Economic value of ecosystem services

What would happen if we valued our ecosystems in economic terms? The Deccan Herald examines the benefits of economic valuation of ecosystem services.

4 October, 2016: American biologist E O Wilson once said, “Nature holds the key to our aesthetic, intellectual, cognitive and even spiritual satisfaction.” In today’s world, people pay for these services (in an urban setup) generously, and yet, nature provides that same for free. How then, has it always been taken for granted? Would we perceive this benevolence in a different light if it is communicated in a language best understood by the masses — economics? In many ways, yes! Across the globe, scientists are exploring the implications of ecological economics to drive better, sound and thoughtful conservation influences.

“The annual value of the benefits provided by the Nagarhole National Park are worth millions of dollars, ranging between US$ 13-148 million per annum or US$ 203-2,294 per hectare per annum,” discloses professor K N Ninan, the lead author of study, Valuing forest ecosystem services and disservices – case study of a protected area in India (co-author Professor Andreas Kontoleon from Cambridge University), published in the journal Ecosystem Services. The study valuates intangible benefits offered by the park like water and soil conservation, carbon sequestration, recreation, nutrient cycling, air purification, biodiversity, and pollination among others. It doesn’t include benefits such as flood protection, water purification, etc, for the lack of data, “Yet, the net benefit provided by the park i.e., value of services minus disservices (for example, wildlife damages, forest fires) are considerable and worth millions of dollars,” he adds.


Tangible & intangible

Besides analysing several papers, official records and journals for information, the authors use economic valuing techniques. Each intangible benefit like water conservation is assessed taking into account the services it provides like hydropower generation, flood protection benefits, sediment control, water provision, etc. “In our study, we have estimated the water conserved or retained in the park from rainfall. Evaporation and run-off rates vary depending on several factors such as forest and site characteristics, canopy cover, soil profile, amount, pattern and intensity of rainfall events, topography, etc,” says Ninan.

To estimate the annual value of the rainwater conserved in the park, the authors used the economic cost of storing water in a man-made reservoir — with water of about 399.9 million m3 in the park, they arrived at a price of about Rs 12 million or US$ 0.20 million per annum.

Stressing on key conservation implications of the study, Ninan states that the added value or extra benefits obtained from maintaining the park are higher than that obtained from converting it to alternate land uses. “For example, the extra benefits obtained from soil and water conservation due to the existence of the park is about US$ 19.7 per hectare per annum as compared to alternate landscapes such as croplands; and for carbon sequestration extra benefits of US$ 320-790 per hectare as compared to benefits from coffee plantations.”

If these values are accounted for in decision making, it could lead to better conservation outcomes. “For example, a hydroelectric project which is found to be viable can be proved non-viable when not only the timber benefits of the forest that it submerges is accounted for, but also all the intangible benefits the same area in the park offers,” explains Ninan.

This is not the first time such a study has been conducted in India. In 1989, the MS Swaminathan committee made recommendations for accounting the natural capital wealth of the country. In 2008, the Supreme Court fixed the net present value (NPVs) of Rs 0.44 million to Rs 1.04 million per hectare for different categories of forests for diversion of forests to non-forest uses.

It has now been revised to range between Rs 0.99 million and Rs 5.55 million for different categories of forests. But, more than ever, the present day situation in the country demands more data on the issue, insists the author, “With India trying to accelerate economic growth and relax forest laws, there is immense pressure to divert forests to non-forests uses. Hence, there is a pressing need to undertake an economic valuation of ecosystem services, especially intangible benefits, provided by forests in India.”

There are quite a few successful examples of such studies having benefited wildlife and wild places across the globe. Findings of the economic valuation of national parks and forest ecosystems have been used to revise park entrance fees in Africa and South America. “Survey of visitors to parks and nature reserves have shown that visitors are willing to pay more than what they actually paid to visit a park,” adds Ninan. But the methods and implications of monetary evaluation of forests has also been criticised by many. For example, authors Leon Bratt and Rudolfo de Groot  argue in a paper that there are several limitations with monetary valuation such as unstable currencies, fluctuating market and of course, when ecosystems are near critical thresholds and change is irreversible, money values don’t help as regulatory mechanisms.

Explaining further, Ninan, also the author of the book, Valuing Ecosystem Services-Methodological issues and Case Studies, says, “These alternate approaches also have their flaws. For instance, in highly stratified and traditional agrarian societies, the voices of the poor and marginalised sections may go unheard while those of the rich and powerful interest groups may dominate. And, hence, deliberative approaches to value biodiversity and ecosystem services may be biased. Making it simpler, for instance, you don’t pay for the air that you breathe. But can you state that it has no value or is zero-priced? In a hospital, you have to pay for oxygen or a factory has pay to purchase industrial oxygen cylinders.”

Citing the example of River Cauvery, based on in-depth field surveys in the Karnataka’s Western Ghats range, the author further recommends that people of cities and towns as well as farmers in the Cauvery delta, who benefit from the river (for example, drinking water, irrigation water), which originates in Kodagu district should be levied a watershed protection cess so as to reward the people of Kodagu for conserving the forest. “Funds collected should be used for furthering development and conservation activities in Kodagu and other Malnad districts,” says Ninan.

There is an old Native American saying, “Everything on earth is borrowed. Even time is borrowed. All you have is what you have come with and what you will leave with. Your spirit.” It’s time to rejuvenate that, and for that you need the wilderness and wildlife. It’s time to value what really matters.

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