ENVIRONMENTAL eftec METHODS

Transcription

1 ENVIRONMENTAL eftec LIABILITY DIRECTIVE EQUIVALENCY Resource Decisions Athens, Greece November 2016 METHODS European Commission, eftec, Abt Associates, Resource Decisions 1

2 Outline of the Session Damage and remediation assessment Selecting the appropriate equivalency analysis Example 2

3 The ELD Assessment Process 1: Preliminary evaluation 2: Determine & quantify debits Should an ELD assessment be performed? Identify and quantify the types and extent of damage 3: Determine & quantify credits Identify and quantify the benefits from remediation 4: Scale complementary & compensatory remediation 5: Monitor and report Ensure that the credits from remediation offset damage Develop monitoring plans to ensure benefits and report

4 Equivalency accounts for differences in Time when damage occurs versus benefits provided by remediation actions Degree of damage (debits), often on some unit basis, compared to the degree of benefits provided by remediation, again on a unit basis Type of resource or service damaged and Benefits (credits) of different remediation options. 4

5 Resource-to-resource: Resource Equivalency Number of trees, fish etc. photos to be added throughout this slide Service-to-service: Habitat Equivalency Area of habitat, % of service lost Value-to-value: Value Equivalency TL of damage compared to TL of benefit from remediation Value-to-cost: Value Equivalency TL of damage is estimated and set as the budget for remediation 5

6 Resource Equivalency in which losses from damage are expressed in terms of resource units (such as numbers of fish or birds); and remediation gains as estimated in similar resource units 6

7 Habitat Equivalency in which losses from damage and gains from remediation are expressed in terms of habitat and are offset by remediation of similar habitat 7

8 Value-to-value in which losses from damage and gains from remediation are expressed in monetary value terms Cost of Damage = TL = Benefit of Remediation 8

9 Total Economic Value Use value Non-use value Option value Actual use For others Existence Direct use Bequest Indirect use Altruism 9

10 Total Economic Value of Water - examples 10

11 Total Economic Value of Land - examples 11

12 Total Economic Value of Habitats and Species - examples 12

13 Value-to-cost in which losses from damage are expressed in monetary terms, and the resulting monetary damage estimate is set as the budget for remediation activities. 1: Preliminary evaluation The benefits from remediation is not assessed in this option. Cost of Damage = TL = Budget for Remediation

14 The ELD Assessment Process 1: Preliminary evaluation 2: Determine & quantify debits Should an ELD assessment be performed? Identify and quantify the types and extent of damage 3: Determine & quantify credits Identify and quantify the benefits from remediation 4: Scale complementary & compensatory remediation 5: Monitor and report Ensure that the credits from remediation offset damage Develop monitoring plans to ensure benefits and report

15 1: Preliminary evaluation?

16 1. Describe the incident 2. Identify and describe affected locations, environments, habitats species 3. Identify nature, degree and spatial and temporal extent of environmental damages 4. Identify potential 1: Preliminary social, economic evaluation and transboundary issues 5. Evaluate benefits of primary remediation 6. Begin initial evaluation of remediation options feasibility assessment 7. Determine the appropriate scale of assessment

17 2: Determine & Quantify Debit 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Interim Loss Before Spill After Spill After Primary Remediation After Complementary Remediation

18 1. Identify damaged resources, habitats and services 2. Identify causes of damage 3. Quantify damage Identify one or more metrics Area of injured habitat/resource; population reduction; 1: biodiversity Preliminary reduction, evaluation etc. Severity of the injuries (e.g., 50% loss) 4. Determine the duration of the damage Is primary remediation being performed? Will services return to baseline? Recovery path/duration 5. Calculate Interim Loss and total debits

19 Quantifying the Debit - Metrics 1: Preliminary evaluation Debits are quantified using metrics to describe changes in resources or resource services Common metrics must be used for both debit and credit side of analysis

20 1: Preliminary evaluation Metrics may be generalized or site-specific Metrics may be quantitative or qualitative (but must be scalable) Metrics may be single-attribute or multiattribute

21 Community-level metrics Total biomass E.g., vegetative biomass Species composition (quantitative; single or 1: Preliminary evaluation multi-attribute) E.g., number of taxa, diversity indices, macroinvertebrate community composition

22 Habitat-level metrics Percent vegetative cover Biodiversity measures Exceedence of habitat-level contamination 1: Preliminary evaluation concentration thresholds Temperature amplitude

23 Population-level metrics Population density (e.g., fish per m 2 ) Population biomass (trout kg) Age-size distribution Toxicity thresholds 1: Preliminary evaluation Individual-level metrics Replacement of individual (protected) organisms Frequency of tumors, other necrotic injuries Individual organism-years

