METODE VALUASI EKONOMI JASA EKOSISTEM Bahan Kajian MK. Ekonomi Sumberdaya Alam dan Lingkungan METODE VALUASI EKONOMI JASA EKOSISTEM Smno.psdl.pdkl.ppsub1023

REPLACEMENT COST

REPLACEMENT VALUE The term replacement cost or replacement value refers to the amount that an entity would have to pay to replace an asset at the present time, according to its current worth. In the insurance industry, "replacement cost" or "replacement cost value" is one of several method of determining the value of an insured item. Replacement cost is the actual cost to replace an item or structure at its pre-loss condition. This may not be the "market value" of the item, and is typically distinguished from the "actual cash value" payment which includes a deduction for depreciation. For insurance policies for property insurance, a contractual stipulation that the lost asset must be actually repaired or replaced before the replacement cost can be paid is common. Replacement cost policies emerged in the mid-20th century; prior to that concern about overinsurance restricted their availability. Replacement cost coverage is designed so the policyholder will not have to spend more money to get a similar new item and that the insurance company does not pay for intangibles. Diunduh dari: http://en.wikipedia.org/wiki/Replacement_value ….. 4/11/2012

RCV = REPLACEMENT COST VALUATION The replacement cost method assumes that it is possible to find substitutes for environmental goods and ecosystem services. The cost of replacing a function of an ecological system with a human engineered system is used as a measure of the economic value of the function itself. The conditions that must be met are the following: The human engineered system provides functions that are equivalent in quality and magnitude to the ecosystem service. The human engineered system is the least cost alternative way of replacing the ecosystem service. Individuals in aggregate would in fact be willing to incur these costs if the ecosystem service was no longer available. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

RCV = REPLACEMENT COST VALUATION Summary of replacement cost studies. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

RCV = REPLACEMENT COST VALUATION The replacement cost method will only result in valid estimates of economic values if the following three conditions are met: The human engineered system provides functions that are equivalent in quality and magnitude to the ecosystem service The human engineered system is the least cost alternative way of replacing the ecosystem service. Individuals in aggregate would in fact be willing to incur these costs if the service was no longer available (Shabman & Batie, 1978). Shabman, L.A. & Batie, S. 1978. Economic Value of Natural Coastal Wetlands: A Critique. Coastal Zone Management Journal, 4, 231-247. The replacement cost method is a valuation method based on cost estimates. The cost of a man-made substitute, that provides the same service as the ecosystem, is estimated to derive the economic value of that ecosystem service. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

RCV = REPLACEMENT COST VALUATION The concept of value The economic concept of value is based on individuals’ preferences. People make trade-offs by choosing less of one good and more of some other good and these trade-offs reveal the economic values people place on the goods. Individuals might place such values on resources not only because of the use people make of them, but also as a result of altruistic concerns. The latter can be the source of non-use or existence values . The total economic value can thus be divided into use and non-use values. Use values are derived from the direct individual use of a resource; a forest provides for example timber but also opportunities for outdoor recreation. Use values are not only placed on goods that are used directly, but also on goods that are used indirectly. Indirect use values can be derived from ecological functions, such as flood control provided by wetlands. People also place monetary values on natural resources that are independent of their present use of those resources, which characterizes non-use values. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

WELFARE MEASURES Economic values are the result of individuals’ preferences, which are communicated as people make trade-offs between goods. The willingness to pay (WTP) is the sum that an individual is willing and capable to pay for a good or service. In a perfect economy the price of a good gives information on the marginal willingness to pay for that good. However, for many environmental goods no market exists and the WTP is not expressed by a price. The fact that no price exists for many environmental goods should not be interpreted as if they have no value. Still, individuals might make trade-offs also between goods that are not traded on markets, which express that the goods actually have a value although it is not communicated as a market price. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

