EPA-SAB-09-012 | May 2009 | www.epa.gov/sab
United States
Environmental Protection
Agency
Valuing the Protection of
Ecological Systems and Services
A REPORT OF THE EPA SCIENCE ADVISORY BOARD
Science Advisory Board
Office of the Administrator
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UNITED STATES ENVIRONMETAL PROTECTION AGENCY
WASHINGTON, DC 20460
May 29, 2009
OFFICE OF THE ADMINISTRATOR
SCIENCE ADVISORY BOARD
EPA-SAB-09-012
The Honorable Lisa P. Jackson
Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N. W.
Washington, D.C. 20460
Subject: Valuing the Protection of Ecological Systems and Services: A Report of the EPA Science Advisory Board
Dear Administrator Jackson:
We are pleased to submit the accompanying SAB report on valuing the protection of ecological systems and
services. There is increasing recognition of the numerous and important services that ecosystems provide to human
populations, such as flood protection, water purification, and climate control. Protecting ecological systems and
services is part of EPA's core mission. To determine the best options for protecting the environment and to demonstrate
the full value of its actions to Congress and others, EPA must be able to fully and accurately value the ecological effect
of its actions.
Unfortunately, as the accompanying report discusses, past efforts at EPA to value the Agency's protection of
ecological systems and services have often suffered from a number of limitations. They have tended to focus on
those ecological effects that are easiest to value because of available data or studies, rather than on the full range of
ecological values that people care about. Where the Agency has valued ecological benefits, it has sometimes used
outdated studies of benefits in one context to estimate the current benefits of protective measures in quite different
contexts. In valuing ecological effects, the Agency also has generally drawn on economic methods and has not taken
advantage of the full range of valuation methods that could be useful. Finally, valuations have often not adequately
addressed uncertainty.
In an effort to strengthen the scientific basis of Agency decisions affecting ecological systems and services, in 2003
the SAB created a committee to examine ecological valuation practices, methodologies, and research needs. To ensure
a broad perspective on this inherently interdisciplinary topic, the SAB appointed experts in decision science, ecology,
economics, engineering, law, philosophy, political science, and psychology to the committee. The interdisciplinary
character of the committee's analysis increased both the complexity of its discussions and the length of time needed to
complete its study. Value is not a single, simple concept, and disciplines often have different understandings of what
value is and how it should be measured. The resulting report is well worth the additional time and effort, specifically
because it brings together these different perspectives. This consensus report represents the first major examination of
ecological valuation to consider both economic and non-economic methods of valuation. We believe the report makes
a significant contribution to the literature, while providing practical advice for EPA.
The report recommends that EPA take a number of steps to improve ecological valuation at the Agency. First, EPA
should focus on valuing all ecological effects that people believe are important, not simply those effects that are easiest
to value. To do so, EPA should begin each valuation by developing a conceptual model of the relevant ecosystem and
the ecosystem services that it provides and use that model, along with information about relevant public concerns and
needs, as a road map to guide the valuation.
Second, EPA should support efforts at the Agency and elsewhere to develop new approaches to measure or predict
the ecological effects of EPA's actions in ways that valuation methods can incorporate. In particular, EPA should
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focus on the development and use of "ecological production functions" that can estimate how effects on the structure
and function of ecosystems will affect the provision of ecosystem services that are directly relevant and useful to the
public. Where ecological production functions do not exist, EPA may be able to rely instead on ecological indicators or
meta-analysis to provide information about the effects of governmental actions on these services.
Third, the Agency should consider the use of a broader suite of valuation methods than it has historically
employed, so long as the methods meet appropriate validity and related criteria. The report considers the possible use
of not only economic methods, but also measures of attitudes, preferences, and intentions; civic valuation; decision
science approaches; ecosystem benefit indicators; biophysical ranking methods; and cost as a proxy for value. EPA
could usefully employ some of these methods in identifying services of importance to the public (as recommended
above), providing information about multiple sources and concepts of value, and better capturing the full range of
contributions stemming from ecosystem protection. EPA can also improve its ecological valuations by carefully
evaluating and overseeing its transfer of value information from one site to another and by more fully characterizing
and communicating uncertainty. Because uncertainty will always exist, the mere existence of uncertainty should not be
an excuse for delaying action, but the Agency should ensure that uncertainty is carefully analyzed and communicated
in any valuation that EPA performs.
EPA should consider making greater use of ecological valuation in a variety of contexts and throughout the Agency.
For this reason, the report discusses how the above recommendations can be implemented in three different contexts:
national rule making, regional partnerships, and site-specific decisions. To date, the focus of ecological valuations at
EPA has been national rule makings. However, as described in the accompanying report, EPA regional offices may
also find valuation useful in setting priorities, such as targeting projects for wetland restoration and enhancement, or
in identifying critical ecosystems or ecological resources for attention. Valuation may also be useful to EPA in making
decisions about the remediation, restoration, and redevelopment of contaminated land or other sites. In addition,
EPA may want to use valuations to assist state and local governments, other federal agencies, and non-governmental
organizations in deciding how best to protect lands and resources and in communicating the suitability of particular
management approaches. Because valuations in these additional settings are generally subject to fewer legal directives
or restrictions than valuations conducted for national rule makings, they may be a particularly appropriate setting in
which to test and evaluate the use of a wider range of valuation methods.
Finally, the report provides recommendations for how EPA's research program can help provide the ecological
information needed for valuation, develop and test valuation methods, and share data. A number of these
recommendations reinforce the research plans already developed by the Office of Research and Development and
other Agency groups.
The SAB thanks EPA staff in both program and regional offices for their help in the work of the committee and
applauds the efforts that the Agency is already taking to improve its ecological valuations. As part of its work, the
committee provided an advisory (EPA-SAB-ADV-05-004) for the drafting of EPA's Ecological Benefits Assessment
Strategic Plan, which previewed many of the recommendations in the accompanying report.
We appreciate the opportunity to provide advice on this very important topic, and we look forward to receiving
your response. The SAB would be pleased to assist EPA in implementing the report's recommendations, if the Agency
would find the support valuable.
Sincerely,
/Signed/ /Signed/ /Signed/
Dr. Deborah L. Swackhamer Dr. Barton H. Thompson, Jr. Dr. Kathleen Segerson
Chair Chair Vice-Chair
Science Advisory Board SAB Committee on Valuing the SAB Committee on Valuing the
Protection of Ecological Systems Protection of Ecological Systems
and Services and Services
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U.S. Environmental Protection Agency
Science Advisory Board
Committee on Valuing the Protection of Ecological Systems and Services
CHAIR
Dr. Barton H. (Buzz) Thompson, Jr., Robert E. Paradise Professor of Natural Resources Law at the Stanford Law
School and Perry L. McCarty, Director, Woods Institute for the Environment, Stanford University, Stanford, CA
VICE-CHAIR
Dr. Kathleen Segerson, Professor, Department of Economics, University of Connecticut, Storrs, CT
MEMBERS
Dr. William Louis Ascher, Donald C. McKenna Professor of Government and Economics, Claremont McKenna
College, Claremont, CA
Dr. Gregory Biddinger, Coordinator, Natural Land Management Programs, Toxicology and Environmental Sciences,
ExxonMobil Biomedical Sciences, Inc., Houston, TX
Dr. Ann Bostrom, Associate Dean of Research and Associate Professor, Daniel J. Evans School of Public Affairs,
University of Washington, Seattle, WA
Dr. James Boyd, Senior Fellow, Director, Energy & Natural Resources Division, Resources for the Future,
Washington, DC
Dr. Robert Costanza, Gordon and Lulie Gund Professor of Ecological Economics and Director, Gund Institute for
Ecological Economics, Rubenstein School of Environment and Natural Resources, The University of Vermont,
Burlington, VT
Dr. Terry Daniel, Professor of Psychology and Natural Resources, Department of Psychology, Environmental
Perception Laboratory, University of Arizona, Tucson, AZ
Dr. A. Myrick Freeman, William D. Shipman Professor of Economics Emeritus, Department of Economics, Bowdoin
College, Brunswick, ME
Dr. Dennis Grossman, Senior Policy Advisor, International Government Relations, The Nature Conservancy,
Arlington, VA
Dr. Geoffrey Heal, Paul Garrett Professor of Public Policy and Business Responsibility, Columbia Business School,
Columbia University, New York, NY
Dr. Robert Huggett, Consultant and Professor Emeritus, College of William and Mary, Williamsburg, VA
Dr. Douglas E. MacLean, Professor, Department of Philosophy, University of North Carolina, Chapel Hill, NC
Dr. Harold Mooney, Paul S. Achilles Professor of Environmental Biology, Department of Biological Sciences,
Stanford University, Stanford, CA
Dr. Louis F. Pitelka, Professor, Appalachian Laboratory, University of Maryland Center for Environmental Science,
Frostburg, MD
Dr. Stephen Polasky, Fesler-Lampert Professor of Ecological/Environmental Economics, Department of Applied
Economics, University of Minnesota, St. Paul, MN
Dr. Paul G. Risser, Chair and Chief Operating Officer, University Research Cabinet, University of Oklahoma,
Norman, OK
Dr. Holmes Rolston, University Distinguished Professor, Department of Philosophy, Colorado State University, Fort
Collins, CO
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Dr. Joan Roughgarden, Professor, Biological Sciences and Evolutionary Biology, Stanford University, Stanford, CA
Dr. Mark Sagoff, Senior Research Scholar, Institute for Philosophy and Public Policy, School of Public Affairs,
University of Maryland, College Park, MD
Dr. Paul Slovic, Professor, Department of Psychology, Decision Research, Eugene, OR
Dr. V Kerry Smith, W.P Carey Professor of Economics, Department of Economics, W.P Carey School of Business,
Arizona State University, Tempe, AZ
CONSULTANTS TO THE COMMITTEE
Dr. Joseph Arvai, Professor, Environmental Science and Policy Program, and Department of Community, Agriculture,
Resource and Recreation Studies (CARRS), Michigan State University, East Lansing, MI
Dr. Ally son Holbrook, Assistant Professor of Public Administration and Psychology, Survey Research Laboratory,
University of Illinois at Chicago, Chicago, IL
Dr. Jon Krosnick, Frederic O. Glover Professor in Humanities and Social Sciences, Professor of Communication,
Director, Methods of Analysis Program in the Social Sciences, Associate Director, Institute for Research in the Social
Sciences, Stanford University, Palo Alto, CA
SCIENCE ADVISORY BOARD STAFF
Dr. Angela Nugent, Science Advisory Board Staff Office, Washington, DC
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U.S. Environmental Protection Agency
Science Advisory Board
CHAIR
Dr. Deborah L. Swackhamer, Professor of Environmental Health Sciences and Co-Director Water Resources Center,
Water Resources Center, University of Minnesota, St. Paul, MN
SAB MEMBERS
Dr. David T. Allen, Professor, Department of Chemical Engineering, University of Texas, Austin, TX
Dr. JohnBalbus, Chief Health Scientist, Environmental Health Program, Environmental Defense Fund,
Washington, DC
Dr. Gregory Biddinger, Coordinator, Natural Land Management Programs, Toxicology and Environmental Sciences,
ExxonMobil Biomedical Sciences, Inc., Houston, TX
Dr. Timothy Buckley, Associate Professor and Chair, Division of Environmental Health Sciences, School of Public
Health, The Ohio State University, Columbus, OH
Dr. Thomas Burke, Professor, Department of Health Policy and Management, Johns Hopkins Bloomberg School of
Public Health, Johns Hopkins University, Baltimore, MD
Dr. James Bus, Director of External Technology, Toxicology and Environmental Research and Consulting, The Dow
Chemical Company, Midland, MI
Dr. Deborah Cory-Slechta, Professor, Department of Environmental Medicine, School of Medicine and Dentistry,
University of Rochester, Rochester, NY
Dr. Terry Daniel, Professor of Psychology and Natural Resources, Department of Psychology, Environmental
Perception Laboratory, University of Arizona, Tucson, AZ
Dr. Otto C. Doering III, Professor, Department of Agricultural Economics, Purdue University, W. Lafayette, IN
Dr. David A. Dzombak, Walter J. Blenko Sr. Professor of Environmental Engineering, Department of Civil and
Environmental Engineering, College of Engineering, Carnegie Mellon University, Pittsburgh, PA
Dr. T. Taylor Eighmy, Assistant Vice President for Research and Director of Strategic Initiatives, Office of the Vice
President for Research, University of New Hampshire, Durham, NH
Dr. Baruch Fischhoff, Howard Heinz University Professor, Department of Social and Decision Sciences, Department
of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA
Dr. James Galloway, Professor, Department of Environmental Sciences, University of Virginia, Charlottesville, VA
Dr. John P. Giesy, Professor, Department of Zoology, Michigan State University, East Lansing, MI
Dr. James K. Hammitt, Professor, Center for Risk Analysis, Harvard University, Boston, MA
Dr. Rogene Henderson, Senior Scientist Emeritus, Lovelace Respiratory Research Institute, Albuquerque, NM
Dr. James H. Johnson, Professor and Dean, College of Engineering, Architecture & Computer Sciences, Howard
University, Washington, DC
Dr. Bernd Kahn, Professor Emeritus and Director, Environmental Radiation Center, Nuclear and Radiological
Engineering Program, Georgia Institute of Technology, Atlanta, GA
Dr. Agnes Kane, Professor and Chair, Department of Pathology and Laboratory Medicine, Brown University,
Providence, RI
Dr. Meryl Karol, Professor Emerita, Graduate School of Public Health, University of Pittsburgh, Pittsburgh, PA
Dr. Catherine Kling, Professor, Department of Economics, Iowa State University, Ames, IA
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Dr. George Lambert, Associate Professor of Pediatrics, Director, Center for Childhood Neurotoxicology, Robert Wood
Johnson Medical School-UMDNJ, Belle Mead, NJ
Dr. Jill Lipoti, Director, Division of Environmental Safety and Health, New Jersey Department of Environmental
Protection, Trenton, NJ
Dr. Lee D. McMullen, Water Resources Practice Leader, Snyder & Associates, Inc., Ankeny, IA
Dr. Judith L. Meyer, Distinguished Research Professor Emeritus, Odum School of Ecology, University of Georgia,
Athens, GA
Dr. Jana Milford, Professor, Department of Mechanical Engineering, University of Colorado, Boulder, CO
Dr. Christine Moe, Eugene J. Gangarosa Professor, Hubert Department of Global Health, Rollins School of Public
Health, Emory University, Atlanta, GA
Dr. M. Granger Morgan, Lord Chair Professor in Engineering, Department of Engineering and Public Policy, Carnegie
Mellon University, Pittsburgh, PA, Immediate SAB Past Chair
Dr. Duncan Patten, Research Professor, Department of Land Resources and Environmental Sciences, Montana State
University, Bozeman, MT, USA
Mr. David Rejeski, Director, Foresight and Governance Project, Woodrow Wilson International Center for Scholars,
Washington, DC
Dr. Stephen M. Roberts, Professor, Department of Physiological Sciences, Director, Center for Environmental and
Human Toxicology, University of Florida, Gainesville, FL
Dr. Joan B. Rose, Professor and Homer Nowlin Chair for Water Research, Department of Fisheries and Wildlife,
Michigan State University, East Lansing, MI
Dr. Jonathan M. Samet, Professor and Chair, Department of Epidemiology, Bloomberg School of Public Health, Johns
Hopkins University, Baltimore, MD
Dr. James Sanders, Director and Professor, Skidaway Institute of Oceanography, Savannah, GA
Dr. Jerald Schnoor, Allen S. Henry Chair Professor, Department of Civil and Environmental Engineering, Co-Director,
Center for Global and Regional Environmental Research, University of Iowa, Iowa City, IA
Dr. Kathleen Segerson, Professor, Department of Economics, University of Connecticut, Storrs, CT
Dr. Kristin Shrader-Frechette, O'Neil Professor of Philosophy, Department of Biological Sciences and Philosophy
Department, University of Notre Dame, Notre Dame, IN
Dr. V Kerry Smith, W.P. Carey Professor of Economics, Department of Economics, W.P Carey School of Business,
Arizona State University, Tempe, AZ
Dr. Thomas L. Theis, Director, Institute for Environmental Science and Policy, University of Illinois at Chicago,
Chicago, IL
Dr. Valerie Thomas, Anderson Interface Associate Professor, School of Industrial and Systems Engineering, Georgia
Institute of Technology, Atlanta, GA
Dr. Barton H. (Buzz) Thompson, Jr., Robert E. Paradise Professor of Natural Resources Law at the Stanford Law
School and Perry L. McCarty Director, Woods Institute for the Environment Director, Stanford University,
Stanford, CA
Dr. Robert Twiss, Professor Emeritus, University of California-Berkeley, Ross, CA
Dr. Thomas S. Wallsten, Professor, Department of Psychology, University of Maryland, College Park, MD
Dr. Lauren Zeise, Chief, Reproductive and Cancer Hazard Assessment Branch, Office of Environmental Health Hazard
Assessment, California Environmental Protection Agency, Oakland, CA
SCIENCE ADVISORY BOARD STAFF
Mr. Thomas Miller, EPA Science Advisory Board Staff Office, Washington, DC
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Acknowledgements
EPA's Science Advisory Board Committee on Valuing the Protection of Ecological Systems and Services would
like to acknowledge many individuals who provided their perspectives and insights for the committee's consideration
in the development of this report.
