Download Use and Non-use Values and Their Economic

Session 13
Valuing Biodiversity – Use and Non-use
Values and Their Economic Measurement
John A. Dixon
[email protected]
The World Bank Institute
Ashgabad, November 2005
GEF
Questions
• What are the principle economic values/uses
associated with biodiversity conservation?
• What economic valuation techniques can be
used to estimate these monetary values?
• What values cannot be estimated in economic
(monetary) terms?
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John A. Dixon, Valuing Biodiversity
GEF
The Total Economic Value approach
Total Economic Value
Use values
Direct use values
(structural values)
Indirect use values
(functional values)
usually measures
output
usually measures
benefits/services
Non-use values
Option values
Bequest values
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John A. Dixon, Valuing Biodiversity
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Existence values
The Total Economic Value (TEV) Approach
and Biodiversity
Includes both Use Values and Non-Use Values
• Use values include direct use (both
consumptive and non-consumptive), indirect
use, and option values
• Non-use values include bequest values and
existence values
The TEV is the sum of all of these values but in
the case of biodiversity, much of the value
may lie in the Indirect Use or Non-use portion
Caspian EVE 2005/UNDP and WBI
John A. Dixon, Valuing Biodiversity
GEF
Identifying types of uses and values for
biodiversity
• Direct-use Values: hunting, directconsumption (e.g. collection of berries,
mushrooms, herbs, plants) are all
“consumptive uses”; whereas observing,
photography, or ecotourism are all “nonconsumptive uses”
• Indirect-use Values: ecosystem services such
as pollination, habitat for other species,
sustaining food chains, other uses are
indirect-use values
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John A. Dixon, Valuing Biodiversity
GEF
Identifying different types of economic
values for biodiversity (continued)
• Non-use Values include Option values,
Bequest values and Existence values (all
usually measured using CVM)
• Unknown values include the value of genetic
material (e.g. a new cure for cancer or AIDS)
• Valuation is easiest for Direct-use values,
quite difficult for Indirect-use values, and very
difficult for Non-use values
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John A. Dixon, Valuing Biodiversity
GEF
Economic Values are Peopledependent!
• Remember, there are few or no economic
values that are NOT directly linked to human
uses or desires, and
• People often do not understand what the real
question is.
• Therefore, market-values may be poor
reflections of ecosystem values or pure
biological uniqueness!
– But…
• Markets and prices often drive government
and private actions!
Caspian EVE 2005/UNDP and WBI
John A. Dixon, Valuing Biodiversity
GEF
Valuing Direct-Use Values (both
consumptive and non-consumptive)
• Direct uses – hunting, fishing, hiking,
photography, tourism/ecotourism, cultural/
historical, scuba diving and other uses are
often the easiest to value and the largest
single item in a TEV calculation.
– Data can be presented at a financial level (e.g.
how large is the economic sector dependent on
ecotourism), or at a broader social welfare level –
usually by measuring the consumers’ surplus or
economic rents generated. The former is easier to
calculate, the latter is more difficult.
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John A. Dixon, Valuing Biodiversity
GEF
Valuing Indirect-Use Values
• Largely composed of ecosystem
services such as
– Ecosystems such as wetlands, lakes,
deserts, forests
– Shoreline protection; water filtration
– Pollination
– Changes in hedonic prices
– Climatic effects (perhaps)
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John A. Dixon, Valuing Biodiversity
GEF
Valuing Non-Use values
• Non-use values – including Option, Bequest and
Existence values, are usually always measured using
some form of CVM. Cultural values may be very
important in non-use values (e.g. Lake Sevan in
Armenia)
• Values may be small per person (a few dollars), but
large when aggregated (as in Armenia)
• Note:
– Non-use values are usually harder to “sell” to decision
makers, but
– For some types of biodiversity (e.g. the panda, the blue
whale) non-use values account for almost ALL of the
economic value measured in a TEV calculation.
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John A. Dixon, Valuing Biodiversity
GEF
Selecting the appropriate valuation
technique (again)
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John A. Dixon, Valuing Biodiversity
GEF
“valuing” the non-measurable
• Some uses or values associated with
biodiversity are impossible to measure.
