Non-monetary benefits without apologyconference.ifas.ufl.edu/aces14/presentations/Dec 11...Non-monetary benefits without apology The economic theory and practice of ecosystem service

Non-monetary benefits without apologyThe economic theory and practice of ecosystem service benefit indicators

Marisa Mazzotta, Ph.D.U.S. EPA Office of Research and DevelopmentAtlantic Ecology DivisionNarragansett, Rhode Island

Presented at ACES 2014, December 11, 2014

The views expressed in this presentation are those of the author and they do not necessarily reflect the views or policies of the

U.S. Environmental Protection Agency

Environmental decisions require

tradeoffs

Which of these sites should we spend money on?

2

http://backpacker.web1.ec2.aimstaging.com/media/originals/NewYorkCityLibertyStateParkLoop110448.jpeg

http://ecosystems.mbl.edu/sippewissett/images/sippewissett2.jpg

Ecological information alone is not

enough to evaluate tradeoffs

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Benefits to people

matter!

Illustration adapted from Dennis King, 1997

Why not evaluate all benefits using monetary measures?

Photo: unep.org

Dollar values may add controversy

rather than clarity

5

[email protected]

Dollar values are only one part of

the story• distribution of benefits

• environmental justice

• precautionary or safe minimum standards

6http://sewagesludgeactionnetwork.com/

Is some number better than no

number?

How should we interpret “the value of everything?”

7

http://www.lucrorfx.com/forex-market-2/best-forex-indicators.html

Values can be assessed using indicators

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What are indicators?

• Indicators simplify complexity to inform decisions and actions.

• They selectively represent a real system.

• They bridge science and policy.

• Value indicators are developed based on economic models and empirical evidence of factors that affect value.

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What are value indicators?

• functional assessment

• “reliability” assessment

• complements assessment

• substitutes assessment

• quantity and quality of valued ecological outputs (potential EGS)

• persistence of supply into the future

• complementary inputs

• natural and technical substitutes

• strength of preferences

• number of beneficiaries

The Socio-Ecological System Types of Assessments Value Indicators

Other Ecosystems

and

built environment

People

Ecosystem

Value indicator framework

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• demand assessment• beneficiary assessment

• scarcity assessment • supply vs. demand

What determines a good set of

indicators?

• understandable

• provide essential information about the system

• policy relevant

• feasible to measure

• simple but not too simple

• scale-appropriate

• based on valid models and assumptions

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What does economic theory say that is relevant to value indicators?

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Value indicator theory

13

Other Ecosystems

and

built environment

EcosystemE = stock of natural capitalA = ecosystem attributes

People G = human interventions

and impactsk = beneficiaries

X = complementary inputsS = substitutes

FUNCTIONAL ASSESSMENT:

supply of ecological outputs

ecological production function:

q = q[E, A(G)]

sufficient quantity

q ≥ q*

sufficient quality

b ≥ b*


Photo: savebay.org

Photo: 4.bp.blogspot.com


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Other Ecosystems

and

built environment





RELIABILITY ASSESSMENT:

How sure are we that benefits will continue?

More reliable --> Greater expected value

Probability that ecological outputs

will persist

Pt(qt)=f(·)


Source: NOAA.gov


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DEMAND ASSESSMENT:

demand for ecological outputs as inputs to valued experiences

household production function:

z = z(cX, bQ)

demand exists

D(Q) > 0

Other Ecosystems

and

built environment






Photo: nhdfl.org

Photo: newstimes.com


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PREFERENCE ASSESSMENT:

utility function and elasticity of demand

utility from EGS

u = u(bQ, z(cX, bQ))Higher utility --> Greater value

Less elastic --> Greater change in value for a given change in Q

strength of preference and

elasticity of demand

Other Ecosystems

and

built environment






photo: greatescape.net.au/


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BENEFICIARIES ASSESSMENT:

"extent of the market"How many people value the EGS?

More beneficiaries --> Greater total value

Sum of demand over number of

beneficiaries

∑kD(Q)will determine total demand

Other Ecosystems

and

built environment






Photo: nhdfl.org

Photo: newstimes.com


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COMPLEMENTS ASSESSMENT:

complementary inputs –capital and labor

z = z(cX, bQ)Value is not received without

all necessary inputs

sufficient quantity

x ≥ x*

sufficient quality

c ≥ c*

Other Ecosystems

and

built environment






Photo: outboardmotoroilblog.com

Photo: kayakspots.com


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number and quality of natural and technological

substitutes

SUBSTITUTES ASSESSMENT:

Number and quality of natural and technological substitutes

Fewer substitutes or lower quality substitutes --> Greater value

Other Ecosystems

and

built environment






Q

P

D0

D1

(fewer substitutes)

S


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SCARCITY ASSESSMENT:(supply relative to demand)

Does demand exceed supply?

By how much?

S ≈ D (low scarcity)

S < D (high scarcity)

Other Ecosystems

and

built environment





Dollar values not always

best

A place for robust value

indicators

Consider how to develop indicators

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Summary

Thank You!

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Marisa MazzottaU.S. EPA Office of Research and Development

Atlantic Ecology [email protected]

Thanks to:Lisa WaingerKristen HychkaJustin BousquinWalter BerryClaudette Ojo

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Non-monetary benefits without apologyconference.ifas.ufl.edu/aces14/presentations/Dec 11...Non-monetary benefits without apology The economic theory and practice of ecosystem service