Many individuals provided perspectives at public meetings of the committee and to members of the committee's
Steering Committee. These individuals included: Mr. Geoffrey Anderson, EPA Office of Policy, Economics, and
Innovation; Ms. Karen Bandhauer, EPA Region 5; Mr. Devereaux Barnes, EPA Office of Solid Waste and Emergency
Response; Ms. Jan Baxter, EPA Region 9; Dr. Richard Bernkopf, U.S. Geological Survey; Dr. Lenore Beyer-
Clowe, Openlands Project; Dr. Ned Black, EPARegion 9; Mr. Robert Brenner, EPA Office of Air and Radiation; Dr.
Thomas Brown, USDA Forest Service; Dr. Randall Bruins, EPA, Office of Research and Development; Mr. David
Chapman, Stratus Consulting; Mr. James DeMocker, EPA, Office of Air and Radiation; Mr. Richard Durbrow, EPA
Region 4; Mr. Jesse Elam, Northeast Illinois Planning Commission; Mr. William Eyring, Center for Neighborhood
Technologies; Ms. Jerri-Anne Garl, EPARegion 5; Ms. Iris Goodman, EPA Office of Research and Development; Dr.
Robin Gregory, Decision Research, Eugene, Oregon; Dr. Sharon Hayes, EPA, Office of Research and Development;
Dr. Bruce Herbold, EPARegion 9; Dr. Julie Hewitt, EPA Office of Water; Mr. James Jones, EPA Office of Prevention,
Pesticides, and Toxic Substances; Dr. Robert E. Lee II, EPA Office of Pollution Prevention and Toxics; Dr. Richard
Linthurst, EPA Office of Research and Development; Dr. Albert McGartland, EPA Office of Policy, Economics, and
Innovation; Mr. James Middaugh, City of Portland; Dr. Chris Miller, EPA Office of Water; Mr. Michael Monroe, EPA
Region 9; Dr. Chris Mulvaney, Chicago Wilderness; Dr. Wayne R. Munns, EPA Office of Research and Development;
Mr. David S. Nicholas, EPA Office of Solid Waste and Emergency Response; Ms. Gillian Ockner, David Evans and
Associates, Inc.; Dr. Nicole Owens, EPA Office of Policy, Economics, and Innovation; Dr. Stefano Pagiola, World
Bank; Ms. Karen Schwinn, EPA Region 9; Dr. Michael Slimak, EPA Office of Research and Development; Dr.
Matthew Small; EPARegion 9; Mr. David Smith, EPARegion 9; Dr. Ivar Strand, University of Maryland; Ms. Alexis
Strauss, EPA Region 9; Ms. Patti Lynne Tyler, EPA Region 8; Mr. John Ungvarsky, EPA Region 9; Mr. James Van der
Kloot, EPA Region 5; Mr. William Wheeler, EPA Office of Research and Development; Ms. Louise Wise, EPA Office
of Policy, Economics, and Innovation; Dr. T.J. Wyatt, EPA Office of Pesticide Programs; and Mr. Steve Young, EPA
Office of Environmental Information.
The committee would also like to thank the speakers and participants at the SAB Workshop Science for Valuation
of EPA's Ecological Protection Decisions and Programs, December 13-14, 2005: Dr. Mark Bain, Cornell University;
Mr. Robert Brenner, EPA Office of Air and Radiation; Ms. Kathleen Callahan, EPA Region 2; Dr. Ann Fisher,
Pennsylvania State University; Dr. George Gray, EPA Office of Research and Development; Dr. Brooke Hecht, Center
for Humans and Nature; Dr. Bruce Hull, Virginia Institute of Technology; Dr. DeWitt John, Bowdoin College; Dr.
Robert Johnston, University of Connecticut; Dr. Dennis King, University System of Maryland; Dr. Joseph Meyer,
University of Wyoming; Mr. Walter V Reid, Stanford University; Dr. James Salzman, University of North Carolina;
Dr. Michael Shapiro, EPA Office of Water; Dr. Elizabeth Strange, Stratus Consulting; and Dr. Paul C. West, The
Nature Conservancy.
The committee especially thanks the experts who provided independent review of the report in draft form. Dr.
Roger Kasperson, Clark University, Dr. James Opaluch, University of Rhode Island, and Dr. Duncan Patton, Montana
State University, reviewed a draft in October 2007. Dr. Trudy Ann Cameron, University of Oregon, Dr. Thomas
Dietz, Michigan State University, Dr. Alan Krupnick, Resources for the Future, and Dr. Mark Schwartz, University
of California - Davis, reviewed a draft in May 2008. The reviewers provided many constructive comments and
suggestions, but were not, however, asked to endorse the conclusions or recommendations in the report.
Finally, the chair and vice chair of the committee thank former committee members Dr. Domenico Grasso
(committee chair 2003-2005) and Dr. Valerie Thomas (committee member 2003-2004), who served on a steering
group for the committee during its early years.
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NOTICE
This report has been written as part of the activities of the EPA Science Advisory Board (SAB), a public advisory group
providing extramural scientific information and advice to the Administrator and other officials of the Environmental Protection
Agency. The SAB is structured to provide balanced, expert assessment of scientific matters related to problems facing the Agency.
This report has not been reviewed for approval by the Agency and, hence, the contents of this report do not necessarily represent
the views and policies of the Environmental Protection Agency, nor of other agencies in the Executive Branch of the Federal gov-
ernment, nor does mention of trade names of commercial products constitute a recommendation for use. Reports of the SAB are
posted on the EPA Web site at http://www.epa.gov/sab.
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Table of Contents
Executive Summary 2
1 Introduction 8
2 Conceptual framework 12
2.1 An overview of key concepts 12
2.1.1 The concept of ecosystems 12
2.1.2 The concept of ecosystem services 12
2.1.3 Concepts of value 13
2.1.4 The concept of valuation and different valuation methods 15
2.2 Ecological valuation at EPA 17
2.2.7 Policy contexts at EPA where ecological valuation can be important 17
2.2.2 Institutional and other issues affecting valuation at EPA 18
2.2.3 An illustrative example of economic benefit assessment related to ecological protection at EPA 19
2.3 An integrated and expanded approach to ecological valuation: key features 21
2.3.1 Early consideration of effects that are socially important 21
2.3.2 Predicting ecological responses in value-relevant terms 22
2.3.3 Use of a wider range of valuation methods 22
2.4 Steps in implementing the proposed approach 24
2.5 Conclusions and recommendations 25
3 Building a foundation for ecological valuation:
predicting ecological responses in value-relevant terms 28
3.1 The road map: a conceptual model 28
3.2 The important role of ecological production functions in implementing the conceptual model 30
3.3 Challenges in implementing ecological production functions 31
3.3.1 Understanding and modeling the underlying ecology 32
3.3.2 Identifying ecosystem services 33
3.3.3 Mapping from ecosystem responses to changes in ecosystem services 35
3.4 Strategies to provide the ecological science to support valuation 35
3.4.1 Use of indicators 36
3.4.2 Use ofmeta-analysis 37
3.5 Data availability 37
3.5.1 Transferring ecological information from one site to another 37
3.6 Directions for ecological research to support valuation 38
3.7 Conclusions and recommendations 38
4 Methods for assessing value 40
4.1 Criteria for choosing valuation methods 40
4.1.1 Suggested criteria 41
4.2 An expanded set of methods 43
4.2.1 Measures of attitudes, preferences, and intentions 44
4.2.2 Economic methods .. . .45
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4.2.3 Civic valuation 47
4.2.4 Decision science methods 49
4.2.5 Ecosystem benefit indicators 50
4.2.6 Biophysical ranking methods 50
4.2.7 Methods using cost as a proxy for value 51
4.3 Transferring value information 53
4.3.1 Transfer of information about economic benefits 53
4.3.2 Transfer methods 54
4.3.3 Challenges regarding benefits transfer 54
4.3.4 Improving transfers of value information 55
4.4 Conclusions and recommendations 57
5 Cross-cutting issues 58
5.1 Deliberative processes 58
5.2. Analysis and representation of uncertainties in ecological valuation 59
5.2.1 Introduction 59
5.2.2 Sources of uncertainty in ecological valuations 59
5.2.3 Approaches to assessing uncertainty 60
5.2.4 Communicating uncertainties in ecological valuations 62
5.2.5 Using uncertainty assessment to guide research initiatives 62
5.3 Communication of ecological valuation information 63
5.3.1 Applying general communication principles to ecological valuation 63
5.3.2 Special communication challenges related to ecological valuation 64
5.4 Conclusions and recommendations 65
6 Applying the approach in three EPA decision contexts 66
6.1 Valuation for national rule making 66
6.1.1 Introduction 66
6.1.2 Valuation in the national rule making context 66
6.1.3 Implementing the proposed approach 72
6.1.4 Summary of recommendations 77
6.2 Valuation in regional partnerships 78
6.2.1 EPA's role in regional-scale value assessment 78
6.2.2 Case study: Chicago Wilderness 79
6.2.3 Other case studies 85
6.2.4 Summary and recommendations 86
6.3 Valuation for site-specific decisions 87
6.3.1 Introduction 87
6.3.2 Opportunities for using valuation to inform remediation and redevelopment decisions 88
6.3.3 Illustrative site-specific examples 91
6.3.4 Summary of recommendations for valuation for site-specific decisions 99
7 Conclusion 100
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7.1 An expanded, integrated valuation approach 100
7.2 Early identification of how actions may contribute to human welfare 101
7.3 Prediction of ecological responses in value-relevant terms 101
7.4 Valuation 102
7.5 Other cross-cutting issues 102
7.5.1 Deliberative processes 102
7.5.2 Uncertainty 102
7.5.3 Communication of valuation information 103
7.6 Context-specific recommendations 103
7.6.1 National rule making 103
7.6.2 Regional partnerships 103
7.6.3 Site-specific decisions 104
7.7 Recommendations for research and data sharing 104
Appendix A: Web-accessible materials on ecological valuation developed by or for the C-VPESS 106
Appendix B: Table of acronyms 107
References 108
Endnotes 117
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Lists of Figures, Tables, and Text Boxes
Figures
Figure 1: Process for implementing an expanded and integrated approach to ecological valuation 24
Figure 2: Illustration from Covich et al., (2004) showing relationships of major functional types
to ecological services 29
Figure 3: Graphical depiction of ecological production functions 31
Figure 4: Ecological impacts of CAFOs at multiple scales 73
Figure 5: Integration of valuation information with the traditional remediation and redevelopment process 89
Figure 6: Framework for net environmental benefit analysis (from Efroymson et al., 2003) 97
Tables
Table 1: A classification of concepts of value as applied to ecological systems and their services 14
Table 2: Key features of an expanded and integrated approach to valuation 26
Table 3: Methods considered by the committee for possible use in valuation 42
Table 4: Table of alternative unit value transfers 56
Text boxes
Text box 1 - Valuation and the aquaculture effluent guidelines 68
Text box 2 - Valuation and the CAFO effluent guidelines 69
Text box 3 - Ecological benefit assessment as part of the prospective study
of the economic benefits of the Clean Air Act Amendments 71
Text box 4 - Charles-George Landfill: An urban example 90
Text box 5 - DuPage Country Landfill: An urban example 91
Text box 6 - Avtex Fibers site: A suburban example 92
Text box 7 - Leviathan Mine Superfund site: An ex-urban example 92
Text box 8 - Net environmental benefit analysis 96
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Valuing the Protection of
Ecological Systems and Services
A OF THE EPA
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Executive Summary
EPA's Science Advisory Board (SAB) created the
Committee on Valuing the Protection of Ecological
Systems and Services (C-VPESS) to offer advice to the
Agency on how EPA might better assess the value of
protecting ecological systems and services. As used in
this report, the term "valuation" refers to the process
of measuring values associated with a change in an
ecosystem, its components, or the services it provides.
The SAB charged the committee to:
It Assess EPA's needs for valuation to support decision
making.
It Assess the state of the art and science of valuing the
protection of ecological systems and services.
It Identify key areas for improving knowledge,
methodologies, practice, and research at the Agency.
This report provides recommendations to the Agency
for improving EPA's current approach to ecological
valuation and for supporting new research to strengthen
the science base for future valuations.
General findings and advice
EPA's mission to protect human health and the
environment requires the Agency to understand and
protect ecosystems and the numerous and varied services
they provide. Ecosystems play a vital role in our lives,
providing such services as water purification, flood
protection, pollination, recreation, aesthetic satisfaction,
and the control of diseases, pests, and climate. EPA's
regulations, programs, and other actions, as well as the
decisions of other agencies with which EPA partners, can
affect ecosystem conditions and the flow of ecosystem
services at a local, regional, national, or global scale. To
date, however, policy analyses have typically focused on
only a limited set of ecological factors.
Just as policy makers at EPA and elsewhere need
information about how their actions might affect human
health in order to make good decisions, they also need
information about how ecosystems contribute to society's
well-being and how contemplated actions might affect
those contributions. Such information can also help
inform the public about the need for ecosystem protection,
the extent to which specific policy alternatives address
that need, and the value of the protection.
Valuation of ecological systems and services is
important in national rule makings, where executive
orders often require cost-benefit analyses and several
statutes require weighing of benefits and costs. Regional
EPA offices can find valuation important in setting
program priorities and in assisting other governmental
and non-governmental organizations in choosing among
environmental options and communicating the importance
of their actions to the public. Ecological valuation can also
help EPA to improve the remediation of hazardous waste
sites and make other site-specific decisions.
This report describes and illustrates how EPA can use
an "expanded and integrated approach" to ecological
valuation. The proposed approach is "expanded" in
seeking to assess and quantify a broader range of
values than EPA has historically addressed and through
consideration of a larger suite of valuation methods. The
proposed approach is "integrated" in encouraging greater
collaboration among a wide range of disciplines, including
ecologists, economists, and other social and behavioral
scientists, at each step of the valuation process.
Value is not a single, simple concept. People may
use many different concepts of value when assessing
the protection of ecosystems and their services. For this
reason, the committee considered several value concepts.
These included measures of value based on people's
preferences for alternative goods and services (measures
of attitudes or judgments, economic values, community-
based values, and constructed preferences) and measures
based on biophysical standards of potential public
importance (such as biodiversity or energy flows).
To date, EPA has primarily sought to measure
economic benefits, as required in many settings by
statute or executive order. The report concludes that
information based on some other concepts of value
may also be a useful input into decisions affecting
ecosystems, although members of the committee hold
different views regarding the extent to which specific
methods and concepts of values should be used in
particular policy contexts.
In addition, the Agency's value assessments
have often focused on those ecosystem services or
components for which EPA has concluded that it could
relatively easily measure economic benefits, rather than
on those services or components that may ultimately be
most important to society. Such a focus can diminish the
relevance and impact of a value assessment. This report
therefore advises the Agency to identify the services and
components of likely importance to the public at an early
stage of a valuation and then to focus on characterizing,
measuring, and assessing the value of the responses of
those services and components to EPA's actions.
EPA should seek to measure the values that people
hold and would express if they were well informed about
the relevant ecological and human well-being factors
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involved. This report therefore advises EPA to explicitly
incorporate that information into the valuation process
when changes to ecosystems and ecosystem services are
involved. Valuation surveys, for example, should provide
relevant ecological information to survey respondents.
Valuation questions should be framed in terms of
services or changes that people understand and can value.
Likewise, deliberative processes should convey relevant
information to participants. The report also encourages
EPA to consider public education efforts where gaps exist
between public knowledge and scientific understanding of
the contributions of ecological processes.
All steps in the valuation process, beginning with
problem formulation and continuing through the
characterization, representation, and measurement
of values, require information and input from a wide
variety of disciplines. Instead of ecologists, economists,
and other social and behavioral scientists working
independently, experts should collaborate throughout the
process. Ecological models need to provide usable inputs
for valuation, and valuation methods need to incorporate
important ecological and biophysical effects.
Of course, EPA conducts ecological valuations within
a set of institutional, legal, and practical constraints. These
constraints include substantive directives, procedural
requirements relating to timing and oversight, and resource
limitations (both monetary and personnel). For example,
the preparation of regulatory impact analyses (PJAs) for
proposed regulations is subject to Office of Management
and Budget (OMB) oversight and approval. OMB's Circular
A-4 on Regulatory Analysis makes it clear that PJAs should
include an economic analysis of the benefits and costs of
proposed regulations conducted in accordance with the
methods and procedures of standard welfare economics. At
the same time, the circular provides that where EPA cannot
quantify a benefit in monetary terms, EPA should still try
to measure the effect of the Agency's action in terms of its
physical units or, where such quantification is not possible,
describe the effect and its value in qualitative terms.
Regional and site-specific programs and decisions, which
are not subject to the same legal requirements as national
rule makings, can offer useful opportunities for testing and
implementing a broader suite of valuation methods.
Three key recommendations
The committee's principal advice to EPA, as noted
above, is to pursue an expanded, integrated approach
to assessing the value of the ecological effects of its
regulations, programs, and other actions. The report
contains three overarching recommendations for
achieving this goal. In particular, the report recommends
that the Agency:
1. Identify early in the valuation process the ecological
responses that are likely to be of greatest importance
to people, using information about ecological
importance, likely human and social consequences, and
public concerns. EPA should then focus its valuation
efforts on those responses. This will help expand the
range of ecological responses that EPA characterizes or
quantifies or for which it estimates values.
2. Predict ecological responses in terms that are relevant
to valuation. Prediction of ecological responses is a
key step in valuation efforts. To predict responses in
value-relevant terms, EPA should focus on the effects
of decisions on ecosystem services or other ecological
features that are of direct concern to people. This, in
turn, will require the Agency to go beyond merely
predicting the biophysical effects of decisions and to
map those effects to responses in ecosystem services
or components that the public values.
