J.A. Bouma

Assessing the value of Earth Observation for managing coral reefs: An example from the Great Barrier Reef

The Integrated Global Observing Strategy (IGOS, 2003) argues that further investments in Earth Observation information are required to improve coral reef protection worldwide. The IGOS Strategy does not specify what levels of investments are needed nor does it quantify the benefits associated with better-protected reefs. Evaluating costs and benefits is important for determining optimal investment levels and for convincing policy-makers that investments are required indeed. Few studies have quantitatively assessed the economic benefits of Earth Observation information or evaluated the economic value of information for environmental management. This paper uses an expert elicitation approach based on Bayesian Decision Theory to estimate the possible contribution of global Earth Observation to the management of the Great Barrier Reef. The Great Barrier Reef including its lagoon is a World Heritage Area affected by anthropogenic changes in land-use as well as climate change resulting in increased flows of sediments, nutrients and carbon to the GBR lagoon. Since European settlement, nutrient and sediment loads having increased 5-10 times and the change in water quality is causing damages to the reef. Earth Observation information from ocean and coastal color satellite sensors can provide spatially and temporally dense information on sediment flows. We hypothesize that Earth Observation improves decision-making by enabling better-targeted run-off reduction measures and we assess the benefits (cost savings) of this improved targeting by optimizing run-off reductions under different states of the world. The analysis suggests that the benefits of Earth Observation can indeed be substantial, depending on the perceived accuracy of the information and on the prior beliefs of decision-makers. The results indicate that increasing informational accuracy is the most effective way for developers of Earth Observation information to increase the added value of Earth Observation for managing coral reefs.

Economic valuation methods for ecosystem services

Introduction Various valuation methods exist and have been applied to estimate the values of different ecosystem services. The methods reflect the extent to which the services provided by ecosystems touch on the welfare of society either as direct determinants of individuals’ well-being (e.g. as consumer goods) or via production processes (e.g. as intermediate goods). The aim of this chapter is to provide an overview of available valuation methods, to discuss their advantages and disadvantages, and to provide guidance on when to use which method. In doing so we do not aim to be comprehensive; extensive details of the underlying theory and on the actual practice of applying the valuation methods are provided in general texts, including Braden and Kolstad (1991), Freeman (2003), Bateman et al . (2002), Mitchell and Carson (1989), Champ et al . (2003), Bockstael and McConnell (2007), and Kanninen (2007). A number of economic valuation methods have been developed to estimate the value of changes in ecosystem services. An important distinction is between market-based and non-market-based valuation methods. Market-based valuation means that existing market behavior and market transactions are used as the basis for the valuation exercise. Economic values are derived from actual market prices for ecosystem services, both when they are used as inputs in production processes (production values) and when they provide direct outputs (consumption values). By observing how much of an ecosystem service is bought and sold at different prices, it is possible to infer directly how people value that good. Examples of market-based methods are the use of direct market prices, net factor income and production function methods, and the calculation of replacement costs, defensive expenditures, and avoided damage costs.

Policy mix: mess or merit?

ABSTRACT Many researchers and policy makers have called for optimal policy mixes to address major issues such as climate change and biodiversity conservation. This paper i) screens and reviews the wider academic literature to define the concept of policy mixes; ii) discusses the justifications for using a policymix and iii) explores the methodologies for evaluating them. In defining a policymix we distinguish between policy objective mixes and policy instrument mixes. Justifications for policy objective mixes generally lie in the domain of distributional concerns and other political issues, whereas justifications for policy instrument mixes are mostly related to specific market, governance or behavioural failures. We reflect on the different justifications and discuss their role in policy mix design and evaluation. We consider the challenges of policy mix evaluation and discuss the potential of experimental methods for policy evaluation and design. We conclude that the design and evaluation of policy mixes requires a mix of methods, since no single method can effectively assess the various welfare impacts of different policy instruments. In addition, we recommend that a policymix evaluation starts by disentangling the different policy objectives, means and instruments in order to be able to define, justify and assess the societal impact and cost-effectiveness of policy instrument design.

