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FRAMEWORK AND GUIDING PRINCIPLES FOR THE POLICY RESPONSE
Box 2.3 provides examples of how economic information
can be applied at decision-making stage.
Box 2.4 illustrates the use of economic valuation at a
later stage, after damage has occurred, to guide legal
remedies and the award of compensation.
Box 2.3: Using valuation as part of a decision
support system
Indonesia: the Segah watershed (Berau District)
contains some of the largest tracts of undisturbed
lowland forest in East Kalimantan (150,000 hectares)
which provide the last substantial orang-utan habitat.
A 2002 valuation study concluded that water
from the Segah river and the nearby Kelay river had
an estimated value of more than US$ 5.5
million/year (e.g. regulation of water flow rates and
sediment loads to protect infrastructure and
irrigation systems). In response to these findings, the
Segah Watershed Management Committee was
established to protect the watershed.
Source: The Nature Conservancy 2007
Uganda: the Greater City of Kampala benefits from
services provided by the Nakivubo Swamp (catchment
area > 40 km²) which cleans water polluted
by industrial, urban and untreated sewage waste.
A valuation study looked at the cost of replacing
wetland wastewater processing services with artificial
technologies (i.e. upgraded sewage treatment
plant, construction of latrines to process sewage
from nearby slums). It concluded that the infrastructure
required to achieve a similar level of
wastewater treatment to that naturally provided by
the wetland would cost up to US$2 million/year c.f.
the costs of managing the natural wetland to
optimise its waste treatment potential and maintain
its ecological integrity (about US$ 235,000). on the
basis of this economic argument, plans to drain and
reclaim the wetland were reversed and Nakivubo
was legally designated as part of the city’s greenbelt
zone.
Sources: Emerton and Bos 2004;
UNDP-UNEP Poverty-Environment Facility 2008
Box 2.4: Economic valuation of damages
to enforce liability rules
The accident of the Exxon valdez tanker in 1989
triggered the application of Contingent valuation
Methods for studies conducted in order to establish
the magnitude of liability for the injuries occurred to
the natural resources, under the Comprehensive,
Environmental Response, Compensation and
Liability Act (CERCLA). A panel headed by Nobel
laureates K. Arrow and R. Solow appointed to advice
NoAA on the appropriateness of use of CvM
in nature resource damage assessments. In their
report the panel concluded that CvM studies can
produce estimates reliable enough to be the starting
point of a judicial process of damage assessment
including passive-use values. To apply CvM appropriately,
the panel drew up a list of guidelines for
contingent valuation studies. While some of the
guidelines have attracted some criticism, the
majority has been accepted widely.
Source: Navrud and Pruckner 1996
2.2.3 BROADER USES OF ECONOMIC
VALUES IN POLICY-MAKING
Successful biodiversity policies are often restricted to a
small number of countries, because they are unknown
or poorly understood beyond these countries. Economics
can highlight that there are policies that
already work well, deliver more benefits than costs
and are effective and efficient. The REDD scheme
(Reducing Emissions from Deforestation and Degradation),
introduced as a key climate policy instrument in
2007, has already stimulated broader interest in payment
for ecosystem services (PES) (see Chapter 5). Several
countries and organisations have collated case studies
on REDD design and implementation that can be useful
for other countries and applications (Parker et al. 2009).
other examples of approaches that could be used more
widely for biodiversity objectives include e.g. green
public procurement and instruments based on the
polluter-pays principle (see Chapter 7).
TEEB foR NATIoNAL AND INTERNATIoNAL PoLICy MAKERS - ChAPTER 2: PAGE 9