Transcript Ecosystem Services: What are they, we need them, and how to

Ecosystem Services:
What are they, we need them, and how to
preserve them.
The Economic Perspective
Joshua Farley
Community Development and Applied Economics
Gund Institute for Ecological Economics
What is Economics?
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The allocation of scarce resources among
alternative desirable ends
3 questions an economist must ask
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What are the desirable ends?
What are the scarce resources?
How do we allocate?
Outline of Presentation
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Answer these questions as they apply to
Vermont’s natural resources
What are the scarce resources, and what are
their characteristics?
How do we allocate?
What are the desirable ends?
Radically practical thoughts on solving the
current economic crisis (if there is time and
interest)
What Are the Scarce
Resources?
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Law of Physics: You can't
make something from nothing
Everything the economy
produces requires raw
materials and energy provided
by nature
Law of Physics: You can't
make nothing from something
Everything the economy
produces returns to nature as
waste
Exponential growth impossible
in finite system
Energy
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Essential to do work
Fossil fuels
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Finite supply
Combustion causes
pollution
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Degrades ecosystems
Hubbert Curve
Ecosystem
Goods
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Raw materials provided
by nature
Essential inputs into all
economic production
We can use them up as
fast as we like
If I use it, you can't
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Competition for use
Market goods
Ecosystem structure,
building blocks of
ecosystems
Ecosystem Services
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Structure generates
function
Ecosystem functions of
value to humans known as
ecosystem services
Includes life support
functions
Regulation
Services
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Water regulation
Disturbance reg
Erosion control
Soil creation
Pollination
Climate regulation
Nutrient cycling
Biological control
Waste absorption
etc.
Provisioning
Services
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Production of food,
fuel, fiber (regeneration
of structure)
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History of Vermont
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Clearing of land
(Timber, Farmland)
Erosion, soil loss,
economic collapse
Depopulation
Can we do this
again?
Information
Services
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Recreation, tourism
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Forests: jobs for
2,393 Vermonters
Annual payrolls of
$33 million annually
Unknown benefits:
e.g. Taxol
Cultural attachments
Scenery
Supporting
Services
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Habitat
Refugia
Without
biodiversity,
there are no
other services
Characteristics of Services
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Provided at a given rate
over time—we can't use
them as fast as we want
If I use it, you still can
(except waste
absorption)
 Cooperative in use
 Prices create artificial
scarcity, e.g. avian flu
Can't be owned
Non-market goods—no
price signal to indicate
scarcity
Ecosystem Services and
Ignorance
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Passenger pigeons and
Lyme disease
The ozone layer
Ecological thresholds
Irreversibility
What role do your
salamanders play?
What risks should we
impose on future
generations?
Agricultural Land
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Land as Good
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Land as Service
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Soil fertility is mined at
rate we choose
Competitive within a
generation
Market good
Crops produced at
certain rate over time
Cooperative: can be
used by this and future
generations
Provides more eco-services than developed land
3.5 times more
phosphorus run-off from
developed land than ag
land
So What?
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All economic production
depletes ecosystem
structure
All economic production
generates waste
Resource extraction and
waste emissions
necessarily degrade
ecosystem services
Ecosystem services
have become the
scarcest resources
The Economic Problem
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How do we allocate finite ecosystem structure
between:
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Economic production
Production of life sustaining ecosystem goods and
services
How should we distribute resources among
individuals?
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Who is entitled to ownership of ecosystem goods?
Is anyone entitled to ecosystem services?
Relative Values
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Both economic production and ecosystem services
essential to our survival
Economics looks at marginal value—value of one
more unit
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More we have of something, the less one more unit is
worth
Value of economic production is decreasing
Value of ecosystem services is increasing
When do we stop converting?
Law of economics: stop doing something when
marginal costs exceed marginal benefits
Estimated value of global ecosystem services twice
that of economic output
Relative Costs
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Is it fair to subsidize development?
Developed land: $1.08-$1.29 in services for
every dollar in taxes
Undeveloped land: $0.06-$0.52 in services
for every dollar in taxes
The Property Rights Issue
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Private property rights
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Public property rights (government
ownership)
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Is it fair for landowners to degrade ecosystem
services that entire community depends on?
Is it fair to prevent landowners from using their
land as they wish?
How do you feel about Ticonderoga paper mill?
No property rights
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Waste absorption capacity
Aquifers?
Solving the Problem
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Market solutions
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one dollar, one vote—plutocracy
Provides incentives that may make us all better
off in some circumstances
Effective for many types of goods and
services
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Those that can be owned
Those for which use by one person prevents use
by another
Solving the Problem
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How do make decisions about resources that
can't be owned, and my use does not leave
less for you to use?
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Markets don't exist
No market incentive to provide resources
One citizen one vote? Democracy?
Cooperative provision, cooperative use?
Existing property rights give owners the right
to do as they choose with ecosystem goods
(structure), hence control over ecosystem
services
Options
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Let rights to goods trump rights to services
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Limit rights to ecosystem goods
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Risk another collapse of Vermont's economy
Services probably provide more benefits than
goods. Inefficient.
Property rights as a bundle
Lake Tahoe example
Is this fair? Speculators vs. farmers.
Purchase rights to ecosystem services
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Conservation easements
Payments for ecosystem services, e.g. NYC
Community purchase of land
Common property rights
(citizen ownership)
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Declare common property rights to unowned goods
and services
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Restore common property rights when possible
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e.g. waste absorption capacity, aquifers, airwaves, etc.
e.g. waterfront and public trust doctrine
Create common assets trust to manage resources
for this and future generations
Can use market mechanisms, e.g. cap and auction
Revenue can be used to purchase and create more
common property
Vermont Common Assets Trust
What are the Desirable Ends?
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Goal of most economists is economic growth
Per capita income has increase 10x since
1900, total income has increased 40x
Per capita income in 1969 was 35% of
today's
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Was life less good then?
Should our goal be to ensure that our
children consume 2x as much as we do? Our
grandchildren 4x as much?
Other Desirable Ends
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Sustainability
Justice (just distribution)
Health
Education
Stability (safe, secure jobs and environment)
Happiness and satisfaction with life as a
whole
Efficiency
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What is the cost of achieving these goals?
Solving the Sustainability Problem:
Case study of the current crisis
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System wide change required
Conceptual
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Institutional
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How does the world work?
What are our goals (the desirable ends)
What are the rules under which the system
operates?
What are the organizations that create and
implement those rules?
Technical
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Techniques and technologies