RCM = REPLACEMENT COST METHOD The replacement cost method is, as the defensive expenditure method, based on the assumption about perfect substitutes, but the replacement cost method is based on non-market behaviour. The cost of a potential or actual replacement technique is used to derive a value of a change in environmental quality. The cost of replacing an ecosystem service with a man-made substitute is used in the replacement cost method as a measure of the economic value of the ecosystem service. Consequently, it must be possible to identify a substitute for the ecosystem service. The cost of investment and the maintenance cost should both be included in the replacement cost. The method could for example be applied to value the flood protection capacity of wetlands by estimating the cost of replacing this capacity with the use of a human made protection, i.e. some kind of artificial coastal defence such as breakwaters or sea walls. The method could also be used to estimate a value of soil fertility by looking at the cost of fertilizers needed to maintain a certain level of productivity. Diunduh dari: ….. 4/11/2012

RCM = REPLACEMENT COST METHOD The conditions are the following: The method is based on the possibility of finding perfect substitutes to ecosystem services. However, the validity of the method does not only depend on the possibility of finding perfect substitutes. Replacement costs can be a valid measure of economic value only if three conditions are met. The conditions are the following: The human engineered system provides functions that are equivalent in quality and magnitude to the ecosystem service (Perfect substitutes). The human engineered system is the least cost alternative way of replacing the ecosystem service (Cost-effectiveness ). Individuals in aggregate would in fact be willing to incur these costs if the ecosystem service was no longer available (Willingness to pay ). Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

REPLACEMENT COST STUDIES: SOIL EROSION Soil erosion in the Upper Mahaweli Watershed of Sri Lanka Gunatilake and Vieth (2000) present a comparison between the replacement cost method and the productivity change method. Both methods are applied to estimate the on-site cost of soil erosion in the study area. The on-site cost of erosion is defined as the value of lost future productivity due to current cultivation. To estimate the replacement cost information on nutrient loss per ton soil eroded, price of nutrients and the cost of labour spreading fertilizer are required. The cost of repair and maintenance of damages due to soil erosion is also included in the replacement cost. Information on nutrient levels in eroded soils was not available in this study and therefore nutrient levels in non-eroded soils were used, under the assumption that soil nutrient levels in eroded and non-eroded soils were the same. Fertilizers generally used in Sri Lanka are identified and the cost of nutrient replacement is calculated from market prices assuming the use of these fertilizers. The estimated on-site cost value is also used in a cost-benefit analysis and compared to the cost of soil conservation practices. Stone terraces and spill drains are two examples of soil conservation measures evaluated in the study. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

REPLACEMENT COST STUDIES: SOIL EROSION Soil erosion in the Upper Mahaweli Watershed of Sri Lanka It is assumed that the productivity of soil can be maintained by replacing the lost nutrients and organic matters artificially. This assumption can be considered as an argument for the idea that the replacement, fertilizers, provides functions that are equivalent in quality and magnitude to the ecosystem service. The first condition is met if this assumption holds. However, it is not presented how organic matter lost due to soil erosion should be replaced. The second condition concerns cost-effectiveness of the replacement technique. Whether applying chemical fertilizer is the least cost replacement technique is not discussed in the paper. Therefore, it is difficult determine if the cost- effectiveness condition is met. From the information in the article it cannot be concluded if the least cost alternative has been used for valuation. A discussion about the connection between the replacement cost and the willingness to pay is also missing. The authors do not present any evidence that a willingness to pay for the service exists and consequently it could not be concluded if the third condition is met. Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

REPLACEMENT COST STUDIES: SOIL EROSION Soil erosion in Korea Inadequate soil management techniques have made erosion a severe problem in these upland areas. The productivity in the upland areas can be maintained either by physically replacing lost soil and nutrients or by adopting a management technique and this is compared in a cost-benefit analysis. The replacement costs are interpreted as a minimum estimate of the value of measures that will improve on site management practices and thereby prevent damages. A combination of straw mulching and vertical mulching is found to be the most efficient soil management approach in reducing erosion. Then, the replacement costs are estimated by adding the cost of fertilizer, transport of organic matter, irrigation and the cost of repairing damaged field structures. Compensation payments for deposition of soil in lowland fields from upland farmers to lowland farmers are also included in the replacement cost. These are all annual costs. In addition to the estimation of the replacement cost and the cost of the soil management technique, an analysis of a status quo alternative is also provided. Diunduh dari: ….. 4/11/2012

