The Ezerani Nature Park

Ministry of Environment and Physical Planning Republic of Macedonia

Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of the Ezerani Nature Park

Integrated Ecosystem Management in the Prespa Lake Basin

Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of the Ezerani Nature Park

Marta Ceroni, PhD ABOUT THIS PUBLICATION:

This publication was produced with technical support from the United Nations Development Programme (UNDP), within the Integrated Ecosystem Management in the Prespa Lakes Basin project.

This report was prepared by Marta Ceroni, PhD, Director, Sustainable Economies Program, Donella Meadows Institute.

The Integrated Ecosystem Management in the Prespa Lakes Basin project is implemented by UNDP with ﬁnancial support from the Global Environment Facility (GEF). Its overall objective is to help the region’s people with long term economic and social development, conserve the rich biodiversity and protect the waters of the Prespa Lakes Basin.

ABOUT THE GEF:

The Global Environment Facility unites 182 member governments - in partnership with international institutions, nongovernmental organizations, and the private sector - to address global environmental issues. As an independent ﬁnancial organization, the GEF provides grants to developing countries and countries with economies in transition for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. These projects beneﬁt the global environment, linking local, national, and global environmental challenges and promoting sustainable livelihoods.

ABOUT UNDP:

UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. On the ground in 177 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations.

Disclaimer:

The opinions and standpoints expressed in this publication are those of the authors and do not necessarily reﬂect the ofﬁcial position of UNDP or the GEF. Table of Contents

Executive Summary...... 4 1 Introduction...... 8 2 Goals of the Study...... 11 3 Goals and Structure of The Report...... 12 4 Ecosystem Services and Conservation...... 13 5 Why We Need Economic Valuations...... 14 6 How Economic Valuations are Done...... 15 7 Environmental Conditions at Ezerani Nature Park...... 17 8 Total Economic Valuation: Introduction...... 19 8.1 Values of Ecosystem Goods and Services of ENP in its Present State ...... 19 8.1.1 Direct Values...... 21 8.1.2 Indirect Use Values...... 21 8.1.3 Option Values...... 22 8.1.4 Existence Values...... 22 !"#$%&'('$)*+$,-*-.('$&/$01&2&341)2$5-'(&6)(4&*""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#7 8.2.1 Restoration of the Former Fish Ponds...... 23 8.2.2 Restoration Options According to Various Sources...... 24 !"#"7$8922:%&'($8922:,-*-.($;*)2<'4'$&/$5-'(&6)(4&*""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#= !"7$0>-1(4?-$%&*'-6?)(4&*$@-6'9'$,9'4*-'':;':A'9)2$B1-*)64&"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#C 9 Total Economic Valuation: Assessment...... 28 9.1 Values of Ecosystem Goods and Services of ENP in its Present State...... 28 9.1.1 Lake Prespa Fishery...... 28 9.1.2 Hunting...... 36 9.1.3 Hay Production...... 37 9.1.4 Reed Collection...... 38 9.1.5 Sand Extraction...... 39 9.1.6 Research Opportunities...... 39 9.1.7 Education Opportunities...... 40 9.1.8 Wildlife Viewing...... 40 9.1.9 Flood Mitigation...... 41 9.1.10 Sediment, Nutrient and Contaminant Abatement...... 41 D"E"EE$F)(4&*)2GH2&I)2$,4&+4?-6'4(<$B43*4.1)*1-"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""J7 9.1.12 Summary of Values of Goods and Services of ENP in its Current State...... 44 D"#$%&'('$)*+$,-*-.('$&/$01&2&341)2$5-'(&6)(4&*""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""JK D"7$5-'92('$&/$8922$%&'($:$8922$,-*-.($;*)2<'4'""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""JC D"J$0>-1(4?-$%&*'-6?)(4&*$@-6'9'$,9'4*-''$;'$A'9)2$B1-*)64&""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""J! 10 Costs of Policy Inaction...... 50 10.1 Perverse Incentives and Water Quality...... 51 11 Conclusions...... 52

List of Figures

Figure 1. Goods, services, and values in a wetland. Modiﬁed from Turner et al. 2003 List of abbreviations

ENP Ezerani Nature Park NPV Net Present Value TAC Total Allowable Catch TEV Total Economic Value WMP Watershed Management Plan WWTP Wastewater Treatment Plant Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 4 the Ezerani Nature Park

Executive Summary 5

Goals Approach

A Total Economic Valuation (TEV) approach was The study assessed the economic values of adopted to answer three different questions: ecosystem services in the recently instituted 1. What are the values of ecosystem goods and Ezerani Nature Park (ENP), in the Republic of services of ENP in its present state? Macedonia and the costs and benefits of specific 2. What would be the costs and benefits of restoration actions. It is the first assessment ecological restoration at ENP? of the economic benefits of conserved areas 3. How does a scenario of effective conservation in the Republic of Macedonia. Its overall goal - which includes ecological restoration - is to provide a conceptual and application compare to the business as usual scenario over framework to conduct similar work in other the long-term? protected areas. The study provides an example of integrated ecological and economic thinking The project proceeded in 5 steps: for strengthening conservation and providing 1) Characterization of the study area; a rationale for public spending in ecological 2) Identification of ecosystem services; restoration. A visit to ENP had the goal of 3) Selection of key ecosystem services; strengthening the capacity of personnel on 4) Assessment of economic values for key economic valuation and to reach out to local ecosystem services and decision-makers as part of a workshop held at 5) Assessment of the costs and benefits of the Municipality of Resen. ecological restoration. The study was based on a thorough review of the previous documents and publications Study Area on ENP, on-site and off-site interviews with local stakeholders, and home-based The Ezerani Nature Park (ENP) is a recently scientific literature review. The interviews with established park that encompasses 1,916 stakeholders, among other things, helped select hectares of wetlands, meadows, and shallow the restoration actions to be evaluated under the waters along the Northern shore of Lake Prespa full cost - full benefit framework. The restoration in the Republic of Macedonia. Its creation is of a former fish pond for wastewater treatment the result of growing national and international emerged as priority. Wastewater from a local interest in the Lake Prespa basin with the treatment plant is not treated to remove nitrogen goal of promoting prosperous communities and phosphorus and is discharged directly into while improving water quality and maintaining the lake, worsening the risks of algal blooms its high levels of biodiversity. Despite the that are becoming more frequent in Lake Prespa. small surface, ENP can pioneer a new path With the restoration, wastewater would be of conservation in the Republic of Macedonia, channeled to the ponds and the pollutants taken based on the participation of local residents up to some degree by the aquatic vegetation and and local institutions in the management of bacteria in the soil. the park’s important resources. Part of this ongoing process has to do with empowering The study also assessed whether the costs local decision-makers with an understanding of of effective conservation can be offset in the the causes of current environmental degradation long run by the benefits of conservation. Such and the values that ENP’s ecosystems bring to costs include the restoration discussed above, local and regional communities. Some of these the establishment of a governing body and values are tangible and easy to recognize, such dedicated park personnel, and active outreach as fishing or the collection of sand for building and education programs. Effective conservation purposes. Less tangible benefits such as a is also expected to carry positive effects on the wetland’s ability to trap sediments and pollutants protection of biodiversity and on the reduction of are more typically ignored. loads of pollutants to the lake due to restoration actions. These benefits, despite being of the highest importance, are the most challenging to capture and were not included in the calculation. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 6 the Ezerani Nature Park

Results Conclusions

Values of ecosystem goods and services of ENP The main conclusion of the study is that in its present state. The study shows that the conservation and restoration investments sum of all tangible benefits from ENP amounts have significant payoffs for local communities, to a total of around 225,000 EUR per year. This regional and national users, and foreign number includes the value of fishing within the investors. This can be especially true if borders of the park (22,200 EUR), sand collection institutions at different levels continue to show a (182,000 EUR), hay for seasonal sheep herds willingness to work cooperatively. In addition, it (9,200 EUR), visits for education (7,000 EUR), is key to evaluate current national policies that research (2,400 EUR) and wildlife viewing (1,800 might favor unsustainable practices in the basin EUR ). In addition, the reed beds and aquatic and around ENP in particular, such as incentives vegetation of ENP are used by a number of for developing new apple orchards on public fish species to lay their eggs, guaranteeing the land. These incentives can be seen as potentially natural restocking for most of Lake Prespa’s “perverse” in that they favor one of the costliest fishery. With no spawning habitats, it would be uses of land as per environmental and public impossible to maintain a viable fish stock. Based health costs. In the end, the water quality issues on expert opinion, artificial restocking, could at of Lake Prespa cannot be addressed without the most cover one fifth of one single species in inviting policy-makers responsible for land the lake at a cost of 32,993.23 EUR annually. use regulation and those responsible for water resource management at the same table. Costs and benefits of ecological restoration. The analysis shows that overall the benefits that the restoration of the fish ponds would bring over the next 20 years are 9 times to 6.5 times higher than the costs when different discount rates are used. The Net Present Values of the restorations range from over 6 million EUR (3% discount rate) to over 3.6 millions EUR (8% discount rate) to around 4 million EUR (7.3 discount rate).

Business-as-usual versus effective conservation scenarios. Overall, the study shows that the benefits of conservation are twice as higher than the costs and would stem from a good balance of increased visitation, sustainable resource use, and the restoration of the fish pond. These benefits would also be 2.5 higher than the benefits in a scenario of no conservation. Conservation and restoration would be particularly cost-effective for the local communities given that most of the costs would be sustained by interested foreign organizations. 7

Acknowledgements

The study has beneﬁted from the generosity, availability, and knowledge of many people. Sincere gratitude goes to the full UNDP regional team for their help with support documentation, logistics, and for sharing their invaluable understanding of complex local and regional socio-environmental issues: Mr Dimitrija Sekovski, Mr Nikola Zdraveski, Mr Aleksandar Blazeski, Ms Gordana Cvetkoska. I am also grateful to Ms Anita Kodzoman and colleagues at the UNDP Country Ofﬁce in Skopje. Experts who provided precious assistance in this study are: Ms Katarina Stojkovska, Director of Regional Environmental Center (REC), hydrologist Mr Vladimir Stavrich, Dr. Svetozar Petkovski, President of BIOECO, Society for the Investigation and Conservation of Biodiversity and Sustainable Development of Natural Ecosystems, Mr Zoran Spirkovski and Ms Dusica Ilik-Boeva, Hydrobiological Institute, Dr. Lubcho Melovski, President of the Macedonian Ecological Society, Ms Natalija Angelova, Mr Vasko Avukatov, Mr Goce Sokolevski, Regional Center for Crisis Management, Mr Muzafer Murati Director of the Public Communal Enterprise, Resen, and Ms Irene Koutseri, Society for the Protection of Prespa. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 8 the Ezerani Nature Park

1 Introduction 9

The Ezerani Nature Park (ENP) encompasses 1,916 hectares of wetlands and meadows in the Northern portion of the Prespa Lake in the Republic of Macedonia. Ecosystems include: wetlands, shoreline dunes, open water, rivers, riparian corridors, wet meadows, alder woods, orchards, and former fish ponds (Table 1). The Prespa Lake, including the ENP, was designated as Ramsar site in 1995, in recognition of its high value for the protection of bird species and other abundant wildlife. The ENP was established in 1996 as a strict reserve (IUCN category I) and went through a process of re-designation to IUCN category IV with a focus on habitat management for species protection. The official proclamation of ENP as protected area under the Land cover type ha new category happened in February 2012 during Sandy areas 1.6 the drafting of this report. The re-designation reflects the need to establish a more integrated Alder forests 12.1 and participatory management model as part Orchards 23.7 of the larger vision promoted by the UNDP-GEF project “Integrated Ecosystem Management Willows/alder riparian forest 93.9 in the Prespa Lakes Basin”. This project has the goal to “catalyse the adoption of integrated Fishponds 142.4 ecosystem management in the trans-boundary Fen 193.3 Prespa Lakes Basin to conserve globally significant biodiversity, mitigate pollution of the Reed beds 212.9 trans-boundary lakes, and provide a sustainable basis for the Basin’s further social and economic Thick willow areas with alder trees 236.9 development”. Wet meadows 243.1 While there is high global interest for Lake 757.2 maintaining biodiversity at ENP, local/regional policies and individual behaviors are hindering Total 1916.10 conservation and the future development potential of the region by treating ecosystems as open access, unregulated resources. Table 1. Surface of different land Unsustainable activities and policy decisions cover types at ENP privilege individual gains in the short-term and result in disproportionately high societal costs. While conservation might come at certain costs to individuals and institutions (opportunity costs), the long-term consequences of unsustainable management are considerably higher and simply unaffordable for current and future generations.

