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Posts Tagged ‘Ecosystem services’

We have been working with several Local Nature Partnerships over the last year or so in two specific areas:

  1. to identify the value of the natural environment in social, environmental and economic terms;and
  2. to make the case to businesses and other organisations for investment in the natural environment within their area.

This natural capital analysis fits with the objective of the Local Nature Partnerships which is to make sure that the value of the natural environment, and the value of the services it provides to the economy and the people who live there, is taken into account in local decisions, for example about planning and development.

This fits within the National Planning Policy Framework which outlines the requirements on local authorities to conserve natural capital. Section 11 of the framework relates to “Conserving and enhancing the natural environment”. This acts as a de facto ‘national guideline’ on how/when the planning system should operate in the context of accounting for natural capital.

In terms of more specific guidelines as to how to value natural capital, there is government guidance for policy and decision makers on using an ecosystems approach and valuing ecosystem services, including:

  1. a) Defra (2015) What nature can do for you. A practical introduction to making the most of natural services, assets and resources in policy and decision making
  2. b) Defra (2007) An introductory guide to valuing ecosystem services
  3. c) Other sources on valuing natural capital (ecosystem services)

In terms of Government requirements on local authorities for the natural environment beyond the NPPF:

  • The Natural Environment and Rural Communities Act 2006 requires all public bodies to consider biodiversity conservation;
  • Some habitats and species are protected under the Habitats Directive through the Conservation of Habitats and Species Regulations 2010 in England; the Birds Directive, through the Conservation of Habitats and Species Regulations 2010, and the Wildlife and Countryside Act 1981 (as amended); and
  • The Town and Country Planning Regulations 2011 require an Environmental Impact Assessment (EIA) to be undertaken in which impacts on natural capital will need to be assessed (Schedule 2 of the Regulations sets out ‘exclusion thresholds’ below which EIA does not need to be considered).

While there is no statutory requirement on local authorities to account for the natural environment in a particular way, the above guidance makes it clear that the natural environment should be given consideration. And the guidance available, including those outlined above, illustrate that there is no lack of available methods.

Our work is trying to make it easier for LNPs and local authorities to use these methods in practice. For some examples of this to date, see our case study write-ups. More will follow soon!

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A shipping lane is being proposed which would go through the Great Barrier Reef so as to improve access to a mining complex.

We must ask some questions that help decide whether the proposed lane should go through the reef or not. Who will benefit or lose out in each scenario, when, and for how long, and by how much?

In economic analysis, as £1 now is worth more than £1 in the future, future costs and benefits are discounted to create a Present Value for each impact, which you can then weigh against each other.  For a project to be recommended on economic analysis grounds only, its benefits over time need to outweigh its costs. In economic terminology Net Present Value (benefits minus costs) > 0 or Benefit Cost Ratio > 1. There are of course many other considerations in making a decision about a project that economic analysis can capture. But let’s see how we can think about this project if we were attempting to do an economic analysis (cost benefit analysis in this case).

Let’s briefly look at the case where the shipping lane does go through the reef. This will not cost the company anything extra than they had already planned. It may, however, have an economic cost to society (a negative externality); reef damage, caused by the ships, will reduce tourism in the area- a huge source of local GDP and employment in Queensland.

We can also look at the case where the shipping lane is diverted to avoid the reef. The tourist numbers and revenues don’t change, but the diversion would cost extra money to the mining and shipping companies in the form of fuel and time.

The comparison of cost of diversion and avoided damage (benefit of diversion) to the reef can conclude:

(a)    if the cost of diverting ships is less than the lost money from tourism and other marketable impacts, the shipping lane should be diverted.

(b)   if the cost of diverting ships outweighs the lost money from tourism and other marketable impacts; the direct lane should go ahead on efficiency grounds.

But hang on a minute, it’s not that simple!

We have to think about the characteristics of the reef that generate values other than the market price and revenues. It’s these social values that are not paid for in a market that are often most important to people and are what make the Great Barrier Reef, well, GREAT.

It’s not that different to what people care about when their house burns down. Do people care about the games console or the expensive pair of new jeans? No, it’s the family photos, the postcards from friends, and the paintings your son made when he was 4 years old that hang in the kitchen.

The same goes for the reef; it’s the bio-diversity, cultural heritage, national pride, the wonder and mystery, and the sheer size of it that are the most ‘valuable’.

These characteristics lead to types of value that cannot be bought, such as: Option value (I may be willing to pay to have the option to see the Reef in the future, even though I have no intention going now); Existence value (I may be willing to pay for the knowledge that the Reef exists without any intention to ever see); and Bequest value (I may be willing to pay so that my descendants can see the Reef).