3. Consider the use of a wider range of possible
valuation methods, either to provide information
about multiple sources and concepts of value or to
better capture the full range of contributions stemming
from ecosystem protection. In considering the use
of different methods, however, care must be taken
to ensure that only methods that meet appropriate
validity and related criteria are used, and to recognize
that different methods may measure different things
and thus not be directly additive or comparable. This
report therefore calls on EPA to develop criteria to
evaluate and determine the appropriate use of each
method. EPA should also carefully evaluate its use of
value information collected at one site in the valuation
of policy impacts at a different site (transfers of
value information) and more fully characterize and
communicate uncertainty for all valuations.
Implementing the recommendations
The report provides specific advice on how to
achieve these overarching recommendations. The report
proposes a large number of steps, some of which can be
implemented in the short run, but others of which will
require investments in research or method development,
policy changes, and/or new resources. EPA should begin
the process of adopting a more expanded, integrated
approach to ecological valuation by prioritizing
the steps that it will take to accomplish the report's
recommendations, taking into account the relative ease
and cost of each potential step.
Implementing recommendation #1
The first major recommendation, as noted, is to
identify from an early stage in the valuation process the
ecological responses that contribute to human well-being
and are likely to be of greatest importance to people, and
then to focus valuation efforts on these responses. To
accomplish this, the report recommends that EPA:
It Begin each valuation by developing a conceptual
model of the relevant ecosystem and the ecosystem
services that it generates. This model should serve as
a road map to guide the valuation.
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It Involve staff throughout EPA, as well as outside experts
in the biophysical and social sciences, in constructing
the conceptual model.
® EPA should also seek information about relevant public
concerns and needs. EPA can identify public concerns
through a variety of methods, drawing on either
existing knowledge or interactive processes designed
to elicit public input.
It Incorporate new information into the model, in an
iterative process, as the value assessment proceeds.
Implementing recommendation #2
Ecological valuation requires both prediction of
ecological responses and an estimation of the value
of those responses. To predict ecological responses in
value-relevant terms, EPA should focus on the effects
of decisions on ecosystem services and should map
responses in ecological systems to responses in services
or ecosystem components that the public can directly
value. Unfortunately, the science needed to do this has
been limited, presenting a barrier to effective valuation
of ecological systems and services. To better predict
ecological responses in value-relevant terms in the
future, EPA should:
It Identify and develop measures of ecosystem services
that are relevant to and directly useful for valuation.
This will require increased interaction within EPA
between natural and social scientists. In identifying
and assessing the value of services, EPA should
describe them in terms that are meaningful and
understandable to the public.
It Where possible, use ecological production functions
to estimate how effects on the structure and function
of ecosystems, resulting from the actions of EPA
or partnering agencies, will affect the provision of
ecosystem services for which values can then be
estimated. Development of abroad suite of ecological
production functions currently faces numerous
challenges and can benefit from new research.
It Where complete ecological production functions do
not exist:
• Examine available ecological indicators that are
correlated with changes in ecosystem services
to provide information about the effects of
governmental actions on those services.
• Use methods such as meta-analysis that can
provide general information about key ecological
relationships important in the valuation.
It Support all ecological valuations by ecological
models and data sufficient to understand and
estimate the likely ecological responses to the major
alternatives being considered by decision makers.
Analyze and report on the uncertainty involved in
biophysical projections.
Implementing recommendation #3
In characterizing, measuring, or quantifying the
value of ecological responses to actions by EPA or other
agencies, EPA should consider the use of a broader
suite of valuation methods than it has historically
employed. As summarized in Table 3 at pages 42-
43, this report considers the possible use of not only
economic methods, but also such alternative methods
as measures of attitudes, preferences, and intentions;
civic valuation; decision science approaches; ecosystem
benefit indicators, biophysical ranking methods; and
cost as a proxy for value. A broader suite of methods
could allow EPA to better capture the full range of
contributions stemming from ecosystem protection and
the multiple sources of value derived from ecosystems.
Non-economic valuation methods may also usefully
support and improve economic valuation by helping to
identify the ecological responses that people care about,
by providing indicators of economic benefits that EPA
cannot monetize using economic valuation, and by
offering supplemental information outside strict benefit-
cost analysis. In this regard, EPA should:
It Pilot and evaluate the use of alternative methods
where legally permissible and scientifically
appropriate.
It Develop criteria to determine the suitability of
alternative methods for use in specific decision
contexts. An over-arching criterion should be
validity - i.e., how well the method measures the
underlying construct that it is intended to measure.
Given differences in premises, goals, concerns, and
external constraints, appropriate uses will vary among
methods and contexts. Different methods are also at
different stages of development and validation.
EPA could also improve its ecological valuations by
carefully evaluating the transfer of value information
and more fully characterizing and communicating
uncertainty. In this regard, EPA should:
It Identify relevant criteria for determining the
appropriateness of the transfer of value information.
These criteria should consider similarities and
differences in societal preferences and the nature of
the biophysical systems between the study site and
the policy site. Using these criteria, EPA analysts and
those providing oversight should flag problematic
transfers and clarify assumptions and limitations of
the study-site results.
It Go beyond simple sensitivity analysis in assessing
uncertainty, and make greater use of approaches, such
as Monte Carlo analysis, that provide more useful
and appropriate characterizations of uncertainty in
complex contexts such as ecological valuation.
It Provide information to decision makers and the public
about the level of uncertainty involved in ecological
valuation efforts. EPA should not relegate uncertainty
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analyses to appendices but should ensure that a
summary of uncertainty is given as much prominence
as the valuation estimate itself, with careful attention
to how recipients are likely to understand the
uncertainties. EPA should also explain qualitatively any
limitations in the uncertainty analysis.
While EPA should improve its characterization
and reporting of uncertainty, the mere existence of
uncertainty should not be an excuse for delaying actions
where the benefits of immediate action outweigh the
value of attempting to further reduce the uncertainty
Some uncertainty will always exist.
Context-specific recommendations
The report also examines how to implement an
expanded and integrated approach to ecological valuation
in three specific contexts: national rule makings, regional
partnerships, and local site-specific decisions.
National rule making
Applying the expanded and integrated valuation
approach to national rule making will entail some
challenges, but also offers important opportunities for
improvement. EPA can implement some, but not all, of
the committee's recommendations using the existing
knowledge base. The committee also recognizes that
EPA must conduct valuations for national rule making
in compliance with statutory and executive mandates.
Specific recommendations for improving valuations for
national rule making in the short run include:
® EPA should develop a conceptual model at the
beginning of each valuation, as discussed above,
to serve as a guide or road map. To ensure that the
model captures the ecological properties and services
that are potentially important to people, EPA should
incorporate input both from relevant science and
about public preferences and concerns.
® The Agency should address site-specific variability
in the impact of a rule by producing case studies
for important ecosystem types and then aggregating
across the studies where information about the
distribution of ecosystem types and affected
populations is available.
® EPA should not compromise the quality of its
valuations by inappropriately transferring information
about values. Where the values of ecosystem
services are primarily local, the Agency can rely
on scientifically-sound value transfers using prior
valuations at the local level. However, for services
valued more broadly, EPA should draw from studies
with broad geographical coverage (in terms of both
the changes that are valued and the population whose
values are assessed).
® EPA should pilot and evaluate the use of a broader
suite of valuation methods to support and improve
RIAs. Although OMB Circular A-4 requires RIAs
to monetize benefits to the extent possible using
economic valuation methods, other methods could be
useful in the following ways:
• Helping to identify early in the process the
ecosystem services that are likely to be of concern
to the public and that should therefore be the focus
of the benefit-cost analysis.
• Addressing the requirement in Circular A-4 to
provide quantitative or qualitative information
about the possible magnitude of benefits (and
costs) when they cannot be monetized using
economic valuation.
• Providing supplemental information outside the
formal benefit-cost analysis about sources and
concepts of value that might be of interest to
EPA and the public but not reflected in economic
values.
It To ensure that RIAs do not inappropriately focus only
on impacts that have been monetized, EPA should
also report on other ecological impacts in appropriate
units where possible, as required by Circular A-4. The
Agency should label aggregate monetized economic
benefits as "total economic benefits that could be
monetized," not as "total benefits."
® EPA should include a separate chapter on uncertainty
characterization in each RIA or value assessment.
Regional partnerships
The committee sees great potential in undertaking a
comprehensive and systematic approach to estimating
the value of protecting ecosystems and services at a
regional scale, in part because of the effectiveness
with which EPA regional offices can partner with other
agencies and state and local governments. Regional-
scale analyses hold great potential to inform decision
makers and the public about the value of protecting
ecosystems and services, but this potential is at present
largely unrealized. The general recommendations of
this report provide a guide for regional valuations.
Regional valuations are a particularly appropriate
setting in which to test alternative valuation methods
because there are generally fewer legal directives
or restrictions regarding the value concepts and
methods to be used. The report also includes several
recommendations specific to regions, including:
® EPA should encourage its regions to engage in
valuation efforts to support decision making both by
the regions and by partnering governmental agencies.
® EPA should provide adequate resources to EPA
regional staff to develop the expertise needed to
undertake comprehensive and systematic studies of
the value of protecting ecosystems and services.
It To ensure that regions can learn from valuation
efforts by other regions, EPA regional offices should
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document valuation efforts and share them with
other regional offices, EPA's National Center for
Environmental Economics, and EPA's Office of
Research and Development.
Site-specific decisions
Incorporation of ecological valuation into local
decisions about the remediation and redevelopment
of contaminated sites can help enhance the ecosystem
services provided by such sites in the long run and thus
the sites' contributions to local well-being. The general
recommendations of the report provide a useful guide
for such site-specific valuations. The report also includes
several recommendations of particular relevance to site-
specific decisions, including:
® EPA should provide regional offices with the staff and
resources needed to effectively incorporate ecological
valuation into the remediation and redevelopment of
contaminated sites.
® EPA should determine the ecosystem services and
values important to the community and affected
parties at the beginning of the remediation and
redevelopment process.
® EPA should adapt current ecological risk assessment
practices to incorporate ecological production
functions and predict the effects of remediation and
redevelopment options on ecosystem services.
® EPA should communicate information about
ecosystem services in discussing options for
remediation and redevelopment with the public and
affected parties.
® EPA should create formal systems and processes
to foster information-sharing about ecological
valuations at different sites.
Recommendations for research and
data sharing
The report provides several recommendations for
EPA's research programs that are designed to provide
the ecological information needed for valuation,
develop and test valuation methods, and share data.
In a number of cases, these recommendations parallel
research plans that have been developed by the Office
of Research and Development and other Agency
groups. As an over-arching recommendation, the report
advises EPA to more closely coordinate its research
programs on the valuation of ecosystem services and
to develop links with other governmental agencies
and organizations engaged in valuation and valuation
research. It advises, at a more general level, fostering
greater interaction between natural scientists and social
scientists in identifying relevant ecosystem services and
developing and implementing processes for measuring
them and estimating their value. The report identifies
important research areas but does not attempt to rank or
prioritize among all of its research recommendations.
The committee recommends that EPA develop a
research strategy, building on the recommendations
in this report, that identifies "low-hanging fruit" and
prioritizes studies likely to have the largest payoff for
their cost in both advancing valuation methods and
providing valuation information of importance to EPA
in its work.
To develop EPA's ability to determine and quantify
ecological responses to governmental decisions, the
Agency should:
It Support the development of quantitative ecosystem
models and baseline data on ecological stressors and
ecosystem service flows that can support valuation
efforts at the local, regional, national, and global levels.
® Promote efforts to collect data that can be used to
parameterize ecological models for site-specific
analysis and case studies or that can be transferred or
scaled to other contexts.
It Carefully plan and actively pursue research to
develop and generate ecological production functions
for valuation, including Office of Research and
Development and STAR research on ecological
services and support for modeling and methods
development. The committee believes that this is a
research area of high priority.
It Given the complexity of developing and using
complete ecological production functions, continue
and accelerate research to develop key indicators
for use in ecological valuation. Such indicators
should meet ecological and social science criteria for
effectively simplifying and synthesizing underlying
complexity and link to an effective monitoring and
reporting program.
To develop EPA's capabilities for estimating the value
of ecological responses to governmental decisions, EPA
should:
It Support new studies and the development of new
methodologies that will enhance the future transfer
of value information and other means of generalizing
ecological value assessments, particularly at the
national level. Such research should include national
surveys related to ecosystem services with broad (rather
than localized) implications so that value estimates
might be usable in multiple rule-making contexts. This
should also be a priority area for research.
It Invest in research designed to reduce uncertainties
associated with ecological valuation through data
collection, improvements in measurement, theory
building, and theory validation.
It Incorporate the research needs of regional offices for
systematic valuation studies in future calls by EPA for
extramural ecological valuation research proposals.
To access and share information to enhance the
Agency's capabilities for ecological valuation, EPA
should:
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i Work with other federal agencies and scientific
organizations such as the National Science
Foundation to encourage the sharing of ecological
data and the development of more consistent
ecological measures that are useful for valuation
purposes. A number of governmental organizations,
such as the United States Department of Agriculture
and the Fish & Wildlife Service, are working on
biophysical modeling and valuation, and EPA could
usefully partner with them.
' Support efforts to develop Web-based databases
of existing valuation studies that could be used
in transferring value information. The databases
should include valuation studies across a range of
ecosystems and ecosystem services. The databases
should also carefully describe the characteristics and
assumptions of each study, in order to increase the
likelihood that those studies most comparable to new
valuations can be identified for use.
' Support the development of national-level databases
of information useful in the development of new
valuation studies. Such information should include
data on the joint distribution of ecosystem and
human population characteristics that are important
determinants of the value of ecosystem services.
' Develop processes and information resources so
that EPA staff in one region or office of the Agency
can learn effectively from valuation efforts being
undertaken elsewhere within the Agency.
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1
Introduction
The mission of the Environmental Protection Agency
(EPA) is to protect human health and the environment.
During its history, EPA has focused much of its decision-
making expertise on the first part of this mission, in
particular the risks to human health from chemical
stressors in the environment. Although protecting human
health is the bedrock of EPA's traditional expertise, the
broad mission of EPA goes beyond this. EPA's Strategic
Plan (U.S. Environmental Protection Agency [EPA],
2006a) explicitly identifies the need to ensure "healthy
communities and ecosystems" as one of its five major
goals. Agency publications and independent sources
document EPA's efforts to protect ecological resources
- and its authority for doing so (EPA, 1994; EPA Risk
Assessment Forum, 2003; EPA Science Advisory Board,
2000; Hays, 1989; Russell, 1993).
EPA's mission to protect the environment requires that
the Agency understand and protect ecological systems.
Ecologists use the term "ecosystem" to describe the
dynamic complex of plant, animal, and microorganism
communities and non-living environment interacting
as a system. For example, a forest ecosystem consists
of the trees in the forest, all other living organisms, and
the non-living environment with which they interact.
Ecosystems provide basic life support for human and
animal populations and are the source of spiritual,
aesthetic, and other human experiences that are valued in
many ways by many people.
There has been a growing recognition of the
numerous and varied services that ecosystems provide to
human populations through a wide range of ecological
functions and processes (e.g., Daily, 1997). Ecosystems
not only provide goods and services that are directly
consumed by society such as food, timber, and water;
they also provide services such as flood protection,
disease regulation, pollination, and the control of
diseases, pests, and climate. There is, too, increasing
recognition of the impact of human activities on
ecosystems (e.g., Millennium Ecosystem Assessment
Board, 2003; Millennium Ecosystem Assessment, 2005).
Among the examples of this impact are traditional air
and water pollution (such as sulfur dioxide emissions,
ground-level ozone, and eutrophication), as well as
global warming; changes in the nitrogen cycle; invasive
species; aquifer depletion, and land conversions that lead
to deforestation or loss of wetlands and biodiversity.
Given the vital role that ecosystems play in our
lives, the state of these systems and the flow of services
they provide have important human implications. EPA
actions, including regulations, rules, programs, and
policy decisions, can affect the condition of ecosystems
and the flow of ecosystem services. These effects can
occur narrowly, at a local or a regional scale, or broadly,
at a national or global scale.
Despite the importance of these ecological effects,
EPA policy analyses have tended to focus on a limited
set of ecological endpoints, such as those specified in
tests for pesticide regulation (e.g., effects on the survival,
growth, and reproduction of aquatic invertebrates, fish,
birds, mammals, and terrestrial and aquatic plants) or
specified in laws administered by the Agency (e.g.,
mortality to fish, birds, plants, and animals) (EPA Risk
Assessment Forum, 2003).' Given EPA's responsibility
to ensure healthy communities and ecosystems, the
Agency should consider the full range of effects that
its actions will have. Thus, in addition to evaluating
impacts on human health and other environmental goals,
EPA should evaluate the effects of its actions, wherever
relevant, on individual organisms and plant and animal
populations, and on the structure and functions of
communities and ecosystems. Such evaluations should
be comprehensive and integrated.
To promote good decision making, policy
makers also require information about how much
ecosystems contribute to society's well-being. EPA
increasingly recognizes this need. The stated goal
of EPA's Ecological Benefits Assessment Strategic
Plan is to "help improve Agency decision making
by enhancing EPA's ability to identify, quantify, and
value the ecological benefits of existing and proposed
policies" (2006c, p. xv). Information about the value of
ecosystems and the associated effects of EPA actions
can also help inform the public about the need for
ecosystem protection, the extent to which specific
policy alternatives address that need, and the value of
the protection compared to the costs.