The economic valuation study that is the subject of this report aims at highlighting the economic beneﬁts of conservation at ENP and promote awareness and participation in the neighboring communities over the strict and tangible linkages between environmental sustainability and human wellbeing. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 10 the Ezerani Nature Park 11

2 Goals of the study

The economic valuation study builds on the The study falls under UNDP-GEF’s mission findings of previous assessments at ENP and to “strengthen the analysis of impacts of benefits from the close collaboration of the ENP environmental stress and the assessment of UNDP team. The study is the first assessment their socioeconomic consequences” through of the economic benefits of conserved areas several actions at ENP, the most relevant of in the Republic of Macedonia. Its overall goal which are: is to provide a conceptual and application framework to conduct similar work in other 1. Assess the socio-economic consequences protected areas. The study provides an example of environmental degradation, including total of integrated ecological and economic thinking economic valuation of such consequences (lost for strengthening conservation and providing recreation, water quality/public health, reduced a rationale for public spending in ecological fish populations and costs thereof to the fishery restoration. The goals can be summarized as and livelihoods, etc..). follows:

1. Raise awareness on the economic values of 2. Enhance capacity for cost-beneﬁt analysis effective conservation in the local population, of ecosystem-based management and habitat ﬁnancial planners and decision-makers in the restoration. area, so as to create a climate more conducive to sustainable policy and behavioral change;

2. Evaluate the costs and beneﬁts of speciﬁc habitat management actions to inform conservation and public funding decisions;

3. Identify ﬁnancial opportunities for the park and neighboring communities associated with the park’s provision of ecosystem services and with speciﬁc management actions;

4. Generate participation and training opportunities for conservation managers and local/regional decision-makers in economic valuation for integrated ecosystem management. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 12 the Ezerani Nature Park

3 Goals and structure 4 of the report

The report has the overall goal of presenting the process, approaches, and results of the economic valuation of ecosystem services at ENP. More speciﬁcally, the goals of the report are to:

1. Present the approach, results, and discussion of the assessment of the values of goods and services at ENP in its current state

2. Present the approach, results, and discussion of a Full-Cost Full-Beneﬁt Analysis for the restoration of former ﬁsh ponds

3. Present the approach, results, and discussion of a Net Present Value assessment of ecosystem goods and services under business as usual and under the scenario of effective conservation that includes the restoration of former ﬁsh ponds

4. Discuss economic costs of policy inaction in the larger watershed context

Sections 4, 5, and 6 provide an introduction to ecosystem service valuation in the context of protected areas. This introductory part is followed by a description of the environmental conditions of ENP (section 7) and rationale and approach for the Total Economic Valuation (section 8). Section 8 also includes a description of the restoration options for ENP and a description of the conservation scenarios (business-as-usual versus effective conservation). Section 9 presents details of the approach and results for the economic valuation and the cost-beneﬁt analysis. Finally, section 10 addresses the costs of business-as-usual and policy inaction at a larger scale to complete the picture provided by the TEV assessments. 13

4 Ecosystem Services and Conservation

With the exception of known national parks such resource being protected, culture, education, as Yellowstone in the USA or Kruger National income, and worldviews. The more dependent Park in South Africa, conservation of biodiversity people are on natural resources for their often risks to be seen as an unproductive way livelihoods, the more they will care about of using the land, something that society has to productive functions such as the production do but that represents a negative in the balance of timber, wild game and fish, construction sheet of public institutions. This is especially materials, etc. Tourists often value scenic beauty the case when local communities have to face and biodiversity more than the locals. A thorough restrictions in their use of the resources being assessment of ecosystem services needs protected. therefore to consider the whole range of values for beneficiaries of services at different scales. What is not normally appreciated though, is that Benefits resulting from conservation include the protection of rare or threatened species often a flow of ecosystem services that ranges from brings along the protection of functions that are habitat provisioning to flood mitigation, to soil important for the well being of local communities erosion control. Such benefits typically outweigh as well as regional and global communities. the costs of conservation when assessed in Recognizing these contributions has the monetary terms. Balmford et al. (2002)1 for important role of justifying public spending on example show that benefits from land managed one end and identifying who benefits or loses for providing ecosystem services consistently from conservation over a full range of values that exceed the benefits of habitat conversion in go beyond the pure economic ones. tropical forests of Cameroon and Malaysia, and in wetlands in Canada. It is of the highest importance also to recognize the different values that people hold in terms The issue then becomes how to redistribute the of benefits from nature at the local, regional, costs of conservation and how to capture some national, and global level. These values have of these high returns for the benefit of local to do with how much people depend on the communities.

1 Balmford, A., A. Bruner, P. Cooper, R. Costanza, S. Farber, R. E. Green, M. Jenkins, P. Jefferiss, V. Jessamy, J. Madden, K. Munro, N. Myers, S. Naeem, J. Paavola, M. Rayment, S. Rosendo, J. Roughgarden, K. Trumper & R. K. Turner. 2002. Why conserving wild nature makes economic sense. Science 297: 950-953. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 14 the Ezerani Nature Park

5 Why we need 6 economic valuations

Most decisions that determine unsustainable The societal costs associated with increased land uses are based on a very limited set of soil loss resulting from deforestation won’t be factors. Consider the case of a farmer living in considered by the farmer, since they are typically a poor and mountainous region who needs to paid by people and municipalities downstream. decide whether maintaining a patch of native Likewise, the costs of preserving the patch of forest on his land or clearing it to plant crops. forest are born entirely by the farmer who gives up the opportunity to make a more profitable use In making this decision the farmer will factor of the land (opportunity costs) and has therefore in the economic gains from selling the timber no incentives to protect the land. and gains from future agriculture production. The costs of clearing will be also considered, Such decisions, having unequal consequences along with the costs of preparing the land for for different stakeholders and affecting the agriculture. Other non-monetary benefits might well-being of entire communities, are better be considered in this decision, for example if the taken in the most informed way, for example farmer collects firewood or mushrooms, these through full cost and full benefit accounting. services will also be part of his decision. What This environmental accounting approach has the will be left out of the decision are the benefits precise purpose of ensuring that all the benefits that this patch of forest provides at a larger scale and costs of a change in land use are taken such as for example the protection of biodiversity into account for the sake of more informed and or the prevention of floods downstream. sustainable decisions. 15

6 How economic valuations are done

The assessment of the economic values of The way economic values of various ecosystem protected areas takes often the form of a services are calculated varies substantially Total Economic Value (TEV) analysis. In a TEV depending on the ecosystem service being economic values of all ecosystem goods and assessed and the type of value that society services provided by a given area are quantified places on that service. Environmental in monetary terms and summed together. In economists typically distinguish between use the context of conservation, TEV studies have values and non-use values and between direct been often used to raise awareness of the and indirect use values (Figure 1). benefits provided by protected areas to local, regional, and global communities and justify Ecosystem goods such as timber or water have public spending. In other cases, benefits and a direct use value, being of direct interest to costs of a conservation option are compared to our economies. For these ecosystem goods, benefits and costs of alternative scenarios of which have established markets, the valuation use such as conversion to agriculture or urban is quite simple and is conducted by quantifying use or a business as usual scenario in which the the amount of goods provided per hectare current prevailing use patterns are maintained. per year and multiplying that amount by the Under this framework total economic values of corresponding market value. In the case of ecosystem goods and services are compared ecosystem services that have an indirect use to the costs associated with given land uses. value to us, such as water regulation or nutrient Conservation costs can for example be compared abatement, the valuation is more complicated to the total economic values of the protected because there are no corresponding market areas and the net benefits of conservation can be values for such services, as they are not traded assessed. in the marketplace. Economists in these cases employ indirect market valuation techniques, Once these values are made apparent through such as those based on revealed or stated quantification, mechanisms can be devised to consumer preferences or based on estimates equally redistribute the costs and benefits of of the costs of replacing a given ecosystem maintaining effective conservation over time. service. Typically, these methods document Not all benefits and costs, though, are easily behaviors that are traceable in the marketplace. quantifiable. This is especially the case of For example, the value of conserving biodiversity people’s preferences for intangible benefits can be estimated from expenses associated that come from nature, such as the importance with traveling to a park. The value of scenic of protecting species for the future. Societal vistas can be estimated from the increased real costs of environmental degradation are also estate value of properties located in the vicinity difficult to capture in a TEV framework due to of scenic features of the landscape. In the case the complexity of measuring impacts on species of ecosystem services that have non-use values, and on human health. Therefore total economic such as the spiritual or cultural importance of values rarely capture all the benefits that come a forest, interview methods are employed to from ecosystem services and should be used as assess people’s willingness to pay or accept a partial indication of people’s preferences rather compensation for maintaining a given service. than conclusive value judgments. Recent studies are also considering quantifying the number of hours people might be willing Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 16 the Ezerani Nature Park

to work in order to maintain a given ecosystem valuation are described in Box 1 using the service. Valuation studies can be based on valuation of biodiversity as an example. Detailed economic values speciﬁcally gathered in the area explanations of economic valuation approaches 7 of interest (primary valuations) or can be based commonly used in TEV studies are provided by on economic values from studies conducted in Lucy Emerton in her report Economic Valuation other areas for similar ecological and socio- of Protected Areas: Options for the Republic of economic systems (secondary valuations or Macedonia (2009). beneﬁt transfer). Different approaches to

Box 1. Commonly used methods to assess the economic values of biodiversity

ǩ0DUNHWSULFHV The economic value of many environmental goods (e.g. medicinal plants) is estimated simply through market prices (e.g.price of pharmaceutical compounds extracted from plants).

ǩ3URGXFWLYLW\PHWKRG Estimates economic values of biodiversity based on its contribution to the production of commercially marketed goods. For example: higher species richness in hay ﬁleds can result in higher yield. This gain, once monetarily quantiﬁed, will represent the monetary value of species richness.

ǩ+HGRQLFSULFLQJPHWKRG Estimates are based on biodiversity’s effects on market prices of some other good, such as housing prices. For example, houses’s prices might be higher near a protected area with high species diversity. These increased costs are used to estimate the monetary value of the protected area with high biodiversity.

ǩ7UDYHOFRVWPHWKRG Estimates are based on the amount of time and money that people are willing to spend to visit areas with high biodiversity. Visitor’s spending and travel time to visit the most diverse biomes is the simplest way to apply this approach.

ǩ$YRLGHGFRVWPHWKRG Estimates are based on costs of avoided damages, such as damages resulting from lost ecosystem services. For example, higher genetic diversity in agriculture often translates in higher resistance to pests. The monetary value of genetic diversity in this case is equal to the amount that would otherwise be lost to pests.

ǩ5HSODFHPHQWFRVWPHWKRG Estimates are based on the costs of replacing a service. For example, the cost of building a new water ﬁltration system for the city of New York can be used as a partial estimate of the value of the natural water puriﬁcation that rsults from maintaining healthy forests in the upper part of the city’s watershed.

The contingent valuation method involves directly asking people, in a survey or interview, how much they would be willing to pay for biodiversity or a speciﬁc component of it. In some cases, people are asked for the amount of compensation they would be willing to accept to give up habitats of high diversity. 17

7 Environmental conditions at Ezerani Nature Park

The ENP area has been amply described in the The GEF Transboundary Diagnostic Analysis report “Feasibility Study for Ezerani“ lead by (2010) identiﬁed ﬁve priority trans-boundary Darrell Smith and Svetozar Petkovski (hereafter environmental problems: Poor Water Quality “revalorization study“) and the Watershed (nutrient, organic and hazardous substances Management Plan (WMP). In this section only a pollution); Inappropriate Land Management; summary of environmental concerns is provided Non-Sustainable Fisheries Management; as a context for the economic valuation in the Declining Lake Level; and Large Sediment report. Transportation. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 18 the Ezerani Nature Park

The WMP study suggests that Lake Prespa’s Other concerns relate to the amount of eutrophic2 conditions place the lake in the sediments reaching the lake and degrading “sensitive to nitrates” category as defined by the habitat of the Prespa barbel. In addition, 8 the new national Law on Water. The document sediment deposition might reduce depth over identifies the following sources of nitrogen: time, contributing to shallower, warmer water. agricultural activities, poultry farming, illegal dumping of organic matter and, and discharged Pollution from nutrients and pesticides in the treated wastewater from the Ezerani waste Prespa Lake is a serious concern for Lake Ohrid water treatment plant (WWTP) without tertiary as well, given that the two lakes are connected de-nitrification treatment (see the revalorization through underground karst conduits. In this study and the WMP for information on the sense the lakes and their watersheds cannot be functioning of the WWTP). treated as two separate systems.

Eutrophication has been a concern for Lake Of particular concern is the decrease in the Prespa for a number of years. Recent monitoring traveling time of the water from the Prespa of algal blooms in the Summer of 2011 detected Lake; while in the past it would take the water microcystins3 in water and ﬁsh tissue samples. from Lake Prespa 1 to 2 months to reach Lake The results revealed a worrisome situation that Ohrid, the traveling time is nowadays of 16 hours if persisted could pose threats for human health. (Zoran Spirkovski, personal communication). Concerning levels of microcystins were reported This phenomenon has been related to natural recently for most Greek lakes, including Mikri geomorphological processes. The degradation of Prespa4. water quality in Lake Ohrid is of special concern due to the long residence time of the water (83 The WMP reports that pesticide compounds have years) compared to Lake Prespa (18 years). In 8.1 been detected in the majority of the monitored addition, Lake Ohrid is the basis of a healthy wells in the lower portion of the watershed. domestic touristic economy. Pesticide contamination was also detected in ﬁsh tissue during the summer monitoring “We can’t address water quality issues in Lake of the Macedonian side of Lake Prespa in Ohrid without addressing conservation in the 2011 (unpublished). It is not known what risks Prespa lake” stated Mr Zoran Spirkovski of the residues of pesticides in the water table, lake Hydrobiological Institute in Ohrid during the site waters, and animal tissues poses for animal and visit of November 2011. human health in the Prespa region. One regional study reports risks for water birds who are particularly subject to accumulation of persistent organic pollutants5.

