«The Economic and Social Aspects of Biodiversity Benefits and Costs of Biodiversity in Ireland REPORT PREPARED BY: CRAIG BULLOCK, OPTIMIZE CONSULTANTS ...»
In terms of public costs, an increasing amount of European and national funding is being directed at research into marine ecosystems and ecosystem fisheries management. A few areas are already zoned for marine protection, but the identification of Marine Protection Areas has made slow progress and an application is only now being made to Brussels. Costs would apply principally to naval enforcement. At present, enforcement has been argued to cost as much as 100 million per year (half the value of output), although the rational has been strategic protection of commercial stocks rather than biodiversity. In principle, a private cost should be incurred in that privately owned vessels will need to adopt new environmentally-friendly fishing gear. However, past experience would suggest that this investment too will be underpinned by the state.
Summary of benefits of selected ecosystem services to marine fisheries and policy costs
* largely reimbursed through EU 11.2.4 Water Water provides for numerous economic and social uses and benefits and, for many of these, good, clean water is the standard required. The chapter on Water noted several key benefits due to the cleaning services performed by the aquatic ecosystem. These include provisioning services such as quality drinking water, supporting services to fisheries and other fresh-water produce, and regulating services such as the assimilation of domestic, agricultural and industrial waste.
W e t l an d s an d flo o d i n g In addition, wetlands perform important economic and social functions in the form of flood mitigation. For peatlands and fens, it is the ecosystem itself that performs the retention function, at least up to a saturation threshold. The economic benefits of flooding avoided are limited for lowland bogs in that most are surrounded by poorly productive pasture. However, upland blanket bogs may be more influential in reducing flash flooding of lowland towns. Flash floods in Boscastle, Cornwall, in 2004 and Carlisle, Cumbria, in 2005 (both beside rivers rising in upland areas) caused many millions of euro worth of damage. In Ireland, bog slides have been a recent phenomenon where the integrity of peatlands has been undermined by a combination of weather conditions, subsoil, overgrazing and structural works. Flooding in October 2004 led to insurance claims of 38 million (Huyskes et al. 2006) causing companies to take climate change very seriously. The predicted drying out of upland bogs could lead to more frequent flooding in future. Indeed, peatlands provide for storage of carbon that would otherwise be lost to the atmosphere. While the living surface layer sequesters carbon only slowly, it does protect the underlying peat carbon store from dessication. This store has been estimated to total 1.07 billion tonnes (Tomlinson, 2005).
F i s h i n g an d re c re a t i o n Rivers and lakes are associated with significant public benefits. To avoid double-counting, the utility benefits of amenity and recreation are specifically dealt with under the section on Welfare below, but it is possible here to consider the amount that is spent on water-based recreation. Domestic spending is at least 70 million per year and that of foreign tourists is put at 65 million according to the Marine Institute (2003). Although much of the former may have resided within Ireland, it can nevertheless be linked to the aquatic ecosystem services.
Angling expenditure is included in the Marine Institute figures. Until very recently wild salmon supported a commercial industry, but falling stocks have led to the closure of the industry. If the recreational catch increases to fill the gap, the value of fish caught should increase to at least 15 million per annum. On top of this can be added the expenditure by foreign anglers which probably at least matches that of domestic anglers at 50 million. Inland trout production depends on clean water and is valued at 600,000 per year.
Waste assimilation Waste assimilation is a tremendously valuable ecosystem service, even if it is one that can quickly be undermined by the quantity or toxicity of pollutants. Industry endures a private cost in that it is required to have on-site waste-water treatment to comply with EPA Integrated Pollution Control licensing. The private costs of this abatement have been estimated by Clinch and Kerins (2002) at anything between 0.08 and 4 per tonne depending of the nature of the industry. Inevitably, pollution regulations would need to be stricter without the subsequent purification provided by natural ecosystem services. Under-investment in municipal treatment plant means that many towns across Ireland depend on these same processes to clean up effluent that has been inadequately treated. Without this waste assimilation, further costs would be incurred for other water users down-stream. Likewise, diffuse pollution from agriculture and rural housing exerts an external cost where this exceeds the assimilation capacity of rivers. The value of the waste assimilation is realised in terms of the avoided cost of additional treatment down-stream. Unfortunately, it is a benefit that is impossible to value precisely, although it is certain to run into hundreds of millions of euro.
I n d u s t ri a l ab s t ra c t i o n Both industry and agriculture require clean water for abstraction. Water for most businesses typically requires treatment and, where provided by rural county councils, the supply cost is around 1 per m3. For a typical creamery, this would result in a cost of around 192,000 per year (Hayes, 2006). Clearly the cost would increase if source waters were more polluted.
Many farms abstract water directly from rivers or groundwater. Although there is only a limited amount of crop irrigation compared with other countries, clean water is needed for livestock.
Assuming that one quarter of the national herd receive their water from natural sources, this represents a cost saving of 35 million compared with county water charges given average consumption per animal of 20m3 per annum.
Aside from agriculture and industry, water is used for domestic use. Artificial treatment is generally provided, but ideally the source should also be of high quality given that this water is used for drinking. No figures on the benefits are available, but the cost of water purification can be estimated in terms of on-going purification and capital expenditure. The former is estimated at 200 million per year assuming daily water consumption per person of 150 litres of which around one quarter would be for drinking/cooking. Given previous underinvestment in environmental infrastructure, capital expenditure is currently very high at around 500 million per year out of a Water Services budget of 860 million. When, finally, this belated investment has been made, the annual capital costs should fall over the long-term.
Summary of benefits of ecological services to water quality and policy costs Table assumes that current expenditure on Water Services is broadly comparable with social benefits.
