Transcript Slide 1

Economic Analysis
of Invasive Species
Module 5:
valuing ecosystem impacts
what this module covers
1. commonly-used
ecosystem valuation
techniques
2. their application to
invasive species
3. the limitations of
economic valuation
2
about
invasive species
Module 1
understanding the economic
causes of invasions
Module 2
impacts of invasive species
and ways to address them
Module 3
defining invasive-related
costs & benefits
Module 4
valuing
ecosystem impacts
Module 5
informing actions
to address invasives
Module 6
Economic Analysis of Invasive Species
market prices
looks at the market price of ecosystem goods and services
how much they cost
to buy or what they
are worth to sell
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Economic Analysis of Invasive Species
market prices
are particularly useful for valuing
the resources and products that are
harvested directly from ecosystems
direct on-site impacts on marketed goods:
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•
when invasive species replace other species which yield marketed products or
resources (for example crops, livestock products, timber or fish)
•
when invasive species themselves yield marketed products or resources (for example
crops, biofuels, livestock products, timber or fish)
Economic Analysis of Invasive Species
market prices
local use of wetland resources in Southern Africa
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•
10 wetlands on Zambezi River
(Angola, Zambia, Botswana,
Namibia, Zimbabwe, Malawi,
Mozambique)
•
carried out inventory of economically
valuable wetland products
•
local market survey conducted to find
out prices for different products
•
user survey identified levels and
quantities of use
•
crops, livestock, fish, tourism, fuel,
handicrafts, construction materials,
medicines, wild foods worth $145
million/yr or $48/ha
(Seyam et al 2001)
Economic Analysis of Invasive Species
going beyond market prices
• the reason why policy, market and price distortions and
failures result in invasions is because prices and markets
send the wrong signals to producers and consumers about
the “real” costs and benefits of their actions
• many ecosystem goods and services do not have markets
• many ecosystem goods and services are subject to
markets which are highly distorted or irregular
• in such cases, alternative valuation techniques must be
applied which do not rely on uncorrected market prices
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Economic Analysis of Invasive Species
summary of valuation methods
stated
preference
methods
revealed preference methods
market
prices
production
function
approaches
market
prices
effect on
production
surrogate
market
approaches
cost-based
approaches
travel
costs
replacement
costs
hedonic
pricing
mitigative &
avertive
expenditures
damage
costs avoided
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Economic Analysis of Invasive Species
contingent
valuation
effect on production
relate changes in the output of a marketed good
or service to a measurable change in the
quality of quantity of ecosystem goods and services
the value of
ecosystem services
as inputs to
production
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Economic Analysis of Invasive Species
effect on production
can be used to look at the changes in output that occur when invasive
species impact on the provision of particular goods and services which
are required for offsite or downstream production
When invasive species:
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•
replace other species which yield marketed products or resources which are used as
inputs for other production processes, such as natural pesticides or pollinators, or raw
materials
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interfere with natural habitat for species which are commercially important offsite such
as bird and fisheries breeding and habitat
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introduce human, plant or animal diseases and pests
•
interfere with or choke water supplies which are required for downstream irrigation,
fisheries, hydropower or urban water supplies
•
lead to changes in soil fertility, or soil erosion
Economic Analysis of Invasive Species
effect on production
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1
determine the contribution of ecosystem goods and services to the related
source of production
2
specify the relationship between changes in the quality or quantity of a
particular ecosystem good or service and output
3
relate a specified change in the provision of the ecosystem good or service
to a physical change in the output or availability of the related product
4
estimate the market value of the change in production
Economic Analysis of Invasive Species
effect on production
global agricultural costs of pollinator decline
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looks at 100 food crops which
depend on insects for pollination
•
used dependence ratios
quantifying impact lack of insect
pollinators on crop value
•
constructed bioeconomic models
using reduction in yield, quantity
produced and consumed,
dependence ratio, retail price
•
total economic value of insect
pollination €153 billion or 9.4% of
total production value
(Gallai et al 2007)
Economic Analysis of Invasive Species
travel costs
look at the ways in which the value of ecosystem goods and
services are reflected indirectly in people’s expenditures on
travel
the value of
ecosystems as
recreational or leisure
