A Framework for Evaluating the Functions and Values Provided by Wetlands

“A Framework for evaluating the functions and values provided by wetlands”

Report to be produced for Ramsar STRP Task 1.4 iii

Draft 4 (15 November 2004)

With several notes in the text (in red or blue) indicating issues that still need attention (your coments on those, and any other suggestions you may have are much appreciated (please send them via the Forum or directly to me or Mishka (see further)

Please note that the Technical Annexes have not been attached so this is only the “base-line document” explaining the main steps of the Valuation Framework

By Rudolf de Groot1 () and Mishka Stuip2 ()

1) Environmental Systems Analysis Group, Wageningen University

(PO Box 47, 6700 AA, Wageningen, The Netherlands)

2) Foundation for Sustainable Development

(FSD, P.O. Box 570, 6700AN, Wageningen, The Netherlands)

with input and useful comments from:

David Coates (), Lijuan Cui () , Nick Davidson (), Lucy Emerton (), Max Finlayson (), Dave Pritchard (), and Roel Slootweg ()

(and many others present at the STRP-meeting in Wageningen, July 2004)

Main text should be max. 7.500 words (text is now ca 8.750 words)


Table of Contents

(to be deleted from final version ?)

1. Background and Purpose

1.1 Why these guidelines?

1.2 What are wetlands?

1.3 Why are wetlands important ?

1.4 Why Valuation ?

1.5 When Valuation

2. Framework for valuation and overview of steps proposed in the Guidelines

2.1 Framework for wetland valuation

2.2 Steps proposed in the Guidelines

3. STEP 1: Policy Analysis ( = “why valuation” ?)

3.1 Why Policy Analysis

3.2 Overview of elements to be included in Policy Analysis

3.3 Methods for policy Analysis

4. STEP 2: Stakeholder Analysis and Involvement (= for whom valuation ?)

4.1 Identifying stakeholders

4.2 Prioritizing stakeholders

4.3 Involving stakeholders

5. STEP 3: Function Analysis (= what to value ?)

5.1 Function-identification

5.2 Function-quantification

6. STEP 4: Function Valuation (= how to value ?)

6.1 Total Value and types of Value

6.2 Ecological Valuation

6.3 Socio-Cultural Valuation

6.4 Economic and Monetary Valuation

7. Recommendations on how to implement these guidelines

References

Annexes (in separate document)

Annex 1: Step 1 - Methods for Policy Analysis

Annex 2: Step 2 - Methods for Stakeholder Analysis

Annex 3: Step 3 - Methods for Function Analysis

Annex 4: Step 4 - Methods for Function Valuation

Annex 5: Application of Valuation for Wise Use of Wetlands: some case studies

1. Background and purpose

1.1 Why These Guidelines?

The Ramsar Scientific Committee, after their meeting in March 2003, requested that the STRP (Strategic and Technical Review Panel) determine and develop guidelines on the ecological character of Ramsar sites and other wetlands, including techniques for delineating and mapping wetlands and for evaluating their functions and values and goods and services.

The request was divided into the following sub-tasks:

i) Guidelines for defining the "ecological character" of Ramsar sites and other wetlands

ii) Guidelines on techniques for delineating and mapping wetlands

iii) Guidelines for evaluating the values and functions, goods and services provided by wetlands

This document deals with the third (iii) task. Therefore the main purpose of this report is to provide practical guidelines on how to go about evaluating the functions and values (ecological, socio-cultural and economic) provided by wetlands, and will discuss the advantages and disadvantages of valuation methods. It also aims to point out where one can find practical information (websites, literature) and examples (case studies) on wetland valuation and how it can be used to support wise use.

1.2 What Are Wetlands?

The definition of wetlands as used by the Ramsar Convention on Wetlands of International Importance “Areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water, the depth of which at low tide does not exceed six metres.” (Ramsar, 19….)

