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Ecosystem Service Valuation: Opportunities for Increased Protection and Conservation in Clallam County, WA
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Date
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2012
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Creator
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Flores, Lola P
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Environmental Studies
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Ecosystem Service Valuation: Opportunities for Increased Protection and Conservation in
Clallam County, WA.
by
Lola P. Flores
A Thesis
Submitted in partial fulfillment
of the requirements for the degree
Master of Environmental Studies
The Evergreen State College
December 2012
©2012 by Lola P. Flores. All rights reserved.
This Thesis for the Master of Environmental Studies Degree
by
Lola P. Flores
has been approved for
The Evergreen State College
By
________________________
Ralph Murphy, Ph.D
Member of the Faculty
________________________
Date
ACKNOWLEDGEMENTS
I would like to take a moment to acknowledge the Evergreen State College. I appreciate
all the help and mentoring I received from all the Masters of Environmental Studies
(MES) faculty and staff. I would also like to extend my gratitude to the adjunct faculty
that made the program a great learning experience and brought to the classroom their
numerous skills and shared their unique knowledge. A special heart warmed thank you to
my thesis reader Ralph Murphy, his feedback, comments and constant brainstorming of
ideas resulted in this finished thesis. The entire MES cohort, with whom I grew and
shared every new concept, idea and experience. I would like to extend a special thanks to:
Matt Ritter, Melissa Pico, Heather Kowalewski, Tim Benedict and Allison Osterberg.
Much appreciation also goes to Earth Economics, who provided the tools and knowledge
to make this thesis possible. The whole Earth Economics staff helped with the review and
editing of the final product. A special thanks to: Maya Kocian, Jen Harrison-Cox, David
Batker, Tedi Dickison and Anna Milliren.
Thank you and the best of luck.
ABSTRACT
Ecosystem Service Valuation: Opportunities for Increased Protection and Conservation in
Clallam County, WA.
Lola P. Flores
Conserving our natural environment has become an interdisciplinary effort for many
years. Economics is a discipline that not only is a part of conservation but also maintains
a crucial role. As an economic analysis, ecosystem valuations can help minimize the gap
created by the interaction of different disciplines. This thesis focuses on an economic
approach to environmental management, using Clallam County in Washington State as a
case study. This county, as many others, is mandated by State law to update their
Shoreline Master Program (SMP), and plans to use this ecosystem assessment as an
integrative part of this update. Through benefit transfer methodology, an ecosystem
service valuation for Clallam County is presented. Based on a total of 15 ecosystem
services over 11 land cover types, Clallam County’s services contribute roughly $1
billion to $12 billion a year to the local and regional economy. The net present value for
Clallam County analyzed over a 50-year period with a nominal rate is over 350 billion,
and at 4% discount rate, 150 billion. These values will be integrated into the SMP update
and used to inform the No Net Loss policy. Approaching environmental management
policies with a multidiscipline analysis enables further conservation of natural
environments. Ecosystem services currently represent zero value in our markets,
appointing a representative value enhances essential understanding of their
environmental, economic and social importance.
2
Table of Contents
Chapter 1- Purpose of Thesis .............................................................................................. 6
Introduction ...................................................................................................................... 6
Context- Research Question ............................................................................................ 7
Chapter 2- Literature Review: Ecosystem Services............................................................ 9
Environmental Economics and Ecological Economics ................................................... 9
Economic Sustainability ................................................................................................ 10
Ecosystem Goods and Services ..................................................................................... 11
Five Important Capitals.................................................................................................. 13
Ecosystem Service Valuation (ESV) ............................................................................. 15
Chapter 3- Related Policies: Shoreline Master Program (SMP) and No Net Loss Policy
(NNL)................................................................................................................................ 19
Shoreline Master Program ............................................................................................. 19
No Net Loss Policy ........................................................................................................ 20
Chapter 4- Clallam County: Site Description and Research Methods .............................. 25
Geography ...................................................................................................................... 25
History............................................................................................................................ 26
Natural Resources Management .................................................................................... 26
Regional Biodiversity .................................................................................................... 27
Salmon ........................................................................................................................... 27
Nearshore ....................................................................................................................... 28
Aesthetic and Recreational ............................................................................................ 30
Habitat and Nursery ....................................................................................................... 31
Water Regulation ........................................................................................................... 32
Erosion Control .............................................................................................................. 33
Food Provision ............................................................................................................... 34
Methods: Land Cover Classification and Valuation Methodology ................................. 35
Land Cover in Clallam County ...................................................................................... 35
Valuation Methodology ................................................................................................. 38
Benefit Transfer Methodology (BTM) .......................................................................... 41
Chapter 5- Ecosystem Service Valuation: Clallam County .............................................. 45
Annual Value of Clallam County .................................................................................. 47
Asset Value of Clallam County ..................................................................................... 52
3
Chapter 6- Conclusions and Future Suggestions .............................................................. 56
Overall Conclusions ....................................................................................................... 56
References in Text ............................................................................................................ 60
References in Value Transfer Studies ............................................................................... 62
Appendix A: Study Limitations ........................................................................................ 70
Appendix B. Value Transfer Studies Used by Land Cover .............................................. 75
4
List of Tables
Table 1. Ecosystem goods and services classifications.. .................................................. 18
Table 2. Land cover categories, C-CAP categories and a brief description of what each
land cover type entails (C-CAP Classification, 2005).. ............................................ 36
Table 3. Primary Valuation Methods. ............................................................................... 40
Table 4. Ecosystem Services present in Clallam County. ................................................ 46
Table 5. Minimum and maximum $ value for agricultural land, beach, and estuary. ...... 48
Table 6. Minimum and Maximum $ value for forest, fresh marsh, and grasslands ......... 49
Table 7. Minimum and Maximum $ value for open water, pasture, and salt marsh ........ 49
Table 8. Minimum and Maximum $ value for shrub and wetland ................................... 50
Table 9. Total annual value in ecosystem services per acre ............................................. 50
Table 10. Net present value with a nominal and 4% discount rates over 50 years.. ......... 54
List of Figures
Figure 1. No Net Loss policy diagram (SMP Handbook, 2010). ..................................... 22
5
Chapter 1- Purpose of Thesis
This thesis attempts to lessen the gap between different disciplines to better
understand of the value of the environment. Taking an interdisciplinary approach to the
subject of conservation, relates economics, ecology and society hoping to enable a clear
communication between disciplines, therefore achieving the overarching goal of
conserving ecosystems’ health and functionality.
Introduction
Recently the study of the environment has incorporated many different
disciplines. As more knowledge is gained regarding natural processes their understanding
becomes more complex. Even though nature is not assigned monetary worth, valuing the
benefits that environmental processes provide is an important tool for its protection. The
importance of placing a dollar value to natural capital can inform decision makers and
politicians to better understand the significance of conserving important ecosystems.
The case study used in this thesis, Clallam County, was divided into 11 land cover
types: Agricultural Land, Beach, Estuary, Forest, Fresh Marsh, Grasslands, Open Water,
Pasture, Salt Marsh, Shrub and Wetland. Each land cover across Clallam County
produces a unique array of ecosystem services. These services were identified, and a
preliminary subset was valued with dollar estimates based on eight valuation techniques:
market value, avoided cost, factor income, travel cost, replacement cost, hedonic pricing,
group valuation and contingent valuation. The 15 ecosystem services examined for
Clallam County include aesthetic and recreational value, biological control, disturbance
regulation, erosion control, food provision, gas and climate regulation, habitat and
nursery, nutrient cycling, pollination, science and education, raw materials, waste
6
treatment, soil formation, water supply and water regulation.
Ecosystems support economies, and provide foundational economic goods and
services. Healthy natural surroundings enable cities, communities, households and their
residents to thrive. However, society has underinvested in ecosystems. When free flood
protection provided by natural systems is lost to development, the results are costly to
repair flooded houses and other built infrastructure. When salmon, drinking water, storm
water conveyance, local climate regulation and other benefits disappear, the economy
suffers from both the direct damage to the ecosystem and the expensive tax districts and
construction costs that are needed to replace natural capital.
Context- Research Question
Ecosystem service valuation (ESV) is a tool used to quantify benefits, goods and
services provided by the environment. In recent years many publications have addressed
the definition of ecosystem services, and have also discussed the many methodologies
used on how to quantify them. In environmental economics many values that are used to
measure ecosystem services are prone to unpredicted changes, and therefore estimates
can sometimes be considered subjective (Batker et al., 2010). However, ESV lessens the
gap between undervalued ecosystems and promotes their conservation and protection;
therefore providing both monetary and non-monetary values that are concise and
understandable to many distinct professions. This tool has become widely accepted and
useful within the economic, political and environmental communities.
Clallam County has a state requirement to update their Shoreline Master Program
(SMP). Local governments utilize SMPs to regulate shoreline use in Washington State.
The SMP can also be integrated with other local government systems for administration
7
and enforcement of land use regulations. In order to highlight the importance of
conserving and protecting their ecosystems, Clallam County plans to include ESV values
in their updated version of the SMP-No Net Loss policy to bolster claims in achieving the
set goals. Clallam County is a case study that assesses the use of ESV values not only in
conserving the local environment, but also as an important tool to enhance regulatory
documents and recommend ways in which these economic values can be applied.
8
Chapter 2- Literature Review: Ecosystem Services
An extensive literature review was completed for this thesis. There are many new
economic and ecological concepts that not only have to be explained but also related to
the overall purpose of this thesis. Starting with the differences between environmental
and ecological economics, leading to an agreement upon what is considered economic
sustainability in this study. One of the main reasons for this chapter is to introduce
ecosystem goods and services as explained by the best available science.
Environmental Economics and Ecological Economics
Although each discipline approaches environmental issues differently they both
share traditional founding economic theories. In order to understand the position taken by
both environmental economics and ecological economics (but not describing these
disciplines in great depth) there are several central concepts that these disciplines
acknowledge as key for the understanding of conserving natural resources and healthy
environments.
Environmental economics, or neoclassical economic theory, approaches
environmental situations with allocation of non-renewable resources and renewable
resources overtime. Traditional economics deals with scarcity and depletion. Economic
analysis uses models to explain common property resources and public goods. As leading
concepts in economic theory, externalities and external costs and benefits explain
environmental issues. Environmental economics helps frame environmental questions to
enhance models that are useful in everyday decision-making (Harris, 2006).
Ecological economics takes a different approach to environmental issues. This
branch of economics has a broader perspective in framing environmental questions. A
9
concept that typically stands out in this discipline is carrying capacity defined by
population levels and consumption activities. Ecological economics argues that standard
theory does not factor sufficient weight for human impacts on the environment, and calls
for a need of major structural changes to adapt to environmental needs (Harris, 2006).
While environmental economics relies heavily on traditional economic theory, ecological
economics searches for alternative approaches of environmental questions other than the
traditionally used economic models.
Economic Sustainability
Economic sustainability depends on environmental sustainability. Natural systems
provide goods and services that are directly linked to the growth of a countries’ economy.
Restoring health to ecosystems is critical to improve quality of life and to secure
sustainability, justice, and economic progress in the area. From this basic idea, four
essential goals to a healthy economy arise: sustainability, justice, economic progress and
good governance (Batker et al., 2010).
Sustainability, although an immensely broad term, simply refers to the ability to
live within a physical scale that does not destroy basic natural systems that maintain the
economy (Batker et al., 2010). Justice and rights both help frame and define the value of
ecosystems. The distribution of the value to many goods and services is determined by
how individual rights are conferred. Also, valuation of the benefits provided by
ecosystems can commonly be decided upon their contingent value, mirroring an
environmental worth placed by society. Economic progress is typically measured by the
Gross Domestic Product (GDP), an index measuring only the production and sales of
material items. Ecological economics suggests alternative measurement for economic
10
progress, one that includes happiness and quality of life as a representation of this
increase. Good governance has the possibility of creating and sustaining institutions,
private and public, market or non-market. Government institutions need to operate
efficiently at the scale of the issue or problem at hand, project specific in order to achieve
meaningful results (Batker et al., 2010).
