A Handbook for Understanding Natural Capital - Earth Economics
A Handbook for Understanding Natural Capital - Earth Economics
A Handbook for Understanding Natural Capital - Earth Economics
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
WHAT IS YOUR PLANET WORTH<br />
A <strong>Handbook</strong> <strong>for</strong> <strong>Understanding</strong> <strong>Natural</strong> <strong>Capital</strong><br />
By Allyson Schrier, Justine Bronfin, and Jennifer Harrison-Cox<br />
September 2013
<strong>Earth</strong> <strong>Economics</strong><br />
exists because generous foundations, governments,<br />
environmental organizations and people like you are<br />
interested in finding ways to conserve the unique<br />
biodiversity of watersheds everywhere.
suggested citation<br />
Schrier, A. V., Bronfin, J., Harrison-Cox, J. 2013. What is<br />
your planet worth A handbook <strong>for</strong> understanding natural<br />
capital. <strong>Earth</strong> <strong>Economics</strong>. Tacoma, WA.<br />
acknowledgements<br />
<strong>Earth</strong> <strong>Economics</strong> wishes to acknowledge the extremely<br />
helpful contributions received during the preparation of<br />
this handbook. First and <strong>for</strong>emost, we wish to acknowledge<br />
the Mountaineers Foundation, the Bullitt Foundation and<br />
independent donors to the <strong>Earth</strong> <strong>Economics</strong>’ General Fund<br />
who made this handbook possible. Thanks to reviewers<br />
Corinne Cooley, Jennifer Harrison Cox, Jonathan Kochmer,<br />
Maya Kocian, Rowan Schmidt, and Aaron Schwartz <strong>for</strong> their<br />
technical editing, research and support in strengthening<br />
the handbook. Thank you also to our wonderfully talented<br />
editor and designer, Leah Eaton Mitchell, and thanks to<br />
Angela Fletcher <strong>for</strong> the final touches to the design. Thanks<br />
to our Board of Directors, Josh Reyneveld, Ingrid Rasch,<br />
David Cosman, David Batker and Josh Farley.<br />
©2013 by <strong>Earth</strong> <strong>Economics</strong>. Reproduction of this<br />
publication <strong>for</strong> resale or other commercial purposes<br />
is prohibited without prior written permission of the<br />
copyright holder. Reproduction of this publication<br />
<strong>for</strong> educational or other non-commercial purposes<br />
is authorized without prior written permission from<br />
the copyright holder provided the source is fully<br />
acknowledged.<br />
Download this handbook <strong>for</strong> free at www.eartheconomics.<br />
org. Large quantities of printed handbooks <strong>for</strong> educational<br />
purposes can be purchased through <strong>Earth</strong> <strong>Economics</strong> by<br />
emailing info@eartheconomics.org. We welcome stories of<br />
how you used this publication and any feedback you have<br />
can be sent to info@eartheconomics.org. Thank you <strong>for</strong><br />
your interest in natural capital!<br />
ii
introduction<br />
In one <strong>for</strong>m or another, humans have always lived off the<br />
land. Our ancestors had a very direct connection with<br />
the <strong>Earth</strong>’s resources, <strong>for</strong>aging <strong>for</strong> food and materials to<br />
create clothing, shelter, and tools. Today, though many<br />
people have never had the experience of plucking a berry<br />
off a huckleberry bush in the mountains, we are still<br />
dependent upon the planet’s natural resources to survive.<br />
We drink water and breathe air filtered by <strong>for</strong>ests. We<br />
take medicines derived from plants and trees. We find<br />
badly needed respite from the workaday world in natural<br />
settings like parks and woodland trails.<br />
It is an un<strong>for</strong>tunate fact that the natural resources we<br />
depend upon are being depleted at an alarming rate, and<br />
that unless people recognize the enormous value of the<br />
<strong>Earth</strong>’s natural systems, they will disappear. Sadly, the<br />
value of our planet’s natural resources has historically<br />
been ignored or seriously underestimated when crucial<br />
decisions have been made about where and how to best<br />
invest in a healthy future.
Things are changing! Exciting methods are being developed to<br />
assign dollar values to fresh air, clean water, and flood control—<br />
just some of the many benefits provided by healthy ecosystems.<br />
Work is being done to give natural systems like waterways,<br />
<strong>for</strong>ests, and soil the same importance and critical economic<br />
value as human-built systems like roads, dams, and water<br />
filtration plants. When policy and decision makers understand<br />
the value of the services provided by a healthy ecosystem, they<br />
can justify spending the money and resources needed to keep<br />
the ecosystem functioning <strong>for</strong> future generations.<br />
This handbook explores and explains the relationship<br />
between human economies and natural systems, and<br />
provides an understanding of the historic disconnect<br />
between the environment and the economy. It introduces<br />
new tools and principles that recognize the economic<br />
importance of our planet’s natural systems and provides<br />
mechanisms to foster the changes needed to preserve our<br />
planet’s precious natural resources.
3<br />
Ecosystems give us natural resources like<br />
clean water and air that we cannot live without.
BENEFITS<br />
OF A HEALTHY<br />
ECOSYSTEM<br />
What What are are Ecosystem Ecosystem Services<br />
Services<br />
Ecosystem<br />
Ecosystem<br />
services<br />
services<br />
are<br />
are<br />
benefits<br />
benefits<br />
that<br />
that<br />
people<br />
people<br />
receive<br />
receive<br />
from<br />
from<br />
natu<br />
natu<br />
Ecosystem services are benefits that people receive from natu<br />
Healthy ecosystems provide many benefits such as habitat<br />
<strong>for</strong> fish and wildlife, recreation opportunities that improve<br />
public health, flood protection, biodiversity, aesthetic and<br />
cultural value and more. These naturally occurring benefits<br />
derived from an ecosystem are called Ecosystem Services.<br />
Four<br />
Four<br />
categories<br />
categories<br />
of<br />
of<br />
ecosystem<br />
ecosystem<br />
services:<br />
services:<br />
Four categories of ecosystem services:<br />
There are four categories of Ecosystem Services:<br />
Provisioning services produce food, water, oxygen, buildin<br />
Provisioning Provisioning services. services These produce are goods food, provided water, by oxygen, buildin<br />
natural Provisioning fuel, clothing,<br />
systems such services medicine,<br />
as lumber produce etc. Everything<br />
and paper food, from water, in our<br />
trees,<br />
oxygen, economy buildin i<br />
fuel, clothing, medicine, etc. Everything in our economy berries, fuel, made mushrooms clothing, from natural medicine, and other capital edibles etc. such Everything <strong>for</strong>aged as minerals, from <strong>for</strong>ests,<br />
our liquids, economy gases<br />
made from natural capital such as minerals, liquids, gases<br />
i<br />
and medicine derived from plants and trees. Rivers supply<br />
fresh made living things.<br />
living water things.<br />
from<br />
<strong>for</strong> drinking natural<br />
and capital<br />
fish <strong>for</strong> such<br />
food. as<br />
Trees minerals,<br />
give us<br />
liquids, gases<br />
oxygen. living Ultimately, things. everything in our economy, from resins<br />
to raincoats, is made from natural capital.<br />
Regula0ng services create and maintain healthy<br />
Regula0ng services create and maintain healthy<br />
Regula0ng environmental services condions. create and Examples maintain are healthy gas, and climate<br />
environmental condions. Examples are gas, and climate<br />
Regulating services. A healthy ecosystem creates and<br />
maintains environmental stability, flood and<br />
healthy environmental condions. storm protecon,<br />
conditions. Examples For are water<br />
example,<br />
gas, quality, and climate soil<br />
stability, flood and storm protecon, water quality, soil<br />
healthy stability, erosion ecosystems control, flood help and and<br />
erosion control, and regulate storm disease<br />
disease protecon, climate, and pest<br />
and pest buffer water control.<br />
control. storm<br />
quality, These<br />
These<br />
soil<br />
surges, reduce soil erosion, and offer disease pest<br />
control.<br />
erosion contribute<br />
contribute control, to ecosystem<br />
to ecosystem and disease funcons<br />
funcons and pest and<br />
and control. economic<br />
economic These resilienc<br />
resilienc<br />
contribute to ecosystem funcons and economic resilienc<br />
In<strong>for</strong>mation services. From watersheds to parks to desert<br />
Suppor0ng services maintain condions <strong>for</strong> life including<br />
landscapes, Suppor0ng ecosystems services provide maintain humans condions with meaningful <strong>for</strong> life including<br />
interactions with nature. These services include spiritually<br />
Suppor0ng habitat, nutrient services cycling, maintain soil <strong>for</strong>maon, condions and <strong>for</strong> life pollinaon.<br />
habitat, nutrient cycling, soil <strong>for</strong>maon, and pollinaon.<br />
including<br />
significant species and natural areas, places <strong>for</strong> recreation/<br />
tourism, habitat, These natural<br />
and nutrient processes<br />
opportunities cycling, <strong>for</strong> scientific soil vital. <strong>for</strong>maon, Provided<br />
research and<br />
and to pollinaon. us free of<br />
These natural processes are vital. Provided to us free of<br />
