Valuation of Biodiversity Benefits (OECD)

More documents

Recommendations

Info

- Valuation procedures vary not only according to whether the value is ‘private’ (WTP ofdrug companies) or social (value of health benefits), but also according to the focus ofthe valuation. In the early studies the focus is on the value of the drug. In the Ruitenbeek(1989) study the focus is on the value of the research discovery as revealed by therenewal fee for patenting the resulting compound. Aylward et al. (1993) note that patentfees impart a downward bias to the estimates since renewal fees are small relative toother costs of R&D. The Pearce and Puroshothaman (1995) study, as well as Reid et al.(1993) studies, adopt a royalty approach, i.e. by looking at what a ‘prospecting’ companywould pay to a host country for the rights to prospect for plant genetic material.Table 2.2 brings together the estimates. The original figures have been converted to 1998estimates using an average inflation rate of 3%. While the numbers have been standardised, cautionshould be exercised in interpreting the table. For the reasons stated above, the figures from differentstudies are not comparable. More generally, the studies are of very varied quality. The best studies arethose of Simpson et al. and Rausser and Small. For more detailed discussion see Pearce et al. (1999).Ecologists also draw attention to a wider insurance value of diversity in terms of its value inecosystem integrity and functioning. The diversity of plants, animals and micro-organisms appears tohave a role in helping ecosystems organise themselves to cope with shocks and stresses. Put anotherway, diversity would appear to be linked to resilience, the capacity of ecosystems to deal withexternally imposed change. Diversity also matters at various levels. Genetic variability enables a givenspecies to survive since, as changes to the environment occur, so some individuals stand more chanceof adapting to the change than do others. A totally genetically homogeneous species could easily be atrisk of being unsuitable to the new conditions, hence failing to survive. But just how importantindividual species are is debated. It appears that ecosystem functioning depends mainly on acomparatively small number of ‘keystone’ species, with others ‘going along for the ride’, so-called‘passenger species’. The less important species are certainly affected by ecosystem change but are notinstrumental in effecting that change. In the same way, there may be a limited number of processesthat drive ecosystem change. Does this mean that many species and processes can be dispensed with inan ecosystem without that ecosystem failing? The answer to this question is disputed. Manyecologists would argue that all species are ‘necessary’ in some sense, not least because they occupyniches that, if the species disappeared, would become empty and hence potentially subject to invasionby some other species that could easily be destabilising. Passenger species may also not be static,transforming themselves into keystone species at a later stage [Barbier et al., (1994), ch.2].Indirect global use values: ecosystem resilienceClearly, there is extensive uncertainty about what species ‘matter’ in the sense of ensuringthat an ecosystem stands more, rather than less, chance of survival. Precautionary approaches wouldsuggest that, in the face of such uncertainty, caution be exercised in eliminating species from withinecosystems simply because they appear to be redundant, in the sense of being ‘passengers’.35
