Ekko C. van Ierland

Ecological-economic analysis of wetlands; scientific integration for management and policy

Abstract Wetlands all over the world have been lost or are threatened in spite of various international agreements and national policies. This is caused by: (1) the public nature of many wetlands products and services; (2) user externalities imposed on other stakeholders; and (3) policy intervention failures that are due to a lack of consistency among government policies in different areas (economics, environment, nature protection, physical planning, etc.). All three causes are related to information failures which in turn can be linked to the complexity and ‘invisibility’ of spatial relationships among groundwater, surface water and wetland vegetation. Integrated wetland research combining social and natural sciences can help in part to solve the information failure to achieve the required consistency across various government policies. An integrated wetland research framework suggests that a combination of economic valuation, integrated modelling, stakeholder analysis, and multi-criteria evaluation can provide complementary insights into sustainable and welfare-optimising wetland management and policy. Subsequently, each of the various components of such integrated wetland research is reviewed and related to wetland management policy.

Dynamics of agricultural groundwater extraction

Agricultural shallow groundwater extraction can result in desiccation of neighbouring nature reserves and degradation of groundwater quality in the Netherlands, whereas both externalities are often not considered when agricultural groundwater extraction patterns are being determined. A model is developed to study socially optimal agricultural shallow groundwater extraction patterns. It shows the importance of stock size to slow down changes in groundwater quality.

Policy Instruments for Groundwater Management in the Netherlands

In the Netherlands agriculture andnature have conflicting interests with respectto groundwater management. Insight into thesuitability of policy instruments to achieveoptimal groundwater level and extractionmanagement in the Netherlands is, however,missing. In this paper the suitability ofpolicy instruments for groundwater managementis studied. Changes in the institutionalenvironment and voluntary agreements seem to bemore suitable for groundwater level managementthan economic instruments. The currenthistorical groundwater extraction rightssystems together with the low groundwaterprices encourage low-value agriculturalgroundwater usage, whereas sprinkling bans andirrigation scheduling currently aim to reducelow-value use of groundwater. These extractioninstruments are less efficient than a systemthat considers externalities in the price ofwater or diverts water away from agriculturewhile encouraging trading.

Economic Modelling for Water Quantity and Quality Management: A Welfare Program Approach

This paper presents an integrated economic model which is able to explicitly address both water quantity and quality. We use a welfare program to maximize social welfare subject to the economic and ecological constraints, where interactions, emissions and environmental impacts are incorporated. Such a welfare program can provide the marginal values of commodities and therefore can price water by means of shadow pricing. The optimal solution to a specified program provides the optimal response strategies, i.e. the efficient allocation of resources in the economy including water use and the efficient level of water quality. We illustrate the mechanism in a numerical example and show, as an example, how we can achieve efficiency by reserving water in the high season for times of high demand in the low season and by introducing price differentiation between the two seasons.

Dynamic Efficiency with Multi-Pollutants and Multi-Targets The Case of Acidification and Tropospheric Ozone Formation in Europe

In this paper we consider two important aspectsin the complex problem of transboundary airpollution in Europe, namely (i) theinterdependence of the problems of troposphericozone and acidification and (ii) the dynamicprocesses related to soil acidification. Wedevelop an optimal control model to analyse theinteraction between acidification as a stockpollutant and tropospheric ozone as a flowpollutant for several countries. Using acost-benefit framework an analysis is performedto determine efficient emission paths fornitrogen oxides, sulphur dioxide and volatileorganic compounds. The model jointly analysesacidification and ozone. The current Europeanreduction plans do not fully take into accountthe multi-pollutants multi-targets nature ofthe problem. In addition, the plans allow fortemporary exceedance of critical loads withoutconsidering the consequences for the temporaldevelopment of the soil quality. This papershows the complex relations and interactionswhich one should deal with while designingpolicies that are efficient with respect to thecross-effects between the differentenvironmental problems. It also shows howdynamic efficient abatement strategies wouldlook if the cross effects and the dynamicprocesses in soil acidification are explicitlyincorporated in the analysis.

Economic Growth and Valuation of the Environment

The debate on the valuation of nature and the environment, sustainable national income and economic growth is one of prime importance in environmental economics. Economic Growth and Valuation of the Environment deals with the fundamental approaches to calculating sustainable national income and their implications for the valuation of the environment.

Metapopulations in agricultural landscapes: a spatially explicit trade-off analysis

This paper presents a spatially explicit trade-off analysis of species conservation in agricultural areas. A spatially explicit model is presented that integrates an applied metapopulation model with a farm management model. The model is used to calculate production possibilities frontiers of net monetary benefits from agriculture and conservation of three species with different habitats. Simulations of spatial habitat allocation under European agri-environment schemes are compared to these production possibilities frontiers. The results suggest that the cost-effectiveness of current conservation policies may be greatly enhanced if the spatial dimension is considered explicitly.