education These charge, about natural they nature. are processes oCen leC are out<br />
charge, they are oCen leC out vital. of economic<br />
of economic Provided to analysis.<br />
analysis.<br />
us free of<br />
charge, they are oCen leC out of economic analysis.<br />
Habitat services. Intact ecosystems provide refuge and<br />
nurseries to wild plants and animals. These habitat<br />
services Cultural contribute services to the provide healthy meaningful growth of populations human interacons<br />
Cultural services provide meaningful human interacons<br />
and the conservation of biological and genetic diversity.<br />
Cultural with ecosystems. services provide Cultural meaningful services include human spiritual,<br />
with ecosystems. Cultural services include spiritual,<br />
interacons<br />
At least twenty-three specific ecosystem services provide<br />
with recreaonal, ecosystems. scienfic, Cultural aesthec services and include educaonal spiritual, value.<br />
recreaonal, scienfic, aesthec and educaonal value.<br />
value to humans, which are shown on the following page.<br />
recreaonal, scienfic, aesthec and educaonal value.<br />
Portions of this project were produced with support from the Washington Department of Ecology gra<br />
Portions of this project were produced Nisqually with River support Council from Watershed the Washington Initiative Department Program. of Ecology gra<br />
4<br />
Portions of this project were produced Nisqually with River support Council from Watershed the Washington Initiative Department Program.<br />
of Ecology gra<br />
Portions of this project Nisqually were River produced Council with Watershed support from Initiative the Puget Program. Sound Partnership<br />
Portions of this project were produced with support from the Puget Sound Partnership<br />
©2011 by <strong>Earth</strong> <strong>Economics</strong><br />
Portions of this project were produced ©2011 by with <strong>Earth</strong> support <strong>Economics</strong><br />
from the Puget Sound Partnership
Provisioning<br />
Regulating<br />
Water Supply<br />
Food<br />
Energy and<br />
RawMaterials<br />
Genetic<br />
Resources<br />
Medicinal<br />
Resources<br />
Ornamental<br />
Resources<br />
Habitat<br />
Habitat and<br />
Biodiversity<br />
Nursery<br />
Provisioning of drinking<br />
water, irrigation and<br />
industrial use.<br />
Producing crops, fish,<br />
game and fruits.<br />
Providing fuel, fiber,<br />
fertilizer, minerals and<br />
energy.<br />
Providing sources of<br />
biological materials that<br />
support crop resistance,<br />
health and scientific<br />
research.<br />
Providing drugs,<br />
pharmaceuticals,<br />
tests, tools and assay<br />
organisms.<br />
Delivering resources<br />
<strong>for</strong> fashion, handicraft,<br />
jewelry, worship and<br />
decoration.<br />
Maintaining genetic and<br />
biological diversity, the<br />
basis <strong>for</strong> most other<br />
ecosystem functions.<br />
Promoting growth of<br />
commercially harvested<br />
species.<br />
CO₂<br />
Gas<br />
Regulation<br />
Climate<br />
Stability<br />
Disturbance<br />
Prevention<br />
Soil<br />
Retention<br />
Water<br />
Regulation<br />
Biological<br />
Control<br />
Waste<br />
Treatment<br />
Providing clean,<br />
breathable air, disease<br />
prevention, and planet<br />
habitability.<br />
Maintaining a favorable<br />
climate promotes human<br />
health, crop productivity,<br />
and other climatic<br />
processes at global or<br />
local levels.<br />
Preventing and<br />
mitigating natural<br />
hazards such as floods,<br />
hurricanes, fires, and<br />
droughts.<br />
Retaining arable land,<br />
slope stability and<br />
coastal integrity.<br />
Provisioning natural<br />
irrigation, drainage,<br />
ground water recharge,<br />
river flows and<br />
navigation.<br />
Providing pest and<br />
disease control.<br />
Improving soil, water<br />
and air quality, pollution<br />
control/detoxification;<br />
break down of waste<br />
materials.<br />
Soil<br />
Formation<br />
Pollination<br />
Nutrient<br />
Regulation<br />
Creating soils <strong>for</strong><br />
agricultural production<br />
and ecosystems integrity.<br />
Providing pollination of<br />
wild and domestic plant<br />
species.<br />
Promoting healthy and<br />
productive soils, and<br />
gas, climate and water<br />
regulating services.<br />
In<strong>for</strong>mation<br />
Providing sensory<br />
enjoyment from viewing<br />
scenic landscapes and<br />
experiencing Nature’s<br />
Aesthetic<br />
beauty.<br />
Experiencing natural<br />
ecosystems and outdoor<br />
activities.<br />
Recreation<br />
Science and<br />
education<br />
Spiritual and<br />
historic<br />
Cultural and<br />
Artistic<br />
Using natural systems <strong>for</strong><br />
education and scientific<br />
research.<br />
Experiencing nature<br />
<strong>for</strong> religious, historic,<br />
heritage or other<br />
purposes.<br />
Using nature as a motive<br />
<strong>for</strong> art, film, painting,<br />
folklore, books, natural<br />
symbols, architecture<br />
and advertising.<br />
5
WHAT DO WE<br />
PAY FOR THESE<br />
SERVICES<br />
These services<br />
are provided free<br />
of charge.<br />
We pay nothing <strong>for</strong> ecosystem services, but when nature<br />
disappears, the services disappear, too. When ecosystems<br />
are destroyed and the services they provide eliminated,<br />
those services must be replaced by manmade systems<br />
(built capital). Replacing natural capital with built capital is<br />
an expensive solution that very rarely works as well— or as<br />
inexpensively— as the natural system that is being replaced.<br />
Consider the Catskills watershed (natural capital), which<br />
provides high quality drinking water storage and filtration<br />
<strong>for</strong> New York City. NYC’s decision to invest 1.5 billion in its<br />
Catskills watershed has saved $ 6 billion compared to the cost<br />
of a filtration plant plus operating costs.<br />
Compare New York City’s water source with an example<br />
from neighboring New Jersey. In addition to the costs of<br />
construction and routine upkeep, the water treatment facility<br />
(built capital) in Haworth, New Jersey was damaged during<br />
Hurricane Sandy. New Jersey is spending an estimated $2.6<br />
billion dollars making repairs post-storm.<br />
RESILIENCY is the ability of a system to<br />
withstand and recover from disturbances<br />
such as pollution or natural disasters.<br />
Ecosystems (<strong>for</strong>ests or wetlands) are selfmaintaining<br />
and remarkably resilient<br />
compared with built capital (cars or levees.)<br />
Regulating services, such as water quality<br />
and climate regulation, create ecosystem<br />
resiliency by allowing it to continue in a<br />
sustainable manner.<br />
6
Value<br />
Value<br />
Value<br />
Value<br />
<strong>Natural</strong> capital does <strong>for</strong> free what built capital does<br />
at great cost. Built capital breaks down, affecting<br />
surrounding ecosystems, animals, and people. The<br />
benefits provided by built capital are typically short<br />
term because it depreciates over time, eventually<br />
needing to be replaced.<br />
Over time, natural capital appreciates in value. This<br />
appreciation is due in part to the fact that natural<br />
capital is constantly being regenerated by living<br />
organisms converting energy from the sun into<br />
growing biomass—the foundation <strong>for</strong> life on <strong>Earth</strong>.<br />
Appreciation is also due to increased scarcity and<br />
approaching thresholds. For example, timber harvest is<br />
now limited by land availability and tree growth rather<br />
than availability of logging equipment. <strong>Natural</strong> capital<br />
provides benefits over a long period of time (centuries<br />
or longer), and requires very little maintenance.<br />
The The “Asset Value” of of the the Nisqually Watershed<br />
Watersheds provide economic benefits across across 3me. 3me.<br />
Measuring the the value value of watersheds of across across decades decades is important; is it determines it how how we we<br />
invest invest watershed in assets. assets.<br />
<strong>Natural</strong> capital capital<br />
Built Built capital capital<br />
VS. VS.<br />
2009 20092025 20252050 20502100<br />
2100<br />
Year Year<br />
2009 20092025 20252050 20502100<br />
2100<br />
Year Year<br />
<strong>Natural</strong> <strong>Natural</strong> capital capital provides provides benefits benefits over over vast base vast<br />
amounts amounts of
SO WHAT’S<br />
THE PROBLEM<br />
As ecosystems<br />
are lost, so are<br />
the services<br />
those ecosystems<br />
previously provided.<br />
Once, raw materials were plentiful and built capital was<br />
scarce. As a result, we live in a society that has long placed<br />
great value on built capital like roads, dams and machinery,<br />
and less value on the raw materials (natural capital)<br />
required to construct these things. Over the past 50 years,<br />
however, humans have altered ecosystems more rapidly and<br />
extensively than in any comparable period in human history.<br />
Today we have plenty of built capital, while natural capital like<br />
healthy wetlands, <strong>for</strong>ests and working lands has become the<br />
limiting factor to further economic development.<br />
Today’s scientific studies consistently conclude that humans<br />
are depleting <strong>Earth</strong>’s flow of natural services faster than the<br />
flow can be regenerated, because the natural capital that<br />
produces these services is being destroyed. For example, it<br />
