Natural capital approaches for the optimal design of policies for nature recovery.

By embedding a spatially explicit ecosystem services modelling tool within a policy simulator we examine the insights that natural capital analysis can bring to the design of policies for nature recovery. Our study is illustrated through a case example of policies incentivising the establishment of new natural habitat in England. We find that a policy mirroring the current practice of offering payments per hectare of habitat creation fails to break even, delivering less value in improved flows of ecosystem services than public money spent and only 26% of that which is theoretically achievable. Using optimization methods, we discover that progressively more efficient outcomes are delivered by policies that optimally price activities (34%), quantities of environmental change (55%) and ecosystem service value flows (81%). Further, we show that additionally attaining targets for unmonetized ecosystem services (in our case, biodiversity) demands trade-offs in delivery of monetized services. For some policy instruments it is not even possible to achieve the targets. Finally, we establish that extending policy instruments to offer payments for unmonetized services delivers target-achieving and value-maximizing policy designs. Our findings reveal that policy design is of first-order importance in determining the efficiency and efficacy of programmes pursuing nature recovery. This article is part of the theme issue 'Bringing nature into decision-making'.

Modelling the impact of forest management and CO2-fertilisation on growth and demography in a Sitka spruce plantation.

Afforestation and reforestation to meet 'Net Zero' emissions targets are considered a necessary policy by many countries. Their potential benefits are usually assessed through forest carbon and growth models. The implementation of vegetation demography gives scope to represent forest management and other size-dependent processes within land surface models (LSMs). In this paper, we evaluate the impact of including management within an LSM that represents demography, using both in-situ and reanalysis climate drivers at a mature, upland Sitka spruce plantation in Northumberland, UK. We compare historical simulations with fixed and variable CO2 concentrations, and with and without tree thinning implemented. Simulations are evaluated against the observed vegetation structure and carbon fluxes. Including thinning and the impact of increasing CO2 concentration ('CO2 fertilisation') gave more realistic estimates of stand-structure and physical characteristics. Historical CO2 fertilisation had a noticeable effect on the Gross Primary Productivity seasonal-diurnal cycle and contributed to approximately 7% higher stand biomass by 2018. The net effect of both processes resulted in a decrease of tree density and biomass, but an increase in tree height and leaf area index.

Perspectives on valuing water quality improvements using stated preference methods.

Improvements to the quality of freshwater rivers and lakes can generate a wide array of benefits, from "use values" such as recreational boating, fishing, and swimming to "nonuse values" such as improved outcomes for aquatic biodiversity. Bringing these nonmarket values into decision-making is crucial to determining appropriate levels of investment in water quality improvements. However, progress in the economic valuation of water quality benefits has lagged similar efforts to value air quality benefits, with implications for water policy. New data sources, modeling techniques, and innovation in stated preference survey methods offer notable improvements to estimates of use and nonuse benefits of improved water quality. Here, we provide a perspective on how recent applications of stated preference techniques to the valuation of the nonmarket benefits of water quality improvements have advanced the field of environmental valuation. This overview is structured around four key questions: i) What is it about water quality that we seek to value? ii) How should we design and implement the surveys which elicit individuals' stated preferences? iii) How do we assess the validity of the findings provided by such studies? and iv) What are the contributions of these valuation exercises to public policy? In answering these questions, we make reference to the contributions provided by the papers in this Symposium.

Combined carbon and health taxes outperform single-purpose information or fiscal measures in designing sustainable food policies.

The food system is a major source of both environmental and health challenges. Yet, the extent to which policy-induced changes in the patterns of food demand address these challenges remains poorly understood. Using a survey-based, randomized controlled experiment with 5,912 respondents from the United Kingdom, we evaluate the potential effect of carbon and/or health taxes, information and combined tax and information strategies on food purchase patterns and the resulting impact on greenhouse gas emissions and dietary health. Our results show that while information on the carbon and/or health characteristics of food is relevant, the imposition of taxes exerts the most substantial effects on food purchasing decisions. Furthermore, while carbon or health taxes are best at separately targeting emissions or dietary health challenges, respectively, a combined carbon and health tax policy maximizes benefits in terms of both environmental and health outcomes. We show that such a combined policy could contribute to around one third of the reductions in residual emissions required to achieve the United Kingdom's 2050 net-zero commitments, while discouraging the purchase of especially unhealthy snacks, sugary drinks and alcohol and increasing the purchase of fruit and vegetables.

