In this Subsection:
 
Links Between "Green Payments" and Environmental Benefits
15 Essential Questions About Relative Ecosystem Values
Types of Ecosystem Values to Consider
Five Sets of Landscape Characteristics to Consider
Five Categories of Ecosystem Value Indicators
Three Stages of  Indicator Development
Benefit-Based Ranking of Regional Conservation Practices
Difficulties with Environmental Valuation

Also in this Section:
 
Relative Value Home

Part I

Introduction to Relative Ecosystem Valuation

Three Illustrations of Relative Ecosystem Value

Part II

Types of Indicators

Definitions

Food for Thought

Steps in Developing Relative Value Indicators

Links Between "Green Payments" and Environmental Benefits

Prioritizing public investments in conservation practices on the basis of intuition or a few "rules of thumb" can work sometimes. However, the essential links between "green payments" and environmental benefits are often too complicated to expect that general decision rules will  be effective and avoid waste.

The table below presents seven stages of benefit development that link  "green payments"  with expected environmental benefits. Each stage and each of the links between successive stages link can be evaluated separately with respect to each type of expected environmental benefit. What is good for fish may not be good for fowl, or for downstream water quality. Links that favor one type of benefit, in other words, may not favor others. The accessibility of a site to certain types of wildlife and to people may generate certain benefits, but have an adverse effect on the survivability of some species. Restoring a small degraded wetland that provides a critical wildlife corridor or is the only source of environmental amenities in a community may generate more of some kinds of benefits than restoring a much larger wetland or constructing a forested buffers in a more remote area. There are always tradeoffs involved in selecting among competing investments, and indicators that reflect critical linkages with respect to different types of benefits help clarify these tradeoffs. 

Indicators based on the linkages listed above will be useful for comparing changes in various types of benefits. However, comparing the overall benefits from investing in different projects or sites may require assigning preferences to different types of benefits. If fishing opportunities are rare and people consider increasing them to be twice as important as increasing already abundant bird-watching opportunities, for example, investments that increase fishing opportunities a little may be more beneficial than investments that increase bird-watching opportunities a lot.

Some of the conceptual and  technical aspects of developing indicators are dealt with in the Food for Thought section.  However,an indicator can be defined generally as a measure of anything that provide clues about  matters of greater importance. The matters of greater importance in our case are  the benefits expected from a conservation practice undertaken at a specific site. In practice this means that anything that reflects conditions that limit or enhance the likelihood of progressing from one stage to another in the following  chart is a good candidate for becoming the focus of an indicator. 
Stage 
Indicator Type 
Focus of Attention

 
1
financial incentives
Eligibility criteria, project ranking criteria, level of funding, allocation of funds, etc.
lead to changes in . . .
2
conservation practices
Conservation tillage, wetland restoration, riparian buffers, noxious weed control, manure management, reduced fertilizer/pesticide use, irrigation practices, etc.
which results in . . .
3
biophysical effects
Reduced sediment, nutrient, contaminant runoff, reduced use of water, energy, manpower; change in mix of seasonal/permanent ground cover, etc. 
which improve . . .
4
the state of environment
Improved habitat for fish, birds, fur-bearing animals; increased water/air/soil quality; reduced sedimentation 
which generates . . .
5
improved environmental functions
hydrological - floodwater control,  groundwater recharge functions 
biological - biodiversity, species abundance, ecosystem resilience
physical - chemical and carbon cycling, etc.
which results in . . .
6
improved environmental services
commercial - better commercial fishing, reduced dredging, etc.
recreational - better rec. fishing, hunting, bird watching, etc. 
other - reduced ecological and public health risks, aesthetics, etc.
which are the source of . . .
7
socioeconomic benefits
Increased quality of life as measured by:
revealed, expressed, or imputed “willingness to pay” for improving environmental services and for reducing environmental & public health risks
estimates of the numbers of people who benefit, etc.
illustrations of how people benefit, costs avoided, etc.

