This section describes conditions, like number and characteristics of users and reliability of future streams of services, that can provide context for determining the values or preferences held for different ecosystem services benefits. This context can inform development of meaningful benefit-relevant indicators (BRIs) and can therefore also inform an assessment of benefits (monetary and non-monetary valuation).
- The conditions that tend to impart value to goods and services provide social and economic context for ecological changes helping to generate meaningful BRIs.
- The conditions that influence value or preference can be broken down into five categories: (1) quality of the service for its intended use, (2) availability of capital and labor that complement the ecological outputs in order to create goods and services, (3) number and characteristics of users or beneficiaries, (4) reliability of the future stream of services, and (5) scarcity and substitutability.
- Scarcity is the overarching concept that imparts value to an ecosystem good or service. In general, the scarcer a service is, the more an increase in its quantity is likely to be valued, all else equal.
To fully appreciate what ecological changes mean to people, those changes must be contextualized to reflect their social relevance using benefits assessment methods or other means to represent demand for or value of those changes. Although people may understand the relevance of a directly measurable biophysical quality (e.g., water clarity improvements) to their well-being, they may not be able to say whether they would be willing to give up some of that water clarity for a competing outcome (e.g., reduced risk of high-intensity fires), without having more context about the benefits and tradeoffs among services.1 The context that determines willingness to give up some goods or services in order to get others requires that managers capture conditions such as the type and degree of the effect, the numbers and distribution of people affected, and people’s preferences, concerns, and vulnerabilities.
Five Types of Conditions That Influence Values or Preferences
The conditions that tend to contribute to the value of an ecosystem good or service fall into several categories: (1) quality of the service for its intended use, (2) availability of capital and labor that complement the ecological outputs in order to create goods and services, (3) number and characteristics of users or beneficiaries, (4) reliability of the future stream of services, and (5) scarcity and substitutability.2 Some of these conditions determine whether a good or service can be derived from the ecological feature or output that is represented by the ecological indicator, whereas others suggest the relative magnitude of benefits.
In the case of a service quality, managers might determine whether provision of a service is possible by asking, for example, “Does the water quality of the lake make it safe (or desirable) for swimming?” If the answer is yes, then the ecological feature of a lake with a certain water quality can provide a swimming opportunity. When assessing whether a change in water quality will create a benefit, managers might ask whether the change in water quality changes the type of use that is possible or markedly superior (e.g., does the lake become swimmable or much better for swimming?) or, whether the risk of contracting illness while swimming is reduced (e.g., do cases of skin rashes in swimmers decline?).
Other qualities might be useful for comparing sites to assess relative magnitude of benefit that would be provided due to an action. If a water body dries up during part of the year, it will not provide the same level of service for irrigation as a water body that maintains water availability year round. As a result, an investment that extends the duration of available water must be judged in terms of whether that change is sufficient to make the site more useful for irrigation or whether it remains insufficient. Thus, the qualities of the ecological structures and processes must be compared to the user needs or preferences to confirm that the outputs are beneficial and to compare benefits among sites.
Capital and Labor
Similarly, the availability of complementary labor and capital might determine whether or not a service can be provided at a site before and after a change. For example, pollinators from natural areas are only able to enhance crop yields if human labor has provided the crops that require pollination in range of the pollinators. In other cases, the availability of complements may not only enable use but also suggest higher use rates at a site. The availability of fishing piers and boat ramps, for example, might increase the use of a lake for recreational fishing. Greater use tends to imply greater benefits from ecological changes because, all else equal, the more site users, the more valuable the aggregate benefits provided by the site.
Number and Characteristics of Users
Population characteristics (size, demographics, and income levels) are also known to influence how much people value certain types of ecological conditions. For example, members of a tribal community value an intact natural area because it is integral to their cultural and spiritual practices. The use of a site by a tribal community imparts a value to the site that can be captured, to some extent, by documenting the number and demographics (age, gender, and so on) of the site users. More generally, surveys and interviews are used to relate people’s values to their socio-demographic profile in order to project the number of site users. For example, national surveys are used to evaluate how participation rates in hunting, fishing, and wildlife watching vary by demographic characteristics and how demographics of nearby populations may translate into likely levels of site use.3
In addition to demographic characteristics, location or physical characteristics of a household or business can determine the number of likely users of an ecological feature, and a greater number of users can suggest greater value. For example, an aquifer’s value as a source of drinking water increases with the number of households that have access to it, all else equal. Similarly, a park with 10,000 visitors a year is more recreationally valuable than a park with 100 visitors a year, all else equal. The aggregate social value of a change can be more sensitive to the size of the beneficiary pool than the magnitude of change to an individual.4 Thus, the number of beneficiaries will be an important benefit-relevant metric.
