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Valuing Ecosystem Goods and Services

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Valuing Ecosystem Goods and Services Ecological Economics 50 (2004) 163–194 www.elsevier.com/locate/ecolecon METHODS Valuing ecosystem goods and services: a new approach using a surrogate market and the combination of a multiple criteria analysis and a Delphi panel to assign weights to the attributes Ian A. Curtis* School of Environmental Studies and Geography, Faculty of Science and Engineering, James Cook University, P.O. Box 6811 Cairns, Queensland 4870, Australia Received 22 February 2003; received in revised form 5 February 2004; accepted 20 February 2004 Available online 25 September 2004 Abstract A new approach to valuing ecosystem goods and services (EGS) is described which incorporates components of the economic theory of value, the theory of valuation (US f appraisal), a multi-model multiple criteria analysis (MCA) of ecosystem attributes, and a Delphi panel of experts to assign weights to the attributes. The total value of ecosystem goods and services in the various tenure categories in the Wet Tropics World Heritage Area (WTWHA) in Australia was found to be in the range AUD$188 to $211 million yearÀ 1, or AUD$210 to 236 haÀ 1 yearÀ 1 across tenures, as at 30 June 2002. Application of the weightings assigned by the Delphi panelists and assessment of the ecological integrity of the various tenure categories resulted in values being derived for individual ecosystem services in the World Heritage Area. Biodiversity and refugia were the two attributes ranked most highly at AUD$18.6 to $20.9 million yearÀ 1 and AUD$16.6 to $18.2 million yearÀ 1, respectively. D 2004 Elsevier B.V. All rights reserved. Keywords: Valuing; Ecosystem services; Economics; Surrogate market; Shadow prices; Delphi; Multiple criteria analysis 1. Introduction pear or be converted to secondary forests within the next century (Wilson, 1988a). Habitats are being Ecosystems are being degraded and destroyed clear-felled, paved over, flooded, ploughed under, worldwide due to human activities at a rate unprec- rained on with acid, invaded by exotic organisms, edented in human history (Daily, 1997; Ponting, overgrazed, and having their climate changed (Ehr- 1998). Closed tropical rainforests only occupy 7% lich, 1988). Destruction of forests also causes of the earth’s land surface yet they contain more changes in the hydrological cycle leading to desert- than half the world’s biota. They will mostly disap- ification, soil salinity, floods and erosion (Winpenny, 1991). Wholesale eradication of populations and species of organisms have a critical and fundamental * Tel.: +61-207-4042-1389; fax: +61-207-4042-1284. impact on the provision of ecosystem goods and E-mail address: [email protected] (I.A. Curtis). services that are essential as planetary life support 0921-8009/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2004.02.003 164 I.A. Curtis / Ecological Economics 50 (2004) 163–194 systems, and not only for humans (Nunes and van Table 1 den Bergh, 2001). The extraordinary variety of life Ecosystem attributes used in the multi-model multiple criteria analysis (adapted and modified after Costanza et al., 1997a; Cork on earth had been imagined through the work of and Shelton, 2000) luminaries such as Erwin (1988) and Wilson Group Type (1988b, 2002), however, the growth of the study of biological diversity as a field of scientific en- Stabilisation Gas regulation (atmospheric composition) services Climate regulation (temperature, rainfall) deavour is revealing an even greater variety of life- Disturbance regulation (ecosystem resilience) forms and inter-connected evolutionary niches. Ig- Water regulation (hydrological cycle) norance of these interactions and their connotations Erosion control and soil/sediment retention with respect to nature’s services, such as the con- Biological control (populations, pest/disease tribution of soil organisms to atmospheric composi- control) Refugia (habitats for resident and transient tion, indicates that humans still lack basic under- populations) standing of the contributions made by the natural Regeneration Soil formation environment to planetary life support (Beattie and services Nutrient cycling and storage (including Erhlich, 2001). The genetic diversity within species carbon sequestration) is declining rapidly and it is largely irreplaceable. Assimilation of waste and attenuation, detoxification Protected areas or reserves may no longer be the Purification (clean water, air) solution to preserving genetic diversity, as climate Pollination (movement of floral gametes) change could cause forest migration and desertifica- Biodiversity tion and many existing natural populations of wild Production Water supply (catchment) organisms will no longer be able to