It is assumed that the productivity in upland areas can be maintained by replacing lost soil nutrients with fertilizer. Moreover, lowland fields are also repaired, which means the damage caused by soil erosion in upland areas is compensated for. If this assumption holds the first condition is met. It is not demonstrated that replacement techniques, fertilizer, irrigation and supply of organic matter, are cost-effective alternatives. Other replacement techniques might exist , it is difficult to determine if the cost-effectiveness condition is met. The willingness to pay for the new soil management technique does not seem to exist, despite the fact that it would be economically rational to use straw and vertical mulching as preventive measures. SOIL EROSION IN KOREA Diunduh dari: http://www.beijer.kva.se/PDF/59295695_Disc184.pdf ….. 4/11/2012

Mar Cabeza , Atte Moilanen Replacementcost: A practical measure of site value for cost-effective reserve planning Mar Cabeza , Atte Moilanen Biological Conservation. Volume 132, Issue 3, October 2006, Pages 336–342. Conservation needs are often in direct competition with other forms of land-use, and therefore protection of biodiversity must be cost-efficient. Besides cost-effective solutions we require flexibility if land-use conflicts are to be effectively resolved. We introduce a novel concept for site value in quantitative reserve planning. Replacement cost refers to the loss in solution value given that the optimal cost-efficient solution cannot be protected and alternative solutions, with particular sites forcibly included or excluded, are needed. This cost can be defined either in terms of loss of biological value or in terms of extra economic cost, and it has clear mathematical definitions in the context of benefit-function-based reserve planning. A main difference with the much-used concept of irreplaceability is that the latter tells about the likelihood of needing a site for achieving a particular conservation target. The replacementcost tells us at what cost (biological or economic) can we exclude (or include) a site from the reserve network. Here, we illustrate the concept with hypothetical examples and show that replacement-cost analysis should prove useful in an interactive planning process, improving our understanding of the importance of a site for cost-efficient conservation. Diunduh dari: http://www.sciencedirect.com/science/article/pii/S0006320706001820 ….. 4/11/2012

Mar Cabeza , Atte Moilanen Replacementcost: A practical measure of site value for cost-effective reserve planning Mar Cabeza , Atte Moilanen Biological Conservation. Volume 132, Issue 3, October 2006, Pages 336–342. Benefit functions of representation – increasing representation indicates increasing value for the species. Target-based selection with equal treatment for species implies the use of the step function with equal weights for species, wj = 1. The step function does not distinguish how much above or below the nominal target is the representation. If proportional target achievement is valued, then the ramp function is used implicitly. Diunduh dari: http://www.sciencedirect.com/science/article/pii/S0006320706001820 ….. 4/11/2012

Mar Cabeza , Atte Moilanen Replacementcost: A practical measure of site value for cost-effective reserve planning Mar Cabeza , Atte Moilanen Biological Conservation. Volume 132, Issue 3, October 2006, Pages 336–342. Replacement cost of a hypothetical site (a) in terms of increase in resources required to maintain value (ΔC) and (b) in terms of loss of conservation value (ΔF). Exclusion cost: the dashed line indicates the value of the best solution when site x is forcibly excluded. Up to a certain resource level, Cmin, site x does not belong to the optimal solution and thus exclusion cost is zero. Even with C > Cmin, exclusion cost can be zero if the conservation value in the site is replaceable with populations occurring in some other combination of sites. Inclusion cost: the dashed line indicates the value of the best solution when a site is forced to be included in the solution. Inclusion cost is highest with low resource, when the forced inclusion of the unwanted site prevents the acquisition of other biologically much more valuable locations. Diunduh dari: http://www.sciencedirect.com/science/article/pii/S0006320706001820 ….. 4/11/2012

DAMAGE COST AVOIDED METHOD The damage cost avoided method uses either the value of property protected, or the cost of actions taken to avoid damages, as a measure of the benefits provided by an ecosystem.  For example, if a wetland protects adjacent property from flooding, the flood protection benefits may be estimated by the damages avoided if the flooding does not occur or by the expenditures property owners make to protect their property from flooding. Avoided cost Services allow society to avoid costs that would have been incurred in the absence of those services (e.g. waste treatment by wetland habitats avoids health costs). Diunduh dari: http://www.ecosystemvaluation.org/cost_avoided.htm#summa ….. 4/11/2012

