Rising value of water rationale for restoring ecosystems

The scarcity of and rising value of water in South Africa supports the argument to view the restoration of ecosystems as an economically viable management option.

Here the abstract of a recent economic study on the Agulhas Plain as published by the Department of Economics, Stellenbosch University:

The Agulhas Plain is a low-lying coastal area within the Cape Floristic Region classified as one of the six plant kingdoms of the world. The area is heavily invaded by alien vegetation that infringes upon the sustainable supply of ecosystem goods and services provided by the native fynbos vegetation. Natural capital restoration is expected to recover the supply of ecosystem goods and services, and in particular to increase the amount of water available for consumption. The study conducts cost-benefit analyses to assess whether alien clearing and restoration would add value to the Agulhas Plain. The analyses indicate that the cost of alien clearing and restoration in the area cannot be justified if the additional water released holds no benefit to the Plain. A brief assessment shows that the actual average value of water on the Agulhas Plain, as estimated by other studies, is higher than the economic cost of making the water available through alien clearing and restoration. Thus this would make alien clearing and restoration economically justified.

The full paper can be downloaded here.

"Nelson Mandela's struggle for a garden on Robben Island" or "Why it makes sense to invest in ecosystem services"

It was not for nothing that Nelson Mandela fought for permission to grow a garden on Robben Island.

In his words: “To plant a seed, watch it grow, to tend it and then harvest it, offered a simple but enduring satisfaction. The sense of being the custodian of this small patch of earth offered a small taste of freedom.”

The simple act of gardening helped Nelson Mandela sustain his longer–term perspective, re-emphasised a sense of responsibility beyond himself and provided a link to freedom. Powerful stuff!

Nelson Mandela’s garden story is beautiful and gripping, but certainly not unique. The link between healthy nature and human wellbeing is well-documented.

It makes sense to invest in ecosystems services.

For the full text of remarks at a recent gathering of the Cambridge Resilience Forum read here.

Image: Nelson Mandela Foundation

Biodiversity: From hotspots to human needs

Protecting ecosystem services and biodiversity in the world's watersheds

Authors: Luck, Gary W.¹; Chan, Kai M.A.²; Fay, John P.³

Source: Conservation Letters, Volume 2, Number 4, August 2009 , pp. 179-188(10)

Publisher: Blackwell Publishing

Abstract:

Despite unprecedented worldwide biodiversity loss, conservation is not at the forefront of national or international development programs. The concept of ecosystem services was intended to help conservationists demonstrate the benefits of ecosystems for human well-being, but services are not yet seen to truly address human need with current approaches focusing mostly on financial gain. To promote development strategies that integrate conservation and service protection, we developed the first prioritization scheme for protecting ecosystem services in the world's watersheds and compared our results with global conservation schemes. We found that by explicitly incorporating human need into prioritization strategies, service-protection priorities were squarely focused on the world's poorest, most densely populated regions. We identified watersheds in Southeast Asia and East Africa as the most crucial priorities for service protection and biodiversity conservation, including Irrawaddy—recently devastated by cyclone Nargis. Emphasizing human need is a substantial improvement over dollar-based, ecosystem-service valuations that undervalue the requirements of the world's poor, and our approach offers great hope for reconciling conservation and human development goals.

Keywords: Biodiversity; carbon storage; conservation investment; conservation policy; ecosystem services; flood mitigation; human well-being; water provision;watershed

Document Type: Research article

DOI: 10.1111/j.1755-263X.2009.00064.x

Affiliations: 1: Institute for Land, Water and Society, Charles Sturt University, Albury, NSW 2640, Australia 2: Institute for Resources, Environment and Sustainability, University of British Columbia, Vancouver, British Columbia, Canada 3: Geospatial Analysis Program, Nicholas School of the Environment and Earth Sciences, Duke University, Durham, NC 27708-9328, USA

A laudable effort!

Several research questions remain, for instance: is investment in biodiversity (and resulting ecosystems goods and services) an effective developmental strategy when compared to alternatives? Who pays for these investments? Will the benefits of investing in ecosystems in fact reach the poor? By which mechanisms?

Overlaying the supply of ecosystem goods and services to the demand from a human needs perspective is a vital first step. Placing this in context of alternative developmental programmes is next. Institutions that realise those remaining real values in a sustainable way are key to implementation.

Investing in ecosystems

Economists have long assisted with valuing the world's natural assets and ecosystems. To create functional markets to exchange this value is the next step. I agreed to talk on this in the local context of the fynbos biome....