Despite EPA's stated mission and mandates, a gap exists
between the need to understand and protect ecological
systems and services and EPA's ability to address this need.
This report is a step toward filling that gap. It describes
how an integrated and expanded approach to ecological
valuation can help the Agency describe and measure the
value of protecting ecological systems and services, thus
better meeting its overall mission. The terms ecological
valuation or valuing ecological change, as used in this
report, refer to the process of estimating or assessing the
value of a change in an ecosystem, its components, or the
services it provides. The values at interest here are those of
the public, and this report discusses how to appropriately
estimate or assess them.
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This report was prepared by the Committee on
Valuing the Protection of Ecological Systems and
Services (C-VPESS) of EPA's Science Advisory
Board (SAB). The SAB saw a need to complement the
Agency's ongoing work by offering advice on how
EPA might better value the protection of ecological
systems and services and how that information could
support decision making to protect ecological resources.
Therefore, in 2003, the SAB Staff Office formed
C-VPESS,2 a group of experts in decision science,
ecology, economics, engineering, law, philosophy,
political science, and psychology, with a particular
understanding of ecosystem protection. The committee's
charge was to undertake a project to improve the
Agency's ability to value ecological systems and
services.3 The SAB set the following goals:
It Assessing Agency needs for valuation to support
decision making
It Assessing the state of the art and science of valuing
protection of ecological systems and services
It Identifying key areas for improving knowledge,
methodologies, practice, and research at EPA
This report provides advice for strengthening the
Agency's approaches for valuing the protection of
ecological systems and services, facilitating the use of
these approaches by decision makers, and investing
in the research areas needed to bolster the science
underlying ecological valuation.4 It identifies the need
for an expanded and integrated approach for valuing
EPA's efforts to protect ecological systems and services.
The report also recognizes and highlights issues that
need to be addressed in using and improving current
valuation methods and recommends new research
to address these needs. It provides advice to the
Administrator, EPA managers, EPA scientists and
analysts, and other staff across the Agency concerned
with ecological protection. It addresses valuation in a
broad set of contexts, including national rule making,
regional decision making, and site-specific decisions that
protect ecological systems and services.
This report appears at a time of lively interest
internationally, nationally, and within EPA in valuing
the protection of ecological systems and services. Since
the establishment of the SAB C-VPESS, a number of
major reports have focused on ways to improve the
characterization of the important role of ecological
resources (Silva and Pagiola, 2003; National Research
Council [NRC], 2004; Pagiola, von Ritter et al., 2004;
Millennium Ecosystem Assessment, 2005).5 In addition,
the Agency itself has engaged in efforts to improve
ecological valuation. The most recent product of these
efforts is the Ecological Benefits Assessment Strategic
Plan noted above (EPA, 2006c). EPA also has sought to
strengthen the science supporting ecological valuation
through the extramural Science to Achieve Results
(STAR) grants program and the Office of Research and
Development's ecosystem-services research program
(EPA Science Advisory Board, 2008b).
The committee has both learned from and built
upon these recent efforts. However, C-VPESS
distinguishes its work from many of the earlier efforts
in several key ways. First, C-VPESS considers EPA its
principal audience. In particular, C-VPESS analyzes
ways in which EPA can value its own contributions
to the protection of ecological systems and services,
so that the Agency can make better decisions in its
eco-protection programs. Many of the recent studies,
including the Millennium Assessment and National
Research Council report, do not consider the specific
policy contexts or constraints faced by EPA. Second,
most, but not all, of the previous work has concentrated
on economic valuation, and monetary valuation in
particular. C-VPESS, by contrast, is interdisciplinary
and does not focus solely on monetary or economic
methods or values.
The report is structured as follows. Chapter 2
provides an overview of the conceptual framework
and general approach advocated by the committee. It
discusses fundamental concepts as well as the current
state of ecological valuation at EPA. Most importantly,
it identifies the need for an expanded and integrated
approach to ecological valuation at EPA and describes
the key features of this approach. Subsequent chapters
develop in more detail the basic principles outlined
in chapter 2, focusing on implementation. Chapter 3
discusses predicting the effects of EPA actions and
decisions on ecological systems and services. Chapter
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4 examines a variety of methods for valuing these
changes. More detailed descriptions of the valuation
methods, developed by members of the C-VPESS,
along with a separate discussion of survey issues
relevant to ecological valuation, are available on
the SAB Web site at http://yosemite.epa.gov/sab/
sabproduct.nsf/WebBOARD/C-VPESS_Web_Methods_
Draft?OpenDocument. Chapter 5 covers cross-cutting
issues related to deliberative approaches, uncertainty,
and communication. Recognizing that implementation
of the process can vary depending on the decision
context, chapter 6 discusses implementation in three
specific contexts where ecological valuation could
play an important role in EPA analysis: national rule
making, regional partnerships, and site-specific decisions
(looking specifically at cleanup and restoration). Finally,
chapter 7 provides a summary of the report's major
findings and recommendations.
Everyone at EPA involved in the design or
implementation of valuation efforts, or in the
establishment of policy for valuations, will find the first
five chapters of this report relevant and important to
their work. Section 6.1 of this report, which addresses
national rule making, will be of particular interest to
EPA officials in Washington, DC. Sections 6.2 and 6.3,
which address regional partnerships and site-specific
decisions, will be of special interest to regional offices,
as well as those national officials responsible for
overseeing regional policy. EPA staff who are looking
for a detailed discussion of specific methods will find the
information on the SAB Web site useful. IP*
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Conceptual framework
2.1 An overview of key concepts
2.7.7 The concept of ecosystems
As noted in chapter 1, the term "ecosystem" describes
a dynamic complex of plant, animal, and microorganism
communities and their non-living environment,
interacting as a system. Ecosystems encompass all
organisms within a prescribed area, including humans.
Ecosystem functions or processes are the characteristic
physical, chemical, and biological activities that
influence the flows, storage, and transformation of
materials and energy within and through ecosystems.
These activities include processes that link organisms
with their physical environment (e.g., primary
productivity and the cycling of nutrients and water) and
processes that link organisms with each other, indirectly
influencing flows of energy, water, and nutrients (e.g.,
pollination, predation, and parasitism). These processes
in total describe the functioning of ecosystems.
2.7.2 The concept of ecosystem services
Ecosystem services are the direct or indirect
contributions that ecosystems make to the well-being of
human populations. Ecosystem processes and functions
contribute to the provision of ecosystem services, but
they are not synonymous with ecosystem services.
Ecosystem processes and functions describe biophysical
relationships that exist whether or not humans benefit
from them. These relationships generate ecosystem
services only if they contribute to human well-being,
defined broadly to include both physical well-being and
psychological gratification. Thus, ecosystem services
cannot be defined independently of human values.
The Millennium Ecosystem Assessment uses the
following categorization of ecosystem services:
® Provisioning services - services from products
obtained from ecosystems. These products include
food, fuel, fiber, biochemicals, genetic resources, and
fresh water. Many, but not all, of these products are
traded in markets.
It Regulating services - services received from the
regulation of ecosystem processes. This category
includes services that improve human well-being
by regulating the environment in which people live.
These services include flood protection, human
disease regulation, water purification, air quality
maintenance, pollination, pest control, and climate
control. These services are generally not marketed but
many have clear value to society.
It Cultural services - services that contribute to
the cultural, spiritual, and aesthetic dimensions
of people's well-being. They also contribute to
establishing a sense of place.
It Supporting services - services that maintain basic
ecosystem processes and functions such as soil
formation, primary productivity, biogeochemistry,
and provisioning of habitat. These services affect
human well-being indirectly by maintaining
processes necessary for provisioning, regulating, and
cultural services.
As this categorization suggests, the Millennium
Ecosystem Assessment adopts a very broad definition of
ecosystem services, limited only by the requirement of
a direct or indirect contribution to human well-being.6
This broad approach recognizes the myriad ways in
which ecosystems support human life and contribute to
human well-being. Boyd and Banzhaf (2006) propose a
narrower definition that focuses only on those services
that are end products of nature, i.e., "components of
nature, directly enjoyed, consumed or used to yield
human well-being" (emphasis added). They stress the
need to distinguish between intermediate products and
final (or end) products and include only final outputs in
the definition of ecosystem services, because these affect
people most directly and consequently are what people
are most likely to understand. In addition, the focus on
final products reduces the potential for double-counting,
which can arise if both intermediate and final products
or services are valued. Under this definition, ecosystem
functions and processes, such as nutrient recycling, are
not considered services. Although they contribute to
the production of ecological end products or outputs,
they are not outputs themselves. Likewise, because
supporting services contribute to human well-being
indirectly rather than directly, they are recognized as
being potentially very important but are not included in
Boyd and Banzhaf's definition of ecosystem services.
Regardless of the specific definition used, ecosystem
services play a key role in the evaluation of policies that
affect ecosystems because they reflect contributions
of the ecosystem to human well-being. Simply listing
the services derived from an ecosystem, using the best
available ecological, social, and behavioral sciences,
can help ensure appropriate recognition of the full range
of potential ecological responses to a given policy and
their effects on human well-being. It can also help make
the analysis of the role of ecosystems more transparent
and accessible. To ensure consideration of the full range
of contributions, this report uses the term ecosystem
services to refer broadly to both intermediate and final/
end services. In specific valuation contexts, however, it
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may be important to identify whether the service being
valued is an intermediate or a final service (see sections
2.1.4, 2.3.3, and 3.3.2 for related discussions).
The committee recognizes that ecosystems can be
important not only because of the services they provide
to humans directly or indirectly, but also for other
reasons, including respect for nature based on moral
or spiritual beliefs and commitments. The committee's
name includes reference to the protection of both
ecosystem services and the ecosystems themselves.
Thus, although much of this report focuses on ecosystem
services, the discussion of ecological protection and
valuation applies both to ecosystem services and to
ecosystems per se.
2.7.3 Concepts of value
People assign or hold all values. All values, regardless
of how they are defined, reflect either explicitly or
implicitly what the people assigning them care about. In
addition, values can be defined only relative to a given
individual or group. The value of an ecological change
to one individual might be very different than its value to
someone else.
Value is not a single, simple concept. People have
material, moral, spiritual, aesthetic, and other interests,
all of which can affect their thoughts, attitudes, and
actions toward nature in general and, more specifically,
toward ecosystems and the services they provide. Thus,
when people talk about environmental values, the
value of nature, or the values of ecological systems and
services, they may have different things in mind that can
relate to these different sources of value. Furthermore,
experts trained in different disciplines (e.g., decision
science, ecology, economics, philosophy, psychology)
understand the concept of value in different ways. These
differences create challenges for ecological valuations
that seek to draw from and integrate insights from
multiple disciplines.7
A fundamental distinction can be made between those
things that are valued as ends or goals and those things
that are valued as means. To value something as a means
is to value it for its usefulness in helping bring about
an end or goal that is valued in its own right. Things or
actions valued for their usefulness as means are said to
have instrumental value. Alternatively, something can be
valued for its own sake as an independent end or goal.
While a possible goal is maximizing human well-being,
one could envision a range of other possible social goals
or ends including protecting biodiversity, sustainability,
or protecting the health of children. Things valued as
ends are sometimes said to have intrinsic value. This
term has been used extensively in the philosophical
literature but there is not general agreement on its exact
definition.8
Ecosystems can be valued both as independent ends
or goals and as instrumental means to other ends or
goals. This report therefore uses the term "value" broadly
to include both values that stem from contributions
to human well-being and values that reflect other
considerations, such as social and civil norms (including
rights), and moral and spiritual beliefs and commitments.
The broad definition of value used here extends beyond
what are sometimes called the benefits derived from
ecosystem services. Even the term "benefits," however,
means different things in different contexts. In some
contexts (e.g., Millennium Ecosystem Assessment Board,
2003; Millennium Ecosystem Assessment, 2005), benefits
refers to the contributions of ecosystem services to
human well-being. In contrast, the term has a very precise
meaning in the context of EPA regulatory impact analyses
conducted under guidance from the U.S. Office of
Management and Budget (OMB). In that context, benefits
are defined by the economic concept of the willingness
to pay for a good or service or willingness to accept
compensation for its loss.
Given the many ways in which people think about
value, the committee discussed a number of different
concepts of value. Table 1 lists the various concepts
of value considered by the committee, categorized as
either preference-based or biophysical. Although people
assign or hold all values, preference-based values reflect
individuals' preferences across a variety of goods and
services, including (but not limited to) ecosystems and
their services. In contrast, biophysical values reflect
contributions to explicit or implicit biophysical goals
or standards determined to be important. The goal or
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standard might be chosen directly by decision makers
or based on the preferences of the public or relevant
groups of the public. Separating values into preference
based and biophysical categories is not the only way
to categorize values, but it has proven useful for the
committee in understanding the various concepts of
value used by different disciplines and how they are
related.9
Table 1: A classification of concepts of
value as applied to ecological systems and
their services.
Preference-based values
Attitudes or judgments
Economic values
Community-based values
Constructed preferences
Biophysical value*
Bio-ecological values
Energy-based values
However, inclusion of a value concept on the list
in table 1 does not imply a consensus endorsement
by committee members of the use of that concept in
ecological valuation. The task of distinguishing what
is valued from the concept used to define the value is
complex, regardless of the disciplinary perspective
adopted. It requires clear, meaningful distinctions
between the information available, perceptions of that
information, and decisions or actions. Each discipline
addresses these issues differently; these disciplinary
differences are a potential source of confusion and
miscommunication. So to make meaningful distinctions
between these, the committee had to agree on a set
of key assumptions. The resulting categorization of
value concepts cannot be evaluated independent of
these assumptions. Table 1 is not the only possible
categorization. Rather it is the one that allowed the
interdisciplinary C-VPESS to develop guidance relevant
to EPA for valuing changes in ecosystem services.
The concepts of value listed in table 1 differ in a
number of important ways. Attitude or judgment-based
values are based on empirically derived descriptive
theories of human attitudes, preferences, and behavior
(e.g., Dietz et al., 2005). These values are not necessarily
defined in terms of tradeoffs and are not typically
constrained by income or prices, especially those that
are outside the context of the specified assessment
process. Rather, the values are derived from individuals'
judgments of relative importance, acceptability, or
preferences across the array of changes in goods or
services presented in the assessment. Preferences and
judgments are often expressed through responses to
surveys asking for choices, ratings, or other indicators of
importance. The basis for judgments may be individual
self-interest, community well-being, or accepted civic,
ethical, or moral obligations.
Economic values assume that individuals are
rational and have well-defined and stable preferences
over alternative outcomes, which are revealed through
actual or stated choices (see, for example, Freeman,
2003). Economic values are based on utilitarianism
and assume substitutability, i.e., that different
combinations of goods and services can lead to
equivalent levels of utility for an individual (broadly
defined to allow both self-interest and altruism). They
are defined in terms of the tradeoffs that individuals are
willing to make, given the constraints they face. The
economic value of a change in one good (or service)
can be defined as the amount of another good that an
individual with a given income is willing to give up in
order to get the change in the first good. Alternatively,
it can be defined as the change in the amount of the
second good that would compensate the individual to
forego the change in the first good. Economic values
can include both use and nonuse values, and they can
be applied to both market and non-market goods.10
The tradeoffs that define economic values need not
be defined in monetary terms (willingness to pay
or willingness to accept monetary compensation),
although typically they are. Expressing economic
values in monetary terms allows a direct comparison
of the economic values of ecosystem services with the
economic values of other services produced through
environmental policy changes (e.g., effects on human
health) and with the costs of those policies. However,
monetary measures of economic values should not be
confused with other monetized measures of economic
output, such as the contribution of a given sector or
resource to gross domestic product (GDP).11
Community-based values are based on the
assumption that, when consciously making choices
about goods that might benefit the broader public,
individuals make their choices based on what they think
is good for society as a whole rather than what is good
for them as individuals. In this case, individuals could
place a positive value on a change that would reduce
their own individual well-being (e.g., Jacobs, 1997;
Costanza and Folke, 1997; Sagoff, 1998). In contrast to
economic values, these values may not reflect tradeoffs
that individuals are willing to make, given their income.
Instead, an individual might express value in terms of
the tradeoffs (perhaps, but not necessarily, in the form
of monetary payment or compensation) that the person
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feels society as a whole - rather than an individual -
should be willing to make.
Values based on constructed preferences reflect the
view that, particularly when confronted with unfamiliar
choice problems, individuals do not have well-formed
preferences and hence values. This view is based on
conclusions that some researchers have drawn from
a body of empirical work addressing this issue (e.g.,
Gregory and Slovic, 1997; Lichtenstein and Slovic,
2006). It implies that simple statements of preferences
or willingness to pay may be unstable (e.g., subject to
preference reversals).12 Some have advocated using
a structured or deliberative process as a way to help
respondents construct their preferences and values (see
section 5.1). This report refers to values arrived at by these
processes as "constructed values." The difference between
economic values and constructed values can be likened
to the difference between the work of an archeologist
and that of an architect (Gregory et al., 1993). Economic
values assume preferences exist and simply need to
be "discovered" (implying the analyst works as a type
of archeologist), while constructed values assume that
preferences need to be built through the valuation process
(similar to the work of an architect). As a result, the
values expressed by individuals (or groups) engaged in a
constructed-value process are expected to be influenced by
the process itself. Constructed values can reflect both self-
interest and community-based values.
