Valuation of Biodiversity Benefits (OECD)

Figure 7.3 Illustration of indicator development and application:Improving functional capacity at Site A compared to Site BWildlife habitat Fishery support Nutrient trappingSite A Site B Site A Site B Site A Site BFunctional CapacityIndex 1.0 1.0 1.0 1.0 1.0 1.0Capacity UtilisationSub-index X 1.2 X 0.8 X 1.2 X 0.8 X 1.2 X 0.8Level of Function1.2 0.8 1.2 0.8 1.2 0.8Service CapacitySub-index X 1.2 X 0.8 X 1.2 X 0.8 X 1.2 X 0.8Level of Service1.44 0.64 1.44 0.64 1.44 0.64Value of ServiceSub-index X 1.2 X 0.8 X 1.2 X 0.8 X 1.2 X 0.8Value 1.73 0.51 1.73 0.51 1.73 0.51Risk of ServiceSub-indexAdjusted ValueX 1.2 X 0.8 X 1.2 X 0.8 X 1.2 X 0.82.07 0.41 2.07 0.41 2.07 0.41Note: Value Index per unit Functional Capacity and, within limits, per unit change in Functional Capacity.Site A 2.074 (1 x 1.2 x 1.2 x 1.2 x 1.2)Site B 0.410 (1 x 0.8 x 0.8 x 0.8 x 0.8).Conclusion: Site A and Site B are identical in size, shape and biophysical characteristics. However,based on differences in landscape context, the “value” of Site A is 4 times higher than the “value” ofSite B [((2.074 – 0.410)/0.410)=4.06]. Within limits, increasing the functional capacity at Site A willresult in 4 times the economic benefits as increasing the capacity at Site B. If costs per unit ofcapacity restoration are the same at both sites, the benefit-cost ratio of restoration investments at SiteA is 4 times higher than Site B. Note that investments to improve the landscape context of Site Bcould yield greater payoff than investing directly at either site.138