Valuation of ecosystem services available from farms and forests Developing reliable approaches for federal agencies

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University of Maryland CES 2 Portland State University Project Co-chairs June

1 Valuation of ecosystem services available from farms and forests Developing reliable approaches for federal agencies Lisa Wainger 1 and David Ervin 2 1 University of Maryland CES 2 Portland State University Project Co-chairs June 29, 2017 NESP webinar Cooperative project between USDA Office of Ecosystem Markets & CFARE

2 Background Project initiated by USDA Office of Ecosystem Markets (OEM) and Council on Food, Agriculture, and Resource Economics (C-FARE) Collaboration among many governmental and academic researchers Intended audiences - USDA analyst or manager and broad federal community 2

3 Question: Can valuation be routinely used to assess conservation program effects? Addressed 3 primary questions: 1. What changes could be valued now with available data, models and understanding? 2. Are these methods sufficiently reliable to support program decisions? 3. If not, what strategic investments are needed? NRCS 3

4 Process for valuing ecosystem service benefits Interdisciplinary teams of economists and ecologists from academia and government Three natural resource areas chosen to reveal differences Pollinator habitat Water quality Forest carbon sequestration No new ecological assessments All valuation used economic benefit transfer (no primary studies) 4

5 Research Teams Pollinator Team Water Quality Forest Carbon Lead: Rich Iovanna, USDA FSA Amy Ando, U Illinois Dan Hellerstein, USDA ERS Jimmy Kagan, Portland State Dave Mushet, USGS Clint Otto, USGS Charlie Rewa, USDA NRCS Scott Swinton, Michigan State Leads: Lisa Wainger, UMCES Noel Gollehon, USDA NRCS John Loomis, Colorado State Robert Johnston, Clark U LeRoy Hansen, USDA ERS Darren Carlisle, USGS Doug Lawrence, Blackwoods Group Lisa Duriancik, USDA NRCS Greg Schwarz, USGS Marc Ribaudo, USDA ERS Caron Gala, CFARE Lead: Kate Zook, USDA OEM Randall Bluffstone, Portland State John Coulston, USFS Robert Haight, USFS Jeff Kline, USFS Steven Polasky, U of MN Dave Wear, USFS + Chris Hartley (USDA OEM) & numerous reviewers and steering committee members 5

6 Pollinator habitat Benefit Relevant Indicator (BRI) example 6

7 Pollinator Habitat Conceptual Diagram Action Process Service Value 3 Lower cost for pollination services Improved honeybee health 2 4 HIgher honey output More forbs in seed mix 1 Greater forb diversity/abundance on field 5 7 Greater pollinator diversity/abundance 9 Greater bird diversity/ abundance Higher yield on adjacent cropland Enhanced recreation Increase in welfare Greater beneficial insect diversity/ abundance 8 Higher yield / lower input cost on adjacent cropland Arrows represent data or models that form the relationship between elements 11 Enhanced aesthetics / existence values Iovanna et al

8 Data gaps were substantial for pollinator benefits to crop production (examples) Outcome Bee health / Colony strength Economic returns Data & information gaps Commonly only modeled for native pollinators More work needed to understand whether CRP forb plantings influence honeybee health No simple model that relates hive strength & colony numbers to economic returns Reduced costs to beekeepers Increased supply of bees to farmers Value of increasing reliability of pollination 8

Data gaps being addressed by new research-

bee model Quality of landscape to honeybees

9 Data gaps being addressed by new research- INVEST pollination model Adapted to include managed bees and project honey production as a function of landscape conditions Managed bee model Quality of landscape to honeybees Amanda Preslicka, Eric Lonsdorf, et al

10 Results Benefit Relevant Indicators useful for comparing cost-effectiveness in this data landscape Not relevant Pollinator Habitat Relevant if within range Food Provision BRI: Area of pollinatordependent crops within flying distance of pollinator habitat 10

11 Questions? 11

12 Water Quality Multiple monetized benefits 12

13 Water Quality Conceptual Diagram Arrows represent data or models that form the relationship between elements. Wainger et al

14 What data & models are needed to value services? Sportfishing example Action Ecosystem Features & Processes Benefit Relevant Indicators Final Ecosystem Service Benefits Valuation Adopt conservation practices Decreased runoff Sediment Nitrogen Phosphorus Decreased nutrient & sediment delivery to waters Increased fish (piscivore) abundance Change in fish caught per day Value of improved fishing Match ecological & economic variables for benefit transfer function 14

