Ecosystem Services: Provision, Value & Policy. Steve Polasky University of Minnesota & Natural Capital Project

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1 Ecosystem Services: Provision, Value & Policy Steve Polasky University of Minnesota & Natural Capital Project

2 Introduction Ecosystems provide a wide array of goods and services of value to people Human actions affect ecosystems and the services they provide The provision of ecosystem services often is not factored into important decisions that affect ecosystems Distortions in decision-making damage the provision of ecosystem services making human society and the environment poorer

3 Introduction How can we mainstream ecosystem services? Bring the value of ecosystem services into the everyday decisions of business, government and individuals

4 Three main tasks 1. Understanding the PROVISION 2. Understanding the VALUE 3. Create incentives for sustainable provision (POLICY)

5 A research agenda for ecosystem services Policy decisions (1) Incentives Decisions by firms and individuals (3) Nonanthropocentric approaches (2) Actions Other considerations (7) Economic efficiency (5) Biophysical tradeoffs Ecosystems (4) Ecological production functions Benefits and costs (6) Valuation Ecosystem services Polasky & Segerson Annual Review of Resource Economics 1:

6 The Natural Capital Project: Mainstreaming ecosystem services

7 InVEST Integrated Valuation of Ecosystem Services and Tradeoffs Frontiers of Ecology and Environment Feb 2009

8 Modeling multiple ecosystem services and tradeoffs at landscape scales Nelson et al Frontiers in Ecology and Environment 7(1): 4 11.

9 Multiple services and scenarios Three scenarios of land use / land cover change for the Willamette Basin Plan trend Development Conservation

10 Projected land use change in 2050 under the three scenarios

11 Multiple services and scenarios Multiple services and biodiversity Water quality (phosphorous) Flooding reduction (storm peak) Soil conservation (sediment retention) Climate stabilization (carbon sequestration) Biodiversity (species conservation) Market returns (crop production, timber harvest and housing values)

12 Outputs through time

13 Ranking of scenarios depends on set of ecosystem services considered

14 Ranking of scenarios depends on set of ecosystem services considered

15 The Impact of Land Use Change on Ecosystem Services, Biodiversity and Returns to Landowners: A Case Study in the State of Minnesota Polasky et al. Forthcoming. Environmental and Resource Economics

16 Introduction Compare the impact on ecosystem services & biodiversity from: Actual land use change from Alternative land use change scenarios

17 Land use scenarios Use National Land Cover Database (NCLD) for 1992 to 2001 for data on actual land use change in Minnesota Alternative land use scenarios: No agricultural expansion No urban expansion Agricultural expansion into highly productive soils Forestry expansion into highly productive forest parcels Conservation: low productivity ag land and ag land within a 100 m buffer of waterways in MN River watershed were converted to pre-settlement vegetation

18 Land use change 1992 to 2001

19 Outputs Ecosystem services Carbon sequestration Water quality (phosphorus exports in the Minnesota River Basin) Biodiversity Grassland bird habitat Forest bird habitat Overall biodiversity (all natural habitat) Returns to landowners Value of agricultural production Value of timber production Value of urban/suburban development

20 Change from 1992 to 2001 by scenario: carbon sequestration 20.0 Baseline No Ag No Urban New Ag New Forest Conservation Mg C

21 Change in phosphorus exports to mouth of Minnesota River 300 Baseline No Ag No Urban New Ag New Forest Conservation 200 Mg P/yr

22 Percentage change in habitat quality for grassland breeding birds 3.0% Baseline No Ag No Urban New Ag New Forest Conservation 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0%

23 Percentage change in habitat quality for forest breeding birds 10.0% 5.0% 0.0% -5.0% -10.0% -15.0%

24 Change from 1992 to 2001 by scenario: market returns to agriculture, forestry, urban Agriculture $4,000 $3,000 $2,000 $1,000 $0 -$1,000 Baseline No Ag No Urban New Ag New Forest Conservation Forestry $4, price and cost in $3, $2,000 $1, price $0 and costs in $1,000 Urban $4,000 $3,000 $2,000 $1,000 $0 -$1,000 Million 1992 US $ Baseline No Ag No Urban New Ag New Forest Conservation

25 Annual value from land use change scenarios Baseline No ag expansion No urban expansion Ag expansion Forest expansion Conservation Change in total value: carbon, water quality, ag & forest production, urban using actual prices (M1992 $) $3,328 $3,407 $3,040 $2,742 $3,300 $3,380 Change in returns to landowners: ag & forest production, urban using actual prices (M1992 $) $3,320 $3,343 $3,027 $3,418 $3,292 $3,221

26 Summary The failure to incorporate the value of ecosystem services in land use planning can result in poor outcomes Low level of ecosystem services Low value of total goods and services from landscape Agricultural land use change had a bigger effect on ecosystem service value and biodiversity than urbanization Result is largely due to the fact that there is far more agricultural land than urban land Urban land: generates negative externalities but the direct value of urban land use is high Agriculture: generates negative externalities but with lower direct land use value

27 Summary Spatially explicit analysis of multiple services Joint provision of services: one landscape, many consequences Tools to address three related tasks of Provision Value Policy

28 Thank you

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