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1 Author's personl copy Ecologicl Economics 71 (2011) Contents lists vilble t SciVerse ScienceDirect Ecologicl Economics journl homepge: Anlysis Vluing pollintion services to griculture Rchel Winfree,,1, Brin J. Gross b,1, Clire Kremen c Deprtment of Entomology, 93 Lipmn Dr., Rutgers University, New Brunswick, NJ 08901, USA b Food nd Resource Economics, University of British Columbi, Vncouver, Cnd, BC V6T1Z4 c Deprtment of Environmentl Science, Policy nd Mngement, University of Cliforni, Berkeley, Berkeley, CA 94720, USA rticle info bstrct Article history: Received 7 December 2007 Received in revised form 30 July 2011 Accepted 7 August 2011 Avilble online 21 September 2011 Keywords: Apis mellifer biodiversity-ecosystem function ecosystem services ntive bee pollintor vlution ecosystem service vlution wild bee Crop pollintion by niml pollintors is n importnt ecosystem service for which there is no generlly ccepted vlution method. Here, we show tht two existing vlution methods, previously thought to be unrelted, re ech specil cse of more generl eqution. We then present new method, termed ttributble net income, for vluing insect pollintion of crops. The ttributble net income method improves upon previous methods in three wys: (1) it subtrcts the cost of inputs to crop production from the vlue of pollintion, thereby not ttributing the vlue of these inputs to pollintors; (2) it vlues only the pollintion tht would be utilized by the crop plnt for fruit production, thereby not vluing pollen deposited in excess of the plnts requirements; nd (3) it cn ttribute vlue seprtely to different pollintor tx, for exmple to ntive vs. mnged pollintors. We demonstrte ll three methods using dt set on wtermelon pollintion by ntive bees nd honey bees in New Jersey nd Pennsylvni, USA. We discuss the resons why different methods produce disprte vlues, nd why the ttributble net income method most ccurtely reflects the ctul ecosystem service tht is being vlued, mrketble fruit production Elsevier B.V. All rights reserved. 1. Introduction Pollintion by nimls is n importnt ecosystem service becuse crop plnts ccounting for 35% of globl crop-bsed food production benefit from niml-medited pollintion (Klein et l., 2007). Bees (Hymenopter: Apiformes) the primry pollintors for most of the crops requiring niml pollintion (Delplne nd Myer, 2000; Free, 1993; Klein et l., 2007). In much of the world, the cornerstone of griculturl pollintion is the mnged honey bee (Apis mellifer). Honey bees, which re ntive to Europe nd Afric but not North Americ, re mintined in hives which re moved into griculturl res during crop bloom. Despite the honey bee's effectiveness s pollintor for mny crops, there re risks ssocited with relince on single, mnged pollintor species. Mnged honey bee stocks in the USA hve decresed stedily since the 1940s, nd re now t less thn hlf their originl numbers (Ellis et l., 2010). Declines since the 1990s re lrgely due to infesttion by prsitic mite, Vrro destructor (NRC, 2007). Since 2006, honey bees in the USA hve experienced further die-offs due to Colony Collpse Disorder (Cox- Foster nd VnEngelsdorp, 2009), rising further concern bout the vilbility of griculturl pollintion. Corresponding uthor. Tel.: E-mil ddresses: rwinfree@rutgers.edu (R. Winfree), brin.j.gross@gmil.com (B.J. Gross), ckremen@berkeley.edu (C. Kremen). 1 Joint first uthors. In contrst to the sole species of honey bee, there re t lest 17,000 species of ntive, wild bees worldwide (Michener, 2007). Mny of these species visit crops (Delplne nd Myer, 2000; Klein et l., 2007), nd they contribute substntilly to the pollintion of such crops s coffee Coffe spp. (e.g. (Klein et l., 2003), wtermelon Citrullus lntus (Kremen et l., 2002; Winfree et l., 2007), tomto Solnum lycopersicum (Greenlef nd Kremen, 2006), blueberry Vccinium spp. (Cne, 1997; Iscs nd Kirk, 2010), sunflower Helinthus nnuus (Greenlef nd Kremen, 2006b) nd cnol Brssic spp. (Morndin nd Winston,2005). These ntive bees provide pollintion thus directly benefiting crop production. In ddition, they complement in number of wys the service provided by honey bees: biologiclly, by enhncing the efficcy of honey bee pollintion in some cses (Greenlef nd Kremen, 2006b), nd economiclly, by insuring ginst pollintion shortges. Hving ccurte estimtes of this vlue could improve lnd use plnning by quntifying the costs nd benefits of conserving hbitt for pollintors in griculturl systems. A few studies hve ttempted to vlue wild pollintors, while much lrger literture hs ttempted to vlue honey bee pollintion. For the most prt, these vlutions hve focused on the benefits to producers, clculted s either 1) the cost of lterntive pollintion sources (Allsopp et l, 2008), or 2) the vlue of production resulting from bee pollintion (Losey nd Vughn, 2006). The first pproch estimting the cost of using n lterntive technology or orgnism to chieve the sme function is commonly known s the replcement vlue method. The ide is the sme s /$ see front mtter 2011 Elsevier B.V. All rights reserved. doi: /j.ecolecon

2 Author's personl copy R. Winfree et l. / Ecologicl Economics 71 (2011) vlution vi input or fctor substitution (Point, 1994). In the cse of ntive pollintors, this typiclly involves mesuring the mount of mnged pollintors (usully honey bees) needed to replce the service (de Grootetl.,2002). In the cse of honey bees, this involves mesuring the cost of chieving pollintion through either nother mnged pollintor, hnd pollintion, or pollen dusting (Allsopp et l., 2008). A second nd more widely used pproch focuses on the vlue of crop production ttributble to pollintion. Production, or yield, is ssumed to fll when pollintors decline. The yield reduction is pproximted using studies of the dependency of fruit set on the presence of insect pollintors (Klein et l, 2007). The expected frctionl yield loss in the bsence of pollintors is then multiplied by the mrket vlue of production (Morse nd Clderone, 2000; Robinson et l, 1989). Studies interested in breking down the service between honey bees nd ntive bees hve estimted the proportion of pollen deposited by respective tx in crop fields nd then used this to pproprite the vlue between the different pollintors (Allsopp et l., 2008; Losey nd Vughn, 2006). With one notble exception, Olschewski et l. (2006), these studies do not tke ccount of production costs nd will be collectively referred to s production vlue pproches. The replcement vlue nd production vlue pproches produce widely divergent results, nd furthermore grner criticism on theoreticl grounds. Allsopp et l. (2008) estimte the vlue of mnged honey bees nd ll unmnged pollintors using both pproches; the resulting vlues clculted for wild pollintors differ by nerly fctor of This lone is evidence tht methodology deserves further ttention. But there re conceptul criticisms tht dditionlly cll into question the vlidity of production vlue pproches. Muth nd Thurmn (1995) rise two concerns in regrds to the production vlue pproch: (1) it ignores the possibility for