“After all those cosy years of working together,  show me the money”: 

From economic valuation to real-world investment in the fynbos biome

Key words: economic valuation, ecosystems, fynbos, decision making, institutional processes and arrangements

The last decade has seen several studies demonstrating the economic value of ecosystems and the fynbos biome is no exception.  Despite notable criticism on some of these studies, on average they have succeeded in raising the awareness on the value of well-functioning ecosystems.  In some instances this has led to conservation and restoration success on the ground, but what is needed is an institutional system that will translate abstract economic values into real financial investments in ecosystems. With continued increased pressure on the world’s biodiversity on the one hand and shifting agendas towards climate change and a rather reductionist and in practice partial ecosystems goods and services (EGS) analysis on the other, economists and ecologists need to build on their successes and find new meaning in their work on total systems value, as opposed to a focus on total economic value (TEV) or an EGS analysis only.  Economists and ecologists would also do well by soliciting the services of those who can assist in the development of new institutional processes and arrangements that can capture the real financial benefits of well-functioning ecosystems beyond the usual short-term and consumptive benefits.  Based on a analysis of current bottlenecks to realise real-world investments in specifically fynbos ecosystems, an action-orientated agenda focussed on performing economic valuation studies to better serve the needs of decision makers, an increased understanding of and leverage of total systems value, and a renewed focus on the institutional process and arrangements to capture fynbos ecosystem values, is proposed.  

ERE conference Cape Town

For the first time in almost a decade South Africa had its own Environmental & Resource Economics conference. 

I scribbled down a few notes:

1. Sometimes one needs to speak a hard language to reach soft targets. Speaking in terms of rands and cents can help achieve objectives of care and justice. Economics can be used for the good. It is not only a throwing of "the bones". Really.

2. The narrative to see the environment as a provider of goods and services in support of human well-being is well-entrenched. 

3. Watch those numbers! Flow values, stock values, net present values, discounted values, operational costs etc etc. Always compare apples with apples.

4. Seems like we need a fresh injection of institutional economics to support an analysis on the creation of viable institutions that can support the development of markets in ecosystems services. 

5. The transition from no markets to full PES markets rises many questions on the speed, timing and focus of market reform.  There should be some good learning somewhere in the historical development of financial markets and the transition from communism to market-economies.

6. Talking about payments for ecosystems services (PES); it is not a macro-developmental concept yet, but the signs are encouraging.  With still comparable low values to water and carbon services generated in rural areas, volumes and scale factors remain crucial for success.

7. Be cautious on how much PES at the end will help the rural poor. Do not oversell. Power traps can be deeply entrenched.

8. With increased scarcity of ecosystems good and services, investment in understanding how the "ecosystem supply factory" is working makes sense. More integrated socio-ecological systems modelling.

9. ERE operates in context. Valuation is a means to and end. Economic analysis and modelling is one input to the decision-making process. Invest in understanding where this can achieve the highest leverage.

It was a great event.

 

Real world impact of ecosystem valuation

Many environmental economists and ecologists seem to find common ground in the language of valuing "ecosystem goods and services". Since the Millenium Ecosystem Assessment, numerous reports have been produced on the topic.  An increasingly important question that is being asked is whether this is all worth the effort.  Does it really make such a difference to provide an economic argument for the conservation and restoration of ecosystems? Would it not be better to just frame an ecological or biodiversity argument?  These questions are very relevant as a typical EGS valuation study does take a lot of effort, discipline and can be quite costly.

A new report 'Valuation of Ecosystem Services and Strategic Environmental Assessment. Lessons from Influential Case Studies' released by the Netherlands Commission on Environmental Assessment provides evidence that results are indeed emerging on a policy level.  

The main messages are as follows:

1. Recognising ecosystems services enhances transparent and engaged decision making

2. Insights in the distribution of ecosystem service benefits highlights poverty and equity issues

3. Valuation of ecosystem services directly facilitates sustainability

4. SEA and planning processes are enhanced by the identification and quantification of ecosystem services

5.  Valuation of ecosystem services is more influential with decision makers 

6.  Methodological complexities do not necessarily hinder influential decision making 

7.  SEA provides a platform to put valuation results in a societal context 

In a nutshell, the value of such a economic valuation of EGS approach is that all beneficiaries are identified and included as stakeholders, all values are taken into account and the distribution of such value can be explicitly included, ecosystems are immediately embedded in socio-economic realities and development needs of the area/city/region/country and the economic value of nature's services communicates far easier to policy makers concerned with poverty and development then biodiversity concepts on its own. 

Ecosystems have a value. Proper investment in such ecosystems improves human well-being and can save households, firms, farmers and authorities a lot of money.