Integrated Cost-Benefit Analysis of Wetland and Forest restoration in ’s ChongMing

MSc Thesis of Urban Environmental Management Program Environmental Systems Analysis

Yingying xie Supervisor: Dr. RS (Dolf) de Groot

1 Table of Contents Preface List of Tables List of Figures

Summary

1. Introduction 1.1 Background 1.2 The study area and restoration plan 1.3 Problem statement 1.4 Objective and Research Questions 1.5 Outline of report

2. Methodology 2.1 Conceptual framework 2.2 Research method 2.3 Data collection

3. Impact of restoration plan on wetland and forest ecosystems in ChongMing district 3.1 Current condition of wetland and forest in ChongMing district 3.2 ChongMing 2040 restoration plan 3.3 Assessment of changes between 2015-2040

4. Quantification and Valuation of wetland and forest ecosystem services 4.1 Provisioning services value 4.2 Regulating services value 4.3 Culture services value 4.4 Habitat services value 4.5 Total Economic Value

5. Integrated Cost-Benefit analysis and NPV 5.1 Cost analysis of ChongMing 2040 master plan 5.2 Benefit analysis of ChongMing 2040 Project 5.3 Cost Benefit ratio 5.4 Net Present Value

6. Discussion 6.1 Uncertainty and limitation 6.2 Comparison with literatures 6.3 Robustness of results

7. Conclusion

References

2 Annexes Annex I: Valuation of selected ecosystem services of forest and wetland in ChongMing district Annex II: “Willingness to pay” questionnaire Annex III: Coverage map of ChongMing district Annex IV: Net Present Value of wetland restoration in ChongMing 2040 project (1) Annex V: Net Present Value of wetland restoration in ChongMing 2040 project (2) Annex VI: Net Present Value of forest restoration in ChongMing 2040 project (1) Annex VII: Net Present Value of forest restoration in ChongMing 2040 project (2) Annex VIII: NPV of wetland restoration in ChongMing 2040 master plan with discount rate of 5%,10%,15% Annex IX: NPV of forest restoration in ChongMing 2040 master plan with discount rate of 5%,10%,15%

3 Preface

The forest and wetland ecosystems in are some of the concrete evidences of nature’s immense gifts. However, over-population and poor urban and rural planning resulted in degradation of our natural environment in China. The once proud nature is disappearing, and we have no one to blame for this rampant degradation of our natural treasures but ourselves.

My bachelor’s background was Urban Planning, and environmental issues was one of my priorities in all my previous activities during my educational days. The reason I took MSc in Urban Environmental Management at Wageningen University and Research was to integrate urban planning and environmental management. My interest gets deeper as soon as I learnt on Environmental Systems Analysis group wherein I have got new technical knowledge specifically in analyzing environmental problems, various quantitative tools on ecosystems and its generating services. With this, thinking of my research topic for my MSc Thesis completion, I’ve searched important issues in my country. I came to read the publication of Master plan and general land-use plan of ChongMing District, Shanghai (2016-2040) wherein there is part of nature wetland and forest restoration. However, it caused lots of controversies and issues with the people. People are doubting if the nature wetland and forest restoration is indeed effective for future development in ChongMing district. With this reason, it gave me motivation to study the effectiveness of this restoration project through doing a integrated cost and benefit analysis of wetlands and forests restoration. Is this a worthy project? Is it right to use the government funds on this project? Is it beneficial? It took me around 7 months to finish this thesis, including two months of literature review, one months of field work, two months of data analysis and two months of writing process.

I would like to express my sincere gratitude to my supervisor dr Dolf de Groot for the guidance, immense knowledge and support to this whole process of master thesis. Also, there’s a lot a people whom I would like to thank that gives me motivation to finish this, such as all my family and friends.

I hope that this research will gives inspiration that restoration of ecosystem is indeed beneficial.

4 List of Tables

Table 1: Description and application of research methods Table 2: Selected forest and wetland ecosystem services in ChongMing district Table 3: Wetland situation in ChongMing district in 2013 Table 4: Wetland vegetation cover in ChongMing district in 2013 Table 5: Forest coverage in ChongMing district in 2015 Table 6: Timbers species coverage in 2008 Table 7: ChongMing 2040 Plan index Table 8: Natural wetland coverage change by ChongMing 2040 Table 9: wetland vegetation cover change by ChongMing 2040 master plan Table 10: Timber cover change by ChongMing 2040 master plan Table 11: Provisioning services value of wetland in ChongMing district in 2013 Table 12: C sequestration value of wetland in ChongMing district Table 13: C sequestration value of forest in ChongMing district Table 14: SO2 capturing value of wetland in ChongMing district Table 15: SO2 capturing value of forest in ChongMing district Table 16: Capturing dust value of forest in ChongMing district Table 17: Water purification value of wetland in ChongMing district Table 18: Value of reducing land abandonment by forest in ChongMing district Table 19: Value of reducing siltation by forest in ChongMing district Table 20: Soil erosion prevention value of forest in ChongMing district Table 21: TEV of selected services by wetland and forest in ChongMing district Table 22: changes in ES value of wetland restoration in ChongMing 2040 plan Table 23: The changes in ES value of forest restoration in ChongMing 2040 plan Table 24: Benefit-cost ratio of wetland & forest restoration in ChongMing 2040 plan Table 25: Net Present Value of wetland restoration in ChongMing 2040 project Table 26: Net Present Value of forest restoration in ChongMing 2040 project

5 List of Figures

Figure 1: Location of ChongMing district Figure 2: Land use in ChongMing 2040 master plan Figure 3: Framework for Analyzing and Capturing the Benefit of Ecosystem Restoration Figure 4: Framework for the Total Economic Value (TEV) Figure 5: Coverage in ChongMing district in 2017 Figure 6: wetland categories in ChongMing district Figure 7: Forest coverage in ChongMing district Figure 8: Existing & simulated coverage maps in ChongMing district Figure 9: willingness to pay for maintenance of water birds in ChongMing district

6 Summary

Shanghai’s Chong Ming district includes the three islands-Chong Ming, Chang Xing, and Hengsha. A quarter of Shanghai’s forests and wetlands are located in these islands, including two national wetland parks. These ecosystems are important for the district and therefore a master plan for sustainable development and improving public awareness for the period 2016-2040 was developed by the Shanghai government. This Chong Ming 2040- Master Plan raised many public concerns and questions. They questioned its effectiveness and its labor intensiveness. The costs and benefits of the wetland and forest restoration project of this plan are assessed in this thesis.

The thesis’s methodology is based on the Framework for analyzing and capturing the benefits of ecosystem restoration by de Groot, et al, 2017. I used five steps in the framework which are: (1) scoping; (2) impact assessment; (3) ecosystem Service analysis; (4) valuation and (5) Net Present Value (NPV). Data were collected from both field work and literature review. A questionnaire was prepared for local/tourists, who visit ChongMing district, to calculate the willingness to pay for conserving wetland habitat services. Also, experts were interviewed.

The ChongMing 2040 plan aims to restore 27294ha of natural wetland, increasing the wetland area from 38% to 45%. This increase includes 2202ha of Phragmites australis and 572ha of Scripus mariquete. The plan also aims to increase the forest area by 21873ha in 25 years, including 3137ha of coniferous forest and 18736ha of broad-leaved forest. This increases from 22% to 35%. The improved wetland conditions stimulate rare waterfowl species which 1% of their global population is found in the ChongMing district 7 species to hopefully 15 in 2040.

To determine the value change of the forest and wetland restorations, eleven ecosystem services (ESs) provided by these forests and wetlands are selected. They include fishing, reed productivity; timber productivity; carbon-sequestration; capturing dust; capturing SO2; water regulation; water purification; soil erosion prevention; recreation and maintenance of water birds’ diversity. Several valuation methods such as direct market valuation, replacement cost and willingness to pay, were applied. The data for these methods stems from a literature study, expert interviews and surveys.

The results show that the annual value of selected services provided by wetlands is currently 459 million US$, representing an annual Total Economic Value (TEV) of 3110 US$ per ha. The current forests provide an annual value of 279 million US$, which represents an annual TEV of 10125 US$ per ha. Assuming the ‘per ha’ value of each ecosystem service remains constant over the years, the increase of wetland area in 2040 by 27294ha, will lead to an annual ecosystem service value increase of approximately 72 million US$. The restoration of 21873ha forest area is valued by 197 million US$.

In the ChongMing 2040 Plan, the cost of forest and wetland restoration is expected to be around 136 million US$, including 38 million US$ for wetland restoration and 98 million US$ for forest restoration. Based on my study, the changes in wetland and forest areas thus bring more benefits than costs (72+197 million US$respectively by 2040; or 5 million US$ per year)

I assumed that the government paid a quarter of all the cost in 2015 and will pay remained proportionally over the coming 24 years (from 2015 to 2040), the Net Present Value (NPV) of

7 wetland restoration is estimated to be 292 million US$ and 1103 million US$ for forest restoration. These estimates are calculated with a discount rate of 5%. Even if the discount rate increases to 15%, wetland and forest restorations are still beneficial.

When my results are compared to other studies on wetland-and-forest restoration value, my result has higher value on wetland restoration and lower value on forest restoration. These differences can be explained, among others, by the inclusion of different ecosystem services in my study. Also, different accounting methods probably lead to different results.

Despite of some uncertainties, my study shows that both wetland and forest restoration projects in ChongMing District are beneficial. By demonstrating a positive benefit-cost ratio of these restoration plans, I hoped that the government will be more motivated to continue investing in the implementation of these plans.

8 1. Introduction

1.1 Background

By the acceleration of urbanization in China, the economic growth has greatly improved people’s quality of life. However, at the same time, the conflicts among human activities and nature have been intensified. With the emergence of a series of urban problems which are caused by confrontation between nature and city, building eco-city has been the current tendency of city development in China.

Conversely, with these changes and developments currently happening, the value of ecosystems is being neglected. People are unrecognizing the significance of ecosystem services and benefits. Ecosystems are “the benefits people derive from ecosystems” (Mill. Ecosystem Assessment, 2005). As stated by TEEB, ecosystem is categorized into Provisioning services, regulating services, Habitat or supporting services and culture services (Lead et al.,2010). With this, Assessment of ecosystem services can help to better understand the value of ecosystem, and therefore it can serve as guidance for decision makers in policy making and analysis.

ChongMing district, which is attached to Shanghai, is consist of , ChangXing island and . Within this, ChongMing island is the third largest island, the largest estuary island and the largest sand island in China. These three islands are enriched with forest and natural wetland ecosystems which give contributions particularly to water treatment, atmosphere purification, pollution degradation and biodiversity protection. Wetlands as defined by the Ramsar Convention, are: “areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six meters”. The forest in this thesis is defined as “a land area of more than 0.5 ha, with a tree crown density of more than 10%, which is not primarily under agricultural or other specific non-forest land use” (FAO, 1998; FRA 2000).

Since 1995, there have been several plans to restore ChongMing district, its development priority change from agriculture and tourism to eco-island and environmental protection. In 2017, Master plan and general land-use plan of ChongMing District, Shanghai, 2016-2040 (ChongMing 2040) was published by Shainghai ChongMing District Government (SCDG) & Shanghai Planning and Land Resource Administration (SPLRA). Thus, this thesis is going to assess the cost and benefit of wetland & forest ecosystem restoration in ChongMing 2040 plan.

1.2 The study area and restoration plan

1.2.1 The study area

ChongMing District, which is under the jurisdiction of Shanghai, China, is located at the estuary of the River (see figure 1). It consists of ChongMing, ChangXing and HengSha islands, with a total land area of 141100 ha and coastal wetland area of 181115 ha. ChongMing island is the largest alluvial estuary in the world, and it is also the third largest island in China, with the land area of 126700 ha. ChangXing island is a sandy island which is formed by the Yangtze River Sediment, it is 20km long from the East to West and 14km width from South to North with the

9 land area of 8800 ha. HengSha island which is located in the easternmost part of the Yangtze River estuary, is the smallest island in ChongMing district with land area of 5600 ha.

