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«The Economic and Social Aspects of Biodiversity Benefits and Costs of Biodiversity in Ireland REPORT PREPARED BY: CRAIG BULLOCK, OPTIMIZE CONSULTANTS ...»

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Given around 200,000 regular anglers and 50,000 regular kayakers in Ireland, the aggregated annual benefits of improved water quality can be estimated at 32 million. The values held by inland sailing or boating enthusiasts, or by naturalists, would surely double this value noting by their greater numbers, but lesser contact with the water.

Substantial welfare benefits also apply to knowing that drinking water quality is clean. Again, there is no estimate of this benefit, although the willingness of up to 50,000 Galway households to pay around 3 per day on bottled water during the current crytospordium crisis provides a minimum estimate of the value people place on clean drinking water. These purchases are founded in people’s valuation of their good health, but additional benefits would be realised in terms of avoided hospital expenses and loss of work days. The 3 figure would exceed 1.4 billion per annum if aggregated to the total Irish population. It is, though, a figure that can only be indirectly equated to the value of ecosystem services in that these play only a partial role in purifying water, particularly of e-coli or cryptosporidium. Nevertheless, the figure does provide some indication of the benefits of sustaining the aquatic ecosystem.

Costs The cost of policies that contribute to improved human welfare by protecting biodiversity amount to around 380 million per year. However, a substantial portion of this figure has been included under other sector headings. In addition, a significant amount of REPS benefits (perhaps half) could be attributed to landscape or social benefits rather than biodiversity. Excluding these factors, the net additional costs are around 50 million and can be attributed to relevant expenditure by the National Parks and Wildlife Service (NPWS) and by the Environmental Protection Agency (EPA).

Much of this expenditure is directed at protection through enforcement, rather than active management for biodiversity and salary costs are a major component. Indeed, environmental protection is the principal objective of the EPA, much of whose annual income of 50 million is directed to areas that are only indirectly related to biodiversity, such as air quality and waste disposal.

Summary of welfare benefits of locations and activities of relevance to biodiversity (Benefits of policies to improve quality. Estimates of annual consumer surplus (CS))

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11.2.7 Health Biological diversity is of fundamental importance to human health on a variety of levels. The nature of this relationship with health is often complex, and often other inter-related factors are of equal or greater importance in determining the health status of a population. While the linkages between health and biodiversity have been clearly demonstrated in many parts of the world, here in Ireland there is not enough baseline information on biodiversity and ecosystem services to allow direct parallels to be drawn. Furthermore, there is little precise data on the amounts spent (for example, by the Department of Health and Children) on related areas of public health protection, such as prevention programmes for specific diseases, through which a link to biodiversity can begin to be quantified, or through which a basic "costs avoided" scenario for nature conservation can be developed.

The chapter on health identified several means through which biodiversity interacts with health, i.e.

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• Physical and psychological health

• Medicinal Resources Research has established that a diverse diet based on a wide variety of fresh foods can be associated with reduced incidence of diseases and other positive health outcomes. However, the economic link between high biodiversity and high food quality, nutrition security and dietary health is impossible to identify in the Irish context, even approximately, given the lack of available information on the costs associated with dietary deficiencies. Furthermore, certain diseases, such as cardiovascular disorders and other so-called "diseases of affluence", are clearly associated with other factors, such as physical exercise and living conditions, that must be factored into any such assessment. Similarly, the links between biodiversity and physical or psychological fitness, though easily demonstrated, are not easy to quantify. The Health chapter of this report has highlighted how an awareness and appreciation of the natural environment, and access to green space, can support individual well-being, social cohesion and overall community health. Unfortunately, not enough research has been carried out in Ireland to allow any direct connections to be drawn.

In terms of infectious diseases, the ecology of disease-causing organisms is directly associated with the functioning and sustainability of the ecosystems within which they circulate. The populations, distribution and dispersal of pathogens are regulated by biodiversity as is the case for all species.

Globally, there are many cases where disease outbreaks in man, wildlife, livestock and plants have been directly or indirectly exacerbated by ecosystem disruption.

On another level, the genetic and species diversity within an ecosystem confers a degree of resilience against the impacts of major disease outbreaks. However, it is difficult to attribute a specific economic value to disease regulation within a diverse ecosystem. In the case of some familiar diseases, such as rabies or bovine TB, there are ongoing costs associated with disease control, treatment, or prevention, some of which can potentially be avoided if appropriate biodiversity conservation strategies are adopted within a health protection programme. In the case of emerging or re-emerging pathogens, costs are not incurred unless a disease outbreak arises, and it is difficult to assess the costs of an event which has not yet happened.

However, lessons from recent history give us many indications of the potential economic value of ecosystem approaches to health in preventing new disease outbreaks. For example, although no direct connection can be drawn between the status of biodiversity and the outbreak of foot and mouth disease in 2001, the huge social and economic damages incurred as a result of that outbreak clearly indicate the level of risks associated with future outbreaks of other infectious diseases of livestock, such as the blue tongue virus. Similarly, although we know little about the role of ecosystems in the influenza pandemic of 1918-19, we know that up to 5% of the world population died, while up to 1.5 million people died worldwide as a result of the flu pandemic of 1957-58.The costs of the current ongoing spread of H5N1 HPAI through Asia and Europe, for which possible links with human alterations to natural ecosystems have already been established, have already cost the global economy over $10 billion, even though the human death toll has been low.

