1. 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
enst.umd.edu/tilley

2. 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

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

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

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

6. 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, Version (143.1)

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

8. 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)

9. 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

10. 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!

11. 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

12. 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

13. 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

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

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

16. 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

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

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

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

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

21. 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….

22. 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

23. 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.

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

25. 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)

26. 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

27. 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

28. 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

29. Value of Forest Ecosystem Services to Maryland

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

31. 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

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

33. 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

34. 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

35. Ecological Investment Corp.

36. Win Win!

37. Consumer Monthly Payments

38. 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

39. Questions?