ChongMing district is enrich with forest and natural wetland ecosystems, it has 27583 ha forest area (Shi Zhenchang, 2017) and 147636 ha of natural wetland area including brine swamp of tideland, estuary and herbage swamp and estuary (China Forestry Bureau, 2015).

Figure 1: Location of ChongMing district

1.2.2 ChongMing 2040 Master Plan

ChongMing 2040 (Master plan and general land-use plan of ChongMing District, Shanghai, 2016- 2040) is an official master plan including the goals of forest coverage and wetland conservation in ChongMing district. The ChongMing 2040 document includes three parts, which are Comprehensive Developing strategy, Spatial layout and Land use, and Special Aspects Planning. Within Spatial layout and Land use, the land use planning in 2040 (figure 2) is shown to emphasize the restoration areas.

10 Figure 2: Land use in ChongMing 2040 master plan (Source: SCDG & SPLRA, 2017)

1.3 Problem statement

By the publication of the ChongMing 2040 master plan in 2017 (SCDG & SPLRA, 2017), various social and academic opinions on the ChongMing restoration project were ventilated. Those who were in favor of this master plan, believed that it can effectively remit the environmental degradation caused by urban development. However, as this restoration plan is costly and labor intensive, some doubt if it is worthy to conduct. Hence, this research is conducting an ecosystem assessment about the effect of the ChongMing 2040 master plan, I will particularly focus on the wetland and forest restoration.

1.4 Objective and Research Question

My study generally aims to analyze the impact of ChongMing 2040 restoration project on the wetland and forest ecosystem services. The main research question (RQ) addressed by this study is:

Are the ChongMing 2040 forest and wetland restoration projects beneficial to society?

11 The following sub-questions should be answered in this research:

RQ1. What is the current condition of forest and wetland ecosystems? RQ2. What is the impact of the restoration plan on wetlands and forests? RQ3. What is the economic value of selected ecosystems services? RQ4. How do the restoration projects affect monetary values of the ecosystem services? RQ5. What are the costs and benefits of ChongMing 2040 restoration plan?

1.5 Outline of report

In the following part, there will be six chapters (from Chapter 2 to 7) in this thesis: Chapter 2 will clearly explain the methodology which includes the conceptual framework namely Framework for Analysing and Capturing the Benefit of Ecosystem Restoration (de Groot et al., 2017), the data collection processed method including primary data and secondary data collection. Chapter 3 examines the impact of restoration plan on wetland and forest in ChongMing district, as the ChongMing 2040 plan will increase the wetland coverage from 38% to 45% and forest coverage from 22% to 35%, this Chapter quantify detailed impact of the plan such as vegetation coverage change. Chapter 4 focusses on the evaluation of the selected ecosystems services and calculate their total economic value (TEV). While in chapter 5 presents the cost-benefit analysis to evaluate the effect of ChongMing 2040 master plan. This chapter also includes a sensitivity analysis on the assumptions used to assess the restoration plan and summarize the total NPV of wetland and forest restoration in the ChongMing 2040 master plan. Chapter 6 discusses the results and compares the data or methods with other studies. Conclusions are in the last chapter, which will answer the research questions and show that the study’s aims have been reached.

12 2. Methodology

2.1 Conceptual Framework

In order to comprehensively analyze the impact of the restoration project, the Framework for Analyzing and Capturing the Benefit of Ecosystem Restoration by de Groot, et al, 2017 is conducted in this thesis, Figure 3 gives a graphic representation of the 9 steps included in the framework.

Figure 3: Framework for Analyzing and Capturing the Benefit of Ecosystem Restoration Adopted from: de Groot, et al, 2017

However, with the data constraints and main objective of this research, this study will focus initially on the three steps which are highlighted in the Figure 3. The Net Present Value (NPV) will be added to conduct after the Valuation step in the study.

2.2 Research methods

Adapted from the framework by de Groot, et al, 2017, Table 1 describes and applies the framework to this research:

13 Table 1: Description and application of research methods (Adopted from: de Groot et.al, 2017) Steps Name Descriptions 1 Scoping Before starting an assessment, the scope, context and purpose of the assessment should be made clear, in close consultation with the most relevant stakeholders, to avoid collecting unnecessary data or forgetting important aspects. 2 Impact Assessment of direct impacts of restoration on ecosystem assessment structure & processes and analysing the indirect effects in terms of changes in the functioning of the landscape (i.e. the (carrying) capacity of the landscape to provide services) compared to the baseline. 3 Ecosystem Effect on changes in actual, and potential, use of specific services analysis ecosystem services 4 Monetary The changes in Natural Capital (‘value of the land’) in terms valuation of ecosystem services and associated benefits, including direct market values, indirect market values and non-market values 5 NPV “the amount by which it increases net worth in present value terms”

2.2.1 Scoping

In the scoping part, the current condition of natural wetland and forest will be assessed. The existing condition is to assess the current biophysical condition of wetland and forest in ChongMing district: the wetland condition includes the coverage of different types of wetland as well as the vegetation coverage in wetlands; the existing forest condition consist of coverage of different woodlands as well as the main timber species coverage.

2.2.2 Impact assessment

In the impact assessment step, it is going to compare the baseline condition and the expected impacts of restoration plan. Thus, the coverage changes of natural wetland and forest by the ChongMing 2040 restoration plan will be analyzed. It also includes the vegetation coverage change by wetland and forest restoration in ChongMing 2040 master plan.

2.2.2 Ecosystem services analysis

In the third step which is Ecosystem services analysis, the effect of changes on wetland and forest ecosystems by ChongMing 2040 Plan will be analyzed and quantified. It involves the selection of ecosystem services provided by forest and natural wetland ecosystems as well as the overview of their indicators. To implicate this step, literature study and expert interviews will be the main methods.

In this part, the impact of the changes by ChongMing 2040 Plan is analyzed in terms of ecosystem services (De Groot, R., 2017). Following the conceptual framework from TEEB, ecosystem services are “the direct and indirect contributions of ecosystems to human well-being”, which are

14 classified into Provisioning services (e.g. food, materials), Regulating services (e.g. flood prevention, air purification), Habitat services (e.g. nursery) and Cultural services (e.g. recreation, education) (Lead et al.,2010). Due to the data limit, there are 9 main services and 11 subservices selected in this study. The lists of selected forest and wetlands ecosystem services are showed in table 2.

Table 2: Selected forest and wetland ecosystem services in ChongMing district Ecosystem services Main services Subservices Wetland Forest Provisioning Fishing Fish services Raw material Reed Timber Regulating services Climate regulation C-Sequestration Air quality Capturing dust regulation Capturing SO2 Water treatment Water storage Water purification Soil treatment Soil erosion prevention Cultural services Opportunities for Recreation recreation and tourism Habitat services Maintenance of life Maintenance of cycle of migratory water birds’ species diversity

2.2.3 Monetary valuation

The third step (Monetary valuation) aims to translate the impact of the changes from restoration project into monetary value. The monetary valuation methods that are used in this thesis includes Direct Market Valuation, Replacement Cost, Damage Cost Avoided, Shadow Price and Willingness to Pay. Due to the limited resources, the data collection method is this step is mainly benefit transfer, which is defined as the use of research results from pre-existing primary studies at one or more sites or policy contexts (Johnston et al., 2015). With this, the Total Economic Value (TEV) framework is conducted for overall value analysis (Figure 4).

15 Figure 4: Framework for the Total Economic Value (Adapted from: de Groot et al. 2006)

The total economic value consists of use value and non-use value. Use value whih means the resources that can be used includes direct use values and indirect use values. Non-use value of the environment is a value associated that does not concern our use, either direct or indirect, resources or services. Option value is in between with use and non-use value, which is the value we place on keeping the option open to use ecosystem services in the future, either within our own life time, or for future generations.

In order to account TEV of influence of wetland and forest ecosystem services change, different valuation methods are conducted to quantify the monetary value. For the use value of wetland and forest, direct market value approach is the main valuation method, and for the non-use value, it can be accounted by the valuation method such as replacement cost, willingness to pay as well as the shadow price approach. Based on this, the application of the TEV on the selected ecosystem services in ChongMing district in showed in Annex I.

2.2.4 NPV

On the step 4, Net Present Value (NPV) is used to evaluate the viability of the restoration project. It aims to account monetary values of environmental impacts of the project with considering the Time Value of the Money as well as the process of restoration implementation. Sensitivity analysis approach is the method conducted in this part.

16 NPV can give right direction to the decision makers/ policy makers. It can give guidance as to the management, action planning and implementation of a particular ecosystem. As defined by Perman et al., 2003. NPV is “the amount by which it increases net worth in present value terms”. It is calculated as follows:

EQ.1

Where N refers to the net benefits, i stands for the interest rate and t represents the year.

2.3 Data collection

This study collected both qualitative and quantitative data generated from two resources: primary and secondary data.

A primary survey was conducted in ChongMing district in December 2017 to determine the willingness to pay for the maintenance of biodiversity specifically for wetland ecosystem. In total 50 respondents were interviewed to know their perspective on biodiversity such as their knowledge on wetland ecosystem services, importance to maintain and protect wetland diversity and willingness to pay for the maintenance through entrance fees (See Annex II for the Sample Questionnaire – translated to Chinese). The respondents were selected randomly during the survey. Also, 3 key informant interviews were conducted from the field of environment, management planning and GIS experts.

Other sources of data were generated by reviewing the literature (mostly local resources), ChongMing District Restoration Plan and other documents from ChongMing District. Relevant information that was suggested by different stakeholders, was also helpful in this cost-benefit analyses.

17 3. Impact of restoration plan on wetland and forest ecosystems in ChongMing district

3.1 Current condition of wetland and forest in ChongMing district

In order to understand the effect of the restoration project (ChongMing 2040) on forest and natural wetland ecosystems in ChongMing district, the baseline condition in the research area should be assessed. To give the general impression of the current wetland and forest cover of Chongming District, an indicative map is shown in figure 5 using training data from google earth base map and processed and classified through R at 95% accuracy and layout using ArcMap (see Annex III for the process GIS map).

Figure 5: Coverage in ChongMing district in 2017 (Due to the limit of GIS software, the wetland coverage 2017 in ChongMing district only include the land area over 0m line, exclude the wetland area under 0m line and over -6m line which cannot be recognized in the aero- photograph.)

3.1.1 Existing wetland condition

The wetland defined by the Ramsar Convention, as: “areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six

18 meters”. However, as the “natural wetland” mentioned in the ChongMing 2040 master plan document is only considered as natural wetland including brine swamp of tideland, estuary and herbage swamp, it will be the defined natural wetland in this thesis.

Wetlands are an essential part of water cycle which moves around the Earth. Wetlands also play an important role in delivering water between landscape and the sea, and they are able to construct land through sediment transfer (Russi et al., 2013). Wetlands provides various ecosystem services that benefit human livelihoods, and the restoration of wetland offer the opportunities to mitigate the pressure from urban development on nature.

(1) Wetland coverage

According to Shanghai wetland survey (2011-2013) (China Forestry Bureau, 2015), the wetland resources in ChongMing district includes three wetland categories namely: (1) coastal wetland; (2) marsh; (3) artificial wetland (see figure 6). The coastal wetland includes silt coast, brine swamp of tideland, estuary and sandy island; the marsh consists of herbage swamp and forest swamp; in artificial wetland, there are canal, aquaculture and pond (China Forestry Bureau, 2015). Within this, brine swamp of tideland, estuary and herbage swamp are considered as defined natural wetland in the analysis, the coverage is shown in table 3.

Figure 6: wetland categories in ChongMing district

19 Table 3: Wetland situation in ChongMing district in 2013 (Cao et al., 2017; China Forestry Bureau, 2015) Wetland category Wetland type Extent (ha) Depth of the water (m) Coastal Brine swamp of 10299 2.5 tideland Estuary 131027 2.5 Marsh Herbage swamp 6310 1.0 Total 147636

ChongMing district covers the natural wetland area of 147636 ha. Within this, estuart accounts for the largest proportion which is 131027 ha, next comes the brine swamp of tideland which is 10299 ha, the herbage swamp has the smallest coverage here which is 6310 ha.

