The world’s forest cover is approximately 4 billion hectares (10 billion acres). Of this total, approximately one-half is temperate forests. These range from the subtropics to roughly 65 degrees in latitude. As we move toward the equator, the forests would generally be considered tropical or subtropical, while forest above the 65th latitude might be considered boreal. Only a relatively small fraction of the forests that are temperate are managed in any significant manner. The major types of management can vary from serious forest protection to selective harvesting, with considerations for regeneration. Intensive forestry exists in the form of plantation forestry and is similar to agricultural cropping. Seedlings are planted, and the trees are managed in various ways while growing (e.g. fertilizers, herbicides, thinnings) and then harvested at a mature age. Typically, the cycle of planting and management then begins anew.
Approximately 200 million hectares of forests are managed beyond simply minimal protection and natural regeneration. Recent estimates suggest that over 100 million hectares globally are intensively managed planted forests. The largest representatives of these forests are found in the Northern Hemisphere (e.g., the United States), China, and various countries of Europe, especially the Nordic countries. However, Brazil, Chile, New Zealand, and Australia are important producers while being in the Southern Hemisphere. A high percentage of managed forests are designed to produce industrial wood for construction and for pulp and paper production.
Finally, in some countries like China, planted forests are intended to replace forests destroyed decades and even centuries ago. Many of these planted forests are intended to provide environmental services, including water capture and control, erosion control and soil protection, flood control, and habitat for wild life. Recently, forests are being considered as a vehicle to help control global warming. In addition, afforestation and/or reforestation may help address damages after a disturbance such as a fire. In China, the “green wall” has been established to prevent shoreline erosion in major coastal areas.
Article
Temperate Forest Economics
Roger Sedjo
Article
The Economic and Health Impacts of Inadequate Sanitation
Luis Andrés, George Joseph, and Suneira Rana
Nearly half of the world’s population, 4.2 billion people, lack access to a hygienic sanitation facility. About 673 million people regularly defecate outdoors, in the open. Many of those who still lack access to sanitation services are among the most challenging populations to reach: the poorest, the most remote, and the most marginalized. Inadequate sanitation is also a major cause of death and disease in countries around the world, causing 432,000 diarrheal deaths annually and contributing to several neglected tropical diseases, including intestinal worm infections, schistosomiasis, and trachoma. It also contributes to malnutrition, adversely affecting early childhood development and thus affecting long-term outcomes, such as educational attainment and earnings in later life. The disease burden of inadequate sanitation overwhelmingly falls on the poor. Sanitation infrastructure access can result in direct benefits that households receive when they have access to sanitation services and an external benefit or externality produced by a community’s access to clean sanitation infrastructure. Thus, for the full benefits of sanitation infrastructure to be realized, efforts should focus on improving community-wide coverage of improved sanitation and eliminating open defecation. This expands the menu of policy options available for targeting conditions like anemia and undernutrition and would require a significant shift in thinking for many researchers and policymakers, who tend to overlook the important role of disease in determining “nutritional” outcomes.
Beyond their intrinsic value to human health and well-being, improved sanitation services would play a contributory and catalytic role in furthering progress toward other development goals, particularly those relating to education, and sustainable economic growth. Thus, furthering people’s access to adequate sanitation services is a necessary milestone in the global stride toward a sustainable, high quality of life for all.