Ecosystem Goods and Services
In defining ecosystem goods and services many past and current authors have
explained the main ideas behind these concepts and their differences. As many other
concepts in the ecological community, they must be explained in the context of the
research question and the purpose of the investigation.
Ecosystem goods are tangible, quantifiable items or flows, like, timber, drinking
water, fish, crops and wildlife. Most goods are considered exclusive, meaning they can
have property rights that can exclude the use or ownership of that good to others. These
excludable goods can be valued; therefore they are tradable and marketable. The flow of
these good can produce economic return. To achieve economic efficiency, the value of
ecosystem goods and services should be considered. The true value of an ecosystem good
is only as real as the ecosystem service or process that happened to produce that good. By
including the value of the entire suit of ecosystem goods and services the relationships
and trade-offs can be better understood (Batker et al., 2010).
Ecosystem services are valuable benefits that are not as obvious as ecosystem
goods. Ecosystem services is a term that has been used for more than a couple decades,
Gretchen C. Daily defines it as: “…ecosystem services are the conditions and processes
through which natural ecosystems, and the species that make them up, sustain and fulfill
11
human life” (p. 23). Unlike ecosystem goods, ecosystem services are not tangible items
you can weigh or hold. Flood protection, recreational value, aesthetic value, storm
protection, waste treatment, climate stability and water filtration are a few of the services
provided. Services are harder to value than goods because many times they are not
present in market values. Paradoxically, ecosystem services are critical to both our
quality of life and for economic production (Daily, 1997; Costanza et al., 1997; Batker et
al., 2010).
In general, ecosystem services are non-exclusive, meaning that if someone enjoys
a service this does not prevent another from doing so as well. An ecosystem service such
as enjoying the view of Mt. Rainier is not exclusive to one person but available to many,
therefore it is not considered an excludable service.
In an ecosystem service market, beneficiaries of an ecosystem service pay those
who offer to provide the ecosystem service. The effectiveness of ecosystem service
markets will likely be seen in coming years as new markets develop for habitat, climate
control, temperature and water quality (Batker et al., 2010). A number of factors make
ecosystem service markets more challenging than markets for goods. A flow of services
cannot be measured in the same terms, quantitative productivity over time, as goods.
Quantifying the amount of flood protection provided by a given forest and the value of
that flood protection is much more difficult than calculating the potential for timber
harvest (Batker et al., 2010). Regardless of the difficulty in measuring service flows, this
value is usually higher then the production of goods of that same ecosystem.
The trade and overall utilization of these goods and services form an essential part
of the economy. Not only do natural services produce goods, but also provide “…actual
12
life-support functions, such as cleansing, recycling, and renewal, and they confer many
intangible aesthetic and cultural benefits as well” (Daily, 1997 pg. 25).
Although the complexity of ecosystems and their functions is widely known, the
loss of many of the natural cycles and processes has led to the deeper appreciation of the
intrinsic value of the services ecosystems provide. The further an ecosystem is disrupted
the more human effort it takes to replace the service once provided. In doing so, a true
and tangible value on the services taken for granted is illuminated. Lack of interest and
knowledge of organisms’ biology and ecosystem basics has also led to a general
depreciation of ecosystems. For example, much of the coastal mangrove vegetation, in
the Pacific Mexican coast, has been removed for development. This ecosystem was never
considered aesthetically worth preserving, now it is a widely known fact that mangroves
provide a unique ecosystem where certain commercial species spend their early life
cycles in these waters and also provide ultimate natural buffer zones preventing coastal
erosion (FAO, 2003). The destruction of these ecosystems has had a tremendous impact
on the ecology, as well as an impact on the regional economy. In recognizing these
interrelations between social needs and the role nature plays, is where discipline such as
ecological and environmental economics commence.
Five Important Capitals
There are five basic capitals, worth describing in detail in order to accomplish
economic and environmental sustainability. These are natural, human, social, built and
financial capital (Batker et al., 2010).
Natural capital represents resources provided by the earth. These can be
renewable or non-renewable, organic and inorganic materials, ecosystems and the
13
biodiversity existing within them. Human capital, or individuals and their
accomplishments, references an array of skills that people gain in life, such as education,
professionalism, work experience, and overall knowledge. The skills individuals’ gain
allows them a better and higher quality of life. Social capital is the network created by
organizations, institutions, laws, other social groups; all that provide for a working and
cooperative social structure. Built capital is the infrastructure that allows human and
social capital to advance forward. It may also mean uprising technologies, machines,
tools, and transportation. Financial capital is the subset of human capital, used as the
currency to which a known and agreed value is placed (Batker et al., 2010).
To understand more of the relationship between natural capital and economic
value, interconnectivity is key. Natural capital provides economic wealth and enables the
other types of capital to prosper. Unlike built capital, healthy natural capital, or
ecosystems, are self-maintaining. This influences the value of natural capital over time
and relies on the provisioning of outputs in perpetuity, increasing in value over time.
Built capital, on the other hand, depreciates over time and maintenance is needed in order
to keep it running (Batker et al., 2010).
Ecosystems also have important structural components that allow an efficient
functionality. These components can be viewed as functions and processes, which allow
natural capital to provide goods and services. Different ecosystem functions support
different types of processes and ultimately provide different outputs. No one single
process can create a single benefit, for this reason interconnectivity is also essential in
natural systems and their value should be considered as such. The valuation process has
always been one of the most debatable concerns in ecological economics. Many
14
environmentalists believe that valuing can over simplify and underestimate the true worth
of nature. This argument will always highlight the limitations of placing an economic
value to a natural process. Nevertheless throughout the years valuing ecosystem services
prove to be advantageous. There are many approaches to determine the value of services.
A common approach would be a utilitarian viewpoint used by economists
especially in a cost-benefit analysis. Armsworth et al. (2007) states that this analysis
provides a “convenient way of ascertaining social values of alternative policies and thus
offers a way to make difficult decisions” (pg. 42). The utilitarian way of viewing the
different alternatives can also be criticized because it does not attempt to correct
differences in awareness or education among individuals, all essential in making lasting
changes.
Ecosystem Service Valuation (ESV)
Knowing the value and importance of ecosystem functionality is the first step in
enabling the identification and classification of ecosystem services. Although different
services have been identified for over a decade, to this day uncertainty in their
classification still varies. “In 2001, scientists from NASA, the World Bank, the United
Nations Environmental Program, the World Resource Institute, and other institutions
examined the effects of ecosystem change on human well being. The product of this
collaboration was the Millennium Ecosystem Assessment (MEA), which classifies
ecosystem services into four broad categories describing their ecological role” (MEA
Introduction, 2003).
Today, a number of federal agencies in the United States, including the
Environmental Protection Agency, the United States Geological Service, and the United
15
States Department of Agriculture house dedicated ecosystem services departments to
advance understanding of how ecosystem services can be promoted to improve long-term
economic prosperity for the nation. Agencies like the Federal Emergency Management
Agency (FEMA) are developing tools to include ecosystem services in their benefit-cost
calculations that dictate their floodplain policy, including grants and loans. Large private
corporations such as PUMA and Dow Chemical have also begun to account for their
impact on ecosystem services (Batker et al., 2010).
Ecosystems provide a wide variety of valuable public goods and services at the
least cost over long periods of time, and in most cases they are the best systems for
producing such goods and services. It would be impractical, and in some cases
impossible and simply undesirable, to replace these economically valuable natural
systems with more costly and less efficient human built substitutes. When ecosystems are
valued as assets and brought to the center of economic decision-making, their costeffective services are less likely to be lost.
Ecosystem services can be categorized in different ways. This study follows the
approach developed by DeGroot et al. (2002), dividing 23 ecosystem services into four
functional categories: Regulating Services, Habitat Services, Provisioning Services and
Information Services. This approach is consistent with the MEA, as well as much of the
scientific and economic literature. The four categories of ecosystem services are
described below and summarized in Table 1.
•
Provisioning services provide basic goods including food, water and materials.
Forests grow trees that can be used for lumber and paper, wild and cultivated
crops provide food, and other plants may be used for medicinal purposes. Rivers
16
provide fresh water for drinking and fish for food. The coastal waters provide fish,
shellfish and seaweed.
•
Regulating services are benefits obtained from the natural control of ecosystem
processes. Intact ecosystems provide regulation of climate, water, soil, flood and
storms, and keep disease organisms in check.
•
Habitat services provide refuge and reproduction habitat to wild plants and
animals and thereby contribute to the (in situ) conservation of biological and
genetic diversity and evolutionary processes.
•
Information services provide humans with meaningful interaction with nature.
These services include spiritually significant species and natural areas, places for
recreation, and educational opportunities through science.
Conclusion
Although environmental and ecological economics have many differences, both
disciplines integrate ecology and economy. Recognizing the important role the economy
plays in maintaining resources is key to conservation. Identifying the ecosystem services
present in a region results in an Ecosystem Service Valuation (ESV), where a simple
representation of these services and their values are analyzed. Although authors may vary
in the methods used to calculate these values, a commonality among them is the valued
benefit of the good provided by the services, assessed in an economic representation.
These values can then be used to influence decision and policy makers to enhance
protection of natural capital.
17
Provisioning
Table 1. Ecosystem goods and services classifications. This table provides the 23 types of ecosystem
services characterized by Rudolf DeGroot. They are separated into four main types of services and
briefly explained (De Groot, 1992).
Good/Service
Water Supply
Economic Benefit to People
Water for human consumption, irrigation, and industrial use.
Food
Food for human consumption.
Raw Materials
Genetic Resources
Biological materials used for clothes, fuel, art, and building.
Geological materials used for energy, construction, or other
purposes.
Genetic material and evolution in wild plants and animals.
Medicinal Resources
Biological materials used for medicines.
Ornamental Resources
Disturbance Prevention
Ornamental and companion uses (flowers, plants, pets, and
other).
Generation of atmospheric oxygen, regulation of sulfur dioxide,
nitrogen carbon dioxide, and other gaseous atmospheric
components.
Regulation of global and local temperature, climate, and
weather, including evapotranspiration, cloud formation, and
rainfall.
Protection from floods, storms, and drought.
Soil Retention
Erosion protection provided by plant roots and tree cover.
Water Regulation
Water absorption during rains and release in dry times,
temperature and flow regulation for people, plants, and animals.
Biological Control
Natural control of diseases and pest species.
Waste Treatment
Absorption of organic waste, natural water filtration, pollution
reduction.
Formation of sand and soil from decaying vegetation and
erosion.
Fertilization of plants and crops through natural systems.
Gas Regulation
Climate Regulation
Regulating
Soil Formation
Pollination
Nutrient Regulation
Information
Habitat
Habitat
Transfer of nutrients from one place to another; transformation
of critical nutrients from unusable to usable forms.
Providing habitat for plants and animals and their full diversity.
Nursery
Growth by plants provides basis for all terrestrial and most
marine food chains.
Aesthetic Information
The role which natural beauty plays in attracting people to live,
work, and recreate in an area.
Recreation and Tourism
The contribution of ecosystems and environments in attracting
people to engage in recreational activities.
Scientific and Educational Value
Spiritual and Religious Experience
The value of natural systems for scientific research and
education.
The use of nature for religious and spiritual purposes.
Cultural and Artistic Information
The value of nature for cultural purposes.
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Chapter 3- Related Policies: Shoreline Master Program (SMP) and No
Net Loss Policy (NNL)
Clallam County, as well as many other counties in Washington State, has to
update their SMP. This overall Plan is a state requirement for each city and county
government to help protect their shoreline. Similar to other local policies required by the
state, they are an opportunity to participate and voice the needs and suggestions of the
communities directly involved with that ecosystem.