2 Eutrophication is a process by which increased levels of nutrients (mostly nitrogen and phosphorus) coming from agriculture runoff or industrial waste favor the growth of algae to levels that are unsustainable. The excessive growth of algae leads to oxygen deficiency, which in turn may lead to fish kills, reduced biological diversity and bottom death. In addition, these blooms produce cyanotoxins which are hazardous to humans, animals, and plants. 3 Toxins produced by cyanobacteria during algal blooms in eutrophic conditions 4 Papadimitriou T, Kagalou I, Bacopoulos V, Leonardos I D. 2010. Accumulation of Microcystins in Water and Fish Tissues: An Estimation of Risks Associated with Microcystins in Most of the Greek Lakes. Environmental Toxicology, 25 , 4: 418-427 5 Sakellarides, TM, Konstantinou, IK, Hela, DG, Lambropoulou, D, Albanis, TA. 2005. Accumulation profiles of persistent organochlorines in liver and fat tissues of various waterbird species from Greece. Chemosphere, 63, 8: 1392-1409 19

8 Total Economic Valuation: Introduction

The TEV at ENR was structured to answer three different questions:

1. What are the values of ecosystem goods and services of ENP in its present state? 2. What would be the costs and beneﬁts of ecological restoration at ENP? 3. How does a scenario of effective conservation - which includes ecological restoration - compare to the business as usual scenario over the long-term?

In this section each of these questions is ﬁrst placed in the context of the park and then discussed from a methodological point of view. Detailed methods and results are presented in section 10 (Total Economic Valuation: Assessment pag. 28)

8.1 Values of ecosystem goods and services of ENP in its present state

The diagram in Figure 1 is a description of how information). The preliminary list of goods and the characteristics of a wetland influence the services is provided below: functioning of the ecosystem which in turn determines the provision of ecosystem goods and Direct values services. Goods are the “tangibles” taken from ǩ Commercial and recreational fishing ENP, such as sand, or water. Services are the ǩ Hunting “intangibles”, the beneficial processes that result ǩ Timber and firewood from the functioning of the ecosystems such as ǩ Hay the filtration of water done by the reed beds along ǩ Sand the shore. Ecosystem goods and services are of ǩ Wildlife viewing different value to people depending on how much ǩ Research opportunities they depend on such benefits for their daily lives ǩ Education opportunities or how much they know about these benefits. ǩ Nature tourism Values, as mentioned before range from direct Indirect values use, to indirect use to non-use. Option values relate to people’s option to directly or indirectly ǩ Flood mitigation benefit from ecosystem goods and services in ǩ Nutrient abatement the future. Each value, if measured through ǩ Toxics abatement economic valuation approaches can then be used ǩ Sediment trapping to calculate the total economic value. ǩ Wildlife habitat

The diagram in Figure 1 was used as a framework Non-use (existence) values for mapping out all goods and services provided National/global biodiversity signiﬁcance by ENP’s ecosystems (see Appendix 1 for more Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 20 the Ezerani Nature Park

The criteria used for prioritizing values of ENP in 3. Values should have policy and/or economic the study were: relevance for the surrounding communities 4. Values should possibly be associated with 1. Values should be relevant in the context of economic opportunities for the park the existing threats to conservation at ENP and 5. Values should be measurable within the time regionally and budget frame of the project 2. Values should be at the core of UNDP/GEF and MoEPP’s goals of integrated ecosystem The sections below discuss each type of value in management the context of the park.

Wetland characteristics ! size, geology, ! hidrology, weather etc.

Structure Processes biomass, soils, photosynthesis, ! ! plant/animal ! ! decomposition, ! ! communities nutrient cycling functioning Wetland ! !

Goods Services ﬁsheries, nutrient and water supply, ! ! toxics removal, sand, hay wildlife habitat, recreation

opportunities use Wetland

Indirect Use Non-use Values Direct Use Values donations, Values avoided costs, public spending, market values replacement contingent costs valuation

Option Values Contingent

valuation values Wetland

Non-use Use Value Value

TOTAL Figure1. Goods, services, and ECONOMIC VALUE values of wetlands. Modiﬁed from Turner et al. 20036

6 R. K Turner, J CJM. van den Bergh , T Soderqvist, A Barendregt, J van der Straaten, E Maltby, E C. van Ierland. 2000. Ecological- economic analysis of wetlands: scientiﬁc integration for management and policy, Ecological Economics 35: 7–23 Total Economic Valuation 8 Introduction 21

8.1.1 Direct values

Most direct use values in the park are associated Estimates of opportunity costs to individuals can with consumptive uses that have been previously be used to design compensation schemes or banned from the core areas such as fishing, incentives for discouraging undesirable activities. hunting, sand extraction, and, to a very limited extent, fuel wood collection and timber harvests. The study focused on uses that are currently Such uses of the land reflect a strong dependence ongoing and have potential to sustainably of local communities on the park for commodities. generate income for the park and/or the Illegal consumptive uses are benefits to the communities. These include fishing, sand users and costs to the park (and society at large). extraction, and cattle grazing on the park’s Most of these uses were not included in the TEV land. Together with consumptive use values, the analysis but were considered opportunity costs TEV included the value of wildlife viewing, and of conservation, i.e. the costs incurred by local research and education opportunities. communities as a result of reduced access.

8.1.2 Indirect use values

These are benefits received indirectly by local mitigation process depends on the water runoff communities or the larger public from the good patterns (e.g. presence and distribution of diffuse functioning of ecosystems, such as in the case and point sources of P and N), extension of the of a wetland trapping excesses of sediments or wetland relative to the catchment area, and filtering contaminants from polluted water. Such climatic conditions. For an accurate estimate of values are of enormous economic significance the value of P and N trapping, the wetland’s P and to local communities (and in some cases to N uptake and storage potential would need to be the global population) and yet they go generally known. unnoticed and undervalued due to a number of erroneous assumptions in prevailing economic Unfortunately, due to the drainage of portions theory and the difficulty to account for them in of the wetland in 1999 and the change of the tangible ways such as monetary figures. course of the Golema River, runoff water that reaches the river is now channeled directly into The most striking contributions of ENP the lake bypassing the wetland filter. Neither undoubtedly come from the wetland ecosystems runoff water or wastewater are treated by the from which a range of indirect use values are current Waste Water Treatment Plant (WWTP) derived. For example, the Eastern wetland at for nutrient reduction and therefore these waters ENP is mentioned in the revalorization study as reach the lake with unchanged concentrations. performing high levels of sediment, nutrient, and An important biofiltering function was formerly contaminant abatement (biofiltering capacity). performed also by the riparian vegetation at The revalorization study also emphasized the role ENP. At present, the extent of the riparian buffer of ENP’s wetlands in mitigating floods and wave was considered too limited for inclusion in the action. analysis.

Phosphorus (P) and Nitrogen (N) trapping The flood mitigation functions of ENP’s wetlands performed by wetlands is especially important are thought to be of limited benefit to the at ENP due to the potential to mitigate surrounding communities due to the fact that eutrophication, one of the largest threats to most of the flooding happens in the upper parts biodiversity conservation and sustainable of the catchment. For this reason, flood mitigation livelihoods in the region. The effectiveness of the benefits were not included in the assessment of Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 22 the Ezerani Nature Park

the economic values of ENP in its present state. their high productivity. The C storage capacity of Restoring the former fish ponds, though, might a wetland though might be limited by fluctuations have benefits for flood mitigation. On this point, in water level and temperatures, resulting in the experts interviewed on-site disagree, as releases of C in the atmosphere. Due to the explained in section 9.2.2. limited extension of the alder and riparian forest and due to the lack of data on the carbon cycle Carbon (C) sequestration is performed especially at ENP’s wetlands, carbon sequestration and by the remnants of the alder forest and by tree storage values were not included in the TEV. This vegetation in the riparian areas. Reed beds are service might be added in future calculations thought to sequester a high quantity of C due to in case reforestation will be included in the management plan.

8.1.3 Option values

These values are derived from the option of species due to lost or degraded habitat (e.g. using the park in the future, either as direct or breeding habitat). The few published economic indirect use values. A typically cited example assessments of this type, rely on complex in the literature is the option of using plant mathematical functions and are too data intensive compounds in the future to develop new drugs. to justify the inclusion of these values in the TEV Another important example is the cost of future at ENP. losses in the abundance of commercially valuable

8.1.4 Existence values

These values are not related to any kind of use The existence value of ENP’s national and global and reflect the fact that people take satisfaction biodiversity significance can safely be assumed from knowing that a species (or a number as the single most important and overarching of species), a landscape or an habitat will be value of the park, the value that justifies all past, preserved indefinitely regardless of whether they current and future conservation costs. In a way will enjoy it in person in their lifetime. The main the sum of all these costs can be taken as an exustence value identified for ENP is the value estimate of this existence value (as suggested for of the park for its biodiversity significance at the example by L. Emerton). On the other hand, if one national or global level. Local experts excluded a goal is to assess the net benefits of conservation, heritage and cultural significance of the wetland the conservation expenditures should be kept ecosystems at ENP. This is not surprising separate from the benefits they generate. In considering that ENP is a category IV park this study, conservation expenditures were focused on habitat management for the protection considered a measure of ENP’s global biodiversity of important species rather than heritage and or significance but were not added to the TEV as a cultural aspects. benefit, but rather as a cost to be evaluated in the context of larger benefits obtained from effective conservation (see section 10.4). Total Economic Valuation 8 Introduction 23

8.2 !"#$#%&'(%)*'*+$#%",% ecological restoration

The restoration options for ENP were evaluated importance of the restoration of former fish ponds based on three main sources: a) the revalorization to enhance the wetlands’ capacity as a biofilter study, b) the Watershed Management Plan and improve water quality. The section below (reaching final stage of drafting at the time provides background information and rationale of this writing), and c) interviews with experts for this restoration option before discussing other and stakeholders. All sources agree on the options.

8.2.1 -*#$".&$/"'%",%$0*%,".1*.%+#0%2"'(#

The fish ponds are areas of ENP separated determined significant hydrological changes from the rest of the wetland by embankments that lead to the permanent presence of water that in the past allowed for the maintenance of and a vegetation succession of hydrophilous a steady volume of water for the restocking of species. When they were in use, the fish ponds valuable fish species such as the carp. These were filled mostly by groundwater and rainwater. structures covered approximately 142 hectares Overall there seemed to be agreement among and were created in the northeastern side of stakeholders on the fact that the fish ponds were the park in a relatively elevated area of the a bad investment in the past if we consider the wetland with intermittent inundation over the limited amount of fish that was produced (large year. The building of the embankments and quantities of fish were regularly lost to fish- an automated inflow-outflow water system eating bird species). Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 24 the Ezerani Nature Park

Put to a new use, the former fish ponds have gravity, pumps can be necessary. Constructed the potential to be successfully restored to wetlands also attract wildlife and can add to the provide wastewater treatment functions. The attractiveness of the area. restoration of the fish ponds would recreate the former hydrological conditions by directing The success of a constructed wetland in nutrient wastewater from the WWTP and water from the and contaminant removal largely depends on Golema River into the different fish ponds. The a steady and adequate supply of water. Various restored fish ponds would function essentially as studies indicate that it is necessary to have a constructed wetlands in a natural setting. minimum of 12 days residence time to remove contaminants such as heavy metals. If water The literature is rich in examples of how properly levels drop drastically, plant life diminishes designed, constructed, maintained and managed and the system does not function correctly. artificial wetlands can provide an efficient In addition to the wastewater to be treated, treatment of wastewater with little energy supplemental water might need to be added if use and equipment. Constructed wetlands the wastewater supply is not sufficient to sustain transfer water by gravity through the system plant populations during dry periods. but in cases where topography limits the use of

8.2.2 Restoration options according to various sources

The revalorization study suggested the following that this action would help manage floods and hydrological interventions: contribute to nutrient abatement of runoff water 1. Restoration of the former riverbed for the from the Golema River during high river flow Golema River and the riparian corridor periods. 2. Restoration of the fish ponds to increase wildlife habitat, flood protection and nutrient/ 2. Establish tertiary wastewater treatment in contaminant abatement. former fish ponds (action 414b). This action would be achieved by connecting the WWTP to The first option would re-establish the old course fish pond 1 to channel untreated wastewater of the Golema River and would bring water back into the pond. The action is ranked 32th in to the alder forest that has been declining due to priority for implementation (out of the 45 actions) reduced water supply since the changed course and is rated with a high level of expectation of the riverbed. The study does not provide for bringing reduction of N and P, and for any further detail on how this action could be the improvement of natural habitat quality. accomplished and what the benefits would be. Removal of “priority substances”, such as The second option is described as two different environmental contaminants, has a moderate actions in the revalorization study (Pag. 238 level of expectation associated with this action. - 241). The two actions are now listed in the The expectation for this action is that reinstated Watershed Management Plan among the 45 flooded conditions can give rise to a succession recommended measures for improving water of hydrophilous vegetation that together with quality in the lake: waterlogged soils can have a remediation effect of the residing waters reducing the load of 1. Rehabilitate fish ponds and construct gate/ nutrients, sediments and, possibly, contaminants barrier on Golema River (action 62). This action on the lake. was rated 9th in priority for implementation (out of the 45 actions). The effect of this action would be to connect the Golema River to fish pond 2 and 3 with the goal of channelling excess water during flood events. The overall expectation is Total Economic Valuation 8 Introduction 25

The on-site interviews with experts and restoring the embankments and running a short stakeholders suggested the following restoration pipe from the WWTP to the fish pond 1 which is actions: conveniently located in reach of the WWTP. Form a biogeochemical point of view, it was noted that 1. the restoration of the delta of the Golema P typically bonds to sediments and that P tries River to increase water retention time and to reach concentration equilibrium. As a result, increase the natural filtration potential of the P rich sediments that get in contact with P poor wetland (option 1 in the revalorization study) and water will release P in the water column. This 2. the restoration of the fish ponds for means P abatement might take a long time. N nutrient and toxics abatement (option 2 in the abatement would be easier to achieve in the fish revalorization study). ponds (Stavrich 2011, pers. communication).

