Valuing the Benefits of Biodiversity
Economics & Funding SIG June 2007
Table of Contents
OVERVIEW ............................................................................... 3
SECTION 1: VALUING BIODIVERSITY ....................................... 3
What is Biodiversity? ............................................................................3
Why is Biodiversity important? ...............................................................3
Why value Biodiversity? ........................................................................3
What is the value of Biodiversity? ...........................................................4
What does the TEV framework mean in practice? ......................................5
How can Biodiversity be valued?.............................................................6
SECTION 2: BIODIVERSITY BENEFITS ...................................... 6
Economic Activity .................................................................................7
Cultural/Spiritual/Aesthetic ..................................................................10
Recreation/Tourism ............................................................................11
Education/Information ........................................................................12
Health ..............................................................................................13
Regulating and Supporting Ecosystem Services ......................................16
Option/Existence................................................................................18
SECTION 3: KEY RESOURCES .................................................. 22
ANNEX 1: VALUING THE NATURAL ENVIRONMENT ......................... 23
ANNEX 2: VALUING BIODIVERSITY.............................................. 24
ANNEX 3: ECOSYSTEM SERVICES FROM KEY HABITATS ................. 32
ANNEX 4: VALUATION STUDIES .................................................. 35
2
Valuing the Benefits of Biodiversity
Overview
This paper provides evidence to support the case for protecting biodiversity.
Biodiversity is recognised as important but can often be overlooked or given
a lower weight. This is partly because decision-making involves weighing
costs and benefits and it is difficult to include biodiversity in this because its
value is not quantified or understood. Valuation becomes necessary therefore
to illustrate the importance of biodiversity. Valuing biodiversity requires an
understanding of the range of benefits it provides. This paper sets out how
biodiversity provides these benefits and the evidence to support this,
including some UK case studies.1
Section 1: Valuing Biodiversity
What is Biodiversity?
Biodiversity can be defined in a variety of ways. A very narrow definition is to
focus on genetic diversity (which occurs within species, e.g.
subspecies/forms) or species diversity, perhaps taking into account the
functional role different species play. A broader definition is to focus not just
on species but also habitat and ecosystem diversity. Here varied landscapes,
uplands, lowlands, wetlands and coastal areas all contribute to the diversity
of the natural environment. This broader version follows the standard
Convention on Biological Diversity definition, see http://www.biodiv.org/.
Why is Biodiversity important?
Diversity within the natural environment is important. It provides variety that
people enjoy, both in species and landscape. Species variety plays a dual role
of ensuring and signalling the vitality of the natural environment. Protecting
biodiversity protects the health of the natural environment and this enables it
to provide services which people depend upon.
Why value Biodiversity?
Valuing biodiversity may seem an odd thing to do. It is also a very difficult
thing to do. However, it is necessary in order to illustrate the importance of
biodiversity. As there are competing uses of the natural environment, for
farming, development or as a natural space, society needs to be able to
choose which is best. The benefits from farming or development can be seen
from the value of their products in the market place. But the products from
This paper is based largely on an earlier paper, Benefits of Biodiversity
Conservation, by Ian Dickie, RSPB.
1
3
the natural environment often do not appear in any market. It is worth
highlighting that even though such natural products may not appear in
markets, they are nonetheless just like any other good. For example, just as
a person may purchase a cup of coffee for the satisfaction it gives them, so
another may choose to take a walk in the countryside for the pleasure it
provides. However, as taking a walk may not ‘cost’ anything it can appear
free or worthless. Unless these products are valued to reflect the benefit they
bring to people, preserving a natural space could be mistaken for an inferior
option.
What is the value of Biodiversity?
The Total Economic Value (TEV) framework (shown in Annex 1) can be used
to value the natural environment. It breaks down why people value the
environment by looking at whether the benefits they gain are Direct, Indirect
or from ‘Non-Use’.
Direct and Indirect Use
People value the environment because they use it, both directly and
indirectly. Visiting the countryside, walking in the woods or across hills are
examples of directly using the environment. But natural processes in the
environment also provide services to people. These include climate regulation
through absorbing CO2 from the atmosphere, and water quality through
natural filtration. Although these are ‘used’ by people, it is indirect as most
people are not aware that they are benefiting in this way.
Example of Direct & Indirect Use Benefits
Wetlands are a good example of the natural environment providing both
direct and indirect use benefits to society. By hosting a variety of birds
and wildlife, wetlands attract large numbers of visitors. These are people
who are directly ‘enjoying’ the natural environment.
However, wetlands also provide other services of benefit to society,
including water purification and flood control. Without these, society would
have to pay higher costs to treat water or build flood defences. These are
considered indirect benefits because people do not ‘consume’ these
services directly, rather they impact on services people do consume
directly, such as water from the tap.
Non-Use
There is a value in maintaining the natural environment separate to the
benefits from using it directly or indirectly. Part of this is a bequest value that
current generations may place on the ability to pass on pristine natural
spaces to future generations. Another part is the value people place on
simply knowing that certain species or natural spaces exist anywhere in the
4
world, even though they may never see or experience them. Finally there is
an option value in maintaining the natural environment. This refers to the
possibility that in the future the natural environment will yield benefits that
are not currently enjoyed. This could be the discovery of new biochemical
functions [can be in existing species] that aid new medicines, or it could be
an insurance function of the natural environment to be resilient in the face of
climatic disturbance.
Example of Non-Use Benefits
Charitable donations to wildlife organisations which endeavour to protect
endangered species across the world are an example of non-use benefits,
and amount to hundreds of millions of pounds worldwide each year. A
small contributor is the £4 million raised in donations last year by the
Whale & Dolphin Conservation Society in the UK. Here, individuals are
willing to give up some of their income in order that species which they
may never see or enjoy in any ‘direct’ sense may survive. It is also
difficult to argue in the case of a single species that its survival provides
some form of indirect benefit either. What ever the reason, individuals
receive satisfaction from knowing that the species survives, and are willing
to pay to ensure that it does.
What does the TEV framework mean in practice?
The TEV framework is a very useful starting point in trying to understand the
value of the natural environment, but it does not necessarily reveal all the
benefits that the natural environment provides. It should be clear that the
value people place on the environment reflects the benefits the environment
provides them with. The bottom part of Annex 1 shows some of these
principal benefits. Focusing on these helps to build a picture about how the
environment is used, enjoyed, and therefore valued.
These benefits will vary according to location, to scale, to landscape type, on
the availability of substitutes, and from individual to individual. For some the
quality of the natural environment is important, for example for aesthetic or
water quality benefits, but for others it may be less so, such as a simple
green space for sport. In other words the benefits depend on what ‘piece’ of
the environment is being looked at and for what purpose.
A significant benefit from biodiversity conservation is the impact on local
economies of organisations that work to restore and maintain a high quality
natural environment. These organisations provide employment and boost
local GDP. Also, a high quality natural environment encourages the ‘visitor
economy’, where day-trippers and tourists visit areas to enjoy wildlife and
scenery, generating custom for local enterprises. While this economic activity
lies outside the TEV framework, it serves to illustrate some of the tangible
benefits to local communities from preserving a high quality environment.
5
How can Biodiversity be valued?
It is difficult to put monetary values on the benefits people derive from the
natural environment. However, a variety of valuation techniques do exist.
These are described in more detail in Annex 2 along with a fuller discussion
of the issues in valuing biodiversity. It should be noted that some of these
attempt to value the benefit itself, while others try to find lower bounds for
the true value. This reflects the methodological challenge in valuing the
environment.
Care must be taken with the approach used here of separating out all the
benefits. There is a temptation to simply add them all up to give a total
figure. There are many reasons why this is inadvisable. The figures presented
below come from a variety of different sources for different parts of the
environment using different valuation techniques, and so are simply not
comparable.
Another problem with ‘adding-them-up’ is double counting. For example,
when someone takes a walk in the countryside this is recreation. However,
there are clearly health benefits to such exercise. Also, the individual may
well enjoy the aesthetic and spiritual aspects of the experience. Some
techniques which ask people to value such activities will inevitably be
recording a value which embodies all these benefits. Care must be taken not
to use such a figure for one benefit only, or else multiple benefits will be
counted more than once. This also shows how difficult it is to isolate separate
values.
Section 2: Biodiversity Benefits
This section discusses some of the key benefits the natural environment
provides. This list is not meant to be exhaustive, but cover the main benefits
from the literature. For each benefit there is a brief description of how the
natural environment provides the benefit. This is supported by a discussion
of some of the key studies that provide evidence that people actually value
these benefits, although figures are not always available. Where possible
case studies are presented to illustrate how benefits relate to conservation
projects or areas in the UK. Where benefits are specific to particular habitats
and landscapes, these are drawn out in some detail.