Informing water harvesting technology contract design using choice experiments

Introducing water harvesting technology is expected to be more effective and last longer if farm households are involved in their design. The main objective of this study is to inform policymakers in Ethiopia about the most important terms and conditions to incentivize farmers to enter into a contractual agreement to invest in water harvesting on their land. In order to test the influence of the way the specific contractual terms and conditions are communicated to farm households, many of whom are illiterate, a split sample approach is applied with and without visual aids for technical, institutional and economic contract characteristics. Both samples generate significantly different results, highlighting the importance of how information is conveyed to farm households. This pattern is confirmed when examining the self-reported importance attached to the various contract characteristics. Equality constrained latent class models show that contract characteristics for which visual aids were developed are considered more attentively, emphasizing the importance of adequate communication tools in a developing country context where literacy rates are limited to increase water technology innovation uptake and reduce farm household vulnerability to droughts.

Greening the charcoal chain in Tanzania

With a population of 34 million and an extremely high reliance on charcoal, Tanzania is a classic example of the social and environmental risks faced by many developing countries. About 85% of the total urban population uses charcoal for household cooking and energy provision for small and medium enterprises (Sawe 2004). In 1992 the total amount of charcoal consumed nationwide was estimated to be about 1.2 million tons (Sawe 2004). In 2002, the charcoal business generated revenues of more than 200 billion TShs (US

Crowdfunding public goods: An experiment

200 million), with more than 70 000 people from rural and urban areas employed in the industry (TaTEDO 2002b). Dar es Salaam, Tanzania’s largest city, accounts for more than 50% of all charcoal consumed in the country. The charcoal sector is far from sustainable. The forest resources that the industry is relying on are disappearing rapidly and the productivity of the sector has not seen any improvement either. The charcoal sector in Tanzania is operating economically, socially and environmentally in a suboptimal manner. However, solutions that safeguard the charcoal sector’s future are not straightforward.

Double dividends of additional water charges in South Africa

We assess the impact of different crowdfunding designs on the success of crowdfunded public goods using a lab-in-the-field experiment. Our design treatments aim to increase the efficiency of crowdfunding campaigns by raising aggregate contributions and decreasing possible coordination problems that may occur when potential donors are faced with a multitude of projects seeking contributions. Amongst others, we explore the potential of seed money and the impact of the attraction effect. Using a four-day time window we implement our crowdfunding experiment using a web-based user interface with multiple threshold public goods, similar in style to conventional crowdfunding websites. We find that such alternative crowdfunding designs affect efficiency via improving coordination, and not so much via affecting total contributions. These results are confirmed in a follow-up framed field experiment with actual nature conservation projects.

Trust and cooperation: Social capital and community resource management

The purpose of this chapter is to show how double dividends could be obtained from using market instruments to tax water use in a developing country. The double dividends are namely environmental (water conservation) on the one hand, and poverty reduction dividends on the other. We apply a water tax on selected industries in South Africa to reduce demand for water, and then transfer the revenue from this tax to the poor to achieve reduction in absolute levels of poverty. South Africa is classified as a semi-arid country. Precipitation has been fluctuating over the years with an average of 500 mm per annum, well below the world average of about 860 mm (DWAF 2002). The total flow of all the rivers in the country combined amounts to approximately 49 200 million m³ per year, while the National Water Resource Strategy estimated the total water requirement for the year 2000 at 13 280 million m3 per year, excluding environmental requirements. In addition, South Africa is poorly endowed in groundwater as most of the country is underlain by hard rock formations that do not contain any major groundwater aquifers (DWAF 2002). While currently only about 24% of rural people have access to water on site, additional sources of water supply are environmentally, financially and politically hard to develop. At the same time, unemployment in rural areas of South Africa is extremely high, which results in severe poverty conditions in these areas.