These may include the following:
– Unknown genetic material
– Global life support services (an infinite
value)
– Cultural or religious values (e.g. in Hawaii,
the native Hawaiians “value” the sea and
the “aina”, the land, very highly)
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John A. Dixon, Valuing Biodiversity
GEF
“valuing” the non-measurable – cont’d
• Suggestions solutions:
– Avoid Extinction!!
– Use of the concept of Safe Minimum
Standards to preserve ecosystems and
their biodiversity
– Creative use of financing to preserve/
protect scarce ecosystems and scarce
biodiversity
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John A. Dixon, Valuing Biodiversity
GEF
What is the TEV of Biodiversity? – no one
really knows!
• As economists always say “It Depends”!!!! It
depends on
• The numbers and types of uses and users
• The values associated with each use
• National vs global values
• The scarcity and uniqueness of the resource
• Final Caution: Be very careful in using the
benefit transfer approach (for biodiversity or
for “hard to value” resources)
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John A. Dixon, Valuing Biodiversity
GEF
A BAD example of benefit transfer due to the “Big Lie”
problem: Estimates of Soil Erosion Rates
1.
2.
A results reported for El Salvador – 140 t/ha – came from measurements on
one plot, for one year (Flores Zelaya, 1982).
A widely reported result for Europe - 17 t/ha/yr. for Europe (source: Pimental,
1995) – is used over and over again in the literature.
Where does this estimate for Europe come from ??
Rate
Area
Covered
Source
Barrow
(1991)
10-25
Belgium
Lal (1989)
Lal (1989)
10-25
Belgium
WRI (1986)
WRI (1986)
10-25
Central
Belgium
Richter
(1983)
Richter
(1983)
10-25
Central
Belgium
Bollinne
(1982)
Bollinne
(1982)
Not stated
12 plots in
Sauveniere
Field
experiments
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John A. Dixon, Valuing Biodiversity
GEF
Another BAD example of benefit transfer:
value of the Whooping Crane in the US
• The Whooping Crane, protected in a small
nature refuge in Texas, was the subject of a
CVM study of WTP by local residents;
• The results were modest -- $1 or $2 per
person per year.
• This amount was then multiplied by the entire
population of the US (over 250 million
people) to get an aggregate value of $100s of
millions per year! Pars pro Toto!
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John A. Dixon, Valuing Biodiversity
GEF
The problem of “pars pro toto:
• When asked their WTP to protect any
single endangered species (e.g. the
whale, the panda, a big-horned sheep,
the sturgeon, the whooping crane)
common responses in the US are about
$5-$10 per person per year.
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John A. Dixon, Valuing Biodiversity
GEF
For example, WTP for preservation of
endangered species
(1990 $US per person per year)
USA
Bald eagle
Emerald shiner
Grizzly bear
12.4
4.5
18.5
Bighorn sheep
8.6
Whooping crane
1.2
Blue whale
9.3
Dolphin
7.0
Sea otter
8.1
Humpback whale
40-48 (w/o info)
49-64 (w. info)
Norway
Brown bear, wolf, wolverine
15.0
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John A. Dixon, Valuing Biodiversity
GEF
“Pars pro Toto” (cont’d)
• When asked their WTP to protect ALL
endangered species in the world, the
responses are about $10 to $15 per
person per year!
• WHY? – the “embedding” problem
created by the interviewer asking the
wrong question
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John A. Dixon, Valuing Biodiversity
GEF
The “Pars pro Toto” Problem
• Only partial information is provided
• The wrong question is asked
WTP for all endangered
species
WTP for any single species
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John A. Dixon, Valuing Biodiversity
GEF
Practical Guide to Valuation of
Biodiversity
• Start with the most direct uses – both
consumptive and non-consumptive
• Carefully consider ecosystem services
(especially when they relate to
marketed goods and services such as
pollination, water supply, land
protection,…)
• Value non-use values with care and
caution; avoid
Caspian EVE 2005/UNDP and WBI
John A. Dixon, Valuing Biodiversity
GEF