Module 4: defining invasive-related costs & benefits Economic Analysis of Invasive Species

2 what this module covers 1.looking at the impact of invasives in economic terms 2.defining the benefits and costs of invasives 3.categorising invasive costs and benefits in terms of ecosystem values 4.using a checklist for identifying the costs and benefits of invasives 5.recognising the complexity of invasive costs and benefits about invasive species Module 1 understanding the economic causes of invasions Module 2 impacts of invasive species and ways to address them Module 3 defining invasive-related costs & benefits Module 4 valuing ecosystem impacts Module 5 informing actions to address invasives Module 6

Economic Analysis of Invasive Species 3 looking at impacts in economic terms invasives occupy a particular “space” (changing the ecosystem and its component species) they alter the economically valuable goods and services it yields these economic impacts are typically both positive and negative economic analysis involves identifying and weighing up these costs and benefits for different groups

Economic Analysis of Invasive Species 4 looking at impacts in economic terms y types and z levels of ecosystem goods and services a types and b levels of ecosystem goods and services

Economic Analysis of Invasive Species 5 direct & indirect economic impacts direct economic impacts indirect economic impacts on-site production impacts arising from the effects of the invasive on the host habitat or ecosystem secondary and tertiary effects on other sites, sectors and times in terms of markets, prices, health, nutrition, trade, environment, public and private spending

Economic Analysis of Invasive Species 6 direct & indirect economic impacts direct economic impacts indirect economic impacts $1.8 mill wildlife-related recreation $0.5 mill soil & water conservation $39.3 mill changes in business volume, personal income, retail sales and other linked economic activities $4.98 mill livestock carrying capacity $11.74 farm production expenditures leafy spurge in Montana, South Dakota and Wyoming (Bangsund et al 1991, 1993, 1999)

Economic Analysis of Invasive Species 7 linking biophysical impacts to economic change biophysical changes = changes in ecology, hydrology, biodiversity, etc. extremely challenging to translate biophysical changes into economic impacts usually involves specifying a series of dose- response relationships between a given biophysical change and a given change in production, consumption, income or expenditures

Economic Analysis of Invasive Species 8 linking biophysical impacts to economic change economic impacts of alien invasive plants on South African ecosystems (various authors, cited in van Wilgen et al 2001) topic biophysical impacts & economic indicators Impacts of alien plant invasions on water yield Reduced water yield from invaded watersheds, prevention of water losses through clearing programmes Ecological-economic simulation model of mountain fynbos Consequences of invasion for water production, wildflower harvest, hiker and ecotourist visitation, endemic species and genetic storage Cost-benefit analysis of black wattle Benefits of commercial crop values and other products, impacts from reduced water yield, increased fire risk and biodiversity loss Cost benefit analysis of biological control of red water fern Loss of water resources and livestock for agricultural sector

Economic Analysis of Invasive Species 9 linking biophysical impacts to economic change European green crab in the USA (Hoagland and Jin 2006) estimates of crab’s economic impact have been used to justify US Government funding for control based on data taken from wrong geographic location incorrect predictions of ecological effects economic methods misapplied

Economic Analysis of Invasive Species 10 defining benefits and costs COSTS BENEFITS management costs direct physical expenditures on controlling invasion: wages, equipment, infrastructure, transport, research, etc direct physical expenditures on controlling invasion: wages, equipment, infrastructure, transport, research, etc on-site production benefits benefits of invasive to on- site production: income, employment, food, fuel, etc benefits of invasive to on- site production: income, employment, food, fuel, etc benefits to other sectors & activities knock-on impacts on other enterprises, sectors and sites that depend on invasive for: income, employment, inputs, commodities, etc knock-on impacts on other enterprises, sectors and sites that depend on invasive for: income, employment, inputs, commodities, etc opportunity costs (benefits foregone) congestion and crowding in uninvaded systems: rising production costs, increased travel costs, disruption, crowding, etc congestion and crowding in uninvaded systems: rising production costs, increased travel costs, disruption, crowding, etc losses to other sectors and activities: higher prices, loss of goods, more floods, less water, etc losses to other sectors and activities: higher prices, loss of goods, more floods, less water, etc on-site production losses: declining yield, increased pest damage, water shortage, flooding, etc on-site production losses: declining yield, increased pest damage, water shortage, flooding, etc

Economic Analysis of Invasive Species 11 looking at impacts in economic terms y types and z levels of ecosystem goods and services x benefits of invasive species w costs of invasives control a types and b levels of ecosystem goods and services

Economic Analysis of Invasive Species 12 categorising costs and benefits through ecosystem values primary concern in economic analysis is assessing incremental costs and benefits that occur when: –invasive species interfere with the functioning of a natural or human-modified ecosystem which yields a flow of economically valuable goods and services –invasive species displace native species or biological associations that are economically valuable thus, when we are looking at opportunity costs or benefits foregone as a result of invasives, we are valuing the impacts of changes in ecosystem services on the economy