(2) Wetland vegetation

The vegetation covered in natural wetland is important for providing ecosystem services particularly regulating and provisioning services. According to reference by Cao Ying et al., (2017). Wetland vegetation in ChongMing district are mainly located in brine swamp of tideland, herbage swamp and forest swamp. As the forest swamp is not assessed in this thesis, the species cover in forest swamp is not included in this part. Wetland vegetation in ChongMing district mainly includes three species which are Phragmites australis, Spartina alterniflora and Scripus mariqueter. Table 4 shows the coverage and description of the wetland species in ChongMing district.

Table 4: Wetland vegetation cover in ChongMing district in 2013 (Cao et al., 2017) Species Extent (ha) Proportion (%) Location Phragmites 11955 72 Brine swamp of tideland; australis (Reed) herbage swamp Spartina 1524 9 Brine swamp of tideland alterniflora Scripus mariquete 3123 19 Brine swamp of tideland Total 16602 100 -

Among the three kinds of wetland species, Phragmites australis which is also named as Reed has the largest coverage of 11955 ha, they are mostly located in the brine swamp of tideland and herbage swamp. The Scripus mariquete which has a coverage of 3123ha is consider by experts as main food resources for water birds, they are located in brine swamp of tideland. The Spartina alterniflora which covers 1524 ha area is also located in Brine swamp of tideland, their expansion in ChongMing district can replace the coverage of Scripus mariquete species, and therefore can cause to the decrease of water birds species.

20 3.1.2 Existing forest condition

Forests impact our daily lives, they offer habitat for biodiversity and livelihood for humans. People are depending on forests for their survival, forests can provide food, shelter, protection and help prevent natural disturbances. However, there is a vast lost in forest ecosystem due to urban development and expansion. In China, deforestation and over grazing are main causes of forest resources lost which has caused concern from both government and social. Thus, the government initiate several initiatives to restore forest system, one of them is involved in ChongMing 2040 project. Hence, this study highlights the importance of forest ecosystem in terms of economic valuation

The forest in this thesis is defined as “a land area of more than 0.5 ha, with a tree crown density of more than 10%, which is not primarily under agricultural or other specific non-forest land use” (FAO, 1998; FRA 2000). According to Forest Law of People’s Republic China (2011), forest consist of forest land, open forest land, shrub land and other woodlands. Within this, forest land refers to woodland attached with forest vegetation, with the crown density no less than 0.20; Open forest land refers to timberlands with the crown density from 0.10 to 0.19; Shrub land refers to woodland with the shrub coverage over 30%. Figure 7 is an indicative map of forest coverage situation in ChongMing district.

Figure 7: Forest coverage in ChongMing district

21 ChongMing district has the total forest area of 27583ha with the forest coverage around 20% in year 2015 (Shi Zhenchang, 2017). Within this, there are 20715 ha of forest land, 52 ha of open forest land, 6220 of shrub land and 596ha of other woodlands (see table 5).

Table 5: Forest coverage in ChongMing district in 2015 (Shi, 2017) Land type Extent (ha) Proportion (%) Forest land Timber forest 19520 70.8 Bamboo forest 1195 4.4 Open forest land 52 0.2 Shrub land 6220 22.6 Other woodlands 596 2.0 Total 27583 100

In order to simplify the data analysis, forest timbers (exclude bamboo) are considered located in forest land (19520 ha) and open forest land (52 ha). Data on the proportion of the timber species of ChongMing ditrict is based on study from Wang Ruijin et al. (2011) which use stratified sampling method which randomly picked 234 sample plots with vegetation in Chongming Island. With these categories, there are mainly five kinds of timber species in ChongMing district namely: (1) Metasequia glyptostroboides; (2) Cryptometia fortunei;(3) Pinus thunbergii; (4) Cinnamomum camp and (5) other Broad-leaved trees. The Cinnamomum camp has the highest proportion among all species which is 34.5%; next comes the other broad-leaved trees which account for 33.9% of all timbers; there are 30.3% of the timbers are Metasequia glyptostroboides and Cryptometia fortune; and the rest 1.3% timbers are Pinus thunbergii (see Table 6).

Table 6: Timbers species coverage in 2008 ((1) Shi, 2017; (2) Wang et al. 2011) Timber species Extent Proportion Species Extent (ha) Proportion (ha) (1) (%) (2) type (%) Metasequia 5930 30.3% Coniferous 6184 glyptostroboides 32% Cryptometia fortunei Pinus thunbergii 254 1.3% Others Broad-leaved 6635 33.9% Broad 13388 68% trees leaved Cinnamomum camp 6753 34.5% Total 19572 100% - 19572 100%

3.2 ChongMing 2040 Master Plan

As mentioned above, ChongMing 2040 is an official master plan including the goals of forest coverage and natural wetland conservation in ChongMing district. Under the environment protection section of the Chongming 2040 Plan, there are seven indexes mentioned namely (1) water coverage; (2) natural wetlands coverage; (3) forest coverage; (4) The number of waterfowl species that account for more than 1% of the global population; (5) Air Quality; (6) coastline protecting; and (7) water quality. According to the subjective of this study, among these indexes, three of them are selected in this study for the impact assessment of restoration project, which are

22 natural wetlands coverage, forest coverage and the number of waterfowl species that account for more than 1% of the global population (Table 7).

Table 7: ChongMing 2040 Plan index (SCDG & SPLRA, 2017) Index Year 2015 Year 2040 The number of waterfowl species that account for 7 15 more than 1% of the global population Natural wetland coverage 38% 45% Forest coverage 22% 35%

The Shanghai government (2017) defines the index ‘The number of waterfowl species that account for more than 1% of the global population’ as ‘a group of waterfowl species or subspecies perched on the three islands in ChongMing district accounts for a population of 1% species in the world, with the actual number of water birds being observed as data during the year of the relevant observation points’. According to ChongMing 2040 document, seven such water birds species exists. These are Roan duck, cranes, black-tailed sandpipers, white necked creased sandpipers, red- necked redshank, ring-necked plover and Mongolian sand. And in 2040, the conducting of restoration project will allow fifteen of theses water birds.

The natural wetland coverage is an index for natural wetland restoration assessment, the natural wetland in this document particularly refers to the natural wetland area which is above -5 meters line including brine swamp of tideland, estuary and herbage swamp. The natural wetland coverage is accounted by the following formula (Shanghai government, 2017).

natural wetland area Natural wetland coverage = EQ.2 land area of islands + beach around islands

The forest coverage is an index of forest restoration target, it is a constraint index that the forest coverage has to rise from 22% in year 2015 to no less than 35% in year 2040 (SCDG & SPLRA, 2017).

3.3 Assessment of changes between 2015-2040

With the intention of visually showing expected impact of the ChongMing 2040 Plan, the existing the simulated condition is compared to in terms of coverage maps. With this, the coverage (2015) in ChongMing District was made by GIS software processed in ArcMap. Also, reference from SCDG & SPLRA (2017) was used to illustrate the 2015 coverage map of ChongMing District. On the other hand, the simulated 2040 land use cover map was obtained through the Chongming District Master Plan restoration project (figure 7).

23

Existing coverage

Based on GIS software, using google earth data in 2017

Simulated coverage

Figure 8: Existing & simulated coverage maps in ChongMing district (Based on master plan map from SCDG & SPLRA, 2017)

3.3.1 Assessment of changes of wetland condition

According to the ChongMing District Master Plan, the natural wetland coverage should increase from 38% in year 2015 into 45% in year 2040, with an increasing rate of 18.42% in 25 years. By compromising the information provided by experts and the reference by Shanghai Government (2017), the natural wetland extent change by ChongMing 2040 is predicted with the increasing of 18.42% in table 8:

24 Table 8: Natural wetland coverage change by ChongMing 2040 (SCDG & SPLRA, 2017) Wetland types Coverage in 2015 Coverage in 2040 Coverage change (ha) (ha) (ha) Estuary 131027 155162 24135 Brine swamp of 10299 12196 1897 tideland Herbage swamp 6310 7573 1262 Total 147636 174931 27294

The natural wetlands resources in ChongMing district are facing with threat mainly from invasion of non-native species (particularly refers to Spartina alterniflora), over-reclamation and pollution emission (China Forestry Bureau, 2015). Thus, based on Shanghai wetland protection and restoration implementation plan (Shanghai government, 2016), the wetland restoration project includes strategies such as controlling the expansion of Spartina alterniflora, bio-accumulation actions (biological siltation) and returning aquaculture to natural wetland. Also, as the implementation of Spartina alterniflora controlling strategy, the species cover of Spartina alterniflora is predicted to constant, the other wetland vegetation cover is predicted to increase equally (Table 9).

Table 9: wetland vegetation cover change by ChongMing 2040 master plan (SCDG & SPLRA, 2017; Shanghai government, 2016) Wetland species Coverage in 2015 Coverage in Coverage change (ha) 2040 (ha) (ha) Phragmites australis (Reed) 11955 14157 2202 Spartina alterniflora 1524 1524 0 Scripus mariquete 3123 3698 572 Total 16602 19379 2774

3.3.2 Assessment of changes of forest condition

Based on ChongMing 2040 Master Plan, the forest coverage should increase from 22% in year 2015 into 35% in year 2040, which means the forest area in ChongMing district will increase from 27583 ha in year 2015 to 49455 ha with an increasing forest area of 21873 ha. In order to simplify the accounting, the increased forest areas are considered as in forest land and open forest land.

Based on the “13th Five-Year Plan” on ChongMing district (Shanghai Government, 2016), in the first five years, it is planned to propagate 4667 ha of woodlands, 70% of which are landscape corridor that are for aesthetic purposes, while the rest part is reinforcement planting of existing forest. Within the landscape corridor, there will be 13 timber species gown in 13 towns with the density of 30~45 trees per hectare (open forest land) in ChongMing district (one timber specie for each town), which are Osmanthus, Maple, Begonia, Acacia, Red cedar, Photinia, Magnolia, Ginkgo biloba L, Sapindus, Sapium sebiferum (L.) Roxb., Oriental cherry, Koelreuteria paniculata, Red plum, Waterelm, Quercus rubra L. and Sophora japonica Linn. As all these timber species are broad leaved trees, the impact on forest ecosystem by ChongMing 2040 Plan can be predicted in table 10.

25

Table 10: Timber cover change by ChongMing 2040 master plan (SCDG & SPLRA, 2017; Shanghai Government, 2016) Timber species Coverage in Coverage in Coverage 2015 (ha) 2040 (ha) change (ha) Metasequia glyptostroboides 5930 8938 3008 Cryptometia fortunei Pinus thunbergii 254 383 129 Others Broad-leaved trees 6635 21946 15311 Cinnamomum camp 6753 10178 3425 Total 19572 41445 21873

26 4. Quantification and Valuation of wetland & forest ecosystem services

4.1 Provisioning services value

Among all the ecosystem services’ categories, provisioning services is the “most common and well-developed indicators” (UNEP-WCMC,2011). Such of the services types enumerated by UNEP (2011) are food, water, raw materials, genetic resource, medicinal resources and ornamental resources. These resources are actually products getting from the ecosystems. For instance, in fisheries sector, human is getting food source in coastal or wetlands ecosystem through fisheries. In addition, wood product from the forest are one of the most common examples.

4.1.1 Provisioning services of wetland

The provisioning services value of natural wetland includes the fishery, which is considered as fishing activities by fisherman in the estuary wetlands. Also, the reed is the raw material provided by natural wetland in ChongMing district. In this part, the provisioning services are valued by direct market valuation method, which will follow the formula (Cao Ying et al., 2017): Ep=A•P•M EQ.3 Where Ep is annual provisioning services value of wetland (US$), A is the coverage of species harvest (ha), P is the annual productivity of each species (ton/ha), M is the market price of the species (US$/ton).

