Biodiversity conservation research: Australia's priorities

Australian and New Zealand Environment and Conservation Council and Biological Diversity Advisory Committee
Commonwealth of Australia, 2001
ISBN 0 6425 4742 4

C. What is the value of biodiversity conservation?

When we set out to estimate the economic, social and environmental value of the services from our native ecosystems we are confronted with the extraordinary complexity of the living world and of our participation in it.

If we are to make informed land-use and land management decisions, it is essential that we have a true cost accounting of the economic value of healthy native ecosystems. This makes the gains, losses and the trade-offs implicit in decision-making more transparent.

The economic value of biodiversity conservation is calculated based on a comprehensive identification of the environmental and social value of ecosystem services 20 as well as the commercial value of activities such as sustainable harvesting.

Environmental value

The environmental value of biodiversity can be found by examining each ecosystem process (see Section B) and identifying the ecosystem services that result. For instance, in wetlands the vegetation captures water-carried sediment and the soil organisms break down a range of nutrients and pollutants washed into the area. These processes provide the ecosystem service of purifying water. Wetlands also act as spawning and nursery grounds for some fish and provide a refuge for animals in times of drought.

Some ecosystem services are easy to overlook until the underlying process is impaired. For instance, dryland salinity has emerged as a problem following sustained clearance of deep rooted perennial plants 21 over wide areas. Water tables have risen carrying dissolved salts which then concentrate in the soil. We can conclude that where vegetation contains a significant proportion of deep rooted plants such as trees, it provides the ecosystem service of moderating water table levels and so contributes to soil fertility. Similarly, the value of oxygen production is likely to be ignored while we have adequate supplies.

Social value

The social value of biodiversity includes aesthetic, recreational, cultural and spiritual values. To this can be added health benefits resulting from recreational and other activities. There can be marked differences in landscape and biodiversity preferences according to age, socioeconomic factors and cultural influences. In Australia, people up to 45 years old tend to be more concerned about the destruction of trees and ecosystems than older people 22.

Some ecosystem services do not lend themselves readily to a monetary value. How do we measure and value beauty, serenity and a sense of belonging? Social science research techniques are needed to fully value the social importance of complex native ecosystems.

Ecosystem services

Native ecological communities have evolved to both provide and be maintained by ecosystem services. These services also support human needs and activities such as intensely managed production ecosystems 23.

Ecosystem services include:

  • the production of oxygen by land based plants and marine algae;
  • the maintenance of fresh water quality by vegetation slowing run off, trapping sediment and removing nutrients and by soil organisms breaking down pollutants;
  • the production and maintenance of fertile soil as a result of many interacting processes;
  • the provision of foods such as fish, pastures for cattle and sheep, timber, fire wood and harvested wildlife such as kangaroos and native cut flowers;
  • the provision of native species and genes used in industry research and development, for instance, in traditional breeding and biotechnology applications in agriculture, forestry, horticulture, mariculture, pharmacy, chemicals production and bioremediation;
  • pollination of agricultural crops, forest trees and native flowering plants by native insects, birds and other creatures;
  • pest control in agricultural land by beneficial native predators;
  • flood mitigation by vegetation slowing run off and trapping sediment;
  • breakdown of pollutants by micro-organisms in soil and aquatic ecosystems and sequestration of heavy metals in marine and fresh water sediments;
  • greenhouse gas reduction by, for instance, sequestering atmospheric carbon in wood and marine calcium carbonate deposits;
  • maintenance of habitats for native plants and animals; and
  • maintenance of habitats that are attractive to humans for recreation, tourism and cultural activities and that have spiritual importance.

Economic value

The economic value of biodiversity can be determined by calculating a monetary value for the environmental and social benefits obtained from the ecosystem services. We tend to underestimate the value of ecosystem services because our knowledge of these processes is incomplete.

Some ecosystem services, such as the prevention and mitigation of dryland salinity, can be provided to varying degrees by healthy native ecosystems, modified and depleted native ecosystems and managed production ecosystems such as farm forestry with and without planted native understorey. A comparison of the value to society of each of these management options is complex and needs to include factors such as the maintenance or decline of soil fertility and water quality, commercial productivity and the effectiveness of native biodiversity conservation.