APPLYING THE DAMAGE COST AVOIDED This method require the initial step—assessing the environmental service(s) provided.  This involves specifying the relevant service(s), how they are provided, to whom they are provided, and the level(s) provided.  For example, in the case of flood protection, this would involve predictions of flooding occurrences and their levels, as well as the potential impacts on property. The second step is to estimate the potential physical damage to property, either annually or over some discrete time period. The final step is to calculate either the dollar value of potential property damage, or the amount that people spend to avoid such damage. Diunduh dari: http://www.ecosystemvaluation.org/cost_avoided.htm#summa ….. 4/11/2012

Advantages of the Damage Cost Avoided Method The methods may provide a rough indicator of economic value, subject to data constraints and the degree of similarity or substitutability between related goods. It is easier to measure the costs of producing benefits than the benefits themselves, when goods, services, and benefits are non-marketed.  Thus, these approaches are less data- and resource-intensive. Data or resource limitations may rule out valuation methods that estimate willingness to pay. The methods provide surrogate measures of value that are as consistent as possible with the economic concept of use value, for services which may be difficult to value by other means. Diunduh dari: http://www.ecosystemvaluation.org/cost_avoided.htm#summa ….. 4/11/2012

Issues and Limitations.. This approach assumed that expenditures to repair damages are valid measures of the benefits provided.  However, costs are usually not an accurate measure of benefits. This method does not consider social preferences for ecosystem services, or individuals’ behavior in the absence of those services.  Thus, it should be used as a last resort to value ecosystem services.  The method may be inconsistent because few environmental actions and regulations are based solely on benefit-cost comparisons.  Therefore, the cost of a protective action may actually exceed the benefits to society.  It is also likely that the cost of actions already taken to protect an ecological resource will underestimate the benefits of a new action to improve or protect the resource. Diunduh dari: http://www.ecosystemvaluation.org/cost_avoided.htm#summa ….. 4/11/2012

Issues and Limitations.. This approach should be used only after a project has been implemented or if society has demonstrated their willingness-to-pay for the project in some other way (e.g., approved spending for the project).  Otherwise there is no indication that the value of the good or service provided by the ecological resource to the affected community greater than the estimated cost of the project. Just because an ecosystem service is eliminated is no guarantee that the public would be willing to pay for the identified least cost alternative merely because it would supply the same benefit level as that service. Without evidence that the public would demand the alternative, this methodology is not an economically appropriate estimator of ecosystem service value. Diunduh dari: http://www.ecosystemvaluation.org/cost_avoided.htm#summa ….. 4/11/2012

HEDONIC PRICING COST

The Hedonic Price Model .HEDONIC PRICING. The Hedonic Price Model Etymologically, the term “hedonics” is derived from the Greek word hedonikos, which simply means pleasure. In the economic context, it refers to the utility or satisfaction one derives through the consumption of goods and services.   Two main approaches contributed greatly towards the theoretical work on hedonic prices. The first approach was derived from Lancaster’s (1966) consumer theory, and the second comes from the model postulated by Rosen (1974). Both of these approaches aimed to impute prices of attributes based on the relationship between the observed prices of differentiated products and the number of attributes associated with these products. The hedonic price model surmised that goods possess a myriad of attributes that combine to form bundles of characteristics (or objectively measurable, utility-affecting attributes), which the consumer values. Diunduh dari: ….. 4/11/2012

.HEDONIC PRICING. The hedonic price approach derived from property values is a popular measure of the price of environmental differences and has also been extended to other areas. The method is used to evaluate air pollution, the effects of aircraft noise, road traffic, railway noise, a good view, spacious streets, and a "good neighbourhood". Studies can highlight the negative impacts of air pollution, noise pollution etc on land values and thus reveal the implicit or indirect price of environmental difference. The approach works in the following manner. Take the case of a house that is close to a scenic landscape or beach. The proximity of this house to a scenic view or beach increases its value relative to a similar house in another less favourable location. This in turn allows for a indirect determination of the value of the environmental amenity itself by comparing the different prices attached to the two houses. Diunduh dari: http://www.euromotor.org/moodle/mod/resource/view.php?id=13990….. 4/11/2012

