Valuation of ecosystem services of Makira and Masoala Protected

areas

Michel Masozera

Mission’s objectives

• Meetings with relevant government, donor, and NGO representatives;

• Review of available GIS data and identification of any new information required to complete the analysis;

• Travel to Makira and Masoala to meet with staff and review final study design, including identification of field work needs;

• Finalize research design and plan field activities and a future visit to Madagascar to complete data collection

• Hold debriefing meeting prior to departure to advise on progress and provide a work plan for completing the assignment.

Relevance of the study to the MIARO project

• Result module IV: Sustainable Financing mechanisms operational

• Sub result module objective (4.2): Build on efforts made and cooperate with other EP3 actors to strengthen potential sources of income for forest habitat conservation

• Activity 4.2.2: Greater information and understanding within Madagascar about the value of ecosystem services developed and promoted

Objectives of the study

• To assess the value of ecosystem services provided by Masoala and Makira protected areas

• Specifically, assess the contribution ecosystem services the local and regional economy

Why value?

• Understand the contribution of ecosystems to the local, regional, national and global economy, and thus build local and political support for conservation and sustainable use;

• Convince (potential) donors that the benefits of conservation and sustainable use of ecosystems and protected areas (usually) outweigh the costs and thus attract investments;

• Identify the users and beneficiaries of ecosystem services to secure financial streams for the long-term maintenance of these services;

Why value?

• How are costs and benefits of a change in ecosystem distributed?

• How to make conservation financially sustainable?

• Spur the creation of innovative institutional and market instruments that promote sustainable ecosystem management

Valuation framework

Step 1-Specification of the boundaries

Impact of deforestation on main stakeholders at different scales

Source: van Beukering et al. 2003

Step 2- Assessment of important ecosystem services for the Makira-Masoala-(Baie

d’Antogil ?) landscape- Regulation services• Maintenance of biodiversity• Water supply (water quantity and quality)• Climate regulation• Carbon sequestration• Erosion control and • Sediment retention

- Production services• Non Timber Forest products

- Cultural values• Recreation and tourism• Cultural, religion and spiritual heritage• Scientific and educational information

Existence valuesIntrinsic value of resources and landscapes,

irrespective of its use such as cultural, aesthetic, bequest significance, etc.

Direct valuesOutputs that can be consumed or processed

directly, such as timber, fodder, fuel, non-timber forest products, meat, medicines, wild foods, etc.

Indirect valuesEcological services, such as flood control,

regulation of water flows and supplies, nutrient retention, climate regulation, etc.

Option valuesPremium placed on maintaining resources and

landscapes for future possible direct and indirect uses, some of which may not be known now.

USE VALUES

NON-USE VALUES

Step 3- Valuation

Total economic value

The four value types are exclusive and may be added. The sum of the direct use, indirect use and option values equals the total use value of the system; the sum of the use value and the non-use value is the total value of the ecosystem

Step 3- Valuation cont.

Example Valuation Techniques

•Avoided Cost (AC): services allow society to avoid costs that would have been incurred in the absence of those services; flood control provided by barrier islands avoids property damages along the coast. •Replacement Cost (RC): services could be replaced with man-made systems; nutrient cycling waste treatment can be replaced with costly treatment systems. •Factor Income (FI): services provide for the enhancement of incomes; water quality improvements increase commercial fisheries catch and incomes of fishermen. •Travel Cost (TC): service demand may require travel, whose costs can reflect the implied value of the service; recreation areas attract distant visitors whose value placed on that area must be at least what they were willing to pay to travel to it. • Hedonic Pricing (HP): service demand may be reflected in the prices people will pay for associated goods: For example, housing prices along the coastline tend to exceed the prices of inland homes. •Marginal Product Estimation (MP): Service demand is generated in a dynamic modeling environment using production function (i.e., Cobb-Douglas) to estimate value of output in response to corresponding material input. •Contingent Valuation (CV): service demand may be elicited by posing hypothetical scenarios that involve some valuation of alternatives; people would be willing to pay for increased preservation of beaches and shoreline. •Group Valuation (GV): This approach is based on principles of deliberative democracy and the assumption that public decision making should result, not from the aggregation of separately measured individual preferences, but from open public debate.

