Valuing Nature's Services
Economics has advanced in the last 20 years, and the methods, tools, and techniques for measuring the value produced by natural systems have improved greatly. It is now clear that natural capital is of tremendous value.
Not all easily-identified ecological services can be expressed in dollar figures. In addition, many ecological services may not yet be identified and value to future generations is not counted. As a result, dollar estimates of the value produced by natural systems are inherently underestimates. For example, while we may be able to place a dollar value on the water filtration services provided by a forest, we cannot fully capture in dollars the aesthetic pleasure humans gain from looking at the forest, nor every aspect of the forest’s role in supporting the intricate web of life.
There are always many values we can name but for which we cannot establish prices or costs. Thus, ecological service valuations are not intended to capture all value, but rather to serve as markers below the minimum value of the true social and ecological value of an ecological service.
However, when societal tradeoffs are being made, these markers remind us that the value held in ecological services is significantly higher than zero. As Robert Costanza and Carl Folke have noted, “[w]e cannot avoid the valuation issue, because as long as we are forced to make choices we are doing valuation.”
Because the remainder of this article discusses the studies conducted to date on ecological services in Washington State, it is helpful to begin with some background on valuation of ecological services. The next few paragraphs provide that background.
Valuation of ecological services
An ecological service is referred to as a “service flux,” which means in part that its productivity is measured as output per unit of time. Healthy, intact ecosystems are self-organizing, providing valuable ecological services on an ongoing basis (“in perpetuity”) at no cost to humans. The delivery of ecosystem services depends on maintenance of a specific arrangement of ecosystem components—on maintenance of a particular “structure.” An example of the concept of structure is a car. A car provides a flow of service, but this service is dependent upon a particular arrangement of the parts of the car—on a particular structure. In this way, yields of ecological services (“service fluxes”) such as pollination, or water filtration, are distinct from “resource flows,” like timber extraction. For example, where as a single-species timber plantation might yield resource-flows such as wood for extraction, the timber plantation would not provide the same service-fluxes as a largely intact natural forest ecosystem. Specifically, service fluxes such as mitigation of floods, decomposition of wastes, renewal of soil, pollination, pest control, translocation of nutrients, and provision of habitat are not yielded by a timber plantation to the same degree as by a natural forest ecosystem. When it comes to generation of ecological services, the elements of the ecosystem, and their relationship to each other, matter.
To describe ongoing fluxes of ecological services, scientists and economists often describe the service-flux in terms of the dollar value it generates per unit of area over a given time period. In order to standardize the language in which ecological services are described, researchers are increasingly expressing the value yielded by ecological services in dollars per hectare per year. One hectare is equivalent to 2.471 acres.
However, because many of the studies referred to in this article were conducted before researchers began working to standardize measures of ecological services, many of the studies cited do not refer to ecological service values in these units. As a result, comparison of the various values is more difficult, as is assessing the relationship between the dollar value cited and the time period over which the ecological service benefits were provided. Such is the nature of an evolving science, however. The values cited here still serve to indicate that quantifiable value is present where we have previously often not recognized it.
It is also important to note that value is not fixed in time. The values of many ecological services are increasing as they become increasingly scarce.
The valuation techniques used to value ecological services were primarily developed within environmental and natural resource economics, branches of traditional economics. They involve a variety of approaches to valuing natural services. These include: direct market pricing, replacement cost, avoided cost, factor income method, travel cost, hedonic pricing, and contingent valuation. The majority of the valuation techniques used in the studies referenced in this article involve direct market pricing, replacement and avoided costs, and travel costs. In a few cases, contingent valuation figures are used.
The Value of Washington State's Coastal Habitats
Coastal ecosystem services provide a significant contribution to human welfare on the planet. Noting that the coastal zone accounts for only 6.3% of the Earth’s surface, Costanza and fellow researchers indicated that the value of the services provided by the coastal zone amount to approximately 43% of total global ecosystem service value. In addition, because we do not yet fully understand all of the dynamics of natural systems, especially marine and coastal systems, this could be an underestimate.