Article
The Economics of Marine Plastic Pollution
Clemens W. Gattringer
Ubiquitous marine plastic pollution has become a prominent ecological issue, as it provokes implications that threaten marine species, induces health concerns, and causes vast economic damages. The complex dynamics behind its pervasive occurrence are multipronged and multidimensional, and simple clear-cut causal chains cannot always be identified. Analytical appraisals aiming to advance the understanding of pervasive plastic pollution need to address these complexities and acknowledge the interconnectedness of social and ecological systems. Orthodox economic analyses have insufficiently addressed this integration and are frequently characterized by shallow transdisciplinary and monodisciplinary approaches. As a result, several mechanisms that are highly relevant in constituting the problem tend to be neglected by presuming simplistic assumptions about human agency and inadequate nature-economy relationships. This reductionism in the conceptualization is mirrored in the policy responses that are advocated to address the issue. A broader perspective and the integration of different disciplinary concepts (such as biophysical limits as a result of the laws of thermodynamics, the notion of power, cognitive biases, institutions, and incommensurability) can underpin a more holistic perspective that considers the issue’s inherent complexities. While in a market idealist world consumers can “vote with their wallets” and transcend their values into purchasing decisions on the market, in reality there are essential difficulties to such an approach. Marine plastic pollution thus challenges economic thinking to address this real-world ecological challenge with insights that are compatible with and noncontradictory to the broad body of knowledge already elaborated by natural sciences. These perspectives are essential not only for forming a substantive interdisciplinary analysis and understanding the underlying institutions of consumption and production, clear key drivers of the problem, but also to identify promising political solutions for meaningful change.
Article
The Economics of Marine Reserves
Venetia Alexa Hargreaves-Allen
Marine protected areas (MPAs) remain one of the principal strategies for marine conservation globally. MPAs are highly heterogeneous in terms of physical features such as size and shape, habitats included, management bodies undertaking management, goals, level of funding, and extent of enforcement. Economic research related to MPAs initially measured financial, gross, and net values generated by the habitats, most commonly fisheries, tourism, coastal protection, and non-use values. Bioeconomic modeling also generated important insights into the complexities of fisheries-related outcomes at MPAs.
MPAs require a significant investment in public funds for design, designation, and ongoing management, which have associated opportunity costs. Therefore cost-benefit analysis has been increasingly required to justify this investment and demonstrate their benefits over time. The true economic value of MPAs is the value of protection, not the resource being protected. There is substantial evidence that MPAs should increase recreational values due to improvements in biodiversity and habitat quality, but assumptions that MPAs will generate such improvements may not be justified. Indeed, there remains no equivocal demonstration of spillover in fisheries adjacent to MPAs, due in part to the variability inherent in ecological and socio-economic processes and limited evidence of tourism benefits that are biologically or socio-cultural sustainable.
There is a need for carefully designed valuation studies that compare values for areas within MPAs compared the same areas without management (the counterfactual scenario). The ecosystem service framework has become widely adopted as a way of characterizing goods and services that contribute directly or indirectly to human welfare. Quantitative analyses of the marginal changes to ecosystem services due to MPAs remains rare due to the requirements of large amounts of fine-grained data, relatively undeveloped bio-physical models for the majority of services, and the complexities of incorporating ecological nonlinearities and threshold effects. In addition while some services are synergistic (so that double counting is difficult to avoid), others are traded off. Such marginal ecosystem service values are highly context specific, which limits the accuracy associated with benefits transfer. A number of studies published since 2000 have made advances in this area, and this is a rapidly developing field of research.
While MPAs have been promoted as a sustainable development tool, there is evidence of significant distributive impacts of MPAs over time, over different time scales and between different stakeholders, including unintended costs to local stakeholders. Research suggests that support and compliance is predicated on the costs and benefits generated locally, which is a major determinant of MPA performance. Better understanding of socio-economic impacts will help to align incentives with MPA objectives. Further research is needed to value supporting and regulating services and to elucidate how ecosystem service provision is affected by MPAs in different conditions and contexts, over time and compared to unmanaged areas, to guide adaptive management.
