Assessing Environmental and Social Impacts ESI

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Assessing Environmental and Social Impacts (ESI)
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The problem

• Donors want to move beyond directly measurable
  economic impacts to account for environmental and
  social impacts (ESI)negative and positive
• SPIA/IAFP work has evolved to consider NRM
  research and poverty impacts but still focused on
  economic impacts expressed through markets
• Important exceptionspesticides and health,
  others?
• This activity emerging from IAFP/Nairobi aims to
  explore and apply approaches to ESI

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Exploring two broad approaches

• A. Cost-Benefit Analysis (CBA) expanded to
  include nonmarket ESI
• Convert all costs and benefits to monetary terms
• Consultant--Jeff Bennett, ANU
• B. Indicators and other measures of ESI that are
  considered separately with market costs and
  benefits
• Variants--weighted indices, cost effectiveness
• Consultantnon-economist?
• Three stages
• Desk review methods and identify relevant case
  studies
• Case studies led by centers
• Synthesize lessons and guidelines

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Expanded CBA The short story

• CBA offers a sound conceptual base for
  policy/project assessment
• BUT the scope of Its application has been limited
• Numerous innovations in application are advancing
  its analytical capacity and policy relevance
• Non-market valuation techniques are being
  developed to estimate the values in monetary
  terms of environmental and social impacts
• Stated preference techniques to estimate weights
  held by society across different groups within
  society (e.g., rich and poor - and/or across time
  e.g., current vs future generations)

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Environmental valuation

• Revealed Preference techniques for use and some
  indirect use values
• Travel cost method costs people incur to visit
  environmental assets to infer their consumer
  surplus for the visit
• Hedonic pricing technique uses the observed
  relationship between the market price for a good
  (e.g., houses) and environmental factors (noise,
  odour, scenic views, proximity to a green space,
  etc) to infer a value for those environmental
  factors

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Stated Preference techniques for all value types
including non-use values

• Contingent Valuation (CV) people asked in a
  survey if they would be willing to pay a stated
  amount for the provision of an environmental
  service
• Option valuewillingness to pay for option to use
  a NR asset in the future (non-use value)
• Choice Modelling (CM) people asked in survey to
  choose between hypothetical options, each of
  which delivers different outcomes for a different
  cost

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Applications to environmental impacts

• Wide range of applications mostly in developed
  countries (EU mandates their use)
• Fewer developing country applications but growing
• Environmental Economics Program South East Asia
  (EEPSEA) portfolios of studies
• Forthcoming volume edited by Bennett and Birol
  (from IFPRI) to showcase developing country
  applications of choice modelling
• Bennetts work on land-use change in China,
  wetland management in the Mekong River Delta,
  (also World Fish) http//www.crawford.anu.edu.au/s
  taff/jbennett.php
• Application to research?

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Social impacts

• Non-use values extend to impacts on
• Social structure (population concentrations and
  movements), social capital (networks,
  institutions), elements of social infrastructure
  (schools, churches, sports fields)
• e.g., Trade offs between environmental services
  and rural community viability in Australia
• Prospects for stated preference techniques to be
  applied in developing countries

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Social impacts Equity

• Sum of discounted streams of benefits and costs
  weighted according to impacts on different groups
  in society and/or over generations
• Rawlsian society assumes weights are zero for all
  except the worst-off
• Weights based on estimates of societal
  preferences (e.g., choice modelling)
• Or leave to the political process
• Applications

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B. Use of Indicators of ESI

• Monitor NR indicators at different scale levels
  (WB/CIAT/FAO)
• Deforestation, nutrient balance, carbon
  footprint,
• Soil quality, pollution
• TFP and TSFP (sustainability)
• Likewise social indicators at different scale
  levels
• Poverty, incomes, equity
• Nutritional levels (DALYs, Vitamin A blood test)
• Empowerment, networks
• Design of indicatorspolicy based (e.g., MDGs)
  vs participatory by stakeholders
• Intermediate indicators
• Use of indicators depends on level
• Macrohave to disaggregate sources of change
  (e.g., IFPRI/IRRI rice impacts on poverty)
• Localdirectly relate to intervention (e.g., CIP,
  CIMMYT and HP on nutrition)
• Indicators can be modeled, estimated, observed,
  or subjective via surveys

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Using indicators

• Track along with economic costs and benefits
• Dealing with substitution among variables
• Reversible vs non-reversible degradation
• How to deal with trade-offs
• Use Multi-criteria analysisweighted scores
• Bringing in the cost side
• Cost per unit change in indicator
• Convert to monetary valuesexpanded CBA!

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Conclusions

• CBA provides a rigorous conceptual framework
• Recent developments in applying non-market
  valuation techniques to ESI
• Promising initial applications in middle income
  developing countries
• Difficult to apply for the poorest?lack of
  choices, numeracy and literacy skills
• Indicators are more flexible approaches but
  usually provide several results with trade-offs
  and substitutions
• Horses for coursesprobably need a combination of
  the approaches
• Indicators needed as a first step to expanded CBA