The Big Picture
Role of NRCS Benefit Estimation in USDA Conservation Programs
Policy-makers need information about FACTS and VALUES to make effective environmental investment decisions. Those who control federal and regional environmental spending (e.g., green payments) have access to three sources of information about FACTS and VALUES. Scientists work to provide them with as much "value-free" information as possible about the FACTS. Interest groups spend to provide them with their spin on VALUES. NRCS benefit estimation provides them with a source of unbiased information about VALUES. As difficult and controversial as value-based research is, it is the only objective source of information that policy-makers have about VALUES. Often it is the only credible basis for opposing the interpretations of VALUES provided by special interests, and the only basis for preventing wasteful environmental investments.
This Section is to assist field staff in the development of conservation benefits indicators and criteria to rank environmental investments based on expected environmental benefits. The section does not provide specific sets of indicators or even specific methods for indicator development. We recommend that this section be used as a tutorial for NRCS to better understand currently proposed methods for assessing relative ecosystem value in non-monetary terms. We encourage feedback on the usefullness of the approaches presented.
Until a comprehensive system and applying conservation benefit indices is developed, this section is for general reference purpose on concepts and methods for developing environmental benefits indicators.
Overview of Relative Ecosystem Values
To get an idea of the potential application of indicators of relative ecosystem value consider the nine conservation alternative depicted in Figure 1a. Applying any of the three practices at any of the three sites may be worthwhile. However, assume that "green payments" are available to fund only one of the practices at one of the sites. Suppose further that each of the nine alternative costs about the same. The question then would be: Which conservation practice at which site would provide the greatest benefits ? The indicators outlined in this section will help answer this question.
Which alternative will provide the greatest environmental benefits?
The types of indicators described in this section will help answer this question.
Clues about Relative Value Indicators
A clue as to how relative value indicators are developed and can help is provided in Figure 2. It puts the Sites shown in Figure 1 in their respective landscape contexts. A site's landscape context, quite apart from its onsite characteristics, has significant impact on the values it provides. And landscape context does not only include the proximityof the site to other natural features. It includes its proximity to man-made features of the landscape, to people, and to problems caused by people. As subsequent sections will show the landscape context of an ecosystem, in its broadest sense, includes many factors that determine the mix of functions and services it will provide, who has access to them, how scarce they are, how useful they are, how replacable they are, and so on.
Another Clue about Relative Value Indicators
To further illustrate the basis oft the indicators described in this section assume that you are asked to conserve or restore one of the two wetland areas depicted in Figure 3. The two wetland sites are shown to be identical in size and shape, and, for purposes of illustration, assume that they are also identical in terms of biophysical characteristics (e.g., soil, hydrology, and vegetative cover). Based on site conditions alone, therefore, the benefits from investing at both wetland sites would appear to be identical. However, a careful look at the different landscape contexts of the two wetlands provide many clues that investing in the wetland at Site A would be far more "valuable" than investing in the wetland at Site B. The challenge of developing relative value indicators, in this case, is to quantify the observable differences in ways that reflect what we know about the landscape factors that enhance or inhibit the flow of benefits from a wetland.
Indicators described in the folowing sections illustrate why conserving or restoring a wetland at Site A would provide far greater environmental benefits than conserving or restoring a wetland at Site B.
Investing in the environment (Natural Capital), like investing in children (Human capital) or highways (Manufactured Capital), produces public benefits in many "roundabout" ways. For example, investments that reduce nutrient deliveries to nearby water bodies may result in more Algae and Submerged Aquatic Vegetation (SAV) and generate pathways of benefits as depicted in Figure 6. Measuring effects of specific investments on each pathway of benefits may be difficult or impossible. However, "leading indicators" can be used to determine the likelihood that a specific investment will contribute to certain benefits.
The indicator development tools presented in this Section are based on three conventional concepts that are central to most economic analysis:
The indicators described in this section focus primarily on differences in landscape context of environmental investment sites as a basis for ranking them in terms of their expected environmental benefits. The logic behind this type of indicator system is based on four testable hypotheses:
Four Testable Hypotheses
Definition of Terms
The description of the benefits indicator system will be simplified by referring to the definitions of terms provided in Figure 1. These definitions distinguish clearly between four attributes of an environmental asset: features, functions, services, and values. These terms are related to one another and, in some cases, may be used to represent one another. However, there are strong reasons why maintaining a clear distinction between them is important for purposes of assessing the benefits of conservation practices. Site and landscape factors strongly influence whether a given environmental feature (e.g., a riparian buffer) will provide a particular function (e.g., trap nutrients) and whether that function will generate a service (e.g., improved water quality, improved fishing) and how much economic value that service will have (e.g., willingness to pay for more fishing opportunities). This is important because the measurable outcome of conservation practices involve changes in environmental features (e.g., wetland acres restored or miles of forested buffer created).
