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Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. The Futurability of Biodiversity Chapter 10 How can we conserve biodiversity?

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Presentation on theme: "Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. The Futurability of Biodiversity Chapter 10 How can we conserve biodiversity?"— Presentation transcript:

1 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. The Futurability of Biodiversity Chapter 10 How can we conserve biodiversity? - Economic aspects - Which choice is more beneficial? Harvesting trees for trading, sale Conserving the forest to obtain subsidies How can we conserve biodiversity?

2 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. In review Biodiversity enriches human life economically, culturally and psychologically. To conserve biodiversity, however, human activities are often restricted.

3 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Todays Topics 1. Social decision making: conservation or development? How can we demonstrate the environmental values of natural resources? 2. Economic incentives Other than legal institutions, what conservation measures are there?

4 Copyright 2019 Research Institute for Humanity and Nature. All Rights Reserved. How can we demonstrate the environmental values of natural resources? 1) Ski resort development / conservation - Travel Cost Method 2) Amenity Values capitalized in land - Hedonic Price Method 3) How to estimate Existence Value - Contingent Valuation Method 4) Social cost-benefit analysis 1. Social decision making: conservation or development?

5 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 1) Ski resort development / conservation In the 1950s, the Walt Disney Company planned to develop the area into a ski resort, and federal approval was granted in Mineral King Valley – State of California, USA Photo: Brian Michelesen

6 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Sierra Club petition Sierra Club Oldest, largest and most influential grassroots organization protecting natural environment in USA (established 1892). Plaintiff: Sierra Club (public welfare representative) Litigation content: Legality of the rights of National Park conversion Federal Court Judgment Appeal dismissed in …Development action does not encroach on the activities of Sierra Club or its members. Public consensus regarding the choice of development or conservation has turned into a point of dispute. - Mineral King Valley argument - 1. Social decision making 1) Ski resort development / conservation

7 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. The legal status of trees...The viewpoint of a legal expert Christopher Stone (University of Southern California) The legal rights of nature or natural beings are independently recognized under the law. Should trees have legal standing? 1. Social decision making 1) Ski resort development / conservation Please! Dont destroy our habitat! (Chistopher 1972)

8 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 1) Ski resort development / conservation The valuation method for the monetary benefit: Travel Cost Method Economists viewpoints If the ski resort development project increases the happiness of the society as a whole (social welfare), such development is considered good. But… What is meant by the happiness of a society as a whole? What is the relationship between individual happiness and social welfare? …cannot be objectively estimated. At least insofar as that part of the benefits which is accrued from the development of the ski resort project and which can be monetarily estimated (social happiness monetarily measured) is less than the development cost, then such development project is deemed not desirable. … People who travel (go skiing) gain pleasure which exceeds.the cost.

9 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Travel Cost Method (TCM) 1. Social decision making 1) Ski resort development / conservation The relationship between the number of ski trips and the cost of travel for Mr. Yamada from his home Let the actual cost be 5,000 yen. Then… …for example, if it costs 4,000 yen per trip, 4 times; if 6,000 yen, 3 times; if 8,000 yen, 2 times and if 10,000 yen, one time. 1 st trip: His willingness to pay (WTP) for a new experience is 10,000 yen. The balance is 5,000 yen after paying the travel cost. This amount, called net benefit, is the monetary equivalence of his happiness. 2 nd trip: his WTP is 8,000 yen. So, the balance is 3,000 yen. 3 rd trip: his WTP is 6,000 yen. The balance is 1,000 yen. 4 th trip: his WTP is 4,000 yen. He will not go skiing, because of the negative net benefit.