Shoreline Master Program
In recent years, shoreline and nearby wetlands have become critical areas that
require conservation practices. For this reason, State requirements enable the creation of a
local Shoreline Master Program. The SMP seeks to establish shoreline uses that will
acknowledge present development, but regulate future development with the goal of
serving the maximum public interest, rather than private interest. In doing so counties
such as Clallam can specify practices and uses for their ecosystems.
Clallam County has a diverse shoreline that residents and visitors enjoy daily
from the services provided by this ecosystem. From all over the nation visitors come to
fish and boat in these waters, camp along them, or simply revel in the marine views.
While tourism is a welcome ingredient of the County's economy, it is equally important
to its residents that the County's shorelines be managed to the maximum benefit of those
who live here now and will live here in the future.
The goal of the SMP is to conserve, to the fullest extent possible, the scenic,
aesthetic and ecological qualities of the shorelines of Clallam County, in harmony with
those uses, which are deemed essential to the life of its citizens. To achieve this goal, the
19
past Master Program of 1992 took into account several general policies, that to this day
are still applicable and serve as baseline information for the required update. Some of
these policies include: the restriction of private and public development that further
destroys the ecological state of the ecosystem; public access to certain areas is restricted
and only permitted under specified terms; water quality is the prime goal of the shoreline
management; conservation is succinct with development either by restrictions or
mitigation efforts; among other general polices (Kramer et al., 2010).
The 2012 update has many similar goals and will be a continuation of the efforts
planned in the 1993 version. There are different policies that will include a quantification
of ecological functions of the existing ecosystems. These requirements and goals are
explained further in the No Net Loss Policy.
No Net Loss Policy
Almost 40 years ago the Washington State Legislature identified a “…clear and
urgent demand for a planned, rational, and concerted effort, jointly performed by federal,
state, and local governments, to prevent the inherent harm in an uncoordinated and
piecemeal development of the state’s shorelines” (Kramer et al., 2010 pg. 1). Since then,
local governments have worked to put the broad policies of the Shoreline Management
Act into practical terms through the development and implementation of Shoreline
Master Programs. In 2003, the Department of Ecology specified that No Net Loss (NNL)
of ecological function is the state standard for local Shoreline Master Program updates.
The Department of Ecology recently updated their SMP Handbook to provide additional
guidance on how to achieve NNL and now requires that each jurisdiction write a
summary report describing how their SMP meets the state standard. On the surface,
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preparing a summary report is a relatively straightforward exercise, but achieving NNL
of ecosystem functions in the face of continued growth and degradation continues to
prove challenging (Kramer et al., 2010).
The SMP Guidelines, adopted in 2003, constitute the first actual rule of the
Washington Administrative Code (WAC) to incorporate the NNL requirement. The
concept of NNL in this State originated with earlier efforts to protect wetlands. In 1989,
Governor Booth Gardner signed an Executive Order establishing a statewide goal
regarding wetlands protection. The interim goal of the SMP is to reduce an overall net
loss in acreage and function of Washington's remaining wetlands. It is further the longterm goal to increase the quantity and quality of these wetlands as a resource base.
Over time, the existing condition of shoreline ecological functions should remain
the same as the SMP is implemented. Simply stated, the NNL standard is designed to halt
the introduction of new impacts to shoreline ecological functions resulting from new
development. Both protection and restoration are needed to achieve NNL. Restoration
activities also may result in improvements to shoreline ecological functions over time.
Figure 1 is commonly used to explain how to achieve the NNL effort. Whether
development will affect ecological functions or not, a mitigating effort must take place in
order to permit new development.
Local governments must achieve this standard through both the SMP planning
process and by appropriately regulating individual developments as they are proposed in
the future. NNL should be achieved over time by establishing environment designations,
implementing SMP policies and regulations that protect the shoreline, and restoring
sections of the shoreline.
21
Figure 1. No Net Loss policy diagram-The red rectangle is representative of degradation or
development. The green rectangle represents the mitigation efforts that are required in order to
offset impacts caused by new development. The horizontal line indicates the minimum of efforts
required while still allowing more mitigation actions to take place, if this limit is exceeded (SMP
Handbook, 2010).
Based on past practice, current science tells us that most, if not all, shoreline
development produces some impact to ecological functions. However, the recognition
that future development will occur is basic to the NNL standard. The challenge is in
maintaining shoreline ecological functions while allowing appropriate new development,
ensuring adequate land for preferred shoreline uses and public access. With due diligence,
local governments can properly locate and design development projects and require
22
conditions to avoid or minimize impacts.
NNL incorporates the following concepts: existing ecological functions should
not deteriorate due to permitted development; new adverse impacts to the shoreline
environment that result from planned development should be avoided; mitigation for
development projects alone cannot prevent all cumulative adverse impacts to the
shoreline environment, so restoration is also needed (Kramer et al., 2010).
Local governments demonstrate NNL at two levels, through the comprehensive
SMP update planning process and over time, during the project review and permitting
processes. Local governments show that their updated SMP will result in a no net loss of
ecological function by completing several tasks in the comprehensive SMP update
process, including (from Kramer et al., 2010):
•
Shoreline inventory and characterization;
•
Shoreline use analysis estimating the future demand for shoreline space
and potential use conflicts over a minimum 20-year planning period and
projects future trends;
•
Shoreline management recommendations that may translate the inventory
and characterization findings into SMP policies, regulations, environment
designations and protection strategies for each shoreline planning unit;
•
Restoration plan, which includes restoration opportunities, priorities and
timelines for shoreline restoration;
•
Cumulative impacts analysis that will assesses the cumulative impacts on
shoreline ecological functions.
23
Given these tasks each county, city and local government must have a preliminary
evaluation of the ecosystem ecological functions and the requisites new development
must follow.
Conclusion
The SMP, as a comprehensive plan that incudes many additional reports, enables
the preservation of the shoreline. It is important for a County to identify and manage the
ecological health of their ecosystems. Clallam County’s income depends on functioning
ecosystems. Local policies such as the SMP, Critical Areas Ordinance, and other
Comprehensive Plans ultimately help prevent further unmanaged degradation.
24
Chapter 4- Clallam County: Site Description and Research Methods
To better illustrate the purpose of ecosystem service valuations and the benefits
and utility these provide, this thesis uses Clallam County as an example. Many times
counties, cities, and watersheds request valuations to support environmental policies and
green agendas. This tool enhances communication between local governments, interested
groups
and
community
members
bolstering
environmental
management
and
conservation.
Geography
Clallam County is located south of the San Juan Islands and is the County furthest
to the north on Washington’s Pacific Coast. Clallam County includes the western most
point of the continental United States. The County is comprised of 254 miles of shoreline,
which ranges the entire length of the Strait of Juan de Fuca to Discovery Bay and the
Pacific Coast. With a population of approximately 71,000, Clallam County is
predominantly rural land with its western border marked by the Olympic Coast National
Marine Sanctuary and the Olympic National Park to the south. Of the total 2,670 square
miles of Clallam County, 1,739 square miles is land while 931 square miles is water,
composed of lakes, rivers and streams (Lear, 2011).
The Strait of Juan de Fuca shoreline is comprised of bluff backed beaches, feeder
bluffs, barrier beaches (spits), rocky platforms, stream deltas, inlets, and embankments
associated with protected lagoons and salt marshes. These features are continually
evolving and changing in response to dynamic geographic and oceanographic processes
such as sediment erosion and deposition, landslides, and bluff (Clallam County, 2011).
25
History
Clallam County takes its name from the Klallam or S’Klallam “strong people”,
the indigenous tribe who occupied the largest portion of what today is inland Clallam
County. The Makah and the Quileute people occupied the coastal areas. Clallam County
was one of the first regions of present day Washington to be explored by Europeans in
1778 and quickly became a prime resource for the fur trade. Despite its early European
exploration and rich natural resources of marine and forest services, the region did not
become a strong economic force until the early 1900s when the Elwha River dam
introduced hydroelectric power. The result was an explosion in the lumber industry,
which maintained its position as the primary employer of the region for the following
several years. The lumber industry then created the pulp and paper industries, which
continue to thrive in the region today. In 1915, a railroad was completed but transport
remained dominated by water travel until the opening of the Olympic Loop Highway
allowing the first convenient automobile access to the region (Clallam County, 2011).
Environmental regulations were revised and updated in the 1980s as a result of
diminished forest ecosystems. Logging activities have declined from peaks but still
remain a strong force. Other industries such as agriculture and services have also
emerged as strong components of the Clallam County economy (Oldham, 2005).
Natural Resources Management
Water and lands of Clallam County are managed by the County’s Department of
Community Development who oversee committees on watershed planning, salmon
recovery, Lake Ozette recovery, groundwater and other water quality, and natural
resource planning and monitoring. The shoreline of Clallam County is regulated by the
26
Washington State Shoreline Management Act and the Clallam County Shoreline Master
Program (SMP) in partnership with the cities in Clallam County. The SMP oversees the
land use and development within 200 feet of rivers, lakes, streams and marine shores.
The SMP was initially adopted in 1976; it was updated in 1992 and is currently
undergoing updates and revisions (Clallam County, 2011).
Regional Biodiversity
Given Clallam County’s numerous and diverse land covers, the County is rich in
plant and animal biodiversity. The existence of dense forests containing douglas fir,
western red cedar, western hemlock, sitka spruce, and other giant conifers made timber
the County's economic core for most of its history (Clallam County, 2011). These forests
provided healthy habitat for the presence of at least 7,013 species, including 4,248
animals, 1,504 plants, 851 fungi and 392 algae in the Puget Sound alone (Chapen et al.,
2000). The North Olympic Land Trust is a local land conservancy that works to protect
the biodiversity of the region.
Salmon
The numerous rivers and streams found throughout Clallam County- the
Bogachiel, Dungeness, Elwha, Pysht, Lyre, Jimmycomelately, Morse, Sol Duc and Salt
Creek, to name a few; have historically allowed for some of the most productive Pacific
salmon runs in the world. Chinook, Coho, Chum, Sockeye, and Pink salmon return
annually to the region (Ward et al., 2008). Stories abound about tremendous runs of 100pound salmon returning to the Elwha River prior to the construction of two dams at the
27
turn of the century, which powered a growing Port Angeles but prevented the fish from
accessing key upstream habitat.
These iconic fish are tremendously significant to local tribes and their members.
They are an important food source, sought for commercial and subsistence harvest, and
desired for their cultural significance. Salmon are also very important to the economy of
this area, for commercial and individual harvest, and for recreational opportunities by
sports and fly fisherman, both local and out-of-town (Clallam County, 2011).
Not to be forgotten is the significant role the Strait of Juan de Fuca nearshore,
which plays as a major salmon migration corridor for Endangered Species Act (ESA)
listed Puget Sound salmon, as well as ESA listed salmon from Klamath and Columbia
River Regions. Nearby pocket estuaries and salt marshes are important breeding, rearing
and feeding areas for juvenile salmon as they gain strength and size before their journey
out to sea (Clallam County, 2011).
However, salmon stocks have significantly declined in the region, in part due to
the effects of overharvest, extensive logging of local forests, as well as development,
population growth, diking, damming and other human impacts to rivers, estuaries and
streams. This has lead to listings under the Endangered Species Act for Puget Sound
Chinook across much of the region, along with other listings for Eastern Strait of Juan de
Fuca and Hood Canal Summer Chum along with bulltrout and steelhead (Clallam
County, 2011).
Nearshore
Puget Sound nearshore is vital for the economic and recreational benefit of over 4
million citizens of the region. The nearshore zone ranges between the riparian forested
28
land and extends to the photic zone where sunlight can no longer reach marine
vegetation. As a result, the nearshore region is rich in a wide diversity of both terrestrial
and aquatic plants and animals. From the shoreline bluffs, backshore, beach face, shallow
tidal areas and subtidal zones, the health of this area is essential to maintaining the health
of the entire region. Vegetation of the nearshore zone is crucial to providing soil stability,
maintaining water quality, abating pollution and providing a protected habitat for
migrating and permanent species (Clallam County, 2011).