Wetlands can be categorised into the following five different wetland types (after Stuip et al., 2002)

·  Coastal wetlands – areas between the land and open sea that are not influenced by rivers (e.g. shorelines, beaches, mangroves and coral reefs

·  Estuaries – where rivers meet the sea and water changes from fresh to salt as it meets the sea (e.g. deltas, mudflats, salt marshes and mangroves)

·  Floodplains – land next to the permanent course of a river that extends to the edge of the valley (e.g. floodplains, including features such as ox-bow lakes and river islands)

·  Marshes/swamps – land where water is more or less permanently at the surface and/or causing saturation of the soil (e.g. papyrus swamp, fen, peatlands)

·  Lakes – areas of permanent or semi-permanent water with little flow (e.g. ponds, salt lakes, volcanic crater lakes)

Box 1. Wetland types

1.3 Why are wetlands important?

Wetlands are important for many reasons: they provide many resources (eg. food and raw materials); they regulate many biophysical processes (eg. they act as a buffer for water flows and clean water from human waste), they provide many cultural and amenity services (eg. for recreational activities and heritage values) and, last but not least, they contain a large portion of the remaining biodiversity on earth and provide many supporting services, such as nutrient cycling, that are essential to maitain our life support system (see section 5 for a more detailed overview of wetland functions).

1.4 Why Valuation?

Because of their many functions and multiple values, many different stakeholders are involved in wetland use (and mis-use), often leading to conflicting interests and the over-exploitation of some functions (e.g. fisheries or waste disposal) at the expense of others (e.g. biodiversity conservation and flood-control). In addition, there are many structural shortcomings in economic accounting and decision-making procedures (see box 2) leading to incomplete cost-benefit analysis of planned interventions in, or conversions of wetlands.

Box: 2 Causes for wetland under-valuation

(Q Dolf: I am not sure if we should leave this Box in; to save space we should maybe just briefly mention these 5 factors in the text; please advise)

Oftentimes, wetland values are not taken into account, or are only partially valued correctly in decision making leading to degradation or even destruction of a wetland. Reasons for undervaluation can be:

·  Public Good Many of the ecological services, biological resources and amenity values provided by wetlands have the qualities of a public good so that it is virtually impossible to market the service, even if it were desired. For example, if a wetland supports valuable biodiversity, all individuals potentially benefit from this service, and no one individual can be excluded from the service.

·  No Clear Ownership Ownership of wetlands can be difficult to establish. Wetland ecosystems often do not have clear natural boundaries and even when natural boundaries can be drawn up, they may not correspond with an administrative boundary and so responsibility of a government organisation cannot be easily allocated and user values are not immediately apparent to a decision maker.

·  Market Failure. Market failures occur when markets do not reflect the full social costs or benefits of a good. For example, the price of agricultural products obtained from drained wetlands does not fully reflect the costs, in terms of pollution and lost wetland-services, which are imposed on society by the production process.

·  Perverse Incentives Many policies and government decisions provide incentives for economic activity that often unintentionally work against wise-use of wetlands, leading to resource degradation and destruction rather than sustainable management.(Vorhies, 1999)

·  Lack of Compensation for “externalities” Side Effects of Human Activity When a wetland is affected by human activity, such as pollution of the upper catchment by runoff from agricultural land, the people living downstream next to the wetland could suffer from this. The resulting loss of value is not accounted for and the wetland stakeholders are generally not compensated for the damages they suffer.(Stuip et al.,2002)

As a result, wetlands (and most natural ecosystems) are still undervalued and over-used: in 1999, 84% of Ramsar listed wetlands had undergone or were threatened by ecological change mainly caused by drainage for agriculture, settlement and urbanisation, pollution, and hunting. Worldwide, 50 % of wetlands are estimated to have been lost since 1900. During the first half of the previous century, this mostly occurred in the northern temperate zone. However, since the 1950’s, tropical and sub-tropical wetlands, particularly swamp forests and mangroves have also been rapidly disappearing. (Finlayson, C.M. & N.C. Davidson (eds.) 1999)

To ensure more balanced decision-making it is therefore crucial to better assess the full importance (value) of wetlands and communicate these values to decision-makers and the general public

(increasingly, studies are showing that sustainable, multi-functional use is usually not only ecologically more sound but also economically more beneficial (Balmford et al., 2002).

