Assessing the Attributes of an Ecosystem Economically (or: “How Much Are Our Natural Resources Worth?”) 1 North Bay Water Association Presentation Roberto.

Assessing the Attributes Assessing the Attributes of an Ecosystem of an Ecosystem

EconomicallyEconomically(or:(or: “How Much Are “How Much Are

Our Our Natural Resources Natural Resources

Worth?”)Worth?”)

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North Bay Water Association Presentation

Roberto PiccioniJuly 10, 2009

Dominican University, San Rafael, California

Master of Business Administration in Sustainable Enterprise

Green MBA Mission:Dominican University of California’s MBA in

Sustainable Enterprise is an engaging learning community where people with strong environmental and social values develop effective leadership capacities to advance economically successful, ecologically restorative, and socially just initiatives in any type of environment.

The Green MBA Curriculum3 Major Components: Business Fundamentals, Sustainability, & Leadership

• Critical Thinking for Leadership in Business Redesign• Eco-Commerce Models• Managerial and Environmental Accounting • Marketing and Communication Skills• Human Relations & Organizational Behavior • Entrepreneurial Finance • Marketing Research

• Operations Management• Social Impacts of Enterprises

• Managerial Finance and Economics• Green and Social Marketing• Strategic Enterprise Planning • Thriving Regenerative Enterprise

• Ecological Economics

Jun-2009

Roberto Piccioni, BS, MS, CSP, CHMM, RAB-EMS, OE-G

• 24 years of experience, EHS, Operations, Corporate, Consulting, Academia

• BS Industrial Technology & Manufacturing Engineering, • MS in Environmental Management• Beckman Instruments, Weyerhaeuser, RPC, Baxter, Genentech• 2001 Distinguished Service award at Baxter for Sustainability

pioneering• Have coached ~25 factories to ISO 14001 & OHSAS 18001

certification in the US, central & South America, Asia, & Europe• “An Operations Management Sustainability Professional”

66

Ecosystem Services: A Guide for Decision Makers

Enhancement of some services often leads to degradation of others creating new winners and losers

Tradeoffs

88

99

Ecosystem Services: A Guide for Decision Makers

CulturalNon-material benefits obtained from ecosystems

RegulatingBenefits

obtained from control of natural

processes by ecosystems

ProvisioningGoods produced or provided by ecosystems

3 categories of ecosystem services

1111

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““The conservation The conservation of our natural of our natural resources and resources and their proper use their proper use constitute the constitute the fundamental fundamental problem which problem which underlies almost underlies almost every other every other problem of our problem of our national life.”national life.”

THEODORE THEODORE ROOSEVELTROOSEVELT

Global usage Global usage exceeds available exceeds available resources by resources by 30%.30%.

By 2030, we will By 2030, we will need “2 Planets” need “2 Planets” at current at current predictionspredictions

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Since the mid 1980s, humanity has been in ecological overshoot with annual Since the mid 1980s, humanity has been in ecological overshoot with annual demand on resources exceeding what Earth can regenerate each year.demand on resources exceeding what Earth can regenerate each year.

It now takes the Earth one year and four months to regenerate what we use It now takes the Earth one year and four months to regenerate what we use in a year.in a year.

Overshoot results in collapsing fisheries, diminishing forest cover, depletion Overshoot results in collapsing fisheries, diminishing forest cover, depletion of fresh water systems, and the build up of pollution and waste, which of fresh water systems, and the build up of pollution and waste, which creates problems like global climate change. creates problems like global climate change.

Source: Global Footprint NetworkSource: Global Footprint Network

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EconomicsEconomics

Neoclassical Neoclassical EconomicsEconomics

Traditional view that Traditional view that the market and laws of the market and laws of supply and demand supply and demand can determine can determine effective allocation of effective allocation of resources.resources.

Ecological EconomicsEcological EconomicsRecognizes that certain Recognizes that certain resources are not resources are not adequately addressed adequately addressed by current market by current market forcesforces

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  Economic Impacts of a Water ShorEconomic Impacts of a Water Shortage tage 

Source: Dr. Robert Eyler, Chair, Source: Dr. Robert Eyler, Chair, Department of Economics and Department of Economics and Director, Center for Regional Director, Center for Regional Economic Analysis at Sonoma Economic Analysis at Sonoma State University , May 2007State University , May 2007

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““Look deep into Look deep into nature, and then nature, and then you will you will understand understand everything everything better.”better.”

