Warren et al. - There are many valuation issues that could be raised here regarding habitat and ecosystem service valuation. A point that hasn't been made touches on your choice of a 6% discount rate, and its implications. This is a seemingly arcane but absolutely critical issue that any ecologist who deals with economic valuation should become familiar with. Assume first off that your per-acre values are "accurate" or scientifically defensible. Using a $34.37/ac-yr value loss for habitat conversion and applying a 6% discount rate (deducting 6% value in every subsequent year) gives an overall "net present value" (sum of the total of all years, each year's value declining at 6%) of $574. Since conversion of land to urban use is basically irreversible, that's the total one-time payment appropriate for such loss of ecological value. But consider what happens if you change the discount rate. At a 2% discount rate (lower than used in many conventional economic analyses, but closer to what many ecological economists would advocate), the NPV of the first 100 years only is $1490.59/ac. If you use a 15% discount rate (very high, but not too far from some discount rates associated with financially risky projects taking place in the developing world), the NPV is only $229. So this seemingly small choice gives you a big range of values! In fact much of the argument about climate change economics centers around appropriate choice of a discount rate - Nordhaus has argued for high discount rates, Stern a low discount rate. The difference is that the resulting NPV, even starting from the same annual value, can justify vastly different policy outcomes (and why these two authors diverge on whether we should take action to address cliamte change). There has been substantial recent work in economics and psychology suggesting that "hyperbolic" discounting that starts with a higher discount rate that declines in subsequent years may more accurately reflect human behavoir and values. For more on discounting I'd suggest checking the recent economics literature, the journal Ecological Economics in particular has offered several useful critiques of conventional (and usually high levels) of discounting. Different arguments can be made for discount rates at high or low levels, which will appeal to different audiences. I won't go into details here, but arguments have centered around intergenerational equity, expected return on investment, ecological thresholds and irreversibility, financial and ecological risk, declining stocks of natural capital, etc. Although I personally would advocate for using low discount rates, one way around this problem is to simply report a range of NPVs over the next 100 years using different discount rates - say 0%, 3%, and 6% (or whatever other values you choose), rather than a single value. This makes your final numbers much more transparent, as well as demystefying discounting and showing its importance in the use of your numbers in policy applications. Ken Bagstad PhD Candidate Gund Institute for Ecological Economics University of Vermont Date: Sat, 14 Jun 2008 21:00:28 +0200From: =?ISO-8859-1?Q?B=E1lint_Cz=FAcz?= <[EMAIL PROTECTED]>Subject: Re: Ecosystems, faux ecosystems, and habitat valuation Hi Warren, Have a look at (e.g.) http://mnp.nl/mnc/i-en-1119.html http://www.environment.gov.au/biodiversity/toolbox/templates/pubs/habitat-hectares.pdf http://www.naturalcapitalproject.org/about.htmlfor some similar projects for quantifying the overall ecological valueof larger areas. We are also currently working on a similar story for Hungary -- butjust providing aggregated relative habitat values (actually NCIs),without translating them into monetary terms. However building indicators like yours (and also ours) is always athin ice, as the question might arise: an indicator of what exactly?To avoid such criticisms, I think that large scale habitat capitalevaluation should preferably be based on ecological survey /monitoring data. Furthermore, such indicators should ideally be placedin a context of ecosystem services -- since there is no single valuecapable of describing all the (major) contexts in which natural andsemi-natural ecosystems support and sustain our society, there couldpotentially be also more than one habitat evaluations for thedifferent aspects, like carbon storage, maintenance of environmentalstability or species diversity. I think that your simple evaluation based on ownership and primaryland use would not work too well for Hungary -- there are too many"exceptions" where e.g. privately owned, actively managed ecosystemsharbor more diversity than unmanaged / abandoned ones -- similarly toGrey's examples from California. On the other hand, in the absence of appropriate data, I admit that"quick and dirty" evaluating schemes may also exert an advantageouspolicy impact, even by the simple fact that it can help this topic topenetrate more into daily political exchange. Simple orientatingpolicy indicators are probably still better than having no indicators. So I think, altogether, that your work, as all work in this field, isvery important -- and I am really interested in all the details aswell as the future outcomes of it. Best regards,Bálint -- Bálint CzúczInstitute of Ecology and Botany of the Hungarian Academy of SciencesH-2163 Vácrátót, Alkotmány u. 2-4. HUNGARYTel: +36 28 360122/157 +36 70 7034692 On Sat, Jun 14, 2008 at 4:56 PM, Grey Hayes <[EMAIL PROTECTED]> wrote:> Hi Warren,>> Your work valuing ecosystems is very interesting, and I'm looking forward to seeing more.? I want to suggest one caveat for your work to see if you might be able to integrate it.