The process is carried out in two stages. .HEDONIC PRICING. The process is carried out in two stages. In stage 1 the price paid for the environmental service such as the scenic view, is estimated by investigating the statistical relationship between the service and a related issue for which the price is known e.g. house prices. So, the implicit price is estimated by first step regression analysis where house prices would be regressed on different characteristics. In stage 2 the "price" is used to derive a demand curve or marginal willingness to pay (WTP) function from these characteristics. This is carried out by regressing the implicit price against observed samples and other variables to estimate the demand function. For example: investigate the relationship between house price and the presence of trees, in order to gain an awareness of the value of trees in the urban environment. In stage 1 the "price" of trees would be estimated carrying out statistical analysis and deriving a function : Where α : constant ; b1 : Coefficient on number of trees ; b2 : Coefficient on structural characteristics ; b3 : Coefficient on neighbourhood characteristics ; b4 ; Coefficient on other explanatory variables . b1 is the coefficient of interest since this relates to the focus, i.e. presence of trees Analysis of the equation provides the proportion of the house price that can be attributed to the presence of trees known as Pt i.e. price of trees. Diunduh dari: http://www.euromotor.org/moodle/mod/resource/view.php?id=13990….. 4/11/2012

Ecology and Society 17(3): 40. Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Deterioration of the Izmit Bay ecosystem, mainly caused by heavy industrialization and urbanization, has significantly impaired its beneficial use and resulted in the surrounding coastal zone losing its attractiveness for the inhabitants. One of the main indicators of deterioration of the coastal system is the decreasing water quality resulting from increased nutrient loads from the surrounding land. The consensus during the initial stakeholder meeting confirmed the widespread awareness of this phenomenon and “improvement of water quality in Izmit Bay” was determined as the main policy issue at stake. Public perception of and satisfaction with water quality were measured by a willingness to pay (WTP) survey. The WTP for improved water quality was analyzed using the contingent valuation method. According to the questionnaire survey, 55% of the participants are willing to pay to increase the water quality. Impact of water quality on real-estate values was evaluated by hedonic pricing method, which is suitable for estimating direct and indirect use values of water resources. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecosystem goods and services for Izmit Bay : Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Ecosystem goods and services for Izmit Bay : Seafood. Despite the anthropogenic pollution, national legislation considers this region as an aquatic production area. However, fishing is not an important economic activity due to the loss of valuable fish. Mediterranean mussels (Mytilus galloprovincialis) grow wild along the coast, especially near discharges, but are not edible because of the pollution. Natural amenities. Before the 1970s, the clear waters of Izmit Bay were very attractive for recreation activities, and Izmit and Hereke were famous sailing towns. These leisure activities are decreasing every year because of the decline in the coastal water quality. The urbanization (physical growth of urban area) of the coastal landscape has diminished the previous serenity of the Bay. Coastal tourism. There are still several local tourism centers in the southern region of the Bay. Until the present study, the link between tourist visits and environmental condition of this coastal system had not been analyzed, yet it seems clear that the dominance of industrial activities must have an adverse effect on tourism in the region. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecosystem goods & services for Izmit Bay : Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Ecosystem goods & services for Izmit Bay : Waste assimilation capacity. The Bay is the receiving body for most of the treated and untreated domestic–industrial wastewaters of the region. Due to the long residence times of the bottom waters, our simulation suggests an imminent risk of creating a costly anoxic condition in the deep Central basin. Provision of cultural amenities and spiritual value. The Izmit Bay, its coasts, and the enveloping skies are the spiritual heritage of all who live in their environment and a source of renewal and refreshment for the multitude who witness them. Mystics, artists, musicians, writers, and fishermen have responded to this throughout the ages. The Bay has also a great importance for scientists from different disciplines (environment, earth, and marine sciences) because of its geographic location and interesting oceanographic characteristics. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Socioeconomic response Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Socioeconomic response There are several methods in the literature for estimating the use and/or non-use values of ecosystem services. Izmit Bay provides services to the public and individuals, thus, we focused not only on its present use value but also on its non-use value. The reduced water quality has impacts both on manufactured capital (housing prices) and social capital (people’s preferences and satisfaction). If pollution of the bay is reduced, both manufactured capital and social capital will increase. Hedonic pricing analysis (HPA) and contingent valuation (CV) constitute two ways of estimating social and economic (market and non-market) benefits; the former estimates use values, and the latter estimates both use and non-use values of improved water quality. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecology and Society 17(3): 40. Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Conceptual diagram of the social and economic model for the Izmit Bay coastal system. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecology and Society 17(3): 40. Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. A diagram of the structure of data and methods used for the social and economic components of the study. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Hedonic pricing analysis (HPA) Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Hedonic pricing analysis (HPA) Hedonic pricing analysis is used to estimate an implicit price for environmental characteristics by looking at real markets in which those characteristics are effectively traded. It assumes that a house in a clean environment will have a higher market value than an identical one located in a polluted area. This method needs a large number of observations in order to make a correlation between the price and the environmental factor (water clarity in our case). The price of a house is determined through a regression analysis that relates the price of the property to its characteristics, and the environmental characteristic of interest. The regression results indicate how much property values will change for a small change in each characteristic, holding all other characteristics constant. There are eight different parameters of water quality and found that only turbidity (which is comparable to SDD measurements of clarity used in this study) and fecal coliform levels significantly correlated with property prices. The poor water quality is resulting from eutrophication in Maine lakes and showed the SDD measurements were those most easily discerned by the public. Secchi disk depth was also highly correlated with other indicators of eutrophication, such as dissolved oxygen, chlorophyll levels, fish habitat, and suitability for bathing. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecology and Society 17(3): 40. Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. In this study, the HPA was used to determine the loss of economic benefit due to pollution, based on real-estate values. We selected SDD as an indicator of water transparency, something easily observed by local inhabitants, and assigned the SDD value of the nearest station to each apartment. The Marmara Research Center (MRC) Environment Institute (EI) offered water quality data from monitoring studies of Izmit Bay conducted by MRC-EI in 2001–2002 and 2008–2009. The information on the real-estate properties was collected from websites of real-estate agencies. Data regarding the price and physical properties of apartments (location, size, age, room number, floor, type of heating, whether has balcony, garden, parking area, sea view, etc.) were collected for 174 apartments for sale all around the bay (all by the seaside). A regression (hedonic) analysis was conducted using all available data. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Hedonic pricing analysis Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. Hedonic pricing analysis The studies showed that water quality can significantly affect property prices and provide insight for the Izmit Bay study site application. Among different variables used to describe the physical properties of a house, only the size of an apartment was statistically significant in influencing the price of an apartment, but the ecological parameter of SDD was also statistically significant. The following formula defines price, P, as a function of S and SDD variables: P = - 69,9 + 955 S + 30,1 (ln SDD); R2 = 0.50, F = 85.4 where P is the sales price of an apartment in TL, S is size of an apartment in square meters, and SDD is the transparency of water in meters. The number of observations is 174. The SDD or water clarity varied between 2 and 12 m for the locations examined in the present study. Water clarity is expressed as the natural log in the above equation to reflect the nonlinear relationship between price and water clarity. It is assumed that, at lower levels of water clarity, property owners are willing to pay more for a 1-m improvement in clarity than are owners who live near water that is relatively clear. In fact, changes in clarity occurring above 4 m are not as visibly noticeable as are changes in clarity below this threshold, supporting the assumption that the relationship between property prices and water clarity is nonlinear. Thus, it can be inferred that an increase in water clarity from 2 to 3 m would increase the price of the average apartment (ca. 450 EUR/m2) by EUR 6.0/m2, whereas an increase from 5 to 6 m would only increase the average apartment price by EUR 2.3/m2. Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

Ecology and Society 17(3): 40. Gamze Tolun, L., S. Ergenekon, S. Murat Hocaoglu, A. Suha Donertas, T. Cokacar, S. Husrevoglu, C. Polat Beken, and A. Baban. 2012. Socioeconomic response to water quality: a first experience in science and policy integration for the Izmit Bay coastal system. Ecology and Society 17(3): 40. The logarithmic relationship between SDD and real-estate value as obtained from regression equation . Diunduh dari: http://www.ecologyandsociety.org/vol17/iss3/art40/ ….. 4/11/2012