There were mixed opinions among the experts In principle fish species could be introduced for on whether the fish ponds could help attenuate sport fishing but the safety of fish consumption the flood problem. In various cases the water by humans and animal species would need to could still go over the embankments in cases be assessed. In addition, any fish introduction of intense rain precipitations (Murati 2011, should be evaluated carefully for potential pers. communication). The best use of the fish impacts on native species. In the end the fish ponds was thought to be for phosphorus and ponds could attract bird species and generate nitrogen abatement (Murati and Stavrich 2011, sport fishing opportunities (for sport fishermen). pers. communication). The cost of restoring the The embankments around the ponds could fish ponds was deemed limited and justifiable provide good observation opportunities and by various experts for the goal of abating trails for hiking or mountain biking (Petkovski phosphorus and nitrogen. These would include 2011, pers. communication). Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 26 the Ezerani Nature Park

8.2.3 345567"#$%,4556)*'*+$%&'&58#/#%",%.*#$".&$/"' 8.3

This report focuses on the two restoration Another important aspect to consider is how to actions included in the revalorization study and give weight to values that accrue in the future the watershed management plan: the costs and versus values that are enjoyed in the present. In benefits of restoring fish pond 1 as a tertiary conventional economic theory, future benefits are treatment for WWTP and 2) the costs and benefit discounted or devalued by a percentage (discount of restoring fish ponds 2 and 3 for managing rate) that reflects the rate of return of other excess water and abate nutrient during flood more profitable investments, often in the range periods. of 3-10%. Calculations are performed so as to calculate costs and benefits over the temporal Costs and benefits of the two restoration actions window selected (usually in the range of 10 were compared using a full cost - full benefit to 20 years for protected areas) adopting the accounting framework (see section 6). chosen discount rate. The calculation generates a measure of Net Present Value (NPV), i.e. the As discussed previously, full cost - full cumulative projected returns (corrected for benefit analysis (hereafter CBA) allows for a costs) for the restoration interventions as if they comprehensive assessments of cost and benefits occurred in the present. NPV allows decision over a range of values. Of crucial importance makers to compare various alternatives on a is the decision of which time frame to adopt similar time scale by converting all options to in assessing costs and benefits. Normally a current monetary figures. A restoration project decadal scale is used, acknowledging the fact is considered acceptable if the NPV is positive or that costs are higher in the early phases of equal to zero. project implementations and that benefits might accrue over a longer period of time. Total Economic Valuation 8 Introduction 27

8.3 9:*7$/;*%7"'#*.;&$/"'%;*.#4#% business-as-usual scenario

The restoration of the former fish ponds is With the proclamation of ENP as a category IV expected to carry some costs (especially in protected area in 2012, it is unlikely that the the beginning) but then the expectation is reserve will continue to be managed in the way that benefits overall will exceed the costs it is currently managed. On the other hand it and will allow ENP to achieve more effective is expected that it will take some time before conservation. In this context, how would the changes in the governance, financing, and economic values of a business as usual scenario management of the park can take place. This compare to those of a conservation scenario scenario reflects the current situation and is a where restoration plays an important role? useful benchmark for evaluating the net benefit of conservation investments over the long-term. The comparison between the two scenarios requires comparing values that accrue in the Effective conservation scenario. Under present to values that will accrue in the future this scenario, the park will reach effective as a result of different actions. The best way to conservation in the relatively short term through do these comparisons is again through a NPV the establishment of a governing body and approach where current values are projected park personnel, the adoption of a management into the future for comparison to future values. plan, enforcement of regulation, and water The NPV approach accounts for all benefits and quality interventions to restore the former costs of the two scenarios over a decadal time fish ponds for wastewater management. In frame as if they occurred today. The time frame addition, this scenario implies the adoption of chosen for this study is of 20 years. The two the WMP and increased visitation as a result of scenarios for which ecosystem service values are regional investments for raising the park’s and compared are described as follows: lake’s profile. Under this scenario, the tertiary treatment of wastewater from WWTP is deemed Business as usual scenario. This scenario necessary for the improvement of water quality implies that management and conservation and is made possible by the restoration of one of actions will not change over the course of the the former fish ponds. next 20 years from their current baseline. The scenario therefore excludes the presence of a governing body for the park, it excludes protection measures, habitat restoration interventions, and enforcing of regulation. The scenario also assumes no actions for at least 20 years on the recommendations for water quality in the WMP, i.e. no restoration of the former fish ponds, neither as tertiary treatment for wastewater from the WWTP nor for flood management. Under this scenario, the tertiary treatment of wastewater for N and P by the WWTP is judged too expensive and the wastewater continues to flow directly into the lake with increasing deterioration of water quality. This scenario also does not consider the effects of the implementation of regional development plans (such as for regional tourism plans). Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 28 the Ezerani Nature Park

9 Total Economic Valuation: Assessment

This section of the report provides detailed information on the TEV and CBA calculations and results. As a reminder, the three guiding questions for the assessment are:

Exchange rates used in this report are based on average rates reported on Oanda.com on February 3 2012:

1 MKD = 0.01610 EUR 1 EUR = 62.1185 MKD 1 MKD = 0.02119 USD 1 USD = 47.1910 MKD

9.1 Values of ecosystem goods and services of ENP in its present state

9.1.1 Lake Prespa Fishery

Fishing in Lake Prespa has traditionally occurred is a direct link between the wetlands at ENP both inside and outside the borders of ENP. and the fish stock of the lake in that no fishery Since 2005 a total national ban on fishing would be possible in Lake Prespa without the has been enacted due to failure in reaching fish spawning habitats located within the border an agreement on the selection process of of the park. These include the reed beds and prospective concessionaries. In the meantime, submerged aquatic vegetation in a radius of 1 fishing occurs in an unregulated and non Km from the coastline. Secondly, fishing is the documented way. With the adoption of the park’s second activity in the region for importance after management plan, fishing within the park will apple growing and it is therefore relevant to the be strictly regulated. While it is expected that regional context of the park’s management. most of the fishing will occur outside of the After a description of the fishery in the lake, the boundaries of ENP, it was deemed important to sections that follow describe the context and include an assessment of the value of the whole valuation approach for commercial, small-scale, fishery in this report for two reasons. First, there and recreational fishing. 29

Fishery of Lake Prespa

Production. The total annual fish production in the Macedonian portion of the lake is estimated at 363 tons. Of this amount, 70%, i.e. 254 tons, is the Total Allowable Catch (TAC) for fishing by commercial and recreational operations. The TAC, which might seem high, reflects the fast growth rates of the commercially important species such as the carp and Prespa chub. Of the 30% that it is not fished, 15% is “left” for birds. The fish is sold fresh, cleaned and frozen, and frozen as a whole.

Fish species. The lake hosts 19 species of Institutions. In the Republic of Macedonia there fish of which 11 are indigenous and 8 are is no ministry specifically for fisheries, and introduced. Among the indigenous species, fisheries fall under the jurisdiction of the Ministry 9 are endemic and can only be found in the of Agriculture, Forestry and Water Management. Prespa Lake. All the endemic fish species, with The Ministry of Environment and Physical the exception of the Prespa chub, are listed in Planning is also involved in fishery management the Red List of Freshwater Fish Endemic to the in relation to biodiversity conservation matters. Mediterranean Basin, published by the World Conservation Union (IUCN). Six species are listed Approach and definitions. For the purpose of as “Vulnerable” while the Prespa trout7 and the the TEV, fishing was divided into: 1) commercial Prespa minnow are listed as “Endangered”. fishing, 2) small-scale fishing, and 3) recreational fishing. In addition, the value of ENP’s wetlands Of the fish species that have commercial value, as spawning habitats was assessed. Commercial the Prespa bleak is the most abundant (65% fishing is defined here as fishing done for profit of total fish stock) followed by the carp (20%), on a relatively large scale that is defined by Prespa roach (6%), Prussian carp (5%) and the local management guidelines (see below). other species, including the Prespa barbel Small-scale fishing is done also for profit but at and Prespa chub (4%). The Prespa barbel is a much smaller scale. Recreational fishing is of high commercial value and “much sought defined here as non-commercial fishing done after for its fine flavour”8. The Prespa roach for pleasure or competition (not for profit). From is an important part of the diet of fish-eating the management point of view small-scale and bird species, but it is not particularly valued for recreational fishing are not distinguishable, human consumption. The carp, while not native but the distinction makes sense from a to the Prespa region is considered naturalized methodological point of view. The economic value due to its introduction in Roman times. The of small-scale fishing is estimated exclusively carp is possibly the most iconic species for Lake through market prices, while the economic value Prespa. The Prussian carp was introduced from of recreational fishing is estimated through a Asia in the 17th century and has become since simplified travel cost that accounts for the time then abundant and competing for feeding and and travel expenses incurred by fishermen spawning resources with the carp. The Prussian visiting from other areas. The market value from carp is of low commercial value and no limits are recreational fishermen is considered negligible set for fishing. and not accounted for.

7 The Prespa Trout is found in the upstream reaches of the Golema River: Brajcinska and Kranska Rivers and the Leva River in the Macedonian and the tributary Agios Germanos River in Greece. Reduction of the population is mainly due to overﬁshing, poaching and the degradation of habitats. 8 Society for the Protection of Prespa Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 30 the Ezerani Nature Park

Commercial fishing artisanal given that operations never reach large crews. Concerns were voiced in the stakeholders Management. One commercial fishing concession interviews over the feasibility of granting one is granted through an application process to a large concession in the near future. The size of concessionary that has capacity to manage at fishing operations has decreased over recent least 15 boats, 30 fishermen and 10 patrol guards. years and the number of eligible prospective Patrol guards who are hired by the concessionary concessionaries has dropped significantly. are said to be more likely to report effective fishing numbers than third party guards. This Master plans for each major lake of the Republic goes against any intuitive explanation but might of Macedonia are being drafted nationally. The be understood in the context of local social norms government of the Republic of Macedonia will and corruption. Fishing patrol guards are paid be responsible for building three landing sites based on a guaranteed minimum amount and for fishing boats, none of which is expected to be then as a percentage of the catch. Commercial located within the park. One landing site will be concessions are granted for the duration of 6 in the area of Pretor, one in the area of Asamati years. The annual cost of the license corresponds and one in the vicinity of Stenje. The sites will to the 10% of the wholesale value of the fishing be equipped for first hand sales of fish (storage stock. Current concession costs are at 24,400 space). euro. Economy. The supply chain of commercial Eighty percent of the funding from the sale of fishery is comprised of three main stages: 1) the commercial fishery license is allocated to harvesting, 2) processing and wholesale, and funding research, monitoring, and restocking in 3) retail and consumption. At each stage of Ohrid Lake by the Hydrobiological Institute. the supply chain, value is added and economic effects ripple through the local and regional On the Macedonian part of Lake Prespa (65% of economy. For example, commercial fishermen, the lake surface) only one such concessionary processors, and retailers each have suppliers exists. Albania has also one concessionary down-stream which benefit from selling allocated. In Greece, no concession is allocated equipment necessary for the fishery operations. and only 15 to 30 families are thought to depend All the money generated through these on fishing for part of their income. Commercial transactions is then re-circulated in the economy fishing in Lake Prespa can be considered as a result of commercial fishing. Total Economic Valuation 9 Assessment 31

Assessment. A thorough analysis of the various (300 MKD per Kg), roach (250 MKD per Kg), and economic impacts of commercial fishing on Prespa bleak (40 MKD per Kg). Retail prices the local economy would require a detailed for other species were derived from qualitative assessment of the revenues and spending in information on the relative commercial value of all sectors associated with the fishery industry. fish species in the lake from the website of the For the purpose of this report, instead, only the Society for the Protection of Prespa (www.spp. wholesale and retail market value of the fish are gr). Table 2 shows the fished species, allowed considered along with employment figures in the catch amounts and retail prices. commercial fishermen operation. Results. The total retail value of the allowed Commercial fishery is expected to bring 270,000 catch quota for commercial purposes is of EUR in the wholesale market every year $22,670,000.00 MKD or ($364,987.00 EUR). At (Hydrobiological Institute). The total allowed least 12 fishery guards will need to be hired to catch for commercial fishing is of 226.4 tons. monitor catches in commercial fishing. Retail prices were available only for the carp

