Externalities and biodiversity valuation’ pot

A S E A N B I O D I V E R S I T Y A P R I L - J U N E 2 0 0 2 ABOUT YOU AND US 2 Readers’ Corner Letters, articles, suggestions and photos are welcome and should be addressed to: The Managing Editor ASEAN Biodiversity ARCBC Annex, Ninoy Aquino Parks and Wildlife Nature Center, North Avenue, Diliman, Quezon City, 1156 P.O. Box 1614 QC CPO, Philippines Fax: +63-2.925-8408 E-mail: publications@arcbc.org.ph Editor-in-Chief Monina T. Uriarte Managing Editor Bridget P. Botengan Creative Artist Nanie S. Gonzales Circulation Manager Arlene Balauro Angelica Castro EDITORIAL BOARD Chairpersons Gregorio I. Texon John R. MacKinnon Members Aida B. Lapis Lauro Punzalan Imelda Pangga Alma Logmao Advisors Mike Appleton Giacomo Rambaldi Lewie Dekker Jose Lambiza ASEAN Regional Centre for Biodiversity Conservation (ARCBC) Headquarters: P.O. Box 35015 College, Laguna 4031 Philippines Tels.: +63-49.536-1659 or 536-4042 Telefax: +63-49.536-3173 or 536-2865 E-mail: contact.us@arcbc.org.ph Website: www.arcbc.org.ph ARCBC Annex Ninoy Aquino Parks and Wildlife Nature Center North Avenue, Diliman, Quezon City, 1156 P.O. Box 1614 QC CPO, Philippines Tels.: +63-2.925-8406 / 925-8407 Fax : +63-2.925-8408 Email: publications@arcbc.org.ph Technical Assistance Service Contract: SECA (France) in association with EDG (UK), GTZ (Germany) and CPRD-DLO (Netherlands) Printed by: Wordshop Specialists Network, Inc. No. of Copies: 5,000 Disclaimer: Views or opinions expressed herein do not necessarily represent any official view of the European Union, the Association of Southeast Asian Nations (ASEAN) Secretariat, or the Department of Environment and Natural Resources. The authors are responsible for any data or information presented in their articles. Dear Co-Directors, Let me thank you for the very informa- tive and diverse ASEAN Biodiversity maga- zine Vol. 1 No. 4, October to December 2001 issue, which you sent me. In behalf of the Foundation for the Philippine Environment, I would like to extend my gratitude for including us in your mailing list. This special issue is so significant con- sidering the very suc- cessful 3D modelling activity in Pu Mat, Vietnam, which I was a part of. Again, my thanks to ARCBC, particularly to Mr. Giacomo Rambaldi. The lessons from the training are so applicable to what we are advo- cating in the Philippines for biodiversity conservation as a foundation for sustain- able development. We hope to receive regular copies of your newsmagazine and other related materials in the future. Fernando Ramirez Area Coordinator - Luzon Convenor, Operations Group Foundation for the Philippine Environment !!! Dear Co-Directors, It is my great pleasure to acknowledge that I have received copies of ASEAN Biodiversity. The articles are so useful, interesting and informative that I can’t express my appreciation in language. I wish ASEAN Biodiversity a long and wide circulation. Professor Md. Mustafizur Rahman Dept. of Crop Botany Bangladesh Agricultural University Mymensingh, Bangladesh !!! Dear Co-Directors, I recently received a copy of Vol. 1 (1&2) of your magazine ASEAN Biodiversity. This is an excellent and most useful publication. Stephen J. Richards Vertebrate Department South Australian Museum North Terrace Adelaide, S.A. 5000 Australia !!! Dear Co-directors The issue of ASEAN Biodiversity Vol. 1 No. 3 titled “A Burning Issue“ was useful in highlighting the problem of forest fires and smoke pollution in the region, but rather disappointing in that hard data on the impact of forest fires on biodiversity was lacking. Also, case studies on suc- cessful community fire management were lacking. In the Upper Nan Watershed Manage- ment Project in North Thailand, the forest area burnt has been reduced from 23% in 1998 to less than 2% in each of the last 4 years due to a successful cooperative Royal Forest Department – Community Fire Management Programme, with Dan- ish assistance. The area covers 1007 km 2 and includes a population of 20,000 in the watershed in 45 villages located in two National Forest Reserves. Also the time of burning on agricultural fields has been delayed from mid-February to late March resulting in a shorter period of smoke and haze pollution. The process for effective fire manage- ment is simple, and similar for all com- munity-based natural resource manage- ment issues. The process requires facili- tators working at the community level: 1. Baseline data collection on the causes of fires, time of burning, areas burnt, conflicts caused and the present community rules and regu- lations. 2. Training and awareness on the en- vironmental damage from uncon- trolled fires, and the use of facilita- tors to bring leaders of neighbouring villages together to solve conflicts over damages caused by fires and other Natural Resource Management (NRM) issues. 3. After two or three meetings, the vil- lage leaders recognised the need to form networks (in the Nan Water- shed Management Project – the for- mation of Village Watershed Net- works). The networks agree on com- munity boundaries for responsibility for improved NRM, and the strength- ening of the existing rules and regu- lations on NRM. 4. The institutionalization of the net- works through the local administra- tion (Tambon and District), and rec- ognition of the network rules. The strength of the process is that it is simple and based on the existing com- munity NRM rules that, in most cases, are weak or cannot be enforced. The process can minimise the burning of forest areas within two years. Peter Hoare Project Coordinator Upper Nan Watershed Management Project, Nan, Thailand Email: phoare@loxinfo.co.th A S E A N B I O D I V E R S I T Y ABOUT YOU AND US Contents Vol. 2, No. 2 " April-June 2002 Readers’ Corner 2 Letter from the NBRU of Cambodia 3 Second quarter in a nutshell 4 Editorial Conservation dividends 7 About You And Us Bookmarks Special Reports 3 An overview of valuation techniques: Advantages and limitations 8 Economic valuation of the Leuser Ecosystem in Sumatra 17 Ways to estimate the value of forest catchments 21 How markets alter the effectiveness of enforcement, payments and agricultural projects near protected areas 25 A profile of the protected area system of Singapore 30 Forest valuation: from science fiction to money on the table 34 3rd Research Conference of the ASEAN Regional Centre for Biodiversity Conservation Economic valuation of biodiversity 35 Surfing the web of life 36 8th Report of the ARCBC-co-funded Philippine Endemic Species Conservation Project of the Frankfurt Zoological Society New species discovered in Panay, Philippines 37 Vietnam hosts the world’s most endangered