Article
The Emerging Environmental Economic Implications of the Urban Water–Energy–Food (WEF) Nexus: Water Reclamation with Resource Recovery in China, India, and Europe
Daphne Gondhalekar, Hong-Ying Hu, Zhuo Chen, Shresth Tayal, Maksud Bekchanov, Johannes Sauer, Maria Vrachioli, Mohammed Al-Azzawi, Hannah Patalong, Hans-Dietrich Uhl, Martin Grambow, and Jörg E. Drewes
With economic and population growth, industrialization, urbanization, and globalization, demand for natural resources such as water, energy, and food continues to increase, particularly in cities. Overconsumption of resources has led to degradation of the environment, a process that is interacting with and is further accelerated by a dangerous alteration to the climate. Fast growing cities worldwide already face severe technical difficulties in providing adequate infrastructure and basic services in terms of water and energy. This situation is set to become increasingly difficult with climate change impacts. The latter are increasingly affecting economically developing as well as developed countries. However, cities often have limited capacities to take comprehensive climate action. Hence, practicable, scalable, and adaptable solutions that can systematically target key entry points in cities are needed. The Water-Energy-Food (WEF) Nexus concept is one potential integrated urban planning approach offering cities a more sustainable development pathway. Within this concept, urban water reclamation with resource recovery offers a key potential: reclaimed products such as water, bioenergy, nutrients, and others are valuable resources for which markets are emerging. Reclaiming water can also reduce stress on natural resources and support the prevention of environmental pollution. Thus, it can support water, energy, and food security and the achievement of the United Nations Sustainable Development Goals. However, so far there are few implemented examples of urban water reclamation with resource recovery at urban scales. Examples of good practice in cities in China, India, and Europe highlight key enablers and barriers to the operationalization of water reclamation with resource recovery and implications in terms of environmental economics relevant for cities worldwide. These findings can support a systemic sociotechnical transition to a circular economy.
Article
The Neoclassical Decision-Making Paradigm and Environmental Valuation: An Environmental Ethics Perspective
Gregory Cooper
The relationship between environmental ethics and the application of economic values to the environment has followed two main paths: (1) blocking attempts to value the environment economically by extending the concept of moral standing to elements of the natural world, and (2) attempting a pragmatic reconciliation that harnesses the efficacy of economic motivation while avoiding the excesses of an exclusively economic perspective. The pragmatic reconciliation must still come to grips with several ethical issues that confront environmental valuation. The fact that economics is grounded in a utilitarian consequentialism renders it susceptible to some long-standing deontological challenges having to do with rights and justice. Other challenges include a reluctance to embrace value pluralism, overly ambitious attempts at pricing, failure to incorporate deeper value commitments that do not take the form of preferences, and the inadequacies of a preference-satisfaction account of well-being.
Article
Use of Experimental Economics in Policy Design and Evaluation: An Application to Water Resources and Other Environmental Domains
Simanti Banerjee
Economics conceptualizes harmful effects to the environment as negative externalities that can be internalized through implementation of policies involving regulatory and market-based mechanisms, and behavioral economic interventions. However, effective policy will require knowledge and understanding of intended and unintended stakeholder behaviors and consequences and the context in which the policy will be implemented. This mandate is nontrivial since policies once implemented can be hard to reverse and often have irreversible consequences in the short and/or long run, leading to high social costs. Experimental economics (often in combination with other empirical evaluation methods) can help by testing policies and their impacts prior to modification of current policies, and design and implementation of new ones. Such experimental evaluation can include lab and field experiments, and choice experiments. Additionally, experimental policy evaluation should pay attention to scaling up problems and the ethical ramifications of the treatment. This would ensure that the experimental findings will remain relevant when rolled out to bigger populations (hence retaining policy makers’ interest in the method and evidence generated by it), and the treatment to internalize the externality will not create or exacerbate societal disparities and ethical challenges.