Washington State’s coastal shorelines can be expected to exhibit a similarly disproportionate level of productivity. Washington State has three “coasts” – the shores of the inland marine waters of Puget Sound and the Strait of Juan de Fuca (2,246 miles); the Pacific Ocean coast (171 miles); and the shores of the estuaries fronting the Pacific Ocean (313 miles). Washington State’s shoreline includes eelgrass meadows, kelp beds, rocky shores, salt marshes, beaches and tidal flats home to numerous species of economic and ecological value. It provides a treasure chest of genetic resources, helps to regulate weather and diffuse storms, and plays an important role in nutrient cycling. Some of these services are well-documented in economic terms and others have yet to be measured.
Lending refuge to fish and wildlife: One of the important services provided by Washington’s shoreline is the refugium and nursery ecological service function. The refugium function is defined as the function of providing “suitable living space for wild plants and animals.” The nursery function is defined as the function of providing “suitable reproduction habitat [for wild plants and animals].”
The Washington State shoreline provides habitat to over 200 species of fish, 26 types of marine mammals, 100 species of sea birds, and thousands of marine organisms. While data do not yet exist on the dollar value of the refugium and nursery service function of the Washington State shoreline, these services are closely linked to dollar figures associated with other ecological services, such as recreation, commercial fishing, and tourism, as is discussed in the sections below. The values for the ecological services of recreation, commercial fishing and tourism discussed in the paragraphs to follow are in part dependent on the refugium function. For example, the income generated by the salmon catch of fishermen, or by the whale watching industry, is dependent upon the continuing viability of the refugium service that sustains salmon and orca whales, and thus provides an indirect indication of its value.
State and federal expenditures on salmon habitat restoration are an additional indirect indicator of the value of the refugium function. State funds appropriated for salmon recovery in 2001-2003 totaled $28.3 million while federal funds for Washington State salmon recovery in the 2000-2002 biennium exceeded $101 million. The willingness of the state and federal government to spend more than a hundred million dollars on salmon recovery indicates that this single species, and by extension, its habitat are valued in the Pacific Northwest. The magnitude of the funds involved also illustrates the costs incurred when healthy ecosystem functions are lost.
A study in Oregon provided a third indication of the value of the ecological service provided by the refugium function. In a study of estuarine function, residents of the Tillamook, Oregon area estimated the value of each additional acre of salmon habitat at approximately $5000.
Providing recreation and tourism opportunities for residents and visitors: The fish and wildlife sector is a major economic force in Washington. Approximately one billion dollars are spent annually on recreational fishing alone, while an additional $1.3 billion is spent annually on wildlife viewing and $408 million on hunting. Commercial fishing generates $289.2 million annually in Washington. This economic contribution equals or surpasses other industries traditionally perceived as Washington’s economic base. Wildlife watching alone generates significantly more revenue for Washington’s economy than the apple industry and supports over 21,000 jobs in the state, more than any Washington employer other than Boeing. In addition, fish and wildlife habitat cannot leave Washington State. Salmon will not migrate to Chicago, or China.
Generating tourism dollars: Washington’s shoreline, including the Puget Sound estuary, is also a significant driver of tourism revenues. According to a study by Portland-based Dean Runyan & Associates, business and leisure travelers in 2001 spent an estimated $10.8 billion visiting Washington State. The Puget Sound region generates approximately 80% of statewide tourism revenues and 75% of tourism-related jobs.