The benefits derived from ecosystems typically arrive as a stream of goods and services through time, and their value is the sum of the expected future stream of benefits. Market behavior suggests that people are often willing to pay more for reliable goods and services (i.e., low performance risk) than for unreliable ones, all else equal. Therefore, anything that affects system reliability, including both controllable and uncontrollable factors, can affect value. Controllable factors might include the types of human activities that are allowed on site and whether the site or surrounding land has been protected from conversion to incompatible uses through purchase of land or easements. Uncontrollable factors might be related to human activities throughout the watershed that affect the site (e.g., hydrologic modification) or outcomes of climate change.
Scarcity and Substitutability
Perhaps the most critical component of the socially relevant indicators list is the issue of scarcity and the related issue of substitutability. The idea that the scarcer an ecological feature or process is, the more valuable it tends to be, is well supported by economic theory and market evidence. However, people can adapt to scarcity by modifying their behavior or finding substitutes. If irrigation water becomes scarce, people can switch to more efficient technologies or non-irrigated crops, or they can stop farming and develop alternative businesses. Together, these actions might eliminate the former evidence of scarcity of irrigation water, if the system achieves a new equilibrium of supply and demand. However, the costs of adaptation or substitution would be considered losses during the time it takes to reach the new equilibrium. In addition, the new equilibrium could create continuing losses to producers, relative to the prior condition, if, for example, the producers were forced to grow a smaller quantity of a crop or to grow a lower-value crop on the same land and costs did not decrease proportionally (i.e., substitutes were imperfect).
Not all of this potential adaptation can be captured, but something that can be measured is whether substitutes are available, either in the immediate surroundings or at a scale that is meaningful for a given service.5 Substitutes may be alternative locations that provide the same service (e.g., alternative fishing sites) or technical substitutes (e.g., levees for wetlands). Thus, scarcity can be evaluated by considering the total amount of a good or service (at the relevant scale), the number of substitute sites, and whether technical substitutes are either already in place or feasible. All else equal, the availability of abundant substitutes suggests that relatively few people will care about a change that affects only a small portion of the available options.
People’s willingness to modify their behavior (rather than pay to restore an ecological condition) is one reason that measures of ecological change, even when modified to reflect the benefits they could provide, may not always reflect a significant willingness to pay (WTP) for a change. A robust valuation study includes information about whether people would be willing to pay for a change, rather than to adapt in some other way.
On the other hand, using BRIs that incorporate information on conditions that influence value can have some advantages over monetary values used alone. For one, they can be more sensitive to social equity concerns because they are not dependent on people’s ability to pay. For example, the number of households displaced by the loss of a service is a more egalitarian metric than the value of homes at risk. In a related example, if managers consider the proportion of at-risk households that are occupied by socio-economically vulnerable groups, they can demonstrate that changes that protect such groups have the benefit of protecting people with little ability to adapt (by modifying their homes) or substitute (by moving).
The population characteristics that suggest limited ability to substitute or otherwise adapt to loss of some types of services will depend on the service. For example, the presence of subsistence fishers at a site might suggest that the benefits of preventing increased toxics levels in fish will tend to be greater than in areas that the fishers do not use. This potential for greater benefits from avoiding toxic contamination is due to the likelihood that the subsistence fishers will continue fishing, even if toxin levels make the fish unsafe to eat. In comparison, economically secure populations are likely to already be substituting other food sources, if fish contain levels of toxins. Therefore, they will not benefit as much as subsistence fishers from preventing additional toxic contamination. Thus, establishing the presence and estimating the size of socially or economically vulnerable populations (e.g., subsistence fishers, households in poverty) or considering economic dependency (e.g., number and size of local businesses that depend on ecological conditions) can reveal when vulnerable groups may incur greater benefits from a change than non-vulnerable groups.
Services with Potential Non-Use Values
The types of factors that influence value will vary by the type of service. All of the categories described above are applicable to goods and services that are directly or indirectly used, but not all are appropriate for evaluating non-use values, which are values people hold for goods and services that they will not directly use. For example, a person may be willing to pay to preserve wild pandas even though she will never see or otherwise use them. When services are identified as potentially reflecting non-use values, managers recognize that some parties may hold economic value (willingness to pay) for their existence, regardless of use. However, not all such services actually possess a value that can be traced empirically and thus their non-use value potential may go unrecorded. Thus, conveying the importance of a biophysical change for non-use value requires characterizing it in a way that communicates the feature that people value, as described further below.