15 Essential Questions About Relative Ecosystem Values

The first few stages depicted in the chart above deal with whether a "green payment" will provide incentives for landowners to undertake conservation practices that will change onsite features.  The rest of the stages address whether changing features at a particular site will affect  ecosystem functions, services and values.  The following questions provide a basis for developing indicators based on whether a conservation practice at a given site will result in ecosystem benefits. 

Functions

1. What environmental functions does this site have the capacity to provide? 

2. Does the site's landscape context allow it to provide these functions? If so, are there factors that will cause it to function below capacity? 

3. Are there factors that may cause it to function beyond its sustainable capacity? 

Services
4. What services, products, and amenities will these ecosystem functions generate? 

5. Over what geographic area will people benefit from these services and products?

Values
6. How scarce are these services, products, and amenities in the region? 

7. How many people benefit from them; what is their income, ethnicity, etc.? 

8. How much does it cost in money or time for people to enjoy these services? 

9. Are there near-perfect natural and man-made substitutes that exist or could be developed? 

10. How could the affected population adapt to having fewer of these services? 

11. How much would the affected population benefit from having more of these services?

12. Will demographic/land use change increase/decrease preferences or availability for these services? 

Risk
13. How might future development make the services provided here more/less important? More or less vulnerable?14. How vulnerable are services generated by this site to temporary/permanent disruptions? 

15. How restorable are these services in this region compared to other regions? 

Types of Ecosystem Values to Consider

Ecosystem values include "active use " values and "passive use" values as depicted in the figure below. Environmental investments at a particular site often generate active and passive values that accrue on or near the site as well as many miles away. In fact, the offsite passive use values associated with many environmental investments often far exceed their onsite active use values. Because of the difficulties in measuring offsite and nonuse values in terms of dollars, these values must be accessed and compared using indicators.


 

Five Sets of Landscape Characteristics to Consider
 
1
Topographical 
adjacent & nearby hydrological./geological features (e.g., upslope/downslope gradients, proximity to water bodies, floodplains) 
2
Habitat 
connection to fish, wildlife, fur-bearer habitats (e.g., flyways, wildlife corridors, other ecosystem areas) 
3
Man-made 
proximity to residential, commercial, industrial land uses, and to roads, parking lots, rights of way, and other property interests
4
Demographic 
size/ age/ mobility/ ethnicity/ geographic distribution of local, regional population and others who benefit
5
Socioeconomic 
income and asset characteristics of the population; ranking of preferences for various ecosystem services; ranking of concerns about public health and ecosystem risks 

Five Categories of Ecosystem Value Indicators

These five categories of indicators may be combined to generate a single overall index of ecosystem value.
 
1
Functional Capacity
Indicators of site conditions that determine an ecosystems ability to provide various functions
2
Capacity Utilization 
Indicators of landscape conditions that determine how much of the functional capacity of the site is likely to be used. 
3
Service Capacity 
Indicators of landscape conditions that limit or enhance the level of services expected per unit of function. 
4
Service Value 
Indicators of local, regional, and national supply and demand conditions, individual and community preferences, and the substitutability of the service, which reflect the expected value per unit service. 
5
Service Risk 
Indicators of the likelihood of future disruptions in service flows that affect the value of expected ecosystem services. These are related to the exposure and vulnerability of the site or other critical landscape features to such threats as floods, droughts, fire, disease, infestations, water diversion, pollution, and industrial development.

Click for a graph depicting flow of indicator development using the factors listed above.

Three Stages of  Indicator Development

Stage 1 - Develop the Tools

Tools are the analytical framework behind the indicators.
 