Clallam’s nearshore area along the Strait of Juan de Fuca is rich in aquatic
vegetation and animals, which support many varieties of life. This area has been
inhabited by human settlements for thousands of years and serves as the migratory path
for a multitude of bird species, Fraser River Salmon, and marine mammals (Clallam
County, 2011).
The temperate climate of the nearshore and the views that it has to offer make the
area extremely desirable for development but the impacts of human activities can lead to
the degradation of the essential components of the nearshore habitats. Shoreline
armoring, a manmade practice, can disrupt the natural sedimentation process, also known
as feeder bluffs. This term is specific to the Puget Sound area, where bluffs are common
and the natural action of sediment disposition is a characteristic of these beaches.
Bulkheads, aquaculture practices, and reduction of endemic vegetation not only harm
natural ecosystems and animal species that depend on the health of the nearshore, it can
also affect resource based industry and job creation in Clallam County (Clallam County,
2011).
29
Clallam County is an area with many natural resources and healthy ecosystems.
The location of Clallam County on the Peninsula makes this area breathtaking and a
popular tourist attraction. Regional healthy ecosystems provide more than beautiful
sceneries, also numerous services that increase quality of life for residents and provide
important economic opportunities.
Following are some detailed explanations of ecosystem services valued in this
thesis. In Clallam County a total of 15 ecosystem services are present (details in Table 1).
In the following section only five of the total ecosystem services present in Clallam
County will be explained in great detail to exemplify the reasoning behind quantifying
particular services. This section also lays out how each of these services are important to
the study area.
Aesthetic and Recreational
Aesthetic value, as an ecosystem service, refers to the appreciation of natural land
and seascapes. The existence of national parks and designated scenic areas attests to the
social importance of this service. There is also substantial evidence demonstrating the
economic value of environmental aesthetics through analysis of data on tourism, housing
markets, wages, and relocation decisions. Degraded landscapes are frequently associated
with economic decline and stagnation (Power et al., 1996).
Clallam County Example
Activities such as sailing, rafting, skiing, kayaking, camping, hunting, hiking, bird
watching and many more are a great source of income for Clallam County businesses
throughout the year. Olympic National Park and Olympic National Forest attracts many
visitors year round. Not only are the County’s beautiful forest and rivers an aesthetic
30
wonder, but the shoreline and beaches are also a great place for recreational activities
such as hiking, fishing, surfing, tidepool exploration, and clamming. Clallam County has
over fifteen parks, totaling approximately 735 acres, where residents and visitors enjoy
interacting in unique natural surroundings providing important learning and bonding
experiences.
Habitat and Nursery
Habitat is the biophysical space and process in which wild species meet their
needs. Healthy ecosystems provide physical structure, adequate food availability,
appropriate chemical and temperature regimes, and protection from predators. Habitat
may also provide nursery functions; a nursery habitat refers specifically to where all the
requirements for successful reproduction occur. Biodiversity provides the structure and
complexity of ecosystems lending resiliency and producing provisioning, regulating,
cultural and supporting ecosystem services. In addition to the physical structure provided
to species, food/web relationships are important components of habitats that support all
species (DeGroot et al., 2002).
Clallam County Example
Ecosystem restoration and salmon recovery actions from the North Olympic
Chapters of the Puget Sound Chinook Recovery Plan, the Eastern Strait of Juan de FucaHood Canal Summer Chum, Lake Ozette Recovery Plan and draft WRIA 19 Recovery
Plans are underway throughout Clallam County (Clallam County, 2011).
The plans include a comprehensive set of actions related to salmon recovery, such
as harvest management, hatchery management, water diversions, or forest management.
All of these actions help prioritize salmon recovery efforts led by the North Pacific Coast
31
Lead Entity in western Clallam County and the North Olympic Lead Entity for Salmon
along the Strait. Other key partners include Tribes, Clallam County, cities, non-profits
and citizens. The steps described in recovery strategies are necessary due to listings of
five salmonid species as threatened under the Endangered Species Act. Salmon
populations in many of Clallam County’s watersheds have declined significantly.
Preserving and restoring ecosystem health of Clallam County’s many watersheds will
help maintain the dwindling salmon populations. Some examples of this work includes
the removal of two aging dams on the Elwha River lead by Olympic National Park in
partnership with the Elwha Klallam Tribe, which is working on the revegetation and
building large engineered log jams to maximize restoration efforts. As well as efforts to
restore floodplain areas along the Dungeness by adding needed woody debris buffers
along rivers.
Water Regulation
This category includes regulation of water flows through the ground and along
terrestrial surfaces, as well as regulation of temperature, dissolved minerals, and oxygen.
Ecosystems absorb water during rains and release it in dry times. They also regulate
water temperature and flow for plant and animal species. Forest cover, riparian vegetation
and wetlands all contribute to modulating the flow of water from upper portions of the
watershed to streams and rivers in the lower watershed. When forested basins are heavily
harvested, the remaining vegetation and litter layer on the forest floor absorbs less water.
The elimination of the vegetation cover reduces water absorption increasing the flow of
water onto land and bodies of water (Moore et al., 2005).
32
Clallam County Example
The lack of water regulation in developed lands can be costly and problematic to
local landowners. In Clallam County, drainage plans are used as a method for the control
of stormwater runoff on individual properties. These plans are required to control
increases in rainwater runoff resulting from development of the land. Every Clallam
resident is responsible for damage caused by stormwater runoff due to their development.
Maintaining natural pervious land cover can significantly reduce the mitigating efforts
required by the county. This will save time and money required to build infrastructure to
mitigate this water flow.
Erosion Control
Erosion is one of the most damaging outcomes of poor land development. Erosion
strips the land of all nutrients and minerals that can prevent or significantly impact the
ability for vegetative cover regeneration. This then creates a chain reaction where fauna is
deprived of their natural habitats and land itself declines in value. Land erosion can
sometimes pose real danger to landowners. Such is the case with shoreline erosion. The
shoreline has been developed over many years. Natural factors like wind and storms
cause accelerated impacts to developed lands, due to the lack of biological cover that
serves as protection (Merrill et al., 2002). Erosion control can be achieved through
stormwater management; avoiding or limiting development in areas with a high risk to
erosion due to slope, erodability of soil, and other factors; protection of endemic land
covers and mitigating previous harmful activities.
33
Clallam County Example
Many shoreline and coastal bluff landowners have expressed interest in protecting
the Nearshore environment. The conservation of this land will ensure their safety and will
protect their property. The Shoreline Master Program deals with regulations that prevent
further damage to the land and consequently will avoid erosion. With the No Net Loss
policy new development is restricted and mitigation efforts are required either onsite or
offsite. These mitigation efforts account for the impact development has on the land. It is
monitored by maintaining the current state of ecological functions present in the area.
Food Provision
Providing food is one of the most important ecosystem functions. Agricultural
lands are our primary source of food; farms are considered modified ecosystems, and
food is considered an ecosystem good with labor and built capital inputs. Agricultural
value is measured by the total market value of crops produced; however, market value is
only a small portion of the total value agricultural lands provide through pollination,
carbon sequestration, aesthetic value, and other services.
Clallam County Example
In Clallam County there are over 900 acres of agricultural land. Each farm has
about 49 acres and the average value of agricultural products sold per farm is
approximately $40,000 thousand per year. Agriculture contributes significantly to the
local and regional economy, by producing high quality produce and jobs. Agricultural
lands, especially organic farms, provide additional ecosystem services, such as
pollination, habitat, flood protection and nutrient regulation. These services are
considered “green infrastructure” and are critical to the local and regional economy.
34
Eventhough a wide variety of ecosystem services exist, they are limited to what is
present in a certain area. All of the 15 services present in Clallam County were valued
and provide a range of benefits. Services are particular to the area of study and their value
may vary depending on geographical location, cultural and traditional activities,
productivity, development, and many other aspects.
Methods: Land Cover Classification and Valuation Methodology
Land Cover in Clallam County
Clallam County, similar to other counties in Washington State is composed of
many different geographically different land covers. The peninsula offers Clallam County
a distinct terrain, increasing the ecosystem services pertinent to these land covers.
Geographic Information Systems (GIS) data on land cover (forests, shoreline, rivers,
pastures, etc.) is provided by satellite surveys. These land cover types provide suites of
ecosystem services that may be valued. Although GIS has come a long way since this
tool was first created, there are still limitations as to the accuracy of the distinct land
cover types, in some cases the delimitation is nearly impossible. This is particularly true
for Clallam County, where the shoreline was a challenge. Many geographical datasets
combine shoreline with barren lands (over developed lands), which cannot be valued. For
this project the acreage for unconsolidated shoreline was used as the area of beach valued.
As for rivers and lakes they were included in the open water category, as well as riparian
buffers. Combining certain land cover types is needed because of the shortage of exact
data of the availability of GIS layers, time and personnel.
This thesis uses Coastal Change Analysis Program (C-CAP) a land classification
by the National Oceanic and Atmospheric Administration (NOAA), which is a national
35
effort to develop and distribute regional land cover and change analysis data for the
coastal zone by using remote sensing technology. In addition to data development, CCAP establishes guidelines and standards for developing digital, regional land cover and
change data along the nation's coastal zone. The data used in this program is created from
a combination of satellites and fieldwork. C-CAP classifies land cover types into 22
standardized classes that include forested areas, urban areas, and wetlands. C-CAP land
cover change data is available in .img format and in Universal Transverse Mercator
(UTM). Data coverage extends well inland from the coastlines, and includes most of the
US shoreline. Typically, data is designated by state and is organized into three datasets
per state: starting time land cover, ending time land cover, and land cover change. Table
2 categorizes and describes each GIS land cover type in the area.
Table 2. Land cover categories, C-CAP categories and a brief description of what each land cover
type entails. Clallam County’s land cover was divided into 11 types. Each land cover type provides
different ecosystem services (C-CAP Classification, 2005).
Land Cover
Type
Agricultural
Land
C-CAP Classification
Description
Cultivated Crops
Areas used for the production of annual crops. Crop
vegetation accounts for greater than 20 percent of total
vegetation. This class also includes all land being actively
tilled. Characteristic land cover features: Crops (corn,
soybeans, vegetables, tobacco, and cotton), orchards,
nurseries, and vineyards.
Beach
Unconsolidated Shore
Unconsolidated material such as silt, sand, or gravel that is
subject to inundation and redistribution due to the action of
water. Characterized by substrates lacking vegetation except
for pioneering plants that become established during brief
periods when growing conditions are favorable. Erosion and
deposition by waves and currents produce a number of
landforms representing this class. Characteristic land cover
features: Beaches, bars, and flats.
36
Estuary
Estuarine Forested,
Scrub/Shrub and
Emergent Wetland
Includes all tidal wetlands dominated by woody vegetation
and erect, rooted, herbaceous hydrophytes (excluding mosses
and lichens). All such wetlands that occur in tidal areas in
which salinity due to ocean is present. Characteristic species:
Sea-myrtle (Baccharis halimifolia), Cordgrass (Spartina spp.),
needlerush (Juncus roemerianus).
Forest
Deciduous, Evergreen and
Mixed Forest
Areas dominated by trees generally greater than 5 meters tall
and greater than 20 percent of total vegetation cover. More
than 75 percent of the tree species shed foliage simultaneously
in response to seasonal change or species that maintain their
leaves all year. Canopy is never without green foliage.
Characteristic species: Maples (Acer), hemlock (Tsuga
canadensis), Douglas-fir (Pseudotsuga menziesii), ponderosa
pine (Pinus monticola), Sitka spruce (Picea sitchensis).