Human preferences directly determine all of
the concepts of value described above. In contrast,
biophysical values do not depend directly on human
preferences. Biophysical values reflect the contribution
of ecological changes to a pre-specified biophysical
goal or standard identified or set prior to measuring the
contribution of those changes. This goal or standard
can be defined in ecological terms (e.g., biodiversity or
species preservation) or based on a biophysical theory of
value (e.g., energy theory of value).
Bio-ecological values depend on known or assumed
relationships between targeted ecosystem conditions and
functions (e.g., biodiversity, biomass, energy transfer,
and transformation), ecosystem functions, and the pre-
specified biophysical goal or standard (see Grossman and
Comer, 2004). Scientists can determine bio-ecological
values in several different ways that contribute to the
goals. For example, contributions to a biodiversity goal
could be based on individual measures such as genetic
distance or species richness, or on more comprehensive
measures that reflect multiple ecological considerations.
Energy-based values are defined as the direct
and indirect energy required to produce a marketed
or un-marketed (e.g., ecological) good or service
(see Costanza, 2004). In contrast to economic values,
energy-based values are not defined in terms of the
preference-based tradeoffs that individuals are willing
to make, and hence the two concepts of value are
conceptually distinct. Nonetheless, researchers who
advocate the use of energy-based values have found
that in some cases energy cost estimates are similar in
magnitude to economic measures of value. Energy-based
methods were designed to provide an alternative way
to define value that is independent of short-term human
preferences. However, some of the components used to
construct these values depend on human choices and the
preferences that underlie those choices.
The committee considered all of these various
concepts of value in its deliberations. To date, EPA
analyses have primarily sought to measure economic
values, as required by some statutes and executive orders
(see section 6.1). However, the committee believes that
information based on other concepts of value can also
be an important input into Agency decisions affecting
ecosystems. Recognizing the significance of multiple
concepts of value is an important first step in valuing the
protection of ecological systems and services.
2.7.4 The concept of valuation and different
valuation methods
Because the committee's charge relates to the value
of protecting ecological systems and services, this
report focuses on valuing ecological changes, rather
than on valuing entire ecosystems or the broader
question of assessing environmental values that relate
to ecosystem protection.13 Thus, although ecosystems
per se and their associated services have value, the term
ecological valuation, as used here, refers to the process
of measuring the value of a change in an ecosystem.,
its components, or the services it provides - i.e., it
is predicated on a comparison of a given alternative
scenario with a baseline scenario. In its simplest form,
valuation requires, first, a prediction of a change in the
ecosystem or the flow of ecosystem services, and then,
the estimation of the value of that change.
An important issue in ecological valuation is
the extent to which individuals who express values
understand the contributions of related ecological goods
and services to human well-being. In many cases, an
ecological change may have important implications
that are not widely recognized or understood by the
general public. This is particularly true for supporting or
intermediate services, where the important contributions
to human well-being are indirect. For example,
Weslawski et al. (2004) indicated that the invertebrate
fauna found in soils and sediments are important
in remineralization, waste treatment, biological
control, gas and climate regulation, and erosion and
sedimentation control. However, the general public
had no understanding or appreciation of these services
(although the public may have an appreciation of the
higher-level services or end-point services, such as
clean water, aesthetics, and foods that could be derived
from the system). Likewise, although individuals might
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understand the recreational contributions to human
well-being associated with a given EPA action to limit
nutrient pollution in streams and lakes, they might not
recognize or fully appreciate the associated nutrient-
cycling or water-quality implications. If asked to value
these services, they may express policy preferences or
values that reflect incomplete information. Individuals
might respond to a survey, make purchases, or otherwise
behave as if they place no value on an ecosystem
service if they are ignorant of the role of that service in
contributing to their well-being or other goals.
There may be occasions where assessments of
existing, uninformed attitudes and values held by the
public are desired, such as when ascertaining current
public understanding of particular ecosystems or
services, and designing communications to improve
understanding of ecosystems or services or to solicit
public support for specific protection policies. In most
cases, however, valuation should seek to measure the
values that people hold and would express if they
were well informed about the relevant ecological and
human well-being factors involved. This embodies two
principles. First, the ultimate objective of any valuation
exercise is to assess the values of the public, not the
personal values or preferences of scientists or experts.
Basing valuation on the personal preferences of scientists
or experts rather than those of the general public would
undermine the usual presumptions that, in a democratic
society, values held individually and collectively within
society should be considered in public policy decisions,
and that public involvement is central to democratic
governance (e.g., Berelson, 1952; NRC, 1996).
Second, when EPA assesses values, the Agency
should provide the public with as much of the relevant
science as necessary to make informed judgments about
the human/social consequences of the changes they
are being asked to value. Lack of public understanding
can pose a potentially serious challenge for ecological
valuation. This problem can be reduced by explicitly
incorporating into the valuation process information
about ecological responses to policy options based
on the best available science. For example, valuation
exercises employing surveys should provide survey
respondents with the relevant ecological information
and the associated human/social consequences.
Likewise, valuation exercises employing deliberative
processes should convey relevant information directly to
participants in the process.
The lack of public understanding about underlying
ecological functions and processes also highlights the
importance of framing valuation-related questions in
terms of services that people can directly understand
and value (see further discussion in section 3.3.2). In
many cases, this means asking people to value final or
end services that directly affect them rather than asking
them to value intermediate services whose effect is less
direct. When an EPA action has an important effect on
an intermediate service, it would then be incumbent on
experts to predict the expected impact of these changes
on final services, which could then be valued. In the
example of Weslawski et al. (2004) discussed above,
this would mean that individuals should not be asked to
value a change in invertebrate fauna or the intermediate
services they impact (remineralization, waste treatment,
etc.). Rather, relevant science should be used to estimate
how these changes would ultimately impact final services
that individuals understand and appreciate (such as clean
water, aesthetics, etc.), and the valuation questions should
be framed in terms of these final services.
Even when valuation is informed by the best available
science, the valuation process will almost always involve
uncertainty. Uncertainty arises in the prediction of
changes in ecosystems, in the resulting change in the
flow of services, and in estimating the values associated
with those changes. The valuation process needs to
recognize, assess, and communicate the various sources
of uncertainty (see section 5.2 for further discussion).
The valuation process should also recognize that
information about different sources of value may be
important for decision making, and it should identify
appropriate methods to characterize or measure those
values. There are a number of valuation methods that can
be used to try to estimate or measure values. The methods
considered here differ on a number of dimensions.
Perhaps most importantly, different methods can
seek to measure different concepts of value, which
differ in their theoretical foundations and assumptions.
The committee engaged in considerable discussion and
debate about the appropriate role of different methods.
Although there is not a one-to-one mapping between
valuation methods and the concepts of value discussed
above, often different views about the appropriate role of
alternative valuation methods stem from different views
about the nature of value or the appropriate concept
of value to apply in a given context. Researchers with
different disciplinary backgrounds (e.g., economics,
psychology, ecology, decision science) often adopt a
particular concept of value and work primarily with and
advocate a specific method or set of methods designed to
measure that concept.
For example, a fundamental distinction exists between
valuation methods that assume individuals have well-
defined preferences and those based on the premise
that preferences - and hence values - are constructed
through the valuation process. As discussed above, the
concept of constructed values is based on the premise
that, for complex and relatively unfamiliar goods such
as ecosystems and some of their associated services, an
individual's preferences may not be well-formed and may
be subject to intentional or unintentional manipulation or
bias, for example by changes in the wording or framing
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of surveys (see "Survey issues for ecological valuation:
Current best practices and recommendations for research
" at http://yosemite.epa.gov/Sab/Sabproduct.nsfAVebFiles/
SurveyMethods/$File/Survey_methods.pdf). The extent
to which this is true has been the subject of scholarly
debate both within the committee and outside, and
most likely varies with the context (for different sides
of this debate, see Becker and Stigler, 1967; Gregory,
Lichtenstein and Slovic, 1993; Lichtenstein and Slovic,
2006; and Tourangeau, 2000). If preferences and values
regarding ecological systems and services are not well-
formed and are instead constructed, they may not be
accurately measured or characterized by valuation methods
that assume well-formed preferences. For example,
some individuals have strongly held values that they
find difficult, impossible, or inappropriate to express in
monetary units. Requiring these individuals to express
such values in monetary equivalents (e.g., in a survey) may
compel them to assume a perspective that is unfamiliar or
even offensive. Valuation methods based on discourse and
deliberation are designed to make explicit and facilitate the
construction of preferences in such contexts.
Methods differ along other dimensions as well. For
example, they can differ in the type(s) of metrics or outputs
produced. In addition, some valuation methods yield a
single metric of value, while others yield multiple metrics.
Methods that produce a single metric are not necessarily
preferable to those that do not. Which approach is more
appropriate or useful depends, in general, on the decision
context. For example, if the context requires a ranking or
choice based on a single criterion (e.g., net benefits), a
valuation approach that yields a single (aggregate) metric
is needed. In contrast, in a decision context where multiple
values are involved (e.g., human health, threatened species,
aesthetics, social equity, and other civil obligations) and
decision makers themselves are charged with appropriately
weighing and balancing competing interests and resolving
trade-offs, a multi-attribute approach is preferable.
Depending upon the context, this weighing and balancing
might be done through political discourse or through a
deliberative, decision-aiding process (see the discussions in
section 5.3).
Finally, some methods are well developed and have
been applied extensively in different contexts; others
are still evolving and require further development and
testing. However, even for methods that have been used
extensively in the past, applying these methods to value
changes in ecological systems and services can pose
significant challenges beyond those that might exist in
other, less complex contexts.
2.2 Ecological valuation at EPA
As noted in chapter 1, this report is focused on
ecological valuation within EPA. This necessitates
consideration of some issues that might not be
considered in more general discussions of ecological
valuation. EPA operates in a variety of different decision
contexts where valuation might be useful. Although
much of the interest in ecological valuation at EPA has
focused on valuation needs in national rule making,
valuation can also be useful in other decision contexts.
Different parts of the Agency need valuation for different
purposes and for different audiences. Some contexts
closely prescribe how valuations are to be conducted;
other contexts are less prescriptive. In addition, EPA
faces institutional constraints that influence and limit
how it typically conducts valuation in different contexts.
This section of the report describes the committee's
understanding of the Agency's needs and constraints
related to ecological valuation. It then discusses the
committee's understanding of how ecological valuation
is typically done at EPA, using an illustrative example.
The committee's observations from this example form
the basis of its recommendations for an expanded
and integrated approach to valuation discussed in the
remainder of this report.
2.2.7 Policy contexts at EPA where ecological
valuation can be important
As noted, much of the interest in ecological valuation
at EPA stems from the need to better value the ecological
effects of EPA actions in national rule makings. Two
of EPA's governing statutes (the Toxic Substances
Control Act and the Federal Insecticide, Fungicide
and Rodenticide Act) require economic assessments
for national rule making. In addition, Executive
Orders 12866 and 13422 have similar requirements
for "significant regulatory actions." These economic
assessments provide information about whether the
aggregate benefits of a policy or regulatory change
exceed the costs, which is an important input into policy
decisions (Arrow et al., 1996). An Office of Management
and Budget circular on "Regulatory Analysis" (OMB
Circular A-4) issued in September 2003 identifies key
elements of a regulatory analysis for "economically
significant rules." Consistent with the principles of
welfare economics that underlie benefit-cost analysis,
the Circular defines benefits and costs in terms of
economic values. Ecological valuation plays a key role
in estimating or characterizing these values (see further
discussions in sections 2.2.2 and 6.1.2).
EPA's regional offices may also find valuation
important in their partnerships with other governments
and organizations where the contributions of ecological
protection to human well-being are potentially important.
Regional offices, for example, may find valuation
useful in setting priorities, such as targeting projects for
wetland restoration and enhancement, or in identifying
critical ecosystems or ecological resources for attention.
Valuation may also assist state and local governments,
other federal agencies, and non-governmental
organizations in deciding how best to protect lands and
land uses and in communicating the suitability of the
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approach chosen.
Valuation can also be useful to EPA in making
site-specific decisions, such as those related to the
remediation, restoration, and redevelopment of
contaminated sites. By providing information about the
value of the ecosystem services that could be obtained
from site redevelopment, ecological valuation can
improve decisions at cleanup sites, including hazardous
waste sites listed on the Superfund National Priority List
and other cleanup sites (e.g., sites that are the focus of
EPA's Brownfields Economic Redevelopment Initiative,
Federal Facilities Restoration and Reuse Program,
Underground Storage Tank Program, and Research
Conservation and Recovery Act).
Although many of the issues and recommendations
throughout this report apply across decision contexts,
specific valuation needs and opportunities vary across
these contexts. For this reason, chapter 6 of this report
discusses the implementation of the report's general
recommendations in these three specific decision
contexts: national rule making, regional partnerships,
and site-specific restoration or redevelopment. Other
examples of contexts where ecological valuation may be
useful for EPA include:
It Assessing programs as mandated by the Government
Performance and Results Act (GPRA) of 199314
It Identifying Supplemental Environmental Projects
(EPA Office of Enforcement and Compliance
Assurance, 2001) for enforcement cases where
projects involve protection of ecological systems
and services
VI Reviewing Environmental Impact Statements
prepared by other federal agencies, under the
National Environmental Protection Act
It Issuing permits to protect water quality for those
specific states that have not applied for or been
approved to run programs on their own and where
established state water quality standards allow
discretion to consider ecological valuation information.
Although this report does not explicitly discuss these
other contexts, the approach and selected valuation
methods described can be useful in such contexts.
2.2.2 Institutional and other issues affecting
valuation at EPA
EPA must conduct ecological valuation within a
set of institutional, legal, and practical constraints.
These constraints include procedural requirements
relating to timing and oversight, as well as resource
limitations (both monetary and personnel). To better
understand the implications of these issues for its work,
the committee conducted a series of interviews with
Agency staff.15 The interviews focused on the process
of developing economic analyses as part of Regulatory
Impact Assessments (RIA) for rule making and on the
relationship between EPA and the Office of Management
and Budget. The interviews also proved beneficial in
better understanding strategic planning, performance
reviews, regional analysis, and other situations where
the Agency needs to assess the value of protecting
ecosystems and ecosystem services.
EPA has a formal rule-development process
involving several stages, each of which imposes
demands on the Agency. Despite the rigidity of
the process, Agency analysts assess the value of
protecting ecosystems in different ways. Practices
vary considerably across program offices, reflecting
differences in mission, in-house expertise, and other
factors. Program offices have different statutory and
strategic missions and have primary responsibility
for developing the rules within their mission-specific
areas. The organization, financing, and skills of the
program offices differ. Although the National Center
for Environmental Economics (NCEE) is the Agency's
centralized reviewer of economic analysis within the
Agency,16 the primary expertise and development of the
rules resides within the program offices.
The timing of the process largely determines the kinds
of analytical techniques that are employed. The timing is
influenced by court-imposed deadlines on the rule process,
as well as Paperwork Reduction Act requirements related
to the collection and analysis of new data. By contrast, the
scientific community is accustomed to much longer time
horizons for their analyses.
Collecting new data poses a significant bureaucratic
problem for the Agency. To collect new information
from individuals, businesses, and other entities protected
under the Paperwork Reduction Act, the Agency must
submit an Information Collection Request, which
is reviewed within the Agency and by OMB. The
Paperwork Reduction Act requires this hurdle and
imposes the review responsibility on OMB, adding a
significant amount of time to the assessment process.
With a time limit of one or two years, at most, to conduct
a study, this kind of review significantly limits the scope
of analysis the Agency can conduct. Because EPA most
often has not been able to collect new information, the
Agency has, by necessity, relied heavily on transferring
ecological and social values information from previous
studies to new analyses.
OMB also acts as an oversight body to review EPA's
economic benefit analyses. EPA must justify its claims
regarding the economic benefits of its actions, including
any analyses of willingness to pay or willingness to
accept for ecological protection. As noted above, OMB's
Circular A-4 provides explicit guidance for valuation.
For a contribution to human welfare or cost that cannot
be expressed in monetary terms, the circular instructs
Agency staff to "try to measure it in terms of its physical
units," or, alternatively, to "describe the benefit or
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cost qualitatively" (p. 10)." Thus, although Circular
A-4 does not require that all economic benefits be
monetized, it does require, at a minimum, some scientific
characterization of those contributions. However, little
guidance is provided on how to carry out this task. The
circular instead urges regulators to "exercise professional
judgment in identifying the importance of non-quantified
factors and assess as best you can how they might
change the ranking of alternatives based on estimated net
benefits" (p. 10).
In conducting benefit assessments, EPA has an
incentive to use valuation methods that have been accepted
by OMB in the past. This may create a bias toward
the status quo and a disincentive to explore innovative
approaches, both when monetizing values using economic
valuation and when quantifying or characterizing values
that are not monetized. The committee recognizes the
importance of consistency in the methods used for
valuation, but also sees limitations from relying solely
on previously accepted methods when innovative or
expanded approaches might also be considered.
A related issue involves review of RIAs by external
experts. The Agency does not take a standardized
approach to RIA review. EPA staff and managers
reported that peer review was focused only on "novel"
elements of an analysis, meeting the requirements of
EPA's peer review policy (EPA, 2006d). This raises the
question of how the term novel is defined by the Agency,
and perhaps by OMB. More importantly, the novelty
standard, ironically, creates another incentive to avoid
conducting innovative analyses because the fastest,
cheapest option is to avoid review altogether.