Authorized Min. Price Popular name Latin name TOTAL MKD catch Kg length (MKD/Kg) Carp Cyprinus carpio 35,000 35 cm 300 10,500,000.00 Prespa chub Squalius perspensis 6,000 25 cm 200 1,200,000.00 Prespa barbel Barbus prespensis 400 20 cm 300 120,000.00 Prespa roach Rutilus perspensis 15,000 15 cm 250 3,750,000.00 Prespa bleak Alburnus belvica 170,000 12 cm 40 6,800,000.00 Prussian carp Carassius gibelio No limit (10,000) No limit 30 300,000.00 TOTAL 226,400 22,670,000.00

Table 2. Market prices and values for commercial ﬁsh species (data from ENP personnel and Hydrobiological Institute, Ohrid) Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 32 the Ezerani Nature Park

Small-scale fishing Ribomak sold 60 six-month fishing licenses (UNDP Integrated Management Report, 1996). Management. Small-scale fishing is defined here as fishing on a household basis by Approximately 240 people are thought to be individuals who depend to some extent on fishing fishing in the region, given that licenses tend to for their income. Fifty to sixty fishermen across be utilized by a family unit of up to four people. the Prespa Basin are estimated to significantly depend for their income on the high-value carp The number of allowed daily permits in the fishery (UNDP, Integrated Management Report, Macedonian Prespa is of 9,485 daily licenses with 1996). Small-scale fishing has progressively 4 kg of total daily catch per license. This number declined in all three Prespa countries. In the does not include the carp for which 1,000 fishing Greek portion of Lake Prespa, only 2% of the days are allowed with a maximum permitted population was listing fishing as an occupation catch of 5 kg per license. in the mid 1990s (UNDP Integrated Management Report, 1996). Assessment. The economic impact of small- scale fishing was derived from market retail Non-commercial fishing is permitted on the prices and total allowed catch. This method was shoreline at five landing sites (Stenje, Oteshevo, deemed more informative than multiplying the Pretor, Asamati and Krani villages) and from number of daily licenses by the allowed daily boats at a distance of 200 meters from the catch. In case where prices were not available shoreline (beyond the spawning habitat). Daily (Prespa chub, P. nase, P. barbel, and Prussian fishing permits are issued by a recreational carp) an estimate was inferred from information fishing concessionaire in accordance to the on the relative demand for each species (SPP Recreational Fishing Rulebook of the Law on website). Fishery. The Rulebook requires to evaluate the 5 year plan each year based on abundances of Results. The total retail value of the allowed fish populations. A maximum increase of 10% catch quota for recreational purposes is of in allowed catch per year is permitted if fish $3,840,000.00MKD or ($61,824.00 EUR). At least abundances allow for it in a given year. 2 fishery guards will be hired in the near future to monitor catches for recreational fishing. Up to two “recreational” concessions are granted (for small-scale fishing and recreational fishing) to organizations that have a minimum of 50 members and are in charge of handling the permitting and patrolling of recreational fishery. Licenses can be for a daily (100 MKD), weekly, or monthly use. In 2004, former concessionary

Authorized Price Popular name Latin name Min. length TOTAL MKD catch Kg (MKD/Kg) Carp Cyprinus carpio 4,000 35 cm 300 1,200,000.00 Prespa chub Squalius perspensis 3,000 25 cm 200 600,000.00 Prespa barbel Barbus prespensis 200 20 cm 300 60,000.00 Prespa nase Chondrostoma prespense 200 25 cm 250 50,000.00 Prespa roach Rutilus perspensis 6,000 15 cm 250 1,500,000.00 Prespa bleak Alburnus belvica 18,000 12 cm 40 720,000.00 Prussian carp Carassius gibelio No limit (5,000) No limit 30 150,000.00 TOTAL 31,400 (+5,000) 4,280,000

Table 3. Market prices and values of ﬁsh species in small-scale ﬁshing (data from Hydrobiological Institute, Ohrid) Total Economic Valuation 9 Assessment 33

Recreational fishing Assessment. Conversations with local experts indicate that a number of recreational fishermen Valuation considerations. The market value drive to ENP from neighboring towns of Bitola, of fish represents only one portion of the total Skopje, Prilep. This crowd tends to spend one or measurable value of recreational fishing: it more nights in the fishing area especially during measures the portion captured by market the summer (not limited to weekends). It is transactions. Typically though, the potential assumed that the number of visiting fishermen is value of recreational fishing is higher than the at least equal to the number of local small-scale market value due to the fact that recreational fishermen. It was assumed that a minimum fishermen are willing to spend time and money of 60 recreational fishermen access the Lake for the fishing experience. Time spent traveling within ENP’s border at least once a year for the and travel expenses can reveal one part of the duration of a weekend (2 nights and three days) value of the fishing experience. It is known from areas such as Skopje or Bitola. An average that recreational fishermen value their fishing distance from Skopje and Bitola to ENP was experience more than what they actually end used to calculate fuel expenditures (end trip up paying for it. This “extra” value, which is not point is assumed to be Asamati). The value of captured in the travel expense receipts, is called time invested traveling and fishing was assessed consumer surplus and is normally measured based on average wage figures of 1.875 USD per through contingent valuation or a travel cost hour. Room and board was assumed to be 25 analysis. Both methods require surveys of euro per day. visiting fishermen. The first method would ask respondents about their willingness to pay for Results. An estimated 305,947.64 MKD is the their fishing experience and the second would value of time and expenses devoted by regional generate a consumer demand curve based fishermen to fishing in the vicinity of the park. on visitation and travel cost data. This study These calculations are highly conservative. For chooses to apply a simplified travel cost method example it is likely that recreational fishermen in which only time spent traveling and fishing, return to their fishing sites more than once a and expenses for fuel, lodging, meals and fishing year. More detailed information would be needed licenses are included. on recreational fishing licenses and sport fishing visits from outside the basin.

Spawning habitats habitat that is lost due to environmental degradation, a corresponding amount of fish ENP wetlands can serve as spawning, feeding, stock is lost, with consequent losses for the or refuge areas, resulting in increased growth fish industry (see Barbier and Hanley 20099 for of stock, increased numbers of fish and/or fish methods). The role of the reed belt in supporting weight. the fishery of Lake Prespa could be evaluated from studying the ecological effects of changes Ecology. Spawning habitats for the carp and in the size or quality of the spawning habitat on other species include the reed belt and shallow the fish population. Changes in the fish adult water (20 m max) with submerged vegetation populations can then be evaluated monetarily (e.g. Potamogetum ssp). Altogether this area based on the market prices of the species. This comprises a belt of 1 Km from the shoreline for approach has two limitations: 1) it requires a the whole extension of ENP’s shore and a belt thorough assessment of the dependence of of 50 meters from the island of Golem Grad in adult fish populations on the size and quality of the Prespa Lake. This area will be signaled in the spawning habitat; and 2) it places excessive the near future using buoyancies; fishing and importance on the market value of fish species any other disturbance will be forbidden for three ignoring the fact that a loss of the spawning months between April 1 and June 30. habitats would not just affect a few commercially valuable species, but a whole range of rare The reed belt is expanding. This change is endemic species of national and global favorable for the carp but it might not be ideal for significance. other fish species who need a variety of habitat conditions. Due to changes in the level of the The replacement cost method uses estimates lake, the Prespa bleak of is nowadays spawning of how much it would cost to achieve the in the middle of the lake instead of near the function performed by the spawning habitats coast. The carp is experiencing similar changes through artificial, man-made infrastructure. with variations from year to year as per locations It is assumed that if the spawning habitats chosen for spawning. disappeared due to poor management and water quality degradation, artificial restocking would Valuation considerations. Based on have to be put in place. In reality, no artificial conversations with senior personnel at the restocking can be assumed to possibly substitute Hydrobiological Institute in Ohrid, the spawning natural spawning habitats. At the most, it was habitats inside ENP are deemed essential for argued by Mr Spirkovski of the Hydrobiological most commercial and non commercial fish Institute, the artificial restocking could supply species. It is therefore assumed in this study one fifth of this ecological function for just that ENP wetlands are critical for the survival the carp. In general, for the application of a of the fish stock. Under this assumption, if this replacement cost method a number of conditions habitat is lost, the fish population and fisheries should be met10: depending upon these habitats would be put at risk of collapsing. 1. the alternative considered provides the same services Two valuation approaches would be possible in 2. the alternative compared for cost comparison this case: 1) production function method and 2) should be the least-cost alternative replacement cost method. 3. there should be evidence of demand for the service if it were provided by that least-cost In the context of this study, the first method alternative. assumes that per any amount of spawning

9 Edward B. Barbier and Nick Hanley. Pricing Nature: Cost-Beneﬁt Analysis and Environmental Policy-Making (1 ed). London: Edward Elgar, 2009. 10 Shabman, L.A., and S.S. Batie. 1978. The economic value of coastal wetlands: A critique. Coastal Zone Management Journal 4: 231-237 Total Economic Valuation 9 Assessment 35

One example of well accepted application of scale fishing based on the fact that 4% of the the replacement cost method is that of the surface of the Macedonian Prespa Lake falls protection of the Catskills watershed in New York within the park’s borders. state, USA as opposed to the building of a new water filtering facility for providing clean drinking water to the population of New York City. In that Ecosystem service Value (MKD) case it turned out to be cheaper to protect the drinking water supply by halting environmental Commercial fishing 22,670,000.00 degradation and increasing conservation efforts. Non-commercial fishing In the case of ENP, degradation of the spawning small-scale fishing 4,280,000 habitats might be addressed at least partly by the recreational fishing 305,947.64 increased protection, but the issue will remain (year 1) 20,684,819.18 of how to approach water quality management Spawning habitat for healthy fisheries at the watershed scale. (year 2) 2,110,747.25 The replacement cost approach in this context TOTAL 29,366,694.89 needs to be seen as a demonstration exercise of the costs involved in substituting nature in the Table 4. Economic Value of the Fishery in Lake Prespa provision of a particular ecosystem service.

Assessment. The replacement cost of constructing a restocking facility for the carp would be around 300,000 EUR. Maintenance costs are estimated at one third of building costs per year.

Running the operation 24 hours a day would require 12 permanent staff persons on 8 hours shifts. The average salary was assumed to be 300 USD per month (based on estimates from ENP personnel). Additional 120 person-hours would needed during the hatching of the eggs (2 days). The hourly wage was assumed to be of 1.875 USD (based on a monthly salary of 300 USD, as per suggestions by the ENP personnel).

Results. Altogether artificially restocking one fifth of the carp stock would require annual personnel costs of 2,049,269 MKD. The costs of replacing the natural spawning habitats would be highest in the fist year when both construction and operation costs would occur for a total of 20,684,819.18 MKD.

Table 4 presents a summary of all values for the fishery in Lake Prespa, including commercial, non-commercial, and value of spawning habitat. The total value of the fishery is estimated to be 47,400,767.62 MKD. It is not known at this moment what levels of fishing could be done within the borders of ENP according to the management plan. It could be assumed for the time being that the economic benefits of sustainable fishing would amount to 4% of the total allowed catch for commercial and small- Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 36 the Ezerani Nature Park

9.1.2 Hunting

Hunting was excluded from the calculations animals for hunting are wild boars, partridges, due to lack of data regarding the current turtledove, ducks, wolf, fox, as well as other bird (unpermitted) use of ENP by the local population species. Some of these species are moving in for hunting. Hunting will not be permitted as part and out of ENP. Unfortunately, the authorities do of the comprehensive management plan of the not keep any records about hunting, which may protected area. be of use.”