6
Economic Activity
Economic activity refers to the direct economic benefits that biodiversity can
provide. These include resources that can be taken from nature for
consumption, the economic impact of maintaining and enjoying a high quality
natural environment and the regenerative effects an improved environment
can bring to an area.
Case Study: Minsmere RSPB
Reserve
Minsmere RSPB reserve lies on
the Suffolk coast, and covers 935
hectares of a variety of habitats.
Because of this diversity, the
reserve supports a larger variety
of birds than other area of its size
in the UK. This helps to make the
site a prime visitor attraction.
A recent study by the RSPB
investigated the impact on the
local economy of RSPB reserves,
including Minsmere. It examines
the direct impacts of the reserves,
through
employment
and
expenditure on material and
contractors in the locality.
It also calculates the impact visitors have on the local economy through
their expenditure. The reserve attracts around 85,000 people every
year, and directly employs the equivalent of 17 full-time workers.
Direct expenditure on the site, its upkeep and on staff is estimated to
be around £775,000 per year, of which some £500,000 remains within
the local area, supporting an additional 4 FTE jobs.
Using survey data, visitor expenditure in the region that could be
attributed to the reserve was estimated to be £1.13 million per year in
2001. Of this, some £338,000 directly supports local income and 32
FTE jobs.
In total, the combined economic impact of the reserve is around 53 FTE
jobs, and worth some £840,000 per year to the local community.
Source: RSPB Reserves and Local Economies (2002)
7
Evidence on Economic Activity Benefits
The natural environment is rich in wild plants and animals that are
harvested for food, for fuel or for medicine. This is additional to farm
produce which comes from specially managed lands. Care must be taken
to ensure these goods are harvested sustainably or else their extraction
could damage the environment. A recent study, ‘Use of wild living
resources in the UK’ mentioned below estimates that these resources are
worth around £4.8 billion a year.
There have been a number of studies which estimate the contribution to
the economy of a high quality natural environment. The argument here is
twofold. Firstly, in restoring and maintaining a high quality natural
environment, conservation agencies employ a large number of people, and
spend money in the economy. Secondly, the provision of a high quality
natural environment attracts visitors who spend money. The combination
creates an industry which is estimated to be worth £18.6 billion per year
in the UK, and provides over 500,000 full-time equivalent (FTE) jobs, see
chart below. The case study above shows the impact on the local economy
of an RSPB reserve.
Comparison of Economic Activity Linked to
Natural Environment with Other Sectors, England
(2004)
Employment (000s)
350
300
250
200
150
100
50
0
Publishing &
Natural
Printing
Environment
Chemicals
Rubber &
Plastic Goods
Motor
Vehicles
Finally, there is evidence to suggest that improving the biodiversity of an
area, its green spaces and flora, helps to improve the perception of the
area and the quality of life of its residents. This can help to foster the
redevelopment of depressed urban areas. However, this is very difficult to
quantify as it is a very intangible benefit where clearly establishing cause
and effect is quite challenging. One example of a scheme to rejuvenate
deprived areas is in Sheffield where the local wildlife trust has put forward
£10 million to develop derelict estates into areas of natural beauty that
can be used and enjoyed by local residents.
8
Studies and Evidence
Study
Area
looked at
Subject Matter
Revealing the Value of
Nature (2004)
Valuing our
environment: The
economic impact of the
environment in Wales
(2001)
The role of the natural
heritage in generating
and supporting
employment
opportunities in
Scotland. Scottish
Natural Heritage SNH
(2004)
England
Use of Wild Living
Resources in UK (2003)
Forestry Commission
(2002)
UK
PACEC (2000)
England
Economic impact of
forestry industry in
England
Valuing the
Environment of the
North East (2001). For
a wider range, see *
under key resources
RSPB Reserves & Local
Economies (2002)
North East
High Quality natural
environment in North
East
All RSPB
Reserves
Revealing the Value of
Nature (2004)
England
Valuing the
Environment of the
North East (2001)
North East
Economic impact of
RSPB reserves on local
economies across UK
Value of tourist trade
attracted to high quality
natural environment
Value of forest tourist
trade in North East
Wales
(NB: similar
studies
exist for
regions)
Scotland
UK Forests
Values
High Quality natural
environment in England
High Quality natural
environment in Wales
£7.6 billion,
299,000 FTE
£8.8 billion,
117,000 FTE
High Quality natural
environment in Scotland
£2.2 billion,
93,000 FTE
Wild living resources
harvested in UK
Direct economic impact
of maintaining forests in
UK
£4.8 billion,
35,000 FTE
£309 million,
30,000 FTE or
£110 per
hectare
£3 billion,
34,000 FTE
(includes wood
processing)
£1.1 billion,
51,666 FTE
9
820 FTE jobs
and £15 million
per year
192,000 FTE
and £5 billion
£40 million
turnover per
annum
Cultural/Spiritual/Aesthetic
The beauty of nature is something many people are enthralled by. There is
something within the natural environment which people really connect to,
and gives them an immense sense of satisfaction when they experience
nature. For some there are cultural or spiritual meanings attached to the
landscape, whereas for others it is simply the aesthetic quality of the natural
environment which they enjoy so much. Anecdotally, this argument is quite
well-founded, but finding empirical evidence with monetary values is difficult.
Evidence on Cultural/Aesthetic Benefits
A study valuing the benefits of forests in Great Britain, listed below,
attempted to draw out the value people place on the contribution of
forests to landscape. Clearly this is an aesthetic benefit, and the study
focused on those households with a woodland view, asking them to place
a value on the benefit they felt from having such a view. When the survey
is scaled up for relevant households across Great Britain, the value is £150
million per year. This represents what residents would be willing-to-pay
(WTP) to preserve their woodland view.
Studies and Evidence
Subject Matter
Values
Amenity value of
forests in Great Britain
and its impact on the
internal rate of return
from forestry (1992),
Willis & Garrod
Costs & Benefits of
Natura 2000 Sites
(2004)
Study
Forest of Dean
Area looked at
Perceived
improvement in
quality of life from
living close to
woodland.
Property prices up
by 7 %
Scotland
Cultural benefits
of Natura 2000
sites in Scotland
Biodiversity & Poverty
Reduction, (2006),
WCMC
Developing
Countries
The Social &
Environmental Benefits
of Forests in Great
Britain (2003) Willis et
al
Great Britain
Cultural benefits
of natural
environment to
people in
developing
countries
Value to people of
a woodland view
from their home.
Qualitative
assessment that
benefits would be
high and favour
local and regional
communities
Qualitative,
cultures attach
special
significance to
their natural
environment
£150 million per
annum
10
Recreation/Tourism
Earlier, was referred to in the context of its impact on the economy. Here,
recreation and tourism refer to the benefits people enjoy from taking
recreation in the natural environment. As mentioned before, there is scope
here to include other benefits in any valuation study. For example, part of
the enjoyment of recreation in the countryside is aesthetic and it is difficult
to separate these out. However, it clear that many people do take day trips
and holidays to areas because of the quality of the natural environment as
well as to visit wildlife.
Case Study: Osprey
Although once a familiar sight in England and
Scotland, the Osprey suffered from human
persecution and the last recorded breeding
took place in 1916. However, in the 1950s
the bird began to turn up in Scotland once
more, and began breeding at Loch Garten.
The RSPB acted to preserve this site, and
others, to ensure the bird’s survival. It also
invited visitors to the sites to enjoy the bird
and its surroundings. Since the 1950s, these
have attracted over 2 million visitors as the
Osprey has flourished. Loch Garten is just
one of a number of Osprey sites around the
country, which collectively attract some
290,000 visitors each year.
Visitors attracted to the sites derive benefits from watching Ospreys,
particularly the chicks. The reserves also offer a wide range of
landscapes and opportunities for recreation and leisure. Visitors, both
tourists and day-trippers, have contributed significantly to the local
economies surrounding the sites.
A study was carried out to estimate the recreational benefit people gain
from the Loch Garten site. It asked people how much they would be
willing to pay as a hypothetical entrance fee to the reserve. The
resulting value lay between £1.96 and £2.65 per visitor.
If this is applied to all visitors to Osprey reserves in the UK, it gives a
value of between £0.57 million and £0.77 million per year. This
represents an estimate of the benefit people enjoy from visiting these
sites, predominantly for recreation.
Source: Value of Biodiversity (2006); Watched Like Never Before (2006) RSPB
11
Evidence on Recreation Benefits
The studies presented below most likely include other benefits than purely
recreation. However, they do provide strong evidence of the value people
place on the natural environment they can use for leisure. For example a
recent study of the Natura 2000 sites in Scotland found that Scottish users
would collectively be WTP £910,000 per year to gain access to the sites.