• This study will use existing studies, reports and data to develop an integrated ecological economic model at the watershed scale.

• In addition we will use a combination of different valuation techniques to determine the total economic value

What has been and being done so far!• Feasibility study “Construction barrage hydroelectrique sur la chute de

Vodriana – Makira forest (4.8 Megawatts) (Direction de l’Energie)

• Etude d’impact économique de la déforestation sur la riziculture irriguée (Jürg Brand, 2002)

• Feasibility Study for an Avoided Deforestation Project in the Makira Region (Winrock International, 2004)

• Socioeconomic studies around Masoala and Makira (WCS)

• Watershed Protection for Ecosystem Services in the Makira Forest Area, Madagascar: a preliminary biophysical assessment (Jessica Albietz, 2005)

• Economic impact of tourism (Amanda Doster and Alex Krasavin, 2006)

• Etat de lieu de la baie d’Antongil (Andrew cook)

What has not been done yet!

- Estimation of total economic value

Previous studies have focused on single ecological services (carbon sequestration or water regulation). This tends to undervalue a landscape that has multiple functions

Applying the economic valuation to PES design

Watershed services: supply and demand

Supply of services:

Upstream land uses affect the Quantity, Quality, and Timing of water flows

Demand for services:Possible downstream

beneficiaries:• Domestic water use• Irrigated agriculture• Hydroelectric power• Fisheries• Recreation• Downstream ecosystems

Source: World Bank 2003

Applying ecosystem valuation to payment for ecosystem service: simple in theory

Benefits to producers

Costs to offsite populations

Conventional resource use:

no conservation

Conservation with payment

for service

Payment

Conservation without

payment

Minimum payment willing to receive to change damaging behaviour to ecosystem

Maximum paymentwilling to pay to reduceenvironmental damage

In practice not so simple…

Complex biophysical linkages (Brand 2003)

In practice still not so simple…valuing effects of change in ecosystem conditions on agricultural

production

Impact on ecological function & service

Physical impact of change in functions

Socio-economic effects of physical impact

Overall impact of Socio-economic effects

Intervention

Reduction in water: floods & drought

Increased erosion

Increase in crop damage (in kg)

Decrease in crop yield (in US$)

Increase use fertiliser & pesticides (in kg)

Increase productioncosts (in US$)

Increase in crop production (in kg)

Increase in crop yield (in US$)

Reduction of forest cover

Reduced pest-control &

pollination

DeforestationChange in Economic Value of Agriculture

(in US$)

Impact on ecological function & service

Physical impact of change in functions

Socio-economic effects of physical impact

Overall impact of Socio-economic effects

Intervention

Reduction in water: floods & drought

Increased erosion

Increase in crop damage (in kg)

Decrease in crop yield (in US$)

Increase use fertiliser & pesticides (in kg)

Increase productioncosts (in US$)

Increase in crop production (in kg)

Increase in crop yield (in US$)

Reduction of forest cover

Reduced pest-control &

pollination

DeforestationChange in Economic Value of Agriculture

(in US$)

Many stakeholders involved

• To develop financing mechanisms for ecosystem services it is necessary to identify the main beneficiaries of the ecosystem services delivered and to understand the different interests and perceptions of the main stakeholders at different scales

Institutions and governance

• Inappropriate institutional and governance arrangements are one of major drivers of ecosystems change

• Existing national and global institutions are not well designed to deal with the management of open access resources, a characteristic of many ecosystem services

• Unless we address the issue of governance and institutions the payments for ecosystem services will not provide the expected results

Next steps

• Jan – Feb, 07: Read all the reports, publications and look at the existing data

• March-May, 07: Collect additional information needed to develop the integrated ecological economic model

• May-Sept, 07: Analysis and report writing