perrot maitre
TRANSCRIPT
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Limitations of Cost-Based Methods Provide only rough indicator of ecosystem value
Replacement cost: often difficult to find perfect replacementsfor ecosystems goods and services, hence valuation results
tend to undervalue ecosystem value
Mitigation expenditures: often peoples perception of theeffect of ecosystem loss and what would be required tomitigate these effects do not always match those of experts.
Damage cost method: estimated damages avoided remainhypothetical in most cases. Often difficult to relate damages tochanges in ecosystems
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CONTINGENT VALUATION
The amount peoplewould pay/accept
under the theoreticalcondition that
biodiversity could bebought and sold
Peoples statedwillingness to pay
E.g. Doi Inthanon and SuthepPui National Parks, Thailand:Willingness to pay for park entryfees
Doi Inthanon 40 Baht per personSuthep Pui 20 Baht per personTOTAL VALUE $1.2 million/year
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Advantages of CV
+ Very flexible. Can be used to estimate economicvalue of about anything but best to use it to estimatevalue of goods and services easily identified andunderstood by users
+ CV is the most widely accepted method for estimating TEV including non use, option and
bequest values (only method to estimate option or existence values)
+ CV has been widely used and a great deal of researchis being conducted to improve the methodology,make results more valid and reliable and understandstrengths and limitations
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Limitations of CV Whether CV really measures WTP still controversial (most people unfamiliar making choices about ecosystem services)
Results highly sensitive to design of choice scenarios and howsurvey conducted (psychological aspects)
WTP sensitive to payment vehicle (WTA compensation)
Strategic bias to influence outcome
Non response bias
Many people including jurists, policy makers, economists andothers do not believe the results of CV analysis
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LESS COMMON METHODS
HedonicPricing
Conjoint Analysis
ChoiceExperiments
Difference in (property or wage) prices thatcan be ascribed to the existence or level of nearby environmental goods and services.
Obtains information on preferences betweenvarious alternatives of environmental goodsand services, at different price or cost.
Present a series of alternative resource or use options, each of which are defined byvarious attributes including price.
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Application of economicvaluation to PES design
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Watershed services: supply and demand
Supply of services:Upstream land uses affect the Q uantity ,Q uality , and Timing of water flows
Demand for services:Possible downstreambeneficiaries:Domestic water useIrrigated agriculture
Hydroelectric power FisheriesRecreationDownstream ecosystems
Source: World Bank 2003
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A pplying ecosystem valuation to payment for ecosystem service: simple in theory
Benefits toproducers
Costs tooffsitepopulations
Conventionalresource use:
noconservation
Conservationwith payment
for service
Payment
Conservationwithout
payment
Minimum paymentwilling to receive tochange damagingbehaviour toecosystem
Maximum paymentwilling to pay to reduceenvironmental damage
Source: A dapted from World Bank 2002
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In practice, not so simple
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In practice not so simple
Complex biophysical linkages (Brand 2003)
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In practice still not so simplevaluing effects of change
in ecosystem conditions on agricultural production
Impact on ecological function &service
Physical impact of changein functions
Socio-economic effectsof physical impact
Overall impact of Socio-economic effects
Intervention
eduction in ater:floods &drought
Increased erosion
Increase in cropdamage ( in kg )
ecrease in cropyield ( in US$)
Increase use fertiliser &pesticides ( in kg )
Increase productioncosts ( in US$)
Increase in crop production ( in kg )
Increase in cropyield ( in US$)eduction of forest cover
educed pest-control &
pollination
eforestationhange in conomicalue of griculture
(in US$)
Impact on ecological function &service
Physical impact of changein functions
Socio-economic effectsof physical impact
Overall impact of Socio-economic effects
Intervention
eduction in ater:floods &drought
Increased erosion
Increase in cropdamage ( in kg )
ecrease in cropyield ( in US$)
Increase use fertiliser &pesticides ( in kg )
Increase productioncosts ( in US$)
Increase in crop production ( in kg )
Increase in cropyield ( in US$)eduction of forest cover
educed pest-control &
pollination
eforestationhange in conomicalue of griculture
(in US$)
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Use-and non use- of economic valuation todesign payments for ecosystem services
Public payments
Costa Rica : $20-44/ha/yr for forest conservation- based on oldsubsidy based on opportunity cost of land use change
USA (Conservation Reserve Program): $50/ha/yr. Opportunity costand cost of conservation measures
Ecuador : municipal water and electrical utility companies each donate1% of total revenues for watershed protaction (oroginally 5% had been
proposed by TNC)
Brazil a water utility in the city of Sao Paulo pays 1% of totalrevenues ($2,500 per month) for the restoration and conservation of theCorumbatai watershed. Funds are used to establish tree nurseries andfor reforestation along riverbanks. Payment is outcoem of politicalnegotiation.
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Use-and non use- of economic valuation todesign payments for ecosystem services
Private payments
France : US$320/ha/year for 7 years, equivalent to 75% of farm income Opportunity cost and actual cost of switching
agricultural technology
Costa Rica : a hydropower company pays US$10 per ha/year to a local conservation NGO for hydrological services in thePeas Blancas watershed
Australia : Since 1999, farmers in the Murray Darlingwatershed pay $AUD 85/ha/yr for forest conservation for 10years or $AUD 17 per million liters of transpired water. Basedon increase in marginal benefits due to reduced soil salinityresulting of 100 ha of reforested area.
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Concluding remarks
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Applicability and limitations of
economic valuationWhen ecosystem benefits that relate to attributes such as human life,cultural or religious significance, economic valuation raises serious ethicalquestions. Ecosystem valuation may be dangerous when it focuses only onfinancial or cash benefits at the expense of other types of values thatcannot-or should not-be valued.
Results of ecosystem valuation studies are not definitive, and transferable between groups and locations. They are generally based on the perceptionof a particular group at one point in time and is not universally valid.
There is no garantee that the findings of economic valuation will supportthe wise use and management of ecosystems and their services. In fact theuse of valuation studies to identify and promote new ways of capturingecosystem values through markets or PES, can be a double-edged sword.
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Key Messages
It is easy to spend tons of money on valuation.
It is easy to value everything, yet the results of valuation are not always useful or correct.
Info on total benefit flows, even if correct, cannot provide guidance on specific conservation decisionswhich are about making incremental changes in theseflows.
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More key messages
1st. step: ask yourself what is the purpose of theanalysis, who should take its results into account
2nd. step: what is your budget, can it be adjusted, whatcapacity is available, which time frame?
3rd. step: which process? Process may be asimportant as the result. Consider stakeholders,including policy makers, participation into the study.
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And moreIn designing PES, the most appropriate method tovalue an ecosystem service is the production functionanalysis-yet it is rarely done
Be pragmatic, learn and adapt: most payments basedon OC to service provided, not on marginal benefit to beneficiary. Payments need not be cast in stone butadapted as more is learned about the system,especially biophysical relationships.
Economic valuation will only address equity issue if this is designed into the valuation study from thestart. Hence back to step 1!
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For further information: IUCN economicFor further information: IUCN economicvaluation productsvaluation products
Working Papers& Policy Briefs
Toolkit
Case Studies
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For further information
Toolkit downloadable from:
http://www.waterandnature.org/value /
New revamped website:
http://biodiversityeconomics.org
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Thank you!