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Use of Property Values and Location Decisions for Environmental Valuation
Lala Ma
The economics literature has developed various methods to recover the values for environmental commodities. Two such methods related to revealed preference are property value hedonic models and equilibrium sorting models. These strategies employ the actual decisions that households make in the real estate market to indirectly measure household demand for environmental quality. The hedonic method decomposes the equilibrium price of a house based on the house’s structural and neighborhood/environmental characteristics to recover marginal willingness to pay (MWTP). The more recent equilibrium sorting literature estimates environmental values by combining equilibrium housing outcomes with a formal model of the residential choice process. The two predominant frameworks of empirical sorting models that have been adopted in the literature are the vertical pure characteristics model (PCM) and the random utility model (RUM). Along with assumptions on the structure of preferences, a formal model of the choice process on the demand side, and a characterization of the supply side to close the model, these sorting models can predict outcomes that allow for re-equilibration of prices and endogenous attributes following a counterfactual policy change.
Innovations to the hedonic model have enabled researchers to more aptly value environmental goods in the face of complications such as non-marginal changes (i.e., identification and endogeneity concerns with respect to recovering the entire demand curve), non-stable hedonic equilibria, and household dynamic behavior. Recent advancements in the sorting literature have also allowed these models to accommodate consumer dynamic behavior, labor markets considerations, and imperfect information. These established methods to estimate demand for environmental quality are a crucial input into environmental policymaking. A better understanding of these models, their assumptions, and the potential implications on benefit estimates due to their assumptions would allow regulators to have more confidence in applying these models’ estimates in welfare calculations.
Article
Valuation of Beach Quality
Ashley Barfield and Craig E. Landry
The result of interactive dynamics of the ocean, landforms, and weather patterns, sandy beaches and dunes are a natural feature along many coastlines around the world. Their contributions to overall social welfare are multifaceted and complex. Providing water access, recreation and tourism potential, scenic beauty, and leisure amenities, sandy coastlines have witnessed extensive commercial and residential development. Intact beach–dune systems provide coastal development projects with protection from storms, erosion, flooding, and (to some extent) sea-level rise. While yielding value through capital investment, market expansion, and the enhancement of access to natural amenities, increases in buildings and infrastructure can upset the delicate dynamic equilibrium in coastal systems. This, in turn, puts beaches, dunes, wetlands, wildlife habitats, and other ecological resources at risk. Concerns about these impacts have provided the impetus for several environmental management initiatives. Critical to these initiatives is information about the multidimensional economic and social values of coastal amenities, especially beaches and dunes.
The economic valuation of beach quality and coastal ecosystem services has traditionally focused on the implementation of non-market valuation techniques, including revealed (e.g., hedonic prices and travel costs) and stated preference (e.g., contingent valuation and choice experiment) approaches, in conjunction with survey/experimental design methods. Analysis of beach quality has become a vibrant topic, especially in response to concerns about the need for climate change adaptation; the impacts of sea-level rise; worsening and more frequent storm events; and changes in ocean temperature, salinity, and alkalinity. Each of these factors can ultimately impact beaches and coastal economies. As a result, the literature has broadened to include a number of interdisciplinary studies that feature the contributions of environmental economics, marine science, applied geology, natural resource management, risk and insurance, and urban planning disciplines, among others. These collaborations have advanced the science of coastal economics and management, but many significant challenges remain. Questions about the optimal order and timing of adaptation procedures, how to balance the provision of synergistic or conflicting goods and services, and how to design dynamic models that incorporate real-world management scenarios across different jurisdictions all require further investigation.
Article
Valuation of Biodiversity
Bartosz Bartkowski
Massive population declines and species extinction have characterized the 20th and early 21st centuries. These local and global phenomena do not only involve the loss of particular species, habitats, and ecosystem services; they also result in a general reduction in biotic diversity. Ecological research has long indicated the importance of biodiversity within and across ecosystems. However, capturing the economic value of biodiversity remains a challenge.
Biodiversity is a multidimensional public good; it encompasses the diversity of genes, species, functional groups, habitats, and ecosystems. A large empirical literature in biology and ecology indicates that biodiversity has a stabilizing effect on ecosystems—the higher the biodiversity within a given ecosystem type, the more well-functioning (productive, stable, and resilient) is the ecosystem. However, the economic importance of biodiversity goes beyond this stabilizing effect.
