valuing biodiversity – use and non-use values and their economic measurement
DESCRIPTION
John A. Dixon Economic values of biodiversity; use and non-use values; indicators; avoiding extinction; and other ecological risks.TRANSCRIPT
GEF
Session 13
Valuing Biodiversity – Use and Non-use Values and Their Economic Measurement
John A. [email protected]
The World Bank InstituteAshgabad, November 2005
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Questions
• What are the principle economic values/uses associated with biodiversity conservation?
• What economic valuation techniques can be used to estimate these monetary values?
• What values cannot be estimated in economic (monetary) terms?
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
The Total Economic Value approach
u su a lly m e asu reso u tp ut
D ire c t u se va lu es(s tru c tu ra l v a lu e s)
u su a lly m e asu resb e n e fits /se rv ices
In d irec t us e va lu es(fu n ctio n a l va lu e s)
O p tion v a lu es
U se va lu es
B e qu e st v a lu es E x iste n ce v a lu es
N o n-u se valu es
Total Econom ic Value
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
The Total Economic Value (TEV) Approach and Biodiversity
Includes both Use Values and Non-Use Values• Use values include direct use (both
consumptive and non-consumptive), indirect use, and option values
• Non-use values include bequest values and existence values
The TEV is the sum of all of these values but in the case of biodiversity, much of the value may lie in the Indirect Use or Non-use portion
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Identifying types of uses and values for biodiversity
• Direct-use Values: hunting, direct-consumption (e.g. collection of berries, mushrooms, herbs, plants) are all “consumptive uses”; whereas observing, photography, or ecotourism are all “non-consumptive uses”
• Indirect-use Values: ecosystem services such as pollination, habitat for other species, sustaining food chains, other uses are indirect-use values
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Identifying different types of economic values for biodiversity
(continued)• Non-use Values include Option values,
Bequest values and Existence values (all usually measured using CVM)
• Unknown values include the value of genetic material (e.g. a new cure for cancer or AIDS)
• Valuation is easiest for Direct-use values, quite difficult for Indirect-use values, and very difficult for Non-use values
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Economic Values are People-dependent!
• Remember, there are few or no economic values that are NOT directly linked to human uses or desires, and
• People often do not understand what the real question is.
• Therefore, market-values may be poor reflections of ecosystem values or pure biological uniqueness!– But…
• Markets and prices often drive government and private actions!
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Valuing Direct-Use Values (both consumptive and non-consumptive)
• Direct uses – hunting, fishing, hiking, photography, tourism/ecotourism, cultural/ historical, scuba diving and other uses are often the easiest to value and the largest single item in a TEV calculation.– Data can be presented at a financial level (e.g.
how large is the economic sector dependent on ecotourism), or at a broader social welfare level – usually by measuring the consumers’ surplus or economic rents generated. The former is easier to calculate, the latter is more difficult.
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Valuing Indirect-Use Values
• Largely composed of ecosystem services such as– Ecosystems such as wetlands, lakes,
deserts, forests– Shoreline protection; water filtration– Pollination– Changes in hedonic prices– Climatic effects (perhaps)
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Valuing Non-Use values• Non-use values – including Option, Bequest and
Existence values, are usually always measured using some form of CVM. Cultural values may be very important in non-use values (e.g. Lake Sevan in Armenia)
• Values may be small per person (a few dollars), but large when aggregated (as in Armenia)
• Note:– Non-use values are usually harder to “sell” to decision
makers, but– For some types of biodiversity (e.g. the panda, the blue
whale) non-use values account for almost ALL of the economic value measured in a TEV calculation.
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Selecting the appropriate valuation technique (again)
Environmental Impact
Measurable change in production
Change in environmental quality
Yes
Nondistorted market prices available?