destinations
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Economic Analysis of Invasive Species
travel costs
can be used to look at the changes in tourism and
recreational earnings which occur when invasive
species make a site less or more attractive to visitors
When :
•
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the habitats being invaded are used for recreational purposes such as hiking, camping,
fishing, boating or are considered to have particular landscape beauty, which is
compromised by the presence of invasive species
Economic Analysis of Invasive Species
travel costs
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1
ascertain the total area from which recreational visitors come to visit an ecosystem,
and divide this into zones within which travel costs are approximately equal
2
within each zone, sample visitors to collect information about costs incurred in visiting
the ecosystem, motives for the trip, frequency of visits, site attributes and socioeconomic variables such as the visitor’s place of origin, income, age, education, etc
3
obtain the visitation rates for each zone, and use this information to estimate the total
number of visitor days per head of the local population
4
estimate travel costs, including both direct expenses (such as fuel and fares, food,
equipment, accommodation) and time spent on the trip
5
carry out a statistical regression to test the relationship between visitation rates and
other explanatory factors such as travel cost and socio-economic variables
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construct a demand curve relating number of visits to travel cost, model visitation
rates at different prices, and calculate visitor consumer surplus
Economic Analysis of Invasive Species
travel costs
freshwater recreation in the USA
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Conservation Research Program
(CRP) aims to mitigate
environmental effects of agriculture
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study to ascertain the impacts of
improved environmental quality on
freshwater recreation, fishing,
hunting and wildlife
•
sample of 15,000 respondents
from 4 states asking about number
of visits, travel costs
•
combined benefit of CRP actions
found to be $35 million/yr or
$2.57/ha
(Feather et al 1999)
Economic Analysis of Invasive Species
hedonic pricing
look at the ways in which the value of ecosystem goods and
services are reflected indirectly in the prices of property
the value of
ecosystems for
quality of life
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Economic Analysis of Invasive Species
hedonic pricing
can be used to look at the changes in
property prices which might occur due to
changes in the landscape wrought by invasives
When:
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the habitats being invaded have particular landscape beauty, and are associated with
premium property prices
•
the invasions leads to difficulties accessing residential areas, or interferes with the
provision of utilities such as water supplies
Economic Analysis of Invasive Species
hedonic pricing
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1
decide on the indicator to be used to measure the quality or quantity of an
ecosystem good or service associated with a particular property
2
specify the functional relationship between property prices and all of the
relevant attributes that are associated with them, including ecosystem goods
and services
3
collect data on property prices in different situations and areas which have
varying quality and quantity of ecosystem goods and services
4
use multiple regression analysis to obtain a correlation between property
prices and the ecosystem good or service
5
derive a demand curve for the ecosystem good or service
Economic Analysis of Invasive Species
hedonic pricing
urban wetlands in the USA
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valued wetland amenities in Portland
Oregon metropolitan region
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data set of 15,000 home sales
•
information gathered about property
price and its structural,
neighbourhood and environmental
characteristics as well as socioeconomic characteristics of buyer
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wetlands classified, and distance
from property computed
•
found wetland proximity exerted
significant influence on property
values
(Mahan 1997)
Economic Analysis of Invasive Species
replacement costs
look at the market trade-offs of maintaining ecosystems for
their goods and services via what it would cost to replace
degraded or lost ecosystem services by alternative means
the value of
ecosystem services in
terms of costs saved
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Economic Analysis of Invasive Species
replacement costs
can be used to look at the changes in output that occur
when invasive species impact on the provision of particular
goods and services which can be replaced by alternative sources
When invasive species:
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replace other species which yield marketed products or resources, and these species
or products have to be sourced from elsewhere or replaced by other products
•
compromise water quality and supplies, requiring alternative sources of water supply or
purification
•
lead to changes in soil fertility, necessitating the application of artificial fertilisers
•
destroy insects which provided pollination services, which have to be replaced
