Essays on the Economics of Ecosystems and Biodiversity Inaugural-Dissertation zur Erlangung des akademischen Grades eines Doktors der Wirtschafts- und Sozialwissenschaften der Wirtschafts- und Sozialwissenschaftlichen Fakultät der Christian-Albrechts-Universität zu Kiel vorgelegt von Diplom-Volkswirtin Christine Bertram aus Hannover Kiel, 2015 Gedruckt mit Genehmigung der Wirtschafts- und Sozialwissenschaftlichen Fakultät der Christian-Albrechts-Universität zu Kiel Dekan: Prof. Dr. Achim Walter Erstberichterstatter: Prof. Dr. Katrin Rehdanz Zweitberichterstatter: Prof. Dr. Ulrich Schmidt Tag der Abgabe der Arbeit: 24.11.2014 Tag der mündlichen Prüfung: 20.02.2015 ACKNOWLEDGEMENTS Acknowledgements There are a number of people whom I would like to thank for having made this dissertation possible. First of all, I would like to thank my first supervisor, Prof. Dr. Katrin Rehdanz, for her constructive guidance, constant support, and valuable contributions to this dissertation. I would also like to thank Prof. Dr. Martin Quaas for insightful discussions, helpful support, and valuable contributions, particularly regarding the fourth paper of this dissertation. Moreover, I thank Prof. Dr. Ulrich Schmidt for contributing his time to be second supervisor. This dissertation was written during my time at the research area “The Environment and Natural Resources” at the Kiel Institute for the World Economy. I am grateful to Dr. Sonja Peterson and Prof. Gernot Klepper, PhD, who were supportive heads of the research area and who created a positive and constructive working environment. I also thank numerous current and former colleagues at the Kiel Institute for interesting discussions and helpful support as well as for refreshing brakes and time-outs. Above all, I thank Dr. Nadine Heitmann, Christine Merk, Sebastian Petrick, and Mareike Söder for a great and inspiring time. In addition, I would like to thank all partners and co-authors whom I worked with on various interdisciplinary projects for the good collaboration, also extending beyond the scope of this dissertation. I am also grateful to numerous researchers whom I met at workshops and conferences and who generously provided helpful comments on my work. A big thank you also goes to the student assistants at the research area for their invaluable help. Last but not least, I would like to say thank you to my beloved family, Andreas, and a number of close old friends, who have always believed in me. It is a pleasure and a great honor to be surrounded by so many wonderful people. I completed this dissertation in memory of my Dad, who passed away much too early: Thank you for always having been proud of me. I will never forget you. III CONTENTS Contents Introduction………………………………………………………………………….. 1 Part I: Valuing urban ecosystem services………………………………………….. 15 Paper 1: Recreation decisions in urban environments: Evidence from participation and choice models……………………………………………………………….. 15 Paper 2: The role of urban green space for human well-being…………………….. 65 Part II: Managing marine ecosystem services and biodiversity………………….. 106 Paper 3: On the environmental effectiveness of the EU Marine Strategy Framework Directive……………………………………………………………………….. 106 Paper 4: Biodiversity and optimal multi-species ecosystem management……….. 155 Eidesstattliche Erklärung…………………………………………………………. 198 Curriculum Vitae………………………………………………………………….. 199 IV INTRODUCTION Introduction Intact ecosystems are fundamentally important for the people living on this planet. They secure livelihoods, provide basic materials for life, and contribute to well-being and health. This insight has been known for millennia (see, e.g., Fisher et al., 2009), and the importance of ecosystem services (ES) has been discussed in science implicitly and explicitly for decades (see Daily et al. (1997) for an overview). However, it was the Millennium Ecosystem Assessment (MA, 2005) which has prominently put forward the role of biodiversity and ecosystems for human well- being and has conceptualized the term “ecosystem services” to categorize in which ways humans benefit socially and economically from biodiversity and ecosystems. According to the MA (2005), ES are “the benefits people obtain from ecosystems” and can be grouped into the following four categories: - Provisioning services, such as food, water, timber, and fiber, - Regulating services, such as climate regulation, flood protection, and water purification, - Cultural services, such as recreation, aesthetic enjoyment, and spiritual fulfillment, as well as - Supporting services, such as soil formation, and nutrient cycling. Figure 1 visualizes the interrelations between ecosystems, biodiversity, ES, and human well-being