Table 11 gives the service valuation of fishing. The overall annual monetary value of provisioning services by wetland in ChongMing district is 707 US$/ha

Table 11: Provisioning services value of wetland in ChongMing district in 2013 (Cao et al., 2017) Species Extent Productivity Market Services MV Services (ha) (tons/ha) price valuation (US$/ha/yr) (US$/ton) Apply (million EQ.3 US$/yr) Fishing Fish 131027 0.13 5861 103.2 699 Raw Reed 11955 1.76 67 1.2 8 materials Overall - 142982 - - 104.4 707

4.1.2 Provisioning services of Forest

As stated by the National Economic and Social Development Statistics Bulletin of ChongMing district in 2016 (Chongming District Government, 2016), the total economic value of forest provisioning services which includes the market value of timbers in ChongMing district is 29.3 million US$ in 2015. As the total forest area in ChongMing district is 27583ha in year 2015, the monetary value of timbers is 1062 US$/ha/yr.

27 4.2 Regulating services value Most of common example/types of regulation services are air quality regulation, climate regulation, water quality, water purification, erosion and pest regulation, pollination and natural hazard (UNEP-WCMC,2011). Regulating services are the benefits that we are getting from the regulation of ecosystem process. For instance, mangrove ecosystem is significant for storm protection (storm surge and tsunamis). This ecosystem is intensely help out to reduce harm or damage from the natural hazards or calamities.

4.2.1 Carbon sequestration

Carbon sequestration is the capture of carbon from the atmosphere by vegetation, in particular by different types of forest and wetland plants, carbon sequestration has been included as a significant account in ecosystem accounting, it plays an important role in reducing the CO2 emission and mitigate the global warming. In this part, carbon tax price is considered as the value of carbon captured in the vegetation. As vegetation can capture the CO2 in the atmosphere and formulate dry matter, 1g of dry matter need 1.62g CO2, as the weight of C/CO2 is 3/11, so 1g of dry matter need 0.4418g Carbon (Phil-WAVES, T. W. G. Southern Palawan. 2015). Therefore, the carbon sequestration value can be accounted by the following formula (Shi, 2017). EC=0.4418•C•∑ 8 • : EQ.4 Where Ec is the annual carbon sequestration value (US$), C is carbon tax which is 150US$/tons of C, A is the coverage of vegetation (ha), T is the dry matter productivity (tons/ha)

(1) C-sequestration of wetland

The value of C sequestration services provided by wetland is considered as the Carbon capturing value of the wetland vegetation, and the carbon capturing capacity can be different for the different types of wetland plants in terms of their dry matter productivity. Thus, the value of Carbon sequestration by natural wetland in ChongMing district is 77.7 million US$/yr, the wetland covered by Phragmites australis has C sequestration monetary value of 644US$/ha/yr, while the value for wetland covered by Spartina alterniflora is 2100US$/ha/yr, and the value of wetland covered by Scripus mariquete is 768 US$/ha/yr, the overall monetary value of carbon sequestration by wetland is 526US$/ha/yr (see table 12).

Table 12: C sequestration value of wetland in ChongMing district ((1) Cao et al., 2017; (2) Ji & Wen, 2013) Wetland species Extent Dry matter Services MV (ha) (1) productivity valuation (US$/ha/yr) (tons/ha) (2) Apply (million US$/yr) Phragmites australis 11955 91 EQ.4 72.1 644 (Reed) Spartina alterniflora 1524 32 3.2 2100 Scripus mariquete 3123 11.5 2.4 768 Overall 16601 - 77.7 526

28 (2) C-sequestration of forest

The Carbon sequestration value of forest are considered ad the carbon capturing value of forest species. As different woodlands have different crown density, they can have different carbon capturing value in terms of dry matter productivity.

Therefore, table 13 shows the C sequestration value of forest ecosystem in ChongMing district, the total carbon sequestration value of forest is 10.3US$/yr, also the monetary value of different woodlands is: 402US$/ha/yr for Forest land, 288US$/ha/yr for Open forest land and Shrub land, and 323US$/ha/yr for other woodlands. The overall monetary value of Carbon sequestration by forest in ChongMing district is 373US$/ha/yr.

Table 13: C sequestration value of forest in ChongMing district ((1) Shi zhenchang 2017; (2) Zhao jun & chen shan, 2011) Land types Extent Dry matter Services valuation MV (ha) (1) productivity (tons/ha) (million US$/yr) (US$/ha/y (2) r) Forest land 20715 5.78 Apply 8.3 402 Open forest 52 4.13 EQ.4 0.01 288 Shrub land 6220 4.13 1.8 288 Other 596 4.65 0.2 323 woodlands Overall 27583 - 10.3 373

4.2.2 Capturing SO2

SO2 is one of the main air pollutant is the atmosphere, it is also the main component of acid rain, it can not only be detrimental to health, but also cause economic losses. Hence, the Chinese government spend financial resources for SO2 controlling every year. Both forest and wetland vegetation can capture the SO2 in the atmosphere.

For the valuation of Capturing SO2 services, the replacement cost method is used. With this, the following formula will be conducted for analyzing the SO2 capturing value of ecosystems (Zhao Jun & Chen Shan, 2011) Es=S•A•C EQ.5 Where Es is the value of capturing SO2 (US$/yr), S is the SO2 capturing capacity of the ecosystem ((kg/ha/yr)), A is the coverage (ha), C is the treatment cost of SO2, which is 95 US$/tons of SO2 (Xiao et al., 2000).

(1) SO2 Capturing value of wetland

The SO2 capturing of natural wetland is considered as the SO2 captured by the wetland vegetation, and the SO2 captured by bare flat or water is not accounted in this thesis. As the lack of data, the SO2 capturing capacity of shrub land is conducted as the SO2 capturing capacity of wetland covered with vegetation which is 90 kg/ha/yr (Wang Liyan et al., 2017). Thus, the service value of SO2

29 capturing by natural wetland in ChongMing district is 0.14million US$/yr, and the monetary value of SO2 capturing by wetland species is 1US$/ha/yr (see Table 14).

Table 14: SO2 capturing value of wetland in ChongMing district ((1) Cao et al., 2017; (2) Wang et al., 2017) Vegetation species Extent SO2 capturing Services valuation MV (ha) (1) (kg/ha/yr) (2) (million US$/yr) (US$/ha/yr) Phragmites australis 11955 0.1 (Reed) 90 Apply 1 Spartina alterniflora 1524 EQ.5 0.01 Scripus mariquete 3123 0.03 Overall 16602 0.14

(2) SO2 capturing value of forest

The SO2 capturing of forest refers to the SO2 captured from atmosphere by the forest timbers. Based on the study by Zhao Jun and Chen Shan (2011), coniferous trees and broad-leaved trees have different SO2 capturing capacity: coniferous forest can capture 216 kg of SO2/ha/yr while the broad-leaved forest can capture 89 kg of SO2 /ha/yr. Therefore, the SO2 capturing service value of forest in ChongMing district is 0.24 million US$/yr, the monetary value of SO2 capturing value by forest in ChongMing district is 9 US$/ha/yr, while 20 US$/ha/yr provided by coniferous forest 8 US$/ha/yr by broad leaved forest (see Table 15).

Table 15: SO2 capturing value of forest in ChongMing district ((1) Shi zhenchang 2017; (2) Zhao jun & chen shan, 2011) Forest species Extent SO2 Services MV (ha) (1) capturing Apply valuation (US$/ha/yr) (kg/ha/yr) (2) EQ.5 (million US$/yr) Coniferous forest 6184 216 0.13 20 Broad leaved forest 13388 89 0.11 8 Overall 19572 - 0.24 9

4.2.3 Capturing dust

Dust refers to the solid particles suspended in the atmosphere, it mainly comes from the vehicles and industry emission. Dust pollution can cause grave damage to people’s health, it affects human respiratory system especially to children and the aged. One of the well-known dust pollutant is PM2.5 which caused various environmental and health problems in China, and Chinese government spent lots of resources on controlling and monitoring dust pollutant in the atmosphere. Forest timbers have an excellent capacity of capturing dust in terms of leaf surface adsorption, filtration and slowing down the wind. Wetland vegetation can also have dust capturing dust capacity, however, the capturing dust value of wetland is neglected because of too little quantity (Wang et al., 2017).

Thus, in this part, capturing dust service provided by forest ecosystems is monetized with Replacement cost method, with the following formula (Zhao & Chen, 2011).

30 Ed=D•A•C EQ.6 Where Ed is the service value of capturing dust (US$/yr), D is the dust capturing capacity of the forest ecosystem (tons/ha/yr), A is the Extent (ha), C is the treatment cost of dust pollution, which is 25 US$/tons of dust (Wang et al., 2017).

The dust capturing capacity can be different for coniferous forest and broad-leaved forest, one hectare of broad-leaved forest can capture 10 tons of dust every year, while each hectare of coniferous forest can capture 33 tons of dust per year. Hence, see table 16, the Capturing dust value of forest in ChongMing district is 8.5 million US$, The dust capturing service monetary value of coniferous forest is 830US$/ha/yr and 253US$/ha/yr for broad leaved forest, the overall monetary value of capturing dust by forest in ChongMing district is 308US$/ha/yr.

Table 16: Capturing dust value of forest in ChongMing district ((1) Shi, 2017; (2) Zhao & Chen, 2011) Forest species Extent (ha) Dust capturing Services valuation MV (1) (tons/ha/yr) (2) Apply (million US$/yr) (US$/ha/yr) Coniferous forest 6184 33 EQ.6 5.1 830 Broad leaved forest 13388 10 3.4 253 Overall 19572 - 8.5 308

4.2.4 Water regulation

Water regulation function is the collective effect of vegetation and soil, both wetland and forest can offer water storage ecosystem services. Water regulation service of natural wetland is considered provided by swamp wetland as its special hydrological and physical properties, the porosity of the soil, which provide the soil high capacity of water regulation (Tang Suxian et al., 2016). Forest has the function of water regulation as the complex structure of forest can intercept the rainwater and convert surface runoff into underground runoff, and therefore store water in the soil and control flood.

(1) Water regulation value of wetland

Water regulation value of wetlands in ChongMing district is accounted with replacement method by the following formula (Cao et al., 2017) Eww=S•Q•P EQ.7 While Eww is the water regulation value of wetland S is the coverage of wetland (US$), Q is the water regulation capacity get by benefit transfer which is 3500m3/ha, P is the cost of project to restore the water which is 0.01US$/m3 (Cao et al., 2017)

As it mentioned above, the water regulation service is considered provided by swamp wetland which is 6310ha, therefore, the water regulation service value of wetland in ChongMing district is 220850US$, and the monetary value of water regulation by wetland is 1.5US$/ha/

31 (2) Water regulation value of forest

Water regulation service value of forest can be accounted by replacement cost method, with the following formula: Ewf=10000•W•A•R•C EQ.8 Where Ewf is the water regulation value of forest (US$/yr), W is water capturing rate, for forest is 25%; A is the Extent (ha); C is the cost to build a reservoir, which is 0.01US$/m3; R is the average annual precipitation, which is 0.12m in Shanghai (Zhao &Chen, 2011).

Thus, the water regulation of forest ecosystem in ChongMing district is accounted as 82749US$/yr, and the its monetary value is 3US$ per hectare per year.

4.2.5 Water purification

Water pollution can cause damage not only to health of people and animals, but also to industry and agriculture. In China, water problem is one of the main constraints in economic and social development. Wetland ecosystem can provide water purification service, in this thesis, water purification service is considered as the capacity of wetlands to capture COD, Nitrogen (N) and Phosphorus (P) in the water. To monetary the water purification service of wetland, the replacement cost is conducted, and the following formula is used to account (Wang et al., 2017) Ep=Q•A•C EQ.9 While Ep is the water purification value of wetland (US$/yr), Q is the pollutant capturing capacity (kg/ha/yr), A is the wetland coverage (ha), C is the emission charge of water pollutant (US$/kg)

Based on reference from Wang et al., (2017), one hectare of wetland can purify 1104 kg of COD, 86kg of Nitrogen and 86kg of Phosphorus every yearand the water pollutant emission charge are 0.1 US$/kg for COD and Nitrogen, 0.4US$/kg for Phosphorus. Therefore, the water purification value of wetland in ChongMing district is 22.6 million US$ per year, and the monetary value is around 153US$/ha/yr (see Table 17).