The multidimensionality and complexity of the biodiversity concept has resulted in a multitude of approaches to its economic valuation. While the theoretical and conceptual literature has focused on biodiversity as insurance and as a pool of options, empirical studies have been much more diverse. Given the public-good nature and complexity of biodiversity, stated preference methods are particularly common. The focus on biodiversity valuation has fostered many important theoretical and methodological developments. Many estimates exist of the willingness to pay for biodiversity conservation in different countries across the world; however, relatively few studies have been conducted in developing countries despite the considerably higher biodiversity levels there as compared with the better-covered developed countries.
Valuation of biodiversity is a controversial subject, and the economic, predominantly anthropocentric approach has been criticized frequently. However, non-anthropocentric accounts of biodiversity value are problematic for their own reasons; an important question is whether biodiversity has intrinsic value and, if yes, whether this can be captured within the economic perspective. Valuation of biodiversity remains a vibrant topic at the intersections of disciplines such as ecology, environmental ethics, and economics.
Article
Valuation of Mangrove Restoration
Edward B. Barbier
Since the 2004 Indian Ocean tsunami, there has been strong interest globally in restoring mangrove ecosystems and their potential benefits from protecting coastlines and people from damaging storms. However, the net economic gains from mangrove restoration have been variable; there have been some notable project successes but also some prominent failures. There is also an ongoing debate over whether or not the cost of mangrove restoration is justified by the benefits these ecosystems provide. Although the high costs of mangrove restoration and the risk of failure have led to criticism of such schemes, perhaps the more pertinent concern should be whether the ex post option of restoration is economically beneficial compared to preventing irreversible mangrove conversion to alternative land uses. Case studies on mangrove valuation from Brazil and Thailand illustrate the key issues underlying this concern. Since much recent mangrove restoration has been motivated by the trees’ potential storm-protection benefit, a number of studies have valued mangroves for this purpose. However, mangroves are also valued for other important benefits, such as providing collected products for local coastal communities and serving as nursery and breeding grounds for off-shore fisheries. The implications of these benefits for mangrove restoration can be significant. It is also important to understand the appropriate use of benefit transfer when it is difficult to value restored mangroves, methods to incorporate the potential risk of mangrove restoration failure, and assessment of cost-effective mangrove restoration.
Article
Valuation of Marine Ecosystems
Achilleas Vassilopoulos and Phoebe Koundouri
Water accounts for more than 70% of Earth’s surface, making marine ecosystems the largest and most important ecosystems of the planet. However, the fact that a large part of these ecosystems and their potential contribution to humans remains unexplored has rendered them unattractive for valuation exercises. On the contrary, coastal zones, , being the interface between the land, the sea, and human activities competing for space and resources, have been extensively studied with the objective of marine ecosystem services valuation. Examples of marine and coastal ecosystems are open oceans, coral reefs, deep seas, hydrothermal vents, abyssal plains, wetlands, rocky and sandy shores, mangroves, kelp forests, estuaries, salt marshes, and mudflats. Although there are arguments that no classification can capture the ways in which ecosystems contribute to human well-being and support human life, very often policymakers have to decide upon alternative uses of such natural environments. Should a given wetland be preserved or converted to agricultural land? Should a mangrove be designated within the protected areas system or be used for shrimp farming? To answer these questions, one needs first to establish the philosophical basis of value within the ecosystems framework. To this end, two vastly different approaches have been proposed. On the one hand, the nonutilitarian (biocentric) approach relies on the notion of intrinsic value attached to the mere existence of a natural resource, independent of whether humans derive utility from its use (if any) or preservation. Albeit useful in philosophical terms, this approach is still far from providing unambiguous and generally accepted inputs to the tangible problem of ecosystem valuation. The utilitarian (anthropocentric) perspective, on the other hand, assumes that natural environments have value to the extent that humans derive utility from placing such value. According to the total economic value (TEV) approach, this value can be divided into “use” and “nonuse.” Use values involve some interaction with the resource, either directly or indirectly, while nonuse values are derived simply from the knowledge that natural resources and aspects of the natural environment are maintained. Existence and altruistic values fall within this latter category.
