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The Definition & Value of Chesapeake Bay Environmental Endpoints James Boyd and Alan Krupnick Resources for the Future November 1, 2011 Ecological Endpoints A special set of biophysical outputs Commodities that directly enter firm or home production Akin to “final goods” Commodities that require little subsequent biophysical translation to make clear their relevance to utility “Endpoint Theory” Distinction between “inputs” and “final goods” is fundamental to Benefit accounting (to avoid double counting) Benefit comprehension by respondents in stated preference studies (to avoid confusion & error) Production Theory Key terms Inputs transformed into Outputs via Production functions Qi = f (Ii1, Ii2, ...) Same thing in natural systems except functions are ecological Examples Input Surface water pH Acres of habitat Wetland acres Urban forest acres Vegetated riparian border Biophysical Process Ecological Endpoint Habitat and toxicity Fish, bird abundance effects Forage, reproduction, Species abundance migration Reductions in flood Hydrologic processes severity Shading and Air quality and sequestration temperature Sediment loadings to Erosion processes reservoirs Commodities that require little subsequent biophysical translation Note Focus on endpoints leads to a smaller set of ecological commodities to be valued The Problem With NonEndpoint Commodities • Requires respondent to understand and translate commodity’s role in subsequent ecological production To value an “input” need to know The value of the output The production relationship between the input and the output Production Function Error • What is the value of “more acres of eagle habitat?” • Need to know two things (1) The value you place on eagle abundance (2) The production function that translates eagle habitat into eagles Respondents will intuit a + relationship But don’t know its magnitude Principle 1 Commodities should be as close as possible to home production For accuracy and scenario acceptance* Obvious? Perhaps, but often/usually not practiced in SP literature Note: “comprehension” alone is not the test * A hypothesis to be tested empirically Dual Commodities Many ecological commodities are both input and output In production theory, a given commodity can be both input and output Cars: output, but input when rented Lettuce: final good at Safeway, intermediate good at McDonalds Dual commodity Process 1 output is Process 2 input Examples Endpoint Biophysical Process Different Endpoint Trout abundance Forage and predation Bird abundance relationships Forest acres Hydrological processes Wetland acres Hydrologic processes Flood pulse regulation Endpoints / final goods Species abundance But also inputs to production of these Respondent Confusion Am I being asked about the commodity as an “end in itself”? Or its value as part of a larger system? Both? Issues for Survey Treatments Different degrees of subjects’ ecological intuition “Naïve” respondents: Wetlands are open space, the value of open space to me is $X “Sophisticated” respondents: The value of open space to me is $X but also Wetlands support crabs, the value of crabs to me is $Y Issue from above What are the appropriate endpoints? Combination of theory and stakeholder interactions EPA Indicators Workshops RFF & EPA ORD (Corvallis) sponsored (Boyd & Ringold) Natural scientists, social scientists, policy offices Charge: Identify monitorable “final ecosystem commodities” for a range of resource beneficiaries To improve national stream monitoring programs (e.g., EMAP) or EPA OW programs (e.g., National Aquatic Resource Surveys) Principles used in EPA Workshop to identifying indicators of final ecosystem services Strictly biophysical features, quantities or qualities that require little further translation to make clear their relevance to human well-being Comprehensive identification requires identification of ecosystem beneficiaries Exhaustive & non-duplicative, but clear desire for parsimony A Group Process Focus on types of users Industry, agriculture, recreation, aesthetics, stewardship Concretely, what do different users want more of or less of? No jargon! (the “next door neighbor test”) Eco-check Index for the Bay (NOAA and UMCES) The “iconic” Bay Iconic is a stock concept; non-marginal Is “iconic” a word for “warm glow”? Resources that underlie being iconic Cultural: the Watermen, Smith Island Biological: Bay oysters, blue crabs Do changes in populations affect iconic status? Future Baseline Is sea level rise in the baseline? If so, Does this remove Smith Island and the Watermen from further consideration? Do crabs and oysters go (locally) extinct in the baseline? If not, Would increases in their population from TMDLs affect their iconic status? Conveying the hidden problems Other endpoint (SP) issues Bundling (CV) vs attribute valuation (CE) Non-market endpoint proliferation With our theory as a guide, are there that many? Bundling of correlated attributes Sample stratification approach Don’t use jobs, livelihood Focus groups help find indices Boundaries Ocean health: spawning success Groundwater Ancillary benefits/costs to BMPs, etc. Increased trees in buffer zones – viewshed, but positive or negative? Cultural losses: the Amish? Added urban green space from addressing urban SWR More Issues Uncertainty: tough to address Timing Design to impute discount rate Long-term benefits: tough issue. Most analysts use shorter periods. Can do adjustments to values off-line Interim benefits is latency. Not a big problem Conclusion Use theory to guide commodity definition Along with stakeholder process Determine future baseline (perhaps use multiple treatments) Solve/make decisions on other issues Valuation Research Issues • Confusion/scenario rejection rates comparing endpoint Q’s to input, process or dual Q’s Validity test differences Test with and without “systems” information treatments Effect of subject prior knowledge on the above Approach Develop mental models of nature (e.g., degree of decomposition into inputs, processes and outputs), compare to those of experts Conduct focus groups to develop survey materials: information treatments, commodity descriptions Conduct pilot studies: use sub-sampling to test treatment effects; develop measures of performance (effect on WTP; variance of WTP; answers to debriefs; passing scope tests) Ecological science partnering to make necessary linkages and development of protocols for ecological science research and reporting Metrics Categories I. Water Quantity (Amount and Timing, Depth, Width, Velocity) II. Water Quality – Physical (Odor, temperature, clarity, biofouling) III. Stream Bed Characteristics (Mud, rock, sand, sediment accumulation) IV. Health risks from contact and drinking water; eating fish V. Species type, abundance, size, health, timing (flora and fauna) VI. Riparian viewshed characteristics VII. Intertemporal “naturalness” – to avoid undesirable resource changes linked to sense of place, culture, history