POLLINATORS POLLINATION AND FOOD PRODUCTION

THE ASSESSMENT REPORT ON POLLINATORS, POLLINATION AND FOOD PRODUCTION
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4. ECONOMIC VALUATION OF POLLINATOR GAINS
AND LOSSES
have significant implications for the long-term management
of the service. As long as there is no price signal from
the market, or other signals from e.g., public policies, the
agents (those whose choices and behaviours influence the
dynamics or conservation of pollinators) will not be affected
by the consequences of their choices and behaviours. This
may potentially result in unstable or unsustainable long-term
management practices.
1.1.4 Monetary contribution versus
economic value of the impact (or
consequences) of an ecosystem service
A distinction should be made between the monetary value
of the contribution to society of an ecosystem service and
the economic impact of the loss of this service on the
society. Taking the example of Figure 4.2, we could assume
that the contribution of the ecosystem service to society is
the gain in production between Q 1
and Q 2
. In this way, the
monetary value of the contribution would be the price, P 1
,
multiply by the net production due to the ecosystem service.
The economic impact or consequence of the ecosystem
service loss measures the impact on the price and quantities
at the equilibrium of such a decline. The economic value of
the decline would be measured by consumer and producer
surplus losses. A more detailed discussion of the distinction
between monetary contribution and economic valuation of
pollination services can be found in Gallai et al. (2009a).
1.1.5 The cost-benefit analysis framework
Economic valuations are usually part of a larger process of
economic analysis. There are in fact two main frameworks:
cost-benefit analysis and cost-efficiency analysis. Both
framework use many of the same principals and data but
have substantially different scope and objectives, making
them useful in different situations.
Cost-benefit vs. cost-effectiveness analysis. Economic
valuations refer primarily to the idea of calculating and
comparing the costs and benefits, typically for policymakers
who have to make a decision among several
choice options. Cost-benefit analysis aims at identifying
the option with the highest net present value (NPV). NPV
measures the balance of economic gains and losses linked
to each option. In order to allow the comparison of cost
and benefits that occur at different time, future gains and
losses are down weighted using a discount rate (see
Section 3.2.2.3.) according to the expected change in the
value of money over time in order to obtain their present
value. When calculated in a social context (as opposite
to individual or private), and provided you have included
and accurately valued all major benefits and costs and
applied the appropriate discount rate, the highest NPV
maximizes the social welfare. Cost-Benefit Analysis (CBA) is
often used to identify this maximum: what are the levels of
benefits gained from investing certain costs in an action. For
example, Blaauw and Isaacs (2014) explicitly measured the
benefits of pollination services from field margins sown with
flowering plants to nearby blueberries relative to the costs
of managing and maintaining these margins, finding that the
total benefits outweighed the total costs after 3 years. It is
therefore quite different from the cost-effectiveness analysis
(CEA), which aims at identifying the most efficient way
(lowest cost) to reach a particular goal: e.g., considering
which mitigation measure would provide a minimum level of
insect pollinators needed at the lowest relative cost.
CBA and distributive justice. A well-designed CBA
should be able to recommend choice options that maximize
social welfare. This optimal situation is sometimes called
allocative efficiency because it is a situation where
all goods are allocated to their most beneficial use.
Nevertheless, this result may not be considered fair. The
CBA may lead to solutions that are theoretically optimal but
less preferable in terms of social justice since the positive
and negative effects are distributed unevenly among agents.
A policy with positive aggregated impact (say a ban of
some pesticides that degrade the diversity of pollinators)
may have a negative impact on certain agents that do not
receive much or any of the benefits (e.g., farmers that grow
wind pollinated crops that depend on this pesticide) (for
overviews of these issues see Martinez-Allier, 2003; Pearce
et al., 2006). Following seminal critics such as Rawls (2001),
Sen (1999a, 1999b) or Fehr and Schmidts (1999), innovative
analyses have introduced justice considerations. CBA can
be carried out with different social decision making rules and
taking into account issues such as the diminishing marginal
utility of income (as required in the UK Treasury Green Book
guidelines) so as to incorporate issues of social distribution.
The same comment may apply to CEA.
The sustainability criterion. Maximizing NPV is an
efficiency-based criterion (the most efficient alternative is
the one that maximizes NPV). As such the NPV can be
positive for a project that is not sustainable (i.e., consistent
with sustainability goals). Indeed, a development project
can be sustainable, while its NPV is negative. The measure
of sustainability is still an ongoing debate, however the
classical sustainability criterion (Pezzey, 1989; Solow,
1993) assumes that consumption or welfare must be
non-decreasing over time (the consumption of tomorrow
should not be lower than the one of today). Since the
consumption path is not necessarily representative of
the welfare (Ascheim, 1994), classical conceptions of
sustainability tend to focus on non-decreasing social
welfare (Arrow et al., 2004). Following the concept of
development as freedom (Sen, 1999a), recent perspectives
tend to consider that a better sustainability criterion should
be to maintain life opportunities (Howarth, 2007). The