Table 17: Water purification value of wetland in ChongMing district ((1) Wang Lijian et al.,2017; (2) Cao Ying et al., 2017) water purifying Wetland Emission Services MV pollutant capacity coverage charge valuation (US$/ha/yr) (kg/ha/yr) (1) (ha) (2) (US$/kg) (1) Apply (million US$/yr) COD 1104 147636 0.1 EQ.9 22.6 153 N 86 0.1 P 86 0.4 Overall 1276 -

4.2.6 Soil erosion prevention

Soil erosion is the displacement of the upper layer of soil. Soil erosion can be harmful in terms of decreasing soil quality, damaging the infrastructure and exacerbating flooding. Forest ecosystem can efficiently prevent soil erosion, as the roots of forest grows across in the upper layer of the soil, which can avoid landslides and debris flows from happening, on the other way, the forest vegetation

32 can eliminate the impact of raindrops on the soil surface, and thereby avoid direct damage of rainwater to the soil. In this part, soil erosion prevention is considered as a service offered by forest ecosystem which can benefit human in terms of reducing land abandonment and reduce siltation in the water.

(1) Value of reducing land abandonment

As soil erosion can lead to soil quality decrease and even desertification, as a result, these land areas are not suitable for agriculture use and will be abandoned. Preventing soil erosion can reduce land abandonment, and the accounting of monetary value of reducing land abandonment by soil erosion prevention can be conducted with shadow price method by the following formula:

(Zhao & Chen, 2011)

= • > ;< = EQ.10 10000 • A • B Where Ed is the value of reducing land abandonment (US$/yr), D is soil conservation amount (tons) which will be accounted as D=Coverage•Soil conservation rate (EQ. 11); B is the economic value of the land area, which is 92 US$ /ha/yr; α is the thickness of the soil, which is 0.4m on average; p is the volume weight of the soil, which is 1.3tons/m3(Zhao &Chenn, 2011).

As the crown density and land condition of forest land, open forest land, shrub land and other woodlands have large differences, their soil conservation capacity differ from each other. The soil conservation rate of woodlands respectively are 4.4 tons of soil per hectare for forestland, 4.8 tons/ha for open forest land and shrub land, and 2.96 tons/ha for other woodlands. Thus, (see table 18) the value of soil conservation amount by forest ecosystem in ChongMing district is 123413 tons in total, and the service value of reducing land abandonment is 2911US$ per year (Table 18).

Table 18: Value of reducing land abandonment by forest in ChongMing district ((1) Shi zhenchang 2017; (2) Zhao jun & chen shan, 2011) Land type Extent Soil Soil conservation Services (ha) (1) conservatio amount (tons) valuation n rate (US$/yr) (tons/ha) (2) Apply Apply Forest land 20715 4.41 EQ.11 91353 formula 2155 Open forest 52 4.83 251 EQ.10 6 land Shrub land 6220 4.83 30042 709 Other 596 2.96 1764 42 woodlands Total 27583 123413 2911

(2) Reducing siltation

As a result of soil erosion, the upper layer of soil is eroded, transported and deposited in the downstream river, the soil siltation in the water can cause river clogged and flood discharge capacity decrease, and ultimately lead to economic loss. Thus, the economic value of soil erosion

33 prevention includes the reducing siltation value which is accounted with the replacement cost method by the following formula: = • D • C ;C = EQ.12 B Where Er is the annual value of reducing siltation (US$), D is soil conservation amount (tons); D is the proportion of annual soil loss which silt up in the pond, river and lake, which is 24%, C is the dredging cost which is 7 US$/m3 of soil, p is the volume weight of the soil, which is 1.3tons/m3 (Zhao &Chen, 2011).

Thus, as the soil conserved by forest ecosystem in ChongMing district is 123413 tons, the reducing siltation value of forest in ChongMing distric is 159485US$ per year, which includes 0.12 million US$/yr from forest land, 325 US$/yr from open forest land, 0.04 million US$/yr by shrub land and 2280 US$/yr from other woodlands (Table 19).

Table 19: Value of reducing siltation by forest in ChongMing district ((1) Shi zhenchang 2017; (2) see table 18) Land type Extent (ha) (1) Soil conservation Services valuation amount (tons) (2) (US$/yr) Forest land 20715 91353 Apply 118056 Open forest 52 251 formula 325 land EQ.12 Shrub land 6220 30042 38824 Other 596 1764 2280 woodlands Total 27583 123413 159485

(3) Erosion prevention value

Combining the value of reducing land abandonment and reducing siltation, the erosion prevention value of forest ecosystem in ChongMing district is 0.16 million US$ every year, while the monetary value of forest erosion prevention service in ChongMing district is 6US$/ha/yr for forest land, open forest land and shrub land, 4US$/ha/yr for other woodlands (Table 20).

Table 20: Soil erosion prevention value of forest in ChongMing district ((1) see Table 18; (2) see Table 19; (3) = (1) + (2); (4) Shi, 2011) Land type Reducing land Reducing Soil erosion Extent MV abandonment siltation value prevention value (ha) (4) (US$/ha/yr) value (US$/yr) (1) (US$/yr) (2) (US$/yr) (3) Forest land 2155 118056 120211 20715 6 Open forest 6 325 331 52 6 land Shrub land 709 38824 39533 6220 6 Other 42 2280 2321 596 4 woodlands Total 2911 159485 162396 27583 6

34 4.3 Cultural services

Tourism and recreation as part of the cultural service, are one of the best contributors in the economic growth. This is considered as the “nonmaterial benefits people obtain from the ecosystems through spiritual enrichment, cognitive development, reflection, recreation and aesthetic experience” (Hein, 2010). Moreover, the preservation of an ecosystem particularly for eco-tourism can provide for the people. In Chongming District, most of the tourists visit the island for recreation and ecotourism. Tourists spend time for nature such as bird watching and national park viewing.

4.3.1 Recreation

As a part of the culture services, recreation provided by forest and wetland ecosystem contributed significantly in economic value in ChongMing district. Both wetland and forest ecosystems offer recreation services in term of parks such as XiSha Wetland Park, DongTan Wetland Park and National Forest Park. In this part, Travel Cost method is used to assess the overall recreation value of wetland and forest, it is defined by UNEP, UNSD, CBD & NORAD (2015) as “Estimates reflect the price that consumers are willing to pay in relation to visits to recreational sites”, it is conducted with the following formulas (Cao et al., 2017; Wang et al., 2017). Ec=TC+TV+CS TC= N•C TV=W•H CS=40%TC EQ.13 Where Ec is the recreation value (US$/yr), TC refers to travel cost (US$/yr), N is the number of tourists per year (person/yr), C is the average consumption of every tourist (US$/person); TV refers to travel time value (US$/yr) , W is the total length of stay (days), H is the salary rate (US$/day); CS refers to consumers surplus (US$/yr), defined as “willingness of the visitors to pay for marine- related activities” (van Beukering, 2007), which is assumed as 40% of the travel cost (US$/yr) (Cao et al., 2017).

Based on the data from ChongMing district government (2016), there are 4.67 million tourists in year 2015, their average consumption is 44 US$ per person, the evarage length of stay is 1.5 days per visitor, and the salary rate in Shanghai is 25 US$/day/person. Therefore, the recreation value of forest and wetland is 462 million US$/yr. For the simplicity of the study, as most tourists come to ChongMing ditrictit for both forest park and wetland park, it is assumed that the wetland and forest have the same recreation value which is 231 million US$/yr, thus, the monetary value of recreation is 8375US$/ha/yr provided by forest ecosystem, and 1565US$/ha/yr provided by wetland ecosystem.

4.4 Habitat services

An example of habitat services are nursery service and genepool protection. De Groot (2010) stated that habitat services has been classified to “highlight the importance of ecosystems to provide for migratory species and genepool protectors”. In Chongming district, maintenance of biodiversity has been classified since the area has plan to increase its wetlands and forest ecosystem.

35 4.4.1 Maintenance of life cycle of migratory species

Wetlands ecosystem as described in Convention on Biological Diversity are significant as the major habitat for the world’s water birds and key habitat of migratory species. It is clearly stated that “Almost all of the world’s water birds use wetlands as feeding and breeding grounds. Migratory water birds use wetlands throughout their range which can sometimes literally be from pole to pole.” (CBD Press Brief, 2015). Thus, maintenance of life cycle of migratory species in this part particularly refers to preservation of life cycle of water bird’s species provided by wetland ecosystems in ChongMing district.

The value of maintenance of life cycle of migratory species can be measured by the “willingness to pay (WTP)” method, and the data is collected from the actual surveys in ChongMing district. There are 50 visitors chosen randomly near XiSha wetland park and DongTan wetland park in ChongMing district, of which are 7 local people and 43 tourists. With this, most of the visitors understand the vital role of wetland in providing habitat for water birds and protecting their species diversity, and also appreciate to protect wetland ecosystem. Being asked how much they are willing to pay for species diversity conservation in terms of paying entrance fee of wetland park, there are only 37 visitors are willing to pay, 28 visitors of them are willing to pay no more than 10 US$, and the rest 9 visitors are willing to pay from 10 to 15 US$ (Figure 9).

Visitors

30

25

20

15

10

5

0 WTP (US$) 0 1~10 10~15 over 15

Figure 9: Willingness to pay for maintenance of water birds in ChongMing district

Based on the survey, the willingness to pay for the habitat service of wetland is 5 US$/visitor, as there are 4.67 million tourists in year 2015 (ChongMing district government, 2016), the habitat service value of wetland in ChongMing district is 23.4 million US$/yr, as the natural wetland covers 147636 ha, its monetary value of recreation by natural wetland in ChongMing district is 158 US$/ha/yr.

36 4.5 TEV of selected ecosystem services in ChongMing district

Overall, in the monetary valuation part, there are 11 ecosystem services provided by forest and wetland ecosystems in ChongMing district included in the analysis, which are (1) fishing; (2) Reed productivity; (3) Timber productivity; (4) Carbon-sequestration; (5) Capturing dust; (6) Capturing SO2; (7) water regulation; (8) Water purification; (9) Soil erosion prevention; (10) Recreation and (11) Maintenance of water birds’ diversity. The overall value of the selected services provided by natural wetland ecosystem in ChongMing district is 459.04 million US$/yr (+0.22 million US$), while services value provided by forest in ChongMing district is 279.28 million US$/yr (see Table 21).

Table 21: TEV of selected services by wetland and forest in ChongMing district Ecosystem Subservices Wetland services value Forest services value services (million (US$/ha/yr) (million (US$/ha/yr) US$/yr) US$/yr) Provisioning Fishing 103 699 services Reed 1.2 8 - Timber - 29.00 1051 Regulating C- 77.7 526 10.30 373 services Sequestration Capturing dust - - 8.50 308 Capturing SO2 0.14 1 0.24 9 Water 0.22* 1.5* 0.08 3 regulation Water 22.6 153 - - purification Soil erosion - - 0.16 6 prevention Cultural services Recreation 231 1565 231.00 8375 Habitat services Maintenance 23.4 158 0 of water birds’ diversity Overall 459.04 3110 279.28 10125 * As the water regulation value of wetland is not annual value, it is not included in the overall value

37 5. Integrated Cost-Benefit analysis and NPV of forest and wetland restoration in ChongMing 2040 master plan

In this chapter, the effect of the ChongMing 2040 master plan on ES value is analyzed based on the changes in surfaces of wetland and forest in ChongMing district (see Chapter 3.3).

5.1 Cost analysis of ChongMing 2040 master plan

A Cost-Benefit Analysis (CBA) attempts to appraise the implementation of an investment project or to embrace the adoption of a new policy that will have effects in the future (Perman et al., 2003). The method behind the CBA includes the assignation of monetary values to environmental impacts and the consideration of these values in the relation between inputs and outputs of a project.