primates 38 Three Black-faced spoonbills “rediscovered” on the Philippine islands 39 New bird species discovered in Cambodia 39 Celebrating Earth Day 2002 40 International Day for Biological Diversity Focusing on forests 42 World Environment Day Give Earth a chance 43 Letter from the NBRU of Cambodia Publications Training Resources Database Entries Capsule reviews 59 Asean plants database now on-Line 58 Dear Readers, Cambodia officially joined the ASEAN Regional Centre for Biodiversity Conservation (ARCBC) in early 2002, and is currently trying to catch up with the accomplishments of the other ASEAN member coun- tries participating in ARCBC. We do appreciate the opportunity given to us to expand our networking, research, database, and training efforts in biodiversity conservation. In May 2002, ARCBC conducted a thematic work- shop in the Philippines on the economic valuation of biodiversity. One of the presentations empha- sized that economic valuation could become a powerful management tool and when used along- side social, scientific and spiritual studies of biodiversity, could present a convincing argument for conservation. As such, I am pleased that the June 2002 issue of ASEAN Biodiversity focuses on resource valuation and revenue-sharing mechanisms. This will provide various stakeholders a better appreciation of the economic importance of the biodiversity of the ASEAN region. I encourage all our readers to get copies of ASEAN Biodiversity so that more people will get a clearer understanding of the urgency of protecting and conserving our biological resources. Kol Vathana Deputy Director and NBRU Coordinator-Cambodia Department of Nature Conservation and Protection Ministry of Environment Kingdom of Cambodia Database Profiles Tarutao National Park – Satun Province, Thailand 44 Lorentz National Park – Province of Paniai, Irian Jaya, Indonesia 50 A P R I L - J U N E 2 0 0 2 Second quarter in a nutshell 4 ABOUT YOU AND US June 5 – Several of the world’s foremost ocean agencies, including the United Nations Environment Programme (UNEP), have created an Internet-based Oceans Atlas ( www.oceanatlas.org) to help reverse the decline and promote the sustainable development of oceans. The Atlas provides users with continuously updated data on the state of the world’s oceans, maps, development trends and threats to human health from the deteriorating marine environment. It is designed to be an encyclopaedic resource and the world’s foremost information clearinghouse and online forum for experts in ocean issues. To reach broader audiences, a CD- ROM and other media will supplement the website. June 3-15 – European Union ministers and ambassadors ratified the Kyoto climate treaty at a United Nations ceremony, handing in papers from their respective nations. The ratification means that national legislatures had approved the pact, aimed at cutting polluting emissions of greenhouse gases, blamed for rising global temperatures. Participants included Ireland, the Netherlands, Spain, Sweden, Germany, Denmark, Austria, Belgium, Britain, Finland, France, Greece, Italy, Luxembourg and Portugal. Margot Wallstrom, the European Commissioner for the Environment, represented the European Commission. May 27 – The IUCN/SSC Asian Elephant Specialist Group met to draw up an action plan for elephant conservation in all of the 13 range states, following continued pressure from deforestation, hunting and major changes in land use. The conference will focus on major issues facing the Asian elephant in the wild, including their virtual extinction in Vietnam, widespread land conversion on the Indonesian island of Sumatra and also materials and sustainable economic development at the local level, and provision of funding for cooperation projects with the world community. June 6 – Australia and the Republic of Korea announced plans to work together to protect birds that migrate between the two countries. The East Asian-Australasian Flyway extends from the Arctic through Asia to Australia and New Zealand. Birds fly through this route twice a year from north to south and back, travelling up to 25,000 km per year. Millions of wading birds, like the Eastern Curlew make this journey, stopping at wetlands in Korea and Australia along the way. Australia already has bilateral migratory bird protection agreements with Japan and the Peoples’ Republic of China. June 5 – The World Wide Fund for Nature (WWF) celebrated the signing of the Tri-national Wetlands Initiative, a historic interna- tional wetlands conservation agreement between Australia, Indonesia and Papua New Guinea. The Initiative is a commitment to work together to achieve sustainable management of 3 million ha of tropical wetlands identified as global priorities for conservation and contained within existing protected areas - Kakadu National Park (Australia), Wasur National Park (Indonesia) and Tonda Wildlife Management Area (Papua New Guinea). The agreement will greatly improve the management of these parks, and encourage the creation of other protected areas. Conservation benefits include cooperative action on common threats and the protection of numerous endangered species and millions of migratory waders and waterfowl. WWF’s Living Waters Campaign has recognized this major contribution to wetland conservation as a “Gift to the Earth”. neighbouring West Bengal state of India a strong shield against sea storms. June 11 – Environment ministers from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam signed a pact to help each other tackle the land and forest fires that have periodically blighted the region’s agriculture and tourist industries with choking clouds of smoke. Smoke and haze caused by massive forest fires in 1997 and 1998 cost regional econo- mies US$9 billion, mainly in agriculture, transport, and tourism. Each country will cooperate in developing and implementing measures to prevent fires and provide early warning systems. Under the agreement, ASEAN countries would allow fire- fighting and search-and-rescue personnel and equipment to transit through their territo- ries. This is the first regional arrangement in the world to collectively tackle land and forest fires and its resultant transboundary haze pollution. June 7 – The Philippines joined Brazil, China, Colombia, Costa Rica, Ecuador, India, Indonesia, Kenya, Mexico, Peru, South Africa, and Venezuela in the Group of Like-Minded Megadiversity Countries for the Conservation and Sustainable Use of Biological Diversity during the 4th Preparatory Commit- tee Meeting for the World Summit on Sustainable Development in Bali, Indonesia. The group represents almost 70% of the planet’s biological diversity