10 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Aggregate the net benefits across all visitors. …The recreational value of the ski resort estimated by TCM 1. Social decision making 1) Ski resort development / conservation Recreation Demand Curve The relationships between the number of ski trips and the cost of travel are depicted graphically below. A+B: WTP (Benefit) The maximum amounts willingly paid for the trips A Recreation Demand Curve Number of trips B Travel cost B: The total cost of traveling A=(A+B)-B: Net benefit Happiness measured in terms of money

11 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 1) Ski resort development / conservation Results: The cost was estimated to be at least US$61,000,000 and the benefit of the development was at most US$27,000,000. Number of Visitors Travel cost Number of visitors Travel cost Benefits of Mineral King ski resort development Impact on the other ski resort in case of decrease in the number of visitors (+) Economists studies: Cicchetti, Fisher, and Smith (1976) The development was unlikely to be desirable for the society. (-)

12 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. It was incorporated into a national park, and ski resort development in the area is permanently and legally disallowed. 1. Social decision making 1) Ski resort development / conservation What has become of Mineral King Valley?

13 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 2) Amenity values capitalized in land When the green in your town may be lost… June 9, 2007 The Asahi Shimbun, morning edition Conservation of the opposite bank of the forest of Fuchi Overall considerations by Takashi Watanabe (Mayor of Higashi-Murayama city) Conservation should be justified if cost of development is proven to be more expensive than its benefit. In response to the public movement concerning the conservation of secondary forest located on the opposite bank of the forest of Fuchi, which is commonly known as Totoro forest, the mayor of Higashi-Murayama city, Takashi Watanabe, has on June 8 th indicated that priority would be given to list Kitayama Park as a public area under the town planning project. At the same time, the mayor recognized that the protection and promotion of green/satoyama was an important issue. He further pointed out that the director, Toshio Yasuda of Fuchi Green Preservation Liaison Council (headed by Hayao Miyazaki) had, on May 18 th, requested that the secondary forest be transformed into a public domain. The mayor conceded he would take all of this into consideration before putting his plan into action.

14 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Can the valuation of the forest be estimated by TCM? Most visitors are neighbors who can travel to the forest at very little cost. TCM can only assess a small fraction of the forests value. For the valuation of the forests near residential areas and other ingredients of those living environments… Hedonic approach Valuation method which focuses on real-estate values (land prices, etc.) 1. Social decision making 2) Amenity values capitalized in land

15 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Hedonic approach Transportation & Communication access Noise Drinking water quality Presence or absence of greenery Natural disasters Exposure to sun Land value is affected by various environmental factors. Environmental value indicators = Changing land value caused by changing environmental conditions …Environmental value can be quantified. 1. Social decision making 2) Amenity values capitalized in land

16 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 100,000 yen – 70,000 yen = 30,000 yen, which is the environmental value of the nearby forest Example: values of two land parcels whose environmental conditions are the same except for a forest existing or not nearby. In the case of the forest of Fuchi, we can predict how much the total land value of the ambient area will decrease by losing the forest. The reduction is estimated by the living environmental value of the forest. 1. Social decision making 2) Amenity values capitalized in land Residence A Land value 100,000 yen/m 2 10 minutes 5 minutes Residence B Land value 70,000 yen/m 2 10 minutes 5 minutes

17 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Higashi-Murayama City disclosed that they would present a supplementary budget proposal of about 73.7 million yen to the city assembly, which includes the cost for acquiring the secondary forest which animated movie director Hayao Miyazaki and others appealed to conserve. Out of the amount, 25 million yen would be applied from the donations to Fuchi Green Preservation Liaison Council whose chairman is Mr. Miyazaki. After the resolution was passed, the forest was expected to turn into a public area within the next month. What has become of the forest of Fuchi? 1. Social decision making 2) Amenity values capitalized in land October 9, 2007 The Chunichi Web Higashi-Murayama City tendered a 73.7 million yen budget acquisition offer. Totoro forest to be turned into public land from next month

18 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 3) How to estimate Existence Value Capturing an environmental value for people who enjoy the environment without visiting or living nearby. Tropical rain forests in Southeast Asia – treasure-house of natural life There are people who do not live in the nearby areas nor visit there. However, they feel a sense of grief if the nature is destroyed. … it is necessary to take into account such a feeling as a cost of environmental destruction when assessing environmental value. Hypothetical Valuation Method (Contingent Valuation Method)