In the end, what are being analyzed in a CBA are the monetary values that result from subtracting the costs of implementing a project from the benefits that the same project can produce. This can give an idea to decision makers whether or not to implement a project that has environmental impacts in a specific region and time.

5.1.1 Cost of wetland restoration in ChongMing 2040 plan

According to National Wetland Protection Project Implementation Plan for the 13th Five-Year Plan (China Forestry Administration, 2017), from year 2015 to 2020, the investment in the national wetland protection project will reach 0.28 billion US$, with an increasing natural wetland coverage of 200000 ha in China, so it is predicted that the cost of natural wetland restoration is around 1400 US$/ha of increased natural wetland area. As in ChongMing 2040 restoration plan, the natural wetland coverage is aiming to increase 27294 ha, so the cost of natural wetland restoration is predicted to be 38.2 million US$ in total.

5.1.2 Cost of forest restoration in ChongMing 2040 plan

Based on the information provided by experts in Shanghai Municipal Planning Bureau, for the forest restoration, the investment of the first five years (2015-2020) is expected to be 19 million US dollars which is around 3.9 million US$/yr, thus, it is assumed that the investment of forest restoration will be the same in the following years, the investment of forest restoration project from 2015 to 2040 (25 years) will be 97.5 million US dollars in total and 4458 US$/ha of restored forest.

5.2 Benefit analysis of ChongMing 2040 Project

5.2.1 Benefit of wetland restoration

As it mentioned in the chapter 3.3, for the ChongMing 2040 project, it will restore natural wetland area of 27294ha in 25 years, including 24135ha of estuary, 1897ha of brine swamp of tideland and 1262ha of herbage swamp. Within this, the wetland vegetation coverage is expected to increase from 16602ha to 19379ha in 25 years, with an increased coverage of 2774ha, including 2202ha of Phragmites australis (Reed) and 572ha of Scripus mariquete.

38 With these changes, the changes in Ecosystem services of wetland is accounted as: ES value change=monetary value • coverage change, and the Total Economic Value of wetland restoration is accounted as: TEV= ES value change/natural wetland coverage change. Thus, (see table 22) the Ecosystem service value change is an increase of 72.38 million US$, and the total economic value (TEV) of natural wetland in ChongMing district is 2652 US$/ha/yr (+1.5 US$/ha).

Table 22: changes in ES value of wetland restoration in ChongMing 2040 plan Ecosystem services Sub services ES value change TEV(US$/ha/yr) (million US$) Provisioning Fishing 19.08 699 service Raw material 0.22 8 Regulation C-sequestration 1.86 68 services Capturing SO2 0.03 1 Water regulation 0.04 1.5* Water purification 4.18 153 Cultural services Recreation 42.72 1565 Habitat services Maintenance of life 4.31 158 Total - 72.38 2652 *The unit of water regulation economic value of wetland in ChongMing district here is US$/ha

5.2.2 Benefit of forest restoration

In ChongMing 2040 plan, it is planned to restore 21873ha of forest, which is considered all of them as open forest land. Within this, it is expected to increase 3137ha of coniferous forest and 18736ha of broad-leaved forest, as all the increased timbers is considered to be landscape use, so timber productivity value is predicted not to be influenced by the forest restoration in ChongMing 2040 plan. With the same ES value change and TEV valuation method as benefit of wetland restoration above, table 23 shows the changes in ES value of forest restoration in ChongMing 2040 plan, which is assessed to be 197 million US$, and the total economic value of forest restoration in ChongMing 2040 plan is 9013US$/ha/yr.

Table 23: The changes in ES value of forest restoration in ChongMing 2040 plan Ecosystem services Sub services ES value change TEV(US$/ha/yr) (million US$) Regulating services C-sequestration 6.30 288 Capturing SO2 0.21 10 Capturing dust 7.34 336 Water regulation 0.07 3 Soil erosion prevention 0.13 6 Cultural services Recreation 183.08 8370 Total 197.13 9013

39 5.3 Cost and Benefit Ratio

Based on the cost and benefit analysis above, the wetland and forest restoration in ChongMing district have much higher benefit compared to the cost. (see table 24) For wetland restoration part in ChongMing 2040 plan, the benefit-cost ratio is predicted to be 34.18 million US$ in total and 1252 US$/ha/yr. For forest restoration part, the benefit-cost ratio is assessed as 99.60 million US$ and 4555US$/ha/yr.

Table 24: Benefit-cost ratio of wetland & forest restoration in ChongMing 2040 plan Ecosystems Wetland restoration Forest restoration (million US$) (US$/ha/yr) (million US$) (US$/ha/yr) Benefit 72.38 2652 197.13 9013 Cost 38.20 1400 97.50 4458 Benefit-cost ratio 34.18 1252 99.60 4555

5.4 Net Present Value

5.4.1 Integrated NPV

As the investment of the project and the ecosystem services change in ChongMing restoration is a dynamic process, in this part, the Net Present Value can be used to evaluate the viability of ChongMing 2040 restoration project. The Net Present Value (NPV) of a project is “the amount by which it increases net worth in present value terms” (Perman et al., 2003). This means is the value obtained after comparing private benefits with private costs of a project after its life cycle with the application of an interest rate. As it mentioned above, it is calculated as follows (Perman et al., 2003).

EQ.14

Where N refers to the net benefits, i stands for the interest rate and t represents the year.

In this part, Assumptions made for the calculation of the Net Present Value are: an interest rate (or discount rate) of 5%, 10% and 15%, and a constant economic growth during the 25 years, linked to a constant recovery rate of restored wetland, forest areas and vegetation. Normally, the discount rate is considered as 5%, however, as there is uncertainty in the future, the value of the money might discount faster than it is predicted to. Thus, in this part, the discount rates of 10% and 15% are also considered. Also, for the simplification of the study, I assumed that the government paid for 25% of all the cost in the first year (year 2015) and will pay for the rest of cost averagely in the following 24 years (until year 2039).

5.4.2 NPV of wetland restoration

The complete calculation of the Net Present Value of wetland restoration can be observed in Annex IV and V, the results are summarized on table 25. When the discount rate is 5%, the wetland restoration in ChongMing 2040 plan will be beneficial from the 5th year which is year 2019 and its

40 Net Present Value is approximately 292 million US$, and when the discount rate is 10%, the wetland restoration in ChongMing 2040 plan will beneficial also starting from year 2019, and its NPV will be around 145 million US$. While the discount rate reaches 15%, the wetland restoration can be beneficial from the 6th year (year 2020), and its NPV is predicted to be about 24 million US$ (see Annex VIII).

Table 25: Net Present Value of wetland restoration in ChongMing 2040 project Net Present Value (million US$) NPV with discount rate of 5% 292.29 NPV with discount rate of 10% 144.49 NPV with discount rate of 15% 23.94

5.4.3 NPV of forest restoration

The complete calculation of the Net Present Value of forest restoration can be observed in Annex VI and VII, and the results are summarized on Table 26. With the discount rate of 5%, and the NPV of the forest restoration in ChongMing 2040 is approximately 1103million US$, and when the discount rate is 10% and 15%, the NPV of forest restoration in ChongMing 2040 are around 534million US$ and 307million US$. With interest rate of 5%,10% and 15%, the forest restoration is going to be beneficial starting from the 4th year which is year 2018 (see Annex IX)

Table 26: Net Present Value of forest restoration in ChongMing 2040 project Net Present Value (million US$) NPV with discount rate of 5% 1103.19 NPV with discount rate of 10% 533.66 NPV with discount rate of 15% 306.90

41 7. Discussion

7.1 Uncertainties and limitations

(1) Uncertainty regarding definition of wetland area

Russi et al., 2013 defined wetlands as “areas where the water table is at or near the surface level, or the land is covered by shallow water”. Many scholoars have evaluated wetlands in the ChongMing district. Cao Ying et al, (2017), for example, distinguish three wetlands types in ChongMing district: coastal wetlands, marshes and artificial wetlands. Within this classification, natural wetlands have six types: silt coast; brine swamp of tideland; estuary; sandy island; herbage swamp; forest swamp, with the coverage of around 187638ha. However, in the ChongMing 2040 restoration document, only brine swamp of tideland, estuary and herbage swamp are considered as ‘natural wetland’, with a coverage of 147636ha. This gap of about 40000ha (representing silt coast, sandy beaches and forest swamps) probably leads to a lower estimate of the existing wetland ecosystems and the wetland restoration benefits in ChongMing 2040 plan. On the other hand, the gap also indicates that there is still a large area of natural wetland that has not got the concern of the government, and thus may not get any protection or restoration activities.

(2) Limited number of selected ecosystem services

There are various ecosystem services provided by wetland and forest ecosystems. However, only eleven ecosystem services are selected for the analysis in my thesis due to resources (time & money) limitations. Also, these ecosystem services are selected based on the advice from experts. Many ecosystem services provided by wetland and forest are therefore not included in this study, for example, in the study of ShuangTai estuary wetland evaluation by Li et al., (2013), production of O2, research and cultural benefits are considered as important wetland ecosystem services. As mentioned by Zhao Jun & Chen Shan (2011), maintenance of soil fertility is considered as an important forest ecosystem service. In reality, wetlands and forests can provide more services than those mentioned in this study. Thus, the restoration of wetlands and forests in ChongMing 2040 plan can bring more benefits to human well-being than shown in this thesis.

(3) Assumptions related to valuation

Several assumptions had to be made to obtain the results presented in my study. For instance, in cost analysis of wetland and forest restoration for ChongMing 2040 project, it is assumed that the government will pay for the 25% of the total cost in the first year and will pay for the rest 75% cost averagely in the following 24 years. However, in reality, the government might pay for the project in a more complex way. This is hard to predict in this study. Also, although the data is lacking in recreation services value accounting, but based on the interviews result, I assumed that the forest and wetland ecosystem have the same tourism service value.

7.2 Comparison with literature

(1) Value of wetland restoration

42 Many studies mention that wetland restoration projects are implemented every year. For instance, one study conducted by Tong et al (2007) explored the potential value of the SanYang wetland near Wenzhou City, China which amounted to 55,332yuan ha/yr (8,811 US$ ha/yr). The environmental services included production output (food and raw materials), water supply and regulation services: environmental purification, gas regulation and biodiversity support.

Another example is the valuation of ecosystem services from wetland restoration in Mississippi Alluvial Valley in United States focusing on three ecosystem services (greenhouse gas (GHG) mitigation, nitrogen mitigation and waterfowl recreation) which generated a value range US$ 171- $222 for GHG mitigation, nitrogen mitigation at US$1248 and waterfowl recreation at US$16. Overall, the social welfare value in Mississippi Alluvial Valley is valued between US$1435 and US$1486/ha/year (Jerkins et al, 2010).

The results of wetland restoration value in my study amounted to 2,652 US$/ha/yr. One reason is that different approaches and methods were used. Another important reason is the different environmental services selected, for example, in my study, the recreation service has a value of 1565 US$/ha/yr, which is not considered in the cases mentioned above.

(2) Valuation of Forest Ecosystem Restoration

A ccomparable example of forest restoration study is the forest ecosystem restoration valuation in Gongdong in China by Yina Yu (2008). It is a restoration program for 45years to restore the degraded forest ecosystems. the value amount was ordered as O2 relief, Carbon sequestration, soil conservation, climate regulation and water regulation, timber product and tourism. The result shows that the valuation of XiaoLiang degraded ecosystem increased to 18318US$/ha during the 45years, including 5043US$/ha of use value and 13257US$/ha of non-use value.

In my study, the value of ecosystem services from forest restoration is 9013US$/ha/year. The value of forest restoration of my study is much lower than the Gongdong case. The differences are related to different accounting method and selected ecosystem services. Also, GDP in Gongdong is higher than my study area, which can lead to the different ecosystem value.

7.3 Robustness of results

In my thesis, I have presented the net benefits of wetland and forest restoration to be 2652 US$/ha/yr and 9013 US$/ha/yr respectively. The wetland restoration value is somewhat higher than the results in literature and forest restoration has much lower value compared to another case in China. Yet, even when applying a high discount rate, the wetland and forest restoration in the ChongMing 2040 master plan is still beneficial.

The result of NPV-calculation shows that the wetland restoration in 2040 is positive for all three discount rates used for the sensitivity analysis (for the period of 25 years): 292 million US$ (5% discount rate), 144 million US$ (10%) and 24 million US$ (15%). For forest restoration the NPV is 1103 million US$ (5%), 534 million US$ (10%) and 307 million US$ (15%). The cost estimated in restoration of national wetland and forest protection is supported by the published documents from China Forestry Administration (2017) and Shanghai Municipal Planning Bureau (2018).

43 8. Conclusion

RQ1. What is the current condition of forest and wetland ecosystems? The general aim of this study is to analyse the effects of ChongMing 2040 restoration project on the services generated by wetland and forest ecosystems. Currently, the natural wetland coverage in ChongMing district is 147636ha (38%), including 10299 ha of brine swamp of tideland, 131027 ha of estuary and 6310 ha of herbage swamp. With the wetland vegetation coverage of 16602ha, including 11955 ha of Reed, 1524 ha of Spartina alterniflora and 3123 ha of Scripus mariquete. The forest covers approximately 27583ha (22%) including 19520 ha timber forest, 1195 ha bamboo forest, 52 ha of open forest land, 6220 ha of shrub land and 596ha of other woodland. The timber forest in ChongMing district is considered to have five main timber species which are: Metasequia glyptostroboides and Cryptometia fortunei (5930ha), Pinus thunbergii (254ha), Cinnamomum camp (6753ha) and Others Broad-leaved trees (6635 ha).

RQ2. What is the impact of the restoration plan on wetlands and forests? With the ChongMing 2040 plan, it is intended to increase the natural wetland coverage from 38% (2015) to 45% (2040), and for forest from 22% (2015) to 35% (2040). In addition, the number waterfowl species which account for more than 1% of global population, will increase from 7 species to 15 species until 2040. Based on my analysis, ChongMing 2040 restoration project is expected to restore 27294 hectares of wetland and 21873 ha of forest. Moreover, the wetland vegetation coverage is expected to increase 2774 ha until 2040, including 2202 ha of Phragmites australis (Reed) and 572 ha of Scripus mariquete. And the restored forest area includes 3137 ha of coniferous forest and 18736 ha of broad-leaved forest.

RQ3. What is the economic value of selected ecosystems services? The current annual monetary value provided by selected wetland ecosystem services is 459 million US$, and 279 million US$ provided by forest ecosystem in ChongMing district, based on 11 ecosystem services provided by forest and wetland ecosystems which are fishing; Reed productivity; Timber productivity; Carbon-sequestration; Capturing dust; Capturing SO2; water regulation; Water purification; Soil erosion prevention; Recreation and Maintenance of water birds’ diversity.

RQ4. How do the restoration projects affect monetary values of the ecosystem services? By conducting the ChongMingn 2040 restoration plan, until year 2040, the increased wetland area is predicted to have an ES value of around 72 million US$, with the TEV of 2652 US$/ha/yr. And the increased forest area will have an ES value of approximately 197million US$, which is 9013 US$/ha/yr.

RQ5. What are the costs and benefits of ChongMing 2040 restoration plan? The cost of the wetland and forest restoration in ChongMing 2040 is predicted to be approximately 135 million US$, including 38 million US$ for wetland restoration and 97 million US$ for forest restoration. The NPV based on the results of my study, using a discount rate of 5% and 25 years

44 (until 2040), for wetland restoration is 292 million US$ and for forest restoration 1103 million US$. Thus, the ChongMing 2040 forest and wetland restoration project is indeed beneficial.

Overall conclusion: This restoration project will have a high benefit as compared to the initial costs or investments. Also, there are still other services that can be generated from these ecosystems that were not included. Thus, the funds that the government of ChongMing District will invest in this restoration project, are actually worth undertaking and can help achieve their policy objectives and goals.

This cost-benefit analysis study of the restoration project can serve as reference, encourage and strengthen the implementation and support in the policy making and analysis. If the restoration project will be implemented efficiently, this money can contribute much to the wellbeing of the people, and to the economy of ChongMing District, and even to Shanghai.

45 References

Aerts, R., & Honnay, O. (2011). Forest restoration, biodiversity and ecosystem functioning. BMC ecology, 11(1), 29.

Millennium Ecosystem Assessment, M. A. (2003). Ecosystems and Human Well-Being. A Framework for Assessment. Report of the Conceptual Framework Working Group of the Millennium Ecosystem Assessment.

Bönhke-Heinrichs, A., & De Groot, R. S. (2010). A pilot study on the consequences of an Open Haringvliet-Scenario for changes in ecosystem services and their monetary value. Wageningen U niversiteit, Environmental Systems Analysis Group.

Brancalion, P. H. S., Viani, R. A. G., Strassburg, B. B. N., & Rodrigues, R. R. (2012). Finding the money for tropical forest restoration. Unasylva, 63(1), 239.

Cao, M., & Xue, J. (2016). Review of service function and value research on Chongming Dongtan wetland ecosystem. Journal of Nanjing Forestry University (Natural Sciences Edition), 40(5), 163- 169.

Cao Ying, Tang Chendong, MaQiang, Xue Jianhui (2017). Re-evaluation of the value of wetland ecosystem services in ChongMing county, Shanghai. Journal of Nanjing Forestry University (Natural Sciences Edition)

De Groot, R.S., Stuip, M., Finlayson, M., & Davidson, N. (2006). Valuing wetlands: guidance for valuing the benefits derived from wetland ecosystem services. International Water Management Institute.

De Groot, R.S., Wilson, M. A., & Boumans, R. M. (2002). A typology for the classification, description and valuation of ecosystem functions, goods and services. Ecological economics, 41(3), 393-408.

De Groot, R.S., Kumar, P., Van der Ploeg, S., & Sukhdev, P. (2010). Estimates of monetary values of ecosystem services. Appendix III in TEEB. EarthScan Publisher, pp.367-401

De Groot, R.S., Blignaut, J., PLOEG, S., Aronson, J., Elmqvist, T., & Farley, J. (2013). Benefits of investing in ecosystem restoration. Conservation Biology, 27(6), 1286-1293.

De Groot, R.S., Moolenaar, S., van Weelden, M., Konovska, I., de Vente, J. (2017). Guidelines to analyse and capture the costs and benefits of nature conservation, landscape restoration and sustainable land management. WUR/FSD Working paper

European Union (2013). The Economic benefits of the Natura 2000 Network. Synthesis Report. Publications Office of the European Union

46 Hein, L., 2010. Economics and Ecosystems: Efficiency, Sustainability and Equity in Ecosystem Management. Edwart Elgar Press, Cheltenham, UL, 202 pp.

Huang, L. Shao, Q., & Liu, J. (2012). Forest restoration to achieve both ecological and economic progress, Poyang Lake basin, China. Ecological engineering, 44, 53-60.

Jenkins, W. A., Murray, B. C., Kramer, R. A., & Faulkner, S. P. (2010). Valuing ecosystem services from wetlands restoration in the Mississippi Alluvial Valley. Ecological Economics, 69(5), 1051- 1061.

Johnston, R. J., Rolfe, J., Rosenberger, R. S., & Brouwer, R. (2015). Introduction to benefit transfer methods. In Benefit Transfer of Environmental and Resource Values (pp. 19-59). Springer, Dordrecht.

Fisher, B., Christie, M., de Groot, R.S., Aronson, J., Braat, L., Gowdy, J., Haines-Young, R., Maltby, E., Neuville, A., Polasky, S., Portela, R. & Ring., I. (2010). Integrating the ecological and economic dimensions in biodiversity and ecosystem service valuation. TEEB.

Lina, J., & Yanping, W. (2013). Wetland Ecosystem Services Valuation of Chongming Dongtan [J]. Chinese Agricultural Science Bulletin, 5, 032.

Lv, X.G., Liu, X.H., 2008. Wetland research progresses in China – dedicated to the50th anniversary of Northeast Institute of Geography and Agroecology, CAS. Sci.Geogr. Sin. 28, 301–308.

Martín-López, B., Gómez-Baggethun, E., García-Llorente, M., & Montes, C. (2014). Trade-offs across value-domains in ecosystem services assessment. Ecological Indicators, 37, 220-228.

Muhammad Bimo Agung Krestiono, Aulia Hapsari Juwita , Evi Gravitiani , Mugi Rahardjo. (2018). Valuation Economy Restoration Program of Mangrove Forest Pasarbanggi Village District of Rembang

Nasi, R., Wunder, S., & Campos, J. J. (2002). Forest ecosystem services: can they pay our way out of deforestation.

Nations, U. (2014). System of Environmental-Economic Accounting 2012. The World Bank.

Palmer, M. A., Bernhardt, E. S., Allan, J. D., Lake, P. S., Alexander, G., Brooks, S., ... & Galat, D. L. (2005). Standards for ecologically successful river restoration. Journal of applied ecology, 42(2), 208-217.

Perman, R. (2003). Natural resource and environmental economics. Pearson Education.

Phil-WAVES, T. W. G. Southern Palawan. 2015. Ecosystem Account for Southern Palawan: Interim Report. Manila: World Bank.

47 Richardson, C. J., Flanagan, N. E., Ho, M., & Pahl, J. W. (2011). Integrated stream and wetland restoration: A watershed approach to improved water quality on the landscape. Ecological Engineering, 37(1), 25-39.

Rodrigues, R. R., Lima, R. A., Gandolfi, S., & Nave, A. G. (2009). On the restoration of high diversity forests: 30 years of experience in the Brazilian Atlantic Forest. Biological conservation, 142(6), 1242-1251.

Shainghai Chongming District Government (SCDG) & Shanghai Planning and Land Resource Administration (SPLRA) (2017). Master Plan and general land use plan of ChongMing district Shanghai, 2016-2040.

Shanghai government (2017). Chongming ecological island development in 13th Five-Year plan

Tang Suxian, Ma Kun, Zhang Yinghu, Liu Junguo (2016). Assessment of Water Storage Capacity in Zoige Alphine Wetland. Bulletin of Soil and Water Conservation.

Tong, C., Feagin, R. A., Lu, J., Zhang, X., Zhu, X., Wang, W., & He, W. (2007). Ecosystem service values and restoration in the urban Sanyang wetland of Wenzhou, China. Ecological engineering, 29(3), 249-258.

Turner, K. (1991). Economics and wetland management. Ambio, 59-63.

UNEP-WCMC 2011. Developing ecosystem service indicators: Experiences and lessons learned from sub-global assessments and other initiatives. Secretariat of the Convention on Biological Diversity, Montréal, Canada. Technical Series No. 58, 118 pages.

Wang, R. J., Zhao, M., & Gao, J. (2011). Carbon storage of main vegetation types of urban forest, Chongming Island of China. Scientia Geographica Sinica, 31(4), 490-494.

Wang Shuqiong, Wang Hanqiang, FangYan, Likai (2014). Ability of plant carbon fixation in the coastal wetland of Chongming Island. Chinese Journal of Ecology

Xiao, D.N., Chen, W.B., Guo, F.L., 2002. On the basic concepts and contents of ecolog-ical security. Chin. J. Appl. Ecol. 13, 354–358.

Yina Yu (2008). Research on the ecological economic value for the restoration of tropical degraded forest ecosystems in Gongdong. ZhongShan University

Zhao, M., & Zhou, G. S. (2006). Carbon storage of forest vegetation in China and its relationship with climatic factors. Climatic Change, 74(1-3), 175-189.

Zhao, Q., Bai, J., Huang, L., Gu, B., Lu, Q., & Gao, Z. (2016). A review of methodologies and success indicators for coastal wetland restoration. Ecological indicators, 60, 442-452.

