Second part of a three part series investigating ecosystem services and what it means for science in the Delta
Ecosystems are the communities that are formed by the interaction between living things such as plants, wildlife, and humans, and non-living things, such as the air, water, and soil. Humans are both part of ecosystems and a beneficiary of ecosystems in many ways; those benefits are known as ecosystem services.
In recent years, there have been attempts made to assign a value (monetary or otherwise) to these ecosystem services with the hope that by quantifying these benefits, policy-makers and others can evaluate management impacts and compare the costs and benefits of potential policies. However, such valuations are estimates, and involve the inherent uncertainty as well as fuel the philosophical debate of evaluating a range non-market costs and benefits, and therefore remain controversial.
Dr. Van Butsic is an assistant cooperative specialist and adjunct professor at UC Berkeley in the Department of Environmental Science, Policy, and Management, where he conducts research on land system science, fire and forest policy, land use planning, and coupled human and natural systems. In this second of a three-part seminar series on ecosystem services and the Delta hosted by the Delta Science Program, Dr. Butsic discusses ways to value ecosystem services and the importance of counterfactuals, drawing on examples from projects he has worked on for Sonoma County and the Coastal Conservancy.
Dr. Van Butsic began by noting that the title of his talk is Ecosystem Services, Conservation, and the Delta, and while he knows a lot about conservation and ecosystem services, he knows little about the Delta, so he won’t be giving any specific recommendations. But in light of the policy discussions about the Delta, these ideas and concepts could be useful to those who are engaged in those discussions.
The concept of ecosystem services has been around for a while, but it’s been a struggle to put ecosystem services into policy, he said. “We’ve been discussing how to use ecosystem services for a long time, but are we able to put it into the public policy context. In my position as a cooperative extension specialist, I do a lot of applied work with communities trying to make better land use decisions and so I have worked with ecosystem services in that context, and today I’m going to present a few snippets of my research in that realm.”
His first work on ecosystem services in California was with a project with Sonoma County; the County was interested in how effective their open space district has been at conserving ecosystem services and wanted quantification of a number of those services, so the Dr. Butsic and his colleagues compared the district's holdings and the ecosystem services available within those holding to the total land base, the adjacent lands, the converted lands, and the rangelands.
InVEST is a suite of free, open-source software models developed as part of Stanford's Natural Capital Project that are used to map and value the goods and services provided by ecosystems. Dr. Butsic and his colleagues used InVEST to quantify five ecosystem services: carbon storage, sediment delivery, nutrient retention, water yield, and scenic quality. He explained that basically all the models function in a similar fashion; the data sets are all spatially referenced and input into InVEST, parameters are set, and the output is fairly user friendly that quantifies these values in different ways.
“The results here aren’t the point,” he said. “The point is that we have the tools to do this type of analysis at broad scales. The datasets are available for a lot of California and these are things we can do. … We were able to do this in six months or so. This is not a huge project to calculate these types of values and really quantify a number of ecosystem services.”
He acknowledged that the output is only as good as the data being input and there is some inherent uncertainty, but from a policy perspective, the values are good enough to start making decisions from. There are a number of examples where people have done a lot of work looking at multiple ecosystem services and the trade-offs associated with those different land use scenarios and really tried to find land use scenarios that maximized a suite of ecosystem services.
He presented a slide showing work from a group out of University of Minnesota on a project in the Willamette Valley in Oregon, which looked at trade-offs between ecosystem services from an academic point of view.
“They were able to quantify a number of ecosystem services, they quantified a number of future land use scenarios, and then they could show under these future scenarios what the trade-offs are between different services – really powerful stuff – and really impossible to put into action. And so that’s sort of where we are today is, how do we actually get the theory, the academic research we’re doing, the applied products like Natural Capital makes and actually get them on the ground?”
He acknowledged there are a lot of barriers: Even if we can show trade-offs in ecosystem services, can we agree on what we want? If we agree on what we want, are there legal means to get there? And, if there’s legal means, will the results be what we anticipate? Did we do the science right? These are all barriers and they make the job of taking ecosystem services from theory to action very hard, he acknowledged.
But perhaps it would work with a project that is not as complex; maybe that would be easier to translate the ecosystem services concepts into policy. Dr. Butsic next discussed a project he did with the Coastal Conservancy in calculating the carbon sequestration services for all the properties the Conservancy had purchased over the last 20 years or so.
The first step was to look at each parcel and determine how much carbon was being sequestered in that area; it’s not that difficult with today’s technology, he pointed out. You can put a price on carbon; although for this example, it’s a made-up price, so these numbers are wrong, he said. But others have gone out and calculated the ecosystem services of other habitats such as grasslands.
If grasslands are worth $5 an acre per year, then the total ecosystem service investment needed to break even can be calculated; it can be input into a formula and the return on investment determined. This is one systematic way to think about the trade-offs of multiple ecosystem services and whether or not these are good investments or not.