Fresh Marsh
Palustrine Aquatic Bed
Includes tidal and non-tidal wetlands and deep water habitats
in which salinity due to ocean-derived salts is below 0.5
percent and which are dominated by plants that grow and form
a continuous cover principally on or at the surface of the
water. These include algal mats, detached floating mats, and
rooted vascular plant assemblages. Total vegetation cover is
greater than 80 percent. Characteristic species: water lilies
(Nymphea, Nuphar), water fern (Salvinia spp.), and
Bladderworts (Utricularia)
Grassland
Grassland/Herbaceous
Areas dominated by grammanoid or herbaceous vegetation,
generally greater than 80 percent of total vegetation. These
areas are not subject to intensive management such as tilling,
but can be utilized for grazing. Characteristic land cover
features: Prairies, meadows, fallow fields, clear-cuts with
natural grasses, and undeveloped lands with naturally
occurring grasses.
Open Water
Lakes and
Rivers
Riparian
Buffer
Pasture
Open Water
All areas of open water, generally with less than 25 percent
cover of vegetation or soil. Characteristic land cover features:
Lakes, rivers, reservoirs, streams, ponds, and ocean.
Grassland/Herbaceous
Areas dominated by grammanoid or herbaceous vegetation,
generally greater than 80 percent of total vegetation. These
areas are not subject to intensive management such as tilling,
but can be utilized for grazing. Characteristic land cover
features: Prairies, meadows, fallow fields, clear-cuts with
natural grasses, and undeveloped lands with naturally
occurring grasses.
37
Salt Marsh
Eel grass
bed
Estuarine Aquatic Bed
Includes tidal wetlands and deep water habitats in which
salinity due to ocean-derived salts is equal to or greater than
0.5 percent and which are dominated by plants that grow and
form a continuous cover principally on or at the surface of the
water. These include algal mats, kelp beds, and rooted
vascular plant assemblages. Total vegetation cover is greater
than 80 percent. Characteristic species: Kelp (Macrocystis and
Laminaria), sea grasses (Halophila spp.)
Shrub
Scrub/Shrub
Areas dominated by shrubs less than 5 meters tall with shrub
canopy typically greater than 20 percent of total vegetation.
This class includes tree shrubs, young trees in an early
successional stage, or trees stunted from environmental
conditions. Characteristic species: scrub oak (Quercus
beberidifolia), sagebrush (artemisia tridentate)
Wetland
Palustrine
Forested,
Scrub/Shrub
and
Emergent Wetland
Areas dominated by saturated soils and often standing water.
Wetlands vegetation is adapted to withstand long-term
immersion and saturated, oxygen-depleted soils. These are
divided into two salinity regimes: Palustrine for freshwater
wetlands and these are further divided into Forested,
Shrub/Scrub, and Emergent wetlands.
Valuation Methodology
Since the 1940s, economists have been developing methods to place monetary
value on the environment. One of the earliest instances was Hotelling’s (1949) discussion
on the value of parks as indicated by travel cost expenditures. The modern development
of ecosystem services as a concept began with the “utilitarian framing” of ecosystem
functions in the late 1970s, to demonstrate the importance of biodiversity conservation to
human well being (Gomez-Baggethun et al., 2010). Ecosystem services are generally
defined as the benefits that people obtain from ecosystems. Ecosystem Service Valuation
(ESV) achieved widespread mainstream interest following the publication of the
Costanza et al. (1997) paper in Nature, which estimated the economic value of the
world’s ecosystem services at $33 trillion, almost double the value of global GNP at the
time.
38
Ecosystem goods and services can be divided into two general categories:
marketable and non-marketable goods and services. Measuring market values simply
requires monitoring data for process and quantities sold. This production creates a flow of
ecosystem goods that have a market-defined economic value over time. Some ecosystem
services can be valued directly by using quantities and prices identified in a competitive
market. Market analysis, in conjunction with factor input (initial input) or productivity
analysis (end productive output) is useful in providing values in cases where services are
priced by the market.
Non-market values of goods and services are difficult to measure. When there is
no explicit market for services, more indirect means of assessing values must be used.
Non-market measurement techniques can be further divided according to whether they
measure use values, either for goods and services that are consumed or for goods and
services. Bird watching is an example of this, where enjoyment does not involve
“consumption” in the usual sense of the term, or non-use values, where there is no actual
contact or encounter with the resource (Leschine et al., 1997). The values associated
with use are revealed through the behavior of individuals, while non-use values are such
that economists tend to rely more on the stated preferences of individuals, such as can be
established through surveys.
Economists may also use the results of previously completed resource valuation
studies, conducted with any of the methods above, if there are enough similarities
between cases to justify the inference that values obtained in one case also apply in
another. This process is known as benefit transfer methodology (Leschine et al., 1997).
This thesis uses the benefit transfer methodology (BTM) for the values resulted in
39
Clallam County’s ecosystem services. However, understanding the primary valuation
methodologies is essential to understand the origin of the valuation process.
Table 3. Primary Valuation Methods-The valuation methods are separated into direct and indirect
use values. With direct only a market price approach is used. Indirect uses include avoided cost,
replacement cost, factor income, travel cost, hedonic pricing, contingent valuation and group
valuation (Earth Economics, 1998).
Direct Use Values
Market Price
Prices set in the marketplace appropriately reflect the value to the “marginal buyer.” The
price of a good tells us how much society would gain (or lose) if a little more (or less) of
the good were made available. Example: Rainforest products such as coffee and cacao.
Indirect Use Values
Avoided Cost
Value of costs avoided by ecosystem services that would have been incurred in the
absence of those services. Example: Hurricane protection provided by barrier islands
avoids property damages along the coast.
Replacement
Cost
Cost of replacing ecosystem services with man-made systems. Example: Natural water
filtration replaced with costly man-made filtration plant.
Factor Income
The enhancement of income by ecosystem service provision. Example: Water quality
improvements increase commercial fisheries catch and incomes of fishermen.
Travel Cost
Cost of travel required to consume or enjoy ecosystem services. Travel costs can reflect
the implied value of the service. Example: Recreation areas attract tourists whose value
placed on that area must be at least what they were willing to pay to travel to it.
Hedonic
Pricing
The reflection of service demand in the prices people will pay for associated goods.
Example: Housing prices along the coastline tend to exceed the prices of inland homes.
Contingent
Valuation
Value for service demand elicited by posing hypothetical scenarios that involve some
valuation of land use alternatives. Example: People would be willing to pay for increased
preservation of beaches and shoreline.
Group
Valuation
Discourse-based contingent valuation, which is arrived at by bringing together a group of
stakeholders to discuss values to depict society’s willingness to pay. Example:
Government, citizen’s groups, businesses come together to determine the value of an
area and the services it provides.
40
The valuation techniques that were used to derive the values in the database were
developed within environmental and natural resource economics. These include market
cost, avoided cost, replacement cost, factor income, travel cost, hedonic pricing,
contingent valuation and group valuation. A short explanation of each technique is found
in Table 3.
Benefit Transfer Methodology (BTM)
BTM provides a simple appraisal format that is inexpensive and can be performed
quickly to affect decision-making. It involves obtaining an estimate for the value of
ecosystem services through the analysis of a single study or group of studies that have
been previously carried out to value similar goods or services in similar contexts. The
“transfer” refers to the application of derived values and other information from the
original study site to a new but sufficiently similar site (Brookshire and Neill, 1992;
Desvousges et al., 1992). As the bedrock of practical policy analysis (Desvouges et al.,
1998), BTM has gained popularity in the last several decades as decision-makers have
sought timely and cost-effective ways to value ecosystem services and natural capital
(Wilson and Hoehn, 2006).
Analysis using BTM estimates the economic value of a given ecosystem from
prior studies of that ecosystem type. Like any economic analysis, this methodology has
strengths and weaknesses. Limitations of BTM commonly cited include (from Batker et
al., 2010):
•
Every ecosystem is unique, per-acre values derived from another location may
be irrelevant to the ecosystems being studied.
41
•
Even within a single ecosystem, the value per acre depends on the size of the
ecosystem; in most cases, as the size decreases, the per acre value is expected to
increase and vice versa.
•
Gathering all the information needed to estimate the specific value for every
ecosystem within the study area is not feasible. Therefore, the true value of all of
the wetlands, forests, pasturelands, etc. in a large geographic area cannot be
ascertained. In technical terms, we have far too few data points to construct a
realistic demand curve or estimate a demand function.
Proponents of the above arguments often recommend an alternative valuation
methodology that amounts to limiting valuation to a single ecosystem in a single location
and only using data developed expressly for the unique ecosystem being studied. The size
and landscape complexity of most ecosystems will make this approach to value extremely
difficult, timely and costly. Oftentimes ecosystem assessments are needed within short
time frames. In such cases primary valuations are not feasible due to expense and time
limitations.
While every wetland, forest or other ecosystem is unique in some way, ecosystems
of a given type, by their definition, have many things in common. The use of average values
in ecosystem valuation is no more or less justified than their use in other macroeconomic
contexts. An estimate of the aggregate value of a site’s ecosystem services is a valid and
useful basis for assessing and comparing these services with conventional economic goods
and services.
42
As employed in most studies using BTM, the prior studies analyzed encompass a
wide variety of time periods, geographic areas, investigators and analytic methods. Many of
them provide a range of estimated values rather than single-point estimates.
As in any methodology there are many limitations and uncertainties. BTM as
mentioned above provides effective values of ecosystem services in an efficient and
quick manner. Other elements in this research may also have limitations. GIS data is
frequently incomplete and imprecise, but today it is the best available science, therefore
that is what is used. Other aspects that may vary and pose limitation to the overall
research are:
•
Increase in scarcity the economy is always changing;
•
Values are not all inclusive, they do not include existing infrastructure for example;
•
Incomplete study, not all ecosystem services that are present were valued;
•
Study selection bias, studies were selected and not every study ever published was
included;
BTM may have many limitations, but as an accepted economic methodology it
also has many other benefits than the ones already discussed, more information on these
may also be found in Appendix A.
Conclusion
The ecosystems present in Clallam County provide many benefits to residents. In
identifying and analyzing these goods and services, an in depth knowledge of the study area
is necessary. Every location is different and although natural resources throughout the world
are similar, scarcity and abundance vary. An economic analysis not only identifies
43
ecosystem services present but also values depending on necessity. The methodology used
to value ecosystems will depend on human and financial resources and time. This thesis
used BTM in valuing ecosystem services in Clallam County.
44
Chapter 5- Ecosystem Service Valuation: Clallam County
Identifying the ecosystem services present in Clallam County is the first step in
order to estimate the value of these services. Working with Earth Economics, Clallam
County’s Department of Community Development, Washington State Department of
Ecology, Coastal Watershed Institute, Washington State Department of Natural
Resources, Peninsula College, and Friends of Dungeness Refuge this valuation was
completed using Geographical Information Systems (GIS) land acreage. Not all
ecosystem services are present in every land cover type.
An initial research goal is to determine the number ecosystem services present in
Clallam County. The County was separated into land cover types determined by the GIS
information provided by Clallam County Department of Planning. This study valued
ecosystem services across 11 land cover types including: Agricultural lands, Beach,
Estuary, Forest, Fresh Marsh, Grassland, Open Water, Pasture, Salt Marsh, Shrub, and
Wetland (reference Table 2 on page 37). Depending on the primary values used, the
presence of an ecosystem service across a specific land cover type is determined. Table 4
lists the land cover types in Clallam County (columns) and compares them with the
ecosystem services evaluated in this study (rows). A total of 15 ecosystem services were
valued: Aesthetic and Recreational, Biological Control, Disturbance Regulation, Erosion
Control, Food Provision, Gas and Climate Regulation, Habitat and Nursery, Nutrient
Cycling, Pollination, Raw Materials, Science and Education, Soil Formation, Waste
Treatment, Water Regulation, and Water Supply.
45
X
X
Pollination
X
X
X
Food Provision
Gas and
Climate
Regulation
Habitat &
Nursery
Nutrient
Cycling
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Science and
Education
X
X
X
X
X
X
X
X
Waste
Treatment
Water
Regulation
Water Supply
X
X
Raw Materials
Soil Formation
X
X
X
X
X
X
X
Wetland
X
Shrub
X
Salt Marsh
Fresh Marsh
X
Pasture
Forest
X
Open Water
Estuary
X
Grassland
Beach
Aesthetic
Recreational
Biological
Control
Disturbance
Regulation
Erosion
Control
Agricultural
Land
Table 4. Ecosystem Services present in Clallam County. Ecosystem Services are categorized into
present and valued; present but not valued and not present.