By including these values, we can build a better understanding of the Total Economic Value of the Reef. ‘But how do you measure them if we can’t buy or sell them?’ I hear you cry. This is where environmental economists earn their money; they realise that these values may be hidden within the price of another good/service that is bought and sold and thus can extract it. Another method is to survey people’s preferences of different scenarios regarding the environmental asset and their associated income in each scenario.

By eliciting these values, we can monetise damage done to the reef that isn’t seen through the market and incorporate it into the decision process.

Accounting for some leeway either side, if the true cost of having a lane directly through the reef i.e. losing all values associated with reef damage, is more than the cost to companies of circumventing the reef, then there is a compelling argument that the direct lane should be shelved.

So what if, even after including these non-marketed values, the damage to the reef is less costly than the cost to the companies of bypassing it?

In reality, we can’t monetise everything and we are never 100% certain what the consequences of reef damage is in the long term; perhaps, with data only available in the future, the costs are found to be so much more than previously thought. In that case, instead of attempting to put a market value on certain attributes, we could just say that, ‘some things are critical for nature and for the people, both now and in the future, and should be protected’.

Yes, economic development may bring us monetary wealth, but perhaps we lose immaterial wealth in the process in terms of wellbeing, morals and principles. Some things are irreplaceable, and should remain that way.

Here is a link to the online petition against the lane.

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This week the UK Natural Capital Committee (more info here) released its first State of Natural Capital report with little fanfare.  It achieved a small amount of press attention, with only four environmental news outlets covering the report (according to Google News). A damp squib in terms of press coverage, which was depressing to those immersed in these concepts and convinced this is the right way forward.

It may be healthy to take a step back and a realistic view on the popularity of Natural Capital as a concept. I used Google Trends to gauge public awareness and interest in the concept.  In order for a fair comparison I compared “Natural Capital” against “Ecosystem Services”  – another environmental economics buzz word.

The Google Trend graph is presented below, with Natural Capital represented in blue and Ecosystem Services  in red:Image

Ecosystem services appears to be getting more ‘heat’ than Natural Capital, despite being around as an idea for less time. Interest in ecosystem services are increasing, while interest in Natural Capital has been flat (or even declining) over the past seven years or so.

Possible reasons for this trend are that ecosystem services as a concept is mutli-disciplinary friendly and less contentious. Consequently it has been adopted across the environmental sector.  Natural Capital, although intertwined with the ideas of ecosystem services, is more difficult to define, and although popular with business may not be popular across the environmental sector.

Perhaps the difference in adoption and interest has its source in concepts themselves. Ecosystem services as a term seeks to capture the benefits flowing from nature without trying to define nature itself. Natural Capital as a concept, shoehorns the matter that makes up nature into a bleak financial framework. For the lay person and those nervous about the ‘commodification’ of nature, Natural Capital is perhaps a step too far.

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George Monbiot’s latest rant against pricing nature is mis-informed to the extent of being counter-productive to environmental protection. His lack of understanding is compounded by his prejudices against economics.

The opening quote by Rousseau is attractive and a view I sympathise with – we are borrowing the planet from future generations. But Monbiot’s interpretation of it is that all property rights are wrong. He’s forgetting they are the basis of the incredibly prosperous society he benefits from living in.

The view that “nature is being valued and commodified so that it can be exchanged for cash” could be more sensibly given as “nature is being valued and commodified so it isn’t ignored and trashed, but instead people are charged for using it, which means they won’t waste it”.

A fundamental misconception is that this valuation/ commodification is akin to ‘privatisation’. It isn’t, privatisation means a change from public ownership (by the government) to private ownership. Trying to identify how valuable something is doesn’t mean you want to change who owns it.

The article then contains a series of other inaccurate statements, such as:

  • Characterising the “rain and the hills and the rivers” as ecosystem services. They are not. Ecosystem services are the processes that take place in these environments and benefit us all (or not if we destroy our hills with overgrazing because we didn’t value all of their services).
  • Suggesting that biodiversity offsets could be used to compensate for damage to ‘a rare meadow’: offsets, as currently proposed in the UK, would not weaken existing protections because ‘rare meadows’ are designated habitats (SSSIs) which can be classified as ‘not offsetable’.
  • Suggesting that a landscape’s “intrinsic value has already been calculated”: this is an oxymoron. As an environmental economist I recognise that nature has intrinsic value, and furthermore that this is a moral value, not one based on human preferences or measured by money (what environmental economics aims to value based on human preferences is change – the extra benefit provided by protecting the environment and the extra cost of destruction).

