The Economics of Ecosystems and Biodiversity

Biodiversity and Water

Patrick ten BrinkTEEB for Policy Makers Co-ordinator

Head of Brussels OfficeInstitute for European Environmental Policy (IEEP)

CBD COP 10Water Ecosystems and Climate Change

Room 211A level 1B16:30 – 17:45

22 October 2010

Nagoya, Japan

1

TEEB origins

Source: Bishop (2010) Presentation at BIOECON

TEEB’s Genesis and progress

“Potsdam Initiative – Biological Diversity 2010”

1) The economic significance of the global loss of biological diversity

TEEB Interim Report @ CBD COP-9, Bonn, May 2008

Brussels 13 Nov 2009

SwedenSept. 2009

India, Brazil, Belgium, Japan % South Africa

Sept. 2010

LondonJuly 2009

Ecosystem Services and awareness of values

Provisioning services• Food, fibre and fuel• Water provision• Genetic resources

Regulating Services• Climate /climate change regulation• Water and waste purification • Air purification • Erosion control• Natural hazards mitigation (e.g. Flood control)• Pollination• Biological control

Cultural Services • Aesthetics, Landscape value, recreation

and tourism• Cultural values and inspirational services

Supporting Services - e.g. soil formation

Habitat Services - e.g. nurseries

+ Resilience - e.g. to climate change

Market values – known and generally taken into account in decision making on land use decisions

Value long ignored, now being understood >> new instruments (e.g. PES), markets, investments

Value often appreciated only after service gone and damage done >> damage costs

Values generally rarely calculated

Value often appreciated only after service is degraded or gone > replacement, substitute costs

The benefits to our economies, livelihoods and wellbeing have generally not been taken into account. There is, however, now

a new awareness of the value of ecosystem services and a growing use of instruments to reward benefits.

Sometimes value explicit / implicit in markets (e.g. tourism spend / house prices)

Ecosystem service generally unpriced, often taken for granted, until service is lost

‘‘We never know the worth of water 'til the well is dry’.

English proverb

‘Men do not value a good deed unless it brings a reward’

Ovid, B.C. 43 – 18 A.D., Roman Poet

Presentation overview

The Economics of Ecosystems and Biodiversity in Policy Making

The Global Biodiversity Crisis

Responding to the value of nature

Available Solutions• Rewarding benefits: PES, REDD+, fiscal transfers, ABS, markets, GPP et al

• Subsidy reform • Addressing losses : Regulation legislation, liability, taxes & charges, offsets, banking

• Protected Areas• Investment in natural capital

Measuring what we manage

http://www.teebweb.org/

• Ecosystem service indicators• Accounts• Valuation and assessment

Valuation and policy making:from valuing natural assets to decisions

To underline the value of natural assets & help determine where ecosystem services can be provided at lower cost than man-made technological alternatives

e.g. water purification and provision, flood control

Conservation / restoration and other Investments decisionsPES instruments at different scales and by different stakeholders

Avoided cost of alternative water purification and provisione.g. USA-NY – Catskills-Delaware watershede.g. New Zealand – Te Papanui Park - watere.g. Mexico – PSAH nationally, and local application eg Saltillo City, Zapaliname mountains

Avoided loss of output e.g. Venezuela: PAs to avoid sedimentation & loss of hydro output

Lower cost of flood control e.g. Vietnam and restoring/investing in Mangroves - cheaper than dyke maintenancee.g. Belgium Schelde river: natural flood defence - cheaper than man-made infrastructure

Inform land-use decision - Creating and improved evidence base

Example: India: Floodplain between Yamuna River and Delhi.

Choice: convert floodplain / embankment plan or not

Evidence showed that ecosystem benefits exceeded opportunity costs of conversion.