artificially
•
degrade ecosystems which provided soil erosion control services, which have to be
replaced by artificial soil erosion control structures
Economic Analysis of Invasive Species
replacement costs
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1
ascertain the benefits that are associated with a given ecosystem good or
service, how it is used and by whom, and the magnitude and extent of these
benefits
2
identify the most likely alternative source of product, infrastructure or
technology that would provide an equivalent level of benefits to an
equivalent population
3
calculate the costs of introducing and distributing, or installing and running,
the replacement to the ecosystem good or service
Economic Analysis of Invasive Species
replacement costs
wetland water quality in Uganda
• Nakivubo swamp in central
Kampala
• receives and treats most of city’s
industrial and residential
wastewater
• looked at costs of replacing
wetland functions with on-site
treatment plants and new
sewerage system
• found annual wetland water
treatment service value of $2
million/yr
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(Emerton et al 1999)
Economic Analysis of Invasive Species
mitigative & avertive expenditure
look at the market trade-offs of maintaining ecosystems
for their goods and services via what it would cost to
undertake the actions required to mitigate or offset the
negative effects of ecosystem service degradation or loss
the value of
ecosystem services in
terms of costs saved
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Economic Analysis of Invasive Species
mitigative & avertive expenditure
can be used to look at the cost of responding
to or remediating the ecosystem damage or
change that has been caused by invasives
When:
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•
the invasive species replace important food species, requiring drought or famine relief
to maintain local nutrition and food security
•
the invaded ecosystem provided flood attenuation services, which require the
introduction of measures to mitigate or avert the effects of flooding on downstream
settlements
•
the invasive species act as pests or diseases on plants, animals or humans, requiring
vaccination or disease control measures to be set in place
•
the invaded ecosystem provided soil erosion control services, necessitating the
installation of silt trapping and sediment removal structures downstream
Economic Analysis of Invasive Species
mitigative & avertive expenditure
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1
identify the negative effects or hazards that would arise from the loss of a
particular ecosystem good or service
2
locate the area and population who would be affected by the loss of the
ecosystem good and service, and determine a cut-off point beyond which
the effect will not be analysed
3
obtain information on people’s responses, and measures taken to mitigate or
avert the negative effects of the loss of the ecosystem good or service
4
cost the mitigative or avertive expenditures
Economic Analysis of Invasive Species
mitigative & avertive expenditure
wetland flood control in Sri Lanka
• Muthurajawela Swamp in
densely-populated urban area
on coast
• water storage capacity prevents
local flooding
• looked at costs of mitigating
effects of floods through
drainage and pumping
• found annual wetland value of
$5 million/yr or $1,750/ha
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(Emerton and Kekulandala 2002)
Economic Analysis of Invasive Species
damage costs avoided
look at the market trade-offs of maintaining ecosystems for their
goods and services via the costs and losses of the damages
arising when ecosystem services are degraded or lost
the value of
ecosystem services in
terms of costs saved
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Economic Analysis of Invasive Species
damage costs avoided
can be used to look at looking at the cost caused to
infrastructure and production when invasives interfere with
the goods and services provided by a particular ecosystem
When:
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•
the invaded ecosystem provided flood control services, and the consequent increase in
the incidence and severity of flooding leads to damages to houses, roads and
agricultural production
•
the invaded ecosystem provided water purification services, and the consequent
decline in water quality leads to human health impacts
•
the invasive species act as pests or diseases on plants, animals or humans, leading to
increased medical expenditures and losses in productivity
Economic Analysis of Invasive Species
damage costs avoided
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1
identify the protective services of the ecosystem, in terms of the degree of
protection afforded and the on and off-site damages that would occur as a
result of loss of this protection
2
for the specific change in ecosystem service provision that is being
considered, locate the infrastructure, output or human population that would
be affected by this damage, and determine a cut-off point beyond which
effects will not be analysed
3
obtain information on the likelihood and frequency of damaging events
occurring under different scenarios of ecosystem loss, the spread of their
impacts and the magnitude of damage caused
4
cost these damages, and ascribing the contribution of the ecosystem service
towards minimising or avoiding them
Economic Analysis of Invasive Species
damage costs avoided
invasive alien plants in South Africa
