Brownfields 2006November 15, 2006 Valuing Ecosystem Services – A Work in Progress Philip Rizzi Senior Principal, SRA International

Valuing Ecosystem Services – A Work in Progress 2 Agenda Introduction to Ecosystems Services Framework Valuation of Ecosystems Services – Theory Valuation of Ecosystems Services – Practice Current State of Knowledge & Resources Future Directions

Valuing Ecosystem Services – A Work in Progress 3 Introduction What if we could measure accurately the value of sites that had been remediated to a natural condition? What if we could analyze and compare different “natural” options as we planned for the reuse of sites in order to get the most value? What would it take to make such analysis possible? What would it take to make such analysis easy? It would take practical, robust, reliable ways to: – Identify ecosystem services – Quantify these services – Calculate a monetary value for them

Valuing Ecosystem Services – A Work in Progress 4 What are Ecosystem Services? Functioning ecosystems are characterized by physical, chemical, and biological processes that contribute to the self-maintenance of an ecosystem. These functions are valuable beyond their contribution to the health of that ecosystem. Ecosystem services are the benefits that people obtain directly or indirectly from ecosystem functions. The U.N.-sponsored Millennium Ecosystem Assessment program (2003) provides a common and broadly accepted framework for identifying and grouping ecosystem services. Regulating ServicesProvisioning ServicesSupporting ServicesCultural Services Carbon dioxide sequestration Oxygen production Flood prevention Habitat refuge Waste treatment (natural attenuation) Food Fuel Fiber Clean water Pollination Biochemicals Nutrient cycling Soil formation Soil retention Climate regulation (indirect, long-term services that support other ones) Spiritual/religious Active recreation Aesthetic Educational Cultural heritage Historical

Valuing Ecosystem Services – A Work in Progress 5 Valuing Ecosystem Services Measuring value – willingness to pay (WTP) and willingness to accept compensation (WAC) Market goods vs non-market goods –Market goods have market prices, which are (usually) easily observed –Non-market goods lack market prices and must be estimated Valuation Techniques for Non-Market Goods – Avoided Cost : what you would pay to avoid costs incurred in absence of that services – Replacement Cost : what you would have to pay to replace that service or its equivalent (natural resource damage models) – Net Factor Income/Productivity Method : value that the service contributes to production of a commercially marketed product – Hedonic Pricing : value based on what you pay for associated goods – Travel Cost : what cost you would pay to travel to enjoy that service – Contingent Valuation/Choice : what you would pay based on hypothetical scenarios/choices

Valuing Ecosystem Services – A Work in Progress 6 Valuing Ecosystem Services Benefit Transfer Method – applying economic values for ecosystem services from a specific site or study to another comparable site situation –Avoids need for some to most site-specific data and analysis and thus is often much cheaper and faster –Benefit value (“unit day approach”) vs benefit function –Applicability hinges on “transferability” – Are sites and services sufficiently similar in form, type, size, quality, location, and “user” population characteristics? –Accuracy of estimates depends on quality of original study –Findings high-quality, relevant studies may be challenging

Valuing Ecosystem Services – A Work in Progress 7 Helpful Resources Association of Environmental and Resource Economists National Academy of Sciences NOAA (evaluating restoration alternatives; methods for environmental valuation; habitat equivalency analysis) (excellent primer with practical tips) World Resources Institute (carbon value analysis) US Forest Service (UFORE and STRATUM models for urban forestry Other possible sources: US EPA Office of Research & Development; USDA Economic Research Service; Dept of Interior US Fish and Wildlife Service; PEW Charitable Trust; Resources for the Future; The Nature Conservancy

Valuing Ecosystem Services – A Work in Progress 8 Helpful Resources STRATUM Model (Street Tree Resource Analysis Tool for Urban Forest Management) - analysis tool using tree inventory data to quantify the dollar value of annual environmental and aesthetic benefits – Energy conservation : energy savings in MBtu/tree/year – Air quality improvement : Pollutant deposition (ozone, oxides, PM) and reduced power plant emissions from lower electricity demand – Carbon dioxide reduction : Carbon sequestration and reduced power plant emissions from lower electricity demand – Stormwater control : Reduced runoff (hundreds of cubic foot/tree/year) – Property values : Increase in values associated with trees Also includes modules for calculating costs and net benefits

Valuing Ecosystem Services – A Work in Progress 9 Practical considerations If benefit transfer method is a reasonable option – use it Developing useful ecosystem service values is still labor-intensive – both to estimate the quantity and quality of services provided and to develop accurate monetary values –Improving the accuracy of valuation estimates usually requires better data - both quantification of eco-services and monetary values associated with them All estimates entail uncertainty – how much is tolerable? Check useful reference sources regularly – new knowledge and more useful data in this field are constantly emerging Often, even incomplete or gross estimates (with appropriate limitations noted) are helpful for informing decisions

Valuing Ecosystem Services – A Work in Progress 10 Directions for Future Research More research to come up with better valuation models/tools (better methods) More studies to develop accurate value estimates for specific ecosystem services Algorithms to extend the current value estimates across a broader range of sites Refine existing values to allow more precise estimates and reduce uncertainty Synthesize and automate ecosystem service values to speed analysis and decision making Integrate values across multiple ecosystem services to analyze different scenarios and weigh trade-offs

Valuing Ecosystem Services – A Work in Progress 11 Potential Future Products Ecosystem service specific methodologies for generic site types Data sets of validated reference values and appropriate caveats/limitations Automated tools incorporating default and custom values Decision-aiding tools that allow users to build and compare alternative scenarios

Valuing Ecosystem Services – A Work in Progress 12 Summary