and around 45% of the world’s population. Member- ship in the group will allow partners to promote and conserve their country’s rich biodiversity through the development of joint projects in making inventories of its resources, investment in the use of endogenous technolo- gies that support the conservation of genetic June 26 – A rare green turtle, about 60 cm wide and weighing more than 70 kg, reappeared after 40 years and laid eggs on Koh Samui in Thailand. Guards would be deployed a week before hatching in August to prevent more theft. Killing sea turtles and taking away their eggs is illegal in Thailand, punishable by up to four years in jail and/or a fine of 40,000 baht. Green turtles have all but gone from Koh Samui but are often seen laying eggs in Malaysia and Indonesia. June 26 – The Philippines’ Department of Environment and Natural Resources (DENR) Secretary Heherson T. Alvarez asked University of the Philippines (UP) President Francisco Nemenzo to help save the UP Arboretum, one of the last remaining forests within Metro Manila. Located in Quezon City, the Arboretum is home to trees, shrubs and herba- ceous plants that are cultivated for scientific and educational purposes. It is currently threatened by the operation of an open garbage dumpsite, as well as encroachment by a growing local community. June 17 – Threatened by global warming, depleting biodiversity and rising fears of natural disasters, Bangladesh recently launched a drive to put at least 20% of the country under forests. The 20% forest cover is needed by 2015 to offset the impact of global warming and shield the country from frequent storms coming from the Bay of Bengal. Forests now cover only 9% of the country’s land. Sundarban, the country’s biggest mangrove forest and a World Heritage Site, is facing decay as thousands of trees suffered a “top dying” disease without remedy. The Sundarban is home to Royal Bengal tigers and hundreds of other wildlife species and provides Bangladesh and A S E A N B I O D I V E R S I T Y 5 ABOUT YOU AND US the potential for conservation efforts in the largely un- studied forests of Myanmar. May 23 – The “Greening the World Summit on Sustainable Development” initiative was launched in Johannesburg, South Africa to ensure that the World Summit is hosted in a way that demonstrates environmental best practice while countering the impact of 60,000 expected delegates. By taking steps to reduce waste and encourage the efficient use of water and energy, the initiative will ease the burden of the WSSD on the environment. It will also leave a legacy of projects that will bring about improvements in the quality of the environment in poor and rural communi- ties over the long term. More information can be obtained from www.greeningthewssd.com. May 20 – Over 1,100 delegates from 130 countries attended the World Ecotourism Summit in Quebec to ensure that ecotourism follows a sustainable path. The summit, an initiative of the World Tourism Organization and the United Nations Environment Programme, was realized in partnership with Tourisme Québec and the Canadian Tourism Commission. Participants were expected to define the content and limits of the term ecotourism itself, so as to prevent its abuse and the dilution of its meaning; develop interna- tional standards for ecotourism by translating principles and guidelines such as the World Tourism Organization’s Global Code of Ethics, the UNEP Principles for Sustainable Tourism and the Convention on Biological Diversity’s Guidelines for Sustainable Tourism in Vulnerable Ecosystems; create an international accreditation body for ecotourism and sustainable tourism as well as determine measures to ensure that local people benefit from ecotourism. May 16 – The Philippines’ Department of Environ- ment and Natural Resources (DENR) pre- sented the results of the Philippine Biodiversity Conservation Priorities Project (PBCPP), which identified, assessed, and prioritized specific geographi- cal areas for biodiversity conservation. Spearheaded by the DENR’s Protected Areas and Wildlife Bureau (PAWB), Conservation International (CI), and the University of the Philippines (UP), the project had the participation of some 300 local and international scientists from more than 100 institutions and identified 170 terrestrial and inland water priority areas and 26 marine priority areas. The project also set the much- needed direction for the Philippine conservation community as a whole, and provided geographical information on areas that need urgent attention. Outputs included two-sided coloured maps, a CD-ROM database and a report that provides additional informa- tion on the priority areas. May 15 – China announced plans to spend several hundred billion yuan in the next 10 years to protect forests and plant green belts to combat blinding sandstorms, illegal logging, and rapid soil erosion. Recurring sandstorms have been blamed in part on overgrazing, over-harvesting of timber, forest clearance for cropland and rampant overuse of water resources. China has earmarked 10 billion yuan (US$1.21 billion) a year for natural forest protection efforts formally launched in 2000, one of six key forestry programs to be underway by the end of 2002. A seeding program to convert cropland to woods would raise forest and grass cover in China by 5%. The resulting green belts could reduce wind speeds by 30 to 50% and cut sand and dust by 99% over barren land. May 14 – Bangladesh and India will work together under a United Nations plan to protect the ecosystem and biodiversity of Sundarban, the world’s biggest mangrove forest shared by the two countries. UNESCO declared the Sundarban a world heritage site in 1997, and the U.N. Development Programme has funded projects to save it from degradation. Nearly two-thirds of the 9,630- square-km Sundarban lies in Bangladesh and the rest in India, stretching along the Bay of Bengal. Sundarban, which is home to the endangered royal Bengal tigers and a number of other unique species such as the Sundari tree, is currently facing a number of threats including illegal poaching, the felling of trees, and dwindling freshwater flow. May 8 – Australia and UNESCO signed a formal Memorandum of Under- standing on World Heritage issues in the Asia-Pacific. Since the region is under-represented on the World Heritage List and a number of countries in the region have only recently joined the World Heritage Convention, the Memoran- dum will help Australia and UNESCO work together in partnership with regional nations in promoting the Convention and managing cultural and natural values in this heritage-rich part of the planet. Pacific Island coun- tries have