vital in order to conceive of appropriate conservation and protection strategies in the long-term. This is urgently needed given that many ES are public goods and common resources with no private ownership or management can be poorly visible and thus falsely assumed or have no market values and tend to be underprovided. According to some reference authors, the Montado effectively exports a large number of ES to the public systems, both tangible and intangible. Especially in small areas like farms, parklands and estates, it is very important to link mechanisms like payment for ES and green EU agro- forestry subsidies or promote an extended environmental fiscal reform in order to provide non-market solutions. The present work pretends to explore the state of the art in terms of externalities like biodiversity, ecosystem services and landscape valuation approaches and methods and explore possible pathways for solving market and non-market economic failures in terms of recognition of sustainable supply of public services. Valuing the Montado ‘Natural Externalities’  Trends and Tendencies Nuno Gaspar de Oliveira, João Rui Ferreira, Paulo Bessa 1CIGEST|Environment & Sustainability – ISG Business & Economics School, R. Vitorino Nemésio, 5, Lisbon, Portugal, +351 751 37 00 ext. 127, nunogoliveira@cigest.ensinus.pt, www.cigest.ensinus.pt 2CE LIÈGE, Confédération Européenne du Liège ; 10, Rue du Debarcadere; 75852 Paris Cedex 17 FRANCE; joaoferreira@celiege.com; www.celiege.com 3CORTICEIRA AMORIM, SGPS, S.A; Apartado 13, 4536-907 S. Paio de Oleiros, PORTUGAL. tel: +351227475793. paulo.bessa@corticeira.amorim.com; www.amorim.com ICAAM International Conference 2013 | Évora, Portugal Acknowledging the MONTADOS and DEHESAS as High Nature Value Farming Systems Montado’s Natural Externalities Biodiversity Ecosystem Services Cultural Landscapes Incentives & Subsidies How to Capture the Montado’s Natural Externalities? What’s going on? Several EU forestry related policy documents (EU Rural Dev. Regulation, EU Forestry strategy, etc.) reflect this new situation and the EU Forest Action Plan emphasis the importance of valuing and marketing those type of forest goods and services • Valuation is an important tool and can help to: • awareness raising , land use decisions, cost-effective forest management, encourage the provision of innovative forest goods and services, justify investments, compare the benefits and costs of different projects or programs, etc. • But, in general, not to determine the price to be paid to the provide of non-market forest goods and services • Non-market forest goods and services have a (potentially high) economic value to the society but since there is no market for them, forest owners do not extract any benefit from their provision and hence, these FGS are underprovided (or their sustainable provision cannot be guaranteed) • The European Commission has proposed a new Environment Action Programme for the EU. Entitled "Living well, within the limits of our planet", it will guide environment policy up to 2020. • The proposal aims to enhance Europe's ecological resilience and transform the EU into an inclusive and sustainable green economy. • Protecting natural capital, encouraging more resource efficiency and accelerating the transition to the low-carbon economy are key features of the programme, which also seeks to tackle environmental causes of disease. • The results should help stimulate sustainable growth and create new jobs to set the Union on a path to becoming a better and healthier place to live. http://ec.europa.eu/environment/newprg/index.htm Unfortunately, market prices do not take into account the full economic value of many goods and services we obtain from our environment. From clean air and water to timber, food and strolls in nature, we often pay for only a fraction of the benefits we receive. Recent studies, including the European Environment Agency’s State and Outlook Report 2010 (SOER 2010), underline that we cannot look at environmental issues in isolation. To preserve and manage our natural capital wisely, Europe needs to reshape its economy and improve resource efficiency. Environmental tax reform is one of the measures that could contribute to Europe’s transition towards a greener economy. • In terms of financing mechanism, there are clear trends towards the use of market mechanisms, e.g. regarding tax systems, subsidy elimination and/or reallocation and the creation of ‘cap-and-trade’ and ‘mitigation/compensation’ mechanisms or regimes. • And since we live in a “post-liberal-capitalism-free-market” modus operandi we should consider empowering the civil society, namelly the land owners and the Montado agroforestry-based communities to lobby at the political- institutional level considering economic incentives, taxes, subsidies, certification-based markets, contracts or tradable permits that can put a value in the Ecosystem Services (ES) externalities that are in fact supporting the well being and ecological health of these unique systems. But stakeholders’ resposponsibility doesn’t end here, actually, it starts with the impulse to innovate the way ES and Biodiversity are perceived and included in the management plans. When Externalities are part of the equation: accounting fot the Total Economic Value EFI Technical Report 50, 2011, www.efi.int In economics, an externality is defined as an (un)intended action caused by an economic agent that directly influences the utility of another agent (Merlo and Croitoru, 2005, Mas- Colell et al. 1995). On the Value of Portuguese Forests On the last few years, there’s been an effort to valuate the ES provided by the forests iun Portugal. This table (on the right) is a good example of an exercice that shows that the non-market value of ES is far, quite far from zero. "Living well, within the limits of our planet“ Hey, do you mean NATURAL limits? More externalities stuff, right… This little externality went to market… and failed! How do we start a tax reform that recognises total economic value? What about doing … nothing!? The agonizing costs of Policy Inaction In search of Trends and Tendencies What type of mechanism could actually work for the Montado?

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