Economic Analysis of Invasive Species 13 the problem of undervaluation ecosystem goods and services are persistently undervalued: –in economic statistics and indicators –in prices and markets people face –in economic policies and instruments –in calculations of profit and loss

Economic Analysis of Invasive Species 14 the problem of undervaluation given this undervaluation, is unsurprising that ecosystems are allowed to be modified, converted and taken over by invasives these land and resource uses seen as being more “productive” and “profitable” there are seen to be few economic costs or losses to ecosystem degradation

Economic Analysis of Invasive Species 15 total economic value DIRECT VALUES production and consumption goods such as: food, fish, fuel, building materials, medicines, fodder, recreation, etc. DIRECT VALUES production and consumption goods such as: food, fish, fuel, building materials, medicines, fodder, recreation, etc. EXISTENCE VALUES intrinsic significance of species and ecosystems in terms of: cultural, aesthetic, heritage, bequest, etc. EXISTENCE VALUES intrinsic significance of species and ecosystems in terms of: cultural, aesthetic, heritage, bequest, etc. INDIRECT VALUES ecosystem functions and services such as: watershed protection, nutrient cycling, flood attenuation, pollination, climate regulation, etc. INDIRECT VALUES ecosystem functions and services such as: watershed protection, nutrient cycling, flood attenuation, pollination, climate regulation, etc. OPTION VALUES premium placed on possible future uses or applications, such as: industrial, agricultural, pharmaceutical, leisure, etc. OPTION VALUES premium placed on possible future uses or applications, such as: industrial, agricultural, pharmaceutical, leisure, etc. USE VALUES NON-USE VALUES

Economic Analysis of Invasive Species 16 total economic value ECOSYSTEM SERVICES Supporting Nutrient cycling Soil formation Primary production … Provisioning Food Fresh water Wood and fiber Fuel … Regulating Climate regulation Flood regulation Disease prevention Water purification … Cultural Aesthetic Spiritual Educational Recreational … Security Personal safety Secure resource access Security from disasters Basic material for good life Adequate livelihoods Sufficient nutritious food Shelter Access to goods Health Strength Feeling well Access to clean air & water Good social relations Social cohesion Mutual respect Ability to help others Freedom of choice and action Opportunity to be able to achieve what an individual values being and doing CONSTITUENTS OF WELL-BEING option values direct values indirect values existence values TOTAL ECONOMIC VALUE Adapted from Millennium Ecosystem Assessment 2005, Emerton and Bos 2004

Economic Analysis of Invasive Species 17 checklist for identifying invasive costs and benefits (on-site)

Economic Analysis of Invasive Species 18 checklist for identifying invasive costs and benefits (off-site)

Economic Analysis of Invasive Species 19 checklist for identifying invasive costs and benefits (congestion)

Economic Analysis of Invasive Species 20 checklist for identifying invasive costs and benefits (management)

Economic Analysis of Invasive Species 21 marginal costs and benefits the change in value resulting from one more unit of a good or service produced or consumed marginal value the change in benefit associated with consuming one additional unit of a good or service marginal benefit the change in cost associated with producing one additional unit of a good or service marginal cost economic analysis addresses levels and degrees of invasion and control, and incremental changes in the quality and quantity of provision of ecosystem services and in associated economic indicators

Economic Analysis of Invasive Species 22 uncertainty and time invasives have special characteristics which mean that dealing with the time dimension is more difficult than would normally be the case timing of impacts is highly context-specific (may be short- term and temporary, may be permanent and irreversible) manifestations of costs and benefits varies over time, for different groups, different places and at different steps in the progression to invasion high levels of uncertainties in biophysical and economic estimates: trajectories and impacts are hard to predict

Economic Analysis of Invasive Species 23 distributional aspects key need to differentiate between economic impacts of invasives on different groups distributional analysis important from both equity and efficiency perspectives what management responses are required depends on who is bearing the benefits and costs identifying and avoiding/mitigating the impact of invasives on poor and vulnerable groups particularly important

Economic Analysis of Invasive Species 24 distributional aspects economic costs and benefits of invasive species in Africa (Wise et al 2007) Invasive speciesCountry Economic impacts per unit area or per capita (US$/year) Nile tilapia (Oreochromis niloticus) Uganda-$0.57 to +$3.4 per fisher Water hyacinth (Eichhornia crassipes) Central African Republic -$429 per gill net fisher, -$127 per palm wine collector, +$351 per spear fisher South Africa-$159 per fisher Larger grain borer (Prostephanus truncatus) Benin-$18 to -$350 per farmer Ghana-$28 to -$124 per farmer Parthenium weed (Parthenium hysterophorus) South Africa -$13.5 per small-scale farmer, -$27.1 per commercial farmer Triffid weed (Chromolaena odorata) South Africa-$59.3 per hectare

Economic Analysis of Invasive Species 25 thank you