Joshua Farley

Modeling the dynamics of the integrated earth system and the value of global ecosystem services using the GUMBO model

A global unified metamodel of the biosphere (GUMBO) was developed to simulate the integrated earth system and assess the dynamics and values of ecosystem services. It is a ‘metamodel’ in that it represents a synthesis and a simplification of several existing dynamic global models in both the natural and social sciences at an intermediate level of complexity. The current version of the model contains 234 state variables, 930 variables total, and 1715 parameters. GUMBO is the first global model to include the dynamic feedbacks among human technology, economic production and welfare, and ecosystem goods and services within the dynamic earth system. GUMBO includes modules to simulate carbon, water, and nutrient fluxes through the Atmosphere, Lithosphere, Hydrosphere ,a ndBiosphere of the global system. Social and economic dynamics are simulated within the Anthroposphere. GUMBO links these five spheres across eleven biomes, which together encompass the entire surface of the planet. The dynamics of eleven major ecosystem goods and services for each of the biomes are simulated and evaluated. Historical calibrations from 1900 to 2000 for 14 key variables for which quantitative time-series data was available produced an average R 2 of 0.922. A range of future scenarios representing different assumptions about future technological change, investment strategies and other factors have been simulated. The relative value of ecosystem services in terms of their contribution to supporting both conventional economic production and human well-being more broadly defined were estimated under each scenario, and preliminary conclusions drawn. The value of global ecosystem services was estimated to be about 4.5 times the value of Gross World Product (GWP) in the year 2000 using this approach. The model can be downloaded and run on the average PC to allow users to explore for themselves the complex dynamics of the system and the full range of policy assumptions and scenarios.

Overcoming systemic roadblocks to sustainability: the evolutionary redesign of worldviews, institutions, and technologies.

A high and sustainable quality of life is a central goal for humanity. Our current socio-ecological regime and its set of interconnected worldviews, institutions, and technologies all support the goal of unlimited growth of material production and consumption as a proxy for quality of life. However, abundant evidence shows that, beyond a certain threshold, further material growth no longer significantly contributes to improvement in quality of life. Not only does further material growth not meet humanitys central goal, there is mounting evidence that it creates significant roadblocks to sustainability through increasing resource constraints (i.e., peak oil, water limitations) and sink constraints (i.e., climate disruption). Overcoming these roadblocks and creating a sustainable and desirable future will require an integrated, systems level redesign of our socio-ecological regime focused explicitly and directly on the goal of sustainable quality of life rather than the proxy of unlimited material growth. This transition, like all cultural transitions, will occur through an evolutionary process, but one that we, to a certain extent, can control and direct. We suggest an integrated set of worldviews, institutions, and technologies to stimulate and seed this evolutionary redesign of the current socio-ecological regime to achieve global sustainability.

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.

The Role of Prices in Conserving Critical Natural Capital

Until recent decades, economic decision makers have largely ignored the nonmarket benefits provided by nature, resulting in unprecedented threats to ecological life-support functions. The economic challenge today is to decide how much ecosystem structure can be converted to economic production and how much must be conserved to provide essential ecosystem services. Many economists and a growing number of life scientists hope to address this challenge by estimating the marginal value of environmental benefits and then using this information to make economic decisions. I assessed this approach first by examining the role and effectiveness of the price mechanism in a well-functioning market economy, second by identifying the issues that prevent markets from pricing many ecological benefits, and third by focusing on problems inherent to valuing services generated by complex and poorly understood ecosystems subject to irreversible change. I then focus on critical natural capital (CNC), which generates benefits that are essential to human welfare and have few if any substitutes. When imminent ecological thresholds threaten CNC, conservation is essential and marginal valuation becomes inappropriate. Once conservation needs have been met, remaining ecosystem structure is potentially available for economic production. Demand for this available supply will determine prices. In other words, conservation needs should be price determining, not price determined. Conservation science must help identify CNC and the quantity and quality of ecosystem structure required to ensure its sustained provision.

Building a Sustainable and Desirable Economy-in-Society-in-Nature

In this chapter we describe what an “ecological economy” could look like and how we could get there. We believe that this future can provide full employment and a high quality of life for everyone into the indefinite future while staying within the safe environmental operating space for humanity on earth. Developed countries have a special responsibility for achieving those goals. To get there, we need to stabilize population; more equitably share resources, income, and work; invest in the natural and social capital commons; reform the financial system to better reflect real assets and liabilities; create better measures of progress; reform tax systems to tax “bads” rather than goods; promote technological innovations that support well-being rather than growth; establish “strong democracy,” and create a culture of well-being rather than consumption. In other words, a complete makeover. Several lines of evidence show that these policies are mutually supportive and the resulting system is feasible. The substantial challenge is making the transition to this better world in a peaceful and positive way. There is no way to predict the exact path this transition might take, but we hope that painting this picture of a possible end-point and some milestones along the way will help make this choice and this journey a more viable option.