1.1 Identify critical links between conservation practices and resulting improvements in environmental functions, services, and values
1.2 Determine limiting or enhancing factors that affect these critical links and provide a basis for comparing the beneficial outcome of conservation practices
1.3 Identify useful indicators of those limiting and enhancing factors 
1.4 Test and validate those indicators 

Stage 2 - Organize the Data

The basis for applying the indicators 
 
2.1 Identify existing data sources
2.2 Identify data gaps sources of data to fill them
2.3 Assemble regional databases
2.4 Develop site-based and landscape-based indicators 

Stage 3 - Prepare Guidance

How to estimate and apply the indicators as guidance for applying conservation benefit indicators cannot be developed until more is known about how the indicators will be developed. The indicators should not be developed until more is known about the types of information that are available to apply them. Table 3 below lists the types of landscape and demographic information that are available in most regions and might be used as a checklist for determining what types of data are available to NRCS field staff.
 
3.1 Illustrations and case studies 
3.2 Background on indicator development and application
3.3 Sources of generic indicators and regional adjustment factors
3.4 Methods of applying and interpreting indicators
3.5 Using indicators to develop project eligibility and ranking criteria 
3.6 Defending indicators as a basis for managing spending 

Benefit-Based Ranking of Regional Conservation Practices

The following chart provides an illustration of a six-step process for determining which linkages are most important and how differences in regional preferences might affect the development of indicators.
 
STEP 1 Determine natural resources at risk and likely causes of risk
Identify
 
Specific Populations - critical life requisites posing problems
Specific Habitats - causes of loss or degradation
Overall ecosystem health - critical trends and their cause
by answering . . .
 
What causes of risk are controllable/uncontrollable?
At what geographic/ political scales can risks be addressed?
How much will changes in agricultural practices affect overall risks?
What is the payoff of lowering certain agricultural risks if other risks persist?
Step 2 Determine community preferences and values
General Preferences

Relative weights on populations, habitats, risks
Importance of specific land use/development patterns
Significance of particular resources, areas, threats
Specific Benefits
 
Commercial - better commercial fishing, reduced dredging, soiling costs
Recreational - better recreational fishing, hunting, bird watching, etc.
Other - reduced ecological and public health risks, aesthetics, etc.
Step 3 Link services and values with the state of the environment 
 
Improved habitat for fish, birds, fur-bearing animals
Increased water/air/soil quality; reduced sedimentation
Step 4 Link state of the environment to changing effects of agriculture
 
Offsite effects of sediment, nutrient, contaminant runoff
Onsite effects of changing seasonal/permanent ground cover
Step 5 Link specific effects to specific conservation practices
  Conservation tillage, wetland restoration, riparian buffers, noxious weed control, manure management, reduced fertilizer/pesticide use, irrigation practices, etc.
Step 6 Link changes in conservation practices to specific incentives
  Eligibility criteria, project ranking criteria, level of financial incentives, allocation of incentives, etc.

Difficulties with Environmental Valuation

Non-Market Goods 
Most environmental goods, such as clean air and water, and healthy fish and wildlife populations, are not traded in markets. Their economic value - how much people would be willing to pay for them in dollars ö is not revealed in market prices. The only option for assigning dollar values to them is to rely on non-market valuation methods.
Non-Rival Goods 
One person's consumption of most goods (apples or housing) reduces the amount available for everyone else. Environmental goods are different. Clean water and air, beautiful views, and to some extent outdoor recreation, can be enjoyed by everyone in the same way as radio and television. The economic value of non-rival or public goods is the sum of all people's willingness to pay.
Non-exclusive Goods 
People cannot be excluded from enjoying most environmental goods and the cost of trying to exclude them is prohibitive. Other than increases in onsite hunting and fishing opportunities, which may be a source of economic benefit to farmers, the environmental benefits of most conservation practices are non-exclusive. The free riders problem makes it impractical for farmers to recoup the cost of on-farm conservation investments from those who benefit from off-farm environmental improvements. 
Inseparable Goods 
Conservation practices at a given site contribute in many roundabout ways to environmental goods and result in environmental and economic benefits that accrue over great distances in time and space. It may be impossible to separate the economic benefits that result from one conservation practice undertaken at one site from another undertaken at another site. Worse, it may be impossible to separate the aggregate benefits of those practices from those of other environmental investments.

 

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