>>> On California's coast, according to my and others' research, it appears that privately owned, cattle grazed grasslands might be valued in your schema more highly than publicly owned, ungrazed grasslands.?>> I understand some of the same ecological processes might be at work in your state where unmanaged (eg., 'wilderness') areas often have some of the major disturbance regimes suppressed, negatively impacting disturbance-dependent native plant species.>> In California's vernal pool systems of the Sacramento Valley, research suggests a similar story, but also more clearly affecting native wildlife populations.>> And so, your valuation system might need to address (especially) grassland ecosystems where privately managed land might be able to maintain some elements of biodiversity more than on underfunded public lands.>> Grey Hayes, PhD> Coastal Training Program Coordinator> Elkhorn Slough National Estuarine Research Reserve> Moss Landing, California, USA>>>>> -----Original Message-----> From: Warren W. Aney <[EMAIL PROTECTED]>> To: [email protected]> Sent: Fri, 13 Jun 2008 10:31 pm> Subject: Re: [ECOLOG-L] Ecosystems and faux ecosystems Re: [ECOLOG-L] Wetland creation>>> Wayne, Bill, Andy, Amartya, et al., I'm in the process of relating all this> discussion to a project I am currently working on and I have found our> exchanges helpful.>> The basic question I've been working on is: how do we determine the actual> per land unit value of habitat (= ecosystem) that is modified or destroyed?> To put it most simply, if, in a given area, broadly defined wildlife related> activities each year create $2 billion in economic activity and we have 50> million land units of habitat, then each land unit is worth $40 in terms of> annual economic activity. However, different categories of land have> different habitat values: A natural (or restored) wetland will have more> value than a created wetland, and this will have more value than a drained> wetland. A late successional forest will have more habitat value than a> tree farm, which will have more habitat value than a golf course, which will> have more habitat value than a housing development.>> So, for this project I arbitrarily assigned relative habitat values by land> category:>> RHV 1.0: Protected natural areas (ecosystems in Late Successional Forest> Reserves, Wilderness Areas, National Wildlife Refuges, National Parks and> Monuments, state wildlife areas, etc.). A protected natural wetland or late> successional forest would fall into this category.>> RHV 0.90: Managed resource lands (rangeland, public and private forestland,> etc.). A restored wetland might fall into this category.>> RHV 0.70: Pasture/rangeland (mostly privately owned). A tree farm might> fall into either this or the previous category, depending on how it is> managed. A created wetland might also fall into this category.>> RHV 0.50: Farm cropland (harvested and pastured farm land). A golf course> might also fall into this category.>> RHV 0.05: Urban built-up area (residential, industrial, commercial,> institutional land, etc.).>> RHV 0.00: Roads and railroads.>> Using these relative habitat values, the total economic activity generated> in the state of Oregon by wildlife (and fish) related activities in a recent> year, and the state acreage in each of the above land categories, I came up> with the following per acre per year values:>> $40.56 for each acre of protected natural areas> $36.50 for each acre of managed resource lands> $28.39 for each acre of pasture/rangeland> $20.28 for each acre of farm cropland> $2.03 for each acre of built-up areas> $0 for each acre of roads and railroads>> (These figures, multiplied by total land area in each category, sum up to> the total economic activity of $2,074 million.)>> How can these figures be put to use? Let's say that one acre is changed> from managed resource lands to a built-up area. The reduction in wildlife> habitat value is $34.47 (the difference between $36.50 and $2.03). In order> to provide $34.47 per year in repayment value, at an annual interest rate of> 6% this developer could contribute or mitigate a total one-time dollar value> of $574.50 per acre.>> These figures and categories are for the purpose of initiating discussion> and will probably be changed and refined if the process takes hold. But I> think the basic concept has merit and can be useful when assessing the> economic effect of land use changes when wildlife habitat is either degraded> or improved. There is one caveat I've tried to remember: if this system is> to be used and understood by a wide variety of decision makers,> administrators and land managers, it has to be kept reasonably simple.>> If anyone wants more details, I'll be glad to share a more detailed write-up> and the actual spreadsheet with formulas. Meanwhile, I'd be pleased to> receive your reactions, suggestions and criticisms (I know you're all good> at the latter). Does this seem to have merit? Is anyone aware of similar> attempts along this line by others?>>> Warren W. Aney> Senior Wildlife Ecologist> Tigard, OR 97223> (503) 246-8613 phone> (504) 539-1009 mobile> (503) 246-2605 fax> [EMAIL PROTECTED]>>>>>>>>>>> _________________________________________________________________ Search that pays you back! Introducing Live Search cashback. http://search.live.com/cashback/?&pkw=form=MIJAAF/publ=HMTGL/crea=srchpaysyouback