X
X
X
X
X
X
X
X
X
X
X
X
X
Ecosystem service produced but not valued in
this study
Ecosystem service produced and valued in this
X
study
Ecosystem service not produced by land cover
type
46
Ecosystem services valued were determined by land cover types present in the
County. Ecosystem services are categorized in the table as either produced by that land
cover type and valued in this study; or produced by that land cover type but not valued in
this study; or not produced by that land cover type. These categories help understand
what values will be present in the economic analysis, as well as where these values
originated. Many other ecosystem services may be present in Clallam County but because
of limitations in primary studies used for BTM or inaccurate GIS data, they are not
represented, analyzed nor valued. However, Table 4 illustrates in a quick manner the
ecosystem services present and valued in this study, across the land cover types found in
Clallam County.
A total of 15 ecosystem services were identified in Clallam County across 11 land
covers. Valuation was possible in a range between 2 and 13 services on a given land
cover, depending on the available studies with an economic value of an ecosystem
service. Table 4 suggests that because a large number of ecosystem services (for most
land covers) have yet to be valued in a primary study, this valuation provides a significant
underestimate of the true value. As further primary studies are added to the database, the
known value of ecosystem services in Clallam County will change.
Annual Value of Clallam County
The preliminary ecosystem service values for Clallam County were converted to
2010 US dollars per acre per year, representing the annual flow of value generated by a
single ecosystem. Combining all the available ecosystem services for one land cover
yield a total value in dollars per acre per year. For example, one peer reviewed scientific
paper valued gas and climate regulation in agricultural land to have a minimum of $11.02
47
and maximum of $128.16 per acre per year. The low and high value, independently, is
then combined with other values of ecosystem services present in agricultural land to
produce a total low and high worth of that land cover type in Clallam County.
Tables 5-8 provide minimum and maximum valuation results per acre by land
cover type. All values are adjusted for inflation dividing a monetary time series by a price
index such as the Consumer Price Index determined by U.S. Department of Labor,
Bureau of Labor Statistics, 2010.
Values are presented in a range. The range may vary in a large and small
difference and this depends solely on the values used from primary sources, since these
sources can vary in year and location of study, the values for a certain ecosystem service
in a specific land cover type may also vary significantly. Even though the range may be
wide, it is a better representation of the value of ecosystem services than a single number.
Table 5. Minimum and maximum $ value for agricultural land, beach, and estuary.
Agricultural Land
Beach
Estuary
Ecosystem Services
Min
Max
Min
Max
Min
Max
Aesthetic and Recreational
$2.06
$29.63
$151.06
$2,846.69
$5.76
$30.92
Biological Control
$14.18
$14.18
Disturbance Regulation
$2.10
$2.10
Erosion Control
$5.82
$5.82
$21.70
$963.03
$23.90
$2,001.04
$77.19
$7,710.95
$6.36
$24.32
$134.90
$10,730.25
Food Provision
Gas and Climate Regulation
$11.02
$128.16
Habitat Refugium and Nursery
Nutrient Cycling
$8.80
$22.32
Pollination
$2.59
$427.34
$2.27
$5.82
Raw Materials
Science and Education
Soil Formation
Waste Treatment
Water Regulation
Water Supply
Total
$48.84
$635.38
$151.06
$2,846.69
48
Table 6. Minimum and Maximum $ value for forest, fresh marsh, and grasslands
Forest
Ecosystem Services
Min
Max
Aesthetic and Recreational
$0.21
$2,174.80
Biological Control
$9.69
$10.04
Disturbance Regulation
$1.40
$5.14
$112.58
$112.58
Erosion Control
Fresh Marsh
Min
Max
$94.63
Grassland
Min
Max
$863.50
$2,051.93
$14.55
$1,066.61
Habitat Refugium and Nursery
$1.22
$538.95
Nutrient Cycling
$74.28
$1,135.64
Pollination
$67.84
$413.73
Raw Materials
$1.87
$1.87
Science and Education
$39.72
$68.37
$13.64
$17.94
$17.94
$33.02
$33.02
$0.08
$219.92
$14.48
$427.34
$0.67
$0.67
$2,051.93
Food Provision
Gas and Climate Regulation
$13.09
$47.10
$512.74
$6.37
$7.21
Soil Formation
Waste Treatment
$169.01
$169.01
$51.62
$51.62
Water Regulation
$10.35
$588.57
$1.59
$4.11
Water Supply
$1,395.98
$1,770.14
$62.56
$166.84
Total
$1,898.70
$8,055.45
$2,262.60
$3,602.22
$132.48
$768.25
Table 7. Minimum and Maximum $ value for open water, pasture, and salt marsh
Open Water
Pasture
Salt Marsh
Ecosystem Services
Min
Max
Min
Max
Min
Max
Aesthetic and Recreational
$4.08
$2,475.18
$0.03
$0.03
$22.46
$203.28
$8.15
$253.97
Food Provision
$8.93
$24.40
Gas and Climate Regulation
$0.35
$990.00
$4.46
$636.77
Habitat Refugium and Nursery
$0.55
$317.20
$6.78
$10,532.22
Nutrient Cycling
$36.92
$103.61
$118.28
$19,041.56
$151.97
$30,413.84
Biological Control
Disturbance Regulation
Erosion Control
Pollination
$2.60
$13.09
$6.70
$6.70
Raw Materials
Science and Education
Soil Formation
Waste Treatment
Water Regulation
Water Supply
$5.16
$2,268.02
Total
$64.14
$6,432.38
$9.33
$19.82
49
Table 8. Minimum and Maximum $ value for shrub and wetland
Shrub
Wetland
Ecosystem Services
Min
Max
Min
Max
Aesthetic and Recreational
$0.19
$2,174.80
$1.67
$4,641.41
$18.35
$8,578.76
$65.71
$9,372.90
Biological Control
Disturbance Regulation
Erosion Control
Food Provision
Gas and Climate Regulation
$6.68
$193.97
$1.79
$774.40
Habitat Refugium and Nursery
$1.33
$538.95
$99.76
$8,679.32
$2,816.44
$2,816.44
Waste Treatment
$76.39
$435.98
Water Regulation
$148.48
$2,914.64
Nutrient Cycling
Pollination
Raw Materials
Science and Education
$39.72
$68.37
Soil Formation
Water Supply
Total
$47.92
$2,976.10
$10.01
$4,289.38
$3,238.60
$42,503.23
Table 9. Total annual value in ecosystem services per acre and total annual values multiplied by
acres present in Clallam County for each land cover type.
Land-cover Description
Agricultural lands
Beach
Estuary
Forest
Fresh Marsh
Grassland
Open Water
Pasture
Salt Marsh
Shrub
Wetland
Total
Acres
916
4,455
916
859,741
9
31,703
594,258
22,675
1,306
130,245
26,353
1,672,577
Low/acre
$49
$151
$135
$1,899
$2,263
$132
$64
$9
$152
$48
$3,239
High/acre
$635
$2,847
$10,730
$8,055
$3,602
$768
$6,432
$20
$30,414
$2,976
$42,503
Low/total acre
$44,735
$672,974
$123,568
$1,632,394,394
$20,363
$4,200,095
$38,117,949
$211,579
$198,474
$6,241,332
$85,346,852
$1,767,572,316
High/total acre
$582,006
$12,682,007
$9,828,913
$6,925,599,844
$32,420
$24,355,975
$3,822,493,138
$449,508
$39,720,471
$387,621,757
$1,120,087,585
$12,343,453,624
50
The combined ecosystem service values for each land cover were summed and the
total value of that land cover type per acre per year is represented in Table 9, along with
the number of acres of each land cover type present in Clallam County.
This baseline appraisal offers values for the benefits provided by nature in
Clallam County annually. These valued services contribute in a number of ways:
protection from storms both erosion and flood prevention, regulation of climate and gas
emissions, provisioning food and pollination, sustaining habitat and soil formation,
among other processes. Based on a total of 15 ecosystem services, Clallam County’s
ecosystem services contribute roughly $1 billion to $12 billion a year to the local and
regional economy, in 2010 US dollars.
This total value of ecosystem services in Clallam County represents social,
environmental and economic benefits to the County’s residents. Defining and quantifying
the County’s natural capital is an important tool to inform public policy, including local
land use planning. It also supports those efforts, which must incorporate state-mandated
goals, and standards that involve protection and enhancement of water quality and
important natural resources, and other quality of life factors.
In Clallam County, these values can be used to inform the update on their
Shoreline Master Plan (SMP). This state mandated requirement obliges Counties to
protect their shorelines at the standard of No Net Loss of ecosystem function, explained
in Chapter 3. In Clallam County, fragile ecosystems such as shorelines are managed and
protected under state law. Decisions by the County and the public on the level of
protection to provide these ecosystems will determine the County’s future sustainability
and quality of life. Decisions could involve choices between development or conservation
51
on the more ecologically important lands, and how development can occur in areas that
are less important to avoid endangering these unique landscapes. Shorelines in Clallam
County produce a number of ecosystem services that contribute between $670,000 and
$12 million annually to the regional economy (as stated in Table 9). Regulatory efforts
such as the SMP and Inventory Characterization Report (ICR) provide the opportunity to
conserve larger areas of fragile ecosystems and produce noticeable economic benefits to
County residents.
Total annual numbers can be used to inform the value of entire ecosystems or a
specific land cover type or an individual ecosystem service. The ability to value one or
many aspects of a region can inform management decisions and influence the creation or
update of local policies, enabling prioritization of environmental issues.
Asset Value of Clallam County
An ecosystem produces a flow of valuable services across time, much like
traditional capital assets. As long as the natural infrastructure of the present ecosystems
are not degraded or depleted, this flow of value will likely continue into the future. This
analogy can be extended by calculating the net present value of the future flows of
ecosystem services, just as the asset value of a capital asset (infrastructure) can be
calculated as the net present value of its future benefits. This calculation is no more than
an economic exercise however, because in reality ecosystems are not bought and sold in
this manner; its usefulness is to demonstrate their long-term economic worth.
Calculating the net present value of an asset requires the use of a discount rate.
The net present value of Clallam County was calculated using two discount rates:
nominal and 4%. Using a nominal rate assumes the regenerating nature of natural capital
52
and, if maintained, people in the future will benefit from the same amount and quality of
services as we enjoy currently. The 4% discount rate is established by the Army Corps of
Engineers used in large projects, which discounts the value of benefits by 4% every year
into the future. Discounting can be adjusted for different types of assets and is designed
to control for the following:
•
Pure time preference of money. This is the rate at which people value what
they can have now, compared with putting off consumption or income
until later.
•
Opportunity cost of investment. A dollar in one year’s time has a present
value of less than a dollar today, because a dollar today can be invested for
a return in one year.
•
Depreciation. Built assets such as cars and levees tend to deteriorate and
lose value due to wear and tear.
Using a discount rate assumes many things, for one, discounting assumes that the
benefits humans enjoy in the present are more valuable than the benefits in future
generations. Using a nominal rate in this thesis adds to the discussion that natural capital
assets should apply lower discount rates than built capital assets because they tend to
appreciate over time, rather than depreciate. Both natural and built capital assets are
important to maintain a high quality of life, but each operates on a different time scale.
For these reasons, a nominal discount rate best reflects the asset value of Clallam
County’s ecosystem services.
Calculations of the present value of the flow of ecosystem services demonstrate
that intact natural systems provide enormous economic value to society in the short and
53
long term. The present generation receives a relatively small amount of the total value
provided by these services. If a total conservation of ecosystems is achieved in the
present, future generations will receive huge economic benefits from healthy functioning
ecosystems that have been accumulating over time. For Clallam County the net present
value analysis over a 50-year period is in table 10.