Envisioning shared goals for humanity: a detailed, shared vision of a sustainable and desirable USA in 2100

Economics has been defined as the science of allocation of scarce resources towards alternative ends. This definition implies that the first step in economic analysis is to determine what ends are desirable for society. Most sectors of the society would agree that sustainability is a desirable end, but there is little agreement as to what a sustainable future would look like. The University of Maryland Institute for Ecological Economics sponsored a democratic future search process designed to create a relatively detailed, shared vision of a sustainable and desirable USA in the year 2100. This paper presents the vision developed at that conference, examines the resources required to achieve the vision, and assesses the suitability of market mechanisms for allocating the required resources towards the desired ends. We find that markets are not efficient mechanisms for allocation in this case, and propose the institutions of a ‘strong democracy’ as a promising alternative. # 2002 Elsevier Science B.V. All rights reserved.

Conservation Through the Economics Lens

Although conservation is an inherently transdisciplinary issue, there is much to be gained from examining the problem through an economics lens. Three benefits of such an approach are laid out in this paper. First, many of the drivers of environmental degradation are economic in origin, and the better we understand them, the better we can conserve ecosystems by reducing degradation. Second, economics offers us a when-to-stop rule, which is equivalent to a when-to-conserve rule. All economic production is based on the transformation of raw materials provided by nature. As the economic system grows in physical size, it necessarily displaces and degrades ecosystems. The marginal benefits of economic growth are diminishing, and the marginal costs of ecological degradation are increasing. Conceptually, we should stop economic growth and focus on conservation when the two are equal. Third, economics can help us understand how to efficiently and justly allocate resources toward conservation, and this paper lays out some basic principles for doing so. Unfortunately, the field of economics is dominated by neoclassical economics, which builds an analytical framework based on questionable assumptions and takes an excessively disciplinary and formalistic approach. Conservation is a complex problem, and analysis from individual disciplinary lenses can make important contributions to conservation only when the resulting insights are synthesized into a coherent vision of the whole. Fortunately, there are a number of emerging transdisciplines, such as ecological economics and environmental management, that are dedicated to this task.

Conserving Mangrove Ecosystems in the Philippines: Transcending Disciplinary and Institutional Borders

Humans are rapidly depleting critical ecosystems and the life support functions they provide, increasing the urgency of developing effective conservation tools. Using a case study of the conversion of mangrove ecosystems to shrimp aquaculture, this article describes an effort to develop a transdisciplinary, transinstitutional approach to conservation that simultaneously trains future generations of environmental problem solvers. We worked in close collaboration with academics, non-government organizations, local government and local communities to organize a workshop in Puerto Princesa, Palawan, Philippines. The primary objectives of the workshop were to: (1) train participants in the basic principles of ecological economics and its goals of sustainable scale, just distribution and efficient allocation; (2) learn from local community stakeholders and participating scientists about the problems surrounding conversion of mangrove ecosystems to shrimp aquaculture; (3) draw on the skills and knowledge of all participants to develop potential solutions to the problem; and (4) communicate results to those with the power and authority to act on them. We found that the economic and ecological benefits of intact mangroves outweigh the returns to aquaculture. Perversely, however, private property rights to mangrove ecosystems favor inefficient, unjust and unsustainable allocation of the resource—a tragedy of the non-commons. We presented the workshop results to the press and local government, which shut down the aquaculture ponds to conserve the threatened ecosystem. Effective communication to appropriate audiences was essential for transforming research into action. Our approach is promising and can be readily applied to conservation research and advocacy projects worldwide, but should be improved through adaptive management—practitioners must continually build on those elements that work and discard or improve those that fail.

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.

A decision model for financial assurance instruments in the upstream petroleum sector

The main objective of this paper is to deepen the discussion regarding the application of financial assurance instruments, bonds, in the upstream oil sector. This paper will also attempt to explain the current choice of instruments within the sector. The concepts of environmental damages and internalization of environmental and regulatory costs will be briefly explored. Bonding mechanisms are presently being adopted by several governments with the objective of guaranteeing the availability of funds for end-of-leasing operations. Regulators are mainly concerned with the prospect of inheriting liabilities from lessees. Several forms of bonding instruments currently available were identified and a new instrument classification was proposed. Ten commonly used instruments were selected and analyzed under the perspective of both regulators and industry (surety, paid-in and periodic-payment collateral accounts, letters of credit, self-guarantees, investment grade securities, real estate collaterals, insurance policies, pools, and special funds). A multiattribute value function model was then proposed to examine current instrument preferences. Preliminary simulations confirm the current scenario where regulators are likely to require surety bonds, letters of credit, and periodic payment collateral account tools.