Lending aesthetic beauty that attracts workers and firms: Many of the high technology and manufacturing companies that contribute to the economic base of the Washington economy locate in the Puget Sound region in part because of the quality of life the region supports. This quality of life is partially the result of ecological services, such as the provision of aesthetic beauty. In a recent consensus letter, dozens of economists including Nobel Laureates Kenneth Arrow and Robert Solow noted that environmental quality today plays a pivotal role in the ability of a region to attract workers and firms. The economists stated that:
[t]hose who believe environmental degradation is an unavoidable price to pay for economic prosperity in the West are wrong. Across most of the West, a community’s ability to retain and attract workers and firms now drives its prosperity…if a community’s natural environment is degraded, it has greater difficulty retaining and attracting workers and firm (Whitelaw 2003).
Though no study quantifies the contribution of aesthetic beauty to the region’s economic base, there is strong evidence that such a contribution exists.
Providing genetic resources: The genetic diversity held in plants, animals, and microorganisms provides significant benefits for food production and health care. In many cases, these benefits are currently given no economic value, though they contribute greatly to social welfare. For instance, marine organisms, having developed complex chemical systems and survival skills to cope with extreme living environments, have contributed to several scientific advancements. Arabinosides, for example, extracted from the Caribbean sponge, Tethya crypta, led to more than $50 million in annual sales from antiviral medicines. Though the Puget Sound is rich in biodiversity, our present understanding of these resources, and their potential applications, is microscopic.
Other ecological services: Additional ecological services provided by Washington’s shoreline ecosystems include carbon storage, atmospheric gas regulation, nutrient cycling, diffusion of coastal storms, and waste treatment.
The value of these services is unknown but likely significant. These services are important contributors to the total value of services contributed by coastal ecosystems, the total global value of which was conservatively valued at $11.7 trillion per year in 1997.
The value of the services provided by Washington’s shoreline ecosystems: Currently, valuation data regarding the services provided by global coastal systems are scarcer than valuation data describing terrestrial ecosystems. This is also the case with the ecological services generated by Washington’s shoreline ecosystems. However, even the limited figures available indicate the great value that marine and estuarine services generate. Expressed in 2004 dollars, the total for shoreline-related recreation and tourism alone is in the range of $10 to $14 billion. This figure does not include the value of the numerous additional services also provided by Washington’s shoreline, including the refugium function, disturbance regulation, carbon storage, nutrient cycling, waste treatment and provision of genetic resources.
The Value of Aquatic and Terrestrial Fish and Wildlife Habitats
Non-marine habitats in Washington State also generate significant value. The section that follows considers three main habitats: wetlands, forests, and other fish and wildlife habitat. For each of these, key ecological service functions are discussed, along with the studies that indicate their value.
Costanza and colleagues estimated that approximately 38% of the estimated total global ecological services result from land-based ecosystems, primarily from wetlands ($4.9 trillion/year) and forests ($4.7 trillion/year). Washington’s wetlands and forests also yield considerable value.
Ecological services of wetlands in Washington
Wetlands provide a host of benefits and services of ecological and economic benefit to communities.
Providing habitat for fish and wildlife: The refugium function of wetlands is an especially important one. Nationally, forty-three percent of federally-listed threatened and endangered species rely directly or indirectly on these critical areas for their survival. This figure is expected to also be significant in Washington State.
Preventing damage from floods: A Washington State wetlands study assessed the value of flood protection in two Washington cities. The study found that wetlands in Lynnwood yielded a flood protection benefit worth between $7800/acre and $51,000/acre, while Renton wetlands yielded a flood protection benefit of $41,300/acre to $48,200/acre. Similarly, a draft study conducted in Portland indicates that creation of a wetland to prevent flooding in a frequently flooding area of Southeast Portland would prevent damage amounting to more than $500,000 per flood. This figure is based on actual damages to local homeowners in previous floods in the area.
Removing pollutants: Other regions in the country have conducted valuations on other ecological services provided by wetlands. A 1990 study found that the 11,000-acre Congaree Bottomland Hardwood Swamp in South Carolina removed the same amount of pollutants as the equivalent of $5 million waste water treatment plant. A study in Georgia revealed that a 2,500 acre wetland saves taxpayers $1 million in water pollution abatement costs. While the exact values of these services may differ in Western Washington, it is expected that these services have significant value here as well.
