The Contribution of Non-Use Values to Inform the Management of Groundwater Systems: The Rokua Esker, Northern Finland Phoebe Koundouri, Mavra Stithou, Eva Kougea, Pertti Ala-aho, Riku Eskelinen, Timo Karjalainen, Bjorn Klove, Manuel Pulido-Velazquez, Kalle Reinikainen, Pekka M.Rossi September 2013 Grantham Research Institute on Climate Change and the Environment Working Paper No. 129 The Grantham Research Institute on Climate Change and the Environment was established by the London School of Economics and Political Science in 2008 to bring together international expertise on economics, finance, geography, the environment, international development and political economy to create a world- leading centre for policy-relevant research and training in climate change and the environment. The Institute is funded by the Grantham Foundation for the Protection of the Environment and the Global Green Growth Institute, and has five research programmes: 1. Global response strategies 2. Green growth 3. Practical aspects of climate policy 4. Adaptation and development 5. Resource security More information about the Grantham Research Institute on Climate Change and the Environment can be found at: http://www.lse.ac.uk/grantham. This working paper is intended to stimulate discussion within the research community and among users of research, and its content may have been submitted for publication in academic journals. It has been reviewed by at least one internal referee before publication. The views expressed in this paper represent those of the author(s) and do not necessarily represent those of the host institutions or funders. The Contribution of Non-Use Values to Inform the Management of Groundwater Systems: The Rokua Esker, Northern Finland Koundouri a Phoebe, Stithou a Mavra, Kougea a Eva, Ala-aho b Pertti, Eskelinen b Riku, Karjalainen c Timo, Klove b Bjorn, Pulido-Velazquez d Manuel, Reinikainen e Kalle, Rossi b M. Pekka aDepartment of International and European Economic Studies, Athens University of Economics and Business, Greece bUniversity of Oulu, Department of Process and Environmental Engineering, Water Resources and Environmental Engineering Laboratory, P.O.Box 4300, 90014 University of Oulu, Finland cThule Institute, University of Oulu, P.O. Box 7300, 90014 University of Oulu, Finland dResearch Institute of Water and Environmental Engineering (IIAMA), Universitat Politècnica de València, Camino de Vera s/n, 46022 Valencia, Spain ePoyry Finland Oy, Tutkijantie 2 A-D, 90590 Oulu, Finland _____________________________________________________________________ Abstract Rokua in Northern Finland is a groundwater dependent ecosystem very sensitive to climate change and natural variability. As such, the water level of most of the lakes is a function of the level of the groundwater table of the esker which is naturally recharged. The management of an ecosystem like this is very challenging and complex because of the many associated use and non-use values. The scope of this study is to expose, apart from the use values, the non- market values attached to the ecosystems services of groundwater systems and reveal their importance. In particular, this chapter illustrates the contribution of stated preference methods to orient policy making and presents results from an application of a choice experiment and contingent valuation method regarding ground water quantity. General public’s elicited values highlight the importance of water management policy which contributes to the sustainability of groundwater dependent ecosystems. Importantly results highlight the need to broaden the policy options beyond the consideration of market and use values of groundwater systems. Instead these systems should be considered as part of the broader ecosystems and broader services considered in decision making. Keywords: Choice experiment, Contingent valuation, Climate change, Water quantity, Groundwater dependent ecosystems. ___________________________________________________________________________ * E-mail address: [email protected] (P. Koundouri) 1. Introduction This chapter focuses on the estimation of use but importantly non-use values to inform the management of groundwater dependent ecosystems (GDEs) using as a case study the Rokua Esker in Northern Finland. GDEs are ecosystems of great importance because of the conservation, biodiversity, ecological, social and economic values they provide. Their basic characteristic is that they require access to groundwater to maintain their healthy condition. Following Evans and Clifton (2001) GDEs include: (i) terrestrial ecosystems that rely seasonally or episodically on groundwater; (ii) river base-flow systems, including aquatic, hyporheic, and riparian ecosystems that depend on groundwater input, especially during dry periods; (iii) aquifer and cave ecosystems, often containing diverse and unique fauna; (iv) wetlands dependent on groundwater influx for all or part of the time; and, (v) estuarine and near shore marine ecosystems that rely on groundwater discharge. As a result, a loss of groundwater resources is a major threat as ecosystems’ functions and composition are reliant on the appropriate supply of groundwater. Consequently these ecosystems are very sensitive to climate change and natural variability. Across Europe, aquifers resources are dramatically changing with groundwater resources to face increasing quantitative pressure mainly from land use issues and consumption pressures (Klove et al., 2011). Also, all regions of the world show an overall net negative impact of climate change, freshwater resources and ecosystems and it is expected that many areas are likely to face a reduction in the value of the services provided by water resources (IPCC, 2007). Adaptation of measures and application of appropriate management practices have an important role in determining the impact of these pressures on water resources and on ecosystems. As a response policy makers in Europe have developed the Water Framework Directive (Directive 2000/60/EC - WFD) which is probably the most ambitious piece of environmental legislation in the EU. While imposing environmental objectives to be achieved, the WFD also calls for the use of a set of instruments and procedures for analyzing the socio-economic and environmental impacts of water uses and at the same time provides guidance for the selection of measures for achieving these objectives. The WFD requires that Member States take the necessary measures for the protection of water bodies, promoting a sustainable water use based on a long-term protection of available water resources. The most cost-effective programme of measures should be selected in order to meet the WFD environmental objectives in all water bodies. For groundwater bodies, along with WFD, GWD requires the achievement of a ‘good groundwater status’ which is achieved when both its quantitative and chemical status are good. As emphasised in the new Groundwater Directive (GWD) (2006/118/EC), groundwater is characterised as particularly important for dependent ecosystems and for its use in water supply for human consumption. The value of GDEs such as wetlands or terrestrial ecosystems has been long recognized (Hynes, 1983). Therefore, according to the GWD when establishing threshold values for groundwater pollutants, Member States need to consider the extent of interactions between groundwater and associated aquatic and dependent terrestrial ecosystems. However, although, the WFD includes provisions to protect groundwater from pollution, and to ensure that groundwater abstraction does not threaten dependent terrestrial or wetland ecosystems, it is important that more emphasis is put on the fact that an aquifer has to be viewed as an ecosystem related to the surrounding environment (Danielopol et al., 2004). This is required in order to achieve an integrated and sustainable groundwater management that addresses the protection of ecologically valuable areas. Economic valuation contributes to improved water management decisions by informing decisions makers about the full social cost of water use and full benefits of the goods and services that water provides. Many of the ecosystems functions that water resources sustain, among others recreation and aesthetic benefits, biodiversity benefits, research benefits, existence benefits, do not have a market price and as such are not recognized as having an economic value by the decision makers (Bateman et al., 2003; Perman et al., 2003). Achieving a good water status requires necessarily the application of non-market economic valuation techniques, such as stated preference methods. Stated preference methods, based on social survey techniques to elicit public preferences, have been used since the 1970s by environmental economists to value the non-market benefits of environmental changes. Of these, Choice experiments (CE) are becoming a popular means of environmental valuation; where respondents are required to trade-off changes in the levels of different attributes that describe the good against the cost of these changes. Contingent Valuation (CV) method is another stated preference technique in which a hypothetical market is being created and respondents are asked directly to express their willingness to pay (WTP) for existing or potential environmental conditions not registered on any market (Mitchell & Carson, 1989). In this study both techniques are employed to explore how people value groundwater quantity in an environment very sensitive to climate change and