The document discusses how ecosystem services can be incorporated into cost-benefit analyses for flood protection projects. It defines ecosystem services and classifies them into different categories. It then examines how flood risk is analyzed through probability and consequences. The document outlines the general methodology for cost-benefit analysis and different techniques for quantifying and monetizing impacts. It analyzes guidelines in the US and Netherlands, comparing approaches from Rebuild by Design, FEMA, and MIRT. It provides examples of projects in Norfolk and Rotterdam. Finally, it concludes that methodologies differ in ecosystem service incorporation and valuation techniques used.

1. Ecosystem Services
in the
Cost Benefit Analysis
of
flood protection projects
Bart van Linge
bartvanlinge@gmail.com
Consulate General of the
Netherlands in New York

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Content
1. Introduction
2. Ecosystem services
3. Flood Protection
4. Cost benefit analysis
5. Different methodologies
6. Conclusions
Intro – ecosystem services – Flood protection– CBA – methodologies - conclusion

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Introduction
Changing emphasis toward
Ecosystem services in
decision-making processes
Cost Benefit Analysis is the
most common tool.
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Source: M-16-01, US Presidents Office, 2015
Intro – ecosystem services – Flood protection– CBA – methodologies - conclusion

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Introduction
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Objectives:
1. How can ecosystem services best be incorporated in a cost
benefit analysis for flood protection projects?
2. How do the guidelines for incorporating ecosystem services in
a cost benefit analysis differ in the United States and the
Netherlands?
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Ecosystem services
Definition:
Ecosystem services are “the contributions that ecosystems
make to human well-being” (source: CICES).
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Source: (Liquete, Piroddi, & Drakou, 2013)
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Ecosystem services
Classification of ecosystem services:
 Provisioning services
 Raw materials
 Fresh water
 Regulating services
 Flood protection
 Climate regulation
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 Cultural services
 Recreation
 Aesthetics
 Supporting or Habitat services
 Habitats for species
 Nutrient cycling
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Ecosystem services
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Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Three common classification
systems
 Millennium Ecosystem
Assessment (MA)
 The Economics of
Ecosystems and Biodiversity
(TEEB)
 Common International
Classification of Ecosystem
Services (CICES)
Source: (Liquete, Piroddi, & Drakou, 2013)

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Flood risk
Risk = probability * consequence1
 Probability
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Source: USACE
 Consequence
𝑃 𝑍 < 0 =
𝑡<𝑠
𝑓𝑟 𝑟 𝑓𝑠 𝑠 𝑑𝑟 𝑑𝑠
Source: Environment & Climate Change Canada
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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General methodology (simplified)
1. Create alternatives
2. Quantify impacts
3. Monetize
4. Make recommendation
Cost benefit analysis
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Source: Arcadis

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Quantification
Describe alternatives according to:
 Landscape
 Measurement
 …?
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Cost benefit analysis
Source: Arcadis

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Quantification
Type of consequence considered:
 Fatalities
 Environmental damage (e.g. #m3 of gh gas)
 Economic damage (e.g. loss of productivity)
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Cost benefit analysis
Source: Arcadis

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Monetization techniques
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Cost benefit analysis
Source: Arcadis
Method Ecosystem services categories
Provisioning
services
Regulating
services
Cultural
services
Supporting /
Habitat
services
Market prices + +/- +/- -
Cost
approaches
+ + - +/-
Revealed
preference
+/- - + +/-
Stated
preference
- - + +
Based on (Silvis & van der Heide, 2013)

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Methodologies
 Rebuild by Design (RbD)
 Federal Emergency Management Agency (FEMA)
 Norfolk
 ‘Meerjaren Infrastructure en Ruimte en Transport’ (MIRT)
 City of Rotterdam: Bergpolder Zuid
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Methodologies
Criteria
1. Are ecosystem services incorporated?
2. What classification system is used?
3. What type of risk reduction is considered?
4. What measurement indicators are used?
5. What type of price indices are used?
6. What type of monetization techniques are used?
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Methodologies
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
Criteria RbD FEMA MIRT
Ecosystem services Yes Yes Yes
Classification system None Pre-defined TEEB
Risk type Unidentified Prob. + Cons Unidentified
Measurement indicators None Land type None / land type
Price indices None # acres/year Variety
Monetization techniques None AC / RC / FI / TC /
HP / CV
BT / RC / TC / HP /
CV
National
Toolkit
Regional

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Sample projects
Norfolk – FEMA methodology
Extended FEMA data with data from
Earth Economics and USACE
1. Ecosystem services: Yes (more than FEMA)
2. Classification system: CICES
3. Type of risk: Probability & consequence
4. Measurment indicators: Type of landcover / # households
5. Price indices: Limited / # acre per year
6. Monetization techniques: AC / RC / FI / TC / HP / CV
Regional values
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Sample projects
MIRT methodology : City of Rotterdam
(Bergpolder Zuid)
Defined new methodology
based on general MIRT
1. Ecosystem services: Yes (limited)
2. Classification system: None
3. Type of risk: Only consequences
4. Measurement indicators: Type of measurement
5. Price indices: Limited / # measure per year
6. Monetization techniques: AC, FI, TC, HP
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Conclusions: different methodologies
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion
1. Ecosystem services All
2. Classification system Own / MEA / TEEB / CICES
3. Type of risk Not always considered that ecosystem
services can provide both probability &
consequences reduction.
4. Measurement indicators Landcover: only for land allocation
Measurement: only for urban envir.
5. Price indices Per acre: non-urban envir.
Per household: urban envir.
6. Monetization techniques: Very similar

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Conclusions: general
Including ecosystem services in CBA promotes:
 Better planning and decision making
 Other types of financing / combination of different budgets
 Early involvement of stakeholders
 Multi-functional, innovative and customized designs
Intro – ecosystem services – Flood protection – CBA – methodologies - conclusion

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Questions
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