A hunting facility is located in the vicinity Recommendations for future calculations of Asamati. It is likely that ENP serves as a reservoir of hunting species for it. Due to While banned in ENP, hunting might keep the lack of data on the abundance of hunted happening in the vicinity of the park. ENP might species, on the movement of such species to the provide hunting facilities with species and bordering hunting area and on the number of might inadvertently be the source of economic animals collected, it is impossible at the moment revenues for these facilities. Whether these to estimate the impact of ENP on hunting revenues can be considered an economic value opportunities and relative revenues in the area. that ENP brings to the local economy will depend Most importantly, it is not clear at the moment on whether the hunting is sustainable. A few what effects hunting right outside the border of recommendations are provided below to help ENP might have of the abundance and behaviors evaluate the inclusion of such values in future of the species at ENP. The UNDP personnel calculations. provided the following information regarding hunting in the region (not in ENP): ǩ Establish whether the presence of a hunting facility in the vicinity of the park is “There are three game hunting facilities in compatible with conservation goals Prespa. The ﬁrst one is in the vicinity of Brajcino ǩ If not compatible, evaluate the potential to village, the second one in the vicinity of Krusje, turn this facility into a biodiversity education Petrino and Evla villages, and the third one is and wildlife viewing area along the shoreline of the Prespa Lake (including ǩ Assess abundance of hunted species the villages of Pokrvenik and Grncari which ǩ Assess role of ENP as reservoir for hunting are located next to the village of Asamati). facilities in the region and in the proximity of The latter facility is most likely bordering the park ENP, although no precise information on the ǩ Establish allowable quotas for each species boundaries of this game hunting facility exists. and regulate license numbers accordingly Concessions are issued for the management ǩ Establish monitoring of species abundances of the hunting facilities. Currently there is a and movement private concessionaire issuing hunting licenses ǩ Establish enforcing of hunting quotas to hunters. The collected animals can be owned ǩ Update report to include the economic by the hunters, subject to payment of certain fee contribution of hunting to the regional to the concessionaire. There is a price list for facilities in case ENP results a signiﬁcant different animals. (e.g. partridge = 25 EUR per source of game species and the hunting is animal, wild boar = 300 EUR). The most attractive sustainable Total Economic Valuation 9 Assessment 37

9.1.3 Hay production

According to the Ministry of Agriculture there is of 192,000 Kg of hay are required each summer virtually no cattle in the villages bordering ENP: for the whole herd (2 kg x 800 sheep x 4 months x only 3 to 4 cows are reported for the village of 30 days = 192,000 Kg hay), corresponding to 7,680 Perovo. A herd of around 800 sheep is known to bales of hay weighting 25 Kg each. Prices for hay graze in the grasslands of ENP (area of Drmeni range from 70 – 80 MKD (1.13 – 1.3 EUR) per bale. and Perovo villages) during a period of 4 months in summer. Results. When using the average price per bale of 75 MKD, the total market value of hay is of Assessment. The reported feed needs per sheep 576,000 MKD (approximately 9,266 EUR) . are estimated to be of 2 kg of hay per day. A total Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 38 the Ezerani Nature Park

9.1.4 Reed collection

larger number of species. In addition, removing reed biomass might be a relevant strategy for nutrient management11. Excessive phosphorus and nitrogen stored in the roots and stalk of the plant can be removed from the system and used elsewhere as compost and fertilizer.

Reed as fuel. Reed biomass can be compacted into pellets that can then be used as fuel in stoves. This option is being pursued in a pilot project in the Albanian side of Lake Prespa funded by KfW Bank for which data are unfortunately not available at the time of this writing.

As a point of comparison, a pilot study funded by the German non-governmental organization EURONATUR in 2008 resulted in the successful production of reed pellets by one harvester at Narew National Park in Poland. The harvester obtained a concession from the park. Twenty hectares of reed were harvested and all pellets generated were sold within the same season12. Reed beds’ productivity can range from 15 to 40 tons of dry matter per hectare per year. Energy production can reach up to 42 MWh per hectare Reed collection was not included in the per year. Harvest is done in winter when moisture calculations of current or future values due to content in the ﬁbers is at its minimum (around lack of data. 20%).

Uses. Reed has been traditionally collected by the local population for thatched roofing. With the Recommendations for future calculations decline of this building practice, reed has become a less important part of the rural economy. Reed The economic impacts of producing reed pellets is often burned to clear land for cultivation. can be assessed once the following information is available: Management. While the reed belt is very important for a number of species at ENP, ǩ Area that can be sustainably harvested several local scientists have reported that this without impacting wild species vegetation type has kept increasing in size due to ǩ Efficiency conversion factors from dry recent hydrological changes at the expenses of biomass to weight of pellets other vegetation covers that can host or attract ǩ Costs of production a varied number of species. A reduction in reed ǩ Market prices biomass is considered beneficial by local experts as a way to diversify habitats for sustaining a

11 Hansson L-A and W Granéli. 1984. Effects of winter harvest on water and sediment chemistry in a stand of reed (Phragmites australis). Hydrobiologia 112 (2): 131-136 12 Biemans, M., Y. Waarts, A. Nieto, V. Goba, L. Jones-Walters, C. Zöckler (2008) Impacts of biofuel production on biodiversity in Europe. ECNC–European Centre for Nature Conservation, Tilburg, the Netherlands. Total Economic Valuation 9 Assessment 39

9.1.5 Sand extraction

Sand for construction is one of the most permission every day from ENP (Branch Ofﬁce of commonly reported extractive activities of ENP. Ministry of Agriculture). It is not clear whether this It has been proposed in various occasions that level of extraction is compatible with conservation. a designated area for regulated sand extraction The average retail cost of sand in the area is should be made available in a low conservation currently of 20 euro per cubic meter. priority area so as to avoid illegal extraction in other more sensitive areas of the park. Results. Overall, unregulated sand extraction results in lost revenues from ENP public land Assessment. At the moment it is estimated that of around 182,000 EUR per year (11,336,626.30 about 25 m3 of sand is being extracted with no MKD).

9.1.6 Research opportunities

Lake Prespa and Lake Ohrid are very well studied non globally referenced journals. A conservative due to their ancient origin, interesting limnology estimate of 48 studies published over 28 years and geomorphology, and high biodiversity. ENP in the Macedonian side of Lake Prespa results is a site of nationally and globally recognized in an average of 1.7 studies per year. It is safe to interest and it provides research opportunities assume that at least 1 study per year on average that contribute to the regional and global welfare is carried out at ENP. of knowledge across multiple areas of the natural The economic value associated with one study sciences. per year at ENP was assumed to be expressed by the work- and travel time and travel expenditures Assessment. This study estimated the economic of university professors and research associates. value associated with research opportunities at It was assumed that on average a team of 3 ENP. This was achieved by first searching the people would visit ENP from Skopje twice a year, reference browser Web of Science to assess spending two nights at a local accommodation at how many studies of international relevance a subsidized rate of 1,000 MKD (inclusive of room were published in the Prespa region. The search and board). Two weeks minimum would be spent returned 121 studies done in the Prespa region per person on laboratory and/or data analysis, from 1984 to 2012. The large majority of the and an equal amount of time for manuscript studies were published by Greek teams on the writing and/or presentation. Greek side of the lake and on Lake Micro Prespa. With the restoration of the former fish ponds, This is especially true until the mid 1990s when more studies are expected to be developed as part studies by Macedonian teams started to become of monitoring and research. It is estimated that at more common. Studies from Albanian teams and least 2 additional studies would be carried out at on the Albanian side of the lake are very limited ENP as a result of the restoration activities. and tend to focus on the cultural, anthropological interest of the region. Results. The overall estimated cost of 1 year of study at ENP is 149,819.66 MKD (or 2,412.10 Altogether, 24 internationally referenced studies EUR). This value represents a very conservative can be ascribed to the Macedonian side of estimate of the investment that national research the Prespa lake for the period 1984 - 2012. It institutions deem worth doing based on funding is expected that at least an equal number of availability and priorities. The projected annual studies has been published in Macedonian value of research activities with the restoration scientific journals, or in proceedings of national of the fish ponds would be of 299,639.33 MKD (or and international conferences, or as articles in 4,824.19 EUR). Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 40 the Ezerani Nature Park

9.1.7 Education opportunities

Each year in early June students from the Institute lodging and meal expenditures for the yearly of Biology (School of Natural Sciences in Skopje) education trip amount to 430,734.10 MKD. Other visit ENP as part of their academic requirements. education-related expenses would include the This two-week research work is mandatory time spent by professors and students in the for the second year students within the course ﬁeld and traveling. This amount of time was not ‘Systematics and phylogeny of higher plants ’. A converted into monetary ﬁgures though because group of 26 students with 4 professors stay in a it was considered to fall under the normal hotel in the village of Pretor for a total of 14 nights requirements for college level students (for which spending 1,000 MKD per day for full board. The they do not receive a salary). It was assumed visitation from students and instructors is likely to that the visitation level from students at different increase at ENP as a result of more accessibility school levels would increase to 300 per year over and more education activities for a wider range of the next 20 years. school levels. Results. In total, spending associated with Assessment. The value provided by ENP in the education opportunities amounts to 6,934.82 EUR form of education opportunities was assessed per year. The visit of 270 students in addition to through visit expenditures. The amount of 1,000 current visits would bring 62,586.19 additional MKD per day for full board was multiplied by EUR to the local economy each year. the visitors’ number of nights in the area. Fuel,

9.1.8 Wildlife viewing

The Macedonian Ecological Society (MES) reports Assessment and Results. An estimated 20 that two travel agencies (one from the Czech birdwatchers come to ENP spending an average Republic and the other from Bulgaria) are offering of 2 to 3 days at ENP (60 overnight stays). The holiday packages to the Republic of Macedonia economic value associated with bird watching including bird watching at ENP. About 10 tourists tours is of 109,949.70 MKD (or 1770.19 EUR ) visit the area in June. Additionally, between 5 and based on a room and board price of 25 EUR 10 scientists and other people may visit the area per night, and a gross margin of 18% for the for bird watching in a year. The restoration of the tour operator. The number of birdwatchers was ﬁsh ponds is expected to bring potentially new assumed to reach 1,000 individuals over the next visitors to ENP due to increased bird presence 20 years. This projection is certainly reasonable (related to a higher surface of inundated wetland) for the park and can be considered quite and improved access and visibility from the conservative. Applying the same reasoning as per embankments. Visitation is also projected to the current visitation, the projected visitation rates increase as a result of increased proﬁle for ENP would generate an additional 86,739.35 EUR per and Lake Prespa consequent to investment year. in regional and transboundary development activities. Personnel of the Society for the Protection of Prespa on the Greek portion of Lake Prespa reports that between 15% and 20% of the visits to the Prespa National Park are from tours that include a one day stop with the wetlands as major nature attraction (total visits are in the range of 6,000 to 10,000 visitors per year). Total Economic Valuation 9 Assessment 41

9.1.9 Flood mitigation

The wetlands of ENP are not thought to provide fact irrigation in the past was done by temporarily flood mitigation benefits in their current status flooding the fields), but it results in leaching of due to the fact that they are located at the end fertilizers, requiring additional applications. The of the catchment, downstream of all villages. flood water on average sits on the orchards for Diverting part of the overflow of the Golema River four days. to the former fish ponds during flood events might result in flood control services. Too little data are Another damage that was reported is the flooding available at the moment on local flood dynamics of houses and storage spaces where apples are to predict whether the restoration could bring kept. This damage totals around 60,000 MKD in substantial savings from avoided damages from each flood event. An average 20 tons of apples are recurrent floods. The flood mitigation value was damaged each season with the resulting in apples therefore not included in the calculations. This of reduced quality and price. The damaged apples section nevertheless discusses current economic are sold for making juice concentrate, which is losses from flood events at ENP to inform three times less profitable. Prices of apples are 18 potential future calculations. MKD per Kg for top quality apples and only 5 MKD per Kg for juice apples. Based on these figures, “The main problem with floods in the area is loss of apple quality due to floods causes a loss that people have occupied the floodplain” stated of around 260,000 MKD (4,186 EUR) during each Mr Murati in a meeting in Resen during the field flood event. visit in this project. Between 300 and 400 hectares of apple orchards The overall cost of reapplying fertilizer following were flooded in the Ezerani area in the last three a flood event is estimated at 15,000 - 20,000 EUR years. Most floods occur in November and April. (the application of fertilizer costs between 400 and Flooding per se does not damage the orchards (in 500 euro per hectare).

9.1.10 Sediment, nutrient and contaminant abatement

It is not known to what extent the wetlands of ENP Biofiltering capacity. Both natural and are contributing to reduce the load of sediments constructed wetlands are known to be particularly and pollutants that reach Lake Prespa as a result effective at trapping sediments (often measured of soil erosion and heavy uses of fertilizers and as total suspended solids), reaching sometimes pesticides in the lower part of the catchment. It almost complete removal13. Constructed wetlands is expected that increasing the residence time were reported to trap between 39% to 100% of of wastewater and runoff water through the pesticide inputs from vineyards14 in France. The restoration of the former fish ponds can help efficiency of pollutant load removal is known remove pollutants from water. The performance to change depending on the size and type of of the restored fish ponds as biofilters is hard to constructed wetlands (e.g. dominant vegetation, estimate but the numerous studies existing in the residence time of the water, climatic conditions literature can provide useful indications. etc). Natural wetlands in the United States

13 Díaz, FJ, O’Geen, AT.; Dahlgren, R A. 2012. Agricultural pollutant removal by constructed wetlands: Implications for water management and design. Agricultural Water Management, Feb, Vol. 104, p171-183