Raising property values through aesthetic and recreational services: Wetlands also serve aesthetic and other functions for humans. Property values are one indicator of the aesthetic and recreational services provided by wetlands. For example, a study in the Portland area found that residential property values increased if they were closer in proximity to wetlands. For every 1,000 feet closer a property was to wetlands, the property’s value increased by $436.
Ecological services of forested land in Washington
Significant fish and wildlife habitat in Western Washington consists of forested lands adjacent to, or close to, currently developed areas. Such forested lands provide valuable ecological services.
Filtering drinking water: One important service provided by forests is water filtration. To avoid the need to build a $200 million water filtration plant and pay to operate it, Portland spends $920,000 annually to protect its Bull Run watershed, thus maintaining natural filtration of its drinking water supply. Annual operating costs of artificial water filtration plants vary. Estimated annual operating costs of a water filtration facility in Portland, Maine were $750,000. In contrast, they were $3.2 million for a facility in Salem, Oregon, and $300 million for New York City.
Regulating the climate and cleaning the air: In a period where climate change is a realized issue, forests provide climate regulation at a value of $35 per acre. This figure is based on the market for carbon sequestration. Economic research also indicates that forests provide environmental purification and recovery of mobile nutrients—waste treatment services—valued at an additional $35 per acre. According to Washington state officials, if logged forests in the Puget Sound region had been kept intact, they would have absorbed approximately 35 million additional pounds of air pollutants per year since 1972, providing a service worth almost $95 million.
Capturing storm water: Over 10,000 acres of forest lands were lost annually due to urban development in the Puget Sound between 1980 and 1990. These low-lying forests provided a valuable stormwater system at no cost to taxpayers. Today, it is estimated to cost $15 to $150 per acre to comply with Phase II of the EPA process of stormwater regulation.
Controlling pests: Natural systems keep a wide variety of pests in check. Estimates indicate that it would cost more than $7 per acre to replace the pest control services provided by birds in forests with chemical pesticides. In addition, these natural pest control services are even more valuable as compared to chemical pest control methods than these figures capture, as they do not include the high associated costs of toxic loading.
Genetic resources: Out of the total quantity of prescription drugs administered in the United States today, approximately 25% contain active ingredients that originate from higher plants. (Higher plants are those that have true roots, stems, and leaves, as well as developed vascular systems). The breast cancer drug taxol, for example, was produced from the bark of our native Pacific yew tree.
Supporting the advance of scientific knowledge: It is estimated that each scientific article resulting from study of natural environments contributes a value of $12,000—over $5 million annually—to the advancement of the goals and interests of humanity. This estimate indicates the interconnection between scientific research and environmental protection.
Supporting quality of life and other human values: Studies of household values routinely reflect strong preferences for protection of forests, fish and wildlife. Olsen and others found that households in the Pacific Northwest were willing to pay between $26 and $74 per year to double the size of the salmon and steelhead runs in the Columbia River. Another study found that Oregon households were willing to pay $2.50 to $7.00 per month to protect or restore salmon, a cumulative total of $3 to $8.75 million dollars per month.
The mean annual value per household of river and fishery restoration on the Olympic Peninsula was $59 dollars in Clallam County and $73 for the rest of Washington. Another study found Oregon households willing to pay $380 annually to increase old growth forests, $250 per year to increase endangered species protections, and $144 to increase protection for salmon habitat.
Ecological services of other fish and wildlife habitat types
Other fish and wildlife habitat types in Western Washington include grasslands; lakes, rivers and reservoirs; agricultural land and pasture; and urban green spaces. There are not good figures for the ecological services values provided by all of these lands in Washington. In general, however, the most developed environments provide the fewest ecological services. By way of comparison, a recent ecological services valuation in Massachusetts indicated that 85% of the value created by ecosystem services was generated by wildlife habitat – wetlands, forest, and water bodies – in contrast to land that had been altered by development.