Spatial cost-benefit analysis of blue restoration and factors driving net benefits globally.

Marine coastal ecosystems, commonly referred to as blue ecosystems, provide valuable services to society but are under increasing threat worldwide due to a variety of drivers, including eutrophication, development, land-use change, land reclamation, and climate change. Ecological restoration is sometimes necessary to facilitate recovery in coastal ecosystems. Blue restoration (i.e., in marine coastal systems) is a developing field, and projects to date have been small scale and expensive, leading to the perception that restoration may not be economically viable. We conducted a global cost-benefit analysis to determine the net benefits of restoring coral reef, mangrove, saltmarsh, and seagrass ecosystems, where the benefit is defined as the monetary value of ecosystem services. We estimated costs from published restoration case studies and used an adjusted-value-transfer method to assign benefit values to these case studies. Benefit values were estimated as the monetary value provided by ecosystem services of the restored habitats. Benefits outweighed costs (i.e., there were positive net benefits) for restoration of all blue ecosystems. Mean benefit:cost ratios for ecosystem restoration were eight to 10 times higher than prior studies of coral reef and seagrass restoration, most likely due to the more recent lower cost estimates we used. Among ecosystems, saltmarsh had the greatest net benefits followed by mangrove; coral reef and seagrass ecosystems had lower net benefits. In general, restoration in nations with middle incomes had higher (eight times higher in coral reefs and 40 times higher in mangroves) net benefits than those with high incomes. Within an ecosystem type, net benefit varied with restoration technique (coral reef and saltmarsh), ecosystem service produced (mangrove and saltmarsh), and project duration (seagrass). These results challenge the perceptions of the low economic viability of blue restoration and should encourage further targeted investment in this field.

Análisis de Rentabilidad Espacial de la Restauración Azul y de los Factores Determinantes del Beneficio Neto Mundial Resumen Los ecosistemas costeros marinos, llamados comúnmente ecosistemas azules, proporcionan servicios valiosos para la sociedad, pero se encuentran bajo una amenaza creciente a nivel mundial causada por una variedad de determinantes, incluyendo la eutrofización, el desarrollo, el cambio en el uso de suelo, la reclamación de tierra y el cambio climático. Algunas veces se necesita de la restauración ecológica para facilitar la recuperación en los ecosistemas costeros. La restauración azul (es decir, en los sistemas costeros marinos) es un campo en desarrollo, con proyectos que a la fecha han sido a pequeña escala y costosos, lo que resulta en la percepción de que la restauración puede no ser viable económicamente. Realizamos un análisis de rentabilidad mundial para determinar los beneficios netos de la restauración de ecosistemas de arrecife de coral, manglar, marisma y pastos marinos en donde el beneficio está definido como el valor monetario de los servicios ambientales. Estimamos los costos a partir de estudios de caso de restauración publicados y usamos un método de transferencia de valor ajustado para asignar los valores de beneficio a estos estudios de caso. Los valores de los beneficios fueron estimados como el valor monetario proporcionado por los servicios ambientales de los hábitats restaurados. Los beneficios superaron los costos (es decir, fueron beneficios netos positivos) de la restauración de todos los ecosistemas azules. El beneficio promedio consistió en que la proporción de costos para la restauración del ecosistema fue 8-10 veces mayor que en los estudios anteriores de la restauración de los arrecifes de coral y los pastos marinos, probablemente debido a que usamos estimaciones de costo más bajas. Entre los ecosistemas, las marismas tuvieron los mayores beneficios netos seguidos por los manglares; los arrecifes de coral y los pastos marinos tuvieron los beneficios netos más bajos. En general, la restauración en los países con niveles medios de ingreso tuvo más beneficios netos (ocho veces más en los arrecifes de coral y 40 veces más en los manglares) que aquellos países con niveles altos de ingreso. En cuanto al tipo de ecosistema, el beneficio neto varió de acuerdo con la técnica de restauración (arrecife de coral y marisma), servicio ambiental producido (manglar y marisma) y duración del proyecto (pastos marinos). Estos resultados desafían las percepciones de la baja viabilidad económica que tiene la restauración azul y deberían fomentar una mayor inversión focalizada en este campo.

Cross-Country Comparisons of Covid-19: Policy, Politics and the Price of Life.