Finally, the Agency relies, to varying degrees, on
a variety of offices to develop assessments, including
individual program offices and NCEE. It is not clear
what form of organization is most effective. The
Agency's Ecological Benefits Assessment Strategic Plan
(2006c) contains suggestions for addressing some of the
limitations on ecological valuation resulting from the
Agency's internal structure. It advocates the creation of a
high-level Agency oversight committee and a staff-level
ecological valuation assessment forum. The committee
endorses these recommendations.
The Agency will continue to face significant external
constraints when considering ecological valuation.
The committee recognizes the practical importance
of these constraints and advises the Agency to be as
comprehensive as possible in its analyses within the
limitations imposed by these constraints.
2.2.3 An illustrative example of economic
benefit assessment related to ecological
protection at EPA
To better understand the current state of ecological
valuation at EPA, the committee thoroughly examined one
specific case in which assessment of economic benefits
was undertaken: the environmental and economic benefits
analysis that EPA prepared in support of new regulations
for Concentrated Animal Feeding Operations (C AFOs)
(EPA, 2002b).18>19 In communications with the committee,
the Agency indicated that this analysis was illustrative in
form and general content of other EPA regulatory analyses
and assessments of the economic benefits of ecological
protection.
EPA proposed the new CAFO rule in December 2000
under the federal Clean Water Act, to replace 25-year-
old technology requirements and permit regulations.
EPA published the final rule in December 2003. The
new CAFO regulations, which cover more than 15,000
large CAFO operations, require the reduction of manure
and wastewater pollutants (from both feedlots and land
applications of manure) and remove exemptions for
stormwater-only discharges.
Because the proposed new CAFO rule constituted
a significant regulatory action, Executive Order 12866
required EPA to assess the economic costs and benefits
of the rule. An intra-agency team at EPA, including
economists and environmental scientists, worked with
the U.S. Department of Agriculture on the economic
benefit assessment. Before publishing the draft CAFO
rule in December 2000, EPA spent two years preparing
an initial assessment of the economic costs and
benefits of the major options. After releasing the draft
rule, EPA spent another year collecting data, taking
public comments, and preparing assessments of new
options. EPA published its final assessment in 2003.
EPA estimates that it spent approximately $1 million
in overall contract support to develop the assessment,
with approximately $250,000 to $300,000 allocated to
water-quality modeling.
EPA identified a wide variety of potential "use"
and "non-use" benefits as part of its analysis.20 Using
various economic valuation methods, EPA provided
monetary quantifications for seven benefit categories.21
Approximately 85 percent of the estimated monetary
benefits quantified by EPA were attributed to
recreational benefits. According to Agency staff, EPA's
analysis was driven by what EPA could monetize. EPA
focused on those contributions for which data were
known to be available for quantification of both the
baseline condition and the likely changes stemming
from the proposed rule, and for translation of those
changes into monetary equivalents.
EPA's final assessment provides only a brief
discussion of the contributions to human welfare that it
could not monetize. A table in the Executive Summary
lists a variety of non-monetized contributions22 but
designated them only as "not monetized." EPA did not
quantify these "contributions" in non-monetary terms
(e.g., using biophysical metrics) or present a qualitative
analysis of their importance. Instead, it represented
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the aggregate effect of these "substantial additional
environmental benefits" simply by attaching a "+B"
placeholder to the estimated range of total monetized
benefits. Although the Executive Summary gives a
brief description of these "non-monetized" benefits, the
remainder of the report devotes little attention to them.
The CAFO economic benefits assessment illustrates
a number of limitations in the current state of ecological
valuation at EPA. First, as noted above, the CAFO
analysis did not provide the full characterization
of ecological contributions to human welfare using
quantitative and qualitative information, as OMB
Circular A-4 would appear to require. The report instead
focused on a limited set of economic benefits, driven
primarily by the ability to monetize these benefits using
generally accepted models and existing value measures.23
These benefits did not include all of the major ecological
contributions to human welfare that the new CAFO rule
would likely generate.24 The circular requires that an
assessment identify and characterize all of the important
benefits of a proposed rule, not simply those that can
be monetized. In this case, the monetized benefits alone
exceeded the cost of the rule and hence the focus on
benefits that could be readily monetized did not affect
the outcome of the regulatory review. However, in a
different context an economic benefit assessment based
only on easily monetized benefits could inadvertently
undermine support for a rule that would be justified
based on a more inclusive characterization of
contributions to human welfare.
Second, the monetary values for many of the
economic benefits were estimated through highly
leveraged benefits transfers (transferring benefits derived
from one or more study sites to a policy site) that often
were based on dated studies conducted in contexts quite
different from the CAFO rule application.25 This was
undoubtedly driven to a large extent by time, data, and
resource constraints, which made it very difficult for the
Agency to conduct new surveys or studies and virtually
forced the Agency to develop benefit assessments using
existing value estimates. Nonetheless, reliance on dated
studies in quite different contexts raises questions about
the credibility or validity of the benefit estimates. This
is particularly true when values are presented as point
estimates, without adequate recognition of uncertainty
and data quality.
Third, EPA apparently did not develop a comprehensive
conceptual model of the rule's potentially significant
ecological effects. The report presents a simple
conceptual model that traces outputs (a list of pollutants
in manure - Exhibit 2-2 in the CAFO report) through
pathways (Exhibit 2-1) to environmental and human
health effects.26 This model provided useful guidance,
but was not sufficiently comprehensive to assure
identification of all possible significant ecological
effects. A conceptual model of the relevant ecosystem(s)
at the start of a valuation project, as discussed in section
3.1, can help to identify not only important primary
effects but also important secondary effects - which
frequently may be of greater consequence or value than
the primary effects.27
Fourth, the CAFO analysis demonstrates the
challenges of conducting required economic benefit
assessments of ecological protection at the national
level.28 National rule making inevitably requires EPA
to generalize away from geographic specifics, in terms
of both ecological responses to policy options and
associated values. It is, however, possible (and desirable)
to use existing and ongoing research at local and regional
scales to conduct intensive case studies (e.g., individual
watersheds, lakes, streams, estuaries) in support of the
national-scale analyses. Systematically performing
and documenting comparisons to intensive study sites
can indicate the extent to which certain regions or
conditions might yield impacts that vary considerably
from the central tendency predicted by the national
model. Alternatively, with sufficient data about the joint
distribution of ecological, socio-economic, and other
relevant conditions, case study results can be combined
in a "bottom-up" approach to produce a national level
analysis (see further discussion in section 6.1.3.1).
Fifth, although EPA invited public comment on the
draft CAFO analysis as required by Executive Order
12866, there is no indication in the draft CAFO report
that the Agency consulted with the public for help in
identifying, assessing, and prioritizing the effects and
values addressed in its analysis. Nor is there discussion
in the final CAFO analysis of any public comments that
might have been received on the draft CAFO analysis.
Early public involvement can play a valuable role
in helping the Agency to identify all of the systems
and services affected by proposed regulations and to
determine the regulatory effects that are likely to be of
greatest value.
Sixth, EPA did not conduct a peer review of the
benefit estimates used in the analysis of the CAFO rule.
While the Agency appropriately emphasized peer review
in its analysis and report, EPA did not seek peer review
in deriving benefit estimates for the CAFO rule. Once
again, this shortcoming is undoubtedly a function of
time and resource constraints. However, peer review,
especially early in the process, could help EPA staff
identify relevant and available data, models, and methods
to support its valuation efforts. An effective method
would be to review not only individual components of an
analysis (e.g., watershed modeling, air dispersal, human
health, recreation, and aesthetics) but also the overall
conceptual model and analytic scheme as well.
Finally, EPA's analysis and report closely adhered to
the requirements of Executive Order 12866. Although
the Executive Order provided the proximate reason
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for preparing the analysis and report, the Agency did
not have to limit itself to the goals and requirements
contained therein. The Executive Order does not
preclude EPA from adopting broader goals and hence
conducting other analyses in addition to the required
benefit-cost analysis. Assessments such as the CAFO
study can serve many purposes, including helping to
educate policy makers and the public more generally
about the economic benefits and other values that
stem from EPA regulations. It is important for EPA to
recognize this broader purpose.
2.3 An integrated and expanded
approach to ecological valuation:
key features
The CAFO example highlights a number of
limitations to the current state of ecological valuation at
EPA. The committee's analysis points to the need for an
expanded, integrated approach to valuing the ecological
effects of EPA actions. This approach focuses on the
effects of greatest concern to people and on integrating
ecological analysis with valuation. The remainder of this
chapter describes the approach to ecological valuation
developed and endorsed by the committee. The approach
should serve as a guide to EPA staff as they conduct
RIAs and seek to implement Circular A-4, as well as in
decisions on regional and local priorities and activities.
Subsequent chapters provide a more detailed discussion
of the implementation of the approach.
As noted above (see section 2.1.4), ecological
valuation requires both prediction of ecological changes
and an estimation of the value of those changes.
The committee recommends that, when conducting
ecological valuation, the Agency use a valuation process
that has three key, interrelated features:
It Early consideration of effects that are socially
important
It Prediction of ecological responses in value-relevant
terms
It Consideration of the possible use of a wider
range of valuation methods to provide information
about values
2.3.7 Early consideration of effects that are
socially important
The first key component of the proposed approach is
the early identification and prediction of the ecological
responses that contribute to human well-being and are
likely to be of greatest importance to people, whether
or not the contributions are easily measured, monetized,
or widely recognized by the public. These could
include ecosystem responses that people value directly
or the resulting responses in the services provided by
the ecosystem. The importance of a given response
will depend on both the magnitude and biophysical
importance of the effect and on the resulting importance
to society. Early in the valuation process EPA needs
to obtain information about the ecosystem services or
characteristics that are of greatest concern, so that efforts
to quantify and characterize values can focus on the
related ecological response.
Identifying socially relevant effects requires a
systematic consideration of the many possible sources of
value from ecosystem protection and an identification of
the values that may be relevant to the particular policy
under consideration. Such a systematic consideration
will likely expand the types of services to be
characterized, quantified, or explicitly valued. Previous
valuation assessments have often focused on what can
be measured relatively easily, rather than what is most
important to society. This can diminish the relevance,
usefulness, and impact of the assessment.
An obvious question is how to assess the likely
importance of different ecological responses prior
to completion of the valuation process. A main
purpose of a thorough valuation study is to provide an
assessment of the importance of ecological responses
to different policy options. Nonetheless, in the early
stages of the process, preliminary indicators of likely
importance can serve as screening devices to provide
guidance on the types of responses that are likely
to be of greatest concern. EPA can obtain relevant
information in a variety of ways. These range from in-
depth studies of people's mental models and how their
preferences are shaped by their conceptualization of
ecosystems and ecological services, to more standard
survey responses from prior or purpose-specific
studies. In addition, early public involvement29 or
the use of focus groups or workshops, composed of
representative individuals from the affected population
and relevant scientific experts, can help identify
ecological responses of concern.
In identifying what matters to people, it is important
to bear in mind that people's preferences depend on their
understandings of causal processes and relationships and
the information at hand. As noted previously, people's
expressions of what is important or of the tradeoffs they
are willing to make can change with the amount and
kind of information provided, as well as the manner in
which it is conveyed. Collaborative interaction between
analysts and public representatives can help to ensure
that respondents have sufficient information when
expressing views and preferences. In fact, EPA can
use the ecological valuation process as a mechanism
for increasing and augmenting public discourse about
ecosystem services and how EPA actions affect those
services, thereby narrowing the gap between expert and
public knowledge of ecological effects.
The committee's approach to valuation envisions
consideration of a broader set of ecological effects.
However, the committee recognizes that in most cases
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the purpose of the ecological valuation is to help answer
specific questions that the Agency faces. The analyses
do not always have to be complete to provide the
information needed to answer a particular question. For
example, suppose a state agency partnering with EPA
must decide whether to allow logging at a particular site
and an analysis focused solely on the recreational value
of the unharvested site shows that these values alone
exceed the net commercial value of logging. The agency
can then conclude that logging will lead to a net social
loss without valuing other ecological effects of logging.
Thus, if the sole purpose of the valuation exercise is to
determine whether the logging would generate a net
social gain or loss and that determination can be based
on a subset of values, then it would be unnecessary
to expend a large effort to analyze the full suite of
values. Of course, if the recreation value is less than
the net commercial value of logging, the agency cannot
conclude that logging would lead to a net social gain.
In such cases, the analysis can be reframed to provide a
lower bound on the magnitude of the ecological benefits
from reduced logging that would be necessary to justify
the cost.
2.3.2 Predicting ecological responses in
value-relevant terms
The second major component of the C-VPESS process
is to predict ecological responses in terms relevant for
valuation. This should begin with a conceptual model,
followed by quantification (where possible) using specific
ecological and related models. It requires both the
prediction of biophysical responses to EPA actions and
the mapping of those responses into effects on ecosystem
services or features that are of direct concern to people
- first conceptually, and then quantitatively. Ideally, this
would be done using an ecological production function
that is specified and parameterized for the ecosystem and
associated services of relevance.
Numerous mathematical models of ecological
processes and functions are available. These models
cover the spectrum of biological organization and
ecological hierarchy (e.g., individual level, population
level, community level, ecosystem level, landscape level,
and global biosphere). In principle, models can provide
quantitative predictions of ecological responses to a
given EPA action at different temporal and spatial levels.
Some models are appropriate for specific contexts, such
as particular species or geographic location, while others
are more general.
Ecological models provide a basis for estimating
the ecological changes that could result from a given
EPA action or policy (e.g., changes in net primary
productivity or tree growth) and the associated changes
in ecosystems or ecosystem services. However, many
have been developed to satisfy specific research
objectives and not EPA policy or regulatory objectives.
Using these models to assess the contributions of EPA
actions to human well-being thus poses challenges.
The first challenge is to link existing models with
Agency actions that are intended to control chemical,
physical, and biological sources of stress. The valuation
framework outlined here requires estimation of the
biophysical responses to a specific EPA action. To be
used for this purpose, ecological models must be linked
to information about stressors. This link is often not a
key feature of ecological models developed for research
purposes. Existing models may need to be modified or
new models developed to address this need.
Ecological models also need to be appropriately
parameterized for use in policy analysis. Numerous
ecological studies have been conducted at various levels,
for example, at Long-Term Ecological Research Sites
(Farber et al., 2006). These might provide a starting
point for parameterizing policy-relevant models. A
key challenge is to determine whether and to what
extent parameters estimated from a given study site
or population can be transferred for use in evaluating
ecological changes at a different location, time, or
scale. In many cases, data do not currently exist to
parameterize existing models for use in assessing EPA's
actions. Such data may need to be developed before
the Agency can use these models fully. To the extent
that transferable models and parameter estimates exist,
a central repository for this information would be
extremely valuable.
The final, but perhaps most important, challenge
is translating the responses predicted by standard
ecological models into responses in terms of ecosystem
services or features that can then be valued. If adapted
properly, ecological models can connect material outputs
to stocks and service flows (assuming that the services
have been well-identified). Providing the link between
material outputs and services involves several steps.
These steps include: identifying service providers;
determining the aspects of ecological community
structure that influence function; assessing the key
environmental factors that influence the provision of
services; and measuring the spatial and temporal scales
over which services are provided (Kremen, 2005).
However, most ecological models currently are not
designed with this objective in mind. In particular, they
do not predict biophysical responses to stressors in ways
that the public can understand or that directly link to
human/social consequences that can be valued.
2.3.3 Use of a wider range of valuation methods
Given predicted ecological responses, the value of
these responses needs to be characterized and, when
possible, measured or quantified. As noted above, a
variety of valuation methods exist. To date, economic
valuation methods have been the mainstay of ecological
valuation at EPA, not only in the context of national rule
making (as required by OMB Circular A-4) but also in
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decision contexts not governed by OMB guidance. A key
tenet of the valuation process proposed by the committee
is consideration of both economic valuation methods and
other valuation methods.
The committee sees two possible roles that use of a
broader suite of methods might play. First, the use of an
expanded suite of methods could allow EPA analyses to
better capture the full range of contributions stemming
from ecosystem protection and the multiple sources
of value derived from ecosystems. Different valuation
methods are designed to assess different sources of
value, using different value concepts, and no single
method captures them all. Thus, in contexts where the
Agency seeks to capture all sources of value and is not
constrained in this regard by legislative or executive
rules, consideration of a broader suite of methods
can contribute to this goal. The specific method(s) to
be used would depend upon the underlying sources
and concepts of value the Agency seeks to assess,
as well as the specific information needs, legal and
regulatory requirements (if any), data availability, and
methodological limitations it faces. When the Agency
can select from a range of methods, there may be scope
for piloting and evaluating the use of methods that are
relatively novel and in the developmental stage.
Second, even when the Agency is required or chooses
to base its assessment on economic values (for example,
in the context of national rule making), non-economic
valuation methods may be useful in supporting and
improving the economic valuation (benefit assessment)
in the following ways:
® Non-economic methods could help identify the
ecological responses that people care about. For
example, surveys, interviews, or focus groups in
which individuals indicate the importance of different
environmental and other concerns might provide
information about the ecological effects of a specific
rule that are likely to be viewed as important.
It Some non-economic methods could provide an
indicator of an economic benefit that the Agency cannot
monetize using economic valuation. For example,
metrics that are primarily biophysical or social-
economic indicators of impact, such as acres of habitat
restored or the number and characteristics of individuals
or communities affected, can serve as indicators of
at least some contributions of ecosystem protection
to human welfare (see further discussion in section
6.1). As noted earlier, OMB Circular A-4 requires that
benefits be quantified when they cannot be monetized;
some bio-ecological or attitude/judgment-based metrics
provide potentially useful forms of quantification in
such circumstances. Although they would not provide
full information about the magnitude of benefits, they
might be expected to correlate with benefits. Thus,
when properly chosen, higher levels of a particular
biophysical, socio-economic or attitudinal metric would
signal higher benefits.