Economic analysis of adaptive strategies for flood risk management under climate change

Climate change requires reconsideration of flood risk management strategies. Cost-benefit analysis (CBA), an economic decision-support tool, has been widely applied to assess these strategies. This paper aims to describe and discuss probabilistic extensions of CBA to identify welfare-maximising flood risk management strategies under climate change. First, uncertainty about the changes in return periods of hydro-meteorological extremes is introduced by probability-weighted climate scenarios. Second, the analysis is extended by learning about climate change impacts. Learning occurs upon the probabilistic arrival of information. We distinguish between learning from scientific progress, from statistical evidence and from flood disasters. These probabilistic extensions can be used to analyse and compare the economic efficiency and flexibility of flood risk management strategies under climate change. We offer a critical discussion of the scope of such extensions and options for increasing flexibility. We find that uncertainty reduction from scientific progress may reduce initial investments, while other types of learning may increase initial investments. This requires analysing effects of different types of learning. We also find that probabilistic information about climate change impacts and learning is imprecise. We conclude that risk-based CBA with learning improves the flexibility of flood risk management strategies under climate change. However, CBA provides subjective estimates of expected outcomes and reflects different decision-maker preferences than those captured in robustness analyses. We therefore advocate robustness analysis in addition to, or combined with, cost-benefit analysis to support local investment decisions on flood risk reduction and global strategies on allocation of adaptation funds for flood risk management.

Measuring the Economic Value of Two Habitat Defragmentation Policy Scenarios for the Veluwe, the Netherlands

This paper offers an economic value assessment of a nature protection programme in the Veluwe. This programme involves two defragmentation scenarios: the first scenario connects the central part of the Veluwe with the IJssel river forelands in a north-eastern direction, while the second scenario is focused on defragmentation in a south-western direction, where the Rhine river forelands are located. The valuation is based on a questionnaire that was administered during face-to-face interviews in the Veluwe area and through the Internet. We employ a contingent valuation approach to assess the respondents’ willingness to pay for the realisation of the defragmentation scenarios. It appears that the mean willingness to pay for the two defragmentation scenarios are € 59.7 and € 162.2 per respondent. These two willingness-to-pay estimates, which refer to a lump sum payment (or ‘once-and-for-all payment’), are based on a lognormal and Weibull distribution respectively. In addition to the willingness to pay, we also estimate recreation benefits of the Veluwe. To that end, we use the travel cost technique, the purpose of which is to arrive at an estimate of the site’s consumer surplus. According to this technique, the yearly recreational benefits are estimated between € 0.06 and € 0.45 per visitor. Whereas the former estimate is based on the fuel costs only, the latter covers also insurance and maintenance costs, and capital depreciation. Finally, we performed an aggregation of individual WTP estimates over Dutch households. With the resulting aggregate estimates we are able to compare the total costs and benefits of the two scenarios for habitat fragmentation in the Veluwe. The result of such a simple comparison turns out to critically depend on whether the mean or median estimate is used for aggregation. If aggregation of individual WTP estimates is based on mean values, then the benefits far exceed the estimated costs of defragmentation. In other words, based on an integrated economic-ecological analysis it makes sense to execute the defragmentation measures described in the scenarios. However, aggregate estimates obtained by using median values result in higher costs than aggregate estimates that are based on mean values. Even stronger, median-based estimates show that the costs of implementing scenario 2 are higher than the total benefits of this scenario.

Cost-Effective Emission Abatement in Europe Considering Interrelations in Agriculture

Agriculture is an important source of ammonia (NH3), which contributes to acidification and eutrophication, as well as emissions of the greenhouse gases nitrous oxide (N2O) and methane (CH4). Controlling emissions of one of these pollutants through application of technical measures might have an impact (either beneficial or adverse) on emissions of the others. These side effects are usually ignored in policy making. This study analyses cost-effectiveness of measures to reduce acidification and eutrophication as well as agricultural emissions of N2O and CH4 in Europe, taking into account interrelations between abatement of NH3, N2O, and CH4 in agriculture. The model used is based on the RAINS (Regional Air pollution INformation and Simulation) model for air pollution in Europe, which includes emissions, abatement options, and atmospheric source-receptor relationships for pollutants contributing to acidification and eutrophication. We used an optimisation model that is largely based on the RAINS model but that also includes emissions of N2O and CH4 from agriculture and technical measures to reduce these emissions. For abatement options for agricultural emissions we estimated side effects on other emissions. The model determines abatement strategies to meet restrictions on emission and/or deposition levels at the least cost. Cost-effective strategies to reduce acidification and eutrophication in Europe were analysed. We found that NH3 abatement may cause an increase in N2O emissions. If total agricultural N2O and CH4 emissions in Europe were not allowed to increase, cost-effective allocation of emission reductions over countries in Europe changed considerably.