Coronavirus has claimed the lives of over half a million people world-wide and this death toll continues to rise rapidly each day. In the absence of a vaccine, non-clinical preventative measures have been implemented as the principal means of limiting deaths. However, these measures have caused unprecedented disruption to daily lives and economic activity. Given this developing crisis, the potential for a second wave of infections and the near certainty of future pandemics, lessons need to be rapidly gleaned from the available data. We address the challenges of cross-country comparisons by allowing for differences in reporting and variation in underlying socio-economic conditions between countries. Our analyses show that, to date, differences in policy interventions have out-weighed socio-economic variation in explaining the range of death rates observed in the data. Our epidemiological models show that across 8 countries a further week long delay in imposing lockdown would likely have cost more than half a million lives. Furthermore, those countries which acted more promptly saved substantially more lives than those that delayed. Linking decisions over the timing of lockdown and consequent deaths to economic data, we reveal the costs that national governments were implicitly prepared to pay to protect their citizens as reflected in the economic activity foregone to save lives. These 'price of life' estimates vary enormously between countries, ranging from as low as around $100,000 (e.g. the UK, US and Italy) to in excess of $1million (e.g. Denmark, Germany, New Zealand and Korea). The lowest estimates are further reduced once we correct for under-reporting of Covid-19 deaths.

Using gross ecosystem product (GEP) to value nature in decision making.

Gross domestic product (GDP) summarizes a vast amount of economic information in a single monetary metric that is widely used by decision makers around the world. However, GDP fails to capture fully the contributions of nature to economic activity and human well-being. To address this critical omission, we develop a measure of gross ecosystem product (GEP) that summarizes the value of ecosystem services in a single monetary metric. We illustrate the measurement of GEP through an application to the Chinese province of Qinghai, showing that the approach is tractable using available data. Known as the "water tower of Asia," Qinghai is the source of the Mekong, Yangtze, and Yellow Rivers, and indeed, we find that water-related ecosystem services make up nearly two-thirds of the value of GEP for Qinghai. Importantly most of these benefits accrue downstream. In Qinghai, GEP was greater than GDP in 2000 and three-fourths as large as GDP in 2015 as its market economy grew. Large-scale investment in restoration resulted in improvements in the flows of ecosystem services measured in GEP (127.5%) over this period. Going forward, China is using GEP in decision making in multiple ways, as part of a transformation to inclusive, green growth. This includes investing in conservation of ecosystem assets to secure provision of ecosystem services through transregional compensation payments.

EAERE Award for the Best Paper Published in Environmental and Resource Economics During 2019.

We present details of the EAERE Award for the Best Paper Published in Environmental and Resource Economics During 2019 together with those Highly Commended papers published during this period.

Natural capital and ecosystem services informing decisions: From promise to practice.

The central challenge of the 21st century is to develop economic, social, and governance systems capable of ending poverty and achieving sustainable levels of population and consumption while securing the life-support systems underpinning current and future human well-being. Essential to meeting this challenge is the incorporation of natural capital and the ecosystem services it provides into decision-making. We explore progress and crucial gaps at this frontier, reflecting upon the 10 y since the Millennium Ecosystem Assessment. We focus on three key dimensions of progress and ongoing challenges: raising awareness of the interdependence of ecosystems and human well-being, advancing the fundamental interdisciplinary science of ecosystem services, and implementing this science in decisions to restore natural capital and use it sustainably. Awareness of human dependence on nature is at an all-time high, the science of ecosystem services is rapidly advancing, and talk of natural capital is now common from governments to corporate boardrooms. However, successful implementation is still in early stages. We explore why ecosystem service information has yet to fundamentally change decision-making and suggest a path forward that emphasizes: (i) developing solid evidence linking decisions to impacts on natural capital and ecosystem services, and then to human well-being; (ii) working closely with leaders in government, business, and civil society to develop the knowledge, tools, and practices necessary to integrate natural capital and ecosystem services into everyday decision-making; and (iii) reforming institutions to change policy and practices to better align private short-term goals with societal long-term goals.

Conserving tropical biodiversity via market forces and spatial targeting.

