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Ecosystem Service Valuation

Natural areas and open space provide many benefits to society, including flood control, climate regulation, recreation opportunities, water storage and aquifer recharge, air quality, waste assimilation, and food and fiber provision.  These benefits, frequently referred to as 'ecosystem services' are often challenging to value as they are typically not associated with a market 'price'.  For example, the value of cleaner air or water is often substantial, but is not as readily measured by traditional economic measures.  To ensure that such benefits are appropriately considered, public and private resource managers are increasingly turning to ecosystem service valuation to identify the social and economic importance of natural systems.


Highland economists with backgrounds in the environmental sciences and economics have the requisite understanding of ecological and economic principles required for defensible ecosystem service evaluation.   We are experienced in diverse methods of ecosystem service valuation, and provide our clients with the information they need to make good resource management decisions.  


Highland economists have designed and implemented the following types of ecosystem service valuation studies, in locations throughout the United States:


  • Cost benefit analyses incorporating ecosystem service values


  • Prioritization of development options based on ecosystem service tradeoffs


  • Value of improved water quality  and quantity from forest restoration


  • Economic value of flood control by natural systems


  • Value of instream flows for water recreation, including fishing and boating


  • Value of open space and natural areas for recreation


  • Health and visibility benefits of air quality improvements


  • Value of carbon sequestration from maintaining or restoring ecosystems


  • Economic value and regional economic benefits of groundwater recharge



Example Ecosystem Service Valuation Projects


Comparing Total Economic Value under Three Land Use Strategies


Highland Economics estimated the total economic value of an ecologically important area in Santa Cruz County, CA under three land use scenarios with different levels of agricultural production and land conservation. In each scenario we estimated the economic value of agricultural production, water supply, water quality, carbon sequestration, recreation, and habitat conservation. To address the role of uncertainty in the analysis, we used @Risk software to conduct sensitivity analyses and run Monte Carlo simulations, which tested our assumptions and provided a range of likely values. Our analysis is being used to inform decision-making regarding the management of the study area.


The Ecological Value of Open Space and Riparian Habitats


In several projects for Sonoma County Agricultural Preservation and Open Space District, Highland Economics identified and quantified the economic benefits of maintaining open space and restoring ecologically important areas in Sonoma County, CA. Our research has focused on the ecological importance of these areas, the human uses and values that are dependent directly and indirectly on these areas, and the associated social and economic values provided by these areas.  Specifically, being careful to ground values in the local socioeconomic context and being careful to avoid double counting, we have described and quantified benefits related to water quality, water quantity, flood control, carbon sequestration, wildlife habitat/biodiversity, aesthetics, and recreation. To assess these benefits, we have used a range of methods, including replacement or substitute costs, avoided costs, and benefit transfer. Our work supports the Ag+Open Space District in communicating the value of conservation investments and also helps the District to prioritize use of its funds.

Payment for Ecosystem Services: Valuing and Paying for Agricultural Conservation Management Actions in Oregon

For the Oregon Agricultural Heritage Program, Highland Economics evaluated the feasibility of creating a statewide program to pay agricultural landowners for implementing conservation practices that provide ecosystem services. We conducted a comprehensive review of the available tools, methods, and Oregon-specific data sources that we could apply to both 1) quantify the environmental effects of conservation practices and 2) economically value the benefit to the public of these environmental effects. The Agricultural Heritage Commission praised our work for clearly and succinctly describing the available resources that could be used in designing and implementing such a program, and identifying the types of conservation practices and benefits that could be feasibly included in a payment for  program.  Our work described how available tools/methods/data sets could be used, outlined their strengths and limitations, and assessed the feasibility to measure and value the range of potential impacts of conservation practices across the state’s very different agricultural regions. As funding is made available, the next phase of the project will be for Highland Economics to develop the state-wide methodology, expected to be based in a GIS-information system, to value ecosystem services resulting from conservation activities on working agricultural lands across the state.

Wetland Creation
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