More detailed information on the primary studies used in this benefit transfer are
listed in Appendix B, they describe the land cover type, ecosystem service, reference of
papers used in this study and the lowest and highest values known for each value utilized
in this study. There is also a single value column where low and high values do not exist.
More detail on study limitations and methodology used are explained in Appendix A.
Table 10. Net present value with a nominal and 4% discount rates over 50 years. This value attempts
to demonstrate the value of services present in Clallam County in the future.
Discount Rate
Nominal (50 years)
4% (50 years)
Low Estimate
$88,378,615,779
$37,971,314,807
High Estimate
$617,172,681,182
$265,164,349,550
Mid point
$352,775,648,481
$151,567,832,179
Net present values are based on the assumption of today’s economy, which can
change significantly over time. The values in Table 10 suggest that natural capital, if
maintained and conserved, could appreciate over time assuming a constant flow
throughout the years. Also, using a 4% discount rate demonstrates that ecosystem
services in 50 years, even with depreciation, are valued in billions of dollars. Similar to
the asset values presented in Table 9, net present values could be used to inform current
and future decisions concerning overall environmental health of ecosystems.
Conclusion
Ecosystem service valuation is primarily a communication tool. The values
resulting from an economic analysis can be refined and used to compare with county and
54
statewide expenditures, benefit cost analysis, job analysis, green infrastructure
investments, funding mechanisms, and many more. The values determined by ESV,
although a broad range, address the current initial problem, zero value for ecosystem
services. Identifying and quantifying services present in an area is the first step for
ecosystem conservation and protection.
55
Chapter 6- Conclusions and Future Suggestions
In order to achieve complete conservation an interdisciplinary approach is
necessary. Economics must have a part in this process and it must be integral to societal
needs, while still maintaining an ecological balance. An ecosystem produces a flow of
valuable services across time, much like a traditional capital asset. As long as the
ecosystems are maintained in their current state, the flow produced currently is likely
continue into the future.
Overall Conclusions
The thesis explores different aspects of the relationship between economy and
ecology. Conserving the environment has become an interdisciplinary effort. In
conserving the environment habits have to change and society as a whole has to evolve.
The transition of becoming a more conscientious community is bolstered by
understanding the connection between environmental science to the rest of the sciences.
Economics plays a significant role in ecosystem conservation.
Although there are many aspects of economics that are dependent on the
environment, this thesis focuses on valuing services provided by ecosystems, also known
as natural capital. Understanding the concept of natural capital entails comprehending the
invaluable aspect of nature. Natural ecosystems are so complex that a complete valuation
is not possible, but partial and baseline values serve the purpose of honing attention on
environmental aspects that are typically overseen by current economic measurements.
This case study provides a baseline appraisal valuation of ecosystem services
present in Clallam County, by quantifying the economic value of natural capital.
Ecosystem services in Clallam County provide food, water, storm and flood protection,
56
carbon intake, aesthetic beauty and recreational areas, and many more services. These
services contribute approximately between $1 billion to $12 billion every year to the
local economy. Land appraisal in Clallam County is estimated at 7.5 billion per year.
This land property value includes land, improvement to land, structures and certain
equipment affixed to structure; however it does not include the value of ecosystem
services.
Ecosystem services can also be treated as assets, and their value over time can be
calculated. Similar to built infrastructure, nature provides natural infrastructure that
provides goods and services. These benefits over time are calculated using discount rates.
Applying a 4% discount rate over 50 years, the net present value of ecosystem services in
Clallam County has an asset value of between $37 billion to $265 billion dollars. This
appraisal values are defendable and applicable to decision-making at every jurisdictional
level. Investments many times require future assessments in value. The net present value
in this thesis attempts to produce a number that can be reflected upon in 50 years. Cities,
counties and states are increasingly dealing with land management conflicts and as urban
areas grow, ecosystems may become threatened. The solution should be inclusive of new
development, stipulating requirements and mitigation efforts in response to impacts that
development activities cause.
Discovering and measuring the value of natural capital in Clallam County is
essential to enhance effective and efficient natural resource management. The creation of
macroeconomic measures in the 1930s, such as measures for the Gross Domestic Product
now the Gross National Product, unemployment and inflation, transformed the United
States because these measures enabled better economic decision-making. Built capital
57
was scarce, and economic measures of built capital were essential to building a
prosperous 20th century economy. Virtually all countries now utilize the same set of
macroeconomic measures. Today, basing the country’s economy on the ability to build
capital might not be a complete representation of a country’s wealth.
Valuation of natural benefits leads to their protection and provides measures to
influence policy development and decision-making. While this thesis provides a
valuation of ecosystem services in the County, it is only a first step in the process of
developing policies, measures and indicators that support discussions about the tradeoffs
in investments of public and private money that ultimately shape the regional economy
for generations to come.
The values found in this case study will be used to inform local county
environmental management policies. These legislative documents, as mentioned before,
are required to be updated by the state every eight years. The economic value of
Clallam’s ecosystem services can be integrated into the Shoreline Master Program and
specifically into the No Net Loss policy. The manner in which these values will help
explain the value of conserving natural assets is still to be determined. An ongoing
separate project in Clallam County will also provide primary valuations that will result in
an economic value specific to the area and case study. These values will quantify fish
abundance, invertebrate population, and feeder bluff erosion. The results of this scientific
research and the economic analysis will produce a primary nearshore valuation for
Clallam County.
Economic sustainability relies on a healthy, functioning environment. The loss of
nature’s bounties has monetary costs. Maintaining the health of ecosystems provide
58
benefits for everyone. As demonstrated by this case study the different land cover types
in Clallam provide goods and services across time and well beyond their boundaries.
Conserving and protecting Clallam County’s natural assets is critical to improving quality
of life and securing sustainability, justice, and economic progress in the region.
Ecological economics provides essential tools to quantify natural capital and
include ecosystem services into economic progress. Development will always be present,
but conservation and preservation efforts can mitigate negative outcomes. Knowledge
about environmental processes, what they provide, and quantifying their value is the first
step in taking a holistic approach to manage natural resources while sustaining quality of
life.
59
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69
Appendix A: Study Limitations
Other General Limitations of BTM
Increases in Scarcity- The original primary valuations may underestimate shifts in
the relevant demand curves as the sources of ecosystem services become more limited. The
values of many ecological services rapidly increase as they become increasingly scarce
(Boumans et al., 2002). If the ecosystem services of a study site are scarcer than assumed,
their value will have been underestimated in this study. Such reductions in “supply” appear
likely as land conversion and development proceed; climate change may also adversely
affect the ecosystems, although the precise impacts are more difficult to predict.
Existence Value- The approach of BTM does not fully include the infrastructure or
existence value of ecosystems. It is well known that people value the existence of certain
ecosystems, even if they never plan to use or benefit from them in any direct way. Estimates
of existence value are rare; including this service will obviously increase the total value of a
study site.
Other Non-Economic Values- Economic and existence values are not the sole
decision-making criteria. Techniques called multi-criteria decision analysis are available to
formally incorporate economic values with other social and policy concerns. Having
economic information on ecosystem services usually helps this process because
traditionally, only opportunity costs of foregoing development or exploitation are counted
against non-quantified environmental concerns.
Incomplete coverage- That not all types of ecosystems have been valued or studied
well is perhaps the most serious issue, because it results in a significant underestimate of the
value of ecosystem services. More complete coverage would almost certainly increase the
70
values in a study, since no known valuation studies have reported estimated values of zero
or less.
Selection Bias- Bias can be introduced in choosing the valuation studies, as in any
appraisal methodology. The use of a range partially mitigates this problem.
Consumer Surplus- Because the benefit transfer method is based on average rather
than marginal cost, it cannot provide estimates of consumer surplus. However, this means
that valuations based on averages are more likely to underestimate total value.
Willingness-to-pay Limitations- Most value estimates in BTM datasets are based on
current willingness to pay or proxies, which are limited by people’s perceptions and
knowledge. Improving people’s knowledge about the contributions of ecosystem services to
their welfare would almost certainly increase the values based on willingness to pay, as
people would realize that ecosystems provided more services than they had previously
known.
Price Distortions- Distortions in the current prices used to estimate ecosystem
service values are carried through the analysis. These prices do not reflect environmental
externalities and are therefore again likely to be underestimates of true values.
Non-linear/Threshold Effects- The valuations assume smooth responses to changes
in ecosystem quantity with no thresholds or discontinuities. Assuming that such gaps or
jumps in the demand curve would move demand to higher levels than a smooth curve, the
presence of thresholds or discontinuities would likely produce higher values for affected
services (Limburg et al., 2002). Further, if a critical threshold is passed, valuation may leave
the normal sphere of marginal change and larger-scale social and ethical considerations
dominate, such as an endangered species listing.
71
Sustainable Use Levels- The value estimates of a BTM analysis are not necessarily
based on sustainable use levels. Limiting use to sustainable levels would imply higher
values for ecosystem services as the effective supply of such services is reduced.
Technical issues surrounding BTM also apply to primary studies, but are important to note:
GIS Data- Since this valuation approach involves using benefits transfer methods to
assign values to land cover types based, in some cases, on their contextual surroundings, one
of the most important issues with GIS quality assurance is reliability of the land cover maps
used in the benefits transfer, both in terms of categorical precision and accuracy. The source
GIS layers are assumed to be accurate but may contain minor inaccuracies due to land use
change since the data was sourced, inaccurate satellite readings and other factors.
Ecosystem Health- There is the potential that ecosystems identified in the GIS
analysis are fully functioning to the point where they are delivering higher values than those
assumed in the original primary studies, which would result in an underestimate of current
value. On the other hand, if ecosystems are less healthy than those in primary studies, this
valuation will overestimate current value.
Spatial Effects- ESV using BTM assumes spatial homogeneity of services within
ecosystems, i.e. that every acre of forest produces the same ecosystem services. This is
clearly not the case. Whether this would increase or decrease valuations depends on the
spatial patterns and services involved. Spatial dynamic analysis would be required to answer
such questions. More elaborate systems dynamics studies of ecosystem services have shown
that including interdependencies and dynamics leads to significantly higher values
(Boumans et al., 2002), as changes in ecosystem service levels ripple throughout the
economy.
72
Potential Benefits of Conducting an ESV using Benefit Transfer Methodology
BTM Justifies Investment in Natural Capital- The outcome of estimating ecosystem
services is to provide a better valuation than the implicit value of zero or infinity. What is
not valued is often lost, and the advantage of a valued asset is that a sufficient budget for its
operations and maintenance can be justified. A valuation of a natural asset may also enable
or facilitate borrowing against the asset.
BTM Can be Used to Develop Funding Mechanisms- Identification, valuation and
mapping of ecosystem services is used to develop sustainable, fair and efficient funding
mechanisms for maintenance and restoration of natural capital, linking (often upstream)
ecosystem service provisioners with (often downstream) ecosystem service users. Funding
mechanisms can be developed based on the physical nature of the ecosystem service, and
can include tax districts, payments for ecosystem services (PES), tradable credits, and fees
and surcharges.
BTM Helps to Educate the Public- Providing transparent information to stakeholders
is crucial to the operations of any public or private enterprise. In the case of a public utility
for example, an ESV provides information to the public on the (often tremendous) asset
value of their watershed. This provides an economic case for why the utility should continue
to invest in the asset. Understanding the value of their shared asset, the public may also take
greater interest in enjoying and enhancing the services it provides.
BTM Helps To Educate Decision Makers- An ESV captures the attention of
decision-makers and helps to strengthen and communicate other important ecosystem
service concepts, for example that natural capital tends to appreciate while built capital tends
to depreciate. Ecosystem services concepts also provide a common language and framework
73
in which to understand the contributions of green infrastructure to the economy (local,
regional and national) and on quality of life, facilitating a conversation between
policymakers, business, scientists, landowners and other stakeholders.
