The Value of Ecosystem Services: Principles for Valuing Fish Habitat

1
The Value of Ecosystem Services Principles for
Valuing Fish Habitat

• Daniel D. Huppert
• School of Marine Affairs
• University of Washington

2
Ecosystem Services (and Goods)

• Habitats support
• 1. Animals used for food, recreation, education,
  spiritual renewal
• 2. Water supply and water quality
• 3. Flood control and transportation
• 4. Housing and nice views (sometimes)
• 5. Protection from various hazards
• 6. Disease organisms and predators

3
These services satisfy human needs and
preferences, hence they have positive economic
value.

• A thing has economic value if people are willing
  to sacrifice other valued things to obtain it.
  Value is relative, there is no absolute economic
  value.

4
Four dimensions of Value

• Total value of a given quantity versus marginal
  value of having another unit (market price)
• Gross value versus value net of costs
• Market versus non-market value
• Direct value in consumption versus indirect value
  through enhanced production

5
Marginal versus Total Value

• Marginal value as demand price
• Market price where quantity demanded quantity
  supplied
• Total value of supply is area under the demand
  curve.

Supply
P
Demand
quantity
6
Example Alaska Salmon

• Marginal Value is highly variable
• Price of salmon has declined recently
• Hence, value of enhancing habitat for commercial
  salmon is way down.

7
Total verus Marginal Value

• When the price is depressed due to unusually high
  supply (e.g., salmon) 1. The total value of
  salmon sold is greater than when supply is small
  and price is high.2. But, the value of
  additional habitat is low because the marginal
  value of salmon is low .

8
Gross Value vs. Net Value

• If fish habitat generates 1 mil. of gross value
  per year, we subtract the cost of maintaining
  habitat catching fish to get the net value
  created.
• Costs include project expenditures and foregone
  value of next best use for the habitat
  (agriculture, logging, harbor, hydroelectrictywha
  tever)

9
Market versus non-market

• Markets dont exist for many habitats or
  components of habitats.
• Examples shorebird habitat on a mudflat fish
  rearing habitat in a wetland winter habitat for
  humpback whales in Hawiian waters.
• Value for these things must be inferred from
  specialized data.

10
Categories of Non-Market

• Recreational value associated with fishing,
  hunting, birding, etc. People are willing to pay
  for opportunities to participate in these
  activities.
• Existence (or passive use) value of species or
  habitats that are prized for their own sake
  (whales, Artic National Wildlife Refuge).

11
Direct valuevs indirect value

• Direct value is market or non-market value of
  final good to consumers.
• Many natural resources and habitats are
  indirectly valuable, primarily for their
  contribution to production of final goods or
  services. Value of fish habitat is
  indirect.Value of farmland is indirect,
  depending upon yield/acre prices.

12
Habitats with Mixed Uses

• Mudflat has indirect value as habitat for crabs
  and oysters and shorebirds.
• Converted mudflat has value as boat harbor.
• Filled land may be valuable for homes.
• Dredged channels have value as transportation
  corridors.
• Mudflat may have direct value as surroundings for
  long-term residents.

13
Measurement

• For small changes in market goods (e.g.
  commercial salmon) use market price times D
  quantity for gross value. Subtract enhancement
  and operating costs for net value.
• For change in non-market good, choose a study
  method appropriate to the type of good (see next
  chart).

14
Valuation Methods
15
Cautions

• None of the valuation methods deal with equity
  and fairness (neither does ecology).
• Most ecosystem valuations rely heavily on
  understanding of ecosystem functioning.
• Ecosystem values will vary widely across time and
  space. There are no fixed points of reference.

16
Mistakes to Avoid

• Economic impact concerns changes in local
  incomes employment, but says little about
  economic value.
• Ratio of GNP to energy use does not indicate the
  value of energy energy content is not
  proportional to value.
• Risky projects need to be assessed for expected
  values variances.

17
Mistakes to Avoid

• Double-counting the indirect value of inputs are
  included in price of final goods and services.
  So, dont add value of fish habitat to value of
  fishing vessels to crew wages to market value of
  salmon. Value of inputs are in market value.
• Non-use values are additional to use values for
  the same good.

18
Conclusions

• Habitat values are ubiquitous and
  multi-dimensional
• Careful accounting is required to avoid
  mis-applications.
• Substantial data collection and analysis is
  required.

19
(No Transcript)
20
(No Transcript)