14 Maillard, E; Payraudeau, S; Faivre, E; Grégoire, C; Gangloff, S; Imfeld, G. 2011. Removal of pesticide mixtures in a stormwater wetland collecting runoff from a vineyard catchment. Science of the Total Environment, 409, 11: 2317-2324. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 42 the Ezerani Nature Park

are estimated to remove 20-21% of the total ton of N or P in the lake are associated with the anthropogenic load of N to the region and roughly costs of increased eutrophication which poses 17% worldwide15. a threat for biodiversity, fish stocks and public health. Likewise, the costs of pesticide can also Average efficiency of removal of Total Nitrogen be related to the negative effects on biodiversity, from agricultural runoff by constructed fish stock, and public health. The difficulty in wetlands in California, USA has been reported conducting this type of economic valuation to be around 50%16, a value that is confirmed lies in the need for establishing a quantifiable by other studies in the literature17. Removal relationships between loads of pollutants and of phosphorus generally shows the highest either biodiversity, the fish stock or public health. variation in the literature, ranging at times Even when the relationship could be established from 73 to 56% among different constructed the challenge would remain of assessing the wetland designs18. Decomposition of biological economic cost of biodiversity loss and the public material is one source of P in wetland effluent, health costs (loss in the fish stock would be indicating that wetlands might be ineffective for comparatively easier). permanent P removal if some level of vegetation management (harvesting) is not performed19. Assessment. For the reasons mentioned above, the calculation used a simplified replacement Valuation considerations. The economic values cost method in which it was assumed that of the biofiltering functions of ENP’s wetlands wastewater and runoff water reaching the fish should ideally be assessed based on the ponds would be treated for nutrient removal amounts of sediments, nutrients, and pesticides with the same efficiency as if the removal was trapped by the wetland through biochemical and performed by the WWTP, only at no cost to the biophysical processes. This can be accomplished WWTP. in a human-controlled wetland by measuring the concentrations of these inputs in the water The interview with senior personnel at the coming into the wetland and the water coming WWTP revealed that treating wastewater for N out (in natural wetlands these measures are and P removal would result in tripled costs of extremely difficult to obtain). Alternatively the utility bills. It was therefore concluded that estimates from the literature can be used. With the use of the fish ponds for nutrient abatement these estimates at hand the valuation could would save the municipality of Resen twice the then establish the savings from having reduced amount that is currently charged for wastewater loads of sediments, nutrients and pesticides treatment. The savings for avoided wastewater in the lake. Ideally, the cost of each ton of the treatment are based on an annual volume of loads mentioned above should be known. For treated water of 1,200,000 m3 and the cost of example costs associated with sediment loads additional treatment on top of primary and are related to increased turbidity in the water secondary treatment. This cost is estimated as and reduction of the volume of water in the being twice as much the cost of 11.23 MKD per lake. Turbidity is known to affect negatively each cubic meter of water for residential use. biodiversity while build up of sediment at the The same cost could be applied to the volume of bottom of the lake might require expensive water that would reach fish ponds 2 and 3 during sediment removal. The costs of each additional flood events in the Golema River, when flow rates

15 Jordan SJ, Stoffer J, Nestlerode JA. 2011. Wetlands as Sinks for Reactive Nitrogen at Continental and Global Scales: A Meta- Analysis. Ecosystems, 14, 1 : 144-155 16 Kadlec, R.H., Roy, S.B., Munson, R.K., Charlton, S., Brownlie, W., 2010. Water quality performance of treatment wetlands in the Imperial Valley, California. Ecological Engineering 36, 1093–1107 17 See for example Díaz et al. 2012 and references therein. 18 Díaz, FJ, O’Geen, AT.; Dahlgren, R A. 2012. Agricultural pollutant removal by constructed wetlands: Implications for water management and design. Agricultural Water Management, Feb, Vol. 104, p171-183 19 Smith, E., Gordon, R., Madani, A., Stratton, G., 2006. Year-round treatment of dairy wastewater by constructed wetlands in Atlantic Canada. Wetlands 26, 349–357. Total Economic Valuation 9 Assessment 43

would reach between 2 and 2.5 m3/sec. In this Results. Annual savings from not having to treat case, the total spill of flood water in the fish ponds wastewaters for N and P are of 26,952,000 MKD would be of 4,082,400 m3. These values were or 433,927.20 EUR. The number is the result derived from the calculations of different flood of multiplying 1,200,000 m3 of water receiving scenarios in the revalorization study (pag 241). primary and secondary treatment X 11.23 MKD (cost of the treatment of each m3) X 2 (double cost No estimates were obtained for the trapping of of removing N and P compared to the baseline). sediments and pesticides that are expected to Annual savings from not having to treat runoff occur (at least to some level) in the ENP wetlands water in coincidence with high flow rates values alongside with the abatement of nutrients. The of the Golema River (under the assumption of one estimate of the value of nutrient abatement is flood per year) would be of 91,700,592.60 MKD or to be considered highly conservative given that 1,476,220.33 EUR. it does not include saved costs of biodiversity loss, reduced fish stock and public health costs.

9.1.11 <&$/"'&5=>5")&5%)/"(/;*.#/$8%#/>'/+7&'7*

No data are available on the willingness by Spending for conservation activities can be used national and international citizens to pay for as indication of the society’s willingness to pay for the conservation, monitoring and education the non-use value of biodiversity. This spending is activities necessary to protect biodiversity at ENP. discussed in detail in section 10.4. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 44 the Ezerani Nature Park

9.1.12 Summary of values of goods and services of ENP in its current state

The annual value of ecosystem goods and services park, rather than a benefit provided. Indirect at ENP is currently 286,271.66 EUR (Table 5). The value of fish spawning habitat is estimated to be direct use value of (unauthorized) sand extraction 32,993.23 EUR per year. The figure reflects the from the park is the highest of all calculated cost of artificially restocking part of the current values, amounting to 182,500 EUR per year. This carp stock. Direct value of hay to sheep herds in value is 8 times higher than the value of fishing the park is estimated at 9,273.60 EUR per year. within the borders of the park (22,281.56 EUR). Economic values from visitation for education Without specific information on whether this level activities (6,934.82 EUR), research (2,412.10 EUR) of extraction is sustainable, this figure should and wildlife viewing (1,770.19 EUR) altogether be interpreted as an indication of a demand for contribute to 4% of the total economic value, the resource and a current lost revenue to the based on very conservative assumptions.

Type of value Ecosystem Service Approach Annual value Direct use Fishing Market values, simplified travel cost 22,281.56 € Hay Market values 9,273.60 € Sand Market values 182,500.00 € Research opportunities Simplified travel cost 2,412.10 € Education opportunities Simplified travel cost 6,934.82 € Wildlife viewing Simplified travel cost 1,770.19 € Indirect use Nutrient abatement N/A N/A Contaminant abatement N/A Sediment trapping N/A N/A Replacement cost, cost of artificially Spawning habitat 32,993.23 € restocking 1/5 of the carp stock National/global biodiversity Non-use N/A N/A significance TOTAL 286,271.66 €

Table 5. Annual economic values of ecosystem goods and services at ENP in its present state Total Economic Valuation 9 Assessment 45

9.2 !"#$#%&'(%)*'*+$#%",% ecological restoration

The full cost - full benefit analysis compared (year 0 through 20). See Table 6 for a more the costs and the benefits of the establishment detailed description of the actions associated of a tertiary wastewater treatment in fish pond with each cost. 1 (action 414b in the WMP). The cost-benefit ǩ Opportunity costs to apple farmers were analysis was based on the following data and based on the per hectare productivity of assumptions: orchards (30,000 Kg per ha), market prices for prime quality apples (18 MKD per Kg), ǩ The time frame for the assessment is set to costs of fertilizers (250 EUR per ha) and 20 years pesticides (400 EUR per ha), and total area of ǩ The average expected inflation rate in the orchards in the fish ponds (25 ha). Republic of Macedonia is set to 3% based on ǩ The following benefits were included: recent projections20 1) savings from not having to treat ǩ The cost of capital for a period longer than wastewater for N and P, 2) increased value Type of value Ecosystem Service Approach Annual value 5 years is 8.9% for domestic loans and 7.3% for wildlife viewing, 3) increased value Direct use Fishing Market values, simplified travel cost 22,281.56 € for foreign loans (2011) for research and education. The benefits Hay Market values 9,273.60 € ǩ Three different discount rates were used: from saving on wastewater treatment are Sand Market values 182,500.00 € a minimum of 3% as in the case of solely assumed to take 5 years to fully manifest. Research opportunities Simplified travel cost 2,412.10 € accounting for minimum projected inflation, A linear function was used to express the a 8% rate for domestic long-term loans, and benefits as fractions of the final target Education opportunities Simplified travel cost 6,934.82 € a 7.3% rate for foreign long-term loans. number over the project life. Wildlife viewing Simplified travel cost 1,770.19 € ǩ The following costs were included: a) Indirect use Nutrient abatement N/A N/A design/surveying costs (year 0), b) building Wildlife viewing is expected to improve due to Contaminant abatement N/A materials and labor (year 0), c) operation increased wetland area and improved access/ Sediment trapping N/A N/A and maintenance costs (year 1 through 20), visibility to the restored fish ponds. Visitation is d) land owner compensation costs (year 1), also arbitrarily estimated to increase over the Replacement cost, cost of artificially Spawning habitat 32,993.23 € restocking 1/5 of the carp stock and e) opportunity costs for apple farmers next 20 years to a total of 3,000 visits per year National/global biodiversity Non-use N/A N/A significance TOTAL 286,271.66 €

20 Pre-Accession Economic Program 2009 - 2011 Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 46 the Ezerani Nature Park

as a result of improved proﬁle and increased a minimum of 3 studies per year as a result of investment in tourism initiatives in the region monitoring and modiﬁcation of habitats (see as described in the Tourism Management Plan. section 10.1.6). Similarly, the value of education The method for estimating the economic value of is projected to increase to reach 300 visits per increased wildlife viewing is described in section year (see section 10.1.7 for methods). 10.1.8. Research activity is expected to reach

Actions Items Cost EUR Specifications 4,500 m3 to be restored (300 m out of the Restore embankments 9,000.00 total length of 7.5 km) Intake structure Connect WWTP to Fish Pond 1 30,000.00 and gate Connection canal 80,000.00 Concrete lined, 800 m long, Q of 3 m3/sec Pipeline 20,000.00 500 m long, 300 mm thick Manholes 6,000.00 Minimum 5 Pump station 4,000.00 TBD Connect Golema River to Alder Small canal 6,000.00 Unlined, 300 m long forest Build/restore inflow and outflow High board risers 12,000.00 12 in all three ponds apparatus Landowner compensation 120,750.00 Electrical pump Annual operation costs 5,000.00 usage Gate valve 600.00 (manpower) Annual maintenance costs Canal cleaning 500.00 General 4,500.00 maintenance Technical design and geodetic 7,300.00 survey Expert review of technical design 2,700.00 Ecological assessment 4,000.00 Annual opportunity costs 16,087.86 TOT inception costs 301,750.00 Maintenance and operation + annual opp. TOT annual costs 26,687.86 costs in year 1

Table 6. Costs included in the CBA Total Economic Valuation 9 Assessment 47

9.3 -*#45$#%",%,455%7"#$%6%,455%)*'*+$%&'&58#/#

The analysis shows that the benefits that the increase in the number of birdwatchers visiting restoration of the fish ponds would bring over the area from 20 to 1,000 over the course the next 20 years are 9 to 6.5 times higher than of fifteen years. Overall inception costs are the costs when different discount rates are estimated to be 295,750.00 EUR while annual used. The Net Present Values of the restorations operation and maintenance costs would amount range from over 6 million EUR (3% discount to 10,600 EUR in the first year. Yearly opportunity rate) to over 3.6 millions EUR (8% discount rate) costs from lost revenues due to changed to around 4 million EUR (7.3 discount rate). ownership are estimated to be of 16,087.86 EUR Building and operation/maintenance costs are on year one. entirely offset already by a perfectly plausible

Years to 3% Discount 8% Discount 7.3% Discount Type of cost or benefit cost or rate rate (domestic) rate (foreign) benefit Construction and maintenance costs - 332,701.23 € - 279,072.36 € - 284,725.07 € 0 Land acquisition costs - 120,750.00 € - 120,750.00 € - 120,750.00 € 0 Landowner opportunity costs - 239,346.73 € - 157,952.98 € - 166,532.23 € 0 Total costs 692,797.96 € 557,775.34 € 572,007.30 € Research opportunities benefits 76,596.01 € 52,188.83 € 54,761.45 € 0 Education opportunities benefits 443,348.45 € 246,927.35 € 266,640.83 € 20 Wildlife viewing benefits 769,269.51 € 435,577.12 € 469,349.64 € 15 Nutrient abatement benefits (wastewater) 5,637,349.69 € 3,514,144.03 € 3,736,132.39 € 5 Total benefits 6,926,563.66 € 4,248,837.33 € 4,526,884.31 € TOTAL net benefits 6,233,765.70 € 3,691,061.99 € 3,954,877.01 €

Table 7. Costs and beneﬁts of restoration action over 20 years using different discount rates Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 48 the Ezerani Nature Park