has been estimated that humans now directly or indirectly<br />
consume up to 40% of the <strong>Earth</strong>’s Annual Net Primary<br />
Productivity. Net Primary Productivity (NPP) is the total<br />
biomass (<strong>for</strong>ests, mangroves etc.) produced by ecosystems<br />
through photosynthesis each year. As humans consume more<br />
biomass, less is available <strong>for</strong> the millions of other species on<br />
the planet, which can cause food webs to collapse and place<br />
greater stress on the environment.<br />
A THRESHOLD is a point at which a system<br />
may experience a dramatic change, or<br />
collapse. Thresholds may include heavy<br />
rainfall triggering landslides and floods,<br />
loss of habitat causing species extinction or<br />
dramatic climate change.<br />
8
What happens when<br />
ecosystems disappear<br />
When ecosystems are destroyed we lose the services they<br />
once provided and the effects can be devastating.<br />
Floods. Covering the earth’s soil with impervious surfaces<br />
(such as pavement and buildings) increases the risk of<br />
flooding. One of the most significant factors in an ecosystem’s<br />
ability to prevent flooding is the absorption capacity of<br />
the land. The U.S. Geological Survey estimates that urban<br />
development leads to 100-600% more flooding <strong>for</strong> two-year<br />
storm events. Increased flooding means more property<br />
damage, lost work time, injuries, and loss of life.<br />
Reduced air quality. Cutting down trees lowers air quality. In<br />
Washington’s Puget Sound area alone, urban <strong>for</strong>ests remove<br />
approximately 78 million pounds of pollutants per year.<br />
Having these gasses sequestered by <strong>for</strong>ests saved $166.5<br />
million per year in avoided health care costs and other costs<br />
<strong>for</strong> the region in 1996. When we strip away this resource,<br />
we lose the valuable gas regulating service; the lower air<br />
quality causes health care costs to spike as the incidence of<br />
respiratory diseases rise.<br />
Erosion. Land clearing (removing stabilizing native<br />
vegetation) increases the likelihood of landslides and water<br />
run-off due to changes in drainage patterns. When we<br />
construct bulkheads and seawalls, the earth’s natural ability<br />
to build and maintain shorelines is disrupted. This leads to the<br />
destruction of marine wildlife habitat and intensifies erosion<br />
on nearby beaches and shorelines. Loss of or sudden change<br />
in shoreline can result in private property damage, public<br />
infrastructure damage, loss of wildlife habitat, and loss of life.<br />
Floods, landslides, and poor air quality are but a few of the<br />
consequences we suffer when ecosystems are destroyed.<br />
Ecosystems give us natural resources like clean water and<br />
air that we cannot live without. These are provided free of<br />
9charge. As ecosystems are lost, so are the services those<br />
ecosystems previously provided.
Built <strong>Capital</strong><br />
<strong>Natural</strong> <strong>Capital</strong><br />
Definition Goods manufactured by humans. Goods or services provided by nature.<br />
Infrastructure Term(s) Built Infrastructure Green Infrastructure<br />
Blue-Green Infrastructure<br />
<strong>Natural</strong> Infrastructure<br />
Examples • Roads and bridges<br />
• Water pumping and filtration plants<br />
• Electrical grid<br />
• Computers and electronics<br />
• Buildings and parking lots<br />
• Dams and levees<br />
• Cars and boats<br />
Investment Pros • Creates short-term jobs<br />
• Enables technology transfers<br />
within and between countries<br />
• Downstream industry creation (repair<br />
and replacement, secondary markets)<br />
Investment Cons • High initial investment costs<br />
• High maintenance costs<br />
• Frequently contributes to<br />
water and air pollution<br />
• Potentially high costs of remediation<br />
• Future regulatory uncertainty<br />
• Typically provides only<br />
short term benefits<br />
• Depreciates in economic value over time<br />
• Wetlands<br />
• Shorelines, beaches, and dunes<br />
• Glaciers<br />
• Aquifers<br />
• Forests and prairies<br />
• Rivers and lakes<br />
• Oceans and seas<br />
• Little or no initial investment cost<br />
• Low maintenance and highly sustainable<br />
<strong>for</strong> generations into the future<br />
• Supports long-term, place-based<br />
jobs that cannot be outsourced<br />
• Left intact will support surrounding<br />
ecosystems, animals, and people<br />
• Provides long-term benefits<br />
• Appreciates in economic value over time<br />
• Requires political will<br />
and public awareness<br />
• Complex dependencies on<br />
surrounding ecosystems<br />
• Difficult to finance with current<br />
accounting and bond rules<br />
10
cosystem<br />
From kelp <strong>for</strong>ests and marine ecosystems to<br />
tropical rain<strong>for</strong>ests; from savannas and deserts<br />
to tundra; countless cases across the world<br />
illustrate the vital role ecosystems play in our lives.<br />
Following are three stories that demonstrate the<br />
importance of ecosystems to our economy and the<br />
dramatic impact caused by their loss.<br />
11
s in action<br />
WATERSHEDS<br />
The federal Environmental Protection Agency (EPA)<br />
defines a watershed as “the area of land where all of<br />
the water that is under it or drains off of it goes into<br />
the same place.” In the continental US there are 2,110<br />
watersheds. Among other services, healthy watersheds<br />
naturally provide, store, and filter water, saving<br />
communities billions of dollars compared to relying<br />
solely on costly filtration plants and retention ponds.<br />
New York City has dedicated approximately $300<br />
million annually to conservation projects in the<br />
Catskill/Delaware River watershed . The city realized<br />
that securing intact watersheds, and thereby the<br />
watershed’s water storage and filtration services, is<br />
a more effective investment than spending $6-10<br />
billion on a water treatment facility with on-going<br />
maintenance costs.<br />
This investment also proved to be a resilient solution<br />
<strong>for</strong> disaster mitigation and recovery. During Hurricane<br />
Sandy, New York City’s watershed provided an<br />
uninterrupted supply of clean, gravity-fed water. Very<br />
few residents of New York City lost potable water<br />
during and after the storm.<br />
In contrast, New Jersey relies on local groundwater,<br />
man-made pumps, filtration plants, and intakes,<br />
which were inundated and contaminated with sewage<br />
and salt water. In the aftermath of Hurricane Sandy,<br />
some counties in New Jersey were in a declared state<br />
of water emergency <strong>for</strong> 50 days , stressing local<br />
businesses and homeowners during the holiday season.<br />
In addition to the cost of importing several weeks’<br />
worth of potable water, the cost to repair New Jersey’s<br />
water supply was an estimated $2.6 billion 7 .<br />
12
cosystem<br />
PARKS<br />
Parks provide tremendous benefits in the <strong>for</strong>m of improved<br />
health <strong>for</strong> people and pets, revenues from tourism, higher<br />
property values <strong>for</strong> nearby residents, and community cohesion.<br />
Populated with trees and plants, natural systems like parks<br />
control greenhouse gases, improve air quality, regulate climate,<br />
and act as a haven <strong>for</strong> city dwellers who flock to parks to stay<br />
cool—a benefit that cannot be underestimated.<br />
Parks provide hiking trails, space <strong>for</strong> picnics, and countless<br />
opportunities <strong>for</strong> recreation and better community health. They<br />
allow young learners to deepen their understanding of and<br />
curiosity about science by providing a safe, natural environment<br />
in which they may explore. Parks in urban landscapes also give<br />
students ready access to nature that they might not otherwise<br />
have.<br />
In 2008, two Washington schools, Foss High School and<br />
Bellarmine Preparatory School, restored sections of the<br />
59.58 acre Snake Lake Park by planting native vegetation.<br />
A 2012 study conducted by <strong>Earth</strong> <strong>Economics</strong> on Snake Lake<br />
Park estimated the economic value of the park’s combined<br />
ecosystem services at $330,250. If the park were to be restored<br />
to full health, the economic value would be $445,250. The<br />
school project not only contributed to the students’ scientific<br />
knowledge, it also improved the economic value of the park.<br />
As more people live in cities, the importance and value of<br />
parks increases. And yet budget cuts in natural resource and<br />
parks funding have resulted in parks being closed across the<br />
country. In May of 2011, the Cali<strong>for</strong>nia Department of Parks<br />
and Recreation announced that it would be closing 70 of its 278<br />
parks due to budget cuts that required a $33 million reduction<br />
by 2012-13.<br />
13<br />
Because the value of parks was never estimated in dollars, it<br />
was difficult to justify their protection. Recent studies have<br />
demonstrated that parks actually contribute tremendous value<br />
to society. In 2009 and 2010, the Trust <strong>for</strong> Public Land released<br />
studies on parks in Seattle, Washington, D.C., and New York<br />
showing these previously ignored benefits are worth hundreds<br />
of millions of dollars. <strong>Understanding</strong> the real economic value of<br />
parks is crucial <strong>for</strong> making well-in<strong>for</strong>med policy decisions.