Studies and Evidence
Study
Area looked at
Subject Matter
Values
Business Case for the
Environment
Research Study
(2003) RSK
North East
Recreational
benefits of
visitors to
natural
environment
WTP of £8.9 million
per year
Costs & Benefits of
Natura 2000 Sites
(2004)
Scotland
Recreational
benefits of
visitors to
Natura 2000
sites
Recreation:
Scottish general
users, £910,000
per year
Specialist Visitors:
£52,000 per year
Rest of UK
Recreation:
General non-Scot
user, £627,000 per
year
Specialist Visitors:
£47,000 per year
The Social &
Environmental
Benefits of Forests in
Great Britain (2003)
Willis et al
Great Britain
Recreational
benefits of
visitors to
woodlands in
Great Britain
£393 million per
year
Education/Information
Unique natural spaces have an important function in enabling society to
improve its knowledge of the natural world. Scientists can use these areas to
gather data and conduct research which can materially benefit society.
Natural spaces also provide an arena in which children can learn outside of
the classroom, and there is evidence to suggest that this is a more effective
form of learning. This general and specialist education depends upon the
provision of natural spaces across the UK.
12
Another incredibly important function of natural spaces is environmental
monitoring. Observing the natural environment allows scientists to
understand underlying trends that indicate the health of the natural
environment. The effects of climate change can be traced through geology
and biodiversity, providing an invaluable resource to scientists predicting the
effects of global warming.
Evidence on Educational Benefits
Such benefits are hard to quantify as some of the information may never
be ‘used’ in a commercial way. However, there are studies which try to
estimate the ‘value-added’ of environmental research. That is, the
commercial return on information gleaned from the environment. A recent
study on marine biodiversity, listed below, found this value to be £317
million per year.
Studies and Evidence
Subject Matter
Value
Costs & Benefits of
Natura 2000 Sites
(2004)
Study
Scotland
Area looked at
Impact on
education benefits
of Natura 200 sites
in Scotland
A review of
research on
outdoor learning
(2004) Rickinson et
al, NFER
UK
Impact of natural
spaces on
educational
performance in UK
Marine Biodiversity
(2006)
UK
The information
revealed through
studying the UK
marine
environment
Qualitative
assessment that
sites would bring
moderate benefits
to all visitors.
Contact with nature
is associated with
improved discipline,
emotional
development, and
improved
community
integration.
£317 million per
year,
Health
A key component in an individual’s health is their activity level. How much
exercise they do, and how often, has a significant impact on the risk of a
variety of illnesses. Despite this, many do not take regular exercise. One
cited reason is a lack of convenient space. A recent study into obesity in
Europe, listed below, found that in 99% of cases this lack of an area in which
to exercise was a contributory factor to the obesity.
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Case Study: Natural Fit
A recent study for the RSPB
sought to investigate the evidence
that green spaces promote more
physical activity.
The study sets out the health risks
and costs associated with physical
inactivity. These costs add up to
some £8.2 billion a year. Most of
this is for work absence, but some
£1.7 billion is the direct cost to
the NHS.
The evidence shows that to
reduce the risks, people need to
undertake moderate exercise.
This can include walking, cycling or even gardening. The major health
benefits are realised through this kind of moderate activity, and further
exercise, say through sport or at the gym, does not appear to deliver
greater health benefits.
By providing green spaces, residents have the opportunity to take
moderate exercise conveniently. Also, because the environment is
improved, they are more likely to take up this opportunity and sustain
it beyond the short term.
While it is difficult to place a monetary value on the health benefits of a
green space because it depends on how many people use it and how
often, if certain assumptions are made it is possible to calculate the
increase in physical activity and therefore the decrease in health risk.
In the study, with an assumption that an urban park provides 20% of a
local population’s total physical activity needs, a single park in an
average urban area could save the economy around £4 million per
year, including £910,000 to the NHS.
Source: Natural Fit (2004)
14
Evidence on Health Benefits
There is evidence to suggest that the provision of green spaces makes it
more likely people will undertake and sustain physical activity. This refers
back to the enjoyment most people feel from being in a more natural
environment. A lack of physical activity also impacts on psychological wellbeing, and so physical inactivity is a root cause for a host of physiological
and psychological ailments which cost society billions of pounds every
year.
While it is difficult to put monetary figures on the effect of green spaces
on health, the case study above presents some work that suggests the
figures could be quite significant.
Another aspect is that living in a high quality environment obviously
provides a better atmosphere, reducing health costs associated with
pollution. These are discussed more fully in the next section.
Studies and Evidence
Study
Area looked at
Costs & Benefits of
Natura 2000 Sites
(2004)
Scotland
Obesity in Europe,
the Case for action
(2002)
International
Obesity Taskforce
Physical & Mental
Health Benefits of
Green Exercise
(2005), Pretty et al
Natural Fit (2004),
Bird
Europe
Subject Matter
Value
Impact on health
benefits of Natura
2000 sites in
Scotland
Effect of green
spaces on physical
activity in Europe
Qualitative
assessment that
benefits are high
UK
Effect of green
spaces on physical
activity in UK
Inactivity costs over
£8 billion a year
UK
Effect of green
spaces on physical
activity in UK, and
particularly Urban
areas.
1. Mental health
costs £9 billion a
year, of which
£1 billion is
attributable to
inactivity.
2. Health problems
from inactivity
can be
prevented
through
moderate
exercise
3. Green spaces
make exercise
UK Urban Areas
15
For 99% of obesity,
the overwhelming
influence is
environmental
more enjoyable
and so increase
take up and
persistence.
4. Estimates that
an urban park
that accounted
for 20% of total
local physical
activity would
save economy
£4.4 million,
including the
NHS £910,000
per year.
Regulating and Supporting Ecosystem Services
The natural environment provides many benefits to society that are often
overlooked. Recently these have started to be classified as ecosystem
services, see Millennium Ecosystem Assessment (2005). In this section the
focus is on regulating and supporting ecosystem services, by which is meant
those natural processes that provide benefits such as climate control,
pollution attenuation, water purification, flood control, nutrient cycling and
soil formation.
These are all processes upon which society is heavily dependent and which it
would be very expensive or impossible to replace. It is difficult to quantify
exactly how much different landscapes or habitats on different scales provide
of these services. It is equally difficult to put monetary values on these
services, partly because of the interdependencies between all sites: the value
of any one site depends on its relationship with wider ecosystems.
Evidence of Ecosystem Services Benefits
To value these, often techniques ask how much it would cost to institute
man-made technologies to replace the natural services provided by a
given ecosystem. An example from a study listed below looks at the role
of salt marshes in food defence. By absorbing and dissipating the power of
waves, salt marshes prevent erosion of the coastline. This means that
flood defence banks of a lower engineering specification and cost can
provide the required level of flood risk protection. The study estimates
that where salt marshes are feasible, this could amount to a cost saving of
£4600 per metre.
16
However, it is possible to qualitatively assess what services are provided by
different habitats and Annex 3 shows some of the key services for the
principal habitats in the UK, and suggests some suitable valuation
techniques.
Case Study: Peat bogs
Peat bogs provide a valuable
service to people by purifying
water. As water coming from
catchments with peat bogs is
therefore cleaner, less money needs
to be spent on artificial means to
purify the water.
In English Uplands, as increasing
amounts of land have come under
cultivation, farmers have drained
peat bogs, clearing the way for
livestock
and
limited
arable
farming. In using the land for the
purpose of this single service, they
have reduced its ability to provide
other services.
Apart from reducing water quality, the draining of peat bogs has
adversely affected the local wildlife, particularly birds, reflecting the
trend that the biggest threat to wildlife comes from habitat destruction.
United Utilities (UU) and RSPB have a mutual interest in restoring peat
bogs, and have collaborated on a project to do so on UU’s estate in the
North West of England, the Sustainable Catchment Management
Programme (SCaMP). United Utilities owns over 58,000 hectares in the
catchment area, a significant proportion of which is SSSI. The project is
designed to restore these to favourable condition, operate sensitive and
viable farming practices, and restore peat bogs.
Although this will bring a wide range of benefits, by restoring the peat
bogs it is estimated that UU will save around £2 million per year in
water supply costs, illustrating the significant economic value of
ecosystem services.
17
Studies and Evidence
Study
Area looked at
Subject Matter
Values
Business Case for
the Environment
Research Study
(2003) RSK
Carbon
Sequestration
Benefits of
Woodland (2003)
Brainard et al
[NB: this values
additional emissions
locked away each
year, as opposed to
stock of fixed
carbon]
The Social &
Environmental
Benefits of Forests
in Great Britain
(2003) Willis et al
Costs & Benefits of
Natura 2000 Sites
(2004)
North East
(urban)
Impact of trees in
Urban areas
NPV of £200 for an
urban tree.
Great Britain
Carbon
sequestration of
forests in Great
Britain
Capitalised value
£1.7 billion to £5.9
billion (depending on
Carbon value and
discount rate)
A guide to the
understanding and
management of Salt
marshes (1995)
National Rivers
Authority.