Table 2.2 Estimates of the Medicinal Value of Plants, 1998 pricesStudy Value CommentFarnsworth and US$ 298 million per plant based drug, Value of prescriptions for plant based drugsSoejarto (1985) USAdivided by 40 drugs based on plants. NB anFarnsworth andSoejarto (1985)Principe (1991)McAllister (1991)Principe (1991)Ruitenbeek (1989)Pearce andPuroshothaman(1995)Reid et al. (1993)Artuso (1994)Mendelsohn andBalick (1995)Simpson et al. (1994,1996)Simpson and Craft(1996)Rausser and Small(1998a)US$ 2.4 million per year per singleuntested plant species, USAUS$ 0.5 million per year per untestedplant species, OECD wideUS$ 9 500 per untested tree species,Canada, per annumUS$ 28.4 million per untested species,OECD, per annumUS$ 190 per untested species perannumUS$ 743 to US$ 1.33 million peruntested species, OECD, per annum.US$ 4 to US$ 4 600 per untestedspecies per annum, hypothetical deal(annuitised at 5% over 20 years)Present value of US$ 866 per sampleextract in terms of private WTP;US$ 9900 per extract in social termsNet revenue to drug companies =US$ 2.8 to 4.1 billion from rights ofaccess to all tropical forests. AroundUS$ 1 her hectare.‘Private’ WTP of US$ 0.02 to US$ 2.29per hectare of ‘hotspot’ land. Max WTPof marginal species = US$ 9 410‘Social’ WTP of US$ 29 to US$ 2 888per hectare of hotspot’ land .Max WTPof marginal species = US$ 33 000‘Private’ WTP of US$ 0 to US$ 9177per hectare of ‘hotspot’ land.average value.40 successful plants out of 5 000 testedentails 1 success per 125 tested plants. Totalvalue of plant based drugs (US$ 298 million)divided by 125 gives value of untestedspecies. NB an average value.Based on Farnsworth and Soejarto but withmodified probability of success in deriving adrug from a plant test. OECD total value ofUS$ 600 million (1980US$) x 1 in 2000probability of success = US$ 300,000 peruntested drug = US$ 510,000 per untesteddrug 1998 prices. Average value.3 in 100 Canadian trees estimated to havemarketable medicinal properties. Value ofuntested species = annual global value of adrug = US$ 250,000 x 0.03 = US$ 7500 in1990 prices. Average value (low value due tolow assumed value of successful drug)US$ 37.5 billion annual value per successfulspecies divided by 1 in 2000 probability ofsuccess = US$ 18.8 billion per untestedspecies, or US$ 28.4 billion in 1998 prices.Value based on value of statistical life savedof US$ 8 million (1984 prices).Assumed 10 research discoveries inCamerounian rainforest each with patentvalue of US$ 7 500 pa. Divided by 500species = US$ 150 or US$ 190 in 1998prices. Note use of patent values asmeasure of value.Uses Principe and Farnsworth data. Lowervalue is private value and upper is socialvalue based on VOSL of US$ 7 million.Royalty of 3% assumed, 1 in 10 000 successrate.Detailed analysis of cash flows associatedwith sampling 25,000 extracts. AveragevalueAverage value based on likely discoveriesand their market value.See Pearce et al. (1999)See Pearce et al. (1999)See Pearce et al. (1999)36
Page 1 and 2: «ENVIRONMENTValuation ofBiodiversi
Page 3 and 4: ORGANISATION FOR ECONOMIC CO-OPERAT
Page 5 and 6: TABLE OF CONTENTSPART 1 ...........
Page 7 and 8: PART 4 ............................
Page 10 and 11: Why value biodiversity?There are th
Page 12 and 13: Figure 1.1 Total economic value: us
Page 14 and 15: from biodiversity at the local leve
Page 16 and 17: in the database and also for undert
Page 18 and 19: in the policy context. This is high
Page 20: Table 1.3 Policy Options for the Cl
Page 23 and 24: Box 1.2 Value of Turkey’s Forests
Page 25 and 26: of the most important implications
Page 27 and 28: Additionally, valuation does not ju
Page 29 and 30: value is the habitat, many differen
Page 31: are very modest. More recently, new
Page 35 and 36: The importance of indirect use valu
Page 37 and 38: pharmaceutical use, although the li
Page 39 and 40: McAllister, D., (1991). Estimating
Page 41 and 42: Simpson, D and Craft, A.. (1996).
