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Evaluating the management of invasive species: A role for non-market valuation and benefit transfer

AARES Workshop 13th of February, 2007

Queenstown, New Zealand

John RolfeCentral Queensland University

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Key reasons for protection

Protection of industry (agricultural) base Many pests and diseases

can cause widespread losses in industry

Protection of biodiversity Both species loss and

impacts on ecosystems Protection of human

health Diseases, pollen, animals

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The economics of prevention and control

Industry impacts Introduced species will

cause Agricultural losses Impacts on rural

communities But private incentives for

control are often weak ‘cascading’ externalities

means that lack of control impacts on other farmers

Case for central control to avoid widespread private losses

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The economics for control and prevention – 2

Biodiversity impacts Introduced species

will cause biodiversity losses

Public values for maintaining biodiversity justify investment of public funds in control

Species on public lands Many ‘points of

invasion’ on public lands

Public health arguments

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The economics of control in biodiversity

Values

Intensity of incursion

Costs of control

Value of biodiversity

Net value of production impacts may be added

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Bioeconomic modelling Dynamics of prevention/control

measures & outbreaks of invasive species are more complicated Biological growth behaviour is non-

linear Feedback loops with prevention &

control measures Threshold effects Ecosystem impacts

Range of bioeconomic models in use / needed to provide suitable information about costs of invasive species and the control costs

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Combining production and biodiversity issues

Values

Intensity of incursion

Costs of control

Averted agricultural and biodiversity losses

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Weighing up the costs and benefits Benefits of maintaining biodiversity difficult to estimate

Mostly associated with indirect and non-use values Need to be assessed with specialist techniques

Sometimes there are other costs to consider Impacts of biological controls Heritage, cultural impacts

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The precautionary principle

Values that population holds for protecting biodiversity will support both Introduction of ‘trump’ rules - SMS Values

Use of extended cost-benefit analysis should generate much the same outcome as support for SMS

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Value taxonomy – coral reef example

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Non – market valuation techniques

Revealed preference techniques Travel cost method

used for recreation impacts Hedonic pricing

used for housing/lifestyle impacts

Averted expenditure techniques Often used to estimate the value of

indirect use benefits Storm protection benefits of mangroves

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Contingent behaviour

Extensions to travel cost method Ask people about planned changes

in behaviour to different scenarios Allows estimates of value for

changed environmental conditions

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Non-market valuation techniques 2

Stated preference techniques Contingent valuation Choice modelling

These are capable of estimating non-use values

Key techniques to use in relation to values for biodiversity

But often complex, expensive and time consuming to apply

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Benefit transfer

The transfer of values from one case study to another policy situation

Most studies focused on particular issues, and are not designed to transfer to other situations

Values may be sensitive to characteristics Populations involved The way the tradeoffs are framed The scope at which the issue is pitched The scale of the tradeoffs

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Key mechanisms for benefit transfer

Point – total value Total value from a previous study

Point – marginal value Value per unit transferred

Benefit function transfer Function allows adjustments for site

and population differences Bayesian transfer

A range of previous and current results can be integrated

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Three main approaches to benefit transfer

‘The Prospector’ – searches for suitable previous studies and transfers results across

‘The Systematic’ – designs a database of values suitable for benefit transfer

‘The Bayesian’ – combines both a review of previous studies with potential data gathering

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Examples of the Prospector

A number of studies conducted in the Fitzroy dealing with water allocation and riparian development issues

Results have been transferred to other policy issues dealing with vegetation, water development, protection of cultural heritage

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Question X: Options A, B and C.

Please choose the option you prefermost by ticking ONE box.

Fifteen-year effectsHow much I

pay eachyear

Healthyvegetation leftin floodplains

Kilometres ofwaterways ingood health

Protection ofAboriginal

Cultural sites

Unallocatedwater

I wouldchoose

Option A

$0 20% 1500 25% 0%

Option B

$20 30% 1800 35% 5%

Option C

$50 40% 2100 45% 10%

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Values for vegetation and waterways over time

00.5

11.5

22.5

33.5

44.5

5

2000 2001 2002 2003 2005 2000 2001 2005

Brisbane Rockhampton

$ p

er 1

% i

mp

rove

men

t

0

0.02

0.04

0.06

0.08

0.1

0.12

$ p

er 1

km i

mp

rove

men

t

Vegetation Waterways

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Examples of the Systematic

Windle and Rolfe (2007) developed a broad data base of NRM values in Qld

Identify the values for improvements in 3 key areas of the investment plans for regional groups Healthy vegetation Healthy waterways Healthy soils

Identify sensitivity to regional issues Identify sensitivity to framing issues

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Regional choice set example

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Summary of values Soil Water Vegetation