19 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1) Provision of information for understanding the hypothetical environmental change and its various pervasive effects through markets and other channels 2) Questionnaire technique for getting accurate and honest answers 3) Statistical method for estimating the sum of WTP/WTA in the society based on the data People are directly asked about their WTP or WTA, namely, the monetary value/loss of their pleasure or grief due to environmental change. Hypothetical valuation method (CVM) 1. Social decision making 3) How to estimate Existence Value (Example) Do you agree with the spending of one million yen for conserving the forest?...Yes/No Creeping in forest deterioration Plantation forest which has not been looked after well tends to lose undergrowth and develop soil erosion. This in turn leads to drought, flood and landslides. Furthermore, in such a forest, the branches or roots of trees do not grow well in comparison with their height, so they become vulnerable to disasters or pests. If we leave the forest as it is, it may not play its important roles well, such as regulation of natural disasters, protection of watershed, prevention of global warming, etc. Moreover, the landscape of the discarded satoyama or bamboo grove will become worsened. It will also make it difficult for people to enter the area, denying them the opportunity to interact with the natural environment. Cumulative ratio of those who answered yes 100% Actual value Estimated value million yen

20 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Use value Existence value Value elicited when the environmental service is enjoyed with other goods in an activity Value derived from only the knowledge of the existence of environmental properties/services. Column 1: Dichotomy of environmental values (Example) scenic beauty … scenery + ecotourism Use value can be measured based on behavioral data from each individual. (Example) Rural nature full of organisms … People feel nostalgic about their birthplace. … People feel sadness and longing over the changing environment of their hometown due to development. Existence value cannot be measured based on behavioral data, so it is measured by CVM or conjoint method which is based on self-reported data (questionnaire) of the respondents. (Problem) The ability to derive accurate valuations and incentives for truth-telling.

21 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 1. Social decision making 4) Social cost-benefit analysis Economic wealth Environmental richness A B C Cost-Benefit Analysis (CBA) When a society has to decide on the most desirable option, the monetary cost and benefit arising from the options should be compared. Why can the decision be made based on monetary terms? (Reason 1) Need for a unified indicator. - How is the desirability of A and B in the figure determined with multiple indicators or criteria? (Reason 2) Economics elaborates a theory on how changes in land use can be measured in monetary terms. - Implementation of an option for which the net benefit is positive improves the society in the sense of Parato efficiency (See Column 2). Multiple evaluation Unification

22 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Cf. Pareto Efficiency - A situation that has been Parato-improved as much as possible - One of the social goals Pareto improvement - If it makes at least one individual better off without making any other individual worse off - The value criteria that CBA relies on Cf. Another important and complementary goal: equity - No one envies any other. Column 2: Pareto improvement

23 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Summary 1. Social decision making: conservation or development? Cost-benefit analysis suggests desirable social decision making between conservation and development of an environmental asset or a natural area. If the net benefit of an option is proven positive by CBA, then its implementation potentially Parato-improves the society. Although it is generally difficult to estimate the benefits from an environmental asset, there are some useful valuation methods such as the TCM and hedonic approach for specific use values and the CVM for all kinds of values, including the existence value.

24 Copyright 2019 Research Institute for Humanity and Nature. All Rights Reserved. What are the measures of conservation other than legal institutions? 1) What are economic incentives? 2) Conditions for economic incentives 2. Economic incentives

25 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. However, the political process is not always reliable. Political process vs. economic incentives Value assessment (CBA) is reflected in political decisions. (1) Political decisions are one-off incidents. They are capricious by nature. 2. Economic incentives 1) What are economic incentives? If the government is legitimate and can enforce its laws, a solution to an environmental conservation / development issue is simply to make a proper political decision which follows as a result of appropriate CBA, taking into account several tangible and intangible benefits of the environmental asset under consideration. (2) Governments errors / presence of corruption may prevent the right decision. (3) There may be too many people and phenomena, like global warming and desertification, for one government to control. (4) Government may not recognize the problem (e.g., a creeping environmental problem) or may intentionally ignore it.

