Benefit transfer and the economic value of Biocapacity: Introducing the ecosystem service Yield factor

Highlights

• The Ecological Footprint can inform ecosystem services evaluation.

• The Yield Factor (YF) considers ecosystem productivity in different locations.

• New Ecosystem Services YFs are introduced for adjusting benefit transfer estimates.

• Biocapacity Economic Values (BEVs) are calculated for the world countries.

• The BEV can be used for natural capital accounting.

Abstract

The Ecological Footprint can inform benefit transfer estimates of ecosystem services by considering the different productivity of land-types. In this paper, ecosystem service values are used to calculate Ecosystem Service Yield Factors (ES-YFs) for the world countries as monetary-based alternative to resource-based Yield Factors (YFs). These scaling factors are context-dependent and can be used for transferring ecosystem service values calculated in different locations for cropland, grazing land and forest.

The ES-YFs were further used to calculate Biocapacity Economic Values (BEVs) that represent natural capital values and can be used for environmental economic accounting and as a component of wellbeing indicators. Besides improving the accuracy and feasibility of the benefit transfer method, the ES-YFs can inform natural resource management towards more sustainable options and allows for comparison with economic values in markets sensible to asymmetry, incomplete information, unfairness and unethical behaviours.

Introduction

Environmental accounting aims at identifying, measuring, and allocating the environmental costs of human activities (Barbier, 2014). This includes the costs of biodiversity loss, climate change, and depletion of resources (IPBES, 2019, IPCC, 2018, Rockström et al., 2009, Steffen et al., 2015).

The Ecological Footprint Accounting (EFA) (Rees, 1992, Wackernagel and Rees, 1996) and the evaluation of Ecosystem Services (ESs, or Nature’s Contributions to People, Díaz et al., 2018) are environmental accounting tools that present scientific data in an informative and useful way for both policymakers and the general public (Galli et al., 2020, Vanham et al., 2019, Wackernagel et al., 2019, Galli, 2015, Leigh Thompson et al., 2016, UK National Ecosystem Assessment, 2014, Spence et al., 2015). Through the definition of the area-equivalent unit of global hectare (gha), the EFA allows for the aggregation of a wide range of different aspects of human consumption, as well as nature’s supply of a wide range of resources and services, into two indicators - i.e. the Ecological Footprint (EF) and the Biocapacity (BC), respectively (Rees, 1996, Borucke et al., 2013, Galli et al., 2007). Similarly, economic evaluations of ESs use monetary units (e.g. $) for providing an aggregate value of multiple nature’s benefits to people. The use of monetary units for ES evaluations has the potential to effectively communicate assessment results at the science-policy interface (Millennium Ecosystem Assessment, 2005, IPBES, 2019), increasing awareness in the media (Richards et al., 2017, McLellan and Shackleton, 2019), and stimulating initiatives from the business sector (BSR, 2014, PUMA, 2012). For example, one of the most discussed results of the influential paper “The value of the world's ecosystem services and natural capital”, published by Robert Costanza et al. in the scientific journal Nature in 1997, was the fact that this value amounted to almost twice as much as global GDP (Costanza et al., 1997, Costanza et al., 2017, Holzman, 2012). The economic value gained by preserving or restoring ecosystem functions and biodiversity can be used to inform economic decision-making (Science for Environment Policy, 2015). Similarly, the cost of environmental degradation quantified as economic loss of ESs can become a component of macroeconomic “beyond-GDP”-type of indicators (Costanza et al., 2014a, Costanza et al., 2014b, Biasi et al., 2019). For example, the Adjusted Net Savings are calculated as the share of Gross National Income for the world countries by, among other adjustments, subtracting forest resource depletion and carbon dioxide emissions damage from net national savings (Lange et al., 2018). Nevertheless, economic evaluation of ESs has its limitations, from the risk of commodification of natural environment, to the influence of market prices and individual preferences affected by incomplete/distorted information (Christie et al., 2012).

A variety of indirect evaluation methods are used for estimating monetary values for ESs out of the market. Amongst these, one of the most widely used is the “benefit transfer” (e.g. Kubiszewski et al., 2013, Adegboyega et al., 2019, Rosenberger and Loomis, 2000, Richardson et al., 2015). This method estimates economic values of ESs by transferring available information from studies completed in another location. For example, values for recreational fishing in a lake may be obtained by transferring values of recreational fishing calculated in a different study from another lake (see http://ecosystemvaluation.org for further details and examples on benefit transfer). As different environmental as well as social and economic factors influence the ES values and ES modes of use, the benefit transfer is criticised as it relies on values from different natural, geographical and cultural contexts: a characteristic that limits the relevance of the results. In this vein, Anderson et al. (2017) use global average values of ESs, and land cover data, to evaluate ESs in South Africa, stressing how this oversimplifies ES valuations by averaging out spatial variation in ES value and ignoring uncertainties. A global quantification of uncertainties and transferability of economic values of ESs is provided by Schmidt et al. (2016), which reveal the limitations of the benefit transfer method and highlight some opportunities for improvement. Despite its criticism, benefit transfer is largely used being the most accessible method for providing, in particular, estimates of ES values at the national scale (Sutton and Costanza, 2002). For minimising its limitations, benefit transfer could include adjusting of the original ES values through context-dependent coefficients which account for the local environmental conditions and/or for the different stakeholder communities living of the local environment (Hynes et al., 2013). These coefficients are calculated via experts judgement (e.g. Xie et al., 2010), surveys (e.g. Barton, 2002) or by means of different statistical tools (e.g. Vista and Rosenberger, 2013), in such a way that the value calculated elsewhere is corrected to be a good approximation of the value of the ES under study. Environmental accounting tools which consider productivity and natural capital availability, such as the EFA, have a high potential to correct benefit transfer estimates. However, only a limited number of studies have linked ES evaluations with the EFA.

By reflecting the demand on natural resources, the EF correlates with a number of indicators of consumption, such as total energy consumption and Gross Domestic Product (GDP; Niccolucci et al., 2007, Chen and Chang, 2016, Moore, 2015, Wackernagel et al., 2017). On the other hand, by accounting for the supply of a subset of goods and services from the environment, the BC reflects natural capital and ES values, and can be used to track the ES values embodied in purchased goods and land in the global market (Coscieme et al., 2016). The BC measures provisioning ESs including the value of cultivated crops, fibers and other materials for agricultural use, and regulating ESs of global climate regulation by reduction of greenhouse gas concentrations. Furthermore, the BC per capita correlates with per capita economic value of forest’s raw material provision and climate regulation services of the world countries (Mancini et al., 2018). Other regulating services and cultural services are not captured by the BC (Galli et al., 2012, Galli et al., 2014).

In this paper, we adapted the method of calculation of the BC for adjusting benefit transfer estimates. By considering the productivity of specific land-types in specific parts of the world, we modified the yield factors (YFs) used for the calculation of the BC into new conversion factors, that we called ecosystem services yield factors (ES-YFs). The ES-YFs can be used for adapting ES values into different locations. By means of these conversion factors, we calculated new economic values of the BC, that we called biocapacity economic values (BEVs), for 159 countries.