It Non-economic methods could be used to provide
supplemental information outside the strict benefit-
cost analysis about sources of value that might not
be fully captured in benefit measures that come from
economic valuation, such as moral or spiritual values.
This is consistent with the EPA's call in its Ecological
Benefits Assessment Strategic Plan for exploring
supplemental approaches to valuation. Even if not
part of a formal benefit-cost analysis, information
about non-economic values may be useful to both
EPA and the public.
Regardless of the specific role played by different
methods, the use of a broader suite of methods must
adhere to some fundamental principles. First, only
valuation methods that meet appropriate validity and
related criteria should ultimately be used. Section 4.1
provides a discussion of criteria for assessing validity.
The validity of some methods has already been subjected
to considerable scrutiny. For methods that are still in
the developmental stage, exploration of the method's
potential should include an assessment of the validity of
the method using a scientifically based set of criteria.
The second principle relates to aggregation across
methods. Clearly, values cannot be aggregated across
methods that yield value estimates in different units.
However, even when units are comparable (e.g., both
methods yield monetary estimates of value), aggregation
across methods may not be appropriate. Because of their
different assumptions, different methods can measure
quite different underlying concepts of value and hence
yield measures that are not comparable. As a result, simple
aggregation across methods is generally not scientifically
justified. For example, it would be conceptually
inconsistent to add monetary value estimates obtained from
an economic valuation method and monetary estimates
obtained from a deliberative process in which preferences
are constructed, because the two are not based on the
same underlying premises. Nonetheless, information
about both estimates of value may be of interest to policy
makers. In such cases, value estimates should be reported
separately rather than aggregated across methods (see
further discussion in section 6.1.3.1.). This is consistent
with the suggestion above that, in the context of national
rule makings where benefit assessments are conducted
under Circular A-4, information about non-economic
values should be considered separately (as supplemental
information) rather than "added to" the economic benefit
estimates to obtain a measure of total value.
A third principle relates to the potential for double-
counting when multiple methods are used to measure
or characterize values. Even when different valuation
methods seek to measure the same underlying concept
of value (so that aggregation is conceptually justified),
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Figure 1: Process for implementing an expanded and integrated approach to ecological valuation
Social, Behavioral, Economic, and Ecological Sciences
(2) Identification of
potential ecological
responses to options
Policy
context
(1) Problem
formulation/
generation of
policy options
(6)
Communication
of valuation
results and
integration with
other analyses
and inputs
needed for
decision
Policy
Decision
k
1
r >
' /
(4) Prediction of ecosystem and
ecosystem responses in biophysical
terms
(5) Characterization,
representation, or
measurement of the
value of changes in
monetary and non-
monetary terms
adding estimates from different valuation methods could
lead to double counting. This can arise either when the
value of a change in a given final service is captured
by multiple methods, or when both an intermediate
service and the final service to which it contributes are
valued separately. Clearly identifying which sources of
value are captured by a given method (and which are
not) will highlight any potential overlap that might exist
when multiple methods are used. This could reduce the
likelihood of double-counting.
2.4 Steps in implementing the proposed
approach
The previous section provides an overview of
an integrated and expanded approach to ecological
valuation proposed by the committee. The process for
implementing the proposed framework would involve
the following steps, depicted in figure 1. The six
steps are:
1. Formulate the valuation problem and choose policy
options to be considered, given the policy context
2. Identify the significant biophysical responses that
could result from the different options
3. Identify the responses in the ecosystem and its
services that are socially important
4. Predict the responses in the ecosystem and relevant
ecosystem services in biophysical terms that link to
human/social consequences and hence to values
5. Characterize, represent, or measure the value of
responses in the ecosystem and its relevant services in
monetary or non-monetary terms
6. Communicate results to policy makers for use in
policy decisions
Although the steps are depicted sequentially, in
actual practice numerous feedbacks should occur with
interactions and iterations across steps. For this reason
and other reasons (see section 3.1), it is important
that the valuation process be based on a conceptual
model, developed initially in steps 2 and 3, that can be
updated and revised. For example, information about
the value of responses in ecosystem services to a given
set of policy options might cause a reformulation of
the problem or identification of new policy options
that could be considered. Also, a projected biophysical
effect might suggest human-social values that were not
initially considered.
As depicted in figure 1, the implementation of the
approach is also contingent upon the specific policy
context and intended to provide input for a particular
policy decision. As noted above, ecological valuation can
play a key role in a number of different decision contexts,
including national rule making and regional or local
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decisions regarding priorities and actions. The valuation
problem should be formulated within the specific EPA
decision context. Different contexts will generally be
governed by different laws, principles, mandates, and
public concerns. These contexts can differ not only in the
required scale for the analysis (e.g., national vs. local)
but possibly also in the type of valuation information
that may be needed. For example, in contexts requiring
an economic benefit-cost analysis, benefits need to be
monetized whenever possible. In contrast, expressing
contributions to human welfare in monetary terms might
be of little or no relevance to EPA analysts in other
contexts. The policy context therefore influences the
appropriateness of methods, models, and data.
Figure 1 also highlights the need for information and
input from a wide range of disciplines at each step of the
process, beginning with problem formulation and the
identification of the ecosystem responses that matter and
continuing through the valuation of those responses. Instead
of ecologists working independently from economists and
other social scientists, experts in those disciplines should
collaborate throughout. Ecological models need to be
developed, modified, or extended to provide usable inputs
for value assessments. Likewise, valuation methods and
models need to be developed, modified, or extended to
address important ecological and biophysical effects that
may be underrepresented in value assessments.
Figure 1 suggests a structure that in many ways
parallels the Agency's Framework for Ecological Risk
Assessment (EPA Risk Assessment Forum, 1992;
EPA Risk Assessment Forum, 1998). This framework
underlies the ecological risk guidelines developed by
EPA to support decision making intended to protect
ecological resources (EPA Risk Assessment Forum,
1992). Ecological valuation is a complement to
ecological risk assessment. Both processes begin with
an EPA decision or policy context requiring information
about ecological effects. Next follows a formulation of
the problem and an identification of the purpose and
objectives of the analysis, as well as the policy options
that will be considered. In addition, both ecological
risk assessment and ecological valuation involve
the prediction and estimation of possible ecological
responses to an EPA action or decision. They also both
ultimately use this (and related) information in the
evaluation of alternative actions or decisions.
Although they are similar, ecological valuation goes
beyond ecological risk assessment in an important way.
Typically, risk assessments primarily focus on predicting
the magnitudes and likelihoods of possible adverse
effects on species, populations, and locations, but do
not provide information about the societal importance
or significance of these effects. In contrast, ecological
valuation seeks to characterize the importance to society
of predicted ecological effects by providing information
on either the value that society places on ecological
improvements or the loss it experiences from ecological
degradation. By incorporating human values, ecological
valuation is closer to risk characterization than risk
assessment. Many of the principles that should govern
risk characterization outlined in the 1996 National
Research Council Report Understanding Risk: Informing
Decisions in a Democratic Society pertain to ecological
valuation as well. For example, both should be the
outcome of an analytical and transparent process that
incorporates both scientific information and information
from the various interested and affected parties about
their concerns and values.
2.5 Conclusions and recommendations
Ecosystems provide a wide array of services that
directly or indirectly support or enhance human
populations. People also can value them in their own
right for reasons stemming from ethical, spiritual,
cultural, or biocentric principles. EPA's broad mission to
protect human health and the environment includes the
protection of ecosystems.
Many EPA actions affect the state of ecosystems
and the services derived from them. To date, ecological
valuation at EPA has focused primarily on a limited set
of contributions to human well-being from ecological
protection. This stems primarily from the difficulty
of predicting the responses of ecological systems and
services to EPA actions and the difficulty of quantifying,
measuring, or characterizing the resulting contributions
to human well-being and associated values. The
presumption that contributions need to be monetized in
order to be carefully characterized also restricts the range
of ecological effects that are typically considered in EPA
analyses, particularly at the national level.
To implement the key features of an integrated an
expanded approach to ecological valuation described
in section 2.3 and reiterated in Table 2, the committee
recommends that the Agency take the following steps.
® EPA should cover an expanded range of important
ecological effects and human considerations using an
integrated approach. Such an approach should:
• Involve, from the beginning and throughout, an
interdisciplinary collaboration among natural and
social scientists, as well as input about public
concerns.
• Identify early in the process the ecological responses
or contributions to human well-being that are likely
to be of greatest importance to people and focus
valuation efforts on these responses. This would
likely expand the range of ecological responses that
are valued, recognizing the many sources of value.
• Predict ecological responses to EPA actions or
decisions in value-relevant terms. To do so, the
valuation process should highlight the concept of
•ill
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Table 2: Key features of an expanded and
integrated approach to valuation
Early consideration of effects that are
socially important
Prediction of ecological responses in value-
relevant terms
Consideration of the possible use of a wider
range of valuation methods to provide
information about values
ecosystem services and provide a mapping from
responses in ecological systems to responses in
services or ecosystem components that can be
directly valued by the public.
• Consider the use of a wider range of possible
valuation methods, Methods not currently used by
EPA could be used to provide information about
multiple sources and concepts of value that might be
of interest to the Agency and the public. In addition,
they could contribute to assessments based on
economic values by (a) helping to identify early in
the process the ecosystem services that are likely to
be of concern to the public and that should therefore
be the focus of the assessment, and (b) addressing the
requirement in Circular A-4 to provide quantitative
or qualitative information about the possible
magnitude of benefits (or costs) when they cannot be
monetized using economic valuation.
1 Because EPA has limited experience with the use
of non-economic valuation methods and some of
these methods are still in the developmental stages,
the committee believes that it would be wise for the
Agency to pilot and evaluate the use of these other
methods in different valuation contexts. In the context
of national rule making, the Agency should conduct
one or two model analyses (perhaps one prospective
and one retrospective) of how the use of a wider
range of methods could improve benefit assessments
in the ways described above. This experience could
then guide the Agency's valuation efforts when it
conducts subsequent benefit assessments. In addition,
the Agency should pilot the use of other valuation
methods in local and regional decision contexts,
which are less prescriptive and therefore do not need
to focus primarily on economic values.
• As part of this effort, EPA should identify the
additional information to be collected and the
valuation methods to be used to collect it. After the
information is collected and the related valuation
completed, EPA should evaluate the contribution of
the data collected through the use of new methods to
the overall valuation analysis. This evaluation should
examine: (a) the properties of the method using
a set of explicit criteria (see section 4.1); (b) the
contribution of the new information to the decision
process; and (c) the potential for using the new
information in subsequent analyses (for example, as
part of a value transfer).
® EPA should create an institutional structure to
facilitate consistent implementation of the proposed
valuation approach across the Agency, including the
establishment of a high-level oversight body and a
staff-level valuation assessment forum, as suggested
in the Agency's Ecological Benefits Assessment
Strategic Plan (EPA 2006c).
Through the use of the expanded and integrated
valuation framework recommended in this report,
EPA can move toward greater recognition and
consideration of the effects that its actions have
on ecosystems and the services they provide. This
will allow EPA to improve environmental decision
making at the national, regional, and site-specific
levels and contribute to EPA's overall mission
regarding ecosystem protection. EPA can also better
use the ecological valuation process to educate the
public about the role of ecosystems and the value
of ecosystem protection. Through this expanded
and integrated approach, different publics can
provide EPA with information about how they value
ecosystem services.
The remainder of this report discusses in more detail
how to implement the ideas embodied in the C-VPESS
integrated value assessment approach. Some of these
ideas can be implemented in the short run, using the
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existing knowledge base, while others require investments
in research and data or method development. Specific
recommendations regarding implementation and research
needs are included in the chapters that follow.
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Building a foundation for ecological valuation:
predicting ecological responses in value-
relevant terms
Chapter 2 presented an overview of an integrated and
expanded approach to valuing ecological responses to
EPA actions or decisions. This chapter focuses on one
part of that approach: predicting ecological responses
in value-relevant terms. In every context where the need
for valuation arises, information about the magnitude
of ecological effects will be a key component of value
assessment. No matter what valuation method is used,
the valuation process first requires an assessment of the
responses of ecosystems and ecosystem services to the
relevant EPA action or decision. Even where valuation
is not possible, an assessment of these responses can
provide valuable information to decision makers and the
public. OMB in Circular A-4, for example, provides that,
where a benefit cannot be expressed in monetary terms
for a major national rule making, EPA "should still try to
measure the benefit in its physical units."
This chapter begins with a discussion of the importance
of developing an initial conceptual model of the relevant
ecosystem and its services that can guide the entire
valuation process. Section 3.2 discusses the steps needed to
estimate the response of ecosystem and ecosystem services
to EPA actions or decisions, including the key importance
of ecological production functions. Section 3.3 highlights
the challenges that currently exist in trying to implement
ecological production functions in specific contexts.
These challenges include understanding and modeling
the relevant ecology, identifying the relevant ecosystem
services, and mapping ecological responses into changes
in the relevant ecosystem services. To a large extent, these
challenges stem from the site-specificity and underlying
complexity of ecosystems. Ecological responses to
stressors are often non-linear and discontinuous. Section
3.4 discusses the strategies for evaluating the effects
of EPA actions on ecosystem services in the absence
of a comprehensive ecological production function.
Section 3.5 examines the problem of data availability
and conditions where transfer of ecological information
might be appropriate. Section 3.6 briefly addresses the
importance of new ecological research to support valuation
efforts. Finally, section 3.7 summarizes the committee's
conclusions and recommendations.
3.1 The road map: a conceptual model
The key first step in predicting the effects of EPA
actions and decisions on ecological systems and services
is the formulation of a conceptual model of the relevant
ecosystem(s) and its associated services that can guide
the valuation effort. The committee recommends that
EPA start each ecological valuation by developing such a
model. Because the purpose of the model is to guide the
valuation process, the model should be context-specific
and constructed at a general level. The conceptual
model should diagram the predicted relationships
among the relevant EPA actions, affected ecosystems,
and associated services. The conceptual model is
fundamentally a tool to help characterize and predict the
ecological and social consequences of the relevant EPA
actions and thereby help guide the full valuation process.
Later in the valuation process, EPA will need to use
ecological production functions to generate more detailed
analyses of key interactions, specific ecological responses
to EPA decisions or actions, and resulting consequences to
ecosystem services using ecological production functions.
As discussed in section 3.3, these analyses will typically
require the use of appropriately scaled and parameterized
ecological models with a narrower focus. The conceptual
model provides a framework for planning for the use of
these predictive models at the start of the process and for
integrating the more specific analyses into the overall
valuation exercise. The goal in the development and use of
all models should be to generate information of relevance to
the policy making decision facing EPA (Dietz et al., 2003).
The conceptual model should clearly identify
the relevant functional levels of the ecosystem, the
interrelationships among ecosystem components, and
how they contribute to the provision of ecosystem
services, either directly or indirectly. Figure 2 provides
an example illustrating some aspects of ecosystem
services related to nutrient pollution, adapted from
Covich et al. (2004).
As figure 2 highlights, the conceptual model should
include both information about the underlying ecology
and a link to ecological services that are of importance
to society. The conceptual model, for example, should
include: the impacts of environmental stressors, such as
waste disposal, on organisms at different trophic levels;
key interactions among species at different levels; and
changes at different levels that affect ecological services,
such as the food supply, clean water, or recreation.
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Not surprisingly, ecologists often focus on
underlying ecological relationships (depicted in the
lower part of figure 2), and valuation experts tend
to focus on the later, value-oriented stages of the
process, starting with ecosystem services (shown at
the top of the figure). A key principle of this report is
the need to consider and integrate both aspects of the
process. For ecological valuation aimed at improved
decision making, a detailed analysis of ecological
responses is insufficient unless those responses are
mapped to responses in ecosystem services or system
components that can be valued. Valuation exercises
that do not reflect the key ecological processes and
functions are similarly insufficient. Both parts of the
valuation process are essential. The development
of a conceptual model at the outset of the valuation
process can help ensure that the process is guided by
this basic principle.
Figure 2: Illustration from Covich et al. (2004) showing relationships of major functional types to
ecological services
Food Supply
Clean Water Recreation
(drinking water, irrigation) (e.g., hunting, fishing, boating)
fish, waterfowl, and other aquatic vertebrates
rngation) (e.g., hunting, fishing, bo
^ ^-1
ler aquatic vertebrates
I
invertebrate
I
predators
macroinvertebrate
grazers
filter/deposit feeders
shredders
\ / ^
X S v FPC
^k J y (fine particutate
phytobenthos, _
biofilms,
aquatic plants
fragmentation
leakage
FPOM>
1 'e organic matter)
protozoans
flagellates
_ phyto- and ^
bacterioplankton
• dissolved nutrients
Waste
Disposal
Terrestrial Input
of Organic Matter
Nutrient Loading
(e.g., weathering of soils)
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The development of the conceptual model is a
significant task that deserves the attention of EPA staff
throughout the Agency, experts in relevant topics from
the biophysical and social sciences, and the public.
Involving all constituents, including the public, at this
stage will enhance transparency, provide the opportunity
for more input and better understanding, and ultimately
give the process greater legitimacy. Participatory
methods such as mediated modeling, described in
section 5.3, can play a valuable role in the development
of the conceptual model. To promote transparency
and understanding, the conceptual model, the process
for developing and completing it, and the decisions
embedded in it should also be part of the formal record.