Review of the
Design and
Management of
Constructed
Wetlands (1997),
Nuttal et al
Value of Biodiversity
(2006) IEEP
England &
Wales
Annual Value: £94
million
Great Britain
Air pollution
attenuation of
forests in Great
Britain
Air pollution
absorption of forests,
annual value of
£0.39 million.
Scotland
Provision of
ecosystem
services by Natura
2000 sites in
Scotland
Role of salt
marshes as a
form of sea
defence
Qualitative, but
would be high and
affect national and
global community.
UK
Role of wetlands
in effluent
treatment
Europe
Role of peat bogs
in water
purification in
Lake district
£400 per metre cost
of using salt marshes
as sea defence,
compared to £5000
per metre using sea
walls.
Cost of treating
sewage, £162,011
using wetlands
versus £249,791 for
conventional sludge
£1.2 million per year
Option/Existence
Society benefits in many ways simply from having a natural environment
regardless of whether it is used. This ‘non-use’ value can be divided to option
and existence value.
18
Option value refers to the possible benefits society could gain in the future
from the natural resource. This relates largely to the possibility of new
discoveries of plant and animal functions or species that could herald new
drugs and treatments. This ‘bioprospecting’ can have value to pharmaceutical
companies but depends upon there being healthy natural environments
around the world to maintain biological resources around the world and allow
their exploration.
Case Study: Halting
biodiversity loss
A
serious
concern
for
wildlife conservation has
been intensive agriculture,
particularly on arable land.
As hedgerows have been
uprooted
and
fields
cultivated
to
their
boundaries, little space has
been left for wildlife.
This loss of habitat has had a serious impact on biodiversity. Insect
numbers have reduced, and farmland birds are fewer today as their
food source and habitat have become squeezed. As a consequence, the
government has initiated agri-environmental schemes which pay
farmers to farm in more sensitive ways, for example by leaving field
margins as shown above.
A study by Defra in 2004 that investigated ways of valuing biodiversity
asked residents in Cambridgeshire whether they were willing to pay for
such a scheme on arable land in Cambridgeshire. As most would never
‘use’ the biodiversity benefits this would be bring, the values the study
elicited were largely non-use, such as existence or bequest.
The results showed a significant positive value for the benefit, with
residents willing to pay £16.6 million per year to support the scheme;
far in excess of the costs of the scheme. This reflects an often found
result in the literature that non-use values tend to be large and
outweigh most others.
Source: Developing measures for valuing biodiversity (2004)
Another option value is the benefit society could receive in the future from
the resilience of the natural environment to some sort of disturbance. As
19
society is heavily dependent on the natural environment any disturbance
would cause significant economic loss. However, the scale of this loss could
be reduced if the natural environment were more resilient. Resilience is
associated with more complex species diversity where a range of species fill
ecological functions to ensure that natural processes continue in the face of
disturbance. One major potential disturbance is climate change, adding to
the importance of preserving a high quality natural environment today. This
is explored further in a recent HM Treasury publication outlining the key
pressures on natural resources and global climate. This can be found at:
http://www.hm-treasury.gov.uk/media/298/55/csr_longterm271106.pdf
Studies and Evidence
Study
Costs & Benefits of
Natura 2000 Sites
(2004)
Area looked at
Subject Matter
Scotland
The non-used
cultural benefit
provided by
Natura 2000
sites in Scotland
Rest of UK
The Social &
Environmental
Benefits of Forests
in Great Britain
(2003) Willis et al
Great Britain
The non-used
cultural benefit
provided by
forests in Great
Britain
Biodiversity &
Poverty Reduction,
(2006), WCMC
Developing
Countries
High species
diversity in a
range of habitats
across globe
Values
Non-use value:
£109 million per
year
£102 million per
year
Non-use value (for
biodiversity that
would not be directly
‘used’)
£386 million per
year
The argument here
is about biodiversity
underpinning
ecosystem
resilience, and acting
as insurance in the
face of change, say
global warming
Evidence on Option & Existence Benefits
Some evidence to support existence value is found in the studies below.
One study looked at Natura 2000 sites in Scotland and asked random
households around the UK how much they would be willing to pay to
preserve these sites. For many respondents it is unlikely they would ever
visit the sites, and yet positive values were elicited. For the UK as a whole,
the study estimated that the population would be willing to pay £211
million a year just to keep the sites in their natural state, far in excess of
the cost of doing so.
Existence value refers to the value placed on simply knowing there is a
natural environment. Part of this is stewardship, a sense of responsibility as
humans for the rest of the natural world. This can be clearly seen by support
20
for anti-whaling bodies, for example, as most people will not get to
experience whales themselves but wish them to be protected anyway.
Another reason may be the desire to bequeath to future generations a
healthy natural environment for their enjoyment. This bequest value is
increasingly significant in light of climate change where future generations
may suffer because of the (lack of) actions of current generations, invoking
in many a moral responsibility to curb global warming today.
21
Section 3: Key Resources
Value of Biodiversity (2006) IEEP
http://www.ieep.org.uk/publications/pdfs/2006/Value_of_biodiversityJune_06.pdf
RSPB Reserves & Local Economies (2002) RSPB
http://www.rspb.org.uk/Images/Reserves%20and%20Local%20Econo
mies_tcm5-36604.pdf
*http://www.rspb.org.uk/policy/economicdevelopment/greeneconomy
Revealing the Value of Nature (2004) GHK Consulting
http://statistics.defra.gov.uk/esg/reports/rvne.pdf
The Hidden Value of Nature (2002) English Nature
http://www.english-nature.org.uk/pubs/publication/PDF/valueofnat.pdf
An Economic Assessment of the Costs & Benefits of Natura
2000 Sites in Scotland (2004) Jacobs report to Scottish Executive
http://www.scotland.gov.uk/Publications/2004/06/19426/38107
Developing Measures for Valuing Biodiversity (2004) Christie et
al, report to Defra
http://statistics.defra.gov.uk/esg/reports/biovalue/mainrep.pdf
Natural Fit (2004) Bird, W. report to RSPB
http://www.rspb.org.uk/Images/natural_fit_full_version_tcm560619.pdf
England’s Ecosystem Services (2005) Eftec report to English Nature
http://www.english-nature.org.uk/pubs/publication/PDF/701.pdf
Ecosystems and Human Well-Being (2005) Millennium Ecosystem
Assessment
http://www.millenniumassessment.org/en/Products.aspx?
22
Annex 1: Valuing the Natural Environment
Linking the benefits of Nature to the Total Economic
Value Framework
Consumptive Use
Products Harvested
Non-Consumptive Use
Cultural/Spiritual;
Recreation/Tourism; Health;
Education; Information
Supporting/Regulating
Ecosystem Services
Nutrient Cycling;
Flood Control;
Water Regulation
Option
Resilience; Bio-prospecting
Existence
Cultural; Stewardship; Bequest
Direct Use
Total
Economic
Value
Indirect Use
Benefits
Non-Use
23
Annex 2: Valuing Biodiversity
Methods of eliciting values
Many biodiversity functions result in goods and services that are not traded
in markets and which therefore remain unpriced. It is thus necessary to
assess the relative economic worth of these goods or services using nonmarket valuation techniques. Over the last 10-15 years, economics has
developed a range of valuation techniques for assessing the economic value
of biodiversity, and these are detailed in table 1, while more detailed
information on the underlying theory of some of these techniques is given
below. These methodologies are soundly based in economic theory and are
generally seen as intellectually rigorous, with the values that emerge from
good quality studies being viewed as robust. The type of valuation technique
chosen will depend on the type of non-market good or service to be valued,
as well as the quantity and quality of data available.
Where market prices exist for resources, these may have to be adjusted to
provide social or shadow prices, but otherwise they are likely to provide a
relatively simple means of assessing economic value. Approaches related to
market analysis include the assessment of productivity losses that can be
attributed to changes in biodiversity and the incorporation of biodiversity as
just one input into the production function of other goods and services.
Investment by public (especially government) bodies in conserving
biodiversity may represent a surrogate for aggregated individual willingness
to pay and hence social value. These ‘public prices’ paid for resources have
been used to approximate the value society places upon them, as for
instance the costs of designating an ecosystem as a nature reserve. For a
variety of reasons, these are unlikely to accurately reflect aggregated
individual values, although techniques exist for attributing economic value
based on such ‘collective choice’ decisions (Turner et al: 2005).
In the absence of market prices, revealed preference methodologies may
be used to estimate the benefits associated with non-market goods and
services. These techniques attempt to use ‘surrogate’ markets to infer the
value of environmental goods and services: The price or cost of other market
goods and services is assumed to reflect the preferences for environmental
resources. For example, individuals may spend considerable time travelling
to a specific site for recreational purposes. Valuing the travel time (e.g. in
terms of wages that could have been earned instead) gives some indication
as to the value individuals put upon the environmental resources they are
using. This travel cost method is one revealed preference methodology;
others include random utility models (used to estimate the value of different
individual features of a site), hedonic pricing models (to estimate the effect
of environmental characteristics on property values) and averting behaviours
(using expenditure on avoiding behaviour as a proxy for damage costs).
