King Conservation District (KCD) programs and activities are vital to empowering landowners with knowledge, tools, and methods for personal gain from ecosystem conservation. KCD programs and activities are also vital for securing and enhancing the common wealth that healthy lands, waters, and ecosystems provide, which is of special and irreplaceable benefit for the greater community. District programs are particularly integral to the improvement of several key ecosystem services in the area: soil formation and retention, water regulation and supply, nutrient regulation, waste treatment, habitat functions, and aesthetic value as well as other services providing special benefit to landowners and other stakeholders in the community.
Although rendered for free in terms of market price, these services have a high economic value. The majority of economic value, or special benefits, provided by ecosystem services is produced as economically non-excludable services for landowners as well as members of the general public. This article estimates the economic value of conservation programs and activities that provide extensive special benefits to landowners and the general community. This case is made using ecosystem service valuation, the best available scientific method for quantitative analysis of the relationships between ecosystem health and economic benefit.
The value of conservation activities
The following points summarize estimates of the economic benefit from conservation activities. These estimates show vast value previously not considered by economic valuation methodologies. This analysis was conducted by Earth Economics with the extensive research support of the Gund Institute for Ecological Economics at the University of Vermont.
- Parcels assessed within the KCD cover 712,336 acres (532,640 individual parcels and 53,859 condominium units), for a total assessment of $2,932,495 at the pre-2006 Special Benefit Assessment rate of $5 per parcel; $586,499 of this funded KCD conservation programs and activities in 2005.
- KCD ecosystems provide ecosystem services with an economic value of $8.70-32.3 billion annually.
- These ecosystems can be managed as natural capital assets providing ongoing service and special benefits to public and private stakeholders. As such, they are conservatively estimated to have a minimum present value, discounted (rate noted) and calculated in perpetuity, of $124 billion (7%), $173 billion (5%), or $247 billion (3.5%).
- Long-term value providing special benefits to current and future generations from ecosystems in the KCD is estimated to have a total economic present value of $867 billion-3.2 trillion (100 years), $2.1-8.0 trillion (250 years), $4.3-16.1 trillion (500 years), with no discounting of benefits to future generations.
- The current annual Special Benefits Assessment of $10 per parcel is still less than .003% of the total annual value of special benefit from ecosystem services produced by these natural capital assets.
- Built capital asset management budgets commonly include 5-10% of total asset value in annual maintenance expenses. This rule of thumb would support a minimum budget of $6.2 million, over $10,500 per parcel, in annual combined public and private conservation investment within the District area until those ecosystems are at a healthy state that does not require conservation maintenance.
- A rapid partial appraisal of the value from KCD programs and activities in 2005 estimates the direct net special benefit after costs of $18,221-$494,538 in the first year alone. Indirect special benefit from landowner implementation of Best Management Practices results in an estimated value of $4.5-$16.4 million, again in the first year alone and not considering landowner investment.
- The long-term present value of special benefit from KCD programs and activities in 2005 is projected in perpetuity to have an estimated value of $4.8-$6.7 million directly from KCD activities. An additional $90.5-$327.3 million is estimated as the indirect special benefit resulting from landowner implementation of Best Management Practices.
- KCD programs and activities are very cost-effective, as measured by a ratio of total special benefit to total costs. A high return on investment is evident from the 2005 Special Benefit Assessment rate of $1 per parcel for the KCD: $4.22-$5.95 of value from direct special benefit, more in indirect benefit.
- Current and proposed future rates of Special Benefit Assessment are expected to demonstrate the same rate of return on investment with minimal variance: a return of $8.44-11.90 per parcel in long-term value is estimated for the $2 per parcel funding the KCD in 2006 and $12.66-17.85 per parcel in long-term value is estimated from the proposed $3 per parcel assessment fee allocation to KCD.
- Any increase or decrease in KCD funding would result in a corresponding gain or loss of at least 422-595% as much in economic value of special benefits from ecosystem services enhanced by KCD programs. Combined with grant programs for landowners, such highly cost-effective conservation activities multiply the economic benefit for landowners as well as the general community.
- Over 98% of the special benefits from ecosystem services are produced as economically non-excludable services, providing beneficial value to landowners and the general public. Market valuation methods provide no quantification of this value.
- The benefit from KCD activities cannot be captured with the current methods for formal appraisal of real estate value. In some cases, close proximity to healthy ecosystems in public open space increases property values by as much as 8-20%. The total economic value of ecosystems is only recently beginning to be understood.
From this analysis, it is clear that KCD programs and activities are integral to maintaining and increasing landowner and community benefit. Thus, this study presents a preliminary economic case for several recommendations:
- Maintain a $10 per parcel Special Benefit Assessment rate funding the KCD and other conservation efforts.
- Increase the KCD portion of this rate to $3 per parcel due to the cost-effectiveness of KCD conservation work.
- Evaluate potential private and public economic value of a moderate 15-20% increase in these rates by 2010.
It is evident that increasing this rate will more than proportionately increase the economic value of special benefits received by landowners and other community members. This proposed change in the per parcel assessment rates ultimately amounts to a relatively small increase that would result in significant increases in short- and long-term returns on investment in natural capital.
Pittman, J. and D. Batker. 2006. Special Benefit from Ecosystem Services: Economic Assessment of the King Conservation District. Report prepared by Earth Economics for King Conservation District. Earth Economics: Seattle, WA. http://www.eartheconomics.org/resources/publication_documents/KCD_Special_Benefit_Analysis.pdf