$ value of each 1% improvement

Brisbane – South East Queensland

Regional model 3.05 3.42 3.01

Statewide model1 5.34 4.99 7.69

Toowoomba – Murray Darling

Regional model 4.02 6.28 2.35

Mackay – Mackay Whitsunday

Regional model 4.60 7.82 2.42

Rockhampton – Fitzroy Basin

Regional model 3.70 6.69 4.48

Pooled models

Regional model 3.72 5.80 2.88

Statewide model 4.64 6.62 4.54

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Some issues

These examples of a benefit transfer approach are difficult to relate to many invasive species issues Often issues are more specific and it is

unclear how general values can be applied

Unclear how values are set when elements of risk and uncertainty are present

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Dealing with the ‘specific to general’ tradeoffs

A benefit transfer application will rarely satisfy ‘ideal’ conditions Identical site characteristics Identical population characteristics Identical policy and tradeoff situations

Better to think of a BT application as a filtering mechanism Identify if there are major differences

between benefits and costs, or Identify if more detailed analysis needs

to be applied.

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Dealing with the risk and uncertainty issues

Issues of risk and uncertainty often ignored in stated preference studies Very difficult to communicate these

alongside information about attributes and alternatives in choice sets

But two key components of non-use values are related to these issues Option Value Quasi-option value

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Some evidence of larger option values

0102030405060708090

100

Use value Option value Bequestvalue

Existencevalue

Quasi-optionvalue

perc

enta

ge

Brisbane

Toow’mba

Mackay

Rockh’ton

Qld surveys for BT database on soils, waterways, veg. Asked to rated a series of questions representing use and

non-use values - From 1 most to 5 (least important) Percentage of respondents scoring values with a “1” or”2”

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Values for water reserve

Population Fitzroy CNM Dawson

Survey 1

Late 2000

Brisbane Not significant6.59

(3.49 to 11.08)* 2.53

(1.72 to 3.62)

Rockhampton2.81

(0.06 to 5.97)

Emerald1.97

(-0.16 to 3.99)

Survey 2

Late 2001

Brisbane 4.13

(2.33 to 6.60)

Rockhampton 3.19

(1.82 to 5.11)

Rockhampton Indigenous

4.05(1.85 to 8.19)

Survey 3Late 2002

Brisbane5.31

(3.33 to 7.71)

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Results at different reserve levels show values of being cautious

Coefficient

-15%-10%

-5%5%

10%15%

20%

-0.9

-0.6

-0.3

0

0.3

0.6

0.9

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Applying option values to water resource allocations

Brisbane households would pay $6.59 annually to Brisbane households would pay $6.59 annually to reserve each 1% of water in the CNM systemreserve each 1% of water in the CNM system

There was 4% currently unallocatedThere was 4% currently unallocated Over 20 years and 300,000 households, present Over 20 years and 300,000 households, present

value is value is $78M$78M with discount rate of 8% with discount rate of 8% or or $59M$59M with 12% discount rate with 12% discount rate

Approximately double if count rest of Qld Approximately double if count rest of Qld If 4% were to be allocated = 40,000 MLIf 4% were to be allocated = 40,000 ML At value of $300/ML, total value = At value of $300/ML, total value = $12M$12M

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Evidence for quasi-option values

Donaghy et al (2004) asked households about WTP for a 5 year moratorium on release of GMOs

Significant values estimated Median and mean WTP estimates of $220 and

$386 per household Respondents did value opportunity to delay

introduction of GMO’s Positive and significant income variable

suggests that as income increases so does quasi-option values

Confirms that quasi-option values exist

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Implications of including option values:assessing invasive species control

There is evidence that community caution about future impacts flows into option values and quasi-option values

Expect this to also apply to issues dealing with invasive species

Just focusing on existence values may not be comprehensive

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Implications for standard use of Cost Benefit Analysis

Particularly for agricultural products, the evaluation typically compares net potential production losses with the costs of prevention or control But prevention and control costs typically

funded publicly This analysis may fail to include:

Existence values for biodiversity impacts Option and quasi-option values Values associated with potential social impacts

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Some policy implications

Important to assess non-use values for biodiversity impacts in same context as agricultural ones Stated preference techniques can be used for

this Not enough attention paid to option

values Inclusion of option values may lead to

more cautious assessments Invasive species Greenhouse gases Water development

May reassess the way we deal with agricultural imports and quarantine

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The risks in importing tourists and products

Values

Probability of incursion

Benefits of imports

Potential agricultural costs

Potential loss in existence values

Option values

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Final comments

In relation to dealing with invasive species, it may be very important to assess: Existence values Option and Quasi-option values

However It may be difficult to assess values, Few studies currently exist

More systematic data may be required Better skills required to integrate these

types of assessments into economic analysis