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•
invasion causes fire risks, and
increases likelihood of fire damage
on Cape Peninsula
•
damage also results in soil loss,
erosion and likelihood of flooding
•
looked at costs of fire and flood
damage, insurance claims, cleanup
costs
•
costs per fire/flooding event of
$150,000 (cleanup), $150,000
(flood damage), $5.7 million
(insurance claims), costs of fire
fighting ($0.5 million)
(van Wilgen et al 2001)
Economic Analysis of Invasive Species
contingent valuation
ask consumers to state their preference directly, rather than
looking at the way in which people reveal their preferences for
ecosystem goods and services through market production and
consumption
the value of
ecosystem services
as perceived by
individuals
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Economic Analysis of Invasive Species
contingent valuation
can be used to look at the non-market values that people place on
ecosystems that run the risk of invasion, and assessing people’s
perceptions of option values for particular sites, species or products
When invasive species:
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replaces species, or interferes with an ecosystem, which are objects of national
heritage, special scientific interest, or international significance
•
replaces species, or interferes with an ecosystem, which may have future use values
such as for hunting, leisure, as a gene pool
•
replaces species, or interferes with an ecosystem, which people wish to conserve for
future generations
Economic Analysis of Invasive Species
contingent valuation
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1
ask respondents their WTP or WTA for a particular ecosystem good or
service
2
draw up a frequency distribution relating the size of different WTP/WTA
statements to the number of people making them
3
cross-tabulate WTP/WTA responses with respondents’ socio-economic
characteristics and other relevant factors
4
use multivariate statistical techniques to correlate responses with
respondent’s socio-economic attributes
5
gross up sample results to obtain the value likely to be placed on the
ecosystem good or service by the whole population, or the entire group of
users
Economic Analysis of Invasive Species
contingent valuation
• most contingent valuation studies are conducted via interviews or
postal surveys with individuals, but sometimes interviews are
conducted with groups.
• the two main variants of contingent valuation are:
– dichotomous choice surveys, which present an upper and lower
estimate between which respondents have to choose
– open-ended surveys, which let respondents determine their own bids
• more sophisticated techniques are also sometimes used, such as
engaging in trade-off games or using take-it-or-leave it experiments
• the Delphi technique uses expert opinion rather than approaching
consumers directly
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Economic Analysis of Invasive Species
contingent valuation
watershed drought mitigation in Indonesia
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•
focused on water catchment
protection services of Ruteng
National Park, Flores
•
looked at local farmer WTP for
drought mitigation services in
relation to rice irrigation water
•
asked whether would pay a set
annual fee, followed up by questions
about lower and higher fees
•
found mean annual stated WTP of
$2-3/hhold, equivalent to 10% of
annual agricultural costs, 75% of
irrigation fees, 3% of food
expenditures
(Pattanayak and Kramer 2001)
Economic Analysis of Invasive Species
applicability and relevance
market prices
on-site marketed direct values
production function approaches
on-site and off-site marketed production values
surrogate market approaches
travel costs
on-site recreation and leisure activities
on-site property prices
hedonic pricing
cost-based approaches
replacement costs
mitigative & avertive expenditures
on-site and off-site (unmarketed) indirect values
damage costs avoided
stated preference approaches
contingent valuation
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on-site and off-site option and existence values
Economic Analysis of Invasive Species
limits to valuation
• generates useful and convincing information for decision-makers and
decision-making, and highlights costs and benefits that are usually
ignored, but is …
– a means to an end, not an end in itself: aim is to enable better and more
informed decisions
– is inexact: based on available knowledge and data at a particular time
– not a stand-alone exercise: requires a multidisciplinary team, not just
economists
– partial: can never fully value ecosystem services
– not universal: certain costs and benefits cannot and should not be valued
– not easily transferable: most findings are specific to area, stakeholder
group, socio-economic and natural conditions
– often biased: studies and their findings are heavily influenced by the
purposes for which they are carried out
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Economic Analysis of Invasive Species
thank you
39
Economic Analysis of Invasive Species
summary of valuation methods
stated
preference
methods
revealed preference methods
market
prices
production
function
approaches
surrogate
market
approaches
cost-based
approaches
market
prices
effect on
production
travel
costs
replacement
costs
hedonic
pricing
mitigative &
avertive
expenditures
damage
costs avoided
40
Economic Analysis of Invasive Species
contingent
valuation