places of out- standing heritage value, but only one site, East Rennell Island in the Solomon Islands, has been nominated and included on the World Heritage list. East Rennell is the largest example on Earth of a raised atoll. It also has the largest freshwater lake, Te Nggano, in the Pacific, a unique habitat for many species of plants, birds and animals that are found nowhere else on Earth. April 25 – The British Antarctic Survey announced that armies of barnacles, mollusks, sea worms, and other marine organisms are travelling on discarded plastic and other human- made rubbish and invading Antarctica and tropical islands, threatening native species. The findings are based on a 10-year study of human litter washed ashore on 30 remote islands around the globe. Regulations forbidding the dumping of waste from ships has begun to make a difference, but more needs to be done because once an invading organism gets into an area, it is impossible to remove it. Studies will be expanded to include other islands, such as the Andamans, L’Ile Amsterdam, Bermuda, Chagos, Cocos/Christmas and Trinidad. April 19 – Peter Ng, director of a museum on biodiversity at the National University of Singapore, announced that Singapore’s only unique wild animals – the Cream- coloured Giant Squirrel and the Banded Leaf Monkey – face extinction due to urbanisation and shrinking forests. Less than 20 Banded Leaf Monkeys and no more than four squirrels still live in what is left of the tiny island nation’s forests. Their likely extinction will mean the end of the last animal sub-species found only in Singapore. The government is currently working with local groups to study and protect the animals. But with only 3% of the island set aside for parks, efforts to breed the animals in captivity and reintroduce Charlevoix Biosphere Reserve, Québec Photo courtesy of World Ecotourism Summit Photo courtesy of UNESCO East Rennell Island World Heritage Site A P R I L - J U N E 2 0 0 2 6 ABOUT YOU AND US them to the forests are likely to fail. April 17 – Researchers have identified a new order of insects known as Mantophasmatodea, a predatory animal that resembles a mix between a stick insect and a preying mantis. This first discovery of a new insect order since 1915 brings the total number of insect orders to 31. The existence of a living population was discovered on Brandberg Mountain in western Namibia. Brandberg is a 120-million year old massif, isolated from other mountains by hundreds of miles of barren sand. April 17 – IUCN’s World Commission on Protected Areas (WCPA) announced the availability of key guidelines for protected areas in East Asia, namely: Guidelines for Tourism in Parks and Protected Areas of East Asia; Guidelines for the Implemen- tation of an Exchange Programme for Protected Areas in East Asia; Guide- lines for Financing Protected Areas in East Asia; and the Directory of Protected Areas in East Asia – People, Organisations and Places. These are the results of projects initially outlined in the “Regional Action Plan for Protected Areas in East Asia” (1996) and completed with the support of the Nature Conservation Bureau of Japan. April 15 – Indonesia is planning to impose a permanent ban on log exports to protect its dwindling tropical forests. In October 2001, the ministers of industry and trade and forestry issued a joint decree putting in place a temporary ban on exports of logs for wood chips, which expired in April. Indonesia’s rainforests have been over-logged for years. April 12 - The Exploration Company ( www.theexploration company.com) has released the Wide Ranging World Map, featuring ecological and cultural details never before shown in a world wall map. The map replaces elevation with the rendition of terrain (deserts, forests, savanna). In addition to displaying all countries, active border disputes and key cities, the map notes cultural regions (Kashmir, Scotland, Transylvania) and prominent indigenous nations (Kurds, Palestinians, Inuit). The map also indicates population density and areas where natural vegetation has been replaced with cropland, along with marine pollution, radioactive contamination, and destroyed rainforests. April 12 – Delegates at the Conference of the Parties to the Convention on Biological Diversity discussed the Global Strategy for Plant Conservation, and agreed on targets to guide and monitor the progress of its implementation. Sustainable use, capacity building, education and awareness, increased networking, and community involvement are vital elements of the Strategy. April 10 – Long-term studies by the Wildlife Conservation Society (WCS) show that uncontrolled hunting and trade form the greatest threats to wildlife and wild lands in Asia. Current patterns of hunting and wildlife trade could drive wildlife to extinction. It adds that over half the prime protected areas in tropical Asia have already lost at least one large mammal due to hunting. Economically valuable species such as Sumatran and Javan rhinos and Siamese crocodiles are specifically targeted and are nearly extinct across Indochina. WCS recommen- dations include renewal of government commitment to the Convention on Interna- tional Trade in Endangered Species (CITES); restriction or elimination of commercial wildlife trade across the region and strengthening of government capacity to protect wildlife in protected areas and forest reserves. April 8 – Nepal’s Depart- ment of National Parks and Wildlife Conservation (DNPWC) revealed that 39 endangered one-horned rhinoceros have been found dead, most due to poaching, during the past 12 months in Royal Chitwan National Park. One-horned rhinos are critically endan- gered around the world and slightly more than 1,800 one-horned rhinos presently survive in the wild. Listed as a UNESCO World Heritage Site, Royal Chitwan National Park in the Terai, the southern plains of the Kingdom of Nepal, is home to 529 one- horned rhinos, according to a rhino census in 1999. Their numbers are up from a census conducted in 1994, which put the rhino popula- tion in the park at 466. April 5 – The Banbai tribal people of New South Wales have made a decision to manage and conserve their Wattleridge traditional land for the protection and conservation of its natural and cultural values, making it the area’s first indigenous protected area (IPA). Wattleridge includes 480 hectares of botanically unique bushland on outcropping granite country. Not logged for 30 years, it is the last unprotected remnant in the New England region. The IPA is also home to at least 15 flora species and 12 rare and/or endangered fauna species, including the glossy black cockatoo, the masked owl and the