9.4 9:*7$/;*%7"'#*.;&$/"'%;*.#4#% business as usual scenario

The economic values of ecosystem goods and nutrient abatement in Table 8 is the value from services were compared for the business as the increased filtering surface of the wetland usual and the effective conservation scenario (additional to the baseline). over the time frame of 20 years and adopting different discount rates (3%, 7.3% and 8%, To assess the projected net benefits of effective see also section 10.2). Values of effective conservation over the next 20 years, costs conservation reflect the value of having were subtracted from benefits. Only the costs additional education, research or bird watching of effective conservation were included. Such visits to the area (the projected increase in value costs included the restoration costs listed in was added to the baseline). Table 6, inception costs for establishing the park management body and staff (42,745.50 EUR ), Under the two scenarios, fishing and collection annual park operation costs (8,050 EUR), and of hay are not expected to change. Reed investments in future conservation education and collection might be developed on a small capacity building activities (380,000.00 between business scale in the future but it is difficult to 2012 and 2017 and then every five years). As with estimate at the time of this writing the allowed benefits, costs of conservation were calculated sustainable harvest amounts and marketability over 20 years at different discount rates (see potential. Sand extraction might be significantly above). Costs of the business as usual scenario reduced in the future so it was not included in were set to zero because no governing body is the effective conservation scenario. Research actively managing the protected area. On the and education opportunities, wildlife viewing and other hand it is expected that the unregulated nutrient abatement are expected to increase as use of the park area under the business as usual discussed in the Cost-Benefit Analysis section. scenario would bring societal costs that are at The value of nutrient abatement from flood water the moment not quantifiable. These costs can was not included in the calculation of benefits be substantial as discussed in the larger context and is only listed as hypothetical. The value in the section on the costs of policy inaction refers to the possibility of excess water from (section 11). the Golema River to reach Fish Ponds 2 and 3. This value entirely depends on precipitation Results. The total value of ecosystem goods conditions an is therefore quite unpredictable. and services under the effective conservation By contrast, it can be assumed that if the tertiary scenario over 20 years amounts to 8,143,656 wastewater treatment was built at Fish pond EUR, more than twice the value of the baseline 1, water will certainly reside in it allowing for (3,277,657 EUR). This is mostly attributed to some level of natural filtration. The wetlands of 1) saved costs of wastewater treatment from ENP in the present state function as biofilters the re-activation of the former fish pond, and for nutrient and pollutant abatement at a level 2) increased visitation for nature tourism, that is not currently known. The expected result education, and research (Table 8). The costs of the restoration of one of the fish ponds for associated with effective conservation amount wastewater treatment is an added biofiletring to half of the benefits (4,186,553 EUR) and are capacity that instead can be measured from expected to be born mostly by foreign agencies. the saved costs of treatment. The value of Total Economic Valuation 9 Assessment 49

Effective conservation is also expected to carry business-as-usual scenario in Table 8 reflects positive effects on the protection of biodiversity the fact that no investment is being placed on and on the reduction of loads of pollutants and restoration or other conservation measures. In sediments to the lake due to restoration actions. reality, the business as usual scenario might These benefits, despite being of the highest have significant negative effects on biodiversity importance, are the most challenging to capture and water quality resulting in high societal costs and were not included in the calculation (see which are not easy to measure (see section above). The zero conservation costs under the below).

Type of value Ecosystem Service Baseline value Effective conservation value Direct use Fishing 893,339.58 € 893,339.58 € Hay 147,241.35 € 147,241.35 € Reed for fuel 0 € N/A Sand 2,897,639.16 € N/A Research opportunities 38,298.00 € 114,894.01 € Education opportunities 110,107.41 € 553,455.86 € Wildlife viewing 28,106.16 € 797,375.68 € Indirect use Nutrient abatement N/A (wastewater) 5,637,349.69 € (runoff 19,178,263.64 €) Flood control N/A N/A TOTAL 4,114,731.66 € 8,143,656.17 € Type of cost Source of funding Baseline cost Effective conservation cost Direct conservation costs Construction and Foreign investment 0 € 332,701.23 € maintenance of ﬁsh ponds Landowner compensation Local/national 0 € 120,750.00 € Capital, maintenance and operation Local 0 € 162,509.17 € Indirect conservation costs Landowner opportunity costs Local/national 0 € 239,346.73 € Capacity building and education Foreign 0 € 3,325,245.99 € Total costs 0 € 4,180,553.12 € Net beneﬁts 4,114,731.66 € 3,963,103.05 €

Table 8. Net Present Values of goods and services at ENR under the business as usual scenario (baseline value) and effective conservation scenario. Only NPV based on a 3% discount rate are included in the table. The value of nutrient abatement in runoff water was not added to the calculation and is only shown as hypothetical (see text for more details). Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 50 the Ezerani Nature Park

10 Costs of Policy Inaction

The Total Economic Value assessment in this study did not have a scope large enough to quantify the societal costs of the business as usual scenario, i.e. the costs of not implementing effective conservation at ENP. This section provides a few pointers to key economic studies that assessed such costs in other parts of the world.

Eutrophication. The costs associated with pesticides, 2.2 billion USD for bird losses due to algal blooms typically include: lost recreation pesticides, and 2.0 billion USD for groundwater opportunity, costs of fishing bans, health costs, contamination. and clean up costs. Soil loss. The capacity of an ecosystem to retain Few studies exist on the costs of eutrophication sediments and prevent erosion depends on and the monetary figures cannot easily be several characteristics, among which vegetation transferred to the Prespa region. Dodds and cover type, soil erodibility, slope, local weather colleagues in 2009 assessed the eutrophication conditions, and management practices. Soil loss costs for the whole United States21 at 2.2 billion from agriculture in the ENP area is estimated USD per year. The costs were related to: reduced to be of 1 to 2 tons per hectare per year. By recreation and angling opportunities (1 billion comparison, a forested, undisturbed soil loses USD), reduced property values of homes (0.3 between 0.004 and 0.05 tons of soil per year - 2.8 billion USD), cost of species recovery (44 versus a heavily degraded pastureland which million USD), and costs of alternative source of can lose 100 tons of soil per ha per year. Part of drinking water (813 million USD). The cost that the lost soil from agriculture or other land uses would be most relevant in the Prespa region is reaches the lake through surface runoff water that of lost biodiversity, which in Dodds et al. was or river transport. Costs generated by the loss assessed from the conservation expenditures of productive soil and sediment runoffs include for the species most directly threatened on-site costs such as reduced agricultural by eutrophication. This value though is not productivity and off-site costs such as damage transferrable to the Prespa region, due to the to roads and infrastructure, filled ditches and differences in wild species and conservation reservoirs, reduced water quality, impact to fish investments. Costs of cleaning excessive growths populations. Reduced agricultural productivity of algae and aquatic vegetation in other US results in loss of revenues from crops and based studies ranged from 1,247 USD to 19,227 in costs of additional fertilizers and water to USD per hectare for mechanical harvest and maintain production levels. In a seminal paper 246 USD to 1,190 USD per hectare for chemical on the costs of soil erosion Pimentel et al. (1995) treatment (see references in Dodds et al. 2009). estimated the costs of lost productivity and additional inputs at 196 USD per ha per year Pesticide compound accumulation. Societal in the US croplands. This figure, which would costs of pesticide use are reported to be correspond to 291 USD today, was based on typically higher than the private benefits to the the average figure of 17 tons of soil lost per ha agricultural sector. In one of the few existing per year. Based on the current estimates of soil studies on the environmental and health costs of loss in the Prespa region, these costs would be pesticide use, Pimentel reports that in the United considerably lower. More accurate quantification States yearly costs are: 1.1 billion USD for public of soil loss and sediment transport could help health, 1.5 billion USD for pesticide resistance in quantify costs and intervention measures. pests, 1.4 billion USD for crop losses caused by

21 W K Dodds, W W Bouska, J L Eitzmann, T J Pilger, K L Pitts, A J Riley, J T Schloesser, and D J Thornbrugh. 2009. Eutrophication of US Freshwaters: Analysis of Potential Economic Damages. Environmental Scence and Technology, 43 (1): 12-19 51

10.1 Perverse incentives and water quality

The problem of water quality in relation to referred to as “perverse incentives” in that they agriculture has a demand side and a remediation result in rewarding the “bads” at the expense of side. The demand side relates to the current the “goods”. An examples from the United States demand (or need) for agricultural inputs such is subsidies to farmers for buying highly toxic as water, fertilizers, and pesticides. Any action pesticides that once applied to the ﬁelds result that decreases the demand for inputs will bring in water body contamination and public health beneﬁcial results for water quality. concerns with overall increase of societal costs.

The remediation side deals with inputs “after It is possible that the Prespa region is affected by the fact”. Any action that reduces the loads perverse subsidies but more research will need of nutrients or pollutants on their way to the to be done. Current policies seem to favor the lake brings beneficial results for water quality. maintenance of existing apple orchards (25,000 The present study focused on the benefits of MKD per hectare per year) and the development remediation by means of ecological restoration. of new ones including in the public land around While the investments for such restorations are ENP (100,000 MKD per each new orchard). These shown to be highly cost-effective, the analysis incentives can be seen as potentially “perverse” of the problem cannot be complete without in that they favor one of the costliest use of land addressing the costs and benefits of reducing as per environmental and public health costs. the demand of agricultural inputs in the area. The solution in case of perverse incentives is Several promising initiatives are ongoing to to shift policies towards rewarding the goods promote targeted use of fertilizers through and taxing the bads, in this case promoting fertirrigation and the optimization of pesticide other crops in addition to apple growing and/ applications through farmers association or incentivizing low input orchards. The water campaigns and assistance programs. One quality issues of the Lake Prespa and Lake Ohrid aspect that seems to be missing from the cannot overall be addressed without inviting current conversations and planning is the role policy-makers from the different agencies of existing policies that promote business-as- responsible for land use regulation and water usual scenarios. Such policies are sometimes resource management at the same table. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of 52 the Ezerani Nature Park

11 Conclusions

The study is a ﬁrst attempt to capture the current and future beneﬁts of ecosystems at ENP using a Total Economic Value approach. A few main conclusions can be drawn from the assessment:

ENP’s wetlands hold the highest value for Wetlands at ENP are currently possibly trapping local communities due to their potential to around 20% of nutrients if estimates from a act as filters for nutrients and contaminants national assessment of the US wetlands hold true at the “strategic end” of the catchment. This in this region. This baseline value is expected to value is particularly important due to the increase with the proposed restoration of one fish declining conditions of Lake Prespa as a result pond for the tertiary treatment of wastewater. But of unsustainable land use practices in the overall it is clear that protecting and enhancing watershed and in particular in the immediate ENP’s wetlands can address only one part of the proximity of ENP. The water purification value of water quality problem. the wetlands is only partly captured by the TEV in this study and would deserve more attention in While many efforts and proposals are ongoing to the form of additional studies. reduce the demand for inputs in agriculture and 53

other intensive land uses, high priority should and contaminants. This restored fish pond also be given to an integrated assessment of the would work similarly to a constructed wetland existing policies that favor business-as-usual in a natural setting, which could reach high practices and land uses, so called “perverse performances if properly maintained. incentives”, which are harmful to both the economy and the environment. A future feasibility study for the restoration of the fish pond(s) should include an ecological Interviews with the stakeholders and the assessment of the possible impacts of increasing workshop at the municipality of Resen made the residence time of waters high in nutrients clear that restoration actions at ENP are and contaminants in the presence of wild deemed necessary. Only one restoration option species. In addition, any intended or accidental was favored by all sources: the restoration of release of fish in the restored fish ponds could former fish pond n. 1 for the tertiary treatment of pose health concerns for the population and the wastewater from the local waste water treatment fish-eating wild species. plant. Opinions then varied on whether priority should be given to restoring the former delta of The scenario of effective conservation at ENP the Golema River and/or restoring the two other is likely to bring tangible benefits in the form former fish ponds as a way to manage floods. of regulated extraction of ecosystem goods The full cost - full benefit analysis in this study and increased visitation for wildlife viewing, shows that the restoration of the former fish education, and research. The benefits would pond n. 1 could be a very cost-effective way result from coordinated actions at the regional to treat wastewater that otherwise would level, such as the implementation of the Tourism reach the lake with its full load of nutrients Plan and persistent foreign investment towards a tri-lateral management of Lake Prespa.

Of particular importance is the coordination among all national parks in the region, especially the Prespa National Park in Greece. The park attracts nature and wildlife tourists who, once the local border between the two countries is re-opened, could travel to both locations with the beneﬁt of extending visitors’ stays in the region.

There are high expectations for the future governing body of ENP at the Municipality of Resen. The shifting of responsibility to a local authority is a highly positive signal in decentralization and participatory governance. The secret to success will lay in maintaining the governing body independent of municipal and regional political agendas that can weaken the conservation mandate.

Finally, turning the attention to the local communities, this study shows that the opportunity costs of conservation and restoration could be affordably offset through speciﬁc compensation mechanisms and regulated sustainable uses of resources. Overall, one of the most important questions, which is only partly addressed in this study, will be how the costs and responsibilities of the effective management of ENP will be distributed among all different sectors. Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of the Ezerani Nature Park photos: Ljubo Stefanov design: APOLOIMAGES

Breaking new grounds in conservation in the Republic of Macedonia: The economic case for long-term protection of the Ezerani Nature Park

Empowered lives. Resilient nations.

This is the country’s ﬁrst ever comprehensive study into the economic beneﬁts of investing in protected areas and nature conservation. It brings stakeholder participation to a new level by directly addressing some of the key concerns people have about the costs of conservation. The study also showcases a model approach to sustainable environmental development—an integrated economic and ecological approach that fully takes into account the diverse interests of all the people most affected by the establishment of nature reserves.

This study has been produced with the technical support from the United Nations Development Programme (UNDP) and the ﬁnancial support from the Global Environment Facility (GEF).

The Ministry of Environment and Physical Planning and the Municipality of Resen would also like to thank the Swiss Development Cooperation for generously funding sustainable development processes in Prespa.

February 2013