26 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Penetration of the poor into vacant, logged-over forested land Oil palm plantation development Examples where the political process fails Column 3: Creeping environmental problems (Moran et al. 2002)

27 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. - We should not only estimate values derived from conservation of biodiversity or the environment, but also establish a system in which conservation activities actually produce benefits in the form of monetary revenues. An alternative to political decision: Economic incentives - If conservation of biodiversity potentially Parato-improves the society, there should be mechanisms in which environmental conservation is economically beneficial and thus promoted. 2. Economic incentives 1) What are economic incentives? Harvesting trees for trading Conserving the forest to obtain subsidies …something which makes people voluntarily take a certain action, for example, an action to conserve the environment.

28 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 2. Economic incentives 1) What are economic incentives? Seva Mandir, NGO in India, –From the 1980s, afforestation of deforested land begins. …failure (Planting efforts are frustrated by the villagers domestic stock. …Young trees eaten up by pastured goats.) –Why? How to resolve the problem? …Trees are state-owned. No incentive for villagers to protect the forest. –Seva Mandir encourages the state government to impose a duty on the villagers to protect the forest and at the same time giving them the right to use the forest on a long-term basis (state forest co- management proposal). …State government: agrees on a trial basis –Result: great success –From 1990s the measure spreads through the whole of India. The implemented area is more than 150 million hectares. Successful example: co-management of state forest in India (State of the World

29 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Conditions for economic incentives in conservation of biodiversity 1)A mechanism whereby benefits will accrue to those who conserve biodiversity and vice-versa is established. 2) Ownership of, or rights to utilize, the targeted areas are clearly indicated. 3) Social environment or natural environment is stabilized. 2. Economic incentives 2) Conditions for economic incentives

30 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Lets think about dynamite fishing preventive measures Problem concerning biodiversity: The detonation of dynamite leads to the destruction of coral reefs. 1)Make sightseeing / diving activities into an additional source of revenue for the fishermen. 2) Accord exclusive fishing rights in the fishing zones concerned to the fishermen. 3) Ensure that these sources of revenue and fishing rights continue to be given to the fishermen. 2. Economic incentives 2) Conditions for economic incentives

31 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. 2. Economic incentives 2) Conditions for economic incentives (Case 1) Villager A: To enable sustainable use of resources, uses a part of them and conserves the rest. Villager B: Uses up the rest of resources (unsustainable use) Villager A: Attempts to use up resources before others can, using them all … disastrous use of resources Cf. G. Hardin The Tragedy of the Commons Why is it necessary to clarify the rights of ownerships / right of utilization? Example: the use of common resources… two typical cases (Case 2) Villager A: To enable sustainable use of resources, uses a part of them and conserves the rest. Villager B: With the assent of A, uses a part of the resources and conserves the rest. … sustainable use of resources is possible. … because behaviors of the others affect ones behavior. (Hardin 1968)

32 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Can privatization be a solution strategy? Successful case: Privatization of forest in Japan after the Meiji Restoration (about 150 years ago). … Forest resource that used to be common lands were equally distributed among the people in the village. Failures: Privatization of forest resources in India or Kenya …Unequal distribution of forest resources. The poor sectors were allocated only a small portion of forest resources. …Poor sectors grabbed forest resources from privately- or publicly-owned areas much more aggressively than before privatization. …Resources in the publicly-owned areas were exhausted, and the problem of poverty became more serious. It is necessary to pay attention to equal distribution. 2. Economic incentives 2) Conditions for economic incentives

33 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Anticipated future uncertainties Economy: If depressions occur, the return may reach zero. Politics: Instability may lead to confiscation of resources or loss of business management rights. If biodiversity in the country is vulnerable to destruction, resources may be ruined. Present value of future benefit = future benefit x discount factor When future value appears smaller, exploitation of present value will be prioritized. …Encouraging unsustainable use of resources Why it is necessary to stabilize the social or natural environment? …The higher the degree of uncertainty, the lower the estimation of the value of future benefit. 2. Economic incentives 2) Conditions for economic incentives

34 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Column 4: Environment and economy -Without global environmental conservation, sustainable growth is not possible. -Without economic growth, it is not possible to stabilize global population. -Without stabilizing global population, it is not possible to conserve the global environment. Economy Environment Production Capital accumulation Consumption Recycle Waste disposal Natural resource flow Waste disposal sink Natural purification Natural resources / environmental services Supplies