The recent report from the Secretariat of the Convention on Biological Diversity [(2010) Global Biodiversity Outlook 3] acknowledges that ongoing biodiversity loss necessitates swift, radical action. Protecting undisturbed lands, although vital, is clearly insufficient, and the key role of unprotected, private land owned is being increasingly recognized. Seeking to avoid common assumptions of a social planner backed by government interventions, the present work focuses on the incentives of the individual landowner. We use detailed data to show that successful conservation on private land depends on three factors: conservation effectiveness (impact on target species), private costs (especially reductions in production), and private benefits (the extent to which conservation activities provide compensation, for example, by enhancing the value of remaining production). By examining the high-profile issue of palm-oil production in a major tropical biodiversity hotspot, we show that the levels of both conservation effectiveness and private costs are inherently spatial; varying the location of conservation activities can radically change both their effectiveness and private cost implications. We also use an economic choice experiment to show that consumers' willingness to pay for conservation-grade palm-oil products has the potential to incentivize private producers sufficiently to engage in conservation activities, supporting vulnerable International Union for Conservation of Nature Red Listed species. However, these incentives vary according to the scale and efficiency of production and the extent to which conservation is targeted to optimize its cost-effectiveness. Our integrated, interdisciplinary approach shows how strategies to harness the power of the market can usefully complement existing--and to-date insufficient--approaches to conservation.

Bringing ecosystem services into economic decision-making: land use in the United Kingdom.

Landscapes generate a wide range of valuable ecosystem services, yet land-use decisions often ignore the value of these services. Using the example of the United Kingdom, we show the significance of land-use change not only for agricultural production but also for emissions and sequestration of greenhouse gases, open-access recreational visits, urban green space, and wild-species diversity. We use spatially explicit models in conjunction with valuation methods to estimate comparable economic values for these services, taking account of climate change impacts. We show that, although decisions that focus solely on agriculture reduce overall ecosystem service values, highly significant value increases can be obtained from targeted planning by incorporating all potential services and their values and that this approach also conserves wild-species diversity.

Benefits transfer of willingness to pay estimates and functions for health-risk reductions: a cross-country study.

This paper provides a first application of the techniques of benefits transfer to the health economics literature. These techniques seek to transfer the value of some good from one 'survey' context to a new 'policy' context so avoiding the need for new valuation surveys each time a new policy question arises. Two approaches to benefits transfer are assessed: the simple transfer of mean values and the transferral of value functions. We develop a new methodology for the latter approach in which value functions are iteratively built up from theoretical principles with transfer errors being tested each time a new variable is added. Through a novel application of advanced statistical tests we show that this approach outperforms the transferral of statistically driven Best-fit functions. The case study presented focuses upon the transfer of contingent valuation (CV) willingness to pay (WTP) estimates and associated value functions for reducing the health risks associated with solar ultraviolet (UV) exposure. Common format studies are conducted in four countries with transfers between all of these being undertaken. By calculating errors in predicted versus actual values across countries we show that, when transferring between similar contexts, simple mean-value transfers outperform more complex value function transfers (with the magnitude of the former errors being encouragingly small). However, this result is reversed when transfers are undertaken across dissimilar contexts where value functions partially adjust for these differences. In summary these findings provide support and guidance for future applications.

Revision of the EU Bathing Water Directive: economic costs and benefits.

The European Union (EU) Bathing Water Directive of 1976 ([Commission of the European Communities, 1976. Council Directive of 8th December 1975 Concerning the Quality of Bathing Water (76/160/EEC). Official Journal of the European Community. 5th February 1976, L31/1, Brussels]) sets out standards for designated bathing waters which should be complied with by all member states. Intervening advances in pollution science, related technology and managerial expertise have allowed the European Commission to consider revision of EU environmental legislation where appropriate. As a result, a number of revisions to the 1976 Directive have been proposed ([Commission of the European Communities, 1994. Commission Proposal for a Council Directive Concerning the Quality of Bathing Water. Communication from the Commission to the European Parliament and the Council, COM (94) 36 Final, Brussels; Commission of the European Communities, 2000. Developing a New Bathing Water Policy, Communication from the Commission to the European Parliament and the Council, COM (2000) 860 Final, 21/12/200, Brussels; Commission of the European Communities, 2002. Commission Proposal for a Directive of the European Parliament and of the Council Concerning the Quality of Bathing Water, COM (2002) 581 Final, 24/10/2002, Brussels]). This paper considers these revisions in terms of the economic costs and benefits associated with any change in policy. The focus is on the public's willingness to pay for a revised Directive and the consequent public health benefits afforded to individuals and society. These economic benefits are compared to the costs of implementing changes to bring bathing waters up to the required standard.