Not surprisingly, economists have long revealed a strong preference for the utilitarian approach. As a result, the valuation of marine ecosystems requires that we understand the ecosystem services they deliver and then attach a value to the services. But what tools are available to economists when valuing marine ecosystems? For the most part, ecosystem services are not traded in formal markets and thus actual prices are usually not available. Valuation techniques essentially seek different ways to estimate measures like Willingness To Pay (WTP), Willingness To Accept (WTA), or expenditures and costs. The techniques used for the valuation of ecosystem services can be divided into three main families: market-based, revealed preference, and stated preference. Finally, value-transfer methods are also used when estimates of value are available in similar contexts. All these methods have advantages and disadvantages, with different methods being suitable for different situations. Hence, extra caution is required during the design and implementation of valuation attempts.
Article
Valuation of Rainforest Preservation in the Amazon
Jon Strand
Different ecosystem values of the Amazon rainforest are surveyed in economic terms. Spatial rainforest valuation is crucial for good forest management, such as where to put the most effort to stop illegal logging and forest fires, and which areas to designate as new nationally protected areas. Three classes of economic value are identified, according to who does the valuation: values accruing to the local and regional populations (of South America); carbon values (which are global); and other global (noncarbon) values. Only the first two classes are discussed. Three types of value are separated according to ecosystem service delivered from the rainforest: provisioning services; supporting and regulating services; and cultural and other human services. Net values of provisioning services, including reduced impact logging and various non-timber forest products, are well documented for the entire Brazilian Amazon at a spatially detailed scale and amount to at least $20–50/ha/year. Less-detailed information exists about values of fish, game, and bioprospecting from the Amazon, although their total values can be shown to be sizable. Many supporting and regulating services are harder to value economically, in particular climate regulation and watershed and erosion protection. Impacts of changed rainfall when Amazon rainforest is lost have been valued at detailed scale, but with relative model values of $10–20/ha/year. Carbon values are much larger, at a carbon price of $30/ton CO2, around $14,000/ha as capitalized value. The average per-hectare value of tourism and the health benefits from having the Amazon forest are low, and such values cannot easily be pinned down to individual areas of the Amazon. Finally, the biodiversity values of the Amazon, as accruing to the local and regional population, seem to be small based on recent stated-preference work in Brazil. Most of the values related to biodiversity are likely to be global and may. in principle, be very large, but the global components are not valued here. The concept of value is discussed, and a marginal valuation concept (practically useful for policy) is favored as opposed to an average or total valuation. Marginal value can be below average value (as is likely for biodiversity and tourism), but can also in some contexts be higher. This can occur where losing forest at a local scale increases the prevalence of forest fires and where it increases forest dryness, leading to a multiplier process whereby more forest is lost. While strides have recently been made to improve rainforest valuation at both micro- and macroscales, much work still remains.
Article
Valuation of Species Preservation
Robert P. Berrens and Therese Grijalva
Against a backdrop of increasing species imperilment, there is considerable empirical evidence that preserving threatened, endangered, and rare (TER) species provides significant economic benefits to society. But efforts to measure these benefits has generated both strong methodological and philosophical criticisms. Since the 1960s, economists have developed a battery of nonmarket valuation approaches for estimating economic values associated with changes in the quantity or quality of environmental goods and services. This battery includes both revealed preference and stated preference (SP) approaches (including the contingent valuation [CV] method), with only the latter capable of providing willingness to pay (WTP) estimates for nonuse values. The total economic value of TER species preservation can include nonconsumptive use values (e.g., wildlife watching), and may be especially composed of nonuse values (e.g., based on existence value motivations).