spotted-tailed quoll. April 5 – Over 150 participants convened in The Hague for the 16th session of the Global Biodiversity Forum (GBF) to tackle key biodiversity issues prior to the 6th meeting of the Conference of the Parties to the Convention on Biological Diversity, and in the run-up to the World Summit on Sustainable Development. The GBF focused on business, communication and liveli- hoods since these are the underpinnings of both the sustainability and biodiversity debates. Key issues are: Managing Forest Ecosystems for Sustainable Livelihoods; Biodiversity Plans for Business; and Mainstreaming Biodiversity – the Role of Communication, Education and Public Awareness. April 4 – In a bid to alleviate increasing pressures on various ecosystems, IUCN’s Commission on Ecosystem Management (CEM) provides expert guidance on integrated ecosystem approaches to the management of natural and modified ecosystems. From 2002 to 2004 CEM will establish baseline information on state- of-the-art restoration methods in different ecosystem types such as forests, arid lands, mangroves and coral reefs. Indicators will be identified as the first step to assessing the status of ecosystems and defining categories of ecosystem threats. CEM will also focus on assessing and promoting practical applica- tions of the Convention on Biological Diversity’s 12 principles that encourage a participatory and pragmatic approach to managing ecosystems to meet the livelihood requirements of people while conserving biological diversity. # Brandberg Massif Photo courtesy of National Museum of Namibia Rhino in Royal Chitwan National Park Photo courtesy of Richard Grassy Photo courtesy of Margaret Turton Spotted-tail quoll in New South Wales A S E A N B I O D I V E R S I T Y 7 ABOUT YOU AND US Editorial ‘Externalities and biodiversity valuation’ # By Glyn Davies Finally, the outcomes of policy incentives are often uncertain. Care is needed in their planning, there- fore, to ensure planned outcomes are realised, and Strategic Environ- mental Assessments should be used to look at the likely environmental and social impacts of planned policy changes. Thereafter, the real impacts of policy change need to be moni- tored. In this issue, the articles featured in the Special Reports section were presented during the Third Research Conference on the “Economic Valu- ation of Biodiversity”, which was sponsored and conducted by the ASEAN Regional Centre for Biodiversity Conservation (ARCBC) in June 2002. Arguing that valuing biodiversity is a key policy interest, the papers stressed that the economic valua- tion of biodiversity is a powerful tool for management, and a convinc- ing argument for conservation es- pecially when used alongside so- cial, scientific and spiritual studies on biodiversity. Although there are some who insist that putting a high value on biodiversity would not al- ways guarantee its conservation, the correct incentives and mechanisms to capture the resource values should be put in place. Without such incentives, value estimates would only represent values on paper that would have limited impact on the decision-making process or none at all. Notwithstanding its weaknesses, the economic approach facilitates comparisons in a world where re- sources are limited and choices have to be made. # O ne of the most important reasons for loss of biodiversity, is that con- servation and sustainable use of natural resources is generally not a viable financial option, and this is because of a combination of market and policy failures. Put simply, natural resources are un- der-valued because no account is taken of the time it takes to pro- duce the next harvest, nor any costs involved in managing lands for future harvests, nor the environ- mental and social costs associated with loss of products. Internalising these costs, so that parties trading in a particular product pay a larger part of these costs, is a central element in dealing with the “externalities” that are driving biodiversity loss. A number of approaches have been taken to address these exter- nalities, and these can be thought of in terms of incentive measures to support conservation and sustain- able use of natural resources. First, and probably the most important incentive in many areas is to remove perverse incentives – policies, sub- sidies and low commodity prices which make it profitable to exploit natural resources without concern for long-term outcomes. Thereafter policy incentives that can be implemented to contribute directly to improving the manage- ment of biodiversity can be divided into four categories: i. trade liberalisation and property rights – which can encourage greater benefits to local stewards of natural resources, thereby providing an incentive for them to engage in sustainable pro- duction systems. ii. standards, regulations and restrictions – these are stan- dard institutional instruments used to set maximum accept- able levels of resource deple- tion, for example by restrict- ing harvest off-takes. iii. fees and environmental charges – these can be used to recover costs of maintain- ing or replacing natural re- sources, and include timber taxes, fishing licenses, and park entrance fees. iv. public financing and environ- mental funds – financial in- centives can be offered to those who harvest in ways that reduce natural resource losses. However, none of these incen- tives will be effective without well- regulated markets, nor will they work without strong political com- mitment to ensure that policy incen- tives are appropriate and imple- mented. Furthermore, giving values to biodiversity values that are long- term and intangible poses many problems. Glyn Davies is the Conservation Programme Director of the Zoological Society of London. A P R I L - J U N E 2 0 0 2 An overview of valuation techniques: Advantages and limitations # By Camille Bann SPECIAL REPORTS 1 This anthropocentric view of biological resources is much more convenient for economic analysis compared to alternative value paradigms such as ‘intrinsic values’ (values in themselves and, nominally, unrelated to human use). Intrinsic values are relevant to conservation decisions, but they generally cannot be measured (Pearce and Moran, 1994). Introduction V aluing biodiversity is of key policy interest. Economic val- ues of non-marketed goods can draw attention to the economic importance of biodiversity in a country’s development prospects, and can provide guidance for imple- menting appropriate conservation mechanisms (other uses are outlined in Box 1). However, estimating the monetary worth of biodiversity is per- haps the most challenging area of environmental resource