11.2.5 R o a d s an d i n f ra s t ru c t u re Although the net impact of roads on biodiversity is evidently negative, a greater amount of attention is given to ecological protection associated with the construction of roads or other public infrastructure than is typically given to private development, including housing. Considerable effort is made to mitigate the adverse environmental impact of roads through the environmental assessment process. Inevitably these vary substantially from one road to the next depending on the environment through which it cuts. The National Roads Authority has not been able to supply an estimate of the average cost of these mitigation measures.
Biodiversity impacts are not included at the cost-benefit analysis stage of road design. Neither are the biodiversity implications of cumulative impacts taken into account, although this should change with the advance of Strategic Environmental Assessment (SEA). Arguably, inadequate consideration is given to the relative biodiversity impacts of alternative transport options, or to the effect that residential planning has on stimulating the need for new roads in the first place.
Summary of benefits of ecological services to roads and infrastructure and policy costs
Benefits Only a handful of environmental valuation studies have been undertaken in Ireland and none of these have been specific to biodiversity. Consequently, the summary table below is in no way comprehensive. Marginal values can be provided as annual estimates of public benefits, expressed as the consumer surplus of particular activities associated with biodiversity, e.g. angling. Alternatively, these marginal values can be expressed as the additional consumer surplus due to incremental improvements in the biodiversity resource, for example due to policies such as the Rural Environmental Protection Scheme (REPS) or water quality improvements. The latter is more reliable and more relevant to cost-benefit analysis.
L an d u s e A recent survey for the Heritage Council (2007) estimated the public benefit of increased government spending on heritage. Of the estimated annual value of 90 million, public preference was greater for spending on natural heritage features (at approx 65m pa.). The association between such features and biodiversity varies considerably, being high for wildlife sites, but less for others where geology, geomorphology or cultural practices play a significant part, e.g. the Cliffs of Moher.
Campbell et al. (2006) have estimated the aggregate value of REPS at 150 million per year. Again, this only provides a partial valuation of the welfare benefit of biodiversity, although the survey found that the greater part of the estimated benefits was associated with rivers and lakes, the quality of which supports biodiversity (and vice-versa).
F o re s t r y Various welfare estimates have been provided for forestry. The most recent of these by Bacon and Associates (2004) includes an annual value of biodiversity of 5.6 million per annum in relation to existing forestry or a marginal value 1.6 million per annum for the proposed expansion programme. Biodiversity also makes a significant contribution to forest recreational benefits estimated at 97 million per year (Coillte/Irish Sports Council, 2005). Few new areas of forest are being planted by the public agencies, and growth in future recreation benefits, together with the associated biodiversity benefit, is restricted by the lack of access to private forests. However, some new marginal benefits will derive from sustainable forestry guidelines applied to existing forest areas.
Wa t e r Estimation of the welfare benefits associated with the recreational use (use value) of rivers and lakes is hampered by the absence of figures on the number of visits to such localities. The Marine Institute (2003) estimates that 190,000 people undertake water-based recreation each year.
However, many more would be involved in more general recreation and leisure. It seems likely that, given the large number of rivers and lakes, together with the relative attraction of water, the number of trips is in excess of the estimated 18 million trips associated with forests (Coillte/Irish Sports Council 2005) or the 25 million trips associated with distinct heritage destinations (Heritage Council 2007). Excluding coastal trips, a possible figure might be 30 million trips. The total utility or consumer surplus associated with each individual trip is unlikely to be less than 10 and is probably significantly more (no estimates are available for Ireland). Biodiversity is likely to contribute strongly to any estimate of this consumer surplus.
The consumer surplus is additional to expenditure incurred. Domestic tourism (excluding angling discussed above) accounts for around 37 million of annual expenditure (Marine Institute, 2003). In principle, much of this spending should be discounted on the basis that it would otherwise be spent elsewhere in the economy (although not necessarily in areas with as high an economic multiplier).
However, the amount spent by tourists from overseas represents a net addition.
As well as the expenditure and utility value, rivers and lakes can be expected to elicit substantial passive use (non-use) benefits given their importance to the Irish rural environment. These benefits have not been quantified, but would probably match those estimated for the farmed countryside, particularly given the importance attached to water by respondents to the REPS survey.
Ideally, for a cost-benefit approach, it is the marginal benefit of protecting or enhancing aquatic biodiversity that is most relevant to an assessment of new biodiversity policies. For the UK, the benefits of improvements in water quality have been estimated by Green and Tunstall (1991) at up to 97 pence per trip. This figure would likely have more than doubled to £2 per trip given income growth in the subsequent period. By comparison, most Irish rivers and lakes are already of relatively good quality compared with those in the UK. Seventy per cent of Ireland’s rivers are described by the EPA as Class A (unpolluted) while 85% of lakes are good quality oligotrophic or mesotrophic (McGarrigle et al. 2002). Taking the proportion of moderately polluted rivers (13%) and assuming that these could potentially share in the presumed 30 million annual trips, such an improvement would be worth at least 10 million per year if transfer values can be based on current UK estimates. Indeed, as the proportion of moderately polluted rivers is higher (25%) in the Eastern Region where most people live, it is possible that actual use benefits could amount to between 10 and 20 million per year.
Welfare benefits would be higher on an individual level amongst specialist users such as anglers, boaters and kayakers. Curtis (2002) estimated total consumer surplus benefits, given current water quality, of between 62 and 185 per trip for anglers in Ireland. These anglers’ valuation of marginal improvements in water quality from moderate to good quality could be estimated at between (at least) 3 and 28 (salmon) per trip based on UK figures (Environmental Agency, 2002).
For kayakers, Hynes and Hanley (2006) report values for improved water quality of 14.50 per trip.