The economic value of biodiversity can be calculated by taking into account factors such as:

  • the full cost of restoring 24 native ecosystems and managed production systems and of implementing threat abatement plans and threatened species recovery plans;
  • the market value of purchasing insurance 25 against a planned activity causing unforeseen damage to biodiversity and requiring conservation actions such as habitat restoration and the recovery of species and ecological communities;
  • the contingent value of biodiversity based on the loss to society from species extinction and irreparable loss of native ecosystem health and complexity 26;
  • the farm gate or harvest site value of products such as fish, timber, kangaroos, cut flowers and fire wood obtained from native ecosystems;
  • that portion of the market value of products – including cattle, sheep, timber and agricultural produce – obtained from managed production systems that can be attributed to biodiversity services such as pollination and the maintenance of soil fertility and water quality;
  • that portion of entry fees to managed conservation areas, the wages of tour guides, the cost of accommodation and other expenses that people engaged in tourist activities and recreation are prepared to pay that can be attributed to the desire to visit places with biodiversity appeal such as unique wildlife, rich native ecosystems and beautiful landscapes;
  • that portion of the commercialisation value of products-obtained from conventional breeding and biotechnology applications that can be attributed to the genetic material obtained from native biodiversity and from cultivars produced by farmers and traditional societies;
  • the cost of alternative delivery mechanisms for ecosystem services, for example:
    • water-carrying and water-purifying plants;
    • mechanical removal of excessive sediment deposited in waterways;
    • human interventions to reduce soil erosion;
    • engineering works to reduce floods and ameliorate river salinity;
    • pollination by introduced bees in managed hives;
    • application of fertilisers in place of impeded nutrient cycling;
    • application of pesticides in place of control by native predators; and
    • production of timber in plantations and fish by mariculture;
  • financial loss from:
    • avoidable flood damage;
    • the corrosive effect of increasing land and water salinity on roads, pipes, building foundations and domestic hot water systems; and
    • declining productivity following ecosystem degradation as a result of, for example, invasion by weeds and ferals, soil erosion, dryland salinity, soil acidification, toxic algal blooms and pollution.

Incentives

A full economic costing is useful when considering financial and other incentives to encourage biodiversity conservation. An interesting recent development is the proposed use of carbon credits to create a financial incentive for reducing the greenhouse gas carbon dioxide 27. In a similar vein, there is some discussion of salinity credits, transpiration credits and biodiversity credits. Such credits would be tradeable items that would reward activities that lead to carbon being removed from the atmosphere and sequested in trees, reduction in dryland salinity and the conservation and sustainable use of biodiversity.

Some caution needs to be shown when considering economic measures that affect the environment. In anticipation of obtaining carbon credits there has been a recent increase in plantation forestry activities in Australia attracting the interest of shareholders. Where degraded farmland is used for plantations this increases both carbon sequestration and biodiversity value.There is, however, some indication of a trend to clear established native woodland to make way for plantations, resulting in a lesser net gain in carbon sequestration and a significant loss of biodiversity value.

In order to avoid perverse incentives that encourage environmentally damaging actions, proposed economic measures need to be assessed by biophysical and social scientists and by economists and to identify the immediate and downstream net effects on the environment.

Modelling and management decisions

Land-use, land management and marine resource management decisions can involve a trade-off among a wide range of potential environmental, social and economic gains and losses. What appears to be a sound economic decision in the short term may have unexpected consequences later. Catchment based and regional planning is proving to be more effective than isolated decisions made by individual land holders and agencies at all levels of government.

Recent research has shown that in some areas, the return from traditional agriculture is significantly less than the return to the community from other ecosystem services such as provision of water and tourism. For instance, in the Australian rangelands the return from beef and wool sales is less than the returns from tourism 28. The Douglas Shire is a good example where nature-based tourism has taken over from agriculture as the community's principle source of income and jobs. Agricultural practices, forest clearing and wetland draining are also the source of sediment and nutrients which are the greatest threat to offshore coral reefs 29. Research on valuing biodiversity in the United States Everglades has lead to the decision to restore the environment in the expectation of making a net profit in the long term from tourism and ecosystem services 30.

Techniques are needed to support natural resource management decisions at farm level, in catchments and bioregions and at the national level. Such predictive tools need to provide a structure that uses local information on ecosystems, other biophysical factors, the benefits and environmental impacts of existing and potential industries, and the full range of community values. It is unrealistic to expect a simulation tool to make decisions – the information fed in will always be incomplete and therefore biased. These modelling tools need to make transparent the interactions between processes and the trade-offs required when different decisions are made. In this way, they are debate support systems.

Priority Research

6. Determining the value of biodiversity conservation

Comprehensively determine the environmental, social and economic value of biodiversity components and ecosystem services provided by native biodiversity.

Highest priority research

Develop credible methods for estimating the environmental, social and economic value of ecosystem services provided by native and modified ecosystems. Initially develop methods applicable to:

  • farms;
  • local areas;
  • entire catchments including the estuary and associated marine area; and
  • marine protected areas.

Develop credible methods for estimating the environmental, social and economic value of components of biodiversity.

