eftec Economics for the Environment Consultancy Roundtable on

eftec Economics for the Environment Consultancy Roundtable on Cost / Benefit of Forestry Projects and Programmes Ece Ozdemiroglu Nancy, 30 May 2012 Using ecosystem services for cost benefit analysis of forestry decisions

eftec Economics for the Environment Consultancy Outline • Purpose • Approach • Example

eftec Economics for the Environment Consultancy Purpose • Understand use the total economic value forests generate: – Land use planning: forestry vs other – Forest management: • Timber • Other non-timber products • Recreation • Biodiversity / wildlife – Capturing total economic value: • Timber pricing (e. g. sustainability premium) • Payments for Ecosystem Services (inc biocarbon) • Biodiversity offsetting • Reforestation credits

eftec Economics for the Environment Consultancy Approach • Total Economic Value – Direct use, indirect use, non-use – Market and non-market data – Visitors, local residents, wider population • Ecosystem Services – General relationships between resource and services, and services – Location specific relationships • Cost Benefit Analysis – Appropriate effort – Sensitivity analysis – Transparency and audit trail

Qualitative assessment Which type of forest likely to provide which service, where, how much Ecosystem Services Approach Quantitative assessment Measuring service levels and impacts of management options Value changes in service levels Apply valuation methods (market prices, revealed preference, stated preference, value transfer) Input to decision making

Provisioning services Timber, renewable energy, food, ornamental goods Direct use Market prices Overlap with cultural values Regulating services Climate, air quality, Indirect use water and flood, water purification, pollination Official guidance, and pest control production function, avoided cost Cultural services Recreation, views / aesthetic enjoyment, historic / cultural values, education, biodiversity (part) Direct use and nonuse Photosynthesis / primary production, soil, nutrient cycling, water cycling Incorporated in other services, ‘resilience’ Supporting services Market prices, travel cost, hedonic pricing, stated preference

eftec Economics for the Environment Consultancy Example: Forestry Commission England study • • Typology of forests Management options Cost of forest management Benefits Scenario analysis Results Caveats

eftec Economics for the Environment Consultancy Typology of forests • • • • • Vegetation type: broadleaf / conifer / open habitat / other Upland / lowland Slope and aspect Ancient / secondary (ASNW, PAWS, OSNW) Location and size Setting (urban / peri-urban / rural) Availability of alternatives Age / class Species BAP priority habitats Alternative habitats, soil type Management practices Ownership Public access Facilities and accommodation Certification Recreation activities Watershed regulation, wind regulation, carbon sequestration

eftec Economics for the Environment Consultancy Typology of forests • Forest / woodland ecology: – Broadleaf / mixed, coniferous, open habitat • Proximity to users: – Urban community – Peri-urban – Rural • Management – Low intensity management – Managed primarily for timber – Managed for multiple objectives • Access – No public access – Access encouraged with low level of facilities – Access encouraged with high level of facilities • Biodiversity – BAP priority / not BAP priority

eftec Economics for the Environment Consultancy Benefits • Timber / fuelwood: – Market price • Greenhouse gas regulation – UK official value for traded / non-traded carbon • Recreation – Value transfer from travel cost and stated preference studies • Aesthetic values – Value transfer from hedonic pricing and stated preference studies • Biodiversity – Value transfer (weak link between typology and values) • Watershed services excluded

eftec Economics for the Environment Consultancy Costs • Land management – Forestry operations • Access provision – Access and facilities for recreation • Conservation and heritage – Biodiversity protection and other natural or human heritage conservation • Community engagement – Consultation and management community involvement in woodland

eftec Economics for the Environment Consultancy Scenarios • Present (status quo) – Maintain public forest estate as is • The recent past – Prior to emphasis on community woodlands an recreation • Future as planned – Based on current Forest Design Plans • People focused – Enhanced emphasis on providing recreation and other services • Habitat Action Plan focused – Enhanced emphasis on conversion to open habitats • Plantation on Ancient Woodland Sites • Timber focused

eftec Economics for the Environment Consultancy Figure 1: Average (per ha) benefits and costs in base year

eftec Economics for the Environment Consultancy Figure 2: Estimated value CHANGES for the year 2070, compared with plan

eftec Economics for the Environment Consultancy Caveats • Simplifying complexity: typology…site specific analysis will reduce this • Errors in estimating physical service provision and change: missing data, data transfer • Recreation values: uncertainty about visit numbers, value per visit, substitution effects, errors in converting from centres to per hectare • Exclude some ecosystem services, not full coverage of others • Approximate estimates, NOT applicable elsewhere

eftec Economics for the Environment Consultancy Lessons • The overall approach works to present all services but missing scientific and economic evidence • Project-specific typology needs to be created • Move from per hectare averages to spatial distribution (e. g. use of GIS) • Appropriate level of effort for CBA? • For new forest projects, include the current baseline landuse to the CBA • Extend CBA to identify new market opportunities / revisions to existing policies

eftec Economics for the Environment Consultancy Thank you! Ece Ozdemiroglu ece@eftec. co. uk +442075805383 www. eftec. co. uk