survive within of goods Food production (that sustainable portion of GPP) their present ranges (Peters, 1988). An alternative Raw materials (that sustainable portion would be for human modified areas to be made of GPP, timber, fibre, etc.) more environmentally hospitable and a balance Genetic resources (medicines, scientific and maintained between wildlife habitat areas and areas technological resources designated for human habitation and food produc- Life fulfilling Recreation opportunities (nature-based tourism) services Aesthetic, cultural and spiritual tion (Winpenny, 1991). Scheffer et al. (2000: 451) (existence values) argue that: ‘‘good ecosystem models, institutional- Other non-use values (bequest and quasi ised ecosystem valuation, and innovative tax-setting option values) schedules are essential to achieving a socially fair and sustainable use of ecosystems by societies’’. Ecosystem goods and services (EGS) can only criteria analysis (MCA) combined with a Delphi support human life if a well-functioning and rich Inquiry is then used to assign shadow prices to variety of systems are spread over most of the the individual EGS and groups of goods and serv- Earth’s surface (Meffe and Carroll, 1997). Impair- ices provided by the World Heritage Area. ment of the ability of ecosystems to provide a sustained flow of beneficial services suggests the loss of a valuable resource (Howarth and Farber, 2. Background 2002). Ecosystem services may be defined as the products of the role that ecological systems play in There is still a fundamental lack of confidence in providing a sustainable environment for life support, the outcomes of attempts to value the environment. such as clean air, clean water, food, habitat and The seminal paper by Costanza et al. (1997a) recreational opportunities (Table 1). In this paper, a published in Nature pulled together many social new method to value the environment will be studies of diverse ecosystems to arrive at a gross described. Relying on valuation theory and the value for the earth’s EGS at US$33 trillion. Yet property market as a surrogate market, the total despite this notable attempt, ecosystems are still value of the Wet Tropics World Heritage Area being degraded partly from the want of a simple (WTWHA) in Australia is determined. A multiple and practical method to assign values to individual I.A. Curtis / Ecological Economics 50 (2004) 163–194 165 EGS. Very few attempts have been made to broadly property value (MUV) in a wider geographical value all EGS in a bioregion or whole ecosystems region. The MUV is then applied to public or due to the difficulty in valuing certain aspects of unrateable land, national parks, etc., in the same them (Cork and Shelton, 2000). While the region to establish a capital value per hectare. The approaches used in neoclassical and environmental terms value and valuation theory are used in this economics have been the subject of aggressive paper to describe the pecuniary worth of EGS and controversy for decades, due to continual refine- the associated theory and practice to do with ment they still have some merit and application establishing values for real property. If economic when it comes to placing value on certain attributes valuation procedures such as contingent valuation of the environment, such as recreation (Harrison, methods are discussed they are described as such, 2002). However, Costanza et al. (1997b) claim that as is also the case with intrinsic value (existence there is now, more than ever, powerful evidence of value). The operational definition of value in this the need for an innovative approach to this type of paper is thus that which is normally expressed analysis that will encompass both economics and through a commercial market (Funtowitz and Rav- ecology. This new approach should require that an etz, 1994). economically efficient allocation of resources be devised that adequately protects the stock of natural 2.1. Valuation theory and practice capital, and at the same time recognises the inter- relatedness and inter-dependence of all physical and The principles of land valuation predate modern biophysical components of the earth’s finite ecosys- economics and consist essentially of precedents in tems. Hawken et al. (1999) describe this require- English Common Law. Now, in Australia it has been ment as reconciling economic and ecological goals. greatly elaborated and replaced by legislation, most Added to this are the problems of removing the of which was first enacted in the late 19th and early odium attached to the idea of putting a monetary 20th century. By far the majority of this legislation value on everything, distributional effects, and is to do with taxing laws (Herps, 1942). Current translating and communicating the need for a mar- methods of valuation
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