Research of national importance

  • Develop methods for estimating the value of in-situ biodiversity conservation and the maintenance of ecosystem services applicable at a range of scales.
  • Compare short, medium and long term valuations.
  • Compare different methodologies including those associated with accrual accounting of natural resource assets in government budgets.

Application

To provide the basis for:

  • valuing native ecosystem services compared to other land and marine area uses;
  • triple bottom line accounting by industry and government;
  • determining the level of incentive appropriate to biodiversity conservation outcomes; and
  • proposing institutional changes to achieve natural resource management.

Related research

Prerequisite:

(5) identify ecosystem processes

Follow up:

(4) make data and information accessible
(11) assess and prevent risks from human activities
(12) develop predictive models
(15) develop educational materials

Relevant policy commitments and legislation

National Strategy for the Conservation of Australia's Biological Diversity: Objective 2.1.1 and 2.1.2

Convention on Biological Diversity:

Commonwealth Environment Protection and Biodiversity Conservation Act 1999: Sections 3(1)(b), 3A(e), 274(2)(e) and 282(2)(e)

Priority Research

7. Developing incentives to conserve biodiversity

Investigate and develop financial and other incentive structures and institutional arrangements which foster biodiversity conservation and restoration.

Highest priority research

Develop incentives which foster biodiversity conservation and restoration:

  • Build on existing work to investigate the socio-economic and environmental consequences and effectiveness of incentives.
  • Develop incentives applicable to local government.

Develop economic tools, such as biodiversity credits, to support market-based incentives that foster biodiversity conservation and restoration.

Research of national importance

  • Investigate the socio-economic and environmental consequences and effectiveness of incentives and institutional arrangements intended to foster biodiversity conservation and restoration.
  • Consider incentives applicable to marine areas and to all kinds of land tenure.
  • Develop incentives applicable to all levels of government.
  • Identify existing perverse incentives and institutional arrangements that discourage biodiversity conservation and restoration.

Application

To provide the basis for:

  • rewarding public good management by the private and public sector; and
  • proposing institutional changes to achieve integrated natural resource management.

Comments

Build on existing research such as that by Carl Binning and Mike Young (1997) Motivating People: Using Management Agreements to Conserve Remnant Vegetation.

Related research:

Concurrent:

(6) value ecosystem services and components of biodiversity

Follow up:

(4) make data and information accessible
(15) develop educational materials

Relevant policy commitments and legislation

National Strategy for the Conservation of Australia's Biological Diversity: Objectives 1.5.1, 2.6.2(c), 2.7.1 and 3.2.3

Convention on Biological Diversity: Article 11

Commonwealth Environment Protection and Biodiversity Conservation Act 1999: Sections 3(1)(b) and 3A(e)

Footnotes:

20. References: Cork SJ and DA Shelton (2000) and CSIRO (2001).

21. Deep rooted plants include trees and some rye grasses.

22. Concern for the destruction of trees and ecosystems: 18-24 years old 30%, 25-34 27%, 35-44 29%, 45-54 26%, 55-64 23%, 65 plus 17%; non-metropolitan residents 28%; metropolitan residents 24%. Australian's had more concern for some types of pollution: air 38%, ocean 28%, freshwater 26% (Australian Bureau of Statistics, 1996).

23. Intensely managed production ecosystems include agricultural, forestry and mariculture ecosystems managed to increase particular forms of productivity. Native ecosystems are also highly productive and deliver a wide range of ecosystem services as well as marketable products.

24. The cost of restoration is usually far in excess of the cost of maintaining established native ecosystems.

25. The cost of unplanned restoration can considerably excede the cost of protecting ecosystems as part of the process of engaging in planned ecologically sustainable industry practices.

26. Any contingent valuation of this sort will be subject to dispute as social values change.

27. A global carbon credit accounting and exchange system could be implemented when the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change comes into effect. This is dependent on the protocol being ratified by a sufficient number of countries.

28. Tourism is the second most important rangelands industry (after mining), contributing 0.4% of gross domestic product (GDP) in 1992-1993. Although pastoralism with sheep and cattle grazing is the most widespread form of land use in the rangelands, its share of GDP is relatively small - about 0.2% in 1993-1994 (ANZECC and ARMCANZ , 1996, pages 9-10).

29. Since an early survey of the Low Isles coral reef area within the Great Barrier Reef lagoon in 1928-29, land-based erosion has led to more sediment and nutrients reaching the reef area, causing loss of the hard corals. Sand will cover underwater surfaces that might otherwise be colonised by hard corals. Excessive nutrients lead to eutrophication discouraging growth of hard coral, which is being replaced by algae, sea grass and soft corals. As it is the hard corals which rebuild reefs after cyclones, the reef ecosystem is threatened (Bell PRF and Elemetry I, 1995).

30. Reference: Davies SM and Ogden JC, 1994.