Valuing Ecosystem Services

Biodiversity

 

Image of the southern Lake Michigan coastline

The southern Lake Michigan coastline is one of the most biologically diverse regions in the country. Over the past century, development and urbanization have impacted the quality and quantity of Great Lakes coastal habitats. One of the key examples of environmental health in the Great Lakes region is biodiversity, which refers to the variety of all life. When this diversity changes or is lost, it can be an indicator that something is occurring that is harming the ecosystem.

Biodiversity Ecosystem Services Framework

Many people’s well-being is improved by biodiversity. For example, commercial and recreational fishers benefit from well-maintained fish populations; indigenous communities benefit from cultural, spiritual, and subsistence practices connected to the natural environment; tourists and recreationists benefit from enhanced bird-watching and other wildlife opportunities; and students benefit from environmental education opportunities.

Individual actions can change biodiversity. For example, boaters can unintentionally transport invasive species — non-native plants, animals, or pathogens that cause harm to natural areas — leading to negative impacts. When invasives attach to boats and boat trailers that are then moved from one body of water to another, the invasives move as well. Once invasives enter a water body, they can compete with native species and change the ecological balance.

Biodiversity can be measured in many ways, including observing how the number of species change over time. Biodiversity can also be measured through multiple indicators (for example, species richness and species distribution); the presence of an indicator species; rare/threatened/endangered species status and location; genetic diversity; and overall habitat preservation/acreage protection.

When biodiversity changes, it can impact many ecosystem benefits. Some examples are:

  • Recreationists − people who enjoy bird-watching, wildlife viewing, and nature photography, for example − have the quality of their experience reduced when the diversity, richness, and abundance of flora, fauna, and fungi declines.
  • Indigenous people and others − biodiversity can impact people’s health by reducing current and potential future medicines. A plant species may have cultural or subsistence properties for indigenous people, or undiscovered medicinal properties.
  • Fishers and aquaculturists are impacted by habitat biodiversity changes that lead to declines in fish stocks and seafood resources.

Because biodiversity is complex, its value is derived through specific measures. Quantitative, non-monetary indicators of biodiversity are designed to measure the variety and number of species, genes, ecosystems, or ecosystem functioning. Tracking these measures over time can show how biodiversity is changing.

Policy makers can use cost-benefit analysis to understand which projects provide the most biodiversity benefit. Value can also be observed through ecosystem program payments, as these programs compensate landowners for providing biodiversity through ecosystem maintenance. Economists have used various methods to assign monetary values for biodiversity, including actual expenditures, revealed preferences (hedonic, travel cost), stated preferences (contingent valuation, conjoint analysis), replacement costs, experimental cash market value, and meta-analyses.

Great Lakes Biodiversity Valuation Studies

Biodiversity

Publication Geography Change Valued Value Estimate ($Year) Valuation
Montgomery, C. A., R. A. Pollak, K. Freemark, and D. White (1999) PA Determining the management price of biodiversity under three land use configurations: status quo, unlimited development scenario, and maximum biodiversity scenario. The opportunity cost of unlimited development was $177 million annually. Actual expenditure

Fauna - Insects

Publication Geography Change Valued Value Estimate ($Year) Valuation
MacDonald, H., D.W. McKenny and V. Nealis (1997) ON Willingness to pay to either use a biologic to control an infestation of insects or provide compensation packages to those experiencing losses from the infestation. Individual, one-time WTP for biologic control of Jack pine budworm/Gypsy moth were between $14.89/$15.15 and $18.17/$27.44. The WTP for letting compensation packages were between $2.07/$5.14 and $4.98/$7.38 ($1997 CAN). Contingent valuation
Morlando, S., S. J. Schmidt and K. LoGiudice (2012) NY Reduction in the risk of tick-borne disease due to restoration of habitat for endangered species in Albany Pine Bush Reserve. The annual willingness-to-pay was $4.24 per household. Aggregate values are available ($2008).
Winfree, R., B. J. Gross and C. Kremen (2011) NJ, PA Pollination service of crops by bees. The annual net income value of watermelon is $3.63 million/year, $2.25 million in pollination services by native bees and $1.38 million/year by honey bees ($2009). Replacement costs