By the early 1980s, applied CV studies focusing on TER species preservation had begun to accumulate. Early research centered in the United States. By the mid-1990s the first statistical meta-analysis of TER species NMV studies was completed, and was then updated a dozen years later. These metaregression functions facilitated potential benefit transfers, where the systematic structure of prior original studies could be used to estimate WTP values for a TER species in another setting (absent an original study). Since roughly 2010, the use of choice experiments as an alternative SP approach expanded rapidly. Likewise, the accumulation of additional SP studies generated new summary reviews and meta-analyses, including applications from both developed and developing countries, and expanded benefit transfer opportunities. Going forward, new studies will lead to updated meta-analyses, with additional statistical and theoretical sophistication. Critiques targeted to SP approaches (e.g., with respect to hypothetical bias and nonuse value motivations) will likely remain, and further validity testing and methods development are called for. However, from a pragmatic perspective, persistent efforts at quantification continue to help make the benefits of TER species preservation visible in the face of rapidly increasing species imperilment.
Article
Valuation of Wetlands Preservation
Alexandra Dehnhardt, Kati Häfner, Anna-Marie Blankenbach, and Jürgen Meyerhoff
All types of wetlands around the world are heavily threatened. According to the Ramsar Convention on Wetlands, they comprise “areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish, or salt.” While they are estimated still to cover 1,280 million hectares worldwide, large shares of wetlands were destroyed during the 20th century, mainly as a result of land use changes. According to the Millennium Ecosystem Assessment (MEA), this applies above all to North America, Europe, Australia, and New Zealand, but wetlands were also heavily degraded in other parts of the world. Moreover, degradation is expected to accelerate in the future due to global environmental change. These developments are alarming because wetlands deliver a broad range of ecosystem services to societies, contributing significantly to human well-being. Among those services are water supply and purification, flood regulation, climate regulation, and opportunities for recreation, to name only a few. The benefits humans derive from those services, however, often are not reflected in markets as they are public goods in nature. Thus, arguing in favor of the preservation of wetlands requires, inter alia, to make the non-marketed economic benefits more visible and comparable to those from alternative—generally private—uses of converted wetlands, which are often much smaller. The significance of the non-market value of wetland services has been demonstrated in the literature: the benefits derived from wetlands have been one of the most frequently investigated topics in environmental economics and are integrated in meta-analyses devoted to synthesizing the present knowledge about the value of wetlands. The meta-analyses that cover both different types of wetlands in different landscapes as well as different geographical regions are supplemented by recent primary studies on topics of increasing importance such as floodplains and peatlands, as they bear, for example, a large flood regulation and climate change mitigation potential, respectively. The results underpin that the conversion of wetlands is accompanied by significant losses in benefits. Moreover, wetland preservation is economically beneficial given the large number of ecosystem services provided by wetland ecosystems. Thus, decision-making that might affect the status and amount of wetlands directly or indirectly should consider the full range of benefits of wetland ecosystems.
Article
The Value of the Environment in Recreation
Gianluca Grilli
Natural environments represent background settings for most outdoor recreation activities, which are important non-consumptive benefits that people obtain from nature. Recreation has been traditionally considered a non-market service because it is practiced free of charge in public spaces and therefore of secondary relevance for the economy. Although outdoor recreation in natural parks became relevant during the 19th century, the increased popularity of recreation after the Second World War required tools for the assessment of recreational benefits, which were not considered in the evaluation of investments in recreational facilities, and increasing spending for recreational equipment captured the attention of outdoor recreation as an economic sector. In the 1990s, it was observed that many recreational activities were commercialized and started being considered equally important to tourism as a means to boost the economy of local communities. The expansion of outdoor recreation is reflected in a growing interest in the economic aspects, including cost–benefit calculations of the investments in recreational facilities and research on appropriate methods to evaluate the non-market benefits of recreation. The first economic technique used for valuing recreation was the travel cost method that consisted in the assessment of a demand curve, where the demanded quantity is the number of trips to a specific site and the cost is the unit cost of travel to the destination. After this first intuition, the number of contributions on recreation valuation exponentially grew, and new methods were proposed, including methods based on stated preferences for recreation that can be used when travel cost data that reveal consumers’ behavior are not available. A regular assessment of recreational benefits has several advantages for public policy, including the evaluation of investments and information on visitor profile and preferences, income, and price elasticity, which are essential to understand the market of outdoor recreation and propose effective strategies and recreation-oriented management. The increasing environmental pressure associated with participation in outdoor recreation required effective conservation activities, which in turn posed limitations to economic activities of local communities who live in contact with natural resources. Therefore, a balance between environmental, social, and economic interests is essential for recreational destination to avail of benefits without conflicts among stakeholders.