on the one hand and drivers of change as well as governance and decision-making on the other hand. It takes into account a more recent definition of ES, which are now seen more as “the direct and indirect contributions of ecosystems to human well-being” (TEEB, 2010). This is close to the original definition of the MA but makes a finer distinction between ES and benefits (see also Fisher et al., 2009). Within ecosystems, biophysical structures, processes, and functions form the basis for the provision of ES. The benefits of these ES are generated where people are directly affected and enjoy the services. In many cases, the realization of the benefits necessitates the input of other forms of capital, i.e., labor or physical capital. 1 INTRODUCTION ES can thus also be understood as a flow of services generated by the stock of natural capital, which benefit humans often only after some form of production or processing (Fisher et al., 2009). The value attached to different benefits, i.e., their importance or worth, can vary with different sets of preferences or norms. Finally, information on the multiple benefits and values of ES can be incorporated in decision-making and influence governance structures. This in turn influences the direct and indirect drivers of change, which feed back into biophysical structures, processes, and functions (TEEB, 2010). Ecosystems & biodiversity Human well-being Biophysical structures Ecosystem Functions services and processes Benefits (e.g. biomass Provisioning Values (e.g., photo- (Contribu- synthesis, production, Regulating tion to (Economic, nutrient- water flow Cultural health, social, and cycling, etc.) regulation) Supporting safety, etc.) ecological) External drivers Direct drivers Governance and (Climate Change) (Land-use change, resource- decision-making use, pollution, etc.) Indirect drivers (Demography, technology, etc.) Figure 1. Relationship between ecosystems, biodiversity, ecosystem services, and human well-being. Own presentation, based on TEEB (2010) and MA (2005). The role of biodiversity for ES provision and human well-being is important but still subject to research in many respects. It is widely acknowledged that biodiversity underpins the functioning of ecosystems and is essential for a sustained flow of ES (CBD, 2010; MA, 2005). However, there remains a vast uncertainty about the exact links between biodiversity, ES, and human well-being (CBD, 2010). One reason for 2 INTRODUCTION this is the broad meaning of the term “biodiversity”. It is defined as “the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part” (UN, 1992). This includes variability at multiple scales of biological organizations (genes, species, and ecosystems) and at different geographic scales (local, regional, or global). The relationship between biodiversity, ES, and human well-being thus depends on contexts and scales, which requires a case-wise appreciation of their interrelations and impedes an easy “one-size-fits-all” global assessment (Sukhdev et al., 2014). A major problem of our time is that biodiversity and ecosystems have been degrading with increasing speed over the last decades and still continue to degrade. To give just a few examples, over half of the 14 biomes assessed by the MA have experienced a 20-50% conversion to human use (MA, 2005). The extent and integrity of natural habitats are thus continuously declining in most parts of the world, and extensive fragmentation and degradation of habitats are contributing to biodiversity loss (CBD, 2010). Over the past few hundred years, human actions have led to an increase in species extinction rates by at least 100 times the background rates that were typical throughout Earth’s history (MA, 2005). Therefore, the target agreed on by the world’s governments in 2002 under the umbrella of the United Nations Convention on Biological Diversity (UN CBD) “to achieve by 2010 a significant reduction of the current rate of biodiversity loss at the global, regional and national level” has not been met. Instead, biodiversity is continuing to decline in all three main components – genes, species, and ecosystems (CBD, 2010). As the MA acknowledges, people all over the world have benefitted from the conversion of natural ecosystems to human-dominated systems. Agriculture, fisheries, and forestry, for example, are often major pillars of national development strategies, providing revenues that allow investments and economic growth. Still, this contributes to biodiversity loss and habitat degradation, and the costs of these activities extend beyond the direct costs of conversion and use. First, there are direct trade-offs between the provision of different ES. Managing practices that increase