s in action<br />
MANGROVE FORESTS<br />
Mangroves are tropical trees and shrubs that grow in<br />
the coastal intertidal zone. Mangroves stabilize land<br />
against the erosive <strong>for</strong>ces of the sea; they protect<br />
communities from devastating storms by acting as a<br />
buffer, lessening strong winds and reducing the threat<br />
of flooding. Healthy mangrove populations support<br />
rich food sources <strong>for</strong> humans including fish, shrimp,<br />
honey, sugar and fruits. These ecosystems capture and<br />
reuse nutrients that might otherwise pollute marine<br />
ecosystems, and their organic material supports a vast<br />
variety of marine life in complicated food webs. Most<br />
commercial seafood species depend on mangroves <strong>for</strong><br />
at least some stage of their life cycle; estimates indicate<br />
this is true <strong>for</strong> up to 80% of species in Florida.<br />
Mangroves provide these benefits <strong>for</strong> free and over<br />
vast spans of time, continually renewed by solar<br />
energy. Yet mangroves are being actively removed at an<br />
alarming rate. Once covering three quarters of tropical<br />
coastlines, one third of mangrove <strong>for</strong>ests have been<br />
wiped out over the past 50 years, with much of the loss<br />
occurring in the last two decades. In the Philippines, of<br />
the 400,000 hectares of mangroves recorded in 1918,<br />
barely ¼ still remain. Many of the remaining mangroves<br />
are degraded, with fewer species and thus reduced<br />
value.<br />
Aquaculture is also ecologically unsustainable:<br />
Following three to ten years of production, aquaculture<br />
operations typically succumb to disease, pollution and<br />
other problems, and are then abandoned. Ecuador, a<br />
global leader in aquaculture shrimp production in the<br />
1980’s, saw its industry collapse in the 1990’s after<br />
mangrove clearing depleted post larval shrimp stocks<br />
used <strong>for</strong> feeding its ponds.<br />
Recent ef<strong>for</strong>ts to assess the financial value of<br />
mangroves have shown that this ecosystem may<br />
actually produce more seafood when intact than when<br />
converted to shrimp ponds. In 2009, a study conducted<br />
by <strong>Earth</strong> <strong>Economics</strong> on the mangrove ecosystems in<br />
the Philippines estimated that the net present value<br />
of healthy mangrove ecosystems is approximately four<br />
times greater than the net present value of shrimp<br />
aquaculture.<br />
A destroyed mangrove ecosystem is extremely difficult<br />
and expensive to restore. With both the aquaculture<br />
operation and the mangroves gone, the local people<br />
who depend on fish are left with none.<br />
The leading cause of mangrove loss is the clearing of<br />
trees to create ponds <strong>for</strong> shrimp and fish aquaculture,<br />
which is the practice of farming aquatic organisms such<br />
as fish and crustaceans in high density. Aquaculture<br />
is an important food source <strong>for</strong> a growing global<br />
population; however, it also pollutes local waters with<br />
sewage and spreads disease. By requiring the pumping<br />
of vast amounts of fresh groundwater, aquaculture<br />
often draws saltwater into coastal aquifers, damaging<br />
the water supply of local communities.<br />
14
HOW DO WE KEEP<br />
ECOSYSTEMS<br />
AND THEIR<br />
SERVICES FROM<br />
DISAPPEARING<br />
We must invest<br />
in natural capital<br />
restoration to<br />
keep ecosystems<br />
productive into<br />
the future.<br />
Healthy ecosystems must be kept intact and damaged<br />
systems restored so that they may provide services <strong>for</strong><br />
future generations. Investing in natural capital promises<br />
longer-term benefits and a stronger path to sustainability<br />
than investments in built capital. Replacement costs can be<br />
avoided by making investments that preserve natural capital,<br />
like maintaining a healthy watershed. When water resources<br />
are depleted, water must be imported from elsewhere at<br />
great expense and damage to other ecosystems.<br />
Some of the most pressing issues facing our economy<br />
stem from a loss or degradation of natural capital. Reliable<br />
supplies of clean water and natural wetlands and floodplains<br />
to absorb flood flows are all becoming increasingly scarce,<br />
and thus, increasingly valuable. The same is true of available<br />
land <strong>for</strong> food production. As ecosystems decline, they can no<br />
longer mitigate the risk of natural disaster, sea-level rise, and<br />
changing climatic conditions.<br />
Loss of crucial ecosystem services inevitably results in higher<br />
costs to residents in the <strong>for</strong>m of increased taxes to replace<br />
natural systems with man-made ones, greater land-use<br />
regulation, and greater risks to public health. When ecosystems<br />
disappear we end up paying in more ways than one.<br />
16
MAKING A CASE<br />
FOR INVESTING IN<br />
ECOSYSTEMS<br />
Knowing the value of ecosystem services allows <strong>for</strong><br />
appropriate investment. Placing a dollar value on nature’s<br />
work is not commoditizing nature. It is recognizing value,<br />
which is often lost if not expressed in monetary terms.<br />
When we put a price tag on nature, we can more accurately<br />
estimate the price we’ll pay when it disappears.<br />
When an ecosystem<br />
is considered<br />
valuable it is<br />
more likely to be<br />
preserved.<br />
18
How Do Values Get<br />
Assigned<br />
Healthy ecosystems are valuable, but just how valuable<br />
are they And how do we measure that There are eight<br />
primary methods used to calculate the value of each of<br />
the twenty-three services that might be produced within a<br />
given ecosystem.<br />
Market Price: Prices set in the marketplace reflect<br />
the value to the “marginal buyer,” that is, the buyers<br />
who will buy if the price is slightly reduced, or stop<br />
buying if the price is increased. The price of a good<br />
tells us how much society will gain (or lose) if a little<br />
more (or less) of the good is made available.<br />
Avoided Cost: The damage cost that would<br />
have been incurred in the absence of ecosystem<br />
services. For example, flood control provided by<br />
barrier islands leads to avoidance of property<br />
damages along the coast.<br />
Replacement Cost: The cost of replacing ecosystem<br />
services with built capital systems. For example,<br />
the cost to build a man-made waste treatment<br />
facility to replace the natural nutrient cycling waste<br />
treatment provided <strong>for</strong> free by a healthy wetland.<br />
Factor Income: The income benefits provided by<br />
an ecosystem service. For example, water quality<br />
improvements increase commercial fisheries catch<br />
and incomes of fishermen.<br />
Travel Cost: Cost of travel required to consume or enjoy<br />
ecosystem services. Travel costs can reflect the implied value<br />
of the service. For example, recreation areas attract tourists<br />
whose value placed on that area must be at least what they<br />
were willing to pay to travel to it.<br />
Hedonic Pricing: The value associated with increased prices<br />
people will pay <strong>for</strong> benefits associated with specific ecosystem<br />
services. For example, housing prices along the coastline tend<br />
to exceed the prices of homes farther away.<br />
Contingent Valuation: The hypothetical value placed on<br />
non-market resources. For example, the price people<br />
would be willing to pay to maintain a pristine shoreline or<br />
uncontaminated wetland.<br />
Group Valuation: A discussion based valuation arrived at by a<br />
group of stakeholders to gauge society’s willingness to pay <strong>for</strong> a<br />
specific ecosystem service.<br />
19
Are Values of<br />
Ecosystem Services<br />
the Same <strong>for</strong> Different<br />
Locations<br />
<strong>Natural</strong> capital can be appraised in a similar fashion<br />
to business or house appraisals. Instead of looking<br />
<strong>for</strong> comparative sales to determine value, we look <strong>for</strong><br />
comparative economic assessment studies that were<br />
developed using the eight methods previously described.<br />
This natural capital appraisal approach , called “Benefit<br />
Transfer Methodology,” has gained popularity in the last<br />
several decades as decision-makers have sought timely and<br />
cost-effective ways to value ecosystem services.<br />
Benefit-Transfer Methodology involves estimating<br />
the natural capital value of a specific region or site by<br />
comparing previous ecosystem service valuation studies<br />
<strong>for</strong> similar geographies, socio-economic sites and<br />
ecosystems. The value derived from the original study site<br />
is “transferred” to the new site, like “comps” are used when<br />
appraising real estate.<br />
20
MAKING<br />
VALUES WORK:<br />
ECOSYSTEM<br />
SERVICE<br />
VALUATIONS<br />
Ecosystem service<br />
valuations quantify<br />
the value of the<br />
natural services<br />
provided by a given<br />
ecosystem, justifying<br />
investment in<br />
natural systems.<br />
An ecosystem service valuation (ESV) identifies the suite<br />
of services in a given ecosystem and assigns value to each.<br />
The sum total of those separate values produces a total<br />
ecosystem valuation. This incredibly in<strong>for</strong>mative number<br />
allows <strong>for</strong> proposed management policies to be considered<br />
in terms of their ability to improve or prevent destruction<br />
of natural capital. Ecosystem valuations are an increasingly<br />
critical part of decision making <strong>for</strong> natural resource<br />
managers, economic and conservation organizations, and<br />
policy makers at the local, state, and national scale.<br />
The importance of ESV now and moving <strong>for</strong>ward:<br />
1) An ESV takes into consideration the long-term impact<br />
of decisions made today that will help create a secure<br />
foundation on which to build the resilient communities and<br />
economies of tomorrow.<br />
2) An ESV provides a means to identify previously<br />
externalized costs (the negative costs/impacts of an<br />
economic decision <strong>for</strong> which no one is held responsible,<br />
such as air pollution from a car) and to factor these<br />
costs into common economic decision making tools and<br />
frameworks.<br />
3) An ESV can be used to justify operations and<br />
maintenance budgets <strong>for</strong> natural capital.<br />
4) An ESV can demonstrate the lucrative return on<br />
investment of conservation actions and innovative 21st<br />
century community development policies.<br />
5) An ESV can help generate funding mechanisms <strong>for</strong> the<br />
preservation, restoration, and maintenance of ecosystems.<br />
22
Who uses Ecosystem<br />
Service Valuations<br />
Increasingly, private businesses and public agencies are <strong>for</strong>mally<br />
recognizing the importance of incorporating ecosystem service<br />
concepts and valuation approaches in management and decision<br />
making frameworks. This includes accounting <strong>for</strong> natural capital<br />
on the books, monetizing the role of natural systems in disaster<br />
mitigation and relief, and including ecosystem service valuation in<br />
environmental impact assessments.<br />
In March 2013, the Obama Administration released an updated<br />
Principles and Guidelines <strong>for</strong> Water and Land Related Resources<br />
Implementation Studies (P&G) , which are the rules that govern<br />
how Federal agencies evaluate proposed water resource<br />
development projects. The new P&G, developed by Federal<br />
agencies with great public input, lays out broad principles and<br />
tools to promote and support cost effective water infrastructure<br />
projects. Included in this improved P&G toolkit are ecosystem<br />
service valuations.<br />
The inclusion of ecosystem service valuations in the P&G will help<br />
guide investments with greater speed and at reduced costs. It<br />
allows <strong>for</strong> the selection of water infrastructure investments that<br />
provide the most significant long-term benefits to a community<br />
and its economy. It sets the stage <strong>for</strong> more in<strong>for</strong>med decision<br />
making about risk mitigation, encourages investment in regional<br />
recreation that boosts local business, and supports priorities of<br />
the local community.<br />
While all federal agencies are updating their procedures to<br />
apply the new P&G guidelines, the United States Federal<br />
Emergency Management Agency (FEMA) became the first<br />
agency to adopt ecosystem service valuation in <strong>for</strong>mal policy.<br />
Faced with rising natural disaster costs and climate uncertainty,<br />
FEMA approved Mitigation Policy FP-108-024-01 in June of<br />
2013. The policy enables the use of FEMA mitigation funds to<br />
remove, rather than rebuild, structures in areas that experience<br />
frequent flood or hurricane damage. This policy shifts billions of<br />
US taxpayer dollars away from rebuilding damaged structures in<br />
the same location where there is a high likelihood that they will<br />
be damaged again. Instead, FEMA funds will be used to secure<br />
permanent no-build zones on flood prone land and structures<br />
will be rebuilt on safer ground.<br />
When an ecosystem is considered valuable it is more likely<br />
to be preserved. Ecosystem service valuations quantify<br />
23
By shifting investment out of<br />
hurricane and flood prone<br />
areas, the new policy will<br />
improve private investment and<br />
incentives. FEMA’s adoption of<br />
ecosystem service valuation will<br />
save lives and secure healthier<br />
ecosystems, stronger economies,<br />
and community resiliency.<br />
Increasingly, private companies in the US and abroad<br />
are adopting an ecosystem services-focused approach.<br />
They recognize the importance of these services to<br />
their own operations and their communities. As of early<br />
2013, over 35 companies publicly named ecosystem<br />
services as an issue of concern. Businesses that have<br />
begun analyzing their practices through this lens are<br />
discovering risks and issues they would otherwise have<br />
overlooked, allowing them to take action be<strong>for</strong>e those<br />
potential risks are realized. As an added incentive <strong>for</strong><br />
businesses, ecosystem risk management approaches are<br />
increasingly the focus of investors, financial institutions,<br />
and corporate ranking systems, such as the World Bank’s<br />
International Finance Corporation, the Dow Jones<br />
Sustainability Index, and banks that have adopted the<br />
Equator Principles .<br />
Dow Chemical is just one of the high profile corporations<br />
undertaking this approach; they are working with the<br />
Nature Conservancy to develop their strategy. In their<br />
own words:<br />
“The collaboration between Dow and The Nature<br />
Conservancy demonstrates that protecting nature<br />
can be both a global business strategy and a company<br />
priority. By combining our resources and expertise, we<br />
are integrating the value of nature into Dow’s business<br />
decision-making.<br />
Scientists, engineers, and economists from both<br />
organizations are working together to analyze the<br />
various services that nature provides to our operations<br />
and the community. Those ecosystem services include<br />
water, land, air, oceans and a variety of plant and animal<br />
life. The work involves validating tools and models that<br />
can assign a value to these services in order to support<br />
Dow’s decision-making when it comes to designing,<br />
constructing and operating its manufacturing sites.”<br />
the value of the natural services provided by a given<br />
ecosystem, justifying investment in natural systems.<br />
24
The Ecosystem<br />
Valuation Toolkit:<br />
Standardizing the<br />
Way We Capture and<br />
Report Value<br />
<strong>Earth</strong> <strong>Economics</strong> has created the web-based Ecosystem<br />
Valuation Toolkit (http://esvaluation.org) to translate<br />
scientific knowledge of ecosystems and the value of the<br />
services they provide seamlessly into in<strong>for</strong>mation readily<br />
accessible by and usable to decision-makers. With ready<br />
access to this kind of organized scientific data, decisionmakers<br />
can more easily factor sustainability into key<br />
decisions and policies. This systematic, effective research<br />
and computational tool has already proven successful at<br />
merging ecological and economic in<strong>for</strong>mation to in<strong>for</strong>m the<br />
financial sector, government, individuals, corporations, and<br />
other economic actors.<br />
25
The EVT plat<strong>for</strong>m accepts geographic and biophysical inputs,<br />
and outputs economic values with associated science-based<br />
ESV modeling and analytical tools. Researchers, land managers,<br />
planners, and policy makers can use EVT to reduce the cost<br />
of valuation from tens of thousands of dollars to hundreds.<br />
Broad adoption and application of the EVT by government<br />
agencies, NGOs, and businesses will result in stronger networks<br />
of protected areas, rigorous benchmarks <strong>for</strong> environmental<br />
