Principles of economic valuation of ecosystems

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Think of an ecosystem as a business

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Principles of economic valuation of ecosystems Dr Francis Vorhies Director earthmind.net

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Bananas, butterflies & Mt Elgon Deriving economic returns from conserving Mt Elgon National Park in Uganda … Bananas & rain Gate fees & villages Butterfly farming Trekking – nature & culture Turkey shoots

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Think of an ecosystem as a business Who are its customers? What goods and services are they interested in? A business-approach to ecosystem management uses economic valuation as a practical tool to assess potential benefits and costs and to identify potential customers and threats.

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Ecosystem customers Think of local communities as customers. What goods and services do they want? Think of actual and potential commercial customers of the ecosystem. Think of “downstream” or indirect customers. What benefits accrue to more distant communities, to the country or to the region? Think of global customers of the ecosystem. Think of the “donors” as customers.

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Ecosystem benefits/values/services Economic valuation is one of the tools we can use to assess the benefits of well-managed ecosystems as well as how these benefits are distributed among the stakeholders. Through an analysis of benefits and costs, we can begin to understand some of the forces which threaten an ecosystem as well as some of the forces which may conserve it.

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Full economic value of ecosystems Use value Non-use value Direct use Indirect use Option use Existence Altruism Bequest

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Types of economic values

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Full moral value of ecosystems Anthropocentric Intrinsic Human well-being (economics) Higher order well-being Eco-centric Ethics Importantly, economics is only one part of a greater understanding of the values of ecosystems.

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Measuring economic values

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Economic contribution of ecosystems

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Ecosystem values & the MDGs

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Ecosystems & sustainable development “Achieving the MDGs will require expanding per capita endowments of capital assets, especially the environmental assets used by the poor to earn their livelihoods and increase their well-being.” “Investments in protecting and restoring natural ecosystems can produce substantial net benefits, especially for the poor.” “The best available evidence suggests that US$60-90 billion per year will be needed to address poverty-environment goals over the next 10-15 years.” David Pearce, 2005

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Valuation as a tool for ecosystem management It is critically important to: 1. Define the audience. 2. Determine the scope of the study. 3. Choose the appropriate analytical techniques.

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Valuation & ecosystem leadership Management is doing things right; leadership is doing the right things. Peter Druker Ecosystem valuation can provide information which is critical to not only to doing things right, but also to doing the right things for both people and the ecological resources on which their livelihoods depend.

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Summing up … Aim: Establish a conceptual framework for ecosystem valuation Learning objective : Principles: understanding the principles of economic valuation of ecosystems Key concepts & skills: ecosystem goods & services full economic value & components measuring economic values; market & non-market values contributions of ecosystem goods & services to the economy contributions of ecosystem goods & services to coastal/marine economics linkages between ecosystem values, sustainable development & the MDGs valuation as a tool for environmental management

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Take-home message If we are serious about conserving ecosystems, we must understand and manage their economic values. fvorhies@earthmind.net