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