incentives and penalties, and greater understanding of the<br />
economic importance of natural capital.<br />
When a discipline reaches a certain state of maturity, the<br />
standardization of language, taxonomies, applications, and<br />
methods is required to go to scale. When standards are<br />
adopted and data becomes readily accessible, phenomenal<br />
growth occurs and novel applications are developed. The fields<br />
of mathematics, in<strong>for</strong>mation technology, and genetics have all<br />
undergone a standardization process similar to the one EVT is<br />
enabling <strong>for</strong> economics.<br />
EVT offers a way to map monetary values onto the physical<br />
world. These values, incorporated into economic frameworks,<br />
can help direct policy and inspire solutions to our most pressing<br />
environmental problems. By making ecosystem service<br />
valuations more accessible, EVT will help prepare us <strong>for</strong> a<br />
sustainable future, economically and environmentally.<br />
EVT offers a way to map monetary values onto the physical<br />
world. These values, incorporated into economic frameworks,<br />
can help direct policy and inspire solutions to our most pressing<br />
environmental problems. By making ecosystem service valuations<br />
more accessible, EVT will help prepare us <strong>for</strong> a sustainable future,<br />
economically and environmentally.<br />
26
IS CALCULATING<br />
AN ECOSYSTEM’S<br />
VALUE ENOUGH<br />
TO PRESERVE IT<br />
The importance<br />
of Accounting <strong>for</strong><br />
Nature’s Value.<br />
The Government Accounting Standards Board (GASB)<br />
produces a set of generally accepted accounting principles<br />
(GAAP) that are well recognized within the accounting<br />
industry as well as by governments in other countries.<br />
These standards dictate what can and cannot be counted as<br />
an asset on an organization’s financial statements. GASB is<br />
currently reviewing a technical proposal submitted by San<br />
Francisco Public Utility Commission and <strong>Earth</strong> <strong>Economics</strong> to<br />
revise accounting standards <strong>for</strong> natural capital. Currently,<br />
on the books of public utilities, the value of a watershed<br />
as an asset is limited to the historical value of the land<br />
that houses that watershed. The services provided by that<br />
watershed, <strong>for</strong> accounting purposes, have no value. This is<br />
a problem, and a look at the San Francisco Public Utilities<br />
Commission (SFPUC) explains why.<br />
The total assets of the SFPUC Water Enterprise are valued<br />
at over $4 billion, with most of that value being found in<br />
built capital. Facilities, pipes, vehicles, buildings, roads,<br />
computers, copy machines, fences—even pencils—all count<br />
as assets. The land from which the utility draws its water<br />
counts as an asset, too, but per GASB standards, it can only<br />
be valued at its historical purchase price of $28 million.<br />
Those standards dictate that the greatest of all SFPUC’s<br />
assets, the filtered water that pours out of every tap in the<br />
San Francisco Bay area, may not counted as an asset on the<br />
utility’s balance sheet.<br />
Accounting practices must change to accommodate natural capital,<br />
and funding mechanisms put in place to sustain ecosystem benefits.<br />
In the United States, accounting standards,<br />
like medical standards, are set by independent<br />
boards. The Financial Accounting Standards<br />
Board is responsible <strong>for</strong> setting corporate<br />
accounting guidelines and rules. Accounting<br />
standards <strong>for</strong> the US Federal government<br />
are set by the Federal Accounting Standards<br />
Advisory Board. Accounting and reporting<br />
standards <strong>for</strong> state and local governments<br />
within the United States are set by the 28<br />
Government Accounting Standards Board.
In addition, since a filtration plant is an acknowledged<br />
asset, a budget <strong>for</strong> maintenance and operations is<br />
justified. With a watershed not being accurately valued<br />
as an asset, it is more challenging to justify a sufficient<br />
ongoing maintenance budget.<br />
Ecological economics, by incorporating science and<br />
sustainability, can reveal blind spots in conventional<br />
economics and provide a major upgrade to our thinking and<br />
decision-making. In this case, <strong>Earth</strong> <strong>Economics</strong> is leading<br />
technical discussions with the GASB Advisory Board to bring<br />
about the adoption of standards that will recognize the<br />
value of ecosystem services on balance sheets, a change<br />
that will help SFPUC and the watersheds they manage well<br />
into the future.<br />
COMPREHENSIVE ANNUAL<br />
FINANCIAL REPORT<br />
For The Year Ending June 30, 2012<br />
SAN FRANCISCO PUBLIC UTILITIES COMMISSION<br />
A Department of the City and County of San Francisco, Cali<strong>for</strong>nia<br />
Current financial accounting standards, relying solely on historical<br />
costs, do not take into sufficient consideration the value of the<br />
watersheds and natural resources that are part of our regional<br />
water system.<br />
For example, the SFPUC Water Enterprise has total assets of over<br />
$4 billion and of this, based on historical costs only $28 million<br />
reflects arguably some of our most important assets, our natural<br />
resources; including our water rights, watersheds and rights-of-way.<br />
29
Creative Funding<br />
Concepts Engage the<br />
Public in Supporting<br />
Ecosystem Services<br />
When we factor nature into economic decisions, we can<br />
develop funding mechanisms to pay <strong>for</strong> the protection of<br />
valuable ecosystem services. Small water surcharges, <strong>for</strong><br />
example, have been successfully implemented in cities to<br />
raise money <strong>for</strong> their watersheds. In 2005, prompted by<br />
local land trusts and the declining quality of their water, the<br />
City of Raleigh, North Carolina began charging an impact<br />
fee <strong>for</strong> new utility connections. The funds generated were<br />
used to acquire property located around their drinking<br />
water intake. As the program grew, it evolved into a line<br />
item on ratepayer’s bills called a “Watershed Protection<br />
Fee” of about 40 cents extra on a monthly bill. Since it was<br />
implemented in November 2012, the fee has fulfilled the<br />
city’s revenue goals and has generated over $1.8 million<br />
<strong>for</strong> watershed protection. Thanks to community outreach<br />
ef<strong>for</strong>ts on the part of Raleigh and the Conservation Trust<br />
<strong>for</strong> North Carolina to educate and in<strong>for</strong>m people about the<br />
value of protecting watersheds, the fee has been met with<br />
little opposition, especially among residential ratepayers.<br />
Watersheds are not the only ecosystem to have benefitted<br />
from creative funding mechanisms. Contrast what<br />
happened in Cali<strong>for</strong>nia (the closing of 70 parks) with<br />
events that took place in Washington State that same year.<br />
During the 2011 legislative session, Senators cited the<br />
economic importance of natural resources jobs provided<br />
by parks to gain support <strong>for</strong> the “Discover Pass.” The pass<br />
would cost $30 annually and would be required on all<br />
vehicles parked in public recreation areas like trailheads<br />
and parks. The Discover Pass was approved, and produced<br />
$22.2 million in revenue over the first 18 months ,<br />
making up <strong>for</strong> some of the State Parks Department’s<br />
budget shortfall with a robust funding mechanism. While<br />
other states were closing parks in 2011, every one of<br />
Washington State’s parks remained open!<br />
Whether it is an individual homeowner paying 40 cents<br />
a month <strong>for</strong> clean drinking water, an outdoor recreation<br />
enthusiast paying <strong>for</strong> the upkeep of public land, or a multimillion<br />
dollar investment on the part of a private or public<br />
sector entity, when the value of ecosystem services and<br />
the cost of losing them is made clear, investment is more<br />
easily justified.<br />
30
CONCLUSION<br />
Nature fuels the economy, and today we can measure the<br />
services it provides.<br />
As a society, we are currently updating outdated 20th<br />
Century economic models and decision-making tools<br />
that were created in a time when natural resources were<br />
plentiful and built capital scarce. By building models to<br />
capture nature’s significant financial contribution, previous<br />
blind spots can be corrected through ecosystem service<br />