Economic valuation may provide decision makers with vital information on the costs and benefits of alternative wetland use options that would otherwise not be taken into account in development decisions. (Barbier et al., 1997)

1.5  When Valuation ?

There are basically three situations in which it is important to carry out valuation studies:

a) Impact and cost-benefit analysis; i.e. to analyse the effects of wetland draining, or other damages, on wetland functions and values

b) Evaluation of alternative development options; e.g. to analyse possibilities (and impossibilities) for combination or separation of functions (e.g. fishery, aquaculture, recreation, conservation, etc.)

c) Calculation of Total Economic Value: e.g. to determine the total contribution of a wetland to the local or national economy and welfare (for example to prevent (partial) destruction or other negative developments).

2. Framework for valuation and steps proposed in the guidelines

2.1  Framework for valuation of wetland functions

To analyse wetland functions, their values and trade-offs associated with their use in a systematic manner, a conceptual framework is proposed which is presented in a simplified form in fig 1. The four steps described in these Guidelines are indicated with colours in the figure: function analysis (green), valuation (red), stakeholder involvement (yellow) and policy analysis (blue). The white fields (i.e. Trade-off Analysis, Planning & Management measures and External Pressures) are not further discussed in this document.

Figure 1: Framework for Integrated Assessment and Valuation of Wetland Functions

after: De Groot, 1992 and De Groot et al, 2002;

`

2.2 Steps for wetland valuation proposed in these guidelines

To assess wetland functions and values in a systematic manner, the following steps are distinguished in this report (see Figure 2.1 for a visual representation of the inter-linkages between these steps)

1.  Analysis of policy processes and management objectives (“why valuation”)

in order to identify the kinds of valuation methods that policy makers and managers require, insight in the policy processes and management objectives is essential to set the stage for a discussion of what kind of valuation is needed (eg. to assess effects of trade-offs in wetland use or –conversion (= partial valuation) or to determine the Total Value of the intact wetland) and how values can be generated that are relevant to policy and management decisions.

2.  Stakeholder-analysis and –involvement (“valuation for and by whom ?”)

in all steps, stakeholder-involvement is essential: i.e. to determine the main policy and management objectives, to identify the main relevant functions in a given situation, to determine the value placed on the availability of wetland functions and to discuss trade-offs involved in wetland use.

3.  Function analysis (“what to value”?)

In this step, wetland characteristics (processes and components) are translated into functions which provide specific goods and services. These goods and services should be quantified in appropriate units (biophysical or otherwise), based on actual or potential sustainable use levels (see table 4)

4.  Function valuation (“how to value”)

In this step, the benefits of the wetland goods and services identified in step 3 are analysed. These benefits should be quantified in both the appropriate value-units (ecological, socio-cultural and economic indicators) as well as monetary values (see Table 8 for details).

Although the guidelines in this report stop with this last step, it is of course crucial that the information generated by function analysis and valuation is structurally integrated in decision-making instruments such as multi-criteria and cost-benefit analysis.

In the following sections, further information is given on the main methods, data needs and linkages with related projects and possible data sources for each step.

3. Step 1: Policy analysis

3.1 Why Policy Analysis?

Policies, institutions and governance aspects influence the kind of values that will be taken into account in decision making and management measures.

The aim of policy analysis is:

·  to identify types of information (and kinds of values) required and by whom.

·  to understand the policy making process and stakeholder interests, both in current practice and the desirable state, and how they influence the kind of information that is required.

·  to enable key stakeholders to assign their own values and incorporate that into decision making, and to be able to compare different kinds of values

·  to describe the objective of the valuation within the policy and stakeholder context.

·  to identify the main valuation questions in relation to the current and ‘desired’ policies.


3.2 Elements of

Policy Analysis

The following five main elements have been identified to be included in Policy Analyses (based on: …………..(some refs to be added)

Note Dolf: final list of elements still to be determined; for now, I grouped the list mentioned in the original table into 5 main elements but I am not a policy specialist so this needs to be checked:

a) Social capital and actors: to involve the right stakeholder groups in the valuation process, the main actors and ‘social capital’ (= …. def.?) need to be identified (see also section 4, Step 2 (Stakeholder analysis)). Questions to be asked include: What is the available knowledge on the current situation? What force is available to harness the problems? Who are the players? Who are affected?

b) Policy context, statements and measure: the current policy context needs to be analysed to see how policies interrelate, how they work together or against each other, and to be aware of opportunities and constraints.

c) Policy process and priorities: through analysing (and valuing (??)) existing policies and policy gaps, policy priorities can be identified