«The Economic and Social Aspects of Biodiversity Benefits and Costs of Biodiversity in Ireland REPORT PREPARED BY: CRAIG BULLOCK, OPTIMIZE CONSULTANTS ...»
In addition, there is a direct benefit where human activity responds and benefits from biodiversity as, for instance, with recreational angling, bird-watching, dolphin watching or similar activities. These benefits are realised by individuals and become part of their preference structure and decision making. In other respects, the benefit of biodiversity is indirect as, for example, where people visit attractive landscapes which are themselves partly a product of biodiversity. Indirect values also derive from such activities as the watching of nature television programmes, reading of relevant books or articles, or from journey amenity. The relationship between biodiversity and human health as discussed in chapter 4.7 provides a further instance of an indirect value.
‘Passive use values’ include the positive utility one may feel from bequeathing a healthy biodiversity to future generations, or from vicarious values, i.e. valuing the benefits enjoyed by others.
Unambiguous non-use or ‘existence values’ occur where people are not engaging in activities such as angling, bird-watching or countryside visits, but nevertheless benefit from knowing that there are healthy fish populations, that birds and their habitats are protected, or that Ireland has an attractive countryside.
It is the indirectness of many biodiversity benefits that make its value difficult to quantify. Much of this arises from what Costanza (1997) calls an “infrastructure” value in which biodiversity supports other activities. Fromm (2000) argues that this input is ignored by the above categorization of Total Economic Value because this considers only outputs and is unconscious of the complementary relationships that exist between species. Society, he argues, is largely ignorant of the inter-related functional benefits of biodiversity which together contribute a vital security value. This security value contributes to activities from which there is an individual benefit, such as recreation, and to productive benefits such as food supply. These benefits are dependent on the ecosystem services provided by a complex web of biodiversity. Without an understanding of these relationships there is a risk of unpredictable, possibly irreversible welfare losses.
In fact, these values can also be included under a Total Economic Value taxonomy. For instance, Fromm’s “security value” is analogous to option value, an accepted component of passive use values which applies where there may be a benefit in protecting biodiversity for potential future use.
However, Fromm does make the point that we know so little about biodiversity that its true indirect or option value likely far exceeds those benefits that we can identify. These benefits may not be singularly confined to identifiable species. The chapter on agriculture noted that ecologists are moving away from discussion of keystone species to a consideration of the uniqueness (or not) of the functions of each species, including investigation into the substitution of functions between species or species redundancy. This is still an area of which we only have the vaguest of understanding. The huge degree of ignorance of ecosystem services means that protecting biodiversity has an insurance value, and particularly so in the face of climate change. This insurance value underpins the need to include safe-minimum standards or a precautionary principle in costbenefit analysis.
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e.g. ecosystem services e.g. countryside for food production recreation 8.2 VA LU I N G B I O D I V E R S I T Y Biodiversity contributes directly and indirectly to our diet and to our health, but also to our quality of life. As these are amongst the key responsibilities that government has for its subjects, so biodiversity is deserving of protection. Its importance is acknowledged by National, European and International policy. However, the benefits of biodiversity are little understood or often intangible and so tend not to be priced by the market. Without a price signal to indicate importance or scarcity, biodiversity is under-valued and public and political awareness may be low. Failure to recognize the benefits, together with individual variations and inequities in use values, means that social or economic activities can impact adversely on biodiversity. When this occurs, costs, i.e.
external costs, are passed onto others. Sometimes these activities can even be encouraged by policy, such as through ill-considered taxation and subsidy schemes. The Common Agricultural Policy is commonly used as an example. Past manifestations of the CAP strove to increase agricultural productivity without consideration of the consequences for biodiversity or the wider public good.
As an un-marketed public good, it is necessary to attribute a value for biodiversity based on an estimation of the contribution to human welfare or utility. One method is to take the price of a marketed good that is associated with biodiversity, for instance agricultural production, fish catch, clean water or land values. The other method seeks this information indirectly by observing people’s behaviour (e.g. travel and spend), or directly by asking people to quantify the value they place on biodiversity through expressions of willingness-to-pay to protect it.
Costanza et al. (1998) attempted to place an approximate value on biodiversity at a global level.
Curtis (2004) also attempts a comprehensive approach, but focuses on the local level (a World Heritage Area in Queensland) using a combination of land values and an expert group interpretation of the value of ecological services. However, valuing biodiversity in its entirety is an impossible task.
A fundamental criticism is that economic value estimations should ideally be of incremental or marginal changes in the quantity of a resource. Inevitably, the value at any one time depends on this change in relation to the total stock of a resource.
One yardstick by which to measure the welfare value is in terms of people’s income and their respective willingness to pay (or be compensated) for changes in a valued resource. Contingent valuation methods (CVM) are employed to derive estimates of people’s willingness-to-pay. Discrete choice experiments (DCE) achieve a similar goal, but with greater reliability in relation to changes in the attributes of a resource (for example, ‘number of species’ would be one of the many attributes of biodiversity).
Economic valuation methods are anthropocentric. They seek only to value those components for which there is an interaction with human welfare. Nunes and van den Bergh (2001) review a number of papers relevant to this topic, but find that few examine biodiversity specifically. Most address aspects of biological resources and are of tenuous relevance to biodiversity (Pearce, 1999).
Some surveys have sought to value individual species. Often these have limited themselves to socalled charismatic species, for example, whales (Loomis and Larson, 1994). Typically these species are familiar occupants at the top of the food chain, although they may nevertheless be representative of a healthy biodiversity. Other studies have estimated the value of particular habitats (e.g. Stevens et al., 1997). Some of these studies have looked at locations described as “biodiversity reserves” or have included estimates of ecotourism value and expenditure (e.g.
Norton & Southey, 1995). Values tend to be higher if there are associated recreational pursuits.
The value placed on recreational sites may also increase as more pristine sites, especially those characterised by high biodiversity, become more scarce. Nevertheless, any valuation must ensure that estimation is not subject to substitution effects whereby survey respondents may fail to take into account other alternative locations or species.
Most valuation methods relate to a specific programme or policy that aims to protect the species or habitat. This avoids confusion with the intrinsic value of a site or species in that survey respondents understand that such policies necessarily involve an economic cost.
Christie et al. (2006) refer to a recent UK study in which only 26% of people admitted to having heard of the term “biodiversity”. 10 They acknowledge that it is difficult to ask general questions of the public about biodiversity and easier to ask people to value rare or endangered species than to ask about ecosystem services. To test this argument, they asked people to value various components of biodiversity in relation to agri-environmental schemes, namely familiar species, rare/unfamiliar species, habitat, and ecosystem services.Their results bore out the researchers’ doubts as to public comprehension of biodiversity, finding that while people valued biodiversity, they were content to leave it to the experts as to how this was best achieved. In addition, they found that the public place a higher value on policies that ensure the survival of biodiversity (rather than slowing its loss) and on the protection of ecosystem services of benefit to mankind (rather than those of benefit to all species).
N a t u ra l h e ri t ag e Wilderness locations high in biodiversity are popular subjects for environmental economists. Invariably such locations attract high expressions of willingness-topay largely by virtue of their uniqueness. Visitors may be willing to pay a large DEFRA (2002) Survey of Public Attitudes to Quality of Life and the Environment – 2001, DEFRA, London.
amount to experience such locations, but value estimates typically include a large measure of passive or existence value too.
Wilderness is rare in Ireland. Remote areas of the west coast are one example, as could be Connemara or mountainous areas such as Kerry, Mayo,Wicklow or the Mournes. However, it is the Burren that is most regularly referred to when it comes to biodiversity. In fact, all these locations are dominated by semi-natural habitat associated with various farming systems. Ireland’s bogs also possess a combination of wilderness and high biodiversity.
A recent national survey for the Heritage Council (Keith Simpson & Associates et al. 2007) found that the Irish public placed a slightly higher value on natural heritage compared with cultural heritage. Their willingness-to-pay for additional measures to protect both forms of heritage averaged 46.83 per person per year. This is equivalent to 90 million per year once aggregated across the adult Irish population.
A gri c u l t u re Chapter 4.1 discussed the value of ecosystem services to agriculture. Two outputs of both agriculture and its associated ecosystem services are farmland habitats and landscapes. As farming is practiced over 90% of Ireland, today’s wildlife is that which has readily adapted to this land use. The biodiversity includes common and less common species. It also includes the interaction of biodiversity with farming activities, geology and topography, with the result being some familiar cultural landscapes.
The most relevant Irish study to date on the welfare benefits of Irish farming is that undertaken on the Rural Environmental Protection Scheme (REPS) by O’leary et al. (2005) and Campbell et al (2006a) on behalf of Teagasc and the Department of Agriculture and Food in Northern Ireland.
REPS compensates farmers for farming in an environmentally friendly manner that protects valuable features of the landscape. These features include farm buildings and stone walls, but also other features that correspond to a healthy biodiversity, namely wildlife habitat, rivers and lakes, hedgerows, pasture and upland pasture. REPS includes a basic premium to cover environmental sensitive farming, but also optional supplementary measures designed to encourage more pro-active conservation. The latest round of REPS funding has extended these proactive measures to include additional supplementary measures for wildflower meadows and corncrakes.
Campbell et al. did not set out to report an average willingness-to-pay for REPS, but rather to examine the distribution of individual willingness-to-pay, finding that, for 41% of respondents, this amount exceeded the average annual per capita cost of the scheme of 63. The researchers used a choice experiment method to determine willingness-to-pay for specific landscape elements, finding that rivers and lakes were easily valued most. They believe that this preference for rivers and lakes results from a logical perception that water quality is indicative of the overall state of the rural environment.
T a b le 8.1 Wi l l i n g n e s s - t o - p a y f o r ag ri - e n v i ro n m e n t a l f e a t u res (p e r p e rs o n p a )
Note: figures after exclusion of lexicographic (fixed) preferences. Source: Campbell et al. (2006b) Similar studies have been conducted in other countries. In the UK, studies have been undertaken of Environmentally Sensitive Areas (ESAs) in England (Willis et al., 1993) and Scotland (Hanley et al., 1998). However, these studies were specific to a single geographically bounded ESA whereas over one quarter of Irish farms are in REPS with the proportion being far higher in many western counties.
Allowing for the level of scheme participation and the prevalence of various landscape features, Campbell et al. estimate aggregate benefits for 2003 of at least 150 million per annum. Although less than the current annual spend of 280 million (approx 195 in 2003), the study was unable to address all the benefits of REPS. Other benefits include specific biodiversity welfare benefits that are not immediately associated with landscape or a single wildlife habitat measure. There is also the benefit of ecosystem services, of which (noting the remarks by Fromm), survey recipients would be largely unaware. In addition, there are social benefits to the smaller landholdings that dominate REPS participant numbers. Here too there is a relationship with biodiversity in that these smaller farms are typically more dependent on ecosystem services than larger, more intensive farms that make greater use of artificial inputs.