That’s a simple way to think about it, but if we’re thinking about public policy, we want some type of additionality, he said. “We don’t want to just pay for ecosystem services that we were getting anyway. In the last example, we are paying to purchase ecosystem services on a rangeland at this one property at the Coastal Conservancy purchased, but there is no indication that all of those ecosystem services would be gone if we didn’t pay for them. From a public policy perspective, this isn’t what we want to do. We want to make sure we’re getting bang for our buck, that we’re getting something extra and we’re paying someone to change their land uses.”
Additionality was an issue in the state’s carbon debates; are we actually getting any extra carbon when we’re paying for it or are people just doing what they would do otherwise? In order to calculate additionality, you need to have a counterfactual or what would have happened had you not paid for that ecosystem service.
To illustrate this concept, Dr. Butsic noted that when the Montesol Ranch property was purchased by the Coastal Conservancy, an appraisal report was done that listed the highest and best use of the property, so they used that as the counterfactual for what would have happened if the property had not been purchased. The appraisal report said that there was the potential for rural residential development on the property of up to 76 legal parcels and 1700 acres of vineyard development.
“So now we have an idea of what we’re getting when we purchase these ecosystem services,” he said. “We’re reducing the odds that the 1700 acres actually develops.”
They then did spatial analysis to try and figure out what vegetation types would have likely changed, noting that the number of acres that would have developed versus the ones that even under the development scenario stayed for the most part in the same vegetation types. There would have been loss of a couple of hundred acres, a little bit of chaparral loss, and a little loss of oak woodlands. The blue and red on the map represent what would have been lost if the Coastal Conservancy had not made the purchase; the green is vegetation that stayed the way it was probably going to be anyway.
This analysis makes it possible to calculate the amount of carbon that would have been lost under the counterfactual. “We were going to lose 50,000 metric tons of carbon under the non-counterfactual, so that’s how much the ecosystem service was providing, but under the counterfactual, we could see that the majority of that would have been on the ground anyway even without purchase, so we were only really saving about 12,000,” Dr. Butsic said, noting they performed this analysis for 83 properties up and down the coast.
Looking at the counterfactual, it changes the return on investment significantly. Before, there was 50,000 metric tons at $5 a metric ton, $71 was the grasslands value x 7,000 acres; the total of that minus the purchase price gives a positive number indicating a good return on investment. But looking at the counterfactual, we were only preventing 12,000 metric tons from being released into the atmosphere and saving only 1800 acres of grasslands, and the math is not nearly as favorable and actually is a negative return on investment.
“The point here is if we really account for what would have happened in the absence of conservation, we come up with very different return on investment, and it’s the difference between counting the ecosystem services that are present versus what would be present without action,” Dr. Butsic pointed out, noting that a lot of calculations don’t take into account counterfactuals. He gave two examples of studies performed by economic consultant firms that didn’t take any counterfactuals into account and ended up with a return on investment of 6 to 1.
“That’s great, but you’re not actually thinking about what would have happened if you hadn’t made these investments in open space,” he said. “You see these values in the press. I love these values as someone who loves open space and conservation, but as someone who cares about public policy, I really question them.”
As they have worked on other programs and their return on investments, Dr. Butsic said he’s come to a few conclusions.
“The first one is that in California, most of the agriculture is pretty high value,” he said. “If you’re growing wine grapes or almonds, you can actually make a lot of money. So what we’ve seen is that it’s pretty darn tough to come up with ecosystem service values that make it so that you can pay a farmer not to convert. If they have land that’s suitable for grapes or almonds, if you’re looking to pay for carbon … the math doesn’t work out. Wine grapes, you can make $3000 per year per acre, almonds it can be even higher, and so trying to prevent conversion by payments for ecosystem services, for many areas in California, it’s not clear to me that ecosystem services are enough to pay for these.”
But where can ecosystem services really work is in changing management. “For example, instead of changing to wine grapes, the rancher faces the choice of grazing and emergent wetlands; the options are they can decide not to graze the wetlands,” he said, acknowledging that while some rangeland advocates might say grazing wetlands is good, for the purposes of this hypothetical situation, the assumption is that it’s not and that grazing reduces the value of the wetlands. “This value of $1000 per acre per year is an actual value that came out of one of the reports that has received quite a bit of press actually, so in a situation like this, when you want a rancher not to graze a specific area, a 5 or 10 acre wetland, all you have to do is replace the nutrients that the cows were going to get from that wetlands and you’re getting ecosystem services that are worth $1000 acre. That’s where ecosystem payments could work. That’s a situation where the public is getting a good bang for its buck. It’s taking this low value use of the land, grazing, off of an area that’s of high ecosystem value.”
“So this change in management I think is an area where ecosystem services actually have a lot of potential in the policy realm, much more so than actual land use conversions. I think that’s a tougher spot to apply ecosystem services.”
But will anyone actually be paid for ecosystem services? There are a few programs in California, but it’s been tough to get these programs going, he acknowledged. “It’s a question of whether we should be paying just for the additional services, the additionality, or should we be just paying people for not screwing things up? That a philosophical question. Or do we assume people aren’t screwing things up and we pay them if they threaten to screw things up? These are tough questions that we have to think about.”
