Motorways versus Nature Institut for Miljøvurdering/Environmental Assessment Institute December 2005 Institut for Miljøvurdering/Environmental Nature Motorways versus Institut for Miljøvurdering/ Environmental Assessment Institute Højbro Plads 4 Motorways versus Nature DK-1200 Copenhagen K Tel. +45 3392 5981 A Welfare Economic Valuation of Impacts Fax +45 7226 5839 [email protected] www.imv.dk 05 05 About the report Motorways are comprehensive infrastructures with great impacts on the environment. Though highly important to society, impacts on nature are generally left out of the economic cost-benefit analyses when new motorways are planned. Instead the impacts are identified and presented in the environmental impact assessment – leaving the cost- benefit analyses incomplete whereby the results potentially can be misleading. The purpose of this joint project between the Environmental Assessment Institute and The Royal Veterinary and Agricultural University, is to produce a set of value estimates for the welfare economic loss of nature associated with building new motorways. The estimates can be used in cost-benefit analyses in relation to future motorway projects in Denmark. Thereby impacts on nature will be handled in a consistent manner like all other impacts in the cost-benefit analyses. About IMV IMV is a policy analysis institute. The Institute’s approach is socio-economic analyses of environmental issues. Forming critical, independent views on the basis of existing knowledge and communicating these to policy makers and public is the core objective of the Institute. IMV was established in 2002. The Institute employs both environmental economists and natural scientists. In 2005 the Institute will turn special focus on environment and growth, on EU policy and on applicability of socio-economic methods. All IMV reports are available at www.imv.dk Viscom as Viscom December 2005 Reference no.: 2002-2108-003 ISBN: 87-7992-035-7 Written by: Søren Bøye Olsen (KVL), Jacob Ladenburg (KVL), Mads Lyngby Petersen (IMV), Ulrich Lopdrup (IMV), Anja Skjoldborg Hansen (IMV) & Alex Dubgaard (KVL) Published: December 2005 Version: 1.0 Photo on cover: © Vejdirektoratet Map on page 42, 188: © Kort & Matrikelstyrelsen ( A. 96-05) © 2005, Environmental Assessment Institute For further information please contact: Institut for Miljøvurdering/ Environmental Assessment Institute Højbro Plads 4 DK-1200 Copenhagen K Tel. +45 3392 5981 Fax +45 7226 5839 [email protected] www.imv.dk FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS VERSUS NATURE DECEMBER 2005 & ENVIRONMENTAL ASSESSMENT INSTITUTE Preface This report is the conclusive output from a joint project between the Environmental Assessment Institute (IMV) and the Environmental Economics and Rural Development Division of the Food and Resource Economics Institute at The Royal Veterinary and Agricultural University (KVL). Using state-of-the-art economic valuation methods the project is aimed at estimating the welfare economic values/costs of the impacts on nature from motorway projects in Denmark. The primary purpose of the project is to widen the scope of welfare economic assess- ments of motorway projects in Denmark. Motorways are long-term, wide-ranging infra- structures, which have a major impact on nature and the environment. However, due to the absence of value estimates, impacts on nature have not been included in Danish cost-benefit analyses of infrastructure projects. Instead, these impacts are identified and presented in physical terms in environmental impact assessments – leaving the cost-benefit analysis incomplete and potentially misleading. Hence, there is an obvi- ous need for knowledge on the welfare economic values associated with the impacts on nature by motorway projects. Special attention has been given to the issues surrounding the choice between two alternative layouts of a new motorway in the Silkeborg area. It is our hope that the results of these investigations can support the ongoing political decision making process in this context. The report is aimed at people who work with the planning of public projects, which have an impact on nature. More specifically, people interested in valuation techniques should find it useful reading. 