Albert EinsteinAlbert Einstein

1818

Objectives of Objectives of Ecological Economics…Ecological Economics…

Sustainable ScaleSustainable Scaleliving within the limits of our living within the limits of our systems…systems…

Just DistributionJust Distributionensuring that all have access to basic ensuring that all have access to basic needs…needs…

Efficient AllocationEfficient Allocationexchanging goods & services exchanging goods & services effectively…effectively…

1919Source: Herman Daly, Ecological Economics, 2004

Ecosystem Services: A Guide for Decision Makers

Understand the link between ecosystems and development

People impact nature

Nature provides people benefits

““Seek policies that set Seek policies that set the marginal benefits of the marginal benefits of production equal to the production equal to the marginal environmental marginal environmental

costs…”costs…”

How can we figure this How can we figure this $ out?$ out?

Taxes? Subsidies? Tradable Taxes? Subsidies? Tradable Permits?Permits?2121

What is the Ecosystem Services Approach?

• A framework for integrating ecosystem services into decision making

• Incorporates a variety of methods, including • ecosystem service dependency and • impact assessment, • valuations, • scenarios, and • policies

• Often applied at a watershed or landscape level

Ecosystem Services: A Guide for Decision Makers

Ecosystem Services: A Guide for Decision Makers

Assess risks and opportunities

3 Generally Accepted Approaches To 3 Generally Accepted Approaches To Estimating Monetary Values Of Estimating Monetary Values Of

Ecosystem ServicesEcosystem Services1.1. Market Prices Market Prices – –

““Revealed Revealed Willingness to Pay”Willingness to Pay”

1.1. Circumstantial Circumstantial Evidence Evidence

““Imputed Imputed Willingness to Pay” Willingness to Pay”

1.1. Surveys Surveys – – ““Expressed Expressed Willingness to Pay” Willingness to Pay”

a.a. Market Price Method Market Price Method

b.b. Productivity Method Productivity Method

c.c. Hedonic Pricing Method Hedonic Pricing Method

d.d. Travel Cost MethodTravel Cost Method

a.a. Damage Cost Avoided,Damage Cost Avoided,

Replacement Cost, Replacement Cost, Substitute Cost MethodsSubstitute Cost Methods

f.f. Benefit Transfer MethodBenefit Transfer Method

g.g. Contingent Valuation Contingent Valuation Method Method

h.h. Contingent Choice Contingent Choice MethodMethod

2525http://www.ecosystemvaluation.org/1-02.htm

2626

General Policy Design General Policy Design Principles Principles

1.1. ……policy always has more than one goal, policy always has more than one goal, and each goal requires it’s own instrument.and each goal requires it’s own instrument.

2.2. ……attain the necessary degree of macro-attain the necessary degree of macro-control with the minimum sacrifice of control with the minimum sacrifice of micro-level freedom and variabilitymicro-level freedom and variability

3.3. ……leave a margin of error when dealing with leave a margin of error when dealing with the biophysical environment. the biophysical environment.

4.4. ……we always start from historically given we always start from historically given initial conditions initial conditions

5.5. ……adapt to changed conditions adapt to changed conditions

6.6. ……policy making unit must be congruent policy making unit must be congruent with the domain of the causes and effects with the domain of the causes and effects of the problem with which the policy deals.of the problem with which the policy deals.2727

Ecosystem Services: A Guide for Decision Makers

European Union European Environment Agency is developing an ecosystem service assessment process

Costa Rica, South Africa, & others

Have established or are exploring markets for ecosystem services

China Proposing national ecosystem assessments and exploring how to incorporate into policy

Countries starting to utilize the Ecosystem Services Approach

Tanzania Government paper identifying concrete ways in which sound ecosystem management can contribute to poverty reduction goals

United States E.P.A. Office of Research and development has an ecosystem service research program

Water quality trading programs emerging in a few states

U.K. DFID/NERC have established an Ecosystem Services for Poverty Alleviation Programme

http://www.greenmba.com/http://www.greenmba.com/

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Thank you for your attention…..Roberto Piccioni

July 10, 2009North Bay Water Association Presentation

[email protected]

““Below the Line” Below the Line” slides…..slides…..

Tradable Permits Tradable Permits

Set and allow a Set and allow a maximum “use” maximum “use” right,right,

A market instrumentA market instrument

Clean Air Act, SO2Clean Air Act, SO2

CA – RECLAIM CA – RECLAIM program, etcprogram, etc

CA AB32CA AB32

FisheriesFisheries

advantages advantages

obstacles obstacles

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