Many surveys have revealed that people value the integrity and long-term persistence of ecosystems and species populations.6 Thus, one way to enhance an indicator that reflects additional acres of a rare ecosystem is to add information to the indicator that conveys capacity to support the ecosystem’s integrity or persistence. For example, the metric might quantify that a restoration project will increase the total area of a priority ecosystem by 25%. Alternatively, a metric might suggest that an action increases long-term population viability as a result of enhancing and protecting the only remaining connection between two parts of an ecosystem that have otherwise become isolated by land conversion. Both metrics put the affected acres of ecosystem into a larger context of what remains and what might be necessary to promote the ecosystem’s long-term existence.
For a species, an example of adding information regarding persistence to an indicator would be to convert the number of the species’ breeding pairs to a change in the probability of the species population viability.7 As in the example of the ecosystem, this change links the ecological indicator to the specific human desire that a species be allowed to persist and be available for future generations. Even if a species or ecosystem does not have its own constituency (i.e., is non-charismatic), it may still be deemed important through an analysis of the scarcity of the genetic or functional information represented by the ecosystem. This information may be made relevant to non-experts by identifying its significance, if any, for agricultural and pharmaceutical product development, for example. Although relevance indicators are currently difficult to assess, they are identified here to promote research and to provide examples of useful metrics in order to guide thinking about the types of available data that might enhance existing metrics.
Relevance evaluations are often the only enhancement that can be made to indicators used to suggest non-use values. Some might even argue that the enhancements discussed here are just flavors of ecological indicators. Such a distinction is not critical; what is critical is recognizing that, when managers are using ecological indicators to reflect non-use values, those indicators should reflect the aspects of the species or ecosystem that are of interest to people. This interest is typically translated into metrics capturing how the proposed action changes the scarcity of the ecological asset.
In these examples, managers rely on the well-established economic concept that goods and services that are scarce will be more valued than those that are abundant. However, this approach does not suggest that common species have no value because people also enjoy keeping abundant species (e.g., songbirds) abundant. However, the scarcer something is, the higher its value, all else equal.
Methods for Quantifying Social and Economic Context in BRIs
Ecological indicators can be more closely tied to what people value and prefer by incorporating information on the conditions described above. The methods for adding such information range from simple to complex. Consider the options available for turning biophysical metrics of wetland area and plant density into a metric that more clearly demonstrates the benefits of a wetland restoration project (Figure 1):
- Option 1: Narrative alone (not a quantitative BRI)—The restored wetlands are reducing risk of damage to a heavily used bridge.
- Option 2: Simple geographic information system or GIS calculations (a weak BRI)—The wetlands reduce risk of damage to the bridge by reducing maximum fetch (distance of open water in the direction of wind) from a maximum of 100 kilometers to 10 kilometers, and the bridge is used by 4,000 drivers per day.
- Option 3: Complex calculations (a strong BRI)—The wetlands are expected to prevent the closure of the bridge for an expected duration of 1 week every 10 years and, for each week of closure, they will prevent 25,000 additional hours of commuting time necessitated by use of alternate routes.
This list represents the options that analysts have to (1) simply identify the potential services on the basis of location, (2) create one or more distinct indicators that quantify site and location characteristics that suggest potential magnitude of benefits, or (3) combine the benefit indicators with models to more precisely quantify the potential magnitude of benefits (Figure1). In both simple and complex calculations (examples 2 and 3), the analysts conduct two types of modeling. First, they evaluate the effectiveness of the wetlands for preventing damage to the bridge (reflected in the fetch calculation in example 2 or the estimated days of closure in example 3).8 Second, they evaluate how many people were affected. In example 2, they simply quantify the number of users. In example 3, they evaluate the number of users and the availability of one type of substitute by calculating the additional hours required to take alternative routes. By considering the ease of taking alternate routes, they more precisely show the level of harm, by considering the capacity of drivers to substitute one route for another.
Figure 1. Causal chain representing the natural protection provided to a bridge by increase in wetlands.
Thus, these examples reveal that two types of calculations are needed to move from ecological indicators to benefits: the effectiveness of the ecosystem change at creating benefits (or preventing harms) and the number of people who care or are affected. Measuring the effectiveness of the ecological change at producing the service (quantifying the change in the BRI) can require many types of expertise, including hydrology, engineering, restoration ecology, and anthropology. Ideally, the benefit-relevant factors will also suggest how much people care by evaluating the availability of substitutes for use services or by evaluating the scarcity of ecosystems or their elements for services with potential non-use values, which, in this example, is represented by how much commuters are collectively inconvenienced. However, still missing from this analysis for decision making is a comparison of the costs and benefits of restoring sufficient wetlands to prevent harm to the bridge versus enhancing the bridge to withstand storms.
