Valuing Ecosystem $ervices of a Restored River of Grass

CERP/CEPP BENEFIT$ & COST$

ACES 2012 Workshop ESV: Why the Controversy? Everglades Case Studies!

Presenting a B:C analysis by the

2010 Arthur R. Marshall Summer Interns

Angelique Giraud presenting

(The Colorful Slides are theirs)

Valuing Ecosystem Services of a Restored “River of Grass”

GEER 2010: Ecosystem Services Valuation as a Method to Guide Future Planning, Policy, and Science

WRAC Meeting: July 8, 2010

Arthur R. Marshall Foundation Summer Interns: Angelique Giraud, Ed Pritchard, Dylan Scott, Adrienne Smith, Jim Wally

The Honorable Rock Salt gives the 2010 Summer Intern

Team a thumb’s up on their ESV “How-to-do-it” Demonstration Project!

To NRC CERP Peer Review Panel

• The Honorable Rock Salt, Deputy Assistant Secretary of the Army (Civil Works):

– From what I have seen in my travels, your 2010 Interns came up with the best illustration of how Ecosystem Services Valuation [ESV] should be applied of any I have seen.

– Admiral Grace Hopper: One good demonstration is worth a thousand expert opinions • CERP = Comprehensive Everglades Restoration Plan

ESV Premise

• All Planetary Ecosystems have value.

– Dollar value benefit of natural capital constitute our life support system

– Intrinsic value harder to quantify

• The challenge is to calculate the dollar value of ecosystems as an understandable means to protect, enhance and sustain ecosystems as resources for present and future generations.

ESV Working hypothesis

• On The Value of the World’s Ecosystem Services and Natural Capital

• Costanza, et al, synthesis of total value of planetary ecosystems, reduced to dollars per acre per year for, 17 characteristics of 18 biomes, provides a quicker, better, cheaper approach & methodology for calculating the economic value of a particular ecosystem.

– Reference: Google Nature 387, or, – http://www.uvm.edu/giee/publications/Nature_Paper.pdf

Benefit:Cost ratio perspective

• ESV Analysis is usually done with benefits resulting from costs of restoring, enhancing or preserving a system, with B > C, or not.

– Straight B:C Cost calculation of restoring a system • Corps of Engineers makes “go” decisions on B:C > 1.5

– Benefit of enhancing a system from some % of degradation to some lesser % of degradation • Estuary situation

– Cost avoidance as a benefit • Preserving a rain forest

• Avoid drought/managed water supply shortages

Introduction

• Valuing ecosystem services = ESV is an aid to environmental decision-making

• Six configurations are from ROG stakeholders

• Analysis uses Costanza, et al, synthesis of planetary ecosystem services value with benefits in terms of $$$ per acre per year

• Benefit-to-cost (B:C) ratios are indicators of optimum value

Table 1. Summary of 6 ROG configuration feature acreages.

Features

Northern Expansion

(ERNE) Bret, Drew

Estuary Driven

Restoration (EDER)

Ted, Pete, Mark, etc

Florida Crystals (FC)

Galen, Sam

Marshall Plan (MPE6)

TomP, Martha,

Performane (P)

TomV, Paul, Karl, etc

Restoration Plus

Employment (RPE)

Joan, Bevin

STA 8,200 32,500 49,200 14,600 34,000 20,000

Deep Storage

55,000 108,333 87,500 90,567 116,667 100,000

Flow Way 170,000 75,000 45,000 108,385

Forested Wetland

14,500

Total Acres: 233,200 215,833 181,700 228,052 150,667 120,000

Figure 1. ESV for floodplains ($ ac-1yr-1). Services provided by marsh/swamp configuration features share similar functions with floodplains as defined by Constanza et al. Water supply is the greatest economic benefit value.

gas regulation, $155

disturbance regulation, $4,241

water regulation, $18

water supply, $4,452

pollution control, $972

habitat/refugia, $257

food production, $28

raw material, $29

recreation, $288

cultural, $1,032

Values of Services for Floodplains/marsh ($ ac-1 yr-1)

Table 2. Ecosystem services found in water conservation features. Flow-ways provide significant ecosystem services values. Values have been adjusted to match potential functions.

Ecosystem Services STA Flow Way Deep Water

Reservoir

Cultural

Disturbance Regulation

ü (x0.5)

Food Production

Gas Regulation

Habitat

Raw Materials

Recreation

Pollution Control (x1.5)

Water Regulation

Water Supply (x0.5)

Table 3. The annual economic value of features in $ per acre per year

Features Annual Value ac

($ ac-1yr-1)

STA $8,643

Deep Water Reservoir $6,590

Flow-Way $10,499

Forested Wetland $11,470

Figure 3. Net benefit of “river of grass” including benefits to estuaries. The Everglades River of Grass Northern Expansion (ERNE) configuration provides the estuaries with the greatest ecosystem benefit. EDER=ERDC

