It doesn’t take a credit card ad for most people to answer, “Priceless.” And, in one sense, this is true. Who could imagine Rhode Island Rhode Island and Block Island — are truly essential to our sense of place in the Ocean State
Yet, daily, in small and large ways, individually and collectively, we make decisions that affect the health and sustainability of the things we value about our rivers, lakes, bays, coastal ponds and ocean. These decisions often have financial outcomes that can be easily measured and evaluated. But they also affect the less tangible, yet no less valuable, aspects of our coastline and waters that matter to people, such as clean water, a thriving fishery, healthy biological communities, views and recreational opportunities. These vital benefits that are freely provided to people by nature are sometimes referred to as “ecosystem services.”
We all would like to see the things we value about our waters sustained. But, at the same time, we want many other things, including jobs, roads and other transportation, electrical power, agriculture, green lawns and places to live. Sometimes our values and wants come into conflict. Then, whether consciously or not, we make tradeoffs.
For example, hardening the shoreline to prevent erosion can disturb nearby habitat or make it impossible for wetlands to migrate inland as sea levels rise. Increasing roads, driveways, roofs and other impervious surfaces diminish the land’s capacity to absorb stormwater, resulting in greater runoff of nutrients and pollutants to our waterways.
Commercial and industrial uses provide jobs but can adversely affect water quality and aesthetics. Competing uses of waterways, such as aquaculture, recreational and commercial fishing, boating, marine transportation or energy generation, can increase some benefits while precluding or diminishing others.
On the positive side, restoring habitat, protecting open space, installing wastewater controls or advanced septic systems and using “green infrastructure” to absorb stormwater are improving water quality, wildlife habitat and aesthetics.
Difficult balancing act
How do we balance these competing interests and benefits to provide the greatest advantage to the most people, while ensuring fairness and equity across groups of people and, at the same time, protecting natural systems from irreversible harm? One way is to consider the values of the benefits and costs of different options when making decisions.
How do we balance these competing interests and benefits to provide the greatest advantage to the most people, while ensuring fairness and equity across groups of people and, at the same time, protecting natural systems from irreversible harm? One way is to consider the values of the benefits and costs of different options when making decisions.
We do this implicitly every time we choose one thing over another. Economic tools are designed to make the outcomes of such choices more explicit, by putting the financial benefits and costs on equal footing with the less tangible social benefits and costs of decisions that affect nature. Of course, there may be things that are non-negotiable, where we, as a society, impose deliberate constraints that preclude using a strict benefit-cost framework.
Laws such as the Endangered Species Act recognize this by removing some choices from the table, making it mandatory to protect threatened and endangered species and their habitats. Issues of social and environmental justice may be similarly addressed. And, extreme uncertainty about future outcomes may also warrant limitations on choices, using safe minimum standards or the precautionary principle.
Beyond those constraints, however, we indicate by our everyday actions that we’re willing to forego some benefits in exchange for others. The ecosystem services provided by Narragansett Bay and our coastal waters include some that result in mostly private financial benefits like fish and shellfish, aquaculture sites, channels used for marine transportation and others that provide mostly public and un-priced benefits, such as water filtration, and habitat and storm protection services of wetlands; aesthetic and cultural services, including views and places of historic or other cultural significance; and many types of recreational services, including swimming and surfing, boating, wildlife viewing, fishing and hunting.
All of these rely on the functioning of the underlying ecosystems, which may be compromised or supported by human actions. While most people understand the importance of Narragansett Bay and Rhode Island
Setting a price
You may wonder how it’s possible to measure the non-financial, public benefits of nature. Natural resource and environmental economists have developed ways to value in dollars, or using value indicators, the un-priced benefits of nature, so that these benefits can be compared to the values of alternative uses. So-called “non-market valuation” methods have been widely used since the 1960s, although they are not always easy to carry out. They are based on the observation that people value nature’s services, even though they do not always directly pay for them. Economic values for nature’s services thus attempt to measure ecosystems’ contributions to society in terms of their value above and beyond the cost of access or use.
You may wonder how it’s possible to measure the non-financial, public benefits of nature. Natural resource and environmental economists have developed ways to value in dollars, or using value indicators, the un-priced benefits of nature, so that these benefits can be compared to the values of alternative uses. So-called “non-market valuation” methods have been widely used since the 1960s, although they are not always easy to carry out. They are based on the observation that people value nature’s services, even though they do not always directly pay for them. Economic values for nature’s services thus attempt to measure ecosystems’ contributions to society in terms of their value above and beyond the cost of access or use.
Economic non-market valuation tools include a variety of methods. Some directly ask people about their values for nature’s free goods and services or indirectly measure values by asking people about choices they would make among different outcomes; others observe people’s behavior, such as how far someone travels to a recreational site or how much more people spend on homes with water access or views, to infer values for recreation, views and other things. Occasionally, it is appropriate to measure benefits in terms of the costs of technological substitutes, such as using the cost of water purification systems to value the natural purification provided by wetlands.