15 Illustrative Valuation Results Western Lake Erie Basin Case Study 15

16 Carbon sequestration by forests Value of a bundle of services 16

17 Forest Carbon Conceptual Diagram Connecting USDA actions and ecological outcomes USDA Policy Private land CRP USDA Policy Federal land restoration Afforestation on marginal agricultural land Restoration of federal forestland Increase in private forestland Increase in trees on federal forestland Increase in carbon stocks Increase in carbon stocks Connecting ecological outcomes and dollar values Increased Carbon Stocks Social Cost of Carbon Avoided negative impacts to agriculture, human health, property damages, energy systems, etc. $ Benefits for Society Bluffstone et al

18 Projected changes in carbon stocks resulting from alternative actions 18

19 Present value of projected CO 2 sequestered in US forests ( ) varies by scenario Values by discount rate ($ billion) Actions added Policy scenario 5% 3% 2.5% Reference 3% and 95th Percentile $125 $517 $807 $1552 Reduced development $134 $555 $867 $1668 Afforestation and Reforestation $155 $649 $1014 $1951 High A&F + Reduced Fire $158 $660 $1031 $

20 Case Study Results: What could be valued with available resources? Resource area Pollinator Habitat Water Quality Ecosystem service benefits Crop and honey yield changes Reduced pest control costs Property value support Recreational fishing Nonuse values for aquatic ecosystems Water supply and recreational services from reservoirs Commercial shipping benefits Forest Carbon Damage costs avoided from climate change 20

21 How to use the reports Methods demonstrated in detail to enable replication Problem framing Applying a benefit transfer function (water quality) Building on Johnston et al. 2006, recreational fishing Applying discounting with the social cost of carbon (carbon) Building on Wear and Coulston (2015) Using biophysical model results in economic models (all) Unpublished details documented (CEAP) Data gaps (pollination) 21

22 Questions? 22

23 Synthesis of ecosystem service modeling opportunities & challenges 23

24 Project Synthesis Lessons Learned and Path Forward Recall overarching purpose Develop reliable approaches that use best available science to estimate ecosystem service values flowing from USDA conservation programs in monetary and non-monetary units. 24

25 Lesson 1 -- Create interdisciplinary analytic teams to enhance credibility of all aspects of value assessment. Federal government and academic scientists bring complementary skills, perspectives and knowledge. Building conceptual value diagrams at the outset helps align the interdisciplinary research team. Recruit scientists who value contributions from outside their disciplines and who wish to document public benefits. 25

26 Lesson 2 -- Monetize benefits as appropriate but non-monetary benefit indicators are valid as well. Economic theory of valuation tends to promote the monetization of ES values. However, monetization is not always feasible nor appropriate for some ES benefits of conservation programs. Non-monetary indicators, such as measures of scarcity of resource provision, can complement monetary measures. 26

27 Lesson 3 -- Demonstrate sensitivities to assumptions and sources of error to develop a shared understanding of how results can best inform policy. Uncertainty about biophysical and socioeconomic linkages pervades ES valuation; treat it transparently! For sources with quantitative bounds, analyze the effects on ES values to ascertain salience, e.g., sensitivity analyses of social discount rate. 27

28 Lesson 4 Strategic investments needed Increased representation of the breadth of effects, e.g., non-market cultural services Empower interdisciplinary teams to use best available science to identify model linkages Create additional benefit transfer functions for priority topics with meta analysis Support new primary valuation studies particularly when it illuminates tradeoffs Develop benefit relevant indicator methods that are peer-reviewed and replicable 28

29 Conclusions -- Valuing conservation practice benefits Best available science is improving but does not fully support a replicable valuation framework that captures all salient values Not realistic to expect a consistent approach to fit all situations Non-monetary benefit indicators complement monetary values; useful in cost-effectiveness analysis Bottom Line systematic valuation of ES is feasible for a host of conservation benefits precision of estimates will vary comparing site specific values is challenging 29

30 For additional information All CFARE reports Pollination model Amanda Preslicka, Eric Lonsdorf, David Mushet, Emily Kirkpatrick, & Amélie Y. Davis Spatially explicit modeling of landscape features for the health of managed bees. IALE Poster Session. Asheville, NC. 30

Valuation of Water-Quality Ecosystem Services Available From Farms

Valuation of Water-Quality Ecosystem Services Available From Farms Noel Gollehon Natural Resources Conservation Service, USDA ACES Conference December 8, 2016 Jacksonville, FL Project Team Lisa Wainger,