The number of beneficiaries for many types of services can be estimated using everything from simple GIS analysis to sophisticated modeling. As one example, numbers of recreation users are well studied and can often be estimated directly from visitation data or by combining survey data on participation rates (e.g., 2011 National Survey of Fishing, Hunting, and Wildlife Associated Recreation) with demographic data.9 In other words, simple GIS models can be used to select likely participants within a site’s user area. The user area might be defined by driving distance from a site (e.g., for recreation) or by hydrologic characteristics (for flood risk mitigation) or by other geographic characteristics, depending on the service. An estimate of use transforms a good BRI (e.g., game population increase) into a better BRI (e.g., change in annual provision of hunting user days) by showing the potential magnitude of welfare effects.10
Measuring substitutability requires making assumptions about what will change. If managers assume that land cover can be held constant, simple GIS screening rules can be used. For example, the number or areal extent of sites that have the same ecological characteristics and are in an appropriate location (e.g., within driving distance of the same population, or in the same floodplain) can be used to quantify potential substitutes for the site undergoing improvement or degradation through a management action. Screening for existing technical substitutes is also important. A wetland behind a dam may not be providing much in the way of flood control mitigation if the dam is already providing effective flood control.
Measuring reliability of a service requires making projections of expected future benefits given various sources of risk. Performance risk of restoration actions is often a key factor in determining whether future ecosystem services will be reliably produced. This risk can be calculated when data are available or can be derived from best professional judgment.11 The future stream of benefits is also determined by the probability of the ecosystem’s persistence and desirable functioning. These factors can be predicted using land conversion models or assessed qualitatively by considering the land’s protected status or zoning.12 A variety of trend data might be brought to bear on explicit risk modeling or qualitative assessments, including use rates (e.g., well pumping effects on aquifer levels) and external drivers (e.g., sea level rise, fire risk). In all cases, managers use this approach to understand the probability that the site will stop functioning for the intended use, and they reduce the expected benefits in proportion to the level of risk. Thus, if the same benefits are measured at two sites but only one site has substantial risk of lost ecological function, the expected benefits of the high-risk site will be much lower than those of the site with minimal risk.
When economic valuation and multi-criteria decision analysis are not possible or appropriate, BRIs may be used to explore the magnitude of benefits, to evaluate how benefits vary across sites, or to compare potential benefits among sites. Carefully selected BRIs that include information, such as numbers of users and available substitutes, can provide additional information when used directly in decision making or when fed into analytic processes that quantitatively compare options in terms of one or more beneficial outcomes.
Boyd, J.W., and L. Wainger. 2002. “Landscape Indicators of Ecosystem Service Benefits.” American Journal of Agricultural Economics 84(5): 1371–1378.
This article describes the rationale for and use of quantitative indicators to represent benefits and presents an example of their application in judging the adequacy of wetland mitigation.
McPhearson, T., P. Kremer, and Z.A. Hamstead. 2013. “Mapping Ecosystem Services in New York City: Applying a Social-Ecological Approach in Urban Vacant Land.” Ecosystem Services 5: e11–e26.
This paper examines social and cultural considerations that are applicable to developing benefit-relevant indicators.
Naeem, S., J.E. Duffy, and E. Zavaleta. 2012. “The Functions of Biological Diversity in an Age of Extinction.” Science 336: 1401–1406.
This paper describes dimensions of biodiversity characterization that may be useful for developing benefit-relevant indicators of non-use values.
Wainger, L.A., D.M. King, R.N. Mack, E.W. Price, and T. Maslin. 2010. “Can the Concept of Ecosystem Services Be Practically Applied to Improve Natural Resource Management Decisions?” Ecological Economics 69: 978–987.
This paper further develops some of the concepts presented in this guidebook and provides an example of the use of benefit indicators and risk assessment in optimization models designed to support decisions regarding invasive species management.
Wainger, L., and M. Mazzotta. 2011. “Realizing the Potential of Ecosystem Services: A Framework for Relating Ecological Changes to Economic Benefits.” Environmental Management 48:710–733.
This article describes the rationale for benefit-relevant indicators and methods for managing or overcoming knowledge gaps during creation of indicators.
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