Biophysical valuation of forest ecosystem services in Maryland to foster development of an Ecological Investment Corporation David Tilley, Elliott Campbell Environmental Science and Technology Department, University of Maryland dtilley@umd.edu enst.umd.edu/tilley

Outline Energy Basis of Ecosystem Services (Emergy) Energy : Money Relationship (Eco-prices) Eco-prices of Forest Ecosystem Services Example: Stormwater Ecosystem Service Ecological Investment Corporation (EIC) Conclusions

Ensuring Ecological Work How can society ensure that ecosystems provide their services in a free-market democracy?

Ecological Investment Corporation Need an Ecological Investment Corporation Operates within market system But…. …need capability to quantify value of ecosystem services

Marketable Value of Ecosystem Services How can we place semi-objective dollar value on ecosystem services? NATURE $$ How to get from NATURE to MONEY…

Ecosystem Service SERVICE: the action of doing work for someone1 Service = Work Ecosystem Service: the work an ecosystem does for society, the economy and the environment Ecosystem Service = Ecological Work 1-Dictionary by Apple, 2011. Version 2.2.1 (143.1)

Work What is work? Physics: moving something by applying a force against another force makes work More Generally: work results in a “useful” change

Work & Energy Work requires Energy “Energy has the ability to do work” They have same units (joules, calories, Btu’s) Ecological Work requires Energy (lots of it)

Energy as common “numeraire” Can we use energy to help with translation of ecosystem service to money? Energy is required for all action Energy can measure work Energy is EVERYWHERE!! Economy Society Environment

Not all Energy is Created Equal” Example #1 Do 2 scientist thinking (200 watts) = A square meter of sunlight (200 watts) Energy = Energy Sunlight drives photosynthesis, can make heat Scientists study photosynthesis while making heat Quality of work is different!

Energy Needs a Quality “Correction Factor” Example #2 Ultimately it takes 6,000,000 watts of sunlight to make 1 W of electric-light using a light bulb 6 million W of sun EMBODIED in 1 W of bulb

Embodied energy of electric light... electricity fuel bulb light Coal mining Power plant biomass Sun Plants Energy 1,000,000 J 500 J 25 J 6 J 0.6 J Quality Factor 1 solar-joule per joule (sej/J) 2000 sej/J 40,000 sej/J 170,000 sej/J 1,700,000 sej/J

Energy Quality… Solar Transformity can indicate Energy Quality Its Defined as Amount of Solar Energy Ultimately Used to Make another Form of Energy per unit of energy remaining

Embodied Energy… Emergy is embodied energy Defined as Total Amount of Solar Energy Ultimately Used to Make another Form of Energy

Freshwater… How Much Solar Emergy is Required to Make It? Sun, Oceans (saltwater), -------> Freshwater Winds

Solar Transformity of Water Solar energy required directly and indirectly to make freshwater per unit of energy available as freshwater = 30,000 J-solar/J-water 1,000,000 MJ-solar 33 MJ-water 33 MJ Fresh Water 1,000,000 MJ Solar

Forests…Energy Inputs Minerals Water Sun Sunlight, Water, Minerals Forest

Indirect Solar Energy… ”Solar Emergy Required” Minerals Water INDIRECT 168,000 sej 233,000 sej Sun 1 kg 8600 sej Sunlight, Water, Minerals Forest

Financial Value of Ecosystem Services Half way there…. NATURE $$ Embodied Energy

How does Emergy = $ Emergy drives GDP Emergy per dollar = (R+N+F)/(GDP) 1 trillion solar-joules per $1 (1E12 sej/$)

How to use Emergy per $ Money is exchanged for goods and services that required Emergy A price of emergy is the amount of money circulating (GDP) per solar emergy driving the circulation Mean PRICE of EMERGY is “Large-Scale” Estimator of ECO-PUBLIC VALUE Economy does a good job valuing human work, not environmental work If an economist designed a car, they would place driver in trunk facing the rear looking in a mirror to see where he was going….

Emergy & Money Public Value - Large-scale price of emergy multiplied by solar emergy of an ecosystem service ($/sej) x (sej/y) = $/y PUBLIC VALUE > Market-equivalent Value Need estimators of Fair-market Value Solution: The Eco-Price, A “Small-Scale” estimator of Fair-market Value Based on transactions of money and emergy Include new table showing process of data-emergy

Three Small-scale Estimators of Eco-price Service-specific Eco-price sej/$ for potable water sej/$ for clean air, etc. Weighted Average Eco-price mean of multiple Service-specific eco-prices Natural Resource Commodity Eco-price Ecosystem services are like primary inputs to the economy sej/$ of copper, corn, wood, etc.

Service-specific Eco-Prices (Campbell and Tilley in review) Add MD emdollar ratio, add units, group by service

Ecosystem Services Evaluated (see Campbell 2012 for complete set) Carbon sequestration Water quality improvement Stormwater runoff abatement Groundwater Recharge Air pollutant removal Soil generation and maintenance Pollination Biodiversity (development of model in process)

Hydrologic Ecosystem Services: Stormwater Retention METHODS Create Biophysical-Hydrological Model Localize Parameters to Maryland Landscapes Emergy of runoff = f(Urban – Forest) Eco-price based on New York Watershed Protection Fair Market Value = Emergy x Eco-price Public Value = Emergy x Large-scale Eco-Price Move data table to after model results talk about physical results of model, check K values

Results: Forest Stormwater Mitigation (48-Hour Storm Event) Price Assumption Dollars Per Acre Forest Land (48-h Event) Public Value $14.00 Commodity Eco-Price $0.78 Weighted Avg. Eco-Price $0.45 Service-specific Ecosystem Service Eco-Price $4.41 Runoff

Results: Public value and fair payment price for forest hydrologic services All Forests in Maryland Price Assumption   Stormwater Mitigation ($ per year) Public Value $717,000,000 Commodity Eco-Price $37,000,000 Weighted Avg. Eco-Price $21,000,000 Service-specific Ecosystem Service Eco-Price $238,000,000

Value of Forest Ecosystem Services to Maryland

Comparison of Eco-price Assumption Eco-Public Return on Private Investment = Public Value/Fair Payment = 5,088/268 = 19:1

Who can society pay to produce Ecosystem Services? Forest land owners who are good stewards should be paid produce them. Consumers of ecosystem services should pay. For PSU talk about provisioning and cultural services

Land Steward: Maintains Capacity of Ecosystems to Work Services Land Produces

Value of Services? Source of Money? What is value of EcoServices? Where does $ come from? $ $ $ $ $ Tons of CO; ac-ft of water; # tree species, birds; bd ft lumber, etc $ Ecosystem Services Land Produces

Consumers of Ecosystem Services pay Land Stewards $ Tons of CO; ac-ft of water; # tree species, birds; bd ft lumber, etc Urban/Suburban Areas Land is Producer

Ecological Investment Corp.

Win Win!

Consumer Monthly Payments

Conclusions Public Value Md. Forest Eco-Services = $5 Billion/y Fair Payment Prices to Land Stewards ~$100/ac/y If 4% of Marylanders donated $6 per month to the EIC it would be economically feasible Eco-Public Return on Private Investment in forest ecosystem services was between 7:1 and 29:1

Questions?