Fauna

Publication Geography Change Valued Value Estimate ($Year) Valuation
Bishop, R.C., K.J. Boyle, and M.P. Welsh (1987) WI Willingness to buy an individual supporting membership to prevent bald eagle extinction in Wisconsin. The estimated annual willingness-to-pay are $75.31, $18.02, and $11.84. ($1984). Contingent valuation
Bowker, J.M. and J.R. Stoll (1988) TX, CA, IL, NY Individual willingness to pay for whooping crane viewing. Annual willingness-to-pay is $21 to $149. Contingent valuation
Boyle, K. J. and R.C. Bishop (1987) WI Willingness to contribute to a program to prevent the bald eagle and striped shiner from becoming extinct. Bald eagle existence values are annually ranging from $10.62- $30.78. The individual willingness-to-pay for striped shiner are $5.66 and $4.16 ($1984). Contingent valuation
Chambers, C.M. and J.C. Whitehead (2003) MN Two state funded wolf management strategies are described to respondents. First strategy is a minimum population and the second livestock compensation. The annual willingness-to-pay was $21.49 and $20.16 ($2001). Contingent valuation
Frederick, S. and B. Fischhoff (1998) ME, WI Three alternate levels of provision for the reestablishment of timber wolves. The individual annual willingness-to-pay for timber wolf reintroduction was $20 in Wisconsin, Maine and in both states together Contingent valuation
Moore, R., R. C. Bishop, B. Provencher and P. A. Champ (2010) WI To increase the wild flock of whooping cranes to 125 cranes. The individual one-time willingness to donate for whooping crane reintroduction was between $21.21- $69.38 ($2004). Contingent valuation

Flora

Publication Geography Change Valued Value Estimate ($Year) Valuation
Nowak, D.J., D.E. Crane, and J.F. Dwyer (2002) GA, MD, MA, NJ, NY, CA, PA Compensatory value of urban trees (value of a tree as a structural asset). The value of urban trees in cities ranged from $101 million to $5.2 billion. In states, the urban forest valued from $913 millions to $146.8 millions. Aggregate values are available. Actual expenditure
Sander, H., S. Polasky and R. G. Haight (2010) MN Proximity to amenities (park, trail head, lake) and 10% increase in view. 100 meters closer to a park leads to a $136 increase in the value of the home, 100 meters closer to a trail lead to a $119 increase in the value of the home, 100 meters closer to a lake leads to a $216 increase in the value of the home, 100 meters closer to a stream leads to a $127 increase in the value of the home. The marginal implicit prices of increasing the percentage of a home’s view composed of grassy surfaces or water by 10% (evaluated at the mean home sale price) are $5517 and $7417, respectively ($2005). Hedonic property
Scarpa, R., J. Buongiorno and J. Hseu (2000) WI Values for timber harvested from maple birch forests and the potential timber that could have been harvested. The study found national forests valued at $49.6/ha per year, which is almost ten times its timber only value of $5.40 ($1984). Hedonic property

Invasive Species

Publication Geography Change Valued Value Estimate ($Year) Valuation
Holmes, T. P., A. M. Liebhold, K. F. Kovacs and B. Von Holle (2010) US[1] The spread of Hemlock Woolly Adelgid in Eastern U.S. forests The aggregate estimate of residential property value losses was $12.4 million to $29.5 million over 10 years. Hedonic property
Lupi, F., J.P. Hoehn, and G.C. Christie (2003) (1995) MI Benefits to Michigan anglers of several sea lamprey treatment options for the St. Mary’s River. The economic use-values were $2,617,000, $4,742,000, and $3,333,000 ($1994). Travel cost method
McDermott, M. S., D. C. Finoff and J. F. Shogren (2013) OH Ash timber shortage in Ohio due to impact of invasive emerald ash borer. The annual impact by households is estimated to be $63.23 million. Aggregate values based on models are available. Actual expenditure
Provencher, B., D. J. Lewis and K. Anderson (2012) WI Spread of Eurasian Watermilfoil by boaters on the lakes of Vilas County. The annual willingness-to-pay for the prevention program was $563 and $577 per individual. The present value of loss was estimated to range from $11,443 to $52,221 ($2008). Contingent valuation
Yue, C., T. M. Hurley and N. Anderson (2011) MN Economic harm, environmental harm, or harm to human health caused by invasive plant species Individual willingness-to-pay was a one-time premium of $0.35 for plants labeled noninvasive and native. Discounted plants labeled invasive and nonnative by $1.01 and plants labeled invasive and native by $1.66. Experimental cash market value