References Vitousek, P.M., J. Lubchenco, H.A. Mooney, J. Melillo. 1997. Human domination of Earth’s ecosystems. Science 277: 494-499. Daily, G.C. 1997. Nature’s Services: Societal Dependence on Natural Ecosystems. Island Press, Washington. 392pp. Marsh, G.P. 1864 (1965). Man and Nature. Charles Scribner, New York. 472pp. Osborn, F. 1948. Our Plundered Planet. Little, Brown and Company: Boston. 217pp. Vogt, W. 1948. Road to Survival. William Sloan: New York. 335pp. Leopold, A. 1949. A Sand County Almanac and Sketches from Here and There. Oxford University Press, New York. 226pp. Sears, P.B. 1956. “The processes of environmental change by man.” In: W.L. Thomas, editor. Man’s Role in Changing the Face of the Earth (Volume 2). University of Chicago Press, Chicago. 1193pp. Ehrlich, P.R. and A. Ehrlich. 1970. Population, Resources, Environment: Issues in Human Ecology. W.H. Freeman, San Francisco. 383pp. - see p.157 Ehrlich, P.R. and A. Ehrlich. 1981. Extinction: The Causes and Consequences of the Disappearance of Species. Random House, New York. 305pp. Daily, G.C. 2000. Management objectives for the protection of ecosystem services. Environmental Science & Policy 3: 333-339. Chichilnisky, G. and G. Heal. 1998. Economic returns from the biosphere. Nature 391: 629-630. Kremen, C. 2005. Managing ecosystem services: what do we need to know about their ecology? Ecology Letters 8: 468-479. Guo, Z.W., X.M. Xio and D.M. Li. 2000. An assessment of ecosystem services: water flow regulation and hydroelectric power production. Ecological Applications 10: 925-936.

Precisely incorrect? Monetising the value of ecosystemservices Joachim H. Spangenberg, Josef Settele. Ecological Complexity. Volume 7, Issue 3, September 2010, Pages 327–337 Environmental scientists employ political and economic arguments to argue for the conservation of biodiversity and the maintenance of ecosystemservices. However, the economic terminology has a number of connotations which makes its usefulness for the intended effect questionable. On the one hand, the basic assumptions underlying economicvaluation are far from realistic and represent rather a caricature of human behaviour. On the other hand, the methods based on these assumptions are manifold and lead to wildly diverging results. Thus the calculated value of ecosystems and their services is not a robust figure, but varies with the valuation method applied (plus a plethora of subjective assumptions). Diunduh dari: http://www.sciencedirect.com/science/article/pii/S1476945X10000267….. 4/11/2012

Precisely incorrect? Monetising the value of ecosystemservices Joachim H. Spangenberg, Josef Settele. Ecological Complexity. Volume 7, Issue 3, September 2010, Pages 327–337 As a result, it is not possible to ‘objectively’ calculate the value of ecosystemservices. Fortunately, it is also not necessary to do so. Given the inherent flaws of the valuation process, it seems more promising for biodiversity and its conservation to restrict the economic calculus to the role of a contribution in the implementation process for a set of politically defined targets, rather than using it as the target setting mechanism itself. Market prices play a role in this analysis, as one factor amongst others. For the implementation, cost-effectiveness analysis gives important hints, and economic instruments – inter alia – can play an important role as enforcement mechanisms. However, incentives should be based on criteria of (potential) effectiveness, not on value calculations. Diunduh dari: http://www.sciencedirect.com/science/article/pii/S1476945X10000267….. 4/11/2012

Precisely incorrect? Monetising the value of ecosystemservices Joachim H. Spangenberg, Josef Settele. Ecological Complexity. Volume 7, Issue 3, September 2010, Pages 327–337 From ecosystem traits to services, via ecosystem functions. Diunduh dari: http://www.sciencedirect.com/science/article/pii/S1476945X10000267….. 4/11/2012

Precisely incorrect? Monetising the value of ecosystemservices Joachim H. Spangenberg, Josef Settele. Ecological Complexity. Volume 7, Issue 3, September 2010, Pages 327–337 Clustering economic valuation approaches according to objects and methods Diunduh dari: http://www.sciencedirect.com/science/article/pii/S1476945X10000267….. 4/11/2012