However, these are based on preferences being ‘revealed’ through
24
observable behaviour, and are restricted in their application to where a
functioning market exists. A drawback of such methods is that they can only
be used to estimate use value and thus these methodologies may be less
appropriate for the valuation of biodiversity.
Stated preferences: these techniques use survey methods to elicit
individuals’ preferences and willingness to pay (WTP) for the non-market
good in question. The advantage of such methodologies is that they can be
used to estimate non-use as well as use value, which may be a significant
part of the Total Economic Value for many biodiversity resources. Two types
of stated preference techniques are contingent valuation (used to value the
natural resource as a whole) and choice modelling (which focuses on the
individual attributes of the resource in question). However, conducting a
stated preference survey can often be a lengthy and resource-intensive
exercise.
.
Cost-based approaches: infer a value of a natural resource by how much it
costs to replace or restore it after it has been damaged. However, as these
methods are based on costs they do not strictly measure utility. Examples of
cost based approaches include:
•
Replacement Cost Method: This technique looks at the cost of
replacing or restoring a damaged asset to its original state and uses
this cost as a measure of the benefit of restoration. The approach is
widely used because it is often easy to find estimates of such costs.
The approach is valid when it is possible to argue that the remedial
work must take place because of some other constraint such as an
environmental standard. Replacement will only be economically
efficient, however, if the environmental standard itself was
economically determined. Otherwise, the approach estimates only the
costs of replacement; it is not a technique for benefit estimation.
•
Damage Costs Avoided: Ecosystem services help to avoid economic
costs. The value of ecosystem services can be inferred from the value
of losses avoided and costs saved. For example, by calculating the
costs of destruction to houses, roads and farms caused by storms and
flooding, which would occur as a result of the loss or irrevocable
degradation of marine and coastal ecosystems.
•
Preventative Expenditures. Ecosystem services can be valued by
looking at how much it would cost to set in place measures to prevent
or mitigate the damage arising from their loss. For example, the cost
of flood control barriers needed to offset or prevent negative impacts
associated with the loss of flood control services (Turner et al: 2005).
It is important to distinguish between valuation techniques that estimate
benefits directly and those that estimate costs as a proxy for benefits. For
instance, estimating Damage Costs Avoided, Replacement/Substitute Costs
25
or Restoration Costs as part of an economic valuation exercise suggests that
the costs are a reasonable approximation of the benefits that society
attributes to the resources in question. The underlying assumption is that the
benefits are at least as great as the costs involved in repairing, avoiding or
compensating for damage. These techniques are widely applied due to the
relative ease of estimation and availability of data, but it is important to be
aware of their limitations in terms of the information they convey with
respect to economic benefits. Where it can be shown that a) replacement or
repair will provide a perfect substitute for the original function, and b) the
costs of doing so are less than the benefits derived from this function, then
the costs do indeed represent the economic value associated with that
function.
26
Table 1: Valuation Methodologies
Valuation Method Description Direct Use Values Indirect Non‐use Use Values Values1 Valuation Methodology Market Analysis Where market prices of outputs (and inputs) are available. Marginal productivity net of human effort/cost. Could approximate with market price of close substitute. Requires shadow pricing. (Productivity Losses) Change in net return from marketed goods: a form of (dose‐
response) market analysis. √ √ (Production Functions) Biodiversity treated as one input into the production of other goods: based on resource linkages and market analysis. √ Market valuation (Public Pricing) Public investment, for instance via land purchase or monetary incentives, as a surrogate for market transactions. √ √ √2 Market valuation √ √ Revealed Preference √ √ Revealed Preference √ √ √ Derive an implicit price for an environmental good from Hedonic analysis of goods for which markets exist and which Price Method incorporate particular environmental characteristics. (HPM) Costs incurred in reaching a recreation site as a proxy for the Travel Cost value of recreation. Expenses differ between sites (or for the Method same site over time) with different environmental attributes. (TCM) Construction of a hypothetical market by direct surveying of a Contingent sample of individuals and aggregation to encompass the Valuation relevant population. Problems of potential biases. (CVM) 27
√ √ Market valuation Market valuation Stated Preference Damage Costs Avoided Defensive Expenditures (Relocation Costs) Replacement /Substitute Costs The costs that would be incurred if the ecosystem function were not present; e.g. flood prevention. Costs incurred in mitigating the effects of reduced environmental quality. Represents a minimum value for the environmental function. Expenditures involved in relocation of affected agents or facilities: a particular form of defensive expenditure. √ Cost Based √ √ Cost Based Cost Based Potential expenditures incurred in replacing the function that √ √ √3 Cost Based is lost; for instance by the use of substitute facilities or ‘shadow projects’. Costs of returning degraded biodiversity to its original state. Restoration √ √ √3 A total value approach; important ecological, temporal and Cost Based Costs cultural dimensions Source: Adapted from Turner et al: 2005. 1 Indirect use values associated with functions performed by an ecosystem will generally be associated with benefits derived off‐site. Thus, methodologies such as hedonic pricing and travel cost analysis, which necessarily involve direct contact with a feature of the environment, can be used to assess the value of indirect benefits downstream from the ecosystem. 2 Investment by public bodies in conserving ecosystems (most often for maintaining biodiversity) can be interpreted as the total value attributed to the ecosystem by society. This could therefore encapsulate potential non‐use values, although such a valuation technique is an extremely rough approximation of the theoretically correct economic measure of social value, which is the sum of individual willingness to pay. 3 Perfect restoration of the ecosystem or creation of a perfectly substitutable ‘shadow project’ ecosystem, which maintains key features of the original, might have the potential to provide the same non‐use benefits as the original. However, cultural and historical aspects as well as a desire for ‘authenticity’ may limit the extent to which non‐use values can be ‘transferred’ in this manner to newer versions of the original. This is in addition to spatial and temporal complexities involved in the physical location of the new catchment or the time frame for restoration. 28
Issues in valuing biodiversity
There are numerous technical issues pertinent to the valuation
methodologies described above, which will not be detailed here. More
generally, however, there are some key issues which make the valuation of
non-market goods, including biodiversity, challenging:
1) The understanding of biodiversity: There is limited understanding of
the concept and worth of biodiversity amongst non-specialists, which
could lead to its being undervalued by individuals. Linked to this
problem of incomplete information is the issue of the credibility of
values achieved using stated preference techniques. If, in order to
reasonably respond to the survey questions, participants must first be
educated about the concept of biodiversity, then it could be argued
that the resultant values are not representative of the general
population who have not had such education. Conversely, it could be
argued that it is pointless to ask people to value something about
which they have little or no knowledge. This issue can be addressed
through the use of valuation workshops2, the use of focus groups and
pilot surveys, and by translating basic biodiversity concepts into terms
which are more readily understood by the general public.
2) Scientific understanding of ecosystems: Even amongst the specialist
community, there is much uncertainty about the range and scale of
the species within ecosystems, as well as the functions and services
provided. In such circumstance, it is difficult to correctly value these
resources;
3) Marginal valuation: In terms of policy decision-making what is required
is the marginal value of biodiversity goods and services i.e. the value
yielded by an additional unit of the good or service. This is because
policy-making is focussed on making trade-offs between use of
resources. A criticism of some of the valuation work that has been
undertaken (e.g. Costanza et al 1997 quoted in the Annex) is that the
values are derived for the entire ecosystem service or biome, using
values established ‘at the margin’.
4) Scale: The geographical scale (or accounting stance) of a study is
determined by the extent of the population affected by the impact
under investigation. The accounting stance should be as encompassing
in this respect as possible. In practice, a pragmatic accounting stance
has to be adopted in specifying the scale, where the gains in accuracy
are balanced against the costs of spreading the scale wider.
2
Valuation Workshops: This type of approach generally incorporate a period of time
in which participants are able to gather and assimilate information from a wide range
of sources and then discuss this information within a group context. Such features
make these approaches particularly useful for the valuation of complex goods; such
as biodiversity
29
5) Aggregation and double counting: For example, if the nutrient
retention function is integral to the maintenance of biodiversity, then if
both functions are valued separately and aggregated, this would
double count the nutrient retention which is already ‘captured’ in the
biodiversity value. This problem can be overcome through careful
design of the study.