Decision: Delhi government halted embankment plan of Yamuna until further order

. Avoid socially less good investment decisions

Valuation and policy making:from valuing natural assets to decisions

PES: They exist, they work(though lots of lessons to learn)

• Instrument growing in applications– 300 PES programmes globally, range of ecosystem services (Blackman & Woodward, 2010)

– Broad estimate for global value: USD 8.2 billion (Ecosystem Marketplace, 2008)

– USD 6.53 billion in China, Costa Rica, Mexico, the UK and the US alone. (OECD 2010)

– increasing by 10-20% per year (Karousakis, 2010)

• For Specific services - e.g. provision of quality water (NY), protect groundwaters (J, D), cleanse coastal waters (Sw), carbon Storage (NZ, Uganda), invasive alien species (SA - WfW), biodiversity (EU)

• Multiple services: e.g Costa Rica’s PSA - carbon, hydrological services preserving biodiversity and landscape beauty.

• Multiple objectives - e.g. Mexico’s PSAH – hydrological services, deforestation, poverty

• Big and small

– E.g. 496 ha being protected in an upper watershed in northern Ecuador

– eg. 4.9 million ha sloped land being reforested by paying landowners China.

• Public (municipal, regional, national) and private (eg Vittel (Fr), Rochefort (B) for quality water

• Local and national and international - e.g. REDD+ for forest carbon plus

See also Chapter 5 TEEB for Policy Makers

Multiple Objectives : PSAH MexicoPES to forest owners to preserve forestManage and not convert forest• e.g. cloud forest US$ 40 per ha/year;• e.g. other tree-covered land US$ 30 per ha/year

Hydrological services: Aquifer Recharge; Improved surface water quality, Reduce frequency & damage from flooding

Munoz 2010); Muñoz-Piña et al. 2008; Muñoz-Piña et al. 2007.

Reduce Deforestation Address Poverty

Multiple Objectives : PSAH Mexico

Balance of priorities varied over time

An instrument can evolve and respond to changing needs

Munoz 2010); Muñoz-Piña et al. 2008

Aquifers

Water scarcity

Deforestation

Poverty

P

A

WS

D

PSAH Mexico

Source Munoz 2010); Muñoz-Piña et al. 2008

Year in which forest is signed into the program …

2003 2004 2005 2006 2007 2008 2009 Total

Surface incorporated into the program (‘ooo ha)

127 184 169 118 546 654 567 2,365

Forest owners participating (individuals + collectives)

272 352 257 193 816 765 711 3,366

Total payment to be made over 5 years (US$ m)

17.5 26.0 23.5 17.2 84.2 100.9 87.4 303

Results: PSAH reduced the rate of deforestation from 1.6 % to 0.6 %. 18.3 thousand hectares of avoided deforestation Avoided GHG emissions this equates 3.2 million tCO2e.

Ecosystem Valuation Benefits

Annual Value (2005, CDN $)

Carbon Values 366 millionAir Protection Values 69 millionWatershed Values 409 millionPollination Values 360 millionBiodiversity Value 98 millionRecreation Value 95 millionAgricultural Land Value

329 million

Multiple Benefits: at the Urban level – City of Toronto• Estimating the value of the Greenbelt for the City of Toronto• The greenbelt around Toronto offers $ 2.7 billion worth of non-market

ecological services with an average value of $ 3, 571 / ha.→ Implication re: future management of the greater city area ?

Source: Wilson, S. J. (2008) Map: http://greenbeltalliance.ca/images/Greebelt_2_update.jpg

The Social Dimension: Jobs: Working for Water

• WfW is a public works programme in South Africa which protects water resources by stopping the spread of invasive plants.