-$40

-$20

$0

$20

$40

$60

$80

$100

$120

0 5 10 15 20 25 30 35 40 45

Pre

sen

t V

alu

e (B

illio

ns)

Years

Net Benefit of Full System

ERNE

EDER

FC

MPE6

P

RPE

Figure 4. The benefit-to-cost ratio of configurations for the total restoration of affected estuaries. *Florida Crystals (FC) has the highest B:C ratio due to the absence of a deep water reservoir, resulting in a low capital and O&M cost. EDRC=EDER (Estuary Driven Everglades Restoration)

0 5 10 15 20 25 30

ERNE

EDRC

FC*

MPE6

P

RPE

B:C

Total Restoration of Estuaries

2010 Summer Intern Conclusions

• Constanza et al. synthesis is an analytic tool

• “Sticker Benefits” overcome “Sticker Shocks”

• Florida Crystals is the best plan for total benefit and cost with B:C > 6:1 (=26:1?)

• Everglades River of Grass Northern Expansion (ERNE) has greatest net benefit economically

• Benefit is clear & the need is pressing

Follow-on work by 2011 Summer Interns

• Calculated Cost to South FL Society & Economy of the 2011 Drought/managed water supply shortage

• Projected cost over 40 year life-cycle of CERP(+), given 3 in 10 yr drought

• Projected economic cost > $11 billion

• Concluded CERP(+) fix would result in some drought/water supply cost avoidance

2011 Result - Re-do 2010 B:C equation

Note: The old data is notionally rounded off, but close, for solution by inspection:

> 2010 Benefits ~ $76 billion; Costs ~ $7.6 B;

> B:C = 10

Premise: CERP(+) saves $7.6 Billon of $11 billion in water supply shortage costs, and cost avoidance is a benefit !

New B:C = $76 + $7.6 = 11

$7.6

2011 B:C Conclusions

> New B:C = $76 + $7.6 = 11

$7.6

> Cost avoidance pays for the cost of a

River of Grass configuration, and;

Increases B:C ratio from 10 to 11

> B:C ratios > 1.5 make for go decisions !

> Keep the younger generation of scientists involved and working on the solution

NYC water supply needs case

• Classic case cited in lit: Build a ~$6 Billion dollar Water Treatment Plant (WTP), or,

• Restore the Catskills watershed + upgrade existing WTP at a cost of ~ $1 Billion

• Cost avoidance is a benefit; B:C ~ 6:1

• CERP(+) is a similar case

– Implement to avoid hi-cost, hi-tech WTP

– Cost avoidance could mean B:C ~ 11:1

ESV Recent B:C case study: Proposed Everglades Headwaters NWR

• Costanza Total Economic Value of Biomes = Benefit based on Ecosystem services value in $/acre/year for

130 Million Acres over 40 yrs = $109.1 Billion !

• Cost estimated at $700 million; use $1 Billion

• Therefore B:C = 109:1

– Costanza, et al, (1998): B:C can be as much as B:C = 100:1

– http://www.uvm.edu/research/?Page=news&storyID=1153&category=uvmresearch

Other recent ESV considerations

• WWF, TNC has ESV studies on the street

– FL Ranchlands Payment for Ecosystem Services (FRPES) Project, a start in the right direction

• White House released a report asking the Feds go in ESV direction for programs like CERP(+):

– Report to the President: Sustaining the Environmental Capital – Protecting Society & the Economy; see

– http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast_sustaining_environmental_capital_report.pdf

• Is A New Decision-Support Paradigm emerging? – When duty calls, youth replies I can

Final Points

• Numerous NGO studies and robust B:C ratios > 6:1 indicate viability of ESV for better decision-support, understandable by Office of Mgt & Budget, Congress and the Public

• When ecosystem services are not given a dollar value, the default value is zero (NRC Study, 2005); Does this place policy of no net loss of wetlands at risk?

• CERP(+) implementers should adopt the ESV approach per White House recommendations and make CERP(+) an example to follow. – Take-Home Assignment: Pester CERP principals to do so!

2013 Advertisement

• The ArtMarshall.org is looking for a few good college students in the eco-sciences or related fields, GPA > 3.0, to take up ESV where our 2012 summer interns left off.

• For details write JAMinfo@aol.com or go to www.ArtMarshall.com

PRIMARY REFERENCES

• Costanza, et al, Report on value of the planet’s 18 biomes; Google Nature 387, or http://www.uvm.edu/giee/publications/Nature_Paper.pdf

• Valuing Ecosystem Services – Towards Better Environmental Decision-making, NRC 2005; See http://www.nap.edu/catalog.php?record_id=11139

• For Additional information and more references: – SEE Handout on 2010 Summer Intern approach, etc. – Go to www.ArtMarshall.org; JAMinfo@AOL.com – See: http://www.palmbeachpost.com/opinion/letters/return-on-

saving-everglades-90-billion-883668.html?cxtype=ynews_rss

Questions