valuations that measure the financial value these services<br />
provide. When natural capital is included in the economic<br />
conversation, we can make better in<strong>for</strong>med policy decisions<br />
and begin generating funds to pay <strong>for</strong> building sustainable,<br />
healthy communities.<br />
The concept of valuing ecosystem services has proven<br />
effective <strong>for</strong> understanding the connection between<br />
ecosystems and human well-being. A huge step <strong>for</strong>ward<br />
was taken when the President recently released Principles<br />
and Guidelines requiring that ecosystem services<br />
framework be adopted by all Federal Departments and<br />
Agencies with jurisdiction over, or impact upon, natural<br />
resources, especially water. Today, a number of U.S. federal<br />
agencies house dedicated ecosystem services departments,<br />
including the Department of Agriculture, the U.S. Geological<br />
Survey, and the Environmental Protection Agency. These<br />
departments advance the understanding of how ecosystem<br />
service valuations can be promoted to improve long-term<br />
economic prosperity <strong>for</strong> the nation.<br />
While resources are still being depleted at an alarming rate,<br />
governments and individuals are grasping the connection<br />
between natural systems and the economy. With tools like<br />
the Ecosystem Valuation Toolkit, it will only get easier to<br />
justify investment in ecosystems which, if properly valued<br />
and preserved, will provide essential and life-sustaining<br />
services to us all, well into the future.<br />
32
ABOUT EARTH<br />
ECONOMICS<br />
Since 1998, the nonprofit organization <strong>Earth</strong> <strong>Economics</strong><br />
has been at the <strong>for</strong>efront of exploring and explaining<br />
the intricate relationship between human economies<br />
and natural systems. To meet the challenges of the 21st<br />
century, the goal of <strong>Earth</strong> <strong>Economics</strong> is to bridge the<br />
historic disconnect between the environment and the<br />
economy through new tools and principles that recognize<br />
and demonstrate the economic importance of our planet’s<br />
natural systems. Healthy communities depend on a healthy<br />
environment; by investing in nature, we are investing in<br />
our well-being and a sustainable future. When critical<br />
decisions are being made, and policies set, our aim at <strong>Earth</strong><br />
<strong>Economics</strong> is to provide nature a place at the negotiating<br />
table.<br />
<strong>Earth</strong> <strong>Economics</strong> is funded by private foundations, contracts<br />
and the generous support of people like you. Please visit<br />
www.eartheconomics.org to learn more and to make a<br />
donation to support this work and future projects like it.<br />
Thank you.<br />
34
ADDITIONAL<br />
RESOURCES<br />
Resource Primary Developer Description Link<br />
Artificial Intelligence<br />
<strong>for</strong> Ecosystem Services<br />
(ARIES)<br />
The ARIES Consortium ARIES redefines ecosystem services<br />
assessment and valuation in decisionmaking.<br />
The ARIES approach to<br />
mapping benefits, beneficiaries, and<br />
service flows is a powerful new way<br />
to visualize, value, and manage the<br />
ecosystems on which the human<br />
economy and well-being depend.<br />
http://ariesonline.org<br />
Biotics 4, Vista NatureServe NatureServe is a leader in the field of<br />
biodiversity data management—the<br />
systems, software, and in<strong>for</strong>mation<br />
technology tools needed to manage<br />
biodiversity data and to deliver useful<br />
products and services.<br />
BSR’s Ecosystem<br />
Services Working Group<br />
Corporate Ecosystem<br />
Valuation (CEV)<br />
35<br />
Businesses <strong>for</strong> Social<br />
Responsibility (BSR)<br />
World Business Council <strong>for</strong><br />
Sustainable Development<br />
(WBCSD)<br />
BSR’s Ecosystem Services Working<br />
Group focuses on emerging risks and<br />
opportunities associated with corporate<br />
reliance on, and impacts to, ecosystem<br />
services.<br />
In April 2011, WBCSD released<br />
the Guide to Corporate Ecosystem<br />
Valuation (CEV), which is the first of its<br />
kind, catering directly to the needs of<br />
business. The Guide is a framework <strong>for</strong><br />
improving corporate decision-making<br />
through valuing ecosystem services, and<br />
a set of resources to navigate through<br />
related jargon and techniques.<br />
Corporation 20/20 Corporation 20/20 Corporation 20/20 is an international,<br />
multi-stakeholder initiative that seeks<br />
to answer these questions. Its goal is<br />
to develop and disseminate a vision<br />
<strong>for</strong> the 21st century corporation in<br />
which social purpose moves from<br />
the periphery to the heart of the<br />
organization.<br />
http://www.natureserve.org/<br />
prodServices/infoTechnology.<br />
jsp<br />
http://www.bsr.org/en/<br />
our-work/working-groups/<br />
ecosystem-services-toolsmarkets<br />
http://www.wbcsd.org/workprogram/ecosystems/cev.aspx<br />
http://www.corporation2020.<br />
org/
Resource Primary Developer Description Link<br />
Ecosystem Based<br />
Management Tools<br />
Network<br />
NatureServe<br />
The mission of the Network is to<br />
promote healthy coastal and marine<br />
ecosystems and communities through<br />
the use of tools that help incorporate<br />
ecosystem considerations into<br />
management.<br />
http://www.ebmtools.org/<br />
Ecosystem Commons<br />
Ecosystem Services<br />
Partnership<br />
Ecosystem Valuation<br />
Toolkit (EVT)<br />
EnviroAtlas<br />
Integrated Valuation of<br />
Environmental Services<br />
and Tradeoffs (InVEST)<br />
The Institute <strong>for</strong> <strong>Natural</strong><br />
Resources, A Community<br />
on Ecosystem Services<br />
(ACES), the National<br />
Ecosystem Services<br />
Partnership (NESP), and<br />
many others<br />
Ecosystem Services<br />
Partnership<br />
<strong>Earth</strong> <strong>Economics</strong><br />
Environmental Protection<br />
Agency (EPA)<br />
The <strong>Natural</strong> <strong>Capital</strong> Project<br />
The Ecosystem Commons is a portal to<br />
the ecosystem services world, hosting<br />
discussions, showcasing projects, and<br />
tracking trends.<br />
The ES-Partnership aims to enhance<br />
communication, coordination<br />
and cooperation, and to build a<br />
strong network of individuals and<br />
organizations.<br />
<strong>Earth</strong> <strong>Economics</strong> provides robust,<br />
science-based, and ecologically<br />
sound economic analysis, policy<br />
recommendations, and tools to<br />
positively trans<strong>for</strong>m regional, national,<br />
and international economics, and asset<br />
accounting systems.<br />
Currently available as a password<br />
protection beta-version, EnviroAtlas<br />
is a collection of tools and resources<br />
that provides geospatial data,<br />
maps, research, and analysis on the<br />
relationships between nature, people,<br />
health, and the economy.<br />
InVEST is a suite of software models<br />
used to map and value the goods and<br />
services from nature that sustain and<br />
fulfill human life.<br />
http://ecosystemcommons.<br />
org/<br />
http://www.es-partnership.<br />
org/esp<br />
http://esvaluation.org<br />
http://www.epa.gov/research/<br />
enviroatlas/<br />
http://www.<br />
naturalcapitalproject.org/<br />
InVEST.html<br />
36
Resource Primary Developer Description Link<br />
International Society <strong>for</strong><br />
Ecological <strong>Economics</strong><br />
(ISEE)<br />
International Society <strong>for</strong><br />
Ecological <strong>Economics</strong><br />
(ISEE)<br />
ISEE is a not-<strong>for</strong>-profit, membergoverned<br />
organization dedicated<br />
to advancing understanding of the<br />
relationships among ecological, social,<br />
and economic systems <strong>for</strong> the mutual<br />
well-being of nature and people.<br />
http://www.isecoeco.org/<br />
Mainstreaming<br />
Ecosystem Services<br />
Initiative<br />
Marine Ecosystem<br />
Services Project (MESP)<br />
Multi-scale Integrated<br />
Models of Ecosystem<br />
Services (MIMES)<br />
The <strong>Economics</strong> of<br />
Ecosystems and<br />
Biodiversity (TEEB)<br />
United States Society<br />
<strong>for</strong> Ecological <strong>Economics</strong><br />
(USSEE)<br />
Valuing Nature Network<br />
(VNN)<br />
World Resources Institute<br />
Duke University<br />
AFORDable Futures<br />
The <strong>Economics</strong> of<br />
Ecosystems and<br />
Biodiversity (TEEB)<br />
United States Society<br />
<strong>for</strong> Ecological <strong>Economics</strong><br />