The conceptual model should allow for iteration
and possible model changes and refinement over time.
For example, analysts may initially believe that an
action at a local site has local ecological effects, but,
on further analysis of the stressors, realize that effects
reach to more distant regions downstream or downwind,
requiring a change in the conceptual model. Similarly,
analysis of the relevant ecological system may show
that stressors originally considered insignificant should
be added to the conceptual model. As an example, a
relatively non-toxic chemical effluent, normally seen as
insignificant, might become significant if it is determined
that low stream flows or intermittent streams effectively
increase the concentration of the chemical to toxic levels
during some parts of the year. The need for iterative
model changes and refinements is critical and should be
part of all valuation efforts.
3.2 The important role of ecological
production functions in implementing
the conceptual model
While the conceptual model serves as a guide
for the overall valuation process, the individual
components and linkages embodied in that model
must be operationalized. The goal is to provide, to the
extent possible, quantitative estimates of the responses
of ecosystem components or services that can then be
valued. Operationalizing the conceptual model requires
mapping or describing:
1. How the relevant EPA action will affect the ecosystem
2. How the effects on the ecosystem will, in turn, affect
the provision of ecosystem services
3. How people value that ecosystem service response.
The third step, valuation, is the subject of chapter
4. The remainder of this chapter considers how to
implement the first two steps, estimating how the EPA
actions will affect the ecosystem, and how the ecosystem
response will affect ecosystem services.
The first step requires describing how the EPA action
- by reducing or eliminating a stressor or by otherwise
protecting or altering an environmental factor - will affect
important aspects of ecosystem structure or function. Would
a stressor that EPA can eliminate otherwise cause a species
to disappear or change in abundance? Would the stressor
result in a change in biogeochemistry? For any important
effects, EPA should make a quantitative estimate.
The ecological production function is a critical tool
for implementing the second step - estimating how
the ecological response will affect the provision of
ecosystem services. Ecological production functions are
similar to the production functions used in economics
to define the relationship between inputs (e.g., labor,
capital equipment, raw materials) and outputs of goods
and services. Ecological production functions describe
the relationships between the structure and function of
ecosystems, on the one hand, and the provision of various
ecosystems services, on the other. These functions capture
the biophysical relationships between ecological systems
and the services they provide, as well as the inter-related
processes and functions, such as sequestration, predation,
and nutrient cycling. Coupled with information about
how alternative EPA actions or management scenarios
will affect the ecological inputs, ecological production
functions can be used to predict the effects of the actions
or scenarios on ecosystem services.
Ecological production functions could describe
the relationship between a broad suite of inputs and
ecosystem services. An ecological production function
could describe the relationship between inputs for
an individual service or, to the extent that two or
more services are linked (e.g., produced jointly or in
competition), a multiple-output function could capture
these linkages.
The analogy between ecological production functions
and economic production functions is not perfect.
Economic production functions generally involve
inputs over which humans have direct control, and the
relationship between inputs and outputs is frequently
well studied and defined. Ecological production
functions, by contrast, involve inputs over which
humans have variable and often limited control, and the
relationship between inputs and outputs is complex and
often very uncertain. Nonetheless, economic production
functions provide a useful analogy for the type of
relationships and models needed in order to effectively
estimate the effect of EPA actions or scenarios on
ecosystem services of importance to the public.
Scientists are making progress in understanding and
defining ecological production functions for certain
ecosystem services. One such service is pollination.
Animal pollination is essential for the production
globally of about one-third of agricultural crops and the
majority of plant species (Kremen and Chaplin, 2007;
Kremen et al., 2007). Ecologists have recently built
spatially explicit models incorporating land use and its
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effect on habitat and foraging behavior of pollinators
(Kremen et al., 2007). Such models can link changes
in ecosystem conditions to the level of pollination of
agricultural crops and their yields. Empirical studies
using such models have shown the effects of proximity
to natural forest on coffee productivity (Ricketts et al.,
2004) and the interaction of wild and honey bees on
sunflower pollination (Greenleaf and Kremen, 2006).
A second ecosystem service for which considerable
progress has been made in developing ecological
production functions is carbon sequestration. Agricultural
systems, forests, and other ecosystems contain carbon in
soil, roots, and above-ground biomass. Rapidly growing
markets for carbon sequestration and the potential
to generate carbon credits are pushing interest in the
accurate assessment of the carbon sequestration potential
of agricultural and other managed ecosystems (Willey
and Chamaides, 2007). It is possible to quantify above-
ground carbon stores fairly accurately in various types of
ecosystems such as forests (e.g., Birdsey, 2006; Smith et
al., 2006; EPA Office of Atmospheric Programs, 2005),
but greater uncertainty remains about stocks of soil carbon
that make up the majority of carbon in agricultural and
grassland systems (e.g., Antle et al., 2002; EPA Office of
Atmospheric Programs, 2005).
Despite this progress, our current understanding of
ecological production functions for most ecosystem
services remains limited (Balmford et al., 2002;
Millennium Ecosystem Assessment, 2005; NRC, 2004).
Although many ecological models exist, most do not
predict ecosystem service responses. The next section
discusses some of the challenges in developing complete
ecological production function models for use in
ecological valuation.
3.3 Challenges in implementing
ecological production functions
Developing and implementing an ecological
production function requires:
It Characterizing the ecology of the system
It Identifying the ecosystem services of interest
It Developing a complete mapping from the structure
and function of the ecological system to the provision
of the relevant ecosystem services
Figure 3 provides a graphical representation of the
necessary elements of an ecological production function.
On the left side of the figure, ecological models at
various organizational levels predict ecological elements
or attributes - ecological endpoints - that can be linked
to ecosystem services of interest. These ecological
Figure 3: Graphical depiction of ecological production functions
ECOLOGICAL PRODUCTION FUNCTIONS
Ecological Models Ecological Endpoints Map to Ecosystem Services
^Habitable
Q
ndividual
/^Population
( Dynamic
/Community
\ Level
/Ecosystem
v. Level
Global
\ Level
Space
• Foraging
Area
Population Level
Biomass
Species
Biodiversity
Biogeochemical
Functions
Biosphere
Preservation
Eco-tourism
Clean Water
Harvest
Flood Control
Spiritual Value
Aesthetics
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models are important components of an ecological
production function, but they are not the complete
function. An ecological production function requires that
the endpoints of these ecological models be mapped or
translated into corresponding predictions regarding the
ecosystem services of interest to humans.
Each of these three key steps in developing and
implementing ecological production functions face
challenges that EPA should work to address. This section
elaborates on the challenges.
3.3.7 Understanding and modeling the
underlying ecology
As noted, the first step in developing an ecological
production function is to understand the components,
processes, and functioning of the ecosystem that underlie
and generate the ecosystem services. Analysts must
have a strong understanding of the underlying ecology.
Although much is known about ecological systems,
current knowledge is still very incomplete, largely
because ecosystems are inherently complex, dynamic
systems that vary greatly over time and space.
As an example of the complexity of ecological
functions, consider the ecological services associated
with the activities of soil organisms that might be
affected by disposal of waste on that soil. These
organisms thrive on organic matter present or added
to the soil. By breaking down that organic matter,
certain groups of organisms maintain soil structure
through their burrowing activities. These, in turn,
provide pathways for the movement of water and air.
Other kinds of organisms shred the organic material
into smaller units that microbes then utilize. The
microbes release nutrients in a form that higher plants
can use for their growth or in a dissolved form that
can move hydrologically from the immediate site into
groundwater or a stream. Other groups of specialized
microbes may release various nitrogen gases directly
to the atmosphere. The nature of soil organisms and
the products that they utilize, store, or release all help
to regulate the biogeochemistry of the site, as well as
the site's hydrology, productivity, and carbon-storage
capacity. Predicting the effect of particular actions on
ecosystem services such as waste processing and the
provision of clean water requires an understanding of
these complex ecological relationships.
Complexity also stems from the fact that ecological
effects may persist for different periods of time,
affecting both the temporal and spatial scales that are
relevant for any analysis. The ecological effects from
carbon dioxide in the atmosphere, for example, are
likely to persist far longer and require a larger temporal
and spatial analysis than the effects from acute toxic
exposures to hazardous chemicals.
Because of the complexity of most ecosystems,
analysts need ecological models to organize information,
elicit the interactions among the variables represented
in the models, and reveal outcomes under different
sets of assumptions or driving variables. Some models
are statistical; others are primarily simulation models.
Some statistical and theoretical models are relatively
small, containing a few equations. Other ecological
models are very large, involving hundreds of interacting
calculations. Models may be valuable in many of the
steps of assessing ecological value including:
It Estimating stress loading
® Estimating the exposure pattern of stress (especially
the spatial and temporal implications)
It Identifying ecological elements receiving exposure
® Estimating the exposure-response function of
ecological elements
It Estimating the change in stress from potential
Agency actions
® Estimating the response of ecosystem services or
functions to change in stress
Ecological models can describe ecological systems
and ecological relationships that range in scale from
local (individual plants) to regional (crop productivity)
to national (continental migration of large animals).
These models frequently focus on specific ecological
characteristics, such as the populations of one or
more species or the movement of nutrients through
ecosystems, and can cover the full spectrum of biological
organization and ecological hierarchy. For instance, a
hydrological model might describe possible changes in
the timing and amount of water in streams and rivers. A
biogeochemical model might predict effects on the levels
of various chemical elements in soils, groundwater, and
surface waters. A terrestrial carbon cycle model might
project changes in plant growth and in carbon sinks
or sources. Population and community models might
project changes in specific animal and plant populations
of concern.
Inevitably, models suffer from limitations. Although
many ecological models are well established and used
routinely for describing ecological systems, ecological
models can only represent the current state of knowledge
about the dynamics of an ecological system and generate
outputs only as reliable as the data the models use. The
dynamism of a system adds to the challenge of modeling,
as do the non-linear and discontinuous responses of
system components. The model outputs are subject to
known, and sometimes unknown, levels of statistical
uncertainty. Chapter 5 of this report discusses the issue of
uncertainty and how EPA should address uncertainty in
its valuation efforts (section 5.2.2 examines the specific
sources of uncertainty in ecological valuations.) It is
important that EPA assess and report on all sources
of uncertainty in order to permit a more informed
evaluation of and comparison between policy options.
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At the moment, the important point to emphasize is
that uncertainty pervades the entire valuation process,
including the modeling of ecological processes.
Moreover, no ecological model can include all
possible interactions. Some ecological models explicitly
or implicitly incorporate human dimensions, but most
focus primarily on ecological functions. In addition,
models capture historical relationships and typically
are not able to predict ecosystem patterns for which no
modern counterpart exists. For example, if a stressor
such as climate change leads species to "reshuffle into
novel ecosystems unknown today" for which there is no
analog, current models will not predict the effect (Fox,
2007; Dasgupta and Maler, 2004).
Data insufficiency also frequently constrains
the applicability, and to some degree formulation,
of ecological models. Even when a full theoretical
model of an ecosystem exists, applying the model to
a specific context of interest will require determining
the parameters of the model for that context. However,
parameterization is generally difficult because of the
complexity of ecological systems and their dependence
on an array of site-specific variables. As a result, many
ecological models are site specific. The relatively large
amounts of site-specific data required to build and
parameterize models mean that transferability of the
models is limited, either because the model has been
developed using spatially constrained data or because
inadequate data are available at specific sites with which
to drive or parameterize the model. This site-specificity
can significantly limit models' applicability to the spatial
and temporal complexities required in valuing ecosystem
services, especially at regional and national scales.
Ecological models incorporate the best available
scientific knowledge of how ecosystems will respond
to a given perturbation and the sensitivity of various
ecosystem components. The committee therefore
recommends that EPA support all of its ecological
valuations with ecological models and data sufficient to
understand and estimate the likely ecological response to
major alternatives being considered by decision makers.
Ecological models are essential in representing and
analyzing ecological production functions. Guided by the
conceptual model described in section 3.1, the Agency
should use ecological models to quantify the likely
effects of an action on the ecosystem and the resulting
effect on ecosystem services.
Given the limitations of many current models,
however, the committee also recommends that EPA make
the development of effective ecological models one of
its research priorities. EPA is already strengthening its
approach for developing and using models for decision
making. For example, EPA has established the Council
for Regulatory Environmental Modeling (CREM), a
cross-Agency council of senior managers with the goal
of improving the quality, consistency, and transparency
of models used by the Agency for environmental decision
making. The committee endorses this effort and advises
EPA to continue to strengthen its work in this area.
Because many ecological models exist and a variety
of models might be used for any particular valuation
context (Roughgarden, 1998b), the Agency will often
be faced with a choice among one or more predictive
models. The appropriate choice of models, and the
availability and appropriateness of supporting databases,
will depend in part on the scale of analysis (e.g., local vs.
national) and the precision of the analysis needed for the
relevant policy decision.
The committee recommends that EPA identify
clear criteria for selecting ecological models and apply
these criteria in a consistent and transparent way.
Several existing reports discuss the selection and use
of models for environmental decision making and can
provide valuable guidance to EPA in the valuation
context. In 2005, EPA's Council for Regulatory
Environmental Modeling prepared a "Draft Guidance
on the Development, Evaluation and Application of
Regulatory Environmental Models." In 2006, an EPA
Science Advisory Board panel reviewed the draft report
and provided recommendations on revisions (EPA
Science Advisory Board, 2006a). Until EPA publishes
final guidance, the draft guidance and SAB review can
provide EPA with valuable advice in selecting models.
A 2007 report of the National Research Council Board
on Environmental Studies and Toxicology entitled
"Models in Regulatory Environmental Regulatory
Decision Making" also provides valuable guidance
on selecting appropriate ecological models for use in
valuation exercises. The criteria in these reports and
the SAB review can guide the Agency both in selecting
among models and in setting priorities for future model
development.
These reports address environmental modeling in
general and do not focus on the use of ecological models
for valuation purposes. For valuation purposes, EPA
should use the criteria from these reports and choose
models that generate outputs either directly in terms of
relevant ecosystem services or that are easily translatable
into effects on such services. The ultimate goal is to
provide a measure of the value of the effects of an action
on ecosystem services. The models chosen must advance
that goal.
3.3.2 Identifying ecosystem services
Another key challenge in implementing ecological
production functions is identifying the relevant
ecosystem services to be evaluated in any given context.
As already emphasized, ecological production functions
must ultimately link ecological responses to effects on
ecosystem services. This requires that EPA identify the
relevant services in a consistent and appropriate way.
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Identifying the relevant ecosystem services cannot be
done deductively. The relevant services depend on what
is important to people in the specific context, once they
have been informed about potential ecological effects.
The objective is to identify what in nature matters to
people and to express this intuitively and in terms that
can be commonly understood. Technical expressions or
descriptions meaningful only to experts are not sufficient;
however, underlying ecological science must inform the
identification of relevant services. Identifying relevant
services requires a collaborative interaction among
ecologists, social scientists, and the public.
The Millennium Ecosystem Assessment (2005)
provides a good starting point for identifying potentially
relevant ecosystem services by providing an extensive
discussion and classification of ecosystem services. In
each specific context, however, EPA should also seek
input from the general public and from individuals
or entities particularly affected by the relevant EPA
decision as to what is important. In doing so, EPA can
use a variety of sources, such as the valuation methods
described in chapter 4 (e.g., surveys, mental models
research, or deliberative processes), content analysis
of public comments, solicitation of expert opinion and
testimony, and summaries of previous decisions in
similar circumstances.
Moving toward a common understanding of
ecosystem services is important for the success of
future valuation efforts. The relative success of EPA
efforts to translate air quality problems into human
health-related social effects is due in part to the
development of agreements about well-defined health
outcomes that can be valued. In order to value the
health effects of air pollution, it has been necessary
to move from describing effects in terms such as
oxygen transfer rates in the lung to terms that are
more easily understood and valued by the public, such
as asthma attacks. Although the search for common
health outcomes that can be used for valuation has
been difficult, the lesson is clear: If health and social
scientists are to productively interact in assessing the
value of improved environmental quality, measures
of health outcomes that are understandable and
meaningful to both groups of scientists are necessary.
These outcomes are now understood by disciplines
as divergent as pulmonary medicine and urban
economics (EPA Science Advisory Board, 2002a). The
search for common outcomes that can be valued will
be equally important in the ecological realm, where
biophysical processes and outcomes can be highly
varied and complex.
Some authors have advocated the development of
a common list of services to be collectively debated,
defined, and used by both ecologists and social scientists
across contexts (e.g., Boyd and Banzaf, 2006). Such a
list might include:
8 Species populations - including those that generate
use value, such as harvested species and pollinator
species, and those that generate existence values
It Land cover types - such as forests, wetlands, natural
land covers and vistas, beaches, open land, and
wilderness
VI Resource quantities - such as surface water and
groundwater availability
VI Resource quality - such as air quality, drinking water
quality, and soil quality
VI Biodiversity
Although only a subset of the services on a common
list might be relevant in any particular context, the list
would provide some standardization in the definition of
ecosystem services across contexts. Advocates argue that
development of a common list is the best way to debate
and convey a shared mindset, foster the integration of
biophysical and social approaches, and provide greater
transparency, legitimacy, and public communication
about what in nature is being gained and lost. Achieving
agreement on a common list might be an important goal,
but it is likely to be difficult for complex ecological
systems. Converging prematurely on a limited list of
services could misdