ASSESSING RISKS TO ECOSYSTEMS USING NET ENVIRONMENTAL BENEFIT ANALYSIS (NEBA)

Transcription

1 ASSESSING RISKS TO ECOSYSTEMS USING NET ENVIRONMENTAL BENEFIT ANALYSIS (NEBA) JOSEPH NICOLETTE, PRINCIPAL AND GLOBAL ECOSYSTEM SERVICES DIRECTOR 16 MARCH

2 AGENDA Ecosystem service valuation 1 Net environmental benefit analysis (NEBA) to support decision-making 2 Case studies 3 Summary 4 2

3 3 HOW DO YOU VALUE PUBLIC ECOLOGICAL RESOURCES? Evolution of ecosystem services analysis in the US 1 Ecosystem Services Ecological Services Human Use Services Direct (e.g., consumptive) Indirect (passive or non-consumptive) Ecological Services: the physical, chemical, or biological functions that one natural resource provides for another natural resource and thus indirectly provides value to the public (e.g., the provision of food for wildlife, protection from predation, and nesting habitat, among others) Human Use Services: the human uses of natural resources or functions of natural resources that provide direct value to the public (e.g., fishing, hunting, birdwatching, boating, nature photography, and education, among others)

4 2005 MILLENNIUM ASSESSMENT ECOSYSTEM SERVICES Ecosystems provide resources and functions that Society values because the environment provides many BENEFITS (e.g., clean water, recreation, fish and willdife ) Commercial activities and government decisions affect the environment; and therefore affect its VALUE Because we value these benefits, government and commercial stakeholders recognize that ecosystems provide SERVICES to the public 4

5 Millennium Assessment by United Nations

6 RAMBOLL ENVIRONMENT & HEALTH Pioneered applications of NEBA and resource equivalency Incorporation into decision-making tools in several international frameworks Co-authored the current NEBA Framework used by US agencies Advising state and federal U.S. agencies and international governments on the NEBA framework 100+ client assignments worldwide Successful use of innovative applications of ecosystem service valuation for alternative comparisons, including collaboration with regulatory agencies and competent authorities Review and analysis of projects and environmental issues using NEBA has substantially reduced costs for commercial clients 6

7 ECOSYSTEM SERVICES ECOSYSTEM SERVICES REPRESENT FLOWS OF VALUE OVER TIME - THE BASELINE CONDITION 0% Baseline Services It is important to note that the baseline level of ecosystem services provided over time is not constant and can vary based on a wide variety of factors. YEARS

8 ECOSYSTEM SERVICES A LOSS OF SERVICES OVER 0% Baseline Services Action YEARS

9 ECOSYSTEM SERVICES A GAIN IN SERVICES OVER TIME 0% Baseline Services Action YEARS 9

10 DISCOUNT RATE IS IMPORTANT IN SERVICE FLOWS AND VALUATION NEBA and CBA are similar both consider time accumulated service flows (i.e., benefits and costs over time) Non-monetary and monetary metrics Because benefits and costs occur over varying time frames, they can be normalised to their net present value using the discount rate. Would you rather have $10,000 now or in 1 year? Would you rather have $9,900 now or $10,000 in 1 year? $9,800 now or $10,000 in 1 year? $9,500 now or $10,000 in 1 year? $9,000 now? $8,500 now? $7,500 now? 10

11 ECOSYSTEM SERVICES GAINS AND LOSSES OF ECOLOGICAL AND SOCIOECONOMIC SERVICES OVER TIME 0% Baseline Services Action YEARS 11

12 THE EVOLUTION OF NEBA AS AN ENVIRONMENTAL DECISION-MAKING FRAMEWORK 12

13 EU ENVIRONMENTAL LIABILITIES DIRECTIVE (ELD) Recent European Union (EU) Directives covering environmental compensation state a preference for resource equivalency approaches over monetary valuation When determining the scale of complementary and compensatory remedial measures, the use of resource-to-resource or service-to-service equivalence approaches shall be considered first. Under these approaches, actions that provide natural resources and/or services of the same type, quality and quantity as those damaged shall be considered first. REMEDE (Resource Equivalency Methods for Environmental Damage in the EU)

14 Net environmental benefits analysis (NEBA) to support decision-making 2 14

15 NET ENVIRONMENTAL BENEFITS ANALYSIS (NEBA) Risk-benefit analysis applied to environmental management options Understand the flow of value over time Incorporate ecosystem service value (ecological and socio-economic) Quantify and incorporate monetary and non-monetary and monetary value Comparative analysis to systematically evaluate and balance risks, benefits and trade-offs associated with competing public-sector or commercial activity alternatives Level of complexity depends on the social, environmental and economic perceptions of the consequences 15