35 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. In cases where environmental conservation In cases where environmental conservation does not depend on political process, it is necessary to establish some economic incentives whereby environmental conservation efforts are considered beneficial to the conservationist concerned. For economic incentives to be in place, it is necessary to define clearly the extent of private ownerships or right of resource use as well as to stabilize the social or natural environment. Summary 2. Economic incentives

36 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Summary of todays topics 1. Where problems are within governmental control, the economic value of the environment can be assessed by CBM, and compensation or fee collection arrangements are included in the implementation process. 2. For creeping environmental problems (beyond governmental control), it is necessary to establish a mechanism to enable users of environmental resources to realize that conservation would bring them greater benefits (the use of economic incentives / market creation). How can we conserve biodiversity ? - Economic aspects -

37 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Exercises 1. About the standard value of social desirability a) Lets discuss the needs of the criterion for a unified value. b) Lets investigate the various definitions of sustainable development and think about their merits and demerits. Lets do the exercises below:

38 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Exercises Lets do the exercises below: 2. In a case where one wishes to halt the expansion of oil palm plantations to protect the tropical rain forests, the following three strategies are mentioned. Lets discuss their feasibility of implementation and their efficiency. a) Consider the protocol of a global convention (agreement) on the restriction of agricultural land development. b) Impose an environmental tax on those importing countries / consumers who are not liable to bear the environmental cost of destruction. c) Establish a market cover with economic incentives. What are the targeted sales?

39 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Glossary The enjoyment forgone as the result of making a choice. (Opportunity) cost The enjoyment gained as a result of making a choice. Benefit A stimulus which causes a certain action (e.g., biodiversity conservation) because of resulting financial punishment or reward). Economic incentives Coefficient factor used when converting the value of future transaction into present value. It is normally below 1. Discount factor Cost and benefit evaluated in monetary terms. The aggregate of the evaluation from the society at large is reflected positively or negatively. Cost and benefit analysis (CBA)

40 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. References & Cited Website Christopher, D. S. (1972) Should trees have standing? - Towards legal rights for natural objects. Southern California Law Review 45: Cicchetti, C. J., Fisher A. C. and Smith V. K. (1976) An econometric evaluation of a generalized consumer surplus measure: The Mineral King Controversy. Econometrica 44: Hardin, G. (1968) The tragedy of the commons. Science 162: Lester, R. B. (ed.) (1994) State of the World Worldwatch Institute Moran, F. E., Brondízio, S. E. and McCracken (2002) Trajectories of Land Use. Soils, Succession and Crop Choice. In Wood, C.H. and Porro, P. (eds.) Deforestation and Land Use in the Amazon. University Press of Florida Flickr Christopher, D. S. (1972) Should trees have standing? - Towards legal rights for natural objects. Southern California Law Review 45: Cicchetti, C. J., Fisher A. C. and Smith V. K. (1976) An econometric evaluation of a generalized consumer surplus measure: The Mineral King Controversy. Econometrica 44: Hardin, G. (1968) The tragedy of the commons. Science 162: Lester, R. B. (ed.) (1994) State of the World Worldwatch Institute Moran, F. E., Brondízio, S. E. and McCracken (2002) Trajectories of Land Use. Soils, Succession and Crop Choice. In Wood, C.H. and Porro, P. (eds.) Deforestation and Land Use in the Amazon. University Press of Florida Flickr

41 Copyright 2010 Research Institute for Humanity and Nature. All Rights Reserved. Authors & Credits The Futurability of Biodiversity Chapter 10 How can we conserve biodiversity ? - Economic aspects - AuthorsKenichi Akao Ayumi Onuma Hiroshi Hasegawa Wataru Fujita Masahiro Ichikawa Shoko Sakai Aya Hatada Choy yee keong Stewart Wachs Martin Piddington Application softwareMicrosoft PowerPoint ® Illustration & design Be4°TECH Koubou Yecoruka PhotosBiodiversity Photos Brian Michelesen Masahiro Aiba Masahiro Ichikawa Tohru Nakashizuka


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