Stavros Georgiou

Valuing nature: lessons learned and future research directions

This paper critically reviews the literature on environmental valuation of ecosystem services across the range of global biomes. The main objective of this review is to assess the policy relevance of the information encompassed by the wide range of valuation studies that have been undertaken so far. Published and other studies now cover most ecosystems, with aquatic and marine contexts attracting the least attention. There is also a predominance of single function valuation studies. Studies valuing multiple functions and uses, and studies which seek to capture the ‘before and after’ states as environmental changes take place, are rare. By and large it is the latter types of analyses that are most important as aids to more rational decision taking in ecosystem conservation versus development situations involving different stakeholders (local, national and global). Aggregate (global scale) estimates of ecosystems value are problematic, given the fact that only ‘marginal’ values are consistent with conventional decision-aiding tools such as economic cost–benefit analysis. In general, valuation data provide prima facie support for the hypothesis that net ecosystem service value diminishes with biodiversity and ecosystem loss [Balmford et al. (2002), Science 297, p. 950]. Future research effort should include complementary research on multiple ecosystem services that seeks to capture the temporal disturbance profile and its causal factors. The explicit recognition of multiple, interdependent ecosystem services and values, poses both conceptual and empirical research challenges. It would serve to transform the practice of research in this sub-field via the a priori assumption of multiple (and inter-dependent) use, instead of independent single use. This line of reasoning can then be extended to the institutional arrangements that determine which values are captured. New institutional processes and arrangements are probably required in order to best realise benefit streams from multiple ecosystem use and non-use provision, across a range of different stakeholders.

On visible choice sets and scope sensitivity

Abstract In this paper we argue that the burgeoning empirical debate over scope sensitivity within contingent valuation studies is fundamentally incomplete in that it has neglected a systematic examination of certain effects of study design upon observed scope sensitivity. In particular we highlight the fact that in certain study designs the choice set initially offered (or “visible”) to respondents is changed in a stepwise manner as they progress through a valuation exercise, while other designs involve advance disclosure regarding the full extent of the final visible choice set prior to any choices or values being elicited. The issue of changes in the visible choice set is alluded to by Smith (J. Environ. Econom. Manage. 22(1) 71), who identifies this as a primary challenge to Kahneman and Knetschs (J. Environ. Econom. Manage. 22(1) 57), well-known experimental results. Kahneman and Knetsch contend that it seems “highly implausible that this minor procedural change would significantly alter results” (p. 61), but do not test this assertion. We present experimental and field tests of the impact upon contingent values of varying the visible choice set through stepwise and advance disclosure. These dimensions of design are interacted with changes in the order in which nested goods are presented (bottom-up versus top-down). When a stepwise disclosure procedure is adopted, the observed scope sensitivity is substantially and significantly affected by the order in which goods are presented but such procedural variance is not observed within advance disclosure designs. Conjectures regarding the origin and implications of such findings are presented.

Managing nutrient fluxes and pollution in the Baltic: an interdisciplinary simulation study

Abstract This interdisciplinary paper reports the results of a study into the costs and benefits of eutrophication reduction in the Baltic Sea. A large multidisciplinary team of natural and social scientists estimated nutrient loadings and pathways within the entire Baltic drainage basin, together with the costs of a range of abatement options and strategies. The abatement cost results were compared with clean-up benefits on a basin-wide scale, in order to explore the potential for international agreements among the countries which border the Baltic. Most countries would seem to gain net economic benefits from the simulated 50% nitrogen and phosphorus reduction policy.

INTEGRATING STAKEHOLDER ANALYSIS IN NON-MARKET VALUATION OF ENVIRONMENTAL ASSETS

Abstract This study employs a mixed methodological approach, using questionnaire surveys of individuals and stakeholder focus groups to investigate economic values placed on a wetland surrounding Kalloni Bay on the island of Lesvos, Greece. The questionnaire survey of local people and visitors to the area included a rating exercise of four possible development scenarios, and each individual was then asked their willingness to participate in payment for their chosen scenario, and if they were willing to participate, they were then asked a willingness to pay question. Participants were also asked a series of attitudinal questions concerning the local environment and issues relevant to the area. This information was then combined with qualitative information derived from the focus groups, which elicited opinions from important local stakeholders, such as fishermen, elected representatives, constructors and hotel owners about their priorities for both conservation and development. By combining these methodologies, information and conclusions of greater relevance to policy makers can be obtained than using either methodology in isolation.

Economic valuation of policies for managing acidity in remote mountain lakes: examining validity through scope sensitivity testing

Abstract.The paper introduces the reader to the contingent valuation method for monetary valuation of individuals’ preferences regarding changes to environmental goods. Approaches to the validity testing of results from such studies are discussed. These focus upon whether findings conform with economic-theoretic expectations, in particular regarding whether valuations are sensitive to the size (or ‘scope’) of environmental change being considered, and whether they are invariant to alterations in study design which are irrelevant from the perspective of economic theory. We apply such tests to a large sample study of schemes to alter the acidity levels of remote mountain lakes. Results suggest that, when presented with environmental changes which respondents are concerned about, their values exhibit scope sensitivity and conform to theoretical expectations, and therefore could be used for formulating policy. However, when presented with changes which respondents feel are trivial, their values fail tests of theoretical consistency and are not scope sensitive, and therefore cannot be used within economic appraisals. Interestingly we find that qualitative focus group analyses are good indicators of whether a given change is likely to be considered trivial or not and therefore whether scope sensitivity tests are likely to be satisfied.

Towards an integrated environmental assessment for wetland and catchment management

This paper develops a decision support system for evaluation of wetland ecosystem management strategy and examines its, so far partial, application in a case study of an important complex coastal wetland known as the Norfolk and Suffolk Broads, in the east of England, UK. Most managed ecosystems are complex and often poorly understood hierarchically organized systems. Capturing the range of relevant impacts on natural and human systems under different management options will be a formidable challenge. Biodiversity has a hierarchical structure which ranges from the ecosystem and landscape level, through the community level and down to the population and genetic level. There is a need to develop methodologies for the practicable detection of ecosystem change, as well as the evaluation of different ecological functions. What is also required is a set of indicators (environmental, social and economic) which facilitate the detection of change in ecosystems suffering stress and shock and highlight possible drivers of the change process. A hierarchical classification of ecological indicators of sustainability would need to take into account existing interactions between different organization levels, from species to ecosystems. Effects of environmental stress are expressed in different ways at different levels of biological organization and effects at one level can be expected to impact other levels, often in unpredictable ways. The management strategy, evaluation methodologies and indicators adopted should also assess on sustainability grounds whether any given management option is supporting, or reducing, the diversity of functions which are providing stakeholders with the welfare benefits they require.

PROCEDURAL INVARIANCE TESTING OF THE ONE-AND-ONE- HALF-BOUND DICHOTOMOUS CHOICE ELICITATION METHOD

The contingent valuation method for estimating willingness to pay for public goods typically adopts a single referendum question format, which is relatively statistically inefficient. As an alternative, Cooper, Hanemann, and Signorello (2002) propose the one-and-one-half bound (OOHB) format, allowing researchers to question respondents about both a lower and higher limit on project costs, thereby securing substantial gains in statistical efficiency. Using an experimental design, we find that responses to OOHB valuation questions fail crucial tests of procedural invariance. We test various competing models of observed response patterns including strategic misrepresentation of standard preferences and nonstandard models of preference formation.

Coastal bathing water health risks: developing means of assessing the adequacy of proposals to amend the 1976 EC directive

Everyone likes clean seawater to bathe in and standards for acceptable seawater quality are set by the European Commission (CEC, 1976). In 1994, proposals to revise these standards were announced. These proposals were the subject of a House of Lords Select Committee Inquiry (HMSO, 1994, 1995), which deplored the fact that a soundly based cost–benefit analysis of the proposed revision had not been produced. This paper considers the question of developing means to assess the adequacy of the proposed revision from a social/public perception standpoint, using a mixed methodology of quantitative survey and qualitative focus groups. The aim of using such an approach is to provide a more in-depth and informative input into the decision-making process for policy makers. Our results show that mean willingness-to-pay amounts, representing the economic benefits of the revision to the 1976 EC bathing water standard, are roughly of the same order of magnitude as the estimated potential cost increases in average annual household water bills necessary to implement the revision. This result is qualified by analysis of how preferences are constructed in terms of socioeconomic variables, perceptions and attitudes towards risk, and issues such as trust, blame and accountability of institutions and regulatory processes involved in setting standards for bathing water quality.

Valuing Coastal Systems

Integrated coastal zone management involves an assessment of development needs and economic inequality, pressures from population growth and mass tourism as well as social and cultural conflicts. In this context, economic valuation of coastal functions that provide goods and services is an important tool. Its applications and caveats are reviewed. Published value estimates range widely (i.e. 0.05–200,000 US

The Socioeconomic Consequences of Climate Change for the Management of Water Resources

ha−1 y−1) depending on function valued, method used and local welfare (f.x. expressed as GDP). An argument is made that, despite this variation and despite imperfect knowledge of ecosystem complexity, societal preferences or the ’real value’ of nature, decisions on coastal development will be made and thus be helped best by the rational provision of scientific knowledge, from both natural sciences and socio-economics. A mixed methodological approach is therefore suggested to be most useful in practical, and multidisciplinary, situations. Three cases are presented of European valuation exercises at different spatial scales on the coast.