6) Allocation over time: It is frequently necessary to choose between
options that differ in temporal patterns of costs and benefits, or that
differ in their duration. Discounting provides a common matrix which
enables comparison of costs and benefits that occur at different points
in time. Use of discounting is integral to cost benefit analysis and cost
effectiveness analysis. Discounting converts the stream of costs and
benefits over time into a stream of ‘present’ values. The difference
between the value of the discounted benefits and costs is referred to
as the ‘net present value’ (NPV). The Treasury Green Book suggests
appropriate discount rates for natural resources values.
7) Irreversible change: Irreversible impacts, for instance the extinction of
species or exhaustion of minerals, are not accounted for in the
standard
procedures
for
economic
evaluation.
Under
such
circumstances, consideration needs to be given to the uncertain future
losses that might be associated with potential irreversible change.
Some protection to the interests of future generations can be offered
through the imposition of the safe minimum standards decision, which
recommends that when a development activity that impacts on the
environment threatens to breach an irreversible threshold, that
conservation is adopted unless the costs of foregoing the development
are regarded as ‘unacceptably large’. It is based on a modified
principle of minimising the maximum possible loss and therefore
differs from routine trade-offs, which are based on maximising
expected gains e.g. cost-benefit and risk analysis. However, activities
that result in potential irreversible change are not rejected if the
associated costs are regarded as intolerably high.
8) Data limitations: It is inevitable that some of the data required for an
economic evaluation will not be readily available. Budgetary
constraints often limit extensive collection of original data. Where data
are limited, this should be acknowledged and the measures taken in
response to this limitation clearly specified. The results and
recommendations should be made explicitly conditional on these
limitations. The various techniques used to value non-marketed goods
and services are each associated with specific data limitations.
While the concerns outlined above increase the complexity of valuing
biodiversity, it should be noted that many of the issues can be resolved
through selection of the most appropriate valuation methodology, and the
30
careful and rigorous design of the study, although this can make the
procedure very expensive. It is also important to remember that the
valuation methodologies discussed are soundly based in economic theory and
are generally seen as intellectually rigorous, with the values which emerge
from good quality studies being viewed as robust.
Benefits transfer
It is not always possible for valuation studies to be conducted for all of the
benefits accruing to biodiversity values. Thus, if a similar environmental good
has previously been valued elsewhere, estimates of its economic value might
be usable as an indicator of the impacts of the new project. Such an
approach has been termed ‘benefits transfer’ because the estimates of
economic benefits are ‘transferred’ from a site where a study has already
been completed to a site of policy interest. Using a benefits transfer
approach appropriately will yield significant time and cost savings as
compared to the time and resource intensive process of designing, testing
and implementing a new valuation study. The benefits transferred from the
study site could have been measured using any of the direct or indirect
valuation techniques outlined above. Environmental value transfer is
commonly defined as the transposition of monetary environmental values
estimated at one site (study site) through market based or non-market
based economic valuation techniques to another site (policy site) (Turner et
al: 2005). The most important reason for using previous research results in
new policy contexts is cost-effectiveness.
Applying previous research
findings to similar decision situations is a very attractive alternative to
expensive and time consuming original research to quickly inform decision
making. However, this technique of ‘benefits transfer’ is still in its infancy
and a number of methodological questions persist. It requires careful design
of the benefits transfer function, that links the environmental goods and the
beneficiary populations at the different sites. Therefore, any results and
recommendations that transpire should explicitly be made conditional on
these limitations. Nevertheless, benefits transfer may be useful in indicating
where values lie, and their relative magnitude.
31
Annex 3: Ecosystem Services from Key Habitats
The following tables come from a study by Eftec, ‘England’s Ecosystem
Services’ (2005), submitted to English Nature.
Ecosystem services for Broadleaved woodland, inter-tidal and freshwater
wetland habitats
Service may be provided. ● Services of probable (relative) importance.
Habitat
Service
Category
Purification &
detoxification
Cycling
processes
Regulation &
Stabilisation
Broadleaved
woodland
Services and goods
Filtration of air pollution
●
Production of oxygen
●
Filtration of water
●
Freshwater
wetlands
Intertidal
habitats
●
Detoxification of water and sediment
●
●
Nutrient cycling
●
●
Translocation of water and nutrients
from depth
Carbon fixation and sequestration
●
●
Global climate regulation
●
●
Local climate regulation
Erosion control
●
●
Flood risk mitigation
●
●
Maintenance of surface water stores
●
Groundwater replenishment
Habitat
Provision
Regeneration
& Production
Habitats of conservation importance
●
●
●
Association with species of
conservation importance
●
●
●
High rates of primary production
●
Fibre and construction products
●
Food and drink products
Medicinal and cosmetic products
Ornamental products and other
products
Consumptive recreation
●
Renewable energy sources
●
●
●
●
Regenerative services
Information
Paleo-environmental data source
●
Preservation of archaeology
●
●
Historical importance
32
●
●
Habitat
Service
Category
Broadleaved
woodland
Freshwater
wetlands
Intertidal
habitats
●
●
●
Recreation and tourism
●
●
Physical health benefits and promotion
of personal wellbeing
●
Historical meanings and cultural
importance
●
Services and goods
Education and scientific research
resource
Gene bank for research and
development of products
Life-fulfilling
Techniques for Valuation of Ecosystem Service Categories
Technique
Service
Category
Purification &
detoxification
Cycling
processes
Regulation &
Stabilisation
Habitat
Provision
Services and goods
Pricing
Filtration of air pollution
●
Production of oxygen
●
Filtration of water
●
Detoxification of water and sediment
●
Nutrient cycling
●
Translocation of water and nutrients
from depth
●
Global climate regulation
●
Local climate regulation
●
Erosion control
●
Flood risk mitigation
●
Maintenance of surface water stores
●
Groundwater replenishment
●
Valuation
●
●
●
●
Association with species of
conservation importance
●
●
Food and drink products
●
Medicinal and cosmetic products
●
Ornamental products and other
products
●
33
Pricing techniques can be
used for, e.g. avoided
health costs, costs of water
treatment works etc.
Valuation techniques can
be used to estimate the
contribution to e.g.
recreation (but need to
avoid double counting)
These are best valued
through production function
pricing approaches, but
typically data are not
available.
Habitats of conservation importance
Fibre and construction products
Comments
Pricing techniques can be
used to estimate avoided
damage to property,
replacement costs (e.g. sea
walls), production inputs to
agriculture from erosion
control, price of water
supply, etc.
Valuation techniques can
measure the health and
psychological effects of
natural disasters.
Pricing techniques can be
used to estimate the
contribution of habitat
provision to products sold in
the market.
Valuation techniques:
Only stated preference
techniques are capable of
capturing the non-use
values of habitats, which
can be a significant portion
Technique
Service
Category
Information
Life-fulfilling
Services and goods
Pricing
Valuation
Comments
Consumptive recreation
●
●
of their value.
Renewable energy sources
●
Regenerative services
●
Paleo-environmental data source
●
Preservation of archaeology
●
●
Historical importance
●
●
Education and scientific research
resource
●
Gene bank for research and
development of products
●
Recreation and tourism
●
●
Physical health benefits and
promotion of personal wellbeing
●
●
Historical meanings and cultural
importance
●
●
34
Pricing techniques are
most relevant using a
production function to
estimate the contribution of
ecosystem services to the
value of research outputs,
education, etc.
Stated preference can be
used to estimate the use
and non-use value of
cultural heritage.
Both pricing and valuation
techniques can capture the
contributions made to the
economy through tourism as
well as the consumer
surplus of informal
recreation and non-use
value of ecosystems.
Annex 4: Valuation Studies
The studies below are provided to illustrate the positive value people
place on biodiversity in the UK. This value is complex and entwined with
appreciation of the wider environment many people hold. This is shown
by the varying object of valuation in these studies. It should be noted
that the list below includes prominent studies but cannot be considered
exhaustive.
Study
Author(s)
Year
Reference
Object of
Valuation
The use of willingness to pay approaches in mammal conservation.
White, P.C.L., Bennett, A.C. and Hayes, E.L.V
2001
Mammal Review, 31, 2, 151 - 167
Area of
Study
Valuation
Method
Type of
Value
Value
Otter
North
Yorkshire
Contingent
Valuation
Direct Use
& Non-Use
Value
£0.84 m
Water Vole
North
Yorkshire
Contingent
Valuation
Direct Use
& Non-Use
Value
£1.05 m
Red
Squirrel
North
Yorkshire
Contingent
Valuation
Direct Use
& Non-Use
Value
£2 m
Brown
Hare
North
Yorkshire
Contingent
Valuation
Direct Use
& Non-Use
Value
£0.42 m
Description
Regional WTP
for BAP to
increase
population of
rare species
Regional WTP
for BAP to
increase
population of
rare species
Regional WTP
for BAP to
increase
population of
rare species
Regional WTP
for BAP to
increase
population of
rare species
Benefits of environmentally sensitive area policy in England: a
contingent valuation assessment
Author(s) Willis K. G., Garrod G. D. and Saunders C. M.
1995
Year
Reference Journal of Environmental Management, 44, 2, 105 - 125
Study
35
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Value
Landscape
Benefits
Somerset
Levels
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£22.51
Landscape
Benefits
Somerset
Levels
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£128,000
Landscape
Benefits
Somerset
Levels
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£15.20
Landscape
Benefits
Somerset
Levels
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£15 m
Landscape
Benefits
South
Downs
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£25
Landscape
Benefits
South
Downs
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£334,000
Landscape
Benefits
South
Downs
ESA
Contingent
Valuation
Direct
Use &
Non-Use
Value
£35.34
Landscape
Benefits
South
Downs
ESA
Contingent
Valuation
Direct
Use &
Non-Use
£77 m
36
Description
Resident’s per
household WTP
per year in
preference to
intensive
agriculture
Resident’s
regional WTP per
year in
preference to
intensive
agriculture
Visitor’s per
household WTP
per year in
preference to
intensive
agriculture
Visitor’s regional
WTP per year in
preference to
intensive
agriculture
Resident’s per
household WTP
per year in
preference to
intensive
agriculture
Resident’s
regional WTP per
year in
preference to
intensive
agriculture
Visitor’s per
household WTP
per year in
preference to
intensive
agriculture
Visitor’s regional
WTP per year in
preference to
Value
intensive
agriculture
Valuing non-market wildlife commodities: an evaluation and
comparison of benefits and costs.
Author(s) Willis, K.
1990
Year
Reference Applied Economics, 22, 13 – 30
Study
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Direct
Use &
Non-Use
Value
Direct
Use &
Non-Use
Value
£150,000
Direct
Use &
Non-Use
Value
£520,000
SSSIs in
North
England
Upper
Teasdale
SSSI
Contingent
Valuation
SSSIs in
North
England
Skipworth
Common
SSSI
Contingent
Valuation
SSSIs in
North
England
Derwent
Ings SSSI
Contingent
Valuation
Study
Author(s)
Year
Reference
Object of
Valuation
£1 m
Description
Upper Teasdale
SSSI aggregate
Visitor’s WTP per
year
Skipworth
Common SSSI
aggregate
Visitor’s WTP per
year
Derwent Ings
SSSI aggregate
Visitor’s WTP per
year
The social and environmental benefits of forestry
Willis et al
2003
http://www.forestry.gov.uk/forestry/ahen-5hzcbh
Area of
Study
Biodiversity Great
in Forests
Britain
Study
Value
Valuation
Method
Type of
Value
Non-Use
Focus
Value
Group
preferences
applied to
existing
Contingent
Valuation
study
Value
£11 bn
Description
Capitalised WTP
of GB population
to preserve
biodiversity,
derived from
annual WTP for
increases in
habitats
supporting
biodiversity
Developing measures for valuing changes in biodiversity
37
Author(s) Christie et al
2004
Year
Reference http://statistics.defra.gov.uk/esg/reports/biovalue/mainrep.pdf
Object of
Area of
Valuation Type of Value Description
Valuation
Study
Method
Value
£16.6
m
Improved
biodiversity
in arable
fields
Cambridgeshire
Contingent
Valuation
Direct &
Non-Use
Value
Recreating
Wetlands
to provide
habitat and
ecosystem
services
Recreating
Wetlands
to provide
habitat and
ecosystem
services
Avoid loss
of
biodiversity
Cambridgeshire
Contingent
Valuation
£12.3
Total
Economic m
Value
Northumberland Contingent
Valuation
£6.2 m
Total
Economic
Value
Cambridgeshire
Contingent
Valuation
Direct &
Non-Use
Value
£10.1
m
Avoid loss
of
biodiversity
Northumberland Contingent
Valuation
Direct &
Non-Use
Value
£4.8 m
Recovery
of rare
unfamiliar
species
Cambridgeshire
Direct
Use &
Non-Use
Value
£115
Recovery
Northumberland Choice
Direct
£189
Choice
Experiment
38
Regional WTP
per year for
biodiversity
enhancements
from
expansion of
agrienvironment
scheme
Regional WTP
per year for
habitat
recreation
Regional WTP
per year for
habitat
recreation
Regional WTP
per year to
avoid
biodiversity
loss from
housing
development
Regional WTP
per year to
avoid
biodiversity
loss from
housing
development
WTP per
household per
year for
recovery of
species to a
stable level
WTP per
of rare
unfamiliar
species
Experiment
Use &
Non-Use
Value
Rare and
common
familiar
species
Cambridgeshire
Choice
Experiment
Direct
Use &
Non-Use
Value
£93.89
Rare and
common
familiar
species
Northumberland Choice
Experiment
Direct
Use &
Non-Use
Value
£97.71
Restoration
of existing
habitats
Cambridgeshire
Choice
Experiment
Direct
Use &
Non-Use
Value
£34.40
Restoration
of existing
habitats
Northumberland Choice
Experiment
Direct
Use &
Non-Use
Value
£71.15
Habitat
Creation
Cambridgeshire
Choice
Experiment
Direct
Use &
Non-Use
Value
£61.36
Habitat
Creation
Northumberland Choice
Experiment
Direct
Use &
Non-Use
Value
£74
Ecosystem
Processes
Cambridgeshire
Indirect
Use
Value
£53.62
Choice
Experiment
39
household per
year for
recovery of
species to a
stable level
WTP per
household per
year for
protection of
species from
further decline
WTP per
household per
year for
protection of
species from
further decline
WTP per
household per
year for
restoration of
existing
degraded
habitats
WTP per
household per
year for
restoration of
existing
degraded
habitats
WTP per
household per
year for
recreation of
habitat on
farmland
WTP per
household per
year for
recreation of
habitat on
farmland
WTP per
household per
year for
maintenance
of ecosystem
Ecosystem
Processes
Northumberland Choice
Experiment
Indirect
Use
Value
Rare
familiar
species
Cambridgeshire
Choice
Experiment
Direct
Use &
Non-Use
Value
Rare
familiar
species
Northumberland Choice
Experiment
Direct
Use &
Non-Use
Value
Study
Author(s)
Year
Reference
Non-market benefits associated with mountain regions
Crabtree, B., Macdonald, D., Hanley, N.
2002
Report for Highlands and Islands Enterprise and Scottish Natural
Heritage
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Value
Description
Direct
Use &
Non-Use
Value
Direct
Use &
Non-Use
Value
£0.14 £0.19
m
Resident’s
WTP per year
£0.18 £2.04
m
Visitor’s WTP
per year
Non-market
benefits from
Upland areas
ESAs
Scotland
Contingent
Valuation
Non-market
benefits from
Upland areas
ESAs
Scotland
Contingent
Valuation
Study
Author(s)
Year
Reference
processes that
directly affect
people
£105.22 WTP per
household per
year for
maintenance
of ecosystem
processes that
directly affect
people
£35.65
WTP per
household per
year for
protection of
rare familiar
species
£90.59
WTP per
household per
year for
protection of
rare familiar
species
Value of Biodiversity
IEEP
2006
http://www.ieep.org.uk/publications/pdfs/2006/Value_of_biodiversityJune_06.pdf
40
Object of
Valuation
Recreational
Benefits of
Visitors to
Osprey
Reserves
Area of
Study
Loch
Garten
Reserve,
Scotland
Valuation
Method
Type of
Value
Contingent
Valuation
Direct
Use
Value
£1.96 £2.65 per
person
Description
Estimate of the
benefit a visitor
enjoys per visit
to the site.
An economic assessment of the costs and benefits of Natura 2000
sites in Scotland
Author(s) Jacobs Babtie for Scottish Executive
2004
Year
Reference http://www.scotland.gov.uk/Publications/2004/06/19426/38108
Study
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Value
Natura
2000 sites,
Scotland
Scotland
Contingent
Valuation
Direct Use
£902,425
Natura
2000 sites,
Scotland
UK
(except
Scotland)
Contingent
Valuation
Direct Use
£626,465
Natura
2000 sites,
Scotland
Natura
2000 sites,
Scotland
Scotland
Contingent
Valuation
Non-Use
Value
£109 mn
UK
(except
Scotland)
Contingent
Valuation
Non-Use
Value
£102, mn
Description
WTP per year of
Scottish
recreational
users of sites
WTP per year of
non-Scottish
recreational
users of sites
WTP per year of
Scottish to
preserve sites
WTP per year of
non-Scottish to
preserve sites
Marine Biodiversity
Study
Author(s)
Year
Reference
Object of
Valuation
Fishing
Industry
Net benefits: a sustainable and profitable future for UK fishing
Cabinet Office
2004
http://www.strategy.gov.uk/downloads/su/fish/pdf/NetBenefits.pdf
Area of
Study
UK
Valuation
Method
Marketbased
Type of
Value
Direct
Value
£540 mn
£800 -
41
Description
Value per year of
catching industry
Value of
£1200 mn
Study
Author(s)
Year
Reference
economic activity
resulting from
catch
Marine environment
Laffoley, D., Tasker, M.