Article
Valuing the Benefits of Green Stormwater Infrastructure
Amy W. Ando and Noelwah R. Netusil
Green stormwater infrastructure (GSI), a decentralized approach for managing stormwater that uses natural systems or engineered systems mimicking the natural environment, is being adopted by cities around the world to manage stormwater runoff. The primary benefits of such systems include reduced flooding and improved water quality. GSI projects, such as green roofs, urban tree planting, rain gardens and bioswales, rain barrels, and green streets may also generate cobenefits such as aesthetic improvement, reduced net CO2 emissions, reduced air pollution, and habitat improvement. GSI adoption has been fueled by the promise of environmental benefits along with evidence that GSI is a cost-effective stormwater management strategy, and methods have been developed by economists to quantify those benefits to support GSI planning and policy efforts. A body of multidisciplinary research has quantified significant net benefits from GSI, with particularly robust evidence regarding green roofs, urban trees, and green streets. While many GSI projects generate positive benefits through ecosystem service provision, those benefits can vary with details of the location and the type and scale of GSI installation. Previous work reveals several pitfalls in estimating the benefits of GSI that scientists should avoid, such as double counting values, counting transfer payments as benefits, and using values for benefits like avoided carbon emissions that are biased. Important gaps remain in current knowledge regarding the benefits of GSI, including benefit estimates for some types of GSI elements and outcomes, understanding how GSI benefits last over time, and the distribution of GSI benefits among different groups in urban areas.
Article
Water and Economy-Wide Modeling: An Overview
William D. A. Bryant
General equilibrium theory thinks of the economy as a collection of interconnected markets, each of which, in isolation and in combination, is driven toward some sort of equilibrium. Computable general equilibrium (CGE) models add to this abstract point of view by calibrating models of the economy using actual economic data. The aim is to empirically solve for equilibrium demand, supply, and price levels across the markets in the economy. Many areas of economic analysis, reform, and policymaking have benefitted from scrutiny in a CGE context. This is particularly true of issues to do with tax and tariff reform, where CGE models first gained prominence. More recently, the areas of environmental economics and regulation has attracted the attention of CGE modelers. Considerations of environment and environmental regulation, inevitably involve a consideration of issues to do with water. Such issues range from aquaculture through pricing of water to virtual water—and many points in between. In the analysis of each of these issues—and the role water plays in the overall economy, CGE models have made an important contribution to understanding and informed policymaking.
Article
Water Supply, Sanitation, and the Environment
N. Vijay Jagannathan
Sustainable Development Goal No. 6 (SDG 6) has committed all nations of the world to achieving ambitious water supply and sanitation targets by 2030 to meet the universal basic needs of humans and the environment. Many lower-middle-income countries and all low-income countries face an uphill challenge in achieving these ambitious targets. The cause of poor performance is explored, some possible ways to accelerate progress toward achieving SDG 6 are suggested.
The analysis will be of interest to a three-part audience: (a) readers with a general interest on how SDG 6 can be achieved; (b) actors with policy interest on improving water supply and safe sanitation (WSS) service issues; and (c) activists skeptical of conventional WSS policy prescriptions who advocate out-of-the-box solutions to improve WSS delivery.
