2008) 1 and the issues of ethics, equity and the discount rate discussed earlier. These are the key elements of our proposed framework: • Examine the causes of biodiversity loss: designing appropriate scenarios to evaluate the consequences of biodiversity loss means incorporating information on the drivers of this loss. For example, loss of marine fisheries is driven by overfishing, so it would be appropriate to compare a scenario of business-asusual (continued overfishing) with one where fisheries are sustainably managed. Evidence suggests that biodiversity is often being lost even where it would be socially more advantageous to preserve it. Identifying the market, information and policy failures can help us identify policy solutions. • Evaluate alternative policies and strategies that decision makers are confronted with: the analysis needs to contrast two or more “states” or scenarios that correspond to alternative action (or inaction) to reduce biodiversity and ecosystem loss (World A and World B). This approach is also used in impact assessments and cost-benefit analyses to ensure that decision makers can make informed decisions on the basis of a systematic analysis of all the implications of various policy choices. • Assess the costs and benefits of actions to conserve biodiversity: the analysis will need to address both differences in benefits obtained from biodiversity conservation (e.g. water purification obtained by protecting forests) and in the costs incurred (e.g. foregone benefits from conversion of the forest to agriculture). • Identify risks and uncertainties: there is much that we do not know about how biodiversity is valuable to us, but that does not mean that what is not known has no value – we risk losing very important, but still unrecognized, ecosystem services. The analysis needs to identify these uncertainties and assess the risks. • Be spatially explicit: economic valuation needs to be spatially explicit because both the natural productivity of ecosystems and the value of their services vary across space. Furthermore, benefits may be enjoyed in very different places from where they are produced. For example, the forests of Madagascar have produced anti-cancer drugs that save lives all over the world. Besides, the relative scarcity of a service, as well as local socio-economic factors, may substantially affect the values. Taking into account the spatial dimension also allows for better understanding of the impacts of conservation on development goals, and for the exploration of trade-offs between the benefits and costs of different options, highlighting regions that may be cost-effective investments for conservation. • Consider the distribution of impacts of biodiversity loss and conservation: the beneficiaries of ecosystem services are often not the same as those who incur the costs of conservation. Mismatches can lead to decisions being taken that are right for some people locally, but wrong for others and for society as a whole. Effective and equitable policies will recognize these spatial dimensions and correct them with appropriate tools, such as payments for ecosystem services. Figures 3.5 and 3.6 illustrate the multi-scale dimension of ecosystem services and thus the need to account for the spatial pattern in their production and use. Even large cities like London depend on a diversity of benefits produced by ecosystems and biodiversity, often at a considerable distance. This framework will be used during Phase II but it will not be possible to collect information for the elaboration of detailed maps for all types of ecosystem services and biomes. Thus the evaluation will also largely rely on “benefits transfer”, making clear the assumptions and defining carefully the conditions for extrapolating from limited data, taking into account the scale and distance-dependency of the various services. Spatial data bases will be used, highlighting where data gaps need to be filled. BRINGING TOGETHER THE ECOLOGICAL AND ECONOMIC ASPECTS IN OUR VALUATION FRAMEWORK Valuing ecosystems requires integration of ecology and economics in an interdisciplinary framework. Ecology should provide the necessary information on the generation of ecosystem services, while economics would bring the tools for estimating their values (see Figure 3.4). Valuation of regulating ecosystem services and some provisioning services must be based on an understanding of the underlying biological and physical processes that lead to their provision. For example, to be able to valuate the water regulation provided by a forest, it is first necessary to have information about the land use, the hydrology of the area and other characteristics, in order to make a biophysical assessment of the service provided. Such an understanding makes it possible to estimate economic value, but there are some challenges which need to be addressed: • Measuring the quantity and quality of services provided by ecosystems and biodiversity in various possible states is a key challenge, and also an opportunity, to avoid the pitfalls of generalization. Valuation is best applied to alternative states or scenarios (e.g. services provided under differing land-use practices reflecting different policy scenarios). For example, the conser- 40 The economics of ecosystems and biodiversity
Figure 3.5: Ecosystem benefits from a protected forest, Madagascar Source: Balmford et al. 2008 Towards a valuation framework 41
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