48 Zhuang H L. Study on the carbon dynamic of Metasequoia glyptostroboides plantation ecosystems in Chongming Island, Shanghai (in Chinese). Master thesis. Shanghai: Shanghai Jiao Tong University, 2012

49 Annex I Valuation of selected ecosystem services of forest and wetland in ChongMing district ECOSYSTEM MAIN SERVICES SUBSERVICES INDICATORS VALUATION FORMULA SERVICES METHODS Fishing Fish Actual productivity Direct Market The MV (US$/ yr) = Provisioning Raw material Reed (kg/ha/yr) Valuation Approach: Extent of the specific services Timber “use data from the production (ha) • market” (TEEB) Actual productivity (kg/ha/yr) • market price (US$/kg) Climate regulation C-sequestration Actual carbon Shadow pricing- “the C sequestration value sequestration assignment of a dollar (USD/yr) = Carbon (tons/ha/yr) value to an abstract sequestration rate commodity that is not (tons/ha/yr) • C ordinarily quantifiable market as having a market price price(US$/ton)*area but needs to be assigned (ha) a valuation to conduct a cost-benefit analysis.” (UN, 2012) Air quality regulation Capturing dust Captured air pollution Replacement cost- The value of air Regulating services Capturing SO2 (kg/ha/ yr) “services could be pollution capturing replaced with human- (US$/yr) = captured made system” ( De air pollution Groot, R. S.et al., 2002) (kg/ha/yr) • treatment cost (US$/kg) •area (ha) Water treatment Water storage Water stored (m3) Replacement cost The value of water storage (US$/yr) = stored water (m3) •reservoir construction cost (US$/m3)

50 Water Extracted pollutant Replacement cost The value of water purification (m3/yr) purification value (US$/yr) = captured pollutant (kg/yr) • emission charge (US$/kg) Soil treatment Soil erosion Topsoil maintained Replacement cost Erosion prevention prevention (kg/ha/ yr) value (US$/yr) = topsoil maintained (kg/ha/yr) •soil value (US$/kg) •area(ha) Opportunities for Recreation Actual number of Direct Market The value of tourism recreation and visitors Valuation Approach (RMB/ yr) = the tourism Number of visitors or average consumption Cultural services facilities (e.g. hotels, of tourists (RMB/n) restaurants, hiking •actual number of paths, parking lots) visitors (n/yr) (n/ha, n/facility/yr) Maintenance of life Maintenance of Species Richness Willingness to pay The value of habitat cycle of migratory water birds (US$/yr) = Habitat services species diversity willingness of average payment (US$/n) •actual number of visitors (n/yr)

51 Annex II: “Willingness to pay” questionnaire

Questions Total Local Tourist 1.Are you a local resident or tourist? 50 7 43

2. What wetland ecosystem services do you know? I don’t know 3 0 (0) 3 (7%) Air regulating 38 6 (86%) 32 (74%) Water purification 23 5 (71%) 18 (42%) Prevent soil erosion 20 4 (57%) 16 (37%) Protect species diversity 38 5 (71%) 33 (77%)

3. Do you think that we need to protect wetland for maintenance of diversity Strongly agree 42 6 (86%) 36 (84%) Somehow agree 8 1 (14%) 7 (16%) I don’t know 0 0 0 Somehow disagree 0 0 0 Strongly disagree 0 0 0

4. How much are you willing to pay for maintenance diversity by entrance fee? (RMB) 0 13 1 (14%) 12 (28%) 1-50 28 4 (57%) 24 (56%) 50-100 9 2 (29%) 7 (16%) 100-200 0 0 0 over 200 0 0 0

5. Do you know about ChongMing 2040 master plan? Yes 13 4 (57%) 9 (16%) No 37 3 (43%) 34 (79%)

6. In ChongMing 2040 master plan, there will be more water birds, how much are you willing to pay for maintenance diversity by entrance fee then? (RMB) 0 4 1 (14%) 3 (7%) 1-50 29 4 (57%) 25 (58%) 50-100 15 1 (14%) 14 (33%) 100-200 1 1 (14%) 0 over 200 1 0 1 (2%)

52 Annex III: Land coverage map of ChongMing district

53

Annex IV: Net Present Value of wetland restoration in ChongMing 2040 project (1) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 coverage rate 0 4% 8% 12% 16% 20% 24% 28% 32% 36% 40% 44% 48% 52% cost 9550000 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 Fishing 0 763140 1526280 2289421 3052561 3815701 4578841 5341982 6105122 6868262 7631402 8394543 9157683 9920823 Raw material 0 8734 17468 26202 34936 43670 52404 61139 69873 78607 87341 96075 104809 113543 C- 0 74240 148479 222719 296959 371198 445438 519678 593917 668157 742397 816636 890876 965116 sequestration Capturing 0 1092 2184 3275 4367 5459 6551 7642 8734 9826 10918 12009 13101 14193 SO2 Water 0 1638 3275 4913 6551 8188 9826 11463 13101 14739 16376 18014 19652 21289 regulation Water 0 179279 358559 537838 717117 896396 1075676 1254955 1434234 1613514 1792793 1972072 2151351 2330631 purification Recreation 0 1708604 3417209 5125813 6834418 8543022 10251626 11960231 13668835 15377440 17086044 18794648 20503253 22211857 Maintenance 0 172498 344996 517494 689992 862490 1034988 1207487 1379985 1552483 1724981 1897479 2069977 2242475 of life net benefit -9550000 952335 3098420 5244505 7390590 9536675 11682760 13828844 15974929 18121014 20267099 22413184 24559269 26705354 5% -9550000 906986 2810358 4530400 6080256 7472234 8717855 9827902 10812461 11680967 12442241 13104525 13675520 14162419 discounted net benefit 10% -9550000 865759 2560678 3940274 5047872 5921525 6594613 7096384 7452422 7685079 7813844 7855684 7825340 7735590 discounted net benefit 15% -9550000 752834 1936240 2590794 2886137 2944044 2851033 2667794 2436210 2184579 1931463 1688526 1462612 1257250 discounted net benefit

54

Annex V: Net Present Value of wetland restoration in ChongMing 2040 project (2) year 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 total coverage 56% 60% 64% 68% 72% 76% 80% 84% 88% 92% 96% 100% - rate cost 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 1193750 0 38200000

Fishing 10683963 11447104 12210244 12973384 13736524 14499665 15262805 16025945 16789085 17552226 18315366 19078506 Raw 122277 131011 139745 148479 157213 165948 174682 183416 192150 200884 209618 218352 2838576 material C- 1039356 1113595 1187835 1262075 1336314 1410554 1484794 1559033 1633273 1707513 1781752 1855992 24127896 sequestration Capturing 15285 16376 17468 18560 19652 20743 21835 22927 24019 25110 26202 27294 354822 SO2 Water 22927 24565 26202 27840 29478 31115 32753 34390 36028 37666 39303 40941 532233 regulation Water 2509910 2689189 2868468 3047748 3227027 3406306 3585586 3764865 3944144 4123423 4302703 4481982 58265766 purification Recreation 23920462 25629066 27337670 29046275 30754879 32463484 34172088 35880692 37589297 39297901 41006506 42715110 555296430 Maintenance 2414973 2587471 2759969 2932467 3104965 3277464 3449962 3622460 3794958 3967456 4139954 4312452 56061876 of life net benefit 28851439 30997524 33143609 35289694 37435779 39581863 41727948 43874033 46020118 48166203 50312288 53652123 659277599 5% 14571937 14910339 15183469 15396776 15555339 15663887 15726825 15748249 15731971 15681534 15600226 15843621 292288299 discounted net benefit 10% 7597486 7420561 7213015 6981878 6733154 6471951 6202594 5928723 5653386 5379113 5107985 4951876 144486785 discounted net benefit 15% 1073742 911946 770817 648797 544073 454754 378980 314997 261190 216103 178444 150426 23943786 discounted net benefit

55

Annex VI: Net Present Value of forest restoration in ChongMing 2040 project (1) year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 coverage 0 4% 8% 12% 16% 20% 24% 28% 32% 36% 40% 44% 48% 52% rate cost 24375000 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 C- 0 251977 503954 755931 1007908 1259885 1511862 1763839 2015816 2267793 2519770 2771747 3023724 3275700 sequestration Capturing 0 8749 17498 26248 34997 43746 52495 61244 69994 78743 87492 96241 104990 113740 SO2 Capturing 0 293973 587946 881919 1175892 1469866 1763839 2057812 2351785 2645758 2939731 3233704 3527677 3821651 dust Water 0 2625 5250 7874 10499 13124 15749 18373 20998 23623 26248 28872 31497 34122 storage Soil erosion 0 5250 10499 15749 20998 26248 31497 36747 41996 47246 52495 57745 62994 68244 prevention Recreation 0 7323080 14646161 21969241 29292322 36615402 43938482 51261563 58584643 65907724 73230804 80553884 87876965 95200045 net benefit -24375000 4838779 12724433 20610087 28495741 36381395 44267049 52152703 60038357 67924011 75809665 83695319 91580973 99466626 5% -24375000 4608361 11541436 17803768 23443517 28505775 33032753 37063952 40636323 43784423 46540558 48934919 50995712 52749276 discounted net benefit 10% -24375000 4398890 10516060 15484663 19462974 22589984 24987595 26762583 28008336 28806411 29227907 29334699 29180520 28811939 discounted net benefit 15% -24375000 4207634 9621499 13551467 16292532 18087983 19137867 19606133 19626645 19308243 18738990 17989741 17117139 16166108 discounted net benefit

56

Annex VII: Net Present Value of forest restoration in ChongMing 2040 project (2) year 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 total coverage 56% 60% 64% 68% 72% 76% 80% 84% 88% 92% 96% 100% - rate cost 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 3046875 0 97500000 C- 3527677 3779654 4031631 4283608 4535585 4787562 5039539 5291516 5543493 5795470 6047447 6299424 81892512 sequestration Capturing 122489 131238 139987 148736 157486 166235 174984 183733 192482 201232 209981 218730 2843490 SO2 Capturing 4115624 4409597 4703570 4997543 5291516 5585489 5879462 6173436 6467409 6761382 7055355 7349328 95541264 dust Water 36747 39371 41996 44621 47246 49870 52495 55120 57745 60369 62994 65619 853047 storage Soil erosion 73493 78743 83992 89242 94491 99741 104990 110240 115489 120739 125988 131238 1706094 prevention Recreation 102523126 109846206 117169286 124492367 131815447 139138528 146461608 153784688 161107769 168430849 175753930 183077010 2380001130 net benefit 107352280 115237934 123123588 131009242 138894896 146780550 154666204 162551858 170437512 178323166 186208820 197141349 2465337537 5% 54220197 55431417 56404334 57158898 57713698 58086048 58292066 58346748 58264042 58056906 57737380 58216387 1103193893 discounted net benefit 10% 28269211 27587045 26795280 25919480 24981468 23999793 22990146 21965725 20937562 19914803 18904962 18195358 553658394 discounted net benefit 15% 15171954 14162107 13157574 12174150 11223419 10313582 9450148 8636490 7874313 7164031 6505072 5988688 306898508 discounted net benefit

57 Annex VIII: NPV of wetland restoration in ChongMing 2040 master plan with discount rate of 5%,10%,15%

5% discounted net benefit 20000000

15000000

10000000

5000000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -5000000

-10000000

-15000000

10% discounted net benefit 10000000 8000000 6000000 4000000 2000000 0 -2000000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -4000000 -6000000 -8000000 -10000000 -12000000

15% discounted net benefit

4000000 2000000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -2000000 -4000000 -6000000 -8000000 -10000000 -12000000

58 Annex IX: NPV of forest restoration in ChongMing 2040 master plan with discount rate of 5%,10%,15%

5% discounted net benefit 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 -10000000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -20000000 -30000000

10% discounted net benefit 40000000

30000000

20000000

10000000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -10000000

-20000000

-30000000

15% discounted net benefit 25000000 20000000 15000000 10000000 5000000 0 -5000000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 -10000000 -15000000 -20000000 -25000000 -30000000

59