2004
http://www.strategy.gov.uk/downloads/files/marine2.pdf
Object of
Valuation
Area of
Study
Valuation
Method
Type
of
Value
Value Description
Food Provision
UK
Market-based
Direct
£800 £1300
m
Disturbance
Protection
UK Wetlands
Metaanalysis of
Contingent
Valuation
Indirect
Use
£2616
m
Nutrient
Cycling
Not specific
Replacement
Cost
Indirect
Use
Gas and
climate
regulation
Miscellaneous
Cost-based
Indirect
Use
£0.10
to
£0.28
per
cubic
metre
£0.53
- £164
per
tonne
Replacement
Cost
Indirect
Use
Bioremediation UK Wetlands
of Waste
42
£1100
£1240
per
acre
Value per
year of
foodstuffs
harvested
from the sea
WTP per year
of UK
population
for flood
protection
Cost per year
of replacing
nutrient
cycling
Cost
estimates per
tonne of
CO2, that
could be
applied to
CO2
sequestration
service of
ocean
Potential cost
savings of
wetlands
over
conventional
waste water
treatment,
discounted
over 30
Raw Materials
UK
Market-based
Direct
Use
£15
bn
Information
Service
UK
Cost-based
Indirect
Use
£83 m
Sea Mammals
UK
Contingent
Valuation
NonUse
Value
£474 £1150
m
Study
Author(s)
Year
Reference
Whale watching in West Scotland
Warburton et al
2001
http://www.multilingual-matters.net/jet/002/0093/
jet0020093.pdf#search=%22warburton%2C%202001
%2C%20whale%20watching%20in%20west%20scotland%22
Object of Area of
Valuation
Study
Whales in Scotland
West
Scotland
Study
Author(s)
Year
years.
Value per
year of
resources
extracted
from sea,
mainly oil
and gas
Expenditure
per annum
on research
into marine
environment.
Does not
reflect the
gains this
research
brings.
WTP per year
of UK
population
for continued
survival of
sea mammals
Valuation Type of
Method
Value
N/A
Direct
Use
Value
N/A
Description
12% of West
coast tourism in
Scotland may
come directly or
indirectly from
whale-related
activities
Valuing benefits from improved marine water quality: experiment
for the Swedish West Coast
Eggert, H., Olsson, B.
2004
43
Reference http://www.handels.gu.se/epc/archive/00003393/01/gunwpe0126.p
df
Object of
Valuation
Marine
Biodiversity
Study
Author(s)
Year
Reference
Object of
Valuation
Coral Reefs
Study
Author(s)
Year
Reference
Area of
Study
Sweden
Valuation
Method
Type of
Value
Choice
Experiment
Direct
Use &
Non-Use
Value
1400
SEK
Description
WTP per person
to avoid
biodiversity loss
Economic valuation of the coral reefs of Hawaii
Cesar et al
2002
Report to NOAA
Area of
Study
Hawaii
Valuation
Method
Type of
Value
Value
Market and
cost-based
Direct &
Indirect
Use value
US$ 364
Description
Value of benefits
provided by coral
reefs, e.g.
tourism, erosion
control
Economic analysis of Indonesian coral reefs
Cesar, H.
1996
http://www.icriforum.org/docs/indonesian_cr.pdf
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Coral Reefs
Indonesia
Market and
Cost-based
Direct &
Indirect
Use
value
Study
Author(s)
Year
Reference
Value
Value
Description
US$ 0.14
to 1.16 m
per square
km,
discounted
over 25
years
Value of some
services provided
by coral reefs
measured by loss
of income (e.g.
tourism) and cost
of replacement
(e.g. coastal
protection).
Ensuring the sustainability of ocean living resources
NOAA
1998
http://www.yoto98.noaa.gov/yoto/meeting/liv_res_316.html
44
Object of
Valuation
World’s
marine
catch
Area of
Study
Global
Valuation
Method
Type of
Value
Marketbased
Direct Use
Value
$80 bn
Description
Estimated value
of marine catch
per year
Study
The value of the world’s ecosystem services and natural
capital
Author(s) Costanza et al
Year
1997
Reference Nature, 1, 253 - 260
Object of
Valuation
Area of
Study
Valuation
Method
Type of
Value
Value
Open Ocean Global
Marine
Ecosystems:
regulating
services
Cost-based
Indirect
Use
$5.2 tr
Global
Coastal
Ocean
Marine
Ecosystems:
regulating
services
Cost-based
Indirect
Use
$11.7 tr
Description
Estimate of the
minimum value
per year of open
ocean regulating
services based
on damage cost
if absent or
replacement cost
Estimate of the
minimum value
per year of
coastal ocean
regulating
services based
on damage cost
if absent or
replacement cost
From ocean to aquarium – the global trade in marine ornamental
species
Author(s) Wabnitz et al
2003
Year
Reference http://www.unep.org/PDF/From_Ocean_To_Aquarium_report.pdf#
search=%22UNEP%202003%2C%20the%20ocean%20to%20aquari
um%2
0the%20global%20trade%20in%20ornamental%20species%22
Study
Object of
Valuation
Marine
ornamental
species
Area of
Study
Global
Valuation
Method
Marketbased
Type of
Value
Direct Use
45
Value
$200 $330 m
Description
Value of trade in
species per year
Study
Author(s)
Year
Reference
Object of
Valuation
Coral Reefs
Study
Author(s)
Year
Reference
Object of
Valuation
Wetlands
Biodiversity
Study
Author(s)
Year
Reference
Object of
Valuation
Cod
Study
Author(s)
Year
Reference
The economics of worldwide coral reef degradation
Cesar et al
2003
http://assets.panda.org/downloads/cesardegradationreport100203.p
df
Area of
Study
Global
Valuation
Method
Type of
Value
Market,
cost-based
&
contingent
valuation
Total
Economic
Value
Value
$30 bn
Description
Value per year
from services
provided by coral
reefs
A meta-analysis of wetland ecosystem valuation studies
Brouwer et al
2003
Chapter in Managing Wetlands: An Ecological Economics Approach,
Edward Elgar: Cheltenham
Area of
Study
Various
Valuation
Method
Type of
Value
Metaanalysis of
contingent
valuation
Direct Use
& NonUse Value
Value
£80
Description
Value per
household per
year to preserve
biodiversity
The economics of a tragedy at sea
Doring, R., Holst, H.
2002
http://assets.panda.org/downloads/tragedyatsea.pdf
Area of
Study
Europe
Valuation
Method
Marketbased
Type of
Value
Direct Use
Value
400 mn
euros
Reefs at risk in the Caribbean
Burke, L., Maidens, J.
2004
http://pdf.wri.org/reefs_caribbean_full.pdf
46
Description
Inflated costs per
year caused by
over- fishing
Object of
Valuation
Area of
Study
Coral Reefs
Caribbean
Study
Author(s)
Year
Reference
Area of
Study
Coral Reefs
South
East Asia
Object of
Valuation
Marketbased
Type of
Value
Direct Use
Value
$4700 m
Description
Gross revenue
per year from
reef-related
tourism
Reefs at risk in South East Asia
Burke, L., Selig, L., Spalding, M.
2002
http://www.wri.org/biodiv/pubs_description.cfm?pid=3144
Object of
Valuation
Study
Author(s)
Year
Reference
Valuation
Method
Valuation
Method
Marketbased
Type of
Value
Direct
Value
$2.4 bn
Description
Value per year of
reef-related
fishing
Marine biodiversity: an economic valuation
Beaumont, N., Townsend, M., Mangi, S., Austen, M
2006
http://www.defra.gov.uk/wildlife-countryside/resprog/findings/mbeconomic/mbeconomic.pdf#search=%22Marine%20Biodiversity%3A
%20an%20economic%20valuation%2C%20beaumont%2C%202006
%22
Area of
Study
Valuation
Method
Type of
Value
Value
Food
provision
UK
Marketbased
Direct Use
£513 mn
Raw
materials
UK
Marketbased
Direct Use
£81.5 mn
Leisure &
recreation
UK
Marketbased
Direct Use
£12 bn
Climate
regulation
(Carbon)
UK
Cost of
avoidance
Indirect
Use
£0.4 £8.5 bn
47
Description
Value per year of
plants and
animals taken
from the sea
Value per year of
marine
organisms taken
from sea but not
directly
consumed
Expenditure per
year of people to
enjoy the marine
environment
Estimate of the
damage cost
avoided through
this natural
Marine
biodiversity
UK
Contingent
Valuation
Non-Use
48
£0.5 £1.1 bn
process
WTP per year of
UK population to
preserve
biodiversity