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Ecosystem Services for Economic Analysis : Conceptual Issues Dr Pushpam Kumar Institute for Sustainable Water, Integrated Management and Ecosystems Research.

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Presentation on theme: "Ecosystem Services for Economic Analysis : Conceptual Issues Dr Pushpam Kumar Institute for Sustainable Water, Integrated Management and Ecosystems Research."— Presentation transcript:

1 Ecosystem Services for Economic Analysis : Conceptual Issues Dr Pushpam Kumar Institute for Sustainable Water, Integrated Management and Ecosystems Research ( SWIMMER), University of Liverpool, UK

2 What are Ecosystem Services? Answer depends on the purpose! If the purpose is mass awareness and education, MAs classification and purpose are most relevant. If the purpose is valuation, accounting, executing PES Scheme etc, then a different approach would be needed

3 Ecosystem Services Regulating Benefits obtained from regulation of ecosystem processes Cultural Non-material benefits from ecosystems Provisioning Goods produced or provided by ecosystems Photo credits (left to right, top to bottom): Purdue University, WomenAid.org, LSUP, NASA, unknown, CEH Wallingford, unknown, W. Reid, Staffan Widstrand

4 fodder productiontourist attraction pollination carbon sequestrationflood protection water purification slope stability Beauty recreation Biodiversity fibre production food production stabilising micro-climate recreation shelter for life stock game reserve Established Fact-Ecosystem Services are like any other Capital Assets!

5 Economics of Ecosystem Services Ecosystem Services Benefits people obtain from ecosystems Conceptual Lenses of Economics Stock Vs Flow Metrics of ES- Stocks (ecological) and flow (ecosystem services) ES are flow on DD and SS side and imbalance would affect the stock!

6 Contd.. Ecosystem Services Timber, water, fodder Lenses of Economics The equivalent economic value of a stock that underlies a flow can be estimated from the present and assumed time course of ecosystem services flows by applying appropriate discount rate (natural capital)

7 Contd Ecosystem Services Charachteristics Lenses of Economics ES can have consumptive vs productive ES can have private good or public good features

8 Fiber Food Freshwater Genetic Resources Aesthetic Insurance Value Spiritual & religious Recreation & tourism Economic Value ($) Economic Valuation Difficult or impossible Easy Private Benefit Capture Difficul t Easy ? ? ? ? ? ? ? Many BENEFITS of ES are public goods (Rivalness and Excludability, Spatial and Temporal Dynamics Joint Production, Complexity, Resilience and Interdependence of the Benefit )

9 Contd. Ecosystem ServicesLenses of Economics vector of services produced by a vector of inputs intermediate / final goods externalities over space and time (soil erosion and flooding)

10 Evapotranspiration(E) Wetland Area (e.g. Floodplain) Soil Moisture(SM) Outputs(O) Inputs(I) The semantics of intermediate / final good differs for ecologist and economist ! I=O+E SM Water Recharge Function in a wetland as Outputs

11 Ecosystem Accounting: Basic Structure

12 Resilience and Thresholds of Ecosystems: Possible Approach of Valuation The biggest perturbation, the ecosystem can absorb without being in another state is RESILIENCE the system Resilience in several contexts may be treated as CAPITAL stock Estimate the accounting price (Maler, 2008) Accounting price here is changes in the expected change in net present value of expected future ecosystem services resulting from a marginal change in the resilience

13 Ecosystem Services require Indicators Indicators about the physical extent, condition and productivity of resources (e.g. size of fish stocks, soil organic matter levels, etc) rate of resource degradation (e.g. rate of forest land conversion) level of vulnerability to natural disasters Variables should not be automatically used as Indicators!!

14 Valuation of Ecosystem Services Agreements already on Joint effort (ecology and economics) Need to know initial condition of Ecosystems Need to know the flow of ES (ecological production function) etc. etc. But Valuation must have a Purpose (resolving trade off, sectoral accounting, CBA, etc.)


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