1 FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS VERSUS NATURE DECEMBER 2005 & ENVIRONMENTAL ASSESSMENT INSTITUTE 2 FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS VERSUS NATURE DECEMBER 2005 & ENVIRONMENTAL ASSESSMENT INSTITUTE Abstract The purpose of the present study is to provide better scientific basis for incorporation of impacts on nature in the decision-making process when planning future motorways in Denmark. Previously, impacts on nature have only been taken into account in the mandatory Environmental Impact Assessments, which provide a qualitative descrip- tion of impacts in physical terms. The present study provides a quantitative descrip- tion of impacts in economic value terms. This will facilitate direct incorporation of preference-based values of the impacts on nature in the cost-benefit analyses, which are regularly carried out when new motorways are planned. Two state-of-the-art valuation techniques – the Contingent Valuation Method and the Choice Experiment Method – were employed in order to estimate the monetary values associated with loss of nature due to motorway encroachment. A Contingent Valuation study is carried out on a sample of respondents living in the Silkeborg area – an area which is currently undergoing a motorway planning process. Results show that faced with the choice of the two proposed layouts for the Silkeborg motorway, 76% of the respondents prefer the Resendal layout whereas only 24% pre- fer the Ringvej layout. To ensure realisation of the preferred layout, those preferring the Resendal layout on average are willing to pay 1318 DKK per household per year, while those preferring the Ringvej are willing to pay 1428 DKK. Further, a Choice Experiment study is carried out on both a national and a local Silke- borg sample. Results show that respondents in general have strong preferences, i.e. high willingness to pay, for protection of forests and wetlands against motorway en- croachment whereas protection of heaths is less valued. It is suggested that non-use values account for more than half of the elicited values, and the presence of anchoring and embedding biases is established. Furthermore, preferences in the Silkeborg sam- ple turn out to be quite similar to those of the national sample, and it is assessed that collection of data via an internetpanel is an effective and feasible alternative to ordi- nary mailout of questionnaires. On the basis of results from both studies, it is finally concluded that the Resendal layout is the preferable layout for the Silkeborg motorway when considering the wel- fare economic value of the impacts on nature. 3 FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS VERSUS NATURE DECEMBER 2005 & ENVIRONMENTAL ASSESSMENT INSTITUTE 4 FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS VERSUS NATURE DECEMBER 2005 & ENVIRONMENTAL ASSESSMENT INSTITUTE Resume (in Danish) Formålet med undersøgelsen er at muliggøre en videnskabeligt funderet forbedret inddragelse af indvirkninger på naturværdier i den fremtidige planlægning af nye dan- ske motorveje. Hidtil har naturværdierne kun været inddraget i kraft af de lovpligtige VVM-analyser, som kvalitativt beskriver motorvejens fysiske indvirkninger på naturen. Nærværende studie tilvejebringer en kvalitativ beskrivelse af den økonomiske værdi af indvirkningerne. Dette giver mulighed for direkte indarbejdelse af præferencebaserede værdier af sådanne indvirkninger på naturen i de cost-benefit analyser, som i forvejen normalt gennemføres i forbindelse med planlægning af nye motorveje. For at estimere monetære værdier tilknyttet tab af natur som følge af nye motorveje, anvender undersøgelsen to ’state-of-the-art’-teknikker – Den Betingede Værdisæt- ningsmetode og Valghandlingseksperiment-metoden. Et Betinget Værdisætningsstudie er gennemført på respondenter fra Silkeborg- området, hvor en ny motorvej længe har været i planlægningsfasen, og det resterende spørgsmål er nu, hvilken af to foreslåede linieføringer for motorvejen skal realiseres. Resultaterne viser, at 76% af respondenterne foretrækker Resendallinien, mens 24% foretrækker Ringvejslinien. For at sikre realisering af den foretrukne linieføring, er dem, som foretrækker Resendallinien, i gennemsnit villige til at betale 1318 kroner årligt pr husstand, mens dem, som foretrækker Ringvejslinien, vil betale 1428 kroner. Desuden er et Valghandlingseksperiment anvendt på både et nationalt og et lokalt Silkeborg sample. Resultater herfra viser, at svarpersonerne har stærke præferencer, dvs. høje betalingsviljer, for beskyttelse af skove og vådområder mod nye motorveje mens beskyttelse af heder er mindre vigtigt. Resultaterne antyder, at ikke- brugsværdier udgør mere end halvdelen af de opgivne betalingsviljer, og desuden påvises problemer med såkaldt ’anchoring’ og ’embedding’. Respondenter i Silkeborg samplet viser sig at have præferencer svarende til respondenter i det nationale sam- ple. Endelig viser dataindsamling via et internetpanel sig at være et effektivt og tro- værdigt alternativ til almindelig postomdeling af spørgeskemaer. Ud fra den velfærdsøkonomiske værdi af indvirkninger på naturen, peger resultaterne fra de to metodestudier på, at Resendallinien bør vælges som linieføring for den frem- tidige Silkeborg-motorvej. 5 FOOD AND RESOURCE ECONOMICS INSTITUTE, KVL MOTORWAYS