Attributes of Ecosystems Features—site-specific characteristics of an ecosystem (e.g., soil, ground cover, hydrology) that establish its capacity to support various functions.
Functions—the biophysical processes that take place within an ecosystem. These can be characterized apart from any human context (e.g., fish and waterfowl habitat, cycling carbon, trapping nutrients). The level of function depends on the capacity of the ecosystem (on-site features) and certain aspects of its landscape context (e.g., connectedness to other natural/human features, accessibility to birds, fish).
Services—the beneficial outcomes that result from ecosystem functions (e.g., better fishing and hunting, cleaner water, better views, reduced human health and ecosystem risks). These require some interaction with, or at least some appreciation by, humans, but can be measured in physical terms (e.g., catch rates, water quality, property damage avoided). These depend on ecosystem functions and certain aspects of landscape context (e.g., proximity to floodwaters, people, and property; accessibility to hunters, birders, fishermen).
Value—defined by Webster to be “the quality of a thing according to which it is thought of as being more or less desirable, useful, estimable or important.” Using this definition the value of an ecosystem might be defined in terms of its beauty, its uniqueness, its irreplacability, its contribution to life support functions or commercial or recreational opportunities, or its role in supporting wildlife or reducing environmental or human health risks, or providing many other services that benefit humans.
Economic Value-defined in strict economic terms as aggregate “willingness-to-pay” in dollars for the stream of services expected from a ecosystem. The full economic value of a ecosystem expressed in absolute (dollar) terms would be the sum of each person’s willingness to pay for each service generated by each ecosystem function. In most cases this is impossible or impractical to measure. As a second-best alternative, the economic values of ecosystem services can be expressed in relative terms using indicators of “willingness to pay.” These indicators can be used to prioritize and compare ecosystems on the basis of their relative economic value and are based on the six factors that determine aggregate “willingness to pay.” These are: 1) the expected mix and level of services provided by the ecosystem; 2) the number of people who benefit from these service; 3) their incomes; 4) their preferences; 5) the cost of gaining/keeping access to the service; and 6) the availability and cost of substitutes. Preferences – are subjective values expressed in relative terms such that one thing is deemed to be more desirable or important than another.
Preferences-- can be revealed (e.g., in purchasing decisions), expressed (e.g., through surveys) or imputed (e.g., cost of replacement). In the case of ecosystems individual and community preferences are usually associated with specific ecosystem services, not with ecosystems themselves or bio-physical measures of ecosystem functions. Ranked preferences for various ecosystem services are much easier to determine than their absolute dollar value. For purposes of comparing ecosystems on the basis of their relative value indicators of ranked preferences are often as useful as estimates of absolute dollar values.
Risk– can be defined generally as “the volatility of potential outcomes.” In the case of ecosystem values the important components of risk are those raise the possibility of disruptions in the level of ecosystem services provided. These are associated with the likelihood of changes in on-site features (e.g., invasive plants, overuse, restoration failure) or of changes in landscape context ( e.g., changes in adjacent land uses, water diversions). In most watersheds bio-physical and demographic conditions are not static and the impacts of controllable and uncontrollable risks are not uniformly distributed among ecosystem areas. Differences in risk factors assigned to ecosystems in different areas can cause significant differences in their economic values even if they are identical and are in are in landscape contexts that are identical now. Risks can be factored into the consideration of ecosystem values (and indicators of ranked preferences) by adjusting the expected flow of future services, or by adjusting the expected value per unit service. Note that the expected value of services from a ecosystem may be affected by the vulnerability of expected service flows from other ecosystems.
Ecosystem Features– on-site characteristics which determine if the ecosystem: a) has the capacity to contribute to certain ecosystem functions, and b) has linkages with the surrounding landscape that are likely to affect off-site ecosystem functions.Examples of Ecosystem Features include:
Landscape Context– off-site features which determine: a) if an ecosystem with the capacity to provide certain functions will have the opportunity to provide them; b) what services those functions will provide; and, to some extent, c) what value people will place on those services.
Resources to support indicator development include topographical maps, soil maps, land use maps, natural resource and habitat maps, and demographic and socio-economic data. With some up-front investments in GIS applications the benefit indicators related to specific environmental services that would result from environmental investments at a particular site could be accessed merely by providing the zip code or lat./long. coordinates of the site.
Methods of incorporating information about public preferences for various environmental services (service weights) are not discussed here. However, they include various types of non-dollar valuation surveys, the use of consensus-building or focus groups, and citizen “valuation” juries.
Regional Survey Results
Click for a Checklist of data resources.