djustments on the prt of the frmer tht could bte the production losses nd (2) tht it fils to distinguish between the verge contribution [of pollintors] nd the mrginl contribution (Muth nd Thurmn, 1995). These two concerns, coupled with the empiricl inconsistency, rgue for n improvement to one or both of the methods. In this pper, we first unify the replcement vlue nd production vlue pproches conceptully by demonstrting tht ech is specil cse derived from the sme generl eqution. Next, we ddress the problemtic issues rised bove through modifiction of the production vlue pproch. The choice to focus ttention on the production vlue method is supported by three considertions: it is the most common method employed, the clcultions re simple, nd it is reltively esy to cquire the necessry dt. We illustrte this improved pproch, which we term the ttributble net income method, using dt set on wtermelon Citrullus lntus pollintion by ntive bees nd honey bees, nd compre the resulting vlues to those obtined by using the two trditionl methods. By ntive bees, we men the ntive, unmnged bees. Our definition of honey bees includes both mnged nd ferl Apis mellifer s it is not possible to seprte the two in most dt sets. 2. Field Study of Wtermelon - Mterils nd Methods The mterils nd methods for the field study of wtermelon re briefly summrized here nd re reported t length elsewhere (Winfree et l., 2007, 2008) Study System The field study ws conducted in 2005 t 23 wtermelon frms locted in centrl New Jersey nd est-centrl Pennsylvni, USA. The 2 The uthors clculte the vlue of wild pollintors using the production vlue ( proportionl dependence ) s $215.9 million. Although not specifying the vlue s such, they lso clculte the cost of replcing wild pollintion with honey bees s $2.6 million (Allsopp et l, 2008). study plnt, wtermelon, requires insect pollen vectors to produce fruit becuse it hs seprte mle nd femle flowers on the sme plnt (Delplne nd Myer, 2000). An individul flower is ctive for only one dy, opening t dybrek nd closing by erly fternoon. In order to be fully pollinted nd set mrketble fruit, femle flower needs to receive t lest 1400 pollen grins, nd fruit production symptotes when 50% of flowers re fully pollinted (Stnghellini et l., 1997; Stnghellini et l., 1998; Stnghellini et l., 2002; Winfree et l., 2007). Knowledge of these vlues nd in prticulr the rte of fruit bortion gives greter confidence in our economic estimtes which could otherwise be confounded by the reltionship between pollintion nd fruit production (Bos et l., 2007). Sixty-five percent of the frmers in the study either own or rent hived honey bees for crop pollintion purposes. Most honey bees recorded in the study were probbly mnged bees, becuse ferl honey bees hve been rre in the study region since in the 1990s due to mites nd other problems (Stnghellini nd Rybold, 2004), lthough they my be rebounding in recent yers (Seeley, 2006). Becuse it is not possible to seprte mnged nd ferl bees in the field our estimtes of honey bee pollintion combine the two. Thus our results will over-estimte the vlue of pollintion from mnged honey bees lone Mesuring Flower Visittion Rtes nd Pollen Deposition Wevisitedechfrmontwodifferentdysndmesuredbeevisittion rte to wtermelon flowers in units of bee visits flower -1 time -1. Visits were recorded seprtely for honey bees nd vrious types of ntive bees. Per-visit pollen deposition ws mesured by bgging unopened femle flowers with pollintor-exclusion mesh, nd then offering virgin flowers to individul bees forging on wtermelon. After bee visited flower, the pollinted stigm ws prepred s microscope slide so tht the number of wtermelon pollen grins could be counted with compound microscope (Kremen et l., 2002). Control flowers were left bgged until the end of the field dy, nd contined few pollen grins (men=3 grins, N=40 stigms). In the field study of wtermelon, we observed totl of 6187 bee visits (2359 by honey bees nd 3828 by ntive bees) nd collected 271 counts of per-visit pollen deposition Simultion Methods In order to estimte the contributions of honey bees nd ntive bees seprtely, we developed Monte Crlo simultion (Mtlb R2006, The MthWorks, Inc., 2006) of the pollintion process. The simultion estimtes totl pollen deposition by ech bee txon by multiplying the dily number of visits to wtermelon flower by the number of grins deposited per visit, using distributions bsed on the field dt for both vribles (Winfree et l., 2007). The estimte is mde seprtely for ech of the 23 frms, nd mens nd stndrd errors (SE) re clculted cross frms. Progrm output is the frequency distribution cross flowers for the number of pollen grins deposited on flower over its lifetime by () ll ntive bees combined, nd (b) honey bees. Further detils of the simultion methods re reported t length elsewhere (Winfree et l., 2007). Simultion results indicted tht cross the study system s whole, ntive bees provide 62% ( 5% SE) of the pollen deposited on femle wtermelon flowers, nd honey bees provide 38% ( 5% SE) (Winfree et l., 2007). These vlues re used for the prmeters ρ nb nd ρ hb in our economic clcultions, below. We lso clculted the frction of flowers t ech frm tht were fully pollinted by either ntive bees lone or honey bees lone by compring the mount of pollen deposited on flowers t given frm to the pollintion requirements of the plnt. The men of these vlues tken cross frms is used below for the prmeters F nb for ntive bees, nd F hb for honey bees. Lstly, we clculted the frction of frms where the crop is fully pollinted by ntive bees (91% ± 6% SE) nd honey

3 Author's personl copy π = P YðqÞ CðYq ð Þ; qþ ð1þ where P is crop price, Y is the ggregte yield of the ffected region, which is function of the mount of pollintion service, q, to the region, nd C(Y(q), q) is the totl cost of production, which is function of both ggregte yield nd pollintion service to the region. We ssume here tht price (P) is fixed in ccordnce with the ssumption tht the region's yield is smll reltive to the mrket supply. The vlue of certin mount of insect pollintion () cn then be depicted by using the chin rule to consider the first order chnges to net income were this mount of service to be eliminted: Δπ = P ΔY C ΔY Y C q ð2þ 82 R. Winfree et l. / Ecologicl Economics 71 (2011) bees (78% ± 9% SE). These lst vlues re used in the replcement where ΔY is the chnge in yield, if ny, resulting from the chnge vlution method below. in pollintion, C Y is the mrginl cost of production the extr cost for producing one more (or less) unit of yield, nd C q is mrginl cost 3. Economic Vlution of Pollintion: Theory nd Methods djustment, such s the cost of renting more bees to compenste for lost pollintion, if ny, for the chnge in pollintion,. The gol of vlution studies of pollintion services is to understnd the vlue tht would be lost following the loss of certin polli- From Eq. (2) it cn be seen tht the vlue of pollintion to production is composed of three components: revenue effects from yield chnges, ntors (for exmple, ntive wild pollintors, or ll pollintors) to cost djustments to yield, nd cost djustments to pollintion service. specified re (for exmple, regionlly, ntionlly, or globlly). For For loss in pollintion (b0), the vlue lost to producers is equl to wnt of logisticlly- nd ethiclly- pproprite controlled experiment, the loss of pollintors is posed s hypotheticl experiment. the revenue lost from reduced yield, less the cost svings from reduced yield, plus the dditionl costs to substitute the lost pollintors. A loss of pollintors could ffect production of pollintordependent crop by reducing yield nd/or by incresing the growers There re circumstnces in which one or more of the three components will be negligible. In prticulr there re two importnt cses to costs. When pollintors re lost, fruit set might decline nd s consequence overll yield flls. This is the most intuitive economic conse- consider, which interestingly correspond with the two most prominent vlution methodologies. The first cse occurs when pollintor quence. But growers cn lso djust inputs to compenste for the loss, loss is perfectly substituted nd thus no yield is lost. In this cse, the thus mitigting or eliminting yield losses, while incresing costs first two components of Eq. (2) drop out nd wht's left is C q, the insted. cost of the substitution. This is precisely wht replcement cost studies estimte. When yield does not remin constnt, then replcement These two effects both impct producer profits negtively, nd dequtely describe the vlue lost from loss in pollintors on reltively smll scle. However if the pollintion loss results in yield cost mesures re not fully cpturing the djustments to production (McConnell nd Bockstel, 2005). In ddition, yield my fll despite reductions on lrge enough scle, then the mrket price of the substitution, or substitution my not occur if replcing the service is crop my increse. This third, indirect effect positively impcts too costly. For instnce, mesures of replcement cost tht exceed growers both within nd outside of the ffected region. It lso negtively impcts consumers t lrge scle. the totl production vlue, s Allsopp et l. (2008) find, would never be pursued s frmers would rther lose the entire crop. Substitution is key component; however it typiclly cnnot be decoupled To understnd the vlue of pollintion, we thus wnt to know the ggregte economic effect of chnge in the pollintion service on from yield effects. these three stkeholders: producers of the crop in the ffected region, The second cse would be one in which the frmer does not compenste in ny wy for the loss in pollintors. If the frmer is ble to producers of the crop outside this region, nd consumers of the crop. When the mrket price is unffected by the hypotheticl chnge in neither employ substitutive pollintion, nor reduce input costs in pollintion, then the vlue computtion would involve only the first the fce of yield losses for exmple in the cse of sudden, unnticipted loss of pollintors fter ll costs hve lredy been outlid group: ssessing the impct on production. But, computing the vlue of pollintion on lrge scle, such s for n entire industry then or globlly, involves ssessing not only the impct on production the ltter two terms of Eq. (2) would be dropped, leving simply but lso the economic consequences of mrket djustments resulting P ΔY, the lost revenue. This is exctly the clcultion tht production vlue pproches use. However, if there is ny cpcity to d- from this impct. For this reson, lrge scle nlysis is nlyticlly distinct nd considerbly more complex thn nlysis on smll just to the expected loss in pollintion by reducing input costs, then scle. In this study, the (hypotheticlly) ffected region, New Jersey the production vlue pproch will over-estimte the vlue of pollintion becuse it ignores cost djustments. nd Pennsylvni, produces less thn 2% of the domestic mrket supply of wtermelon, so we cn resonbly rule out price effects in our nlysis. We therefore focus on yield nd cost effects only. We invite 3.2. Improving the Production Vlue Method interested reders to see Appendix A for discussion of vlution t lrge scles, which includes price effects. The production vlue method estimtes the vlue of pollintion under this ltter ssumption of no substitutive pollintion nd complete revenue loss. To estimte the chnge in yield the production 3.1. A Conceptul Frmework for Pollintion Vlue vlue pproch uses the crop's dependency on insect pollintion, Consider the production of pollintor-dependent crop in region tht currently hs certin level of pollintion service input, when insect pollintors re bsent (Klein et l, 2007). D is mesured D, which represents the frctionl reduction in fruit set tht occurs denoted by q. Following McConnell nd Bockstel (2005), we consider griculturl profit, π, s the net vlue to production, or revenue exclusion nd f p = fruit set with insect pollintors present. Then s 1 ( f pe /f p ), where f pe = fruit set under conditions of pollintor minus cost: ΔY, the expected reduction of yield for ρ% reductioninin- sect pollintors, is pproximted s Y D ρ. Substituting this expression in for the lost revenue results in the common eqution used in production vlue pproches (Allsopp et l., 2008; Glli et l., 2009; Kremen et l., 2007; Losey nd Vughn, 2006; Morse nd Clderone, 2000; Robinson et l., 1989): V Δpollintion = P Y D ρ The vlue of ll pollintion is clculted by replcing ρ with 1. The vlue of pollintion contributed by prticulr tx, for exmple, the vlue of ll pollintion from ntive bees, or from honey bees, is clculted by replcing ρ with ρ nb or ρ hb, which represents the frction of ll pollen grins tht re deposited by ntive bees or honey bees, ð3þ

4 Author's personl copy R. Winfree et l. / Ecologicl Economics 71 (2011) respectively. When pollintion dt re not vilble, ρ nb or ρ hb cn be estimted s the frction of ll flower visits provided by ech group, which should provide resonble proxy in most cses (Vzquez et l, 2005). A problem we hve noticed in the published literture is tht the clcultion of Eq. (3), is commonly pplied in contexts other thn the specil cse for which it is pproprite. First, the clcultion is often employed for ntion-wide or globl nlysis (e.g. Glli et l., 2009; Losey nd Vughn, 2006; Morse nd Clderone, 2000; Robinson et l., 1989), in which cse the ssumption tht prices re unffected is not vlid. Secondly, most studies re interested in vluing the pollintion service in nnul terms. Under these circumstnces, the ssumption tht producers could not djust their input mix to ccommodte the reduced pollintion every yer is flwed, nd leds to inflted vlues for pollintion services (Muth nd Thurmn, 1995). We discuss these issues t greter length in the Discussion nd Appendix A. The production vlue pproch cn be mended esily by considering chnges to costs. Cost djustments to yield cn be estimted using estimtes of yield chnge nd the mrginl cost of production. When mesures for mrginl costs cn't be found, they cn be pproximted using verge vrible costs. Vrible costs, which re defined s the expenses tht vry ccording to output, will fll by pproximtely the sme proportion tht quntity declines, D. Using VC to denote totl current vrible costs, the ssumption cn be expressed s ΔC(Y, q) VC ΔY/Y VC D. This pproximtion will generlly over-estimte the cost djustment to yield (McConnell nd Bockstel, 2005), since some vrible costs my not be reduced in proportion to D for exmple, if the frmer is not wre of pollintion filure until fter some costs hve been incurred. We cn now use simple clcultion to represent the vlue depicted in Eq. (2): V Δpollintion ðp Y VCÞ D ρ ð4þ where VC gin denotes the totl vrible cost, nd other terms re defined in Eqs. 1 nd 3. We term this pproch the net income method following Point (1994). We note tht Olschewski et l. (2006) used similr pproch by reporting chnges in net revenue. The only distinction between their method nd ours is tht we include only vrible costs in VC, on the ssumption tht only vrible costs will be recouped should pollintion fil, wheres Olschewski et l. used totl costs. The second issue tht our new vlution method ddresses is the clcultion of expected yield reductions, nd the importnce of ccurtely relting pollen deposition to the expected yield. Most plnts hve threshold number of pollen grins tht re required to set the mximum-sized fruit; this is referred to s the plnt's pollintion threshold. Additionl pollen deposited beyond this threshold will not increse yield. Pollintion thresholds cn be exceeded in griculturl, s well s nturl, settings. For exmple, in our field study, pollen deposition exceeded the threshold for wtermelon fruit set t ll frms (see Fig. B.1). In the context of over-pollintion, the question rises s to which pollintors re residul tht is, superfluous. The nswer to this question need not be the sme in ll contexts. In mny cses frmers rent honey bees for their crops, choice tht cn be revoked, wheres ntive pollintors re provided by the mbient ecosystem. This implies tht honey bee pollintion is more esily removed nd thus deemed superfluous. Counterexmples exist, such s when honey bees re ferl (supplied by the mbient ecosystem) or come from hives belonging to someone else, the frmer hs no control over them. And in some situtions, frmers cn ffect ntive bee popultions by modifying hbitt on the frm. In this cse, the hbitt mngement decision could be revoked, nd ntive bee pollintion considered superfluous. We present the results in both wys to cover ll cses Attributble Net Income Method We derived the prmeter vlues for our study re s follows. We estimted the nnul dollr vlue of wtermelon production in New Jersey nd Pennsylvni combined (P Y) using the totl h in wtermelon production 3, wtermelon production in kg per h 4, nd price per kg 4. For wtermelon D=1 becuse f pe =0(Stnghellini et l., 1998); tht is, wtermelon doesn't produce ny fruit under conditions of pollintor exclusion nd thus its dependency on pollintors is 100%. We used the output of the simultion to clculte the frction of ll pollen deposition ttributble to ntive bees (ρ nb ), long with its SE. The vlue for honey bee pollintion (ρ hb ) ws estimted similrly. In second step, we subtrct the costs of vrible inputs to production from the totl production vlue. In plce of P Y, the totl production vlue, we now use (P Y VC), where VC is the summed cost of ll known vrible inputs to production. Crop production budgets provided by extension progrms re good source for verge costs per unit yield nd this is wht we used for our clcultions 5. As n intermedite step, we compre these results, which we term net income, to the other methods. We then modify the eqution to relte the pollintion delivered to the pollintion needs of the crop, nd to prtition the resulting vlue mong vrious tx of pollintors. First, rther thn ttributing vlue to ntive bees ccording to the frction of totl pollen tht they deposit (ρ nb ), the ttributble net income method vlues only the pollen tht is needed for fruit production. In other words, it does not vlue pollen delivered in excess of the pollintion requirements of the plnt. In this wy it directly ties the ecosystem service (pollen deposition by ntive bees) to the production of vlue to people (mrketble wtermelon fruits). Second, the ttributble net income method ccounts for the presence of other pollintor tx by optionlly considering given txon s either the primry pollintor in the system (i.e., ll of the pollintion it provides up to the plnt's pollintion threshold is vlued) or residul (i.e., the pollintion it provides is only vlued if the pollintion lredy provided by other pollintor tx is insufficient). We demonstrte the ttributble net income method by considering ntive bee pollintion first, nd vluing honey bee pollintion only in ddition to ntive bee pollintion. However, the lternte order (honey bee pollintion vlued first, ntive bee pollintion second) cn lso be done nd those numbers re lso presented in the Results. Eq. (5) vlues ntive bee pollintion bsed on the extent to which ntive bees lone fully pollinte the crop. There re two components to full pollintion: t the flower scle, flower must receive certin mount of pollen deposited in order to set mrketble fruit; nd t the field scle, fruit set will symptote s the percentge of flowers tht re fully pollinted pproches sturtion point. In the cse of wtermelon, flower must receive 1400 conspecific pollen grins in order to set mrketble wtermelon fruit, nd fruit set symptotes t the field scle when round 50% of flowers re fully pollinted (see Methods 2.1). These two components cn be incorported into the vlue function: V nb = ðp Y VCÞ D min 1 α F nb; 1 3 Bsed on dt recorded by griculturl extension gents in ech stte: for New Jersey, by M. Henninger of Rutgers University, nd for Pennsylvni, by M. Orzolek of Pennsylvni Stte University (Henninger nd Orzolek, pers. com.). 4 USDA-NASS Vlues from 2009 for the neighboring stte of Delwre were used becuse USDA-NASS does not record wtermelon production sttistics for New Jersey or Pennsylvni. 5 Source for wtermelon production cost budget: University of Delwre Coopertive Extension Vegetble Crop Budgets , vilble online t extension/vegprogrm/publictions.htm. ð5þ

5 Author's personl copy 84 R. Winfree et l. / Ecologicl Economics 71 (2011) Where VC=the summed costs of the producers vrible inputs to wtermelon production, α = the symptotic fruit set proportion t the field scle, i.e. the mximl proportion of flowers tht cn produce fruit, F nb = the frction of flowers tht re fully pollinted by ntive bees, i.e., tht receive 1400 pollen grins from ntive bees, 6 nd the other prmeters re s in Eq. (3). Honey bee pollintion is vlued bsed on the dditionl pollintion honey bees contribute, bove the mount contributed by ntive bees but only up to the pollintion threshold: V hb = ðp Y VCÞ D min 1 α F hb ; 1 min 1 α F nb ; 1 Where F hb = the frction of flowers tht re fully pollinted by honey bees nd the other prmeters re s in Eqs. (3) nd (5). As in Eq. (5), the fctor of 1 α ssocited with the F hb nd F nb terms ccounts for the fct tht fruit production symptotes when 50% of flowers re fully pollinted. All vlutions reported in this pper were done using 2009 US dollrs. In ll of our estimtes we were only ble to propgte error through the prmeters obtined from our own work (ρ nb, ρ hb, F nb, F hb ;from Winfree et l, 2007). The prmeters obtined from other sources did not include the informtion necessry to propgte error. Therefore, the stndrd errors (SE) reported in the Results re under-estimtes of the true SE Replcement Vlue Method A replcement vlue for ntive bee pollintion is wht it would cost frmers to rent enough honey bees to replce the pollintion currently provided by ntive bees. We clculted this vlue by multiplying the re in wtermelon production (746 h) 2 by the industry-wide recommended honey bee stocking rte ( 4.5 hives h -1 ; Delplne nd Myer, 2000) by the nnul rentl cost of honey bee hive in the study re ($60-$75 hive -1 ) 7 by the frction of frms t which ntive bees lone re fully pollinting the crop (91%). We used the sme method to estimte the replcement vlue of honey bee pollintion, substituting the frction of frms fully pollinted by honey bees (78%) for the frction fully pollinted by ntive bees (91%). This replcement vlue represents wht it would cost to replce the pollintion services currently provided by honey bees with equivlent services provided by new honey bees. Our clcultion of the replcement vlue differs from wht hs been used by other workers, who hve not included informtion bout how much pollintion bees re currently providing (our coefficients of 0.91 nd 0.78 bove). For this reson, these previous estimtes re too high. Previous estimtes vlue wht it would cost to provide complete pollintion by honey bees, not wht it would cost to replce the pollintion provided by ntive bees. 4. Results The vlue of ntive bee pollintion bsed on the replcement vlue of renting enough honey bee hives to replce ntive bees is $0.21 million yer -1 (rnge, $ $0.21 million yer -1 ) nd the replcement vlue of honey bee pollintion is $0.18 million yer -1 (rnge, $ $0.18 million yer -1 ); (Fig. B.2). The results re presented s rnges becuse one of the input vribles, the cost of hive rentl, is only vilble s rnge. 6 As for ρ nb, vlues of F nb come from the dt nd simultion presented in Winfree et l., Rnge of rentl costs for pollinting cucurbit crops in our study region; Tim Schuler, Stte Apirist for New Jersey, pers. com. Prices vry by beekeeper nd ccording to the number of hives rented, but no further informtion tht would llow vrince to be clculted is vilble. ð6þ The production vlue method provides higher estimte. The estimted nnul production vlue of wtermelon in New Jersey nd Pennsylvni combined (P Y), before subtrcting the costs of inputs to production, is $7.64 million yer -1. Multiplying this production vlue by the 62%±5% (SE) of ll pollen deposition done by ntive bees provides n nnul vlue of $4.74±0.38 (SE) million for the pollintion service provided by ntive bees. For honey bees, the corresponding vlue is $2.90±0.38 (SE) million yer -1 (Fig. B.2). After subtrcting the costs of vrible inputs to production, the estimted nnul net income vlue (Eq. (4)) of wtermelon in New Jersey nd Pennsylvni combined is $3.63 million yer -1, leding to estimtes of $ (SE) million for the pollintion services provided by ntive bees nd $ (SE) million yer -1 for honey bees (Fig. B.2). The nnul ttributble net income vlue of ntive bee pollintion, when ntive bees re considered primry pollintors (Eq. (5)), is $3.40±0.16 (SE) million yer -1. The vlue of honey bee pollintion, when honey bee pollintion is vlued residully (Eq. (6)), is $0.24± 0.16 (SE) million yer -1 (Fig. B.2). When honey bee pollintion is vlued s primry (Eq. (5)), its vlue is $3.07±0.25 (SE) million yer -1. When ntive bee pollintion is vlued residully (Eq. (6)), its vlue is $0.56±0.25 (SE) million yer -1 (Fig.B. 2). 5. Discussion nd Conclusions There is gret need for better understnding of ecosystem services in terms of both their ecology (Kremen nd Ostfeld, 2005) nd their economic vlue (Dily et l., 2000; Turner et l., 2003). There re mny methods for vluing ecosystem services nd ech hs its limittions (Hel, 2000; Turner et l., 2003). Our gol here is to mke these vlution methods more consistent nd their ssumptions more explicit, using pollintion s model ecosystem service. We first demonstrte tht the two min vlution methods currently in use, the replcement vlue nd the production vlue methods, re specil cses of the sme generl eqution (Eq. (2)). We then use single dt set to compre the estimtes of producer-side pollintion service vlue obtined with these two widely-used methods, s well s with third vlution method tht we develop here nd cll the ttributble net income method. The ttributble net income method modifies the production vlue to subtrct the costs of inputs to production, thereby reducing the extent to which this method overestimtes pollintion vlue. It lso ccounts for the pollintion requirements of the plnt, nd the pollintion lredy provided by other pollintor tx, thereby better relting the mesured service (pollintion) to the mrketble good (fruit production). The ttributble net income method produces vlutions tht re intermedite between those obtined with the replcement vlue nd the production vlue pproches. We further discuss the strengths nd limittions of these methods, nd the reltionships mong them, below. The replcement vlue method ssumes tht production does not chnge when pollintors re lost, nd vlues the cost of obtining replcement pollintion services. For ntive bee pollintion this replcement is bsed on the cost of renting honey bees, since for most crops the given level of pollintion from ntive bees could be obtined equivlently from honey bees. We mesured this vlue using current honey bee rentl costs nd obtin reltively smll vlue (Fig. B.2). However, this method ssumes tht honey bees re indefinitely vilble s replcement for ntive pollintors, wheres n importnt component of the vlue of ntive bees is their bility to compenste, in prt, for the potentil loss of the honey bee. Current chllenges to honey bee helth such s Colony Collpse Disorder (VnEngelsdorp et l., 2009) mke the ssumption of indefinite honey bee vilbility questionble. Furthermore, the replcement vlue method excludes potentil future price increses in honey bee rentl costs, which seem likely given continued honey bee helth problems. For exmple, the cost of renting single honey bee colony for lmond pollintion incresed from $35 in the erly 1990s to $150

6 Author's personl copy R. Winfree et l. / Ecologicl Economics 71 (2011) in 2007 (Johnson, 2007). The sme conceptul problems pply when this method is used to clculte the replcement cost for honey bees, i.e., the cost of replcing the existing honey bees with new honey bees. An lterntive wy to use the replcement vlue method, which does not ssume the vilbility of honey bees, would be to clculte the cost of replcement for both ntive bees nd honey bees, such s hnd-pollintion by people (Allsopp et l., 2008). This pproch produces much higher vlutions (Allsopp et l., 2008) but is only possible for the smll number of crops tht hve been pollinted by other mens other thn bees. No cost estimtes for non-bee pollintion of wtermelon re vilble. The production vlue method mkes the opposite ssumption from the replcement vlue method: it ssumes tht no replcement for the lost pollintors is possible, nd vlues pollintion services s the loss in production tht would occur subsequent to pollintor loss. This widely-used method (Allsopp et l., 2008; Glli et l., 2009; Losey nd Vughn, 2006; Morse nd Clderone, 2000; Robinson et l., 1989), essentilly clcultes the proportion of the totl vlue of the crop tht depends on pollintors. There re severl problems with the production vlue method which my led it to its overestimting the producer welfre vlue of pollintion. The ttributble net income method corrects most of these problems. First, the production vlue method ignores the possible reduction of other inputs to production tht would ensue from significnt loss in production cpbility (McConnell nd Bockstel, 2005). For exmple, if pollintion filed then frmers would not invest further in inputs tht vry with yield, such s hrvest costs. The production vlue method disregrds these cost svings, thereby over-estimting the vlue of pollintion. This problem cn be meliorted by subtrcting the costs of vrible inputs production from the vlue of production, s we do in our net income method. In our cse this reduces the vlue of pollintion services by 52% (Fig. B.2), nd suggests tht mny of the previous estimtes of pollintion vlue hve been too high. Absent the distinction of fixed nd vrible costs, the subtrction of totl costs s done by Olschewski et l. (2006) would still be preferble, thereby ttributing the net, not the gross, vlue of crop production to pollintion. A second problem with the production vlue method is tht the method ssumes ll the pollen deposited is necessry for fruit set, wheres in relity plnts my be getting more pollintion thn they need (Muth nd Thurmn, 1995). The ttributble net income method solves this problem by vluing only the pollintion tht is likely to be utilized in fruit production, i.e., the pollen delivered up to the threshold pollintion requirements of the plnt. The ttributble net income method lso llows for vluing given pollintor txon either independent of, or in ddition to, nother txon. In systems such s ours where most frms re over-pollinted, the decision bout whether to consider pollintor txon s primry or residul cn led to 6 13 fold difference in its ecosystem service vlue (Fig. B.2). This highlights the importnce of specifying the gol of the vlution - decision tht must be mde by stkeholders or users. A third problem with the production vlue method is tht it does not ccount for opportunity costs in this cse chnges growers could mke if pollintion becme more costly, such s switching to less pollintiondependent crops (Muth nd Thurmn, 1995; Southwick nd Southwick, 1992). These re long-term considertions, however. Both the production vlue nd the ttributble net income methods re best interpreted s estimtes of vlues over the short-term. A fourth problem with the production vlue method is tht it ssumes the mrket price of the output crop is fixed, nd would not djust to the resulting loss in yield. If the re in question is significnt sy, t ntionl scle or even for lrge region the resulting (hypotheticl) loss in yield would surely ffect the mrket price nd men the clcultion is not ccounting for the consequentil effects. It is problemtic then tht this method hs been used in contexts where its ssumptions re violted. While the ttributble net income method presented in the text suffers from the sme limittion, we present in Appendix A generlized ttributble net income method nd frmework for clculting the vlue of pollintion in these lrger contexts. In this pper we hve shown tht the two commonly used methods for vluing pollintion services to griculture, the replcement vlue method nd the production vlue method, re specil cses of the sme generl eqution. This eqution hs implicit sptio-temporl ssumptions which we clrify here s they hve t times been violted in the published literture. We introduce new method, Attributble Net Income, which overcomes some of the limittions of existing methods. In so doing, it brings the vlution of the regulting service of pollintion into better lignment with the provisioning service tht provides the finl utility to people: crop production. We hope tht this work moves the science of ecosystem service vlution one step closer to the level of ccountbility required for use in the policy ren. Acknowledgements We thnk the frmers nd reserch ssistnts who prticipted in the wtermelon field study; Nel M. Willims for ssistnce with the field study of wtermelon pollintion nd for comments on the mnuscript; nd Dvid Zilbermn nd Kenneth Mulder for their insights bout developing the ttributble net income method of vlution. Funding for the wtermelon field work nd/or support for RW ws provided by the Ntionl Fish nd Wildlife Foundtion nd NSF collbortive grnt #DEB / #DEB (PIs CK nd Nel M. Willims, Co-PI RW). BJG ws supported by funding from McDonnell Foundtion 21st Century Awrd (PI CK), the Chncellor's Prtnership Fund (PIs CK nd D. Zilbermn), n NRCS Cliforni Conservtion Innovtion Grnt (PIs CK nd S. Hoffmn-Blck), nd Genome British Columbi (PI L. Foster). Appendix A. Generlizing the Frmework to Lrger Scles In Section 3.1, we discussed vluing loss in pollintion when the scle of the loss ws smll enough to not ffect the mrket price of the crop. One of the shortcomings of this frmework is tht it is not pplicble for vlutions on the globl, ntionl or even regionl scles if the output of the re in question represents sizble portion of the mrket. In this Appendix, we generlize the model to llow for price effects, nd thus provide more brodly pplicble frmework. Our objective here is to rticulte the necessry components for this more comprehensive nlysis. The lyout is s follows: we first depict the totl welfre t stke when it comes to loss in pollintion, we then relte the pproches of existing studies within this frmework, nd end by simplifying the clcultion of ech component to mximlly tke dvntge of existing dt. The pproch of this frmework is, s in the min text, first order pproximtion: linerized prediction of outcomes bsed on smll chnges from the current sitution. A loss of bees is ssumed to occur for specified re, nd directly impct the production of pollintor-dependent crop in this re, which we now denote by. If both the effect on yield nd the re's totl production reltive to the mrket re significnt, then the mrket price of the crop my djust nd consequently ffect two dditionl stkeholders prt from the producers in the re: consumers of the output crop, s well s producers of the crop in other res, the ltter of which will be denoted by. The totl socil welfre then is the sum of net benefits ccruing to the producers of the crop in the re, to producers of the crop outside the re, nd to consumers of the crop: SW = π + π + CS ða:1þ where π is net income (or profit) of producers in the ffected re, π represents the net income to producers in the rest of the mrket, nd CS represents the consumer surplus the vlue to consumers for the output crop.

7 Author's personl copy 86 R. Winfree et l. / Ecologicl Economics 71 (2011) We now define ech of the three terms in Eq. (A.1). The producer profit of the ffected re is very similr to tht lid out in Section 3.1, with one importnt exception: π = PY + Y Y CY ð ; q Þ ða:2þ Here, unlike in Eq. (1), the price, P, is now recognized to be function of the totl mrket production, which is the sum of tht produced within the re (Y ) with tht from the rest of the mrket (Y ). But prt from the substitution of P, the eqution is otherwise the sme s before (now with subscripts ). In similr fshion, the producer profit of the entire mrket, less the ffected re, is defined s π = PY + Y Y C Y ; q ða:3þ For simplicity, we ssume the sme cost structure, C(Y,q), for both the ffected re nd out-of-re producers. The vlue of the crop to consumers is defined s the consumer surplus nd is represented by the re bove the price nd under the demnd curve for the crop: CSðPÞ = P QðpÞdp P ða:4þ where Q(p) is mrket demnd t price p, nd P is the threshold price bove which there is no demnd. The loss of insect pollintion to the re ( ) cn then be vlued by considering first order chnges, employing prodigious use of the chin rule, to totl socil welfre (Eq.(A.1)) were this mount of service to be eliminted: V Δpollintion = Δπ + Δπ + ΔCS = ΔY Y ΔY + P ΔY C ΔY Y C q + ΔY Y ΔY + Y + Y ΔY ΔY ða:5þ where ΔY is the chnge in the re's yield, if ny, resulting from the chnge in pollintion, is the chnge in crop price, if ny, ΔY resulting from the chnge in yield, nd s before C Y is the mrginl cost of production the extr cost for producing one more (or less) unit of yield, nd C q is cost djustment, if ny, for the chnge in pollintion,. Eq. (A.5) is cumbersome, but not overly complex once it is broken down nd simplified. The first line is very similr to Eq. (2), with n dditionl term for the chnge in price,. This ΔY line represents the vlue to the re's producers. The second line represents the spillover effects of the re's productivity to producers outside the re. And the lst line represents the chnge in Consumer Surplus. Eq. (A.5) cn be verblly interpreted s follows. A loss in pollintion potentilly ffects the welfre of three groups: ffected re's producers (the first line of Eq. A.5), out-of-re producers (the second line), nd consumers of the crop (the lst line). If the crop price rises, consumer welfre unmbiguously declines, out-of-re producers unmbiguously gin with higher prices, while ffected producers could lose or gin depending on the mgnitude of the price effect. The economic effect on producers in the re is equl to the revenue gin from incresed price, less the revenue lost from reduced yield, plus the cost svings from reduced yield, less the dditionl costs to substitute the lost pollintors. While in most cses we would expect producers to lose when environmentl service is stripped wy, the potentil for price increses to negte this loss is importnt nd must not be disregrded. As will be discussed below, existing studies hve estimted mesures of impcts on one of these three groups, but wht Eq. (A.5) demonstrtes is tht the pproprite vlution should unite producer nd consumer welfre in single vlue clcultion. As discussed in Section 3.1, there re certin circumstnces in which one or more of the terms will be negligible. In tht section we presented two importnt cses which correspond with the two most common methodologies employed. In the first cse, yield losses re verted through input substitution leving just C q (the replcement cost), which is still the cse under this frmework. The second cse ws sudden, short run loss precluding ny possible cost djustments. From Eq. (2), this resulted in P ΔY (the production vlue pproch). The more complete frmework presented here revels the limittions of tht pproch. First, we see tht ignoring the chnge in price mens tht production vlue clcultions overestimte the vlue to the re's producers (who cn benefit from price increses), while ignoring entirely the possible spillover benefits to other producers (who benefit from those sme increses while not sustining yield losses). Second, the production vlue pproch clcultion ignores the loss to consumers, which is n importnt component of the vlue of pollintors, nd provides no guidnce s to how tht loss compres with the vlue clculted for producers. Focusing on tht consumer welfre component, third cse is worth considering. This cse corresponds with nother common methodology, consumer surplus pproches. As it hs been frmed in existing studies, this nlysis focuses on the so-clled long run (Southwick nd Southwick, 1992). The long run ssumption is tht crop choice is not fixed nd entry is free so supply is highly elstic. Even slight chnges in price drive lrge chnges in supply: n increse in price drives supply up s more lnd is enrolled into production, nd the converse is true for price decreses. The net result is tht price chnges very little s incresed or decresed production moves the price bck towrds the long-run equilibrium. Thus, long-run supply is more-or-less flt (i.e. long-run price is fixed), implying zero profit. It should be noted t this point tht this long-run ssumption of perfect elsticity (n impliction of zero profit) is less reflection of relity s it is simplifying ssumption to focus solely on consumer surplus: with zero profits, the first two terms of Eq. (A.1) vnish nd we re left with only the consumer surplus. The mrginl impct is then just: ðy + Y Þ ΔY. This is the mesure used ΔY by Southwick nd Southwick (1992) to vlue pollintion services. Another study hs considered consumer surplus losses nd is worth n extended discussion. Glli et l (2009) estimte the globl vlue of pollintion using production vlue pproch in ddition to quntittive considertion of consumer surplus effects. The scle of nlysis in tht study ( globl ssessment) certinly implies price effects nd so production vlue pproch lone would not be sufficient. Thus the considertion of consumer surplus is wrrnted. However, there re three problems with the pproch of Glli et l (2009).Thefirst problem is tht costs re not included; thus if producers re ble to djust nd/or substitute for the loss in bees, the vlue clcultion will be n over-estimte. The second issue is tht the totl vlue of pollintion is comprised of the sum of the welfre chnges to producers nd to tht of consumers (see Eq. (A.5)) thus, while Gllietl(2009) clculte both, the two should be united in single clcultion. The third issue is conceptul one. As stted bove, the consumer surplus pproch of Southwick nd Southwick (1992) ssumes profit to be negligent, which is n ssumption tht runs into direct conflict with the production vlue pproch, which mesures the effect of pollintion loss on profit. Insted, the clcultion of consumer surplus need not follow the frmework of Southwick nd Southwick (1992), which ignores the effects on producers, nd cn insted simply estimte consumer surplus effects s but one component of the overll clcultion, s in

8 Author's personl copy R. Winfree et l. / Ecologicl Economics 71 (2011) Eq. (A.5). Despite these issues, Glli et l (2009) mke n importnt step in the right direction by t lest considering mesures of losses to both producers nd consumers. As the min point of this Appendix is to elucidte efficient nd sufficient wys of clculting the vlue of pollintion, we now ttempt to ΔY simplify Eq. (A.5). The min text focuses on the terms, C q, nd, so here we focus on the key dditionl term in Eq. (A.5) the chnge in price, nd how to estimte it. The question is: ΔY wht is the reltionship between the re's yield nd the mrket price? This reltionship is contined within prmeter commonly estimted in industry nlyses: the price elsticity of supply. The price elsticity is denoted,defined s = ΔY P, nd represents the sensitivity of supply to chnges in price (specificlly, it is Y the percent chnge in supply for 1% chnge in price). Rerrnging this definition, we hve the simple representtion of the chnge in price s result of chnge in re yield: = 1 P : ΔY Y ða:6þ In other words, the price chnge cn be estimted with the current price, the re's yield nd n estimte of the price elsticity of supply. We cn then use this eqution for the chnge in price to substitute for in Eq. (A.5), exchnging vribles for quntities tht re ΔY more esily mesured, nd simplifying the vlue clcultion. Using Eq. (A.6), nd in some cses grouping terms, the totl vlue of the pollintion (Eq. (A.5)) cn be simplified to: V Δpollintion = P ΔY C ΔY Y C q + 1 P ΔY Y Y + 1 P ΔY Y + Y Y : ða:7þ Appendix B. Figures Fig. B.1. Pollen Deposition by Bees. A grphicl representtion showing how different vlution methods ttribute vlue to multiple pollintor tx. In this exmple using dt from one of our study frms, ntive bees deposit medin of 5427 grins per flower nd honey bees deposit medin of 2558 grins per flower, wheres symptotic fruit set is obtined when the medin flower receives only 1400 grins (the pollintion threshold, indicted by the red line). The production vlue method ttributes 68% (=5427/7985 grins) of the crop pollintion to ntive bees, nd 32% (=2558/7985 grins) to honey bees. In contrst, becuse ech txon fully pollintes the crop, the ttributble net income ttributes 100% of the pollintion to whichever txon is vlued first, nd 0% to the txon vlued second. Eq. (A.7) hs the sme elements s Eq. (A.5), but now it is expressed entirely in vribles tht cn be estimted using current dt nd informtion. And to reiterte, this vlue clcultion unites producer nd consumer welfre in singulr clcultion, nd does so without requiring the ssumptions tht re mde in the existing production vlue nd consumer surplus pproches. The frmework presented in this Appendix represents n pproximtion to the vlue of pollintion t scles lrge enough to impct supply nd the mrket price. The strength of this frmework is tht it unites the vlues for different components (tht is, the different stkeholders ffected by pollintion) within single clcultion, nd llows for comprisons between different existing methodologies. The min drwbck of this frmework, which is common to ll current pproches, is tht it extrpoltes welfre effects bsed on limited set of informtion. The frmework utilizes current mesures of yield, price, nd price elsticity of supply, long with flower-level estimtions of crop-pollintion dependency, to predict the effect loss of pollintion on ggregte supply nd producer nd consumer welfre. It does this by considering first-order chnges to supply (or in other words, ssuming liner supply nd demnd curves round the equilibrium), which works well for smll chnges in supply nd price. It cn be improved by considering second-order effects (tht is, non-liner supply nd demnd curves), or using ctul estimtes of supply nd demnd curves nd impcts. We invite further work tht would mke this pproch more pplicble to lrge scle nlyses. Fig. B.2. Clculting the Vlue of Pollintion. The nnul vlue of wtermelon pollintion by honey nd ntive bees in New Jersey nd Pennsylvni, s estimted using different vlution methods. PV: Production Vlue, NI: Net Income, ANI_hb1: Attributble net income, honey bees primry pollintors, ANI_nb1: Attributble net income, ntive bees primry pollintors, RV: Replcement Vlue. Depending on which pollintor is deemed primry nd which residul, the ttributble net income results differ significntly for ech tx, lthough in sum remin the sme s net income. References Allsopp, M.H., Lnge, W.J.D., Veldtmn, R., Vluing insect pollintion services with cost of replcement. PloS One 3 (9). Bos, M.M., Veddeler, D., Bogdnski, A.K., Klein, A., Cvets to quntifying ecosystem services: Fruit bortion blurs benefits from crop pollintion. Ecologicl Applictions 17 (6),