valuation. Fundamental to any discussion of the value of biodiversity is an understanding of what precisely the object of value is. It is necessary to distinguish between biological re- sources and biological diversity. A biological resource is a given ex- ample of a gene, species or eco- system. Biological diversity refers to the variability of biological resources. Biodiversity is the ‘variety of life’ whereas biological resources are the manifestation or embodiment of that variety (OECD, 2002). Because diversity valuation re- quires some idea of willingness to pay (WTP) for the range of species and habitats, it is hard to use the term ‘biodiversity’ as the object of valuation. In reality what economic studies normally measure is the economic value of ‘biological re- sources’ rather than biodiversity it- self. Biological resource is a more anthropocentric term for biota such as forest and components of biodiversity that maintain current or potential human uses 1 . There are other reasons why it is difficult to put a monetary estimate on biodiversity. There is a lack of consensus on the total number of living species (i.e., baseline measure- ments for biodiversity), rate of biodiversity loss, and biodiversity indicators fundamental to the valu- ation process (see Box 2). There is also a lack of knowledge of the true value and extent of current and potential future uses of biodiversity. Criticisms of Economic Evalua- tion and Cost Benefit Analysis (CBA) include: • Distributional Equity - Distribu- tional concerns are rarely in- corporated into the economic evaluation framework despite the fact that they are often of paramount concern, especially in poor countries. • Discounting and Future Gen- eration - Discounting does not satisfactorily deal with signifi- cant environmental costs and benefits occurring in the future (although these concerns can be dealt with by other means). • Raise public and political awareness of the importance of biodiversity. • Set conservation priorities given a limited budget. • Facilitate land use decisions. • Guide legal proceedings for determining damages where an agent is held liable for biodiversity loss. • Limit or ban trade in endangered species. • Prevent new invasions. • Revise national income accounts. • Design capture mechanisms (e.g., market creation, economic instruments, international transfers). • Revise investment decisions (e.g., infrastructure development) that might otherwise ignore the impacts on biodiversity. Source: OECD, 2002 Box 1. Uses of Economic Valuation and Biodiversity Conservation Measurement of biodiversity is very complex because diversity is multi-dimensional. There are fundamental definitional problems relating to species and ecosystems. For example, discrete cut-off points for determining boundaries between species (Gaston and Spicer, 1998) or ecosystems is still subject to research and discussion. Even if this issue was resolved, the inventory task is monumental given the staggering number of microorganisms present at any location. The task is even more unmanageable at that genetic level. Furthermore, science has only a limited idea of the genetic dissimilarity between species. Notions of species richness, evenness and distance are the most used expressions of diversity 1 . Clarification of these measures has important implications for conservation policy. Solow et al 1993 show that if the objective is to conserve diversity, an understanding of species distance is very important. Solow presents an example using the pairwise distance between cranes and their extinction probabilities. The conservation of the most endangered species does not in fact maximise diversity. The reason for this is that the genetic distance between the endangered species and at least one of the ‘safe’ species is small. Minimising the probability of the number of species lost is not the same as minimising the value of lost biodiversity. In practice conservation resources are largely allocated to ‘exotic’ species conservation (e.g., giant pandas and tigers) without any real consideration of the diversity issue. This focus might be because the difference between biological diversity and biological resources is unrecognised, or because conservation policy responds to the high values attached to scarce species. Nonetheless, if the stated aim is to conserve diversity, those policies may not be soundly based. Source: OECD, 2002 Box 2. Biodiversity Indicators and Policy Assessment 8 A S E A N B I O D I V E R S I T Y SPECIAL REPORTS • Intrinsic vs. Instrumental Value - There are different philo- sophical viewpoints on ‘value’. CBA is founded on the instru- mentalist view, whereas it is argued that the ‘true’ notion of biodiversity value is intrinsic. • Relative vs. Absolute Value - CBA embodies the economist’s notion that value is relative, i.e., the value of something is always relative to something else. Critics argue that biodiversity has absolute value in itself, and hence it cannot be measured relative to other things. • Incremental vs. Total Values - CBA values discrete changes in the stock of biodiversity. It is argued that CBA might judge each small loss of biodiversity as being justified, while overlooking the fact that each small change contributes to the risk that the total stock will be lost (Norton, 1988). Despite these drawbacks there is considerable scope for at least se- curing minimum values for biologi- cal diversity through the use of approaches focused on the market values of the sustainable uses of biodiversity (e.g., ecotourism, and the collection of medicinal plants and other non-timber forest products [NTFP]). Measuring these direct use values of biodiversity conservation is extremely important since biodiversity will be more prone to loss when these are not appreciated. Furthermore, estimates of direct use values pro- vide an important benchmark for other, less easily quantified, uses. While most of these other uses are still associated with some particular current or future use (such as bioprospecting or amenity), the uncertainty associated with valuing these goods and services is often orders of magnitude greater than the uncertainty associated with the simple direct (but often untraded) uses. The availability of such baseline information is necessary, for ex- ample, to estimate ‘option values’ for future uses. Also, the baseline information allows setting of man- agement and research priorities (Huber et al, 1997). An Overview of Valuation Techniques 2 A range of techniques is avail- able for the estimation of biological resource values (see Box 3). A com- prehensive valuation would capture the Total Economic Value (TEV) of the resource (i.e., use and non-use values). Different valuation ap- proaches are applicable to the dif- ferent components of TEV. Direct use values are relatively straightfor- ward to measure, and usually in- volve the market value of produc- tion gains. Since environmental func- tions are rarely exchanged in mar- kets, measurement of indirect use values typically entails more com- plex techniques such as the change in productivity approach, travel cost method, and hedonic pricing method. Non-use values can only be defined from surveys of people’s preference about their WTP (e.g., Contingent Valuation). Non-use values tend to be important in cer- tain contexts, notably when the good in question has few substitutes. Since many biological resources are by definition unique, their non-use value is likely to be significant. Valuation approaches can be broadly categorised according to market values, revealed preference approaches and stated preferences approaches (OECD, 2002) 3 . Valua- tion approaches based on market values rely on the availability of market price and quantity informa- tion to derive total values. Revealed preference valuation techniques seek to determine preferences for the environment from actual, observed market based information. Often, when no market price exists for an environmental good or service, peoples’ preferences for the envi- ronment can be ‘revealed’ indirectly by examining their behaviour in markets that are linked to the envi- ronment. Some goods and services are complements to environmental quality, while others are proxies, surrogates or substitutes for it. There- fore, by examining the prices paid in environment-related markets, peoples’ environmental preferences can be uncovered (Pearce and Moran, 1994). An advantage of these techniques is that they rely on actual choices rather than on the creation of a hypothetical market to uncover the value of the environmen- 9 Approaches Based on Market Values • Observed Market Value and the Related Goods Approach –market prices for environmental goods and services can be combined with quantity information to derive estimates of value. The related goods approach uses information on the relationship between a marketed and non-marketed good or service to estimate the value of the non-marketed good (e.g., barter exchange approach, direct substitute approach, indirect substitute approach). • The Productivity Approach – uses market prices to value environmental services in situations where environmental damage or improvement shows up in changes in the quantity or price of marketed inputs or outputs. • Cost-Based Methods – use some estimate of the costs of providing or replacing a good or service to approximate its benefit (e.g., opportunity cost, indirect opportunity cost, restoration cost, replacement cost, relocation cost, preventive expenditure). Cost-based methods are second best techniques and must be used with caution. Revealed Preference Approaches - use information about a marketed commodity to infer the value of a related, non-marketed commodity (e.g., travel cost method, hedonic pricing method). Stated Preference Approaches - elicit directly, through survey methods, consumers’ willingness to pay for non-marketed environmental values (e.g. contingent valuation method). Box 3. Categories of Valuation Techniques 2 This paper provides a non-technical overview of valuation techniques. For a detailed account on methodologies, see Freeman, 1994; Johansson, 1994. 3 Many authors categorise valuation techniques differently. A P R I L - J U N E 2 0 0 2 tal good or service in question as stated preference approaches do. The correct measure of value is an individual’s maximum WTP to pre- vent environmental damage or realise an environmental benefit (represented by the area under the demand curve). Economic values comprise both the price paid in markets and the consumer surplus that users obtain. Consumer surplus indicates the excess of what the consumer would have been willing to pay over what he or she actually had to pay. This concept is particu- larly important when estimating the benefits of environmental goods and services that have a low, or no market price. In such cases, the entire area under the demand curve represents the benefit of the good. To estimate economic value, we therefore need to be able to derive the demand curve. Valuation approaches based on market values do not allow us to do this and so will always underes- timate the true value of the resource. Valuation Approaches The following section provides a brief description of the individual valuation approaches. For each tech- nique a Table is provided summarising its advantages and limitations, and its application to biodiversity valuation is outlined. In reality, decisions on what valuation approach to use will depend on the nature of the study plus the availability of resources (funds, time and expertise). Approaches Based on Market Values There are three valuation ap- proaches based on market values: • Observed market value and related goods approach • Productivity approach • Cost based methods includ- ing replacement cost. Approaches using market prices offer the most pragmatic route to the monetisation of environmental use values. Therefore, economic values such as they exist in market values should be recorded and reported. Such information will con- tribute to priority setting. Observed Market prices Where market prices exist they can be combined with quantity in- formation to estimate the value of a resource. The use of market prices is undoubtedly the most straightfor- ward of the valuation approaches and provides a relatively cheap and quick estimate of value. However, few studies report theoretically cor- rect estimates due to data constraints. Strictly speaking efficient prices should be used, i.e., they should account for any distortions such as externalities, taxes and subsidies. Values used should be net of pro- duction costs. They should also be based on optimal harvesting levels, and account for seasonal changes in production and prices. Market analysis may also be necessary to understand the likely effects of market expansion, shifts in demand and in- ternational price fluctuations. Related Goods Approach The related goods approach consists of three similar valuation techniques: barter exchange, direct substitute, and indirect substitute approach. These relatively simple, intuitive approaches are often useful for estimating products in develop- ing countries that are largely used by rural communities for subsistence purposes or traded informally. These approaches are based on the fact that often a non-marketed good or service is related to a