The environmental movement needs passionate and articulate leaders, like George Monbiot can be. But leaders need to have their facts straight; if not they will undermine the very cause they are trying to promote.

Like George, I am suspicious of the motivations of the city, and yes, these powerful economic forces, with nature valued at zero, have brought about its destruction. If we abandon the market economy, we need an alternative: can’t think of one? Neither can I. So my suggestion is that we redirect this powerful human force, the market economy, towards saving nature.

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It’s been over a month since we have posted here which is too long. But we’ve had some new calves who’ve joined the pasture and lots more work to feed them. In August, we’ll have the London Olympics and holidays (not very long ones in this pasture).  So we’ll be back from September again (or earlier if there is something that really bugs us). In the meantime, here are a few summer reads for you:

  • Speaking of the Olympics, if you’re more technically minded you may be interested in this Stated Preference Analysis for an Impact Study on the Olympic Games carried out by eftec in 2004 as part of the London’s (obviously successful) bid to host this year’s Olympics. Even if you’re not technically minded, you might be interested enough to glance at the Executive Summary which details the UK population’s valuation of the intangible benefits and costs of the games.
  • If you were in Southern Ontario, you could have found out the value of the nature around you. We haven’t checked this in detail but we have rated it “pretty cool” in our professional opinion. This is exactly the kind of work we do and of course there are the obvious caveats (the app is unlikely to be able to generate values specifically tailored to specific areas due to the unique properties and relationships humans have with each area) but caveats aside, the app will be able to give people a rough idea of the value of their local environment and perhaps we need to learn from this to make our work more fun!
  • Although we’ve been quiet The Economist has managed some chatter for us – they’ve covered ecosystem services in their Science pages. Let’s hope that after the summer we’ll make it to the main pages, and preferably with better referencing than the 1997 Costanza paper (famously quoted as being “a serious underestimate of infinity”).
  • Unfortunately, it’s not all been good news…. following 2 years of very little rain we’ve had a depressingly (and record-breaking) wet ‘summer’ in London until about three days ago and as if that’s not bad enough, it looks like it may be the early signs of a changing climate, which is making extreme weather events more likely.

With such a wide selection we hope you’ve found something that interests you in our absence, but of course if you really miss us or if you’re inspired to comment on any of the above topics you’re always welcome to Moo with us here!

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Watching the 10 o’clock news is now a slightly more enlightened experience. They managed to make the connection between droughts and floods. A good explanation of how we are in the ‘wettest drought ever’ was beyond them though. After some reassurances from Government that they are trying to avoid soggy armagedon, the report moved on to puzzlement with our water cycle.

It featured a vox pop from a motorist held up in a flood: “I just struggle to understand why we still have a hosepipe ban” she chimed. Well if your car is sitting in it, it isn’t coming down your tap is it, let alone in a drinkable condition. How difficult is that to work out? For any given rainfall, the bigger the flood (i.e. the more water running off the surface) the lower the storage (water permeating through soil into the ground).

Obviously, there has been a lot of rain, but the important clue was in the reports, which noted the speed of the floods. The quicker the water enters rivers, the less chance it has to be intercepted, either by natural processes, or by water companies. Some attention on those natural processes would be nice next. How about a science correspondent’s report from arable land in the midlands, where all non-crop vegetation has been removed to allow water to reach Northamptonshire towns as quickly as possible.

Obviously, a link to climate change and fuel prices is just fantasy.

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For more information on droughts and why there can be flooding during a drought, see this Environment Agency page.

For the interested, the weekly and monthly water situation reports from the Environment Agency can be accessed by clicking here.

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I attended a meeting researching ecosystem market opportunities yesterday. The research will inform the government’s ecosystem markets taskforce. It was an interesting gathering of people from across the environment sector, and there were lots of entrepreneurial ideas. However, these are largely extensions of existing environment sector activity. Much niche good practice is ready to be scaled up, if barriers like perverse subsidies were removed.

Links outside the environment sector were less conspicuous. Despite the strong evidence that access to the environment is the best treatment for many causes of ill-health (from heart-disease to avoiding diabetes to dementia) no one from the health sector was present. Apparently some patients are being prescribed gym memberships to stimulate physical activity, but are ‘green gyms’ being given the same level of attention?

Maybe the ‘indoor gyms’ sector is a bit better connected to the Dept of Health? It feels like more than an environment department research project is needed here. To shake the health sector out of its budget-pressured symptom-treating silo, some political leadership is called for. The greenest Government ever? How about a health-environment summit at no 10?

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