(USSEE)<br />
Valuing Nature Network<br />
WRI works toward a world in which<br />
governments and businesses value and<br />
invest in ecosystems—<strong>for</strong>ests, wetlands,<br />
coral reefs, etc.—in order to secure<br />
economic growth and people’s wellbeing.<br />
Strategy is two-fold: 1. Provide<br />
decision-makers with in<strong>for</strong>mation and<br />
assessment tools that link ecosystem<br />
health with the attainment of economic<br />
and social goals; and 2. Develop new<br />
markets, economic incentives, and<br />
public policies that restore and sustain<br />
ecosystems.<br />
The MESP mission is to help society<br />
identify and sustainably manage the<br />
globe’s ocean and coastal ecosystems<br />
<strong>for</strong> the benefit of people and society<br />
by understanding the value of these<br />
ecosystems and the services they<br />
produce.<br />
MIMES is a multi-scale, integrated<br />
set of models that assess the value of<br />
ecosystem services. MIMES provides<br />
economic arguments <strong>for</strong> land use<br />
managers to approach conservation<br />
of ecosystems as a <strong>for</strong>m of economic<br />
development. The model facilitates<br />
quantitative measures of ecosystem<br />
service effects on human well-being.<br />
The <strong>Economics</strong> of Ecosystems and<br />
Biodiversity (TEEB) is a global initiative<br />
focused on drawing attention to the<br />
economic benefits of biodiversity. Its<br />
objective is to highlight the growing<br />
cost of biodiversity loss and ecosystem<br />
degradation.<br />
The United States Society <strong>for</strong> Ecological<br />
<strong>Economics</strong> (USSEE) provides a venue <strong>for</strong><br />
intellectual exchange and collaboration<br />
on issues related to the theory, policy,<br />
and implementation of sustainable<br />
development.<br />
The Valuing Nature Network brings<br />
together natural scientists and<br />
economists, alongside decision-makers<br />
in business and policy, who have an<br />
interest in valuing nature.<br />
http://www.wri.org/project/<br />
mainstreaming-ecosystemservices<br />
http://mesp2.env.duke.edu/<br />
http://www.a<strong>for</strong>dablefutures.<br />
com/services/mimes<br />
http://www.teebweb.org/<br />
http://www.ussee.org/<br />
http://www.valuing-nature.net<br />
37
CITATIONS<br />
1 Vitousek, P., Ehrlich, P., Ehrlich, A., Matson, P. “Human Appropriation of the Products of Photosynthesis.” BioScience,<br />
Vol. 36, No. 6 (Jun., 1986), pp. 368-373. Published by University of Cali<strong>for</strong>nia Press on behalf of the American<br />
Institute of Biological Sciences. Web. 17 Aug. 2013.<br />
2 Kocian, M., Batker, D., Harrison-Cox, J. 2011. An Ecological Study of Ecuador’s Intag Region: The Environmental<br />
Impacts and Potential Rewards of Mining. <strong>Earth</strong> <strong>Economics</strong>, Tacoma, WA<br />
3 Batker, D., Kocian, M., McFadden, J., Schmidt, R. 2010. Valuing the Puget Sound Basin: Revealing Our Best<br />
Investments. <strong>Earth</strong> <strong>Economics</strong>, Tacoma, WA.<br />
4 EPA United States Environmental Protection Agency. Water>>Our Waters>>Watersheds>>What is a Watershed.<br />
August 16, 2012. <br />
5 Official Website <strong>for</strong> the State of New Jersey. 17, August, 2013. http://www.state.nj.us/infobank/circular/eocc106.pdf.<br />
6 News Release: “Christie Administration Lifts Water Use Restrictions.” 20 Dec. 2012. State of New Jersey Department<br />
of Environmental Protection. 17 Aug, 2013..<br />
7 Johnson, Tom. “Hurricane Sandy Leaves State With $2.6B Tab <strong>for</strong> Water Infrastructure.” NJSpotlight. 10 April 2013.<br />
Ed. Lee Keough. 17 Aug. 2013. http://www.njspotlight.com/stories/13/04/09/hurricane-sandy-leaves-state-with-2-<br />
6b-tab-<strong>for</strong>-water-infrastructure/.<br />
8 Christin, Z., Batker, D., Harrison-Cox, J., 2011. Economic Impact of Metro Parks Tacoma Ecosys¬tem Services:<br />
Economic Impact Study Phase II. <strong>Earth</strong> <strong>Economics</strong>, Tacoma WA.<br />
9 Christin, Z., Batker, D., Harrison-Cox, J. Economic Impact of Metro Parks Tacoma Ecosystem Services.<br />
10 Christin, Z., Batker, D., Harrison-Cox, J. Economic Impact of Metro Parks Tacoma Ecosystem Services.<br />
11 Batker, D., Farley, J., de la Torre, I. 2009. Conserving Mangrove Ecosystems in the Philippines: Transcending<br />
Disciplinary and Institutional. Environmental Management (2010) 45:39-51.<br />
12 Batker, D., Farley, J., de la Torre, I. 2009. Conserving Mangrove Ecosystems in the Philippines.<br />
13 Batker, D., Farley, J., de la Torre, I. 2009. Conserving Mangrove Ecosystems in the Philippines.<br />
14 Batker, D., Farley, J., de la Torre, I. 2009. Conserving Mangrove Ecosystems in the Philippines.<br />
15 Carlton, D., Wahlund, N. June, 2013. Return on Risk Analysis of Flood Risk Management Solutions <strong>for</strong> Pierce County.<br />
<strong>Economics</strong>, Tacoma WA.<br />
16 Brookshire D.S., Neill, H.R., 1992. Benefit Transfers: Conceptual and Empirical Issues. Water Resources Research 28,<br />
651-655. 17 Aug. 2013. <br />
38
17 Desvousges, W.H., Naughton, M.C., Parsons, G.R., 1992. Benefit transfer: conceptual problems estimating water<br />
quality benefits using existing studies. Water Resources Research 28. 17 Aug. 2013. <br />
18 Wilson, M., Hoehn, J.“Valuing environmental goods and services benefit transfer: The state-of-the art and science.”<br />
Ecological <strong>Economics</strong> (2006). 335-342. 17 Aug. 2013. <br />
19 “Updated Principles and Guidelines <strong>for</strong> Water and Land Related Resources Implementation Studies”. The White<br />
House: Council on Environmental Quality. 17 Aug. 2013. <br />
20 “Updated Principles and Guidelines <strong>for</strong> Water and Land Related Resources Implementation Studies”. The White<br />
House: Council on Environmental Quality. 17 Aug. 2013. <br />
21 Waage, S., Kester, K. “Private Sector Uptake of Ecosystem Services Concepts and Frameworks.” 2013. Business of<br />
Social Responsibility (BSR), New York. NY.<br />
22 Waage, S. “Why Disney, BP and Rio Tinto Are Exploring Ecosystem Services.” Greenbiz. 12 July 2012. Ed. Joel<br />
Makower. 17 Aug. 2013. < http://www.greenbiz.com/blog/2013/07/12/disney-bp-rio-tinto-ecosystem-services><br />
23 Website of Dow Chemical Company. 17 Aug. 2013. <br />
24 San Francisco Public Utilities Commission Comprehensive Annual Financial Report 2012. 17 Aug. 2013. .<br />
25 Website of the City of Raleigh. 17 Aug. 2013.<br />
26 “Potomac River Basin Drinking Water Source Protection Partnership.” 15 May 2013. Quarterly Meeting Summary of<br />
the Potomac Partnership. 17 Aug 2013. <br />
27 Bloxom, B., Courtney C., Mor<strong>for</strong>d, A., Stonecipher L., Sheeler C. “Funding Public Recreation With the Discover<br />
Pass: Policy and Practicality.” 4 March 2012. Accessed 17 Aug. 2013.<br />
39
IMAGE<br />
CITATIONS<br />
PAGE<br />
CITATION<br />
PAGE<br />
CITATION<br />
Cover<br />
New York, Heather Telesca<br />
19<br />
Prairie Pothole wetland, USFWS<br />
i<br />
Prairie Smoke, Jennifer Briggs, USFWS<br />
20<br />
Fly fishing, South Santiam Watershed Council<br />
1-2<br />
3<br />
Iron Ore Bay, Beaver Island, Michigan, public<br />
domain image<br />
Lake Zander, Michian, public domain image<br />
21<br />
23<br />
Metro Parks Tacoma Phase II, Emiliano Hernandez<br />
Cover Crops, Black Hawk County, Iowa,<br />
courtesy of USDA – NRCS<br />
4<br />
Icons, Meghan C. Arntson<br />
24<br />
Alaska, April 30, 2013, <strong>Earth</strong> <strong>Economics</strong><br />
6<br />
7<br />
8<br />
9<br />
10<br />
13<br />
14<br />
Wetland scene in the Catskills Mountains, Tiner<br />
Ralph, U.S. Fish and Wildlife<br />
Field Windbreaks, USDA<br />
Wisconsin Wetlands, Rock Springs, Barry Bahler,<br />
FEMA<br />
Cedar Rapids, Iowa, Paul Marlow<br />
Whidbey Island Landslide, Washington,<br />
Ted S. Warren, US News<br />
Woman jogging, Metro Parks Tacoma<br />
Florida Mangroves, Hans Hillewaert<br />
25<br />
26<br />
27<br />
29<br />
30<br />
31<br />
33<br />
Las Animas County, Colorado, Chris M. Morris<br />
Denver, Colorado, author Hogs555<br />
Moth, Heather Telesca<br />
Golden Gate Bridge and San Francisco, Cali<strong>for</strong>nia,<br />
Charlie Day Daytime Studios<br />
Palouse Falls State Park Entrance, Public Domain<br />
Image<br />
Hoh Rain<strong>for</strong>est, Washington, Konrad Roeder<br />
Bio Blitz, Metro Parks Tacoma<br />
15<br />
Devil’s Tower, Wyoming, Heather Telesca<br />
17<br />
Wisconsin Wetlands Educator’s Workshop,<br />
Laura England<br />
40
<strong>Earth</strong> <strong>Economics</strong><br />
107 N. Tacoma Avenue<br />
Tacoma, Washington 98403<br />
253.539.4801<br />
info@eartheconomics.org<br />
www.eartheconomics.org