Dr. Butsic noted that the numbers don’t really work out for land use change issues such as converting to a high-valued crop or residential, but ecosystem service payments could be a very good fit for changing management. “They really could work when you’re just moving management a little bit and you’re getting a big change in the ecosystem service for a relatively small cost to the farmer.”
So how does this ecosystem services framework and the idea of changing management versus changing land use fit in the Delta? “Wetlands are valuable and some of the highest value per acre areas in terms of ecosystem services, so is there potential for them to pay? Are there relevant counterfactuals for conserved land in the Delta? Is there a counterfactual of what would have happened, or are the areas in the Delta areas that aren’t likely to be developed anyway? How do you deal with the fact that some of the ecosystem services may be happening not on public land? Advantages and disadvantages of payment for service type programs versus title purchases. These are all questions I look forward to discussing now.”
QUESTIONS AND ANSWERS
Question: When you were talking about quantifying the amount of ecosystem services pre or post changing land management practices, and you look at things like carbon sequestration, do you look at other types of maybe non-economic values? If you were to convert farmland to open areas, the amount of money that could be added to the economy for tourism and recreation – are those things that you consider?
Answer: “One big issue when we talk about ecosystem service values is for any piece of land, we can think of an incredible suite of ecosystem services, so the question is, what ones are you going to put into the analysis and put a value on? Which ones are you going to exclude? How are you going to go about valuing those things? Within the Sonoma County project that we worked on, and then an upcoming project we’re working on in Alameda County, we are looking at viewsheds as a proxy for the general prettiness of conservation. Are you conserving places that people can see that enhance their daily commute to work? Economists have put values on those types of things so they do exist.”
“One thing that I’ve often thought about ecosystem services and trying to apply it to a policy, if you’re thinking about a cost-benefit analysis and you’re trying to make a decision if you should invest in a property or not invest in a property, you don’t necessarily need to value all the services. You just need to value the services until you get over a threshold. If you value a bunch of services and you don’t get over a threshold, is adding one more minor service going to get you over that threshold? Probably not. So I think one of the criticisms of ecosystem services is that there’s a tremendous number of them and what ones you choose to value makes a difference in your analysis, but I do think from a practical point of view, hopefully by choosing the most influential ecosystem services to value, you’ll get a rough sense of whether or not you’re going to make it over the hurdle where it’s a worthwhile investment or not. There’s practical reasons why we can’t value everything.”
Question: I’m curious about the perspective from the landowner in these cases. It sounds like in a lot of cases, the public are these nonprofit groups are probably paying too much for the land. I’m wondering if there’s been any research done on what kind of innovative solutions there might be to make the deal a little bit sweeter for the landowner? Perhaps, in a lot of these counterfactual cases, there’s going to be incredibly regulatory burdens that the landowner would have to jump through, for example, turn a parcel into a vineyard, certainly in the Delta with all the requirements … What kind of carrots can we offer to the landowner to bring down that price and maybe get it to a point where it does make sense, considering not just the counterfactual from the public benefit perspective, but from the landowner’s regulatory cost perspective, because presumably if they are going to leave it as open space, the regulatory burden is not completely eliminated, but it’s also a lot less.
Answer: “Something we ran into when we were doing the Coastal Conservancy work was when we looked at the biggest 100 or so properties, there was about 18-20 properties where the appraiser said, ‘this county is not going to let anybody develop this land, it doesn’t matter what. This is going to stay open space that the county politics are such they aren’t going to let you have a subdivision here,' and so in those cases, in our counterfactual, they got zero credit. This interaction between the regulatory component of local planning and the payments is a really interesting one. I’ve never seen any real academic research in that realm, but I think that’s a great question. How do those interact and can they sort of work together in some way? It does seem that especially in California where the regulatory burden is high, the higher the burden, the lower the price you should have to pay for the properties.”
Question: When you split out some of the different benefits, who do they accrue to? In your example here, you use things that may fall through the gaps and could be addressed by public policy. The average person may not be willing to pay for conservation of our vernal pools. A lot of the examples I’ve seen in Latin America for the Water Fund or in New York or Oregon are from water companies or public utilities with a constant revenue stream and can pay for this if they are a beneficiary. Have you scoped that out? Public policy shared carbon benefits versus local and here’s the funding stream that could pay for it, and looked at those thresholds?
Answer: “We have not in our own work, but that’s a very good point. One thing we are seeing in California is quite a bit of interest in using basically payments for upstream forest management to potentially increase water yield to downstream users, which is certainly an example of ecosystem services management where there’s a very distinct user that’s getting the benefits, somebody’s getting that water on their agricultural fields or what not. In areas like that, and of course the famous New York example, markets work pretty well because there’s some guy who is drinking water so you make him pay for that water and these market solutions work well. As we’ve seen globally with carbon, it’s more difficult and probably with things such as biodiversity or vernal pools as well, the benefits are more dispersed.”
FOR MORE INFORMATION …
- Click here for more information on Stanford’s Natural Capital Project.
- Click here for more information on the InVEST suite of models.
- Click here for more information on Stanford’s Water in the West Program.
- Click here for more information on the Millennium Ecosystem Assessment.
- Click here for information on the CGIAR Research Program on Water, Land and Ecosystems (WLE)
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