Use change-in-productivity approach
Use surrogate market approaches, apply shadow prices to changes in production
Yes No
Habitat
Opportunity-cost approach
Replacement cost approach
Land value approaches
Contingent Valuation
Air and water quality
No
Cost-effectiveness of prevention
Preventive expenditure
Replacement/ relocation costs
Health effects
Sickness Death
Medical costs
Loss of earnings
Human capital
CEA of prevention
Recreation
Contingent valuation
Travel cost
Aesthetic, Biodiversity, Cultural, Historical assets
Contingen Valuation
Contingent Valuation
Hedonic wage approach
Contingent Valuation
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
“valuing” the non-measurable• Some uses or values associated with
biodiversity are impossible to measure. These may include the following:– Unknown genetic material– Global life support services (an infinite
value)– Cultural or religious values (e.g. in Hawaii,
the native Hawaiians “value” the sea and the “aina”, the land, very highly)
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
“valuing” the non-measurable – cont’d
• Suggestions solutions:– Avoid Extinction!!– Use of the concept of Safe Minimum
Standards to preserve ecosystems and their biodiversity
– Creative use of financing to preserve/ protect scarce ecosystems and scarce biodiversity
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
What is the TEV of Biodiversity? – no one really knows!
• As economists always say “It Depends”!!!! It depends on
• The numbers and types of uses and users• The values associated with each use• National vs global values• The scarcity and uniqueness of the resource
• Final Caution: Be very careful in using the benefit transfer approach (for biodiversity or for “hard to value” resources)
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
A BAD example of benefit transfer due to the “Big Lie” problem: Estimates of Soil Erosion
Rates1. A results reported for El Salvador – 140 t/ha – came from measurements on one plot, for one year (Flores Zelaya,
1982).2. A widely reported result for Europe - 17 t/ha/yr. for Europe (source: Pimental, 1995) – is used over and over again
in the literature. Where does this estimate for Europe come from ??
Rate Area Covered
Source
Barrow (1991)
10-25 Belgium Lal (1989)
Lal (1989) 10-25 Belgium WRI (1986)WRI (1986) 10-25 Central
BelgiumRichter (1983)
Richter (1983)
10-25 Central Belgium
Bollinne (1982)
Bollinne (1982)
Not stated 12 plots in Sauveniere
Field experiments
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Another BAD example of benefit transfer:
value of the Whooping Crane in the US
• The Whooping Crane, protected in a small nature refuge in Texas, was the subject of a CVM study of WTP by local residents;
• The results were modest -- $1 or $2 per person per year.
• This amount was then multiplied by the entire population of the US (over 250 million people) to get an aggregate value of $100s of millions per year! Pars pro Toto!
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
The problem of “pars pro toto:
• When asked their WTP to protect any single endangered species (e.g. the whale, the panda, a big-horned sheep, the sturgeon, the whooping crane) common responses in the US are about $5-$10 per person per year.
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
For example, WTP for preservation of
endangered species(1990 $US per person per year)
USABald eagle 12.4Emerald shiner 4.5Grizzly bear 18.5Bighorn sheep 8.6Whooping crane 1.2Blue whale 9.3Dolphin 7.0Sea otter 8.1Humpback whale 40-48 (w/o info)
49-64 (w. info)NorwayBrown bear, wolf, wolverine 15.0
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
“Pars pro Toto” (cont’d)• When asked their WTP to protect
ALL endangered species in the world, the responses are about $10 to $15 per person per year!
• WHY? – the “embedding” problem created by the interviewer asking the wrong question
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
The “Pars pro Toto” Problem
• Only partial information is provided• The wrong question is asked
WTP for all endangered species
WTP for any single species
Caspian EVE 2005/UNDP and WBI John A. Dixon, Valuing Biodiversity
GEF
Practical Guide to Valuation of Biodiversity
• Start with the most direct uses – both consumptive and non-consumptive
• Carefully consider ecosystem services (especially when they relate to marketed goods and services such as pollination, water supply, land protection,…)
• Value non-use values with care and caution; avoid