Page 43 and 44: practice, the overlap between these
Page 45 and 46: aimed at giving more precise quanti
Page 47 and 48: structural values. There are a numb
Page 49 and 50: Reid (forthcoming) discusses the po
Page 51 and 52: Ecotourism as a Way to Generate Loc
Page 53 and 54: endangered Indian rhino and other t
Page 55 and 56: ReferencesBann, C., and M. Clemens
Page 57 and 58: PART 261
Page 59 and 60: many European countries, CBA has a
Page 61 and 62: (1) Cost and time constraintsThe co
Page 63 and 64: activity day, there is greater vari
Page 65 and 66: added independent variable C s= cha
Page 67 and 68: error in valuing respiratory sympto
Page 69 and 70: ReferencesArrow, K.J., R. Solow, E.
Page 71 and 72: OECD (1995). The Economic Appraisal
Page 73 and 74: CHAPTER 5:by José Manuel LIMA E SA
Page 75 and 76: linkages usually lead to diverse co
Page 77 and 78: A discrete choice approach to quest
Page 79 and 80: Table 5.2 Model-based point estimat
Page 81 and 82: is potentially very large for multi
Page 83 and 84:
P3 is already in the mix is 2.51, s
Page 85 and 86:
PART 391
Page 87 and 88:
measures of value. An appendix to t
Page 89 and 90:
features (such as parks, beaches or
Page 91 and 92:
included in cost-benefit analysis o
Page 93 and 94:
A Discussion of Past Efforts to Dev
Page 95 and 96:
Satellite AccountsIn addition to th
Page 97 and 98:
which many people argue are associa
Page 99 and 100:
approach to competing uses of water
Page 101 and 102:
Figure 6.2 Trade-Off AnalysisEnviro
Page 103 and 104:
However, the farmers need not bear
Page 105 and 106:
Appendix 1: Theory and Application
Page 107 and 108:
iwhere C is the income adjustment n
Page 109 and 110:
complete. If there are more than on
Page 111 and 112:
Horowitz, Joel. L. and Jordan. J. L
Page 113 and 114:
CHAPTER 7:by Dennis M. KING and Lis
Page 115 and 116:
Box 7.1 Definition of terms related
Page 117 and 118:
Box 7.2 Categories of Ecosystem Ser
Page 119 and 120:
Box 7.4 Dollar-based ecosystem valu
Page 121 and 122:
Non-monetary indicators of ecosyste
Page 123 and 124:
Figure 7.1 Effects of Wetland Locat
Page 125 and 126:
description, and that the usefulnes
Page 127 and 128:
2) Service capacity sub-indexIndica
Page 129 and 130:
wetlands, for example, results in F
Page 131 and 132:
(1) Functional CapacityIndexFigure
Page 133 and 134:
constituents of runoff can be predi
Page 135 and 136:
Service(on or off site)Recreational
Page 137 and 138:
Table 7.3 Service Risk Sub-index De
Page 139 and 140:
Measuring Service Preference Weight
Page 141 and 142:
Table 7.4 Illustration of Paired Co
Page 143 and 144:
PART 4151
Page 145 and 146:
Ecological foundations for biodiver
Page 147 and 148:
Phenotic diversity is a measure bas
Page 149 and 150:
Operationalisation of the biotic-ri
Page 151 and 152:
ten attributes that could score a m
Page 153 and 154:
The choice of the scale relates to
Page 155 and 156:
Nature measurement methodIn 1995, t
Page 157 and 158:
Table 8.4 Value orientations and en
Page 159 and 160:
Table 8.5 Identification of monetar
Page 161 and 162:
Table 8.6 Valuation studiesSingle s
Page 163 and 164:
in waterway systems for nine impact
Page 165 and 166:
to other contexts, conditions, loca
Page 167 and 168:
ReferencesAkcakaya, H.R. (1994).
Page 169 and 170:
de Groot, R.S. (1994). “Environme
Page 171 and 172:
Mace, G. M. & S. N. Stuart. (1994).
Page 173 and 174:
Turner, R.K., Perrings, C. and Folk
Page 175 and 176:
John A. DixonJohn A. Dixon is Lead
Page 177 and 178:
Robert O’NeillDr. O’Neill recei
Page 179 and 180:
Steven StewartSteven Stewart is Ass
Page 181:
OECD PUBLICATIONS, 2, rue André-Pa
show all

Valuation of Biodiversity Benefits (OECD)

Create successful ePaper yourself

Delete template?

Save as template?