Determining and Scaling Habitat Services Natural Capital Meeting April 20, 2009 Wilmington, DE

Overview of Presentation Habitat service flows HEA as scaling tool Metrics used in HEA

Habitat Equivalency Analysis (HEA)

Habitat Service Flows B C A Time Resource Services Compensatory Interim Lost Services Resource Services B Baseline Service C Level A Time Incident Primary Compensatory Restoration Begins Full Natural Restoration Recovery Begins

Brief History of Habitat Equivalency Analysis Originally developed in 1992 to quantify damages associated with oiled wetlands Applied to cover injuries due to chronic contamination, spills and vessel groundings in variety of habitats 1152

When to Consider Use of HEA When values per unit of replacement services and lost services are comparable (same type, quality, comparable value) or value differences are known When definition of injury and benefits using a common metric is possible Metric defines the injury more specifically and becomes the basis for restoration When replacement of habitat/resource services feasible When replacement methodology is sufficiently understood to determine model parameters 784mod3

Graphical Representation of HEA

HEA Methods Measuring Resource Services Discounting Through Time How big are areas A and B? Discounting Through Time How do we compare A and B despite differences in the timing of service flows? Resource-to-Resource Conversions How do we compare A and B when the resources are different?

HEA Steps Quantify injury (loss) Determine discount rate Determine shape of path and time to recovery Identify/evaluate/select compensatory restoration alternative Determine parameters for compensatory restoration Compute total discounted measure of lost service flows (debit) Compute total discounted measure of services provided by compensatory project (credit) Calculate size of compensatory project

Measuring Resource Services Losses from injury and gains from restoration must be quantified Metrics may be selected to represent resource function E.g., stem height and density of Spartina in an oiled or restored marsh; abundance of benthic organisms in contaminated sediments Injury may be quantified directly (e.g. bird mortality)

Importance of Metrics For Assessment HEAs simplify very complex ecosystems Properly implemented HEAs based on metrics that are highly correlated with most relevant resource services for that case Critical HEA parameters, such as recovery, maturity and relative productivity only make sense in context of specific metric Common metrics include: Percent vegetative cover, short-shoot density, benthic biomass, species abundance, etc.

Measures vs. Metrics Two hypothetical wetlands - each 100 acres and each with an expected lifespan of 50 years Both wetlands will provide 5,000 acre-years of services over their lifespans (undiscounted) Only in the context of metrics can we talk about the relative services that each marsh actually provides

Array of Possible Metrics for Marshes

Factors Influencing Metric Choice Nexus with relevant injured and restored services Appropriate metric may differ by case, even for the same type of habitat Ability to quantify Cost of quantification Sampling methods required e.g., destructive vs. non-destructive

Discounting Over Time Since multiple time periods involved, need to consider discount rate Also known as rate of time preference – describes preference for present use vs future use Method for putting all measurements (dollars or DSAYs) into present value terms

Discounted Service Flows 553mod3

Summary HEA used to scale services lost from injury to services gained from restoration Can be used to scale differences in services between existing and future scenarios Choice of metric important Other valuation methods for human uses of natural resources

Questions?

Extra Valuation Slides

Stated Preference Methods

Stated Preference Techniques Unlike HEA, can directly address issue of resource value Used in Value-to-Value and Value-to-Cost Approaches Focuses on most important resource characteristics Commonly applied in market and non-market settings (e.g. product development and resource valuation) 1456

Sample Survey Question

Obtaining an Estimate of Value Econometric model fits payments and environmental characteristics to a statistical distribution Loss can be expressed in monetary terms, or in units of required restoration A variety of potential restoration scenarios can be evaluated 1456

Revealed Preference Methods

Scaling Recreational Services Travel Cost Models estimate the value of recreational sites and site characteristics Exploit analogy to market behavior Price, Quantity, Consumer Surplus Benefits Transfer borrows information from previous analysis 1456

The Travel Cost Method Recreation Site If people drive 75 miles to get to a resource, and the cost of driving is $1.00 per mile in time and expense, the trip must be worth at least $150 75 miles Recreation Site Those who travel only 25 miles are getting surplus value of $150 – $50 = $100. 1456 25 miles

The Travel Cost Demand Curve Consumer Surplus Price Recreation Site 50 25 3 1456 7 Quantity 50 miles 75 miles Price = ƒ(distance) = Out-of-Pocket Travel Cost + Time Cost

Obtaining an Estimate of Value Estimate consumer surplus values for many sites Compare (using regression analysis) site values to site characteristics Estimate value of characteristics (e.g. urban environment, fish consumption advisories) 1456

Benefits Transfer Previous studies are applied to new problems Some measure of impact at the affected site is required, usually involving observed levels of recreational activity Important to consider characteristics of site where value/parameter obtained and methods used 1456