Corporate Ecosystem Valuation (CEV) Road Test Case Study: Lafarge May 3, 2011

Suzanne Ozment, World Resources Institute Amy Rosenthal, World Wildlife Fund John Finisdore, The Nature Conservancy The Presenters

Lafarge Group Major positions in three product lines: –Cement –Aggregates and Concrete –Gypsum Wallboard Global manufacturing operations Approx. 80,000 employees worldwide Approx. 2,000 facilities worldwide Approx. 720 quarries worldwide

Assess the value of ecosystem services to enhance Lafarge’s land management planning for future quarry reclamation Better understand ecosystem services, valuation, and how to incorporate ecosystem services into Lafarge business decision-making The Objective & Partnership

The Plan for Ecosystem Valuation Tools: Corporate Ecosystem Services Review Wildlife Habitat Benefits Estimation Toolkit Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST)

Ecosystem Valuation Partnership Major positions in three product lines: –Cement –Aggregates and Concrete –Gypsum Wallboard Global manufacturing operations Approx. 80,000 employees worldwide Approx. 2,000 facilities worldwide Approx. 720 quarries worldwide

5. Develop strategies 4. Identify business risks and opportunities 3. Analyze trends in priority services 2. Identify priority ecosystem services 1. Select the scope The Corporate Ecosystem Services Review

Huron Watershed Land Use (1996) Forest66% Agriculture22% Residential/Industri al 10% Other2% PIQ

Step 2: Identify dependence & impacts

Step 3. Trends analysis framework Condition and trends in ecosystem service Direct drivers Activities of others Indirect drivers Company activities

Ecosystem Valuation Tools Corporate Ecosystem Services Review Wildlife Habitat Benefits Estimation Toolkit Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST)

Wildlife Habitat Benefits Estimation Toolkit Spreadsheet-based valuation models Value databases & peer-reviewed studies of ecosystems and species Recreation use model Technical reports & user’s manual

The WHBE Toolkit ₊ Increases in property value from nearby open space ₊ Outdoor recreation associated with wildlife ₊ Conservation of threatened & endangered species ₊ Some ecosystem services, using ‘benefits transfer’ = Total conservation value of a site for wildlife + habitat

How the Toolkit works: pros & cons Pros Synthesizes information from many studies Straightforward data needs Useful for rapid assessment, cheaper than new studies Cons Requires some technical expertise Not specifically designed for business applications Values derived from other study sites can be inaccurate

Toolkit is Best Used When Working in the US context The area is a commonly studied habitat type Studies are available for characteristics being evaluated Coarse estimates are needed Benefit transfer Single point estimate Avg value Admin approve d value Use value estimate at site

Natural Capital Project: InVEST Integrated Valuation of Ecosystem Services and Tradeoffs Family of models that enables users to quantify, map and value the ecosystem service impacts of alternative decisions. Maps, tradeoff curves, balance sheets

Lands and waters: Carbon Hydropower Water purification Avoided sedimentation Managed timber production Crop pollination Oceans and coasts: Wave energy Coastal hazards Aquaculture Aesthetic views Biodiversity Ecosystem Services

Measures & Values Supply of service Delivery of service Value Market valuation Avoided damage costs Production Economics

InVEST is Best Used When Addressing a specific business strategy, question or decision Comparing alternative options or scenarios Managing land, water or coastal resources Considering moderate resolution and scale Land cover 2000 Conservation 2025BAU 2025 or

Pros Spatially explicit results comparing options Good for addressing multiple benefits & risks Cons Requires technical expertise, data & time Not specifically designed for business applications Without reliable, precise input data, values derived can be inaccurate How InVEST works: pros & cons

Project Work Flow Project team 3 technical team, 2 reporting team, 2 Lafarge team, review & support from numerous others Timeline 6 months 1. kick-off & scoping, 2. planning & valuation, 3. review & reporting Tools 4 models, 1 report Cost ~ $60,000

Results: Habitat Benefits

Risks & Opportunities: Water contamination v. purification Nitrogen pollutant load PIQ Total: ~2,500 kg/year Nitrogen regulation services PIQ Total: over 3,300 kg/year *In PIQ, nutrient exported goes through sediment settlement system*

Value of Ecosystem Services Valuation of Erosion Regulation Services PIQ Total: ~$2,000,000 per year PIQ Total: over 145,000 metric tons retained annually

Challenges & risks  successes & opportunities Complexity Uncertainty Landscape scale Stakeholders Data, techniques & costs Defined business decision Defined material risks and opportunities Consistency, conservative, transparency, validation Physical measurement Strive for “necessary” Economic valuation Engage experts Data, techniques & costs Use sensitivity analysis

Acknowledgements Lafarge: Harve Stocke & David Carroll WRI: Susan Minnemeyer & Andrew Leach Natural Capital Project: Nirmal Bhagabati, Emily McKenzie, Heather Tallis, Driss Enaanay, Sheri Willoughby