16 RISK VERSUS INJURY ISSUES Risk involves conservatism and uncertainty Injury involves more direct measures of cause and effect, is less conservative, and less uncertain Injury and benefits to ecosystem service values associated with remedies are rarely quantified a) Remediation can create more natural resource harm than that predicted using traditional risk assessment b) Remediation may provide marginal benefit compared to the effort expended NEBA provides collaborative framework to make risk management decisions

17 Concentration/Risk UNDERSTANDING RISKS AND BENEFITS OF ACTIONS & THE TRADEOFFS Criterion Level High Risk Areas Larger Reduction in Risk Smaller Reduction in Risk Marginal Risks/ Uncertainty Lower % Higher % Effort/Cost ($) NEBA can minimize project impacts by identifying activities with certain gains that can replace (or offset) the uncertain losses, and stop spending money that provides little improvements 17

18 Net Ecological Service Loss Relative Risk (Increasing) USING NEBA, COST PROFILE CHANGES FOR DIFFERENT OPTIONS BECOME EVIDENT Cost (Millions) ALTERNATIVE Baseline Alt 1 Alt 2 Alt 3 Alt There is a Break-Point Net Human Use Value Loss 18

19 Case Studies 19

20 CASE STUDY 1 SEDIMENT DREDGING IN LOUISIANA, US Calcasieu River Estuary, Clooney Loop EDC contamination Considerable biodiversity and high-value recreation

21 % of Services CASE STUDY 1 NATURAL ATTENUATION Benefits = 0 Deficit = -4,000 SHYs with natural recovery Baseline Services 20 Start Years Full Recovery

22 % of Services CASE STUDY 1 CLEANUP TO CRITERIA: INVASIVE REMEDIATION CAN RESULT IN ADDITIONAL INJURY (DEBIT) Natural Recovery [Loss of 4,000 SHY] Baseline Services 20 Invasive Remediation [Loss of 2,600 SHY] Full Recovery Start Years

23 % of Services CASE STUDY 2 RESTORATION-BASED OFFSET Restoration Credit Deficit -800 SHYs Habitat Disturbance -150 SHYs Baseline Services 20 Remediation Option: Dredge Hot Spots and Perform Restoration on Nearby Habitats Start Years

24 CASE STUDY 1 NEBA RESULTS Remediation Option Ecological Benefits Costs Dredge to Criteria Level - 6,600 SHY $25,000,000 Dredge Hot Spots with Restoration -950 SHY + 5,000 SHY +4,050 $2,000,000 $1,000,000 $3,000,000 Dominant Strategy Also received a covenant not to sue for NRDA liability

25 CASE STUDY 2 NEBA USED TO COMPARE NATURAL ATTENUATION AND SEDIMENT DREDGING Estuarine system Lead contamination AO stipulated dredging Hot Spot Removal Conducted Evidence of limited risk Evidence of attenuation Used NEBA to compare remedial alternatives

26 % Services CASE STUDY 2 NATURAL ATTENUATION: NO ACTION THE RED AREA REPRESENTS MARGINAL RISKS ( POTENTIAL INJURY) ASSOCIATED WITH THE NO- ACTION ALTERNATIVE 0% 25% Baseline 50% 75% 100% 30 Hectares Affected - 50 Net dshys Marginal Risk Year

27 % Services CASE STUDY 2 DREDGING IMPACTS 0% 25% Baseline 50% 75% 30 Hectares Affected - 40 Net dshys 100% Year dshy = discounted service hectare year

28 % Services CASE STUDY 2 NATURAL ATTENUATION WITH RESTORATION (BALANCE RISKS) A Certain Gain 0% 25% 50% 75% Baseline An Uncertain Loss Debit = - 50 dshys Credit = +166 dshys NET = +116 dshys 100% Year

29 CASE STUDY 2 NEBA RESULTS Remedial Action Cost ($) Net Envir. Benefit Dredging 16 M $ -50 dshys +10 dshys Net -40 dshys Natural Attenuation 0.5 M $ -50 dshys Natural Attenuation With Restoration 1.0 M $ -50 dshys +166 dshys Net +116 dshys

30 SUMMARY 30

31 USING NEBA TO INCORPORATE ECOSYSTEM SERVICE VALUES INTO DECISION-MAKING IS A WIN-WIN SOLUTION Government Provides technical and scientific basis for policy and regulation decisions Demonstrates wisdom to a skeptical public Public Compensated for changes to a long-term tangible asset Commercial interests Provides defendable basis for investment and spending Can reduce liabilities (costs) Builds trust with regulators and the public Attentiveness to sustainability and stewardship corporate responsibilities 31

32 QUESTIONS? 32