• Municipal government contracting workers to manage public land sustainably

Results - More than 300 projects in all nine South African provinces. • Employed around 20,000 people per year, • 52 per cent of them women4, and • also provided skills training, health and HIV/AIDS education to participants.• costs to rehabilitate catchments range from 200-700 EUR/ha (Turpie et al. 2008)

• benefits may reach a 40 year NPV of 47,000 EUR/ha (see TEEB Foundations, 2010)

Wunder et al 2008a; http://www.dwaf.gov.za/wfw/

WfW: The Manalana wetland (near Bushbuckridge, Mpumalanga)

• severely degraded by erosion that threatened to consume the entire system• WfW public works programme intervened in 2006 to reduce the erosion and

improve the wetland’s ability to continue providing its beneficial services

Results • The value of livelihood benefits from degraded wetland was just 34 % of what could be achieved after investment in ecosystem rehabilitation;• Rehabilitated wetland now contributes provisioning services at a net return of 297 EUR/household/year;• Livelihood benefits ~ 182,000 EUR by the rehabilitated wetland; x2 costs is • The Manalana wetland acts as a safety net for households.

Sources: Pollard et al. 2008’; Wunder et al 2008a; http://www.dwaf.gov.za/wfw/

Security and meeting objectives working with nature: Flood Control and the Schelde : Belgium

• Major infrastructural works were planned - deepening fairway to the harbour of Antwerp and complementary measures to protect the land from storm floods

• CBA carried out, including ecosystem services (recreational value) of new floodplains.

• Evaluation Result: an intelligent combination of dikes and floodplains can offer more benefits at lower cost than more drastic measures such as a storm surge barrier near Antwerp.

• 14 vs 41 year payback

• Policy Response / Action: The Dutch & Flemish gov’ts approved an integrated management plan consisting of the restoration of approximately 2500 ha of intertidal and 3000 ha of non-tidal areas

University of Antwerp and VITO (2004) in TEEB in National Policy (2011)

Security and meeting objectives working with nature: Flood Control and the Schelde : Belgium

University of Antwerp and VITO (2004) in TEEB in National Policy (2011)

Phase 1 2Measurements Storm

surge barrier

Over-Schelde

Dykes (340km)

Floodplains (CIA, 1800

ha)

Floodplains (RTA, 1800

ha)

Floodplains (1325 ha) +

dykes (24 km)

Investment and maintenance costs 387 1.597 241 140 151 132Loss of agriculture 16 19 12Flood protection benefits

727 759 691 648 648 737Ecological benefits 8 56 9Other impacts:- shipping- visual intrusion

-1 -3 -3 -5

Total net benefits 339 -837 451 498 530 596Payback period (years) 41 / 27 17 14 14

Table 4.2 Different alternatives for flood protection in the CBA (Phase 1: different measures; Phase 2 optimization)

Private Sector Interests: Water: Vittel (France)

Vittel mineral water, France Perrot-Maître 2006; Wunder and Wertz-Kanounnikoff 2009

Since 1993, PES programme in its 5100 ha catchment in the Vosges Mountains.26 farmers paid to adopt best low-impact practices in dairy farming

Payment levelsAve. payments are EUR 200 ha/year over a five year transition period and up to 150,000 EUR per farm to cover costs of new equipment. Contracts are long-term (18-30 years), with payments adjusted to opportunity costs on a farm-by-farm basis.

Making it Happen• built on a 4-years research by the France’s INRA (National Institute for Agricultural Research )• took 10 years to become operational• Success because of economic rationale + tenacity of Vittel

Similar case for Beer ! Rochefort, Belgium . What cases do you know of ?

Natural resource management & spatial planning

• Flooding of River Elbe, Germany (2002)

• Damage over EUR 2 billion

• Assessment that flood damage (+ cost of dams) by far exceed costs of upstream flooding arrangements with land holders

→ The value of upstream ecosystems in regulating floods was re-discovered !

→ Local authorities start changing spatial planning & seeking arrangements upstream

Thank you

TEEB Reports available on http://www.teebweb.org/

& TEEB in Policy Making will come out as an Earthscan book in March 2011See also www.teeb4me.com

Patrick ten Brink, ptenbrink@ieep.eu

IEEP is an independent, not-for-profit institute dedicated to the analysis, understanding and promotion of policies for a sustainable environment www.ieep.euManual of EU Environmental Policy: http://www.earthscan.co.uk/JournalsHome/MEEP/tabid/102319/Default.aspx