24 Must be estimated for both damaged and remediated environments (debit and credit) Recovery rates are conceptually sitespecific but are almost always 1: Preliminary evaluation generalized Published literature

25 Equivalency over time Damage and remediation happen at different points in time We do not value the past and the future in the same way as today. So we need to find equivalent values for past, today (present value) and future to compare cost of damage and benefit of remediation 25

26 Why don t we value past-present-future the same? Time preference: We are impatient We have limited time on Earth (even societies have limited time but longer) 26

27 Why don t we value past-present-future the same? Cost of capital: All resources can be used to generate further benefits. If the resource is polluted or degraded, these benefits are lost. 27

28 What is discounting/compounding? Procedure to ensure that values (costs and benefits) that happen in different points in time are compared on an equal basis. Discount / compound rate a rate to convert the future / past values to present value The rate is higher for private costs and benefits, lower for social costs and benefits 28

29 Discounting? Make the resource available sooner, we ll take less! (Like a lottery win) Money TL (F), next year (n = 1), 3% (r), Present Value (PV) 20000/(1+0.03) 1 = 20000/1.03 = 19, /(1+0.03) /(1+0.03) 2 = 19, = 38,268 Instead of = 40,000 If no discounting, we will be overcompensated 29

30 Compounding The past Discounting The future x (1 + r) base year - year x 1: Preliminary evaluation The present Base year 1/(1 + r) year base year

31 Compounding? If we had the resource in the past, we would have done something with it and generate benefits (Like putting the money in a bank account) Money TL (P), next year (n = 1), 3% (r) Future Value (FV) x (1+0.03) 1 = x 1.03 = 20, x (1+0.03) x (1+0.03) 2 = = 41,818 Instead of = 40,000 If no compounding, we will be undercompensated 31

32 Discount fact (3%) (a) Damaged (ha) (b) PV damaged ha (a x b) (1/(1+0.03)) (1/(1+0.03)) (1/(1+0.03)) : Preliminary evaluation 0.89 (1/(1+0.03)) (1/(1+0.03)) (1/(1+0.03)) (1/(1+0.03)) (1/(1+0.03)) (1/(1+0.03)) Sum of PV Damaged ha (DSHaYs) (~64)

33 3: Determine & Quantify Credits Compensatory Remediation Complementary Remediation Primary Remediation 33

34 1. What types of remediation projects could be conduct to replace, restore, or enhance services similar to those lost through damage? 2. What credits will be generated by the remediation 1: project(s)? Preliminary evaluation 3. How much time is required to implement the remediation project(s)? 4. Following implementation, how long will the project(s) take to reach maximum function?

35 1. Identify and evaluate potential remediation options 2. Calculate gains (credits) of remediation options Unit of remediation option (tree, ha, bird, TL) Benefits 1: per Preliminary unit of remediation evaluation 3. Deal with uncertainty and variable outcomes of equivalency analysis

36 4. Scale complementary & compensatory remediation 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Interim Loss Before Spill After Spill After Primary Remediation After Complementary Remediation Compensatory Remediation Complementary Remediation

37 1. Compute total discounted debit to reflect interim loss (in the past, present, and future) from the time of the incident 2. Compute a total discounted credit to reflect benefits of the remediation 1: Preliminary evaluation 3. Scale the remediation so that total discounted service losses of debit are equal to the discounted service gains of credit

38 Criteria to Evaluate Remediation Projects ELD (Annex II, 1.3.1) identifies 9 criteria, including collateral damage of projects, consideration of relevant social, economic and cultural concerns, geographical 1: Preliminary linkage to evaluation the damaged site Criteria provide objective basis for project selection Public transparency Provide means to articulate management goals (other than just least cost ) Toolkit identifies additional criteria that may be considered

39 Remediation Project Evaluation (Annex II 1.3.1) The effect of each option on public health and safety, The cost of implementing the option, The likelihood of success of each option, The extent to which each option will prevent future damage, and avoid collateral damage as a result of implementing the option, 1: Preliminary evaluation The extent to which each option benefits to each component of the natural resource and/or service, The extent to which each option takes account of relevant social, economic and cultural concerns and other relevant factors specific to the locality, The length of time it will take for the remediation of the environmental damage to be effective, The extent to which each option achieves the remediation of site of the environmental damage, The geographical linkage to the damaged site.