Washington State’s ecological systems generate great value—the research summarized in this article indicates that Washington alone produces several billion dollars in ecological services annually.
While the figures in this report cannot be strictly summed, it is worth reviewing the numbers presented here, all of which are direct or indirect financial indicators of the value of fish and wildlife habitat in Washington:
- Well over $100 million in federal and state funding for salmon recovery in Washington State between 2000 and 2003.
- Residents of Oregon estimated the value of each additional acre of salmon habitat at approximately $5000.
- Approximately $1,000,000,000 is spent annually on recreational fishing in Washington.
- An additional $1,300,000,000 is spent annually on wildlife viewing.
- Commercial fishing generates $289.2 million annually in Washington.
- In 2001 travelers spent an estimated $10.8 billion visiting Washington state.
- The Puget Sound area generates approximately 80% of statewide tourism revenues.
- Wetlands in Western Washington provide a flood protection benefit worth between $7,800 and $51,000 per acre.
- In Washington’s neighbor city of Portland, property values increase by $436 with every 1,000 feet of additional proximity to wetlands.
- Forests provide a carbon sequestration service worth $35 per acre.
- Forests also remove additional pollutants from the air, generating a service worth an additional $35 per acre.
- Removal of low-lying forests is linked to increased stormwater costs. Compliance with Phase II of the EPA storm water regulation process is estimated to cost between $15 to $150 per acre.
- Artificial water filtration plants to replace natural water filtration services can cost $200 million or more to construct, and also necessitate additional expenditures to cover operating costs.
- To replace the natural pest control services provided by birds in forests would cost an estimated $7 per acre.
- Each scientific article derived from the study of natural environments is estimated to contribute an average of $12,000 to the advancement of humanity’s interests.
- Households in the Pacific Northwest indicate a willingness to pay between $26 and $250 per year to protect fish species such as salmon and steelhead.
- Studies in other states have found that 85% of the value generated by ecological services was generated by natural wetlands, forest, lakes and rivers, and shorelines, as opposed to land that had been altered by development.
These figures indicate that ecological services provided by fish and wildlife habitat in Washington State are generating value worth at least several billion dollars annually. This number is guaranteed to be a vast underestimate as some ecological services cannot be valued, the list of ecological services valued above is an incomplete one, and scientific understanding of the full range of services humans derive from ecosystems is incomplete.
Intact ecosystems in Washington State provide an extremely valuable basket of ecological services for free and in perpetuity. If we damage these ecosystems, it will cost us, be it in additional water treatment, flood control, stormwater management, and water filtration costs, or reduced property values, tourism and recreation revenues, or the costs associated with an unpredictably shifting climate or dirtier air. All of these costs harm taxpayers and governments or erode quality of life. Even when ecological services can be partially replaced through a human-made system, the full range of services formerly provided by a functioning ecosystem cannot be recreated.
Even this preliminary compilation of ecological service values indicates the need to develop with a greatly increased degree of care. Although current data and methods only enable us to glimpse a small portion of the total value provided by natural systems in Washington, this glimpse is sufficient to set us on notice of our previous tendency toward blind destruction. Evolving research and improved techniques will likely shine additional light on the ways in which, and the degree to which, ecosystems support human well-being. Such improved knowledge will enhance our ability to make informed choices about the tradeoffs involved in development regulation. Growth in human-produced capital does not occur in a vacuum but rather often comes at the cost of lost ecological capital.
In the meantime, we are likely best served by precautionary approaches. The precautionary principle states that in the face of uncertainty, it is preferable to take actions to avert potential serious harm. In essence, the precautionary principle captures the common sense notion that it is better to be safe than sorry. Without precaution, we will destroy what we do not yet fully understand, harming ourselves and other present and future inhabitants of the Earth in ways that we cannot yet fully predict or even perceive.
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