BTM is Cost Effective and Timely- A primary study generally looks at one or a few
ecosystem services and takes up to two years, costing upwards of $100,000. A benefit
transfer can now be completed in less than six weeks currently, assessing up to 23
ecosystem services, and at a fraction of the cost.
BTM Produces Defensible Results- The low valuation boundary is likely an
underestimate of actual value, but can demonstrate that ecological services in an area are
worth at least a certain dollar amount, which is usually sufficient to inform policy decisions
such as restoring or maintaining those systems. A range of values also captures the
uncertainty that is inherent in both ecology and economics. Economic values are volatile
and decision-makers are accustomed to this, and like ESV, economic values are often
presented in an appraisal format.
BTM shows Proven Results- ESV demonstrate the multiple benefits of ecosystems.
They get the attention of decision-makers and move them more quickly toward conservation
investments and permanent funding mechanisms for conservation.
74
Appendix B. Value Transfer Studies Used by Land Cover
Data
Land Cover
Agricultural
Lands
Ecosystem Service
Author(s)
Min
Max
Biological Control
Wilson, S. J.
$14.18
$14.18
Disturbance Regulation
Wilson, S. J.
$2.10
$2.10
Erosion Control
Canadian Urban Institute.
$5.82
$5.82
Nutrient Cycling
Canadian Urban Institute.
$22.32
$22.32
Wilson, S. J.
$8.80
$8.80
Southwick, E. E. and Southwick, L.
$2.59
$2.59
Wilson, S. J.
$427.34
$427.34
Robinson, W. S., et al.
$13.04
$13.04
Canadian Urban Institute.
$5.82
$5.82
Wilson, S. J.
$2.27
$2.27
Sandhu, H.S., et al.
$5.82
$5.82
Smith, W.N. et al.
$28.15
$28.15
Wilson, S. J.
$11.02
$128.16
Bergstrom, J., Dillman, B. L. and Stoll, J. R.
$29.63
$29.63
Knoche and Lupi
$2.06
$4.78
Taylor, L. O. and Smith, V. K.
$451.00
$451.00
Bell, F.W. and Leeworthy, V.R.
$2,571.82
$2,846.69
Fankhauser, S. and Pearce, D.W.
$151.06
$151.06
Newell et al.
$77.19
$77.19
Costanza, R., et al.
$7,710.95
$7,710.95
Water Supply
Whitehead, J. C., et al.
$6.36
$24.32
Aesthetic and Recreational
Habitat Refugium and
Nursery
Whitehead, J. C., et al.
$5.76
$30.92
Farber, S. and Costanza, R.
$188.28
$2,001.04
Armstrong
$23.90
$133.81
De Groot, R.S.
$124.21
$124.21
Food Provision
Costanza, R., et al.
$21.70
$963.03
Biological Control
Krieger, D.J.
$9.69
$9.69
Wilson, S. J.
$10.04
$10.04
Disturbance Regulation
Dodds, W.K., et al.
$1.40
$5.14
Erosion Control
Dodds, W.K., et al.
$112.58
$112.58
Nutrient Cycling
Dodds, W.K., et al.
$74.28
$1,135.64
Pollination
Hougner, C.
$67.84
$304.71
Wilson, S. J.
$191.49
$413.73
Raw Materials
Dodds, W.K., et al.
$1.87
$1.87
Waste Treatment
Wilson, S. J.
$169.01
$169.01
Water Regulation
Olewiler, N.
$31.53
$31.53
Loomis J.B.
$10.35
$10.35
Wilson, S. J.
$588.57
$588.57
Water Supply
Ribaudo, M. and Epp, D. J.
$1,395.98
$1,770.14
Science and Education
Gas and Climate
Regulation
Bishop, K.
$39.72
$68.37
local estimate
$67.15
$1,066.61
Pimentel et al.
$15.39
$15.39
Mates. W., Reyes, J.
$57.52
$253.97
Wilson, S. J.
$14.55
$637.67
Bennett, R., et al.
$182.22
$182.22
Bishop, K.
$1,940.39
$2,174.80
Pollination
Soil Formation
Gas and Climate
Regulation
Aesthetic and Recreational
Beach
Estuary
Forest
Aesthetic and Recreational
Nutrient Cycling
Aesthetic and Recreational
75
Maxwell, S.
$12.69
$12.69
Prince, R. and Ahmed, E.
$2.19
$2.80
Willis, K. G. and Garrod, G. D.
$4.04
$4.04
Willis, K.G.
$.42
$205.41
Knowler, D. J. et al.
$30.57
$30.57
Shafer, E. L., et al.
$112.25
$580.70
Boxall, P. C., et al.
$.21
$.21
Amigues, J. P., et al.
$73.92
$282.41
Haener, M. K. and Adamowicz, W. L.
$1.52
$10.42
Kenyon, W. and Nevin, C.
$538.95
$538.95
Shafer, E. L. et al.
$2.98
$2.98
Garber et al.
$290.73
$487.59
Wilson, S. J.
$1.22
$1.22
Disturbance Regulation
Roel/Ken
$2,051.93
$2,051.93
Raw Materials
Roel/Ken
$6.37
$7.21
Water Supply
Gas and Climate
Regulation
Aesthetic and Recreational
Roel/Ken
$62.56
$166.84
Roel/Ken
$47.10
$512.74
Gund Database
$94.63
$302.68
Roel/Ken
$275.78
$863.50
Biological Control
Pimentel et al.
$13.09
$13.64
Erosion Control
Costanza, R., et al.
$17.94
$17.94
Pollination
Pimentel et al.
$14.48
$14.84
Wilson, S. J.
$427.34
$427.34
Soil Formation
Sala, O.E., Paruelo. F.M.
$.67
$.67
Waste Treatment
Pimentel et al.
$51.62
$51.62
Water Regulation
Jones et al.
$4.11
$4.11
Costanza, R., et al.
$1.59
$1.59
Copeland et al.
$.08
$.08
Wilson, S. J.
$10.62
$168.80
Costanza, R., et al.
$3.85
Fankhauser, S. and Pearce, D.W.
$5.61
$5.61
Salas OE and Paruelo JM
$87.97
$219.92
Food Provision
Tyrvainen, L.
$33.02
$33.02
Disturbance Regulation
Rein, F. A.
$8.15
$253.97
Nutrient Cycling
Costanza, R., et al.
$36.92
$103.61
Water Supply
Bouwes, N. W. and Scheider, R.
$665.24
$665.24
Gramlich, F. W.
$221.01
$221.01
Henry, R., Ley, R. and Welle, P.
$462.52
$462.52
Ribaudo, M. and Epp, D. J.
$908.71
$908.71
Rich, P. R. and Moffitt, L. J.
$5.16
$5.16
Berrens, R. P., et al.
$2,268.02
$2,268.02
Croke, K., et al.
$609.70
$609.70
local estimate
$99.00
$990.00
Costanza, R., et al.
$.35
$45.24
Burt, O. R. and Brewer, D.
$497.56
$497.56
Cordell, H. K. and Bergstrom, J. C.
$204.35
$858.14
Kahn, J. R. and Buerger, R. B.
$4.08
$4.08
Kealy, M. J. and Bishop, R. C.
$13.93
$13.93
Piper, S.
$258.79
$258.79
Shafer, E. L. et al.
$95.64
$1,186.64
Young, C. E. and Shortle, J. S.
$88.18
$88.18
Habitat Refugium and
Nursery
Fresh Marsh
Grasslands
Gas and Climate
Regulation
Open Water
Gas and Climate
Regulation
Aesthetic and Recreational
76
Sanders, L. D., et al.
$2,475.18
$2,475.18
Ward, F. A., et al.
$20.14
$2,067.09
Kahn, J. R. and Buerger, R. B.
$2.33
$18.74
Loomis J.B.
$17.13
$17.13
Knowler, D. J. et al.
$11.24
$51.50
Knowler, D.J., et al.
$.55
$2.95
Streiner, C., Loomis, J.
$317.20
$317.20
Costanza, R., et al.
$8.93
$24.40
Postel and Carpenter
$22.54
$22.54
Pollination
Costanza, R., et al.
$2.60
$13.09
Soil Formation
Pimentel et al.
$6.70
$6.70
Aesthetic and Recreational
Boxall, P. C.
$.03
$.03
Waste Treatment
Gas and Climate
Regulation
Breaux, A., et al.
$118.28
$19,041.56
Roel/Ken
$32.01
$348.48
Stern and Boscolo
$4.46
$636.77
Anderson, G. D. and Edwards, S. F.
$22.46
$203.28
Batie, S. S. and Wilson, J. R.
$6.78
$848.14
Johnston, R. J. et al.
$1,523.82
$1,523.82
Mazzotta, M.
$10,532.22
$10,532.22
Bishop, K.
$39.72
$68.37
local estimate
$6.68
$193.97
Bennett, R., et al.
$182.22
$182.22
Bishop, K.
$1,940.39
$2,174.80
Haener, M. K. and Adamowicz, W. L.
$.22
$.22
Maxwell, S.
$12.69
$12.69
Prince, R. and Ahmed, E.
$1.61
$2.01
Willis, K.G.
$.45
$205.41
Shafer, E. L., et al.
$580.70
$580.70
Boxall, P. C., et al.
$.19
$.19
Haener, M. K. and Adamowicz, W. L.
$1.33
$9.11
Kenyon, W. and Nevin, C.
$538.95
$538.95
Shafer, E. L. et al.
$3.21
$3.21
Roel/Ken
$1,394.58
$1,394.58
Leshcine et al.
$362.73
$2,366.79
Wilson, S. J.
$560.43
$560.43
Costanza, R., et al.
$280.89
$280.89
Woodward, R., and Wui, Y.
$18.35
$8,578.76
Raw Materials
Dodds, W.K., et al.
$2,816.44
$2,816.44
Waste Treatment
Pate, J. and Loomis, J.
$76.39
$344.14
Olewiler, N.
$155.17
$435.98
Water Regulation
Woodward, R., and Wui, Y.
$148.48
$2,914.64
Water Supply
Creel, M. and Loomis, J.
$584.64
$584.64
Roel/Ken
$42.52
$113.39
Hayes, K. M., et al.
$1,387.49
$2,156.77
Brouwer, R., et al.
$21.77
$53.15
Woodward, R., and Wui, Y.
$10.01
$4,289.38
Roel calculation for LA
$43.30
$393.49
Roel/Ken
$48.02
$774.40
Wilson, S. J.
$1.79
$186.47
Habitat Refugium and
Nursery
Food Provision
Pasture
Salt Marsh
Aesthetic and Recreational
Habitat Refugium and
Nursery
Shrub
Science and Education
Gas and Climate
Regulation
Aesthetic and Recreational
Habitat Refugium and
Nursery
Wetland
Disturbance Regulation
Wilson, S. J.
Gas and Climate
Regulation
77
Aesthetic and Recreational
Habitat Refugium and
Nursery
Food Provision
Costanza, R., et al.
$178.88
$178.88
Roel/Ken
$187.43
$586.87
Whitehead, J. C.
$1,027.44
$2,262.93
Hicks et al.
$157.32
$157.32
Wilson, S. J.
$129.11
$129.11
Cooper J. and Loomis, J.
$327.15
$1,284.80
Costanza, R., et al.
$100.71
$396.27
Whitehead, J. C., et al.
$237.71
$237.71
Woodward, R., and Wui, Y.
$1.67
$4,641.41
Pate, J. and Loomis, J.
$99.76
$317.15
Mazzotta, M.
$8,679.32
$8,679.32
Wilson, S. J.
$739.50
$739.50
Kazmierczak, R.F.
$273.67
$530.31
Streiner, C., Loomis, J.
$243.61
$243.61
Woodward, R., and Wui, Y.
Roel/Ken (for low value); Woodward and Wui,
(for high value)
Woodward, R., and Wui, Y.
$158.50
$510.52
$65.71
$1,518.75
$180.18
$9,372.90
78
Flores_L-thesis2012.pdf