Social and economic valuation of functioning wetlands

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Social and economic valuation of functioning
wetlands

• Diane Burgess and Sarah Cornell

This work is part of the interdisciplinary
research programme of the ESRC Centre for Social
and Economic Research on the Global Environment
(CSERGE).
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Ecology
Wetland Functioning
Structure e.g. biomass, flora, fauna
Processes e.g. photosynthesis, biogeochemistry
Boundary Conditions e.g. size, geology,
slope, climate
Wetland Uses
Knowledge e.g. environmental, cultural,
historical
Ecology-Economics interface
System Infrastructure
Services e.g. flood control, nutrient removal,
etc.
Goods/ Products e.g. agriculture, fisheries
Total Economic Value e.g.
Direct and indirect use, non-use, option values
Symbolic Values e.g. historical and cultural
Prior Value
Ecosystem Value
Economics
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Incorporating Stakeholder and Economic Analysis
into the WEDSS

• Science
• FAPs biophysical characteristics of the
  catchment

Multi-criteria decision support systems

• Economics
• Environmental/economic valuation data
• Socio-economic growth

• Social Perspective
• Drivers of socio-economic change
• Human impacts

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Strategic Decision Support Process - an
Integrated Assessment Approach

• Local
• Regional
• National/international

Scale

• Social preferences influencing government policy

Socio-Economic Drivers

• Sustainability Objectives

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Driving Pressure - State - Impact - Response
Framework
- Some factors are external to or beyond policy
control
Socio-Economic Drivers
Environmental State Changes
Environmental Pressures
Impacts on Human Welfare
Policy Response Options
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Strategic Decision Support Process - an
Integrated Assessment Approach
Scale
Socio-Economic Drivers
Development of Future Scenario(s)

• Social Discourse Analysis

Stakeholder Analysis
Development of Policy Options

• Cost-benefit analysis
• Risk-benefit analysis
• Cost-effectiveness analysis

Constraints Regulatory Financial
Evaluation of Options
Identification of Preferred Option(s)

• Multi-Criteria Analysis

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This session

• Economic Appraisal
• Stakeholder analysis
• Tomorrow - MCA

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Economic Analysis

• Economic Valuation
• how to value wetlands
• Data Requirements

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Determining economic values

• Functional Value Approach
• Identification of the function (FAPs)
• Determination of how a change in a wetland
  function will change human welfare
• Valuation of the function
• Selection of appropriate evaluation method to
  quantify this change in welfare

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Four stages of evaluatory process

• Assessment of the potential provision
• Determine the extent to which the good or service
  is provided a with/without comparison
• Identification of actual impact on human welfare
• Estimating the economic value of the good or
  service
• Threshold of wetland to retain nutrients
  (nutrient retention specific)

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Example of valuing a function

• Nutrient Export
• The removal of excess nutrients (nitrogen,
  phosphorus) from a wetland via biological,
  biochemical, physical and land management
  processes

What effect does this function have on human
welfare?
Improvement in Water Quality
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Assessment of nutrient retention

• Stage I Assess potential for retention
• FAPs identify the necessary conditions
• Input of nitrogen and phosphorus nutrients
• Vegetation type
• Soil water regime
• Soil pH.

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Stage II Determining the reduction of nutrients
released into the downstream waters
Essential to quantify the nutrient entering the
wetlands and how much is retained through the
processes that occur within the wetland

• Retained in living and dead biomass
• Biogeochemical interactions with the mineral
  content of the soil
• Deposition of particulate nutrient matter

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Stage III - Identification of Adverse effects on
human welfare
Consequences of nutrient release

• Increased productivity of ecosystems downstream
• Can lead to eutrophication in lakes or estuarine
  ecosystems and affect water quality
• Recreation
• Diversionary Costs
• Commercial Fisheries
• Non-use Values

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Stage IV Valuation of these effects

• 1) Recreation
• Expenditure on recreational activities
• e.g. expenditures by anglers has been estimated
  at 1,735.90 per fish (1999 figures)
• (Radford et al, 1991)
• Costs/time spent travelling to visit an area can
  be used as a proxy
• 2) Commercial Fisheries
• Assessment of a change in marketed output

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• 3) Diversionary
• Labour productivity forgone through ill health.
• Expenditures to avoid drinking poor quality
  water.
• Costs of improving water for human and industrial
  use in the absence of the wetland
• 4) Non-use
• Setting up a hypothetical market (contingent
  valuation)
• How much would you be willing to pay for.

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Stage V Assessment of Thresholds

• Is there a limit to the capacity of the wetland?
• If yes, then a some stage benefits from this
  function will become costs!

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Data Requirements

• Within wetland
• Quantification of wetland function itself
• i.e. How much nitrogen is retained by the wetland
• Downstream
• Impacts of a wetland are felt downstream
• Increased productivity impacts on lakes
  downstream
• i.e. What quantities of nutrients retained by a
  wetland will stop a lake becoming eutrophic?

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Functions
Data Availability? Quantifiable? within
wetland? downstream?
Methods of description (FAPs)
Selection of Schemes

• Base Line, Policy Targets, Deep green

How functions will be affected in each of the
schemes
Quantified
Methods of Valuation
Monetary
Quantified
Unquantified
Data Availability (and can it be obtained)
Estimates by analogy