The values of biodiversity to the fields of medicine and drug discovery are considerable, and include the market values of specific compounds, and the positive social impacts and health outcomes that may be derived as a result of research. The disappearance of any aspect of biodiversity means the permanent loss of any benefits that may have been gained from future research. As discussed in the Health chapter, the importance of biodiversity as a living library of information and medicinal resources is growing in the current era of emerging infectious diseases and increasing problems of anti-microbial resistance. As biodiversity loss in Ireland continues, so too does the loss of potential new and significant economic resources.

It is clear that the conservation and sustainable use of services provided by healthy, biologically diverse ecosystems can contribute to population health in many ways. It is equally clear that the loss of biodiversity and disruption of ecosystems can potentially have direct and severe negative consequences for human health. Therefore, perhaps the important point to consider is not how much the potential gains from biodiversity may be worth economically, but rather the nature and scale of potential losses that can be avoided. Although data is lacking, people are clearly willing to pay considerable amounts to ensure their family’s good health. But how much would people in Ireland be willing to pay for nature conservation measures to ensure human health and well-being.

In answering that question, an economist or accountant would want to know how value could be gained in return. The lack of information on the health-related costs associated with biodiversity loss in Ireland makes this impossible to answer at the present time. Nevertheless, the value placed on maintaining public health means that any positive contribution from biodiversity is significant in economic terms.

11.3 P O L I C Y CO S T S CO M PA R E D W I T H B E N E F I T S

Market failure means that the true scarcity value of biodiversity is unpriced by the market and often over-looked by society. At a time when ecosystem services are undermined by a multitude of threats, including over-development, over-exploitation, pollution, introduction of alien non-native species, and climate change, there is an urgent need for various policy strategies that can signal the true value of biodiversity to those whose activities either depend on or impact on it. These options

include regulatory instruments such as:

- voluntary agreements,

- command and control mechanisms,

as well as economic instruments that include:

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The OECD (2004) has recommended the greater use of economic instruments to encourage biodiversity conservation. These include market-based instruments which attempt to change behaviour in a manner that accounts for true biodiversity values. Incentives supported by liability rules or the creation of property rights (for example transferable fishing quotas or development rights) are amongst the means available to achieve these ends.

The problem, as we have noted, is that attributing a value to biodiversity is very difficult. This is true even when regulatory or economic instruments seek marginal, rather than absolute, values. It can be almost impossible to identify the proportion of a marketable good’s output that is contributed by ecosystem services. Even where direct valuation methods are used to measure utility benefits, these are rarely elicited just for biodiversity and, where this has occurred, these are only baseline values based on either the expert’s, or the public’s, very incomplete understanding of ecosystem services. Consequently, all the values provided in this report represent minimal and very approximate expressions of the value of selected ecosystem services or biodiversity benefits. Some significant benefits are also omitted because there are virtually unquantifiable, waste assimilation within aquatic ecosystems.

The same is true of policy costs. Very few policies are initiated with the express intent of preserving biodiversity. One of the better exemptions is REPS.Yet, while agri-environmental policy benefits biodiversity, this is but one of several objectives which include also landscape, human health, animal welfare and the protection of farm livelihoods.

A partial comparison of the marginal benefits of ecosystem services with current policy costs

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Given the partial nature and inadequacy of the figures, we do not attempt a comparison of the benefits and costs beyond what can be discerned from the selected examples in the table above.

What is obvious is that we are spending very little on biodiversity protection compared with the benefits that we receive in return. Equally, though, we would not need so many environmental policies were resources managed in a way that respects biodiversity and ecosystem services. For example, a large part of the environment-related spending in agriculture and, increasingly in the marine sector, is actually correcting for the past poor management of biodiversity under the Common Agricultural Policy and Common Fisheries Policy respectively. Similarly, much of the current capital spending on water quality is correcting a deficit in environment infrastructure due to past under-investment or is attempting to mitigate the external costs that agricultural or planning

policies have on aquatic ecosystems. Poor resource management presents two other observations:

- Firstly, lack of biodiversity protection means that there are some economic sectors that are functioning at well-below their potential value. Fisheries are one clear example given that catches are well below what they could be if the resource was properly managed.

- Secondly, poor management of biodiversity means that we have become reliant on production methods and inputs that present significant, but often unrecognized, external social costs and which, ultimately, are unsustainable.

Given that we appear to have raised the stakes by having unleashed threats to biodiversity which are now largely beyond our control, namely the unintentional introduction of alien species and the spectre of global warming, the urgency of proper resource and biodiversity management has never been greater.

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Clinch, J. P. & Kerins, D. (2002). Assessing the Efficiency of Integrated Pollution Control Licensing, Environmental Studies Research Working Paper Series, University College Dublin.

Environmental Protection Agency (2005). Annual Report and Accounts 2005, EPA.

Hayes,T. (2006). Groundwater – Part of Ireland’s Sustainable Development.

www.igi.ie/files/IrelandsNaturalResources/Presentations/TeriHayes.pdf Heritage Council (2007). Valuing Heritage in Ireland, Report prepared for Heritage Council, Kilkenny, by Lansdowne Market Research, Keith Simpson & Associates and Optimize.

Huyskes, E.,Thornton, P. & Joyce,T. (2006),The Public and Climate Change.

Organization on Economic Cooperation and Development (2004). Recommendation of the Council on the use of Economic Instruments in Promoting the Conservation and Sustainable Use of Biodiversity, 21st April 2004.

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