James Nelson Blignaut

Triple dividends of water consumption charges in South Africa

The South African government is exploring ways to address water scarcity problems by introducing a water resource management charge on the quantity of water used in sectors such as irrigated agriculture, mining, and forestry. It is expected that a more efficient water allocation, lower use, and a positive impact on poverty can be achieved. This paper reports on the validity of these claims by applying a computable general equilibrium model to analyze the triple dividend of water consumption charges in South Africa: reduced water use, more rapid economic growth, and a more equal income distribution. It is shown that an appropriate budget-neutral combination of water charges, particularly on irrigated agriculture and coal mining, and reduced indirect taxes, particularly on food, would yield triple dividends, that is, less water use, more growth, and less poverty.

Benefits of investing in ecosystem restoration

Measures aimed at conservation or restoration of ecosystems are often seen as net-cost projects by governments and businesses because they are based on incomplete and often faulty cost-benefit analyses. After screening over 200 studies, we examined the costs (94 studies) and benefits (225 studies) of ecosystem restoration projects that had sufficient reliable data in 9 different biomes ranging from coral reefs to tropical forests. Costs included capital investment and maintenance of the restoration project, and benefits were based on the monetary value of the total bundle of ecosystem services provided by the restored ecosystem. Assuming restoration is always imperfect and benefits attain only 75% of the maximum value of the reference systems over 20 years, we calculated the net present value at the social discount rates of 2% and 8%. We also conducted 2 threshold cum sensitivity analyses. Benefit-cost ratios ranged from about 0.05:1 (coral reefs and coastal systems, worst-case scenario) to as much as 35:1 (grasslands, best-case scenario). Our results provide only partial estimates of benefits at one point in time and reflect the lower limit of the welfare benefits of ecosystem restoration because both scarcity of and demand for ecosystem services is increasing and new benefits of natural ecosystems and biological diversity are being discovered. Nonetheless, when accounting for even the incomplete range of known benefits through the use of static estimates that fail to capture rising values, the majority of the restoration projects we analyzed provided net benefits and should be considered not only as profitable but also as high-yielding investments. Beneficios de Invertir en la Restauración de Ecosistemas.

Investing in Natural Capital and Economic Development: South Africa’s Drakensberg Mountains

We describe a proposed large-scale restoration and land use management project planned for a portion of the Drakensberg Mountains in South Africa. Some 250,000 ha of high-lying land in the Drakensberg range are a protected conservation area and also a World Heritage Site. Bordering this conservation enclave is another 250,000 ha of increasingly degraded land subject to a variety of competing land uses. Conflicting land use objectives could, in theory, be mitigated and reconciled by identifying and developing a market for the delivery of ecosystem services such as water use and quality, carbon sequestration, erosion and siltation reduction, combating desertification, and the promotion of biodiversity conservation. The project we describe here can serve as an example of how long-term investment in the restoration of natural capital (RNC) will benefit both developed and developing countries, with payment for ecosystem services as a key way to finance the restoration work. International investments in the Drakensberg project are being sought in emerging markets for carbon, water, and biodiversity credits—the so-called “umbrella ecosystem services.” Food, water, energy, and income security for local people, however, remain top priorities. We argue that this kind of RNC project is a way to simultaneously pursue the objectives of the global conventions on Biodiversity, Climate Change, and Desertification arising from the United Nations’ Rio Summit of 1992, and to help meet the United Nations’ Millennium Development Goals for alleviating poverty.

System dynamic modelling to assess economic viability and risk trade-offs for ecological restoration in South Africa

Can markets assist by providing support for ecological restoration, and if so, under what conditions? The first step in addressing this question is to develop a consistent methodology for economic evaluation of ecological restoration projects. A risk analysis process was followed in which a system dynamics model was constructed for eight diverse case study sites where ecological restoration is currently being pursued. Restoration costs vary across each of these sites, as do the benefits associated with restored ecosystem functioning. The system dynamics model simulates the ecological, hydrological and economic benefits of ecological restoration and informs a portfolio mapping exercise where payoffs are matched against the likelihood of success of a project, as well as a number of other factors (such as project costs and risk measures). This is the first known application that couples ecological restoration with system dynamics and portfolio mapping. The results suggest an approach that is able to move beyond traditional indicators of project success, since the effect of discounting is virtually eliminated. We conclude that systems dynamic modelling with portfolio mapping can guide decisions on when markets for restoration activities may be feasible.

Economics of climate change adaptation at the local scale under conditions of uncertainty and resource constraints: the case of Durban, South Africa

This paper describes the design and application of a benefit-cost model to the city of Durban’s (South Africa) climate change adaptation options. The approach addresses the inability to compile an accurate damage-cost function for economic prioritizations at the local level. It proposes that uncertainty over climate impacts and the efficacy of adaptation responses, in conjunction with the lack of economic data, high levels of economic informality and inequality make it difficult to link adaptation efforts to positive GDP impact in Durban. Instead, the research based its calculations of “benefits” on the number of people impacted and the extent of the welfare benefits imparted by the respective adaptation efforts. It also took into account the uncertainty over future events, capacity constraints, priorities of decision makers and the risk of maladaptation. The results were reported as benefit-cost ratios for 16 clusters of interventions (many of which were primarily the responsibility of one municipal department or agency) in each of four future scenarios (defined by minor or major climate change and weak or strong socio-institutional capacity). The paper presents and discusses the benefit-cost ratios and total benefits for each of the intervention clusters in each of the future scenarios. It emphasizes how these are influenced by choices of time frames. It also highlights how the most efficient interventions across all futures and time frames tend to be socio-institutional – for instance the creation of a cross-sectoral disaster management forum, sea level rise preparedness and early warning system, and creating climate change adaptation capacity within the water services unit. Ecosystem-based adaptation measures had moderate benefit-cost ratios, probably because in Durban the land that needs to be purchased for this is relatively expensive. Infrastructure-based clusters generally had the lowest benefit-cost ratios.

The road to sustainability must bridge three great divides.

The worlds large and rapidly growing human population is exhausting Earths natural capital at ever‐faster rates, and yet appears mostly oblivious to the fact that these resources are limited. This is dangerous for our well‐being and perhaps for our survival, as documented by numerous studies over many years. Why are we not moving instead toward sustainable levels of use? We argue here that this disconnection between our knowledge and our actions is largely caused by three “great divides”: an ideological divide between economists and ecologists; an economic development divide between the rich and the poor; and an information divide, which obstructs communications between scientists, public opinion, and policy makers. These divides prevent our economies from responding effectively to urgent signals of environmental and ecological stress. The restoration of natural capital (RNC) can be an important strategy in bridging all of these divides. RNC projects and programs make explicit the multiple and mutually reinforcing linkages between environmental and economic well‐being, while opening up a promising policy road in the search for a sustainable and desirable future for global society. The bridge‐building capacity of RNC derives from its double focus: on the ecological restoration of degraded, overexploited natural ecosystems, and on the full socio‐economic and ecological interface between people and their environments.

Assessment of the performance and sustainability of mining sub-soil assets for economic development in South Africa

Abstract A natural resource accounting approach was applied in this study to evaluate the performance and sustainability of mining practices and strategies in South Africa (SA). The study showed that except for a brief period during the 1980s, rent capture was very low and almost all the resource rent from minerals dissipated to private companies. Recently, however, user costs have appeared to have been reasonably recovered by taxes and institutional royalties and the capital component of the rent (user cost) has fully been reinvested by mining companies. While adequate reinvestment of recovered user costs in alternative forms of capital might imply sustainable management, this can only hold under the assumptions of perfect substitution between human-made and natural capital of the weak sustainability (WS) paradigm. However, even if one adopts WS, the present analysis could not provide adequate evidence in support of the prudence of mining activities in the country. This is due to a lack of adequate information on the proportions of royalties and taxes reinvested collected by the government and private landowners. Moreover, the fact that this study does not account for the environmental impacts of mining is another important limitation on the ability of the present analysis to conclude that mineral resources have been prudently exploited in SA.

The economics of restoration: looking back and leaping forward

Since the publication of the Millennium Ecosystem Assessment in 2005 there has been a surge of interest in ecological restoration (ER) to recover biodiversity, re‐establish ecosystem functioning and connectivity, and reactivate the delivery of ecosystem services. In policy spheres, there have also been repeated calls for expansion of restoration efforts. In many countries, new legislation now requires some form of restoration and/or a form of offset investment. All of this will require major increases in financial allocations toward restoration science, technology, and implementation, and much more detailed valuation techniques. The economics of restoration is a new field emerging to support these needs. Our paper here starts with an analysis of the articles and reviews published on this broad subject from 1928 to 2012, as captured in the Scopus academic search platform. Our goal is to present and summarize what has been said and done in this area to date. Next, we map out one possible way forward, illustrated by examples and based on a coherent bundle of decision parameters related to the economics of ER and, more broadly, to the restoration of natural capital. The restoration of natural capital is defined as activities that integrate investment in, and replenishment of, natural capital stocks to improve the flows of ecosystem goods and services, and the preservation of biodiversity, while enhancing all aspects of human well‐being. We give special attention to system dynamic approaches and other promising tools and techniques.

Conceptual frameworks and references for landscape-scale restoration : reflecting back and looking forward

Abstract We review some of the most commonly known models in restoration ecology from the past 20 years. From these, we seek to identify essential elements required for the scaling-up and mainstreaming of restoration and, based on that, develop a new framework that could be used to assist in the realization of long-lasting and effective restoration policies and programs at the landscape and larger spatial scales. We argue that the reference model is particularly important at a time when there are urgent calls and investments for scaling-up restoration to the landscape scale. At that scale, we argue, it is essential to consider both ecological restoration and ecological rehabilitation as just two of the various components in a “family” of restorative activities that must be deployed, including changed management practices for agriculture, to make ongoing human activities and land uses more ecologically sound and sustainable. In conclusion, we present a new model that could help orient if not actually design planning, monitoring and evaluation, scaling-up, and applying restorative activities in new areas.

Conceiving the Science, Business, and Practice of Restoring Natural Capital

natural capital is still very much the “new kid on the block” when one considers either ecological restoration or ecological economics. In essence, the term refers to the need for augmenting our natural resource stock if we wish to maintain or, ideally, increase flows of ecosystem goods and services to support an ever-growing global population. Capital augmentation as a strategy towards welfare enhancement is not new either. John Hicks (1946) referred to it for the first time shortly after World War II, although he only focused on manufactured capital. In brief, Hicks noted that if you do not keep your capital stock intact, you seem to desire to be worse off in the future than you are now! The principle that now bears his name can be applied equally well to natural capital. Restoration of natural capital differs from, yet complements, conservation, which, although essential for preserving the current stock of natural capital, does not take sufficient consideration of human livelihoods, sustainable economic development, and the delicate relationship between man and nature. The Millennium Ecosystem Assessment (2005) has underscored this fact in no uncertain terms. Two of the four main conclusions from the assessment read as follows: Over the past 50 years, humans have changed ecosystems more rapidly and extensively than in any comparable period of time in human history, largely to meet rapidly growing demands for food, fresh water, timber, fiber and fuel. This has resulted in a substantial and largely irreversible loss in the diversity of life on Earth. The changes that have been made to ecosystems have contributed to substantial net gains in human wellbeing and economic development, but these gains have been achieved at growing costs in the form of the degradation of many ecosystem services, increased risks of nonlinear changes, and the exacerbation of poverty for some groups of people. These problems, unless addressed, will substantially diminish the benefits that future generations obtain from ecosystems.