The economics of conservation debt: a natural capital approach to revealed valuation of ecological dynamics.

Some species are valued for their direct usefulness to society, through immediate financial returns from market activities such as harvesting or ecotourism. But many are valued for their passive usefulness, i.e., their mere existence contributes to supporting, regulating or cultural environmental services that support human well-being. Hence, there is inherent social value to conserving such species as natural assets. However, such species are seldom priced as natural assets, and thus not accounted for in sustainability wealth measures because deriving non-market prices is challenging. We overcome this limitation by presenting a new approach for natural asset pricing of species with passive value that can be incorporated into national sustainability wealth accounting. We explicitly consider the relationship between prevailing institutions, species interactions, and ecosystem dynamics. Our approach is illustrated with the case of threatened woodland caribou in the Alberta Oil Sands. We show that conservation can be considered an investment while destructive activities can lead to a loss or conservation debt; and forgoing destructive activities can be considered a capital gain, increasing future wealth. Our approach reveals that caribou conservation in Alberta is leading to a conservation debt on the order of CA$800 million.

Modeling opportunity costs of conservation in transitional landscapes.

Conservation scientists recognize the urgency of incorporating opportunity costs into conservation planning. Despite this, applications to date have been limited, perhaps partly because of the difficulty in determining costs in regions with limited data on land prices and ownership. We present methods for estimating opportunity costs of land preservation in landscapes or ecoregions that are a changing mix of agriculture and natural habitat. Our approach derives from the literature on estimating land values as opportunity costs of alternate land uses and takes advantage of general availability of necessary data, even in relatively data-poor regions. The methods integrate probabilities of habitat conversion with region-wide estimates of economic benefits from agricultural land uses and estimate land values with a discount rate to convert annual values into net present values. We applied our method in a landscape undergoing agricultural conversion in Paraguay. Our model of opportunity costs predicted an independent data set of land values and was consistent with implicit discount rates of 15-25%. Model-generated land values were strongly correlated with actual land values even after correcting for the effect of property size and proportion of property that was forested. We used the model to produce a map of opportunity costs and to estimate the costs of conserving forest within two proposed corridors in the landscape. This method can be applied to conservation planning in situations where natural habitat is currently being converted to market-oriented land uses. Incorporating not only biological attributes but also socioeconomic data can help in the design of efficient networks of protected areas that represent biodiversity at minimum costs.

Economic benefits of biodiversity exceed costs of conservation at an African rainforest reserve.

Economic research on biodiversity conservation has focused on the costs of conservation reserves and the benefits of intact ecosystems; however, no study has simultaneously considered the costs and benefits of species diversity, a fundamental component of biodiversity. We quantified the costs and benefits of avian biodiversity at a rainforest reserve in Uganda through a combination of economic surveys of tourists, spatial land-use analyses, and species-area relationships. Our results show that revising entrance fees and redistributing ecotourism revenues would protect 114 of 143 forest bird species (80%) under current market conditions. This total would increase to 131 species (approximately 90%) if entrance fees were optimized to capture the tourist's willingness to pay for forest visits and the chance of seeing increased numbers of bird species. In contrast, the cost of purchasing agricultural land for ecological rehabilitation of the avian habitat would be economically prohibitive. These results suggest that local biodiversity markets could play a positive role in tropical conservation strategies if the appropriate institutions for redistribution can be developed.

Incorporating natural capital into economy-wide impact analysis: a case study from Alberta.

Traditionally, decision-makers have relied on economic impact estimates derived from conventional economy-wide models. Conventional models lack the environmental linkages necessary for examining environmental stewardship and economic sustainability, and in particular the ability to assess the impact of policies on natural capital. This study investigates environmentally extended economic impact estimation on a regional scale using a case study region in the province of Alberta known as the Foothills Model Forest (FMF). Conventional economic impact models are environmentally extended in pursuit of enhancing policy analysis and local decision-making. It is found that the flexibility of the computable general equilibrium (CGE) modeling approach offers potential for environmental extension, with a solid grounding in economic theory. The CGE approach may be the tool of the future for more complete integrated environment and economic impact assessment.