Dynamic non market valuation of Ecosystem Services

Citation

Land & Water Australia. 2009. Dynamic non market valuation of Ecosystem Services. [Online] (Updated June 25th, 2009)
Available at: http://lwa.gov.au/node/3513 [Accessed Tuesday 12th of March 2013 12:29:37 PM ].

We all agree that valuing ecosystem services is crucial for better management of the ecosystem. We don’t seem to agree on how to do it. Current methods do not model the dynamics of economic or ecological systems.

Dr Greg Hertzler’s (USyd) research project developed a dynamic model to value ecosystem services and natural resources. It found natural resource managers (who often value the ecosystem using their preferences and knowledge) are crucial, particularly if they consult widely using citizen juries. Non-market valuations on the other hand, must eliminate their preferences to consume from the estimation of values and include the value of conserving – emphasis on the citizens’ role as owners rather than consumers.

This challenges the use of non market valuation, contingent valuation and choice modelling surveys (static consumer theory) and provides theoretical support for citizen juries.

Managers can use these values to inform the difficult trade-offs between conservation and development. Economic institutions can be redesigned to ensure that the value of ecosystem services is included in all decisions that threaten economic and ecological sustainability.

Project Objectives

Enhance current models of ecosystem services to integrate dynamic ecosystems with a dynamic economy, include the production of amenities from ecosystem services and incorporate the risks and uncertainties about the future.
Use the enhanced models to develop a framework for estimating the value of ecosystem services.
Use the framework to estimate dynamic non market values for ecosystem services and compare with estimates from existing methods of non market valuation.

Outcomes

Greg Hertzler provides some useful insights into the target audiences for the research.

1. Economists
For over 50 years natural resource economists have studied and modelled ecological systems such as fish and wildlife populations, river and groundwater catchments, forests, trans-boundary resources and stock pollutants, to give a few examples. Economists who promote non market valuation have usually considered themselves to be environmental economists. They have focused on people as consumers and the environment as a consumer good, with little input from ecology.

Historically, ecologists have been skeptical of economics and critical of economic methods. The economy competes with ecology, often resulting ecosystems being under valued and over exploited. Many ecologists are now collaborating with economists in managing this competition before ecosystems are irreversibly lost.

2. Natural resource managers who usually work in government agencies.

Often they express the view that their job is to weigh up priorities and values for society and to make the hard judgments about the development of the economy versus the conservation of ecosystems. Non market valuation may challenge practice.

Through the project life the audiences remained the same. Outcomes from the project should be easy for both natural resource managers and ecological economists to accept. Their methods of integrating dynamic ecosystems have always focused on owners and resource managers as the conservators for the future. The research adds to their work by specifying how to observe social welfare in a dynamic model.

“Originally, I thought that the research would challenge natural resource managers who value ecosystems. Instead, the results confirm that their knowledge and preferences are crucial, particularly if they consult widely by using citizen juries.”

The preferences of consumers, on the other hand, are to consume rather than conserve. Non market valuation must find ways to eliminate their preferences from the estimation of non market values and focus on the value of conserving for the future.

“As such, the outcomes of the research are likely to be unacceptable to some environmental economists who have spent the last four decades developing contingent valuation and choice modelling surveys based on static consumer theory. Originally it was thought the results would be unpopular with natural resource managers. Now it is thought the results will challenge traditional practitioners of non market valuation”.