40 5: Monitor & Report

41 1. Remediation planning and implementation 2. Monitoring remediation success 3. Reporting

42 Reporting: Purposes Communicating remediation plan successes (and failures) to the affected public Communicating necessary alterations in monitoring design or anticipated recovery 1: Preliminary rates to the evaluation affected public Communicating any potential human health risks (or lack thereof) to the affected public Contributing to the scientific knowledge regarding remediation efficacy and recovery rates

43 Summary of Important Cost Components when Estimating Remediation Costs Planning Acquisition of permits, land Implementation Operation and Maintenance Oversight Monitoring and Reporting Failure Contingency Planning and design, including preliminary surveys Acquisition of any necessary permits or access requirements. Land (or other assets) may need to be acquired Labour, materials, transport, infrastructure development, site management and oversight, supplies All costs required to run and manage the project, including labour, equipment, materials and supplies 1: Preliminary evaluation Costs of oversight by Competent Authorities, including labour time, and administrative overhead Including costs of labour, materials, supplies and information dissemination All necessary and appropriate contingency costs that apply to uncertainties associated with project implementation and monitoring. General practice is between 20%-40% of total estimated costs.

44 Simple Example Wetland Damage A wetland is damaged, resulting in loss of habitat services Debit: Hectares of damage x % Service Loss 1: Preliminary evaluation Multiply by number of years of damage and incorporate discount rate to calculate present value of damage Credit: What is the amount of compensatory remediation required to provide equivalent ecological services?

45 Wetland Example the Debit What s the damage? Ecological services provided by the wetland Biodiversity, predator-prey relationships, habitat, protected species, etc. 1: Preliminary evaluation What s the metric? Because everything is harmed in the simple example, we will use a habitat-level metric, as measured by percent vegetative cover of natural wetland species What are the level of services as measured by the metric? Zero. No vegetative cover. 100% service loss (relative to a baseline wetland in this area)

46 Wetland Example the Debit What s the area of damage? Assume 10 hectares Current level of debit? 10 hectares x 100% service loss = 10 service-hectares of debit 1: Preliminary evaluation If damage had been 50% service loss, then 10 hectares x 50% = 5 service-hectares of debit How long will the damage persist? Assume 10 years from today (recovery begins in 5 years) Interim loss? 10 service-hectares of debit for 10 years What about the present value of loss over this time?

47 Discount Factor 3%) Damaged Ha PV Damaged Ha : 0.86 Preliminary evaluation Sum of PV Damaged Hectares (DSHaYs): 63.93

48 Wetland Example the Credit Identify remediation alternatives Assume wetland restoration 1: Preliminary evaluation Start with partially functioning wetland and do improvements to go from 50% function to 100% function relative to the injury site Similar habitat, similar ecological services, nearby location Projects are feasible, desired by competent authority and public, and available

49 1: Preliminary evaluation

50 Wetland Example the Credit Determine the DSHaYs of credit provided by each hectare of wetland creation 1: Preliminary evaluation How much service gain? How long to recovery? How long will services be provided? Must use same metric! Assume +50% service gain Linear recovery over 10 yrs Services continue 100 yrs

51 Percent Service : Preliminary evaluation Years Following Remediation

52 Year Discount Factor 3%) Percent Service Gain PV Credit per Hectacre % % % % % % % : Preliminary evaluation % % % % % % 0.04 Sum of PV Credit (DSHaYs) per hectare: 14.5

53 Wetland Example Scaling Compensatory Remediation Total interim loss (debit) = ~64 DSHaYs Total credit per each hectare of compensatory 1: Preliminary evaluation wetland remediation: ~14.5 DSHaYs Compensatory remediation required = 64/14 = 4.4 ha Why is required remediation (4.4 ha) < damaged wetland (10 ha)?

54 Wetland Example Calculating the Liability Required compensatory remediation = 4.4 ha Calculate cost of remediation 1: Preliminary evaluation Include costs of planning and design, permitting, implementation, oversight, operations/maintenance, monitoring, etc. Assume hypothetical unit cost of remediation = 50,000 /hectare Total liability for hypothetical scenario = 4.4 x 50,000 = 220,000

55 Selecting equivalency analyses ELD presents a hierarchy: 1: Preliminary evaluation Resource-to-resource Service-to-service Value-to-value Value-to-cost

56 Value equivalency is preferred if YES to Do the damaged resources differ in type from the remediated 1: Preliminary (complementary evaluation or compensatory) resources? Must different resources or services be remediated to compensate for environmental harms, if in-kind remediation is not feasible?

57 Value equivalency is preferred if YES to Do the damaged resources differ in quality from 1: Preliminary evaluation the remediated (complementary or compensatory) resources? Is the scope of the damage so large that the necessary assumptions of service-to-service and resource-to-resource equivalency are not supportable?

58 Value equivalency is preferred if YES to Are important 1: Preliminary human use evaluation services lost as a result of the damage? Is the location of remediation actions sufficiently far from the damaged site that value equivalency should be considered?