marketed good or service. By using information about this relationship and the price of the marketed product, the analyst may be able to infer the value of the non-marketed product. For ex- ample, the direct substitute approach bases the value of a non-marketed good such as fuelwood, on the price of its closest marketed substitute (e.g., charcoal) and the rates of exchange between them. Application to Biodiversity Many natural resource products have market prices that can be used in the valuation exercise, for ex- ample, non-timber forest products, and genetic material for agricultural products and drugs. Empirical stud- ies demonstrating the values of naturally occurring products are common (see Bann 1998, Pearce and Pearce, 2001 for review). The Production Function Approach The production function approach is a common economic technique, which relates output to different lev- els of inputs of the so-called factors of production (land, labour, capital, raw materials). It is often thought of as the most straightforward way to valuing the environment 4 . More formally, the production function for a single output may be given by: y = F (X, Z) 4 Variously called the change in produc- tion approach, the input-output or dose response approach. All involve an attempt to relate the incremental output of a marketed good or service to a measurable change in the quality and quantity of a natural resource. SPECIAL REPORTS 10 Advantages Issues / Limitations Relatively simple. Market values tend to reflect actual use and hence ignore non-use values. High intuitive appeal. Does not capture consumer surplus. Likely to require the undertaking of market surveys and direct use surveys (However such surveys are simpler and less costly to conduct than those required by more sophisticated approaches). Large data requirements may be necessary to estimate theoretically correct values. Table 1. Observed Market Prices and Related Goods Approach – Advantages and Limitations [...]... Indonesia, Lao PDR, Malaysia, Philippines, Thailand and Vietnam, and Singapore; representatives of the ASEAN Secretariat and ASEAN Working Group on Nature and the Conservation of Biodiversity (AWGNCB); Philippine delegates and officials from the Department of Environment and Natural Resources (DENR) and the National Economic Development Authority (NEDA) as well as ASEAN and European Union Resource Persons As... Animals and Birds Act (Revised) 2001 2002 Source: Tan, 1998 ASEAN BIODIVERSITY 31 SPECIAL REPORTS Photo courtesy of Sungei Buloh Wetland Reserve China It is also home to resident ister environmental and biodiversity herons, kingfishers, doves, bee-eatconservation policy in Singapore: ers, tailorbirds, woodpeckers and Ministry of Environment (ENV) – munias It handles overall management of Mangroves and. .. MPA planning and management into an Integrated Coastal Management framework; 3) enhance sustaining mechanisms to enable managers and institutions to continue adaptive management; 4) fill in gaps in the establishment and understanding of representatively adequate MPAs in the various biogeographic zones (e.g W Sumatra, E Philippines and Myanmar); and 5) improve and establish joint research and cooperative... scientific knowledge and policy guidance, with the aim of mitigating environmental problems in both developed and developing economies Research topics such as natural resource valuation and management, economic instruments, wetlands and coastal zone management, biodiversity conservation and sustainable development are analyzed using a variety of research tools These include economic cost-benefit and cost-effectiveness... comprising areas that have and have no protected status, as the most important sites for biodiversity conservation Three are within gazetted nature reserves, while the rest includes four wetland areas (Kranji, Khatib Bongsu, Sungei Buloh and Senoko), two islands (Pulau Tekong and Pulau Ubin) and a mangrove area (Mandai), all of which are to the north of Singapore Bukit Timah is considered the most important... characteristics and those of other sites remaining constant The method has limited use for valuing anything other than parks and charismatic species that can provoke travel behaviour The most credible applications to date have involved national parks, recreational sites and international travel behaviour when visiting wildlife parks and reserves (Tobais and Mendelsohn, 1991; Maille and Mendelsohn 1993; Hanley and. .. apiculata, the ferns of other green areas, parks and Acrostichum aureum, A speciosum landscaping Parks are the responand the shrubs Acanthus ebracteatus sibility of the Parks and Recreation and A ilicifolius Rare species inDepartment, within the Ministry of clude Aegiceras corniculatum, National Development The Parks Bruguiera parviflora and Rhizophora and Recreation Department is restylosa, which are... Measurement of Environmental and Resource Values Theory and Methods’ Resources for the Future, Washington DC Garrod, G and K Willis, 1992 ‘The Environmental Economic Impact of Woodland: a Two Stage Hedonic Price Model of the Amenity Value of Forestry in Britain’, Applied Economics 24 715-28 Gaston, K and J Spicer, 1998, Biodiversity: An Introduction’ Oxford: Blackwell Science Hanley, N D and R.J Ruffell, (1993)... valuation of biodiversity is useful in raising public and political awareness, setting conservation priorities, and facilitating land-use decisions The workshop introduced the Total Eco- nomic Valuation (TEV) framework and Cost Benefit Analysis (CBA) appraisal approaches as important tools for promoting biodiversity conservation It was also stressed that demonstrating a high value for biodiversity. .. Q Tran, T.B Cliff Saltman, (1997) ‘Economic and Environmental Benefits of Biodiversity BioScience 47(11):747-757 Purvis, A and A Hector, 2000 ‘Getting the Measure of Biodiversity Nature, 405, 212-219 Solow, A., S Polasky and J Broadus, 1993 ‘On the Measurement of Biological Diversity’ Journal of Environmental Economics and Management, 24, 60-68 Tobais, D and Mendelsohn, R 1991 ‘Valuing Ecotourism . to convert cropland to woods would raise forest and grass cover in China by 5%. The resulting green belts could reduce wind speeds by 30 to 50% and cut sand and dust by 99% over barren land. May 14. courtesy of Margaret Turton Spotted-tail quoll in New South Wales A S E A N B I O D I V E R S I T Y 7 ABOUT YOU AND US Editorial Externalities and biodiversity valuation’ # By Glyn Davies Finally,. parks and reserves (Tobais and Mendelsohn, 1991; Maille and Mendelsohn 1993; Hanley and Ruffell 1993). Application to Biodiversity Where feasible, TCM is impor- tant when evaluating the demand for