While Narragansett Bay is one of the most studied estuaries in the country, a limited number of economic valuation studies have been conducted in recent years. I include here some examples of studies of Narragansett Bay values, and values from similar estuaries, which can provide a sense of the economic importance — both financial and non-financial — of the bay and other Ocean State
A 2007 Rhode Island Economic Policy Council report estimated the financial benefits of the state’s water cluster — water dependent and water-related businesses. It found that these businesses provided about 37,000 jobs and $1.8 billion in wages. But jobs tell only one part of the story. Other important benefits include recreation, property values and the value of intact habitats.
Researchers at the National Oceanic and Atmospheric Administration (NOAA) estimated that in 2001 about 2.6 million people participated in coastal recreation in Rhode Island, leading the state to be ranked 15th in the United States for number of coastal recreation participants.
In 2005, Linwood Pendleton, director of the Coastal Ocean Values Center at The Ocean Foundation, estimated the following coastal recreational values for Rhode Island: beach-going was valued at $94 to $379 million per year; recreational fishing was valued at $76 to $511 million per year; and marine-related wildlife viewing was valued at $202 million to $2 billion per year (converted to 2007 dollars for comparison to wage figures).
Professor Joan Poor and colleagues, in 2007, found that, in the St. Mary’s River watershed in Maryland, a one-unit (mg/L) increase in dissolved inorganic nitrogen, a contributor to eutrophication, decreased the price of the average home in the watershed by close to 9 percent, or $17,642.
In Long Island’s Peconic Estuary, in a survey I conducted with colleagues from URI in 1995, residents of the East End indicated that they were willing to pay $95,000 to $136,000 per acre to restore eelgrass; $78,000 to $116,000 per acre to restore wetlands; and $44,000 to $64,000 per acre to restore safe shellfishing areas (in values converted to 2007 dollars).
A related study found that homes in Southold, Long Island , adjacent to open space were worth almost 13 percent more than comparable homes not adjacent to open space.
In the Narragansett Bay region, researchers have estimated values for fish saved from impingement and entrainment by construction of two cooling towers to replace the once-through cooling water system at the Brayton Point power plant in Somerset , Mass.
Scientists estimated that, prior to installing the two cooling towers, trillions of organisms — fish eggs, larvae, juveniles and adults — were killed each year in Mount Hope Bay Mount Hope Bay
Financial vs. non-financial outcomes
Evaluating benefits in dollars allows comparison of both financial and non-financial outcomes of choices in a common metric. But, often it is difficult or infeasible to measure dollar values to support a decision. In such cases, the economic framework of tradeoff analysis can be used with value indicators that include all of the important factors related to non-financial benefits, and ensure that all aspects and outcomes of a choice are considered in deliberations.
Evaluating benefits in dollars allows comparison of both financial and non-financial outcomes of choices in a common metric. But, often it is difficult or infeasible to measure dollar values to support a decision. In such cases, the economic framework of tradeoff analysis can be used with value indicators that include all of the important factors related to non-financial benefits, and ensure that all aspects and outcomes of a choice are considered in deliberations.
In general, economic valuation of nature’s benefits is an attempt to balance public and private interests. It brings to the table a set of tools that, at a minimum, can inform discussion and debate over how best to manage people’s interactions with nature.
Economic valuation of ecosystem services can’t be carried out without first evaluating how human actions affect the things people care about in the ecosystem. Social and natural scientists need to collaborate to understand and evaluate the ecological outcomes that are important to people, and how changes in human behavior will change those outcomes. We’re fortunate to have some of the best marine and estuarine scientists in the world studying and recommending actions to protect Narragansett Bay and our other coastal waters. This scientific knowledge is essential to understanding what it takes to sustain the things we value.
But understanding ecological relationships is not enough. Natural scientists must be able to predict how human actions will affect the outcomes that people value, using metrics that people can understand and relate to, before economists can estimate how values change as a result of choices.
The multidisciplinary work required to support the best possible decisions is increasingly being conducted in government agencies, non-government organizations and universities. This work is receiving attention at the national and international levels, including a recent article in The New York Times — “An Economist for Nature Calculates the Need for More Protection” (Aug. 8) — that describes ongoing work to quantify the value of ecosystem services and apply those values to policies and decisions worldwide.
The Environmental Protection Agency’s Office of Research and Development is currently conducting such research throughout the United States
Examples of ongoing projects that I’m involved with, along with EPA ecologists, include a study that relates nitrogen loading to eelgrass extent in Rhode Island, Massachusetts and Connecticut, and eelgrass extent to recreational fishing success and values; and a project to develop a value indicator approach that can help funding agencies and advocates demonstrate the benefits of, and compare, wetland restoration projects.
Over time, we are likely to face increasing challenges in making decisions to sustain and restore our waters and coasts, as pressures increase due to sea level rise and an increasing population, among other changes. Every action costs money, and most choices require giving up something that people value. Over time, personal and public values can change, and scientific knowledge grows, so the process of managing people’s interactions with nature is an ongoing and evolutionary endeavor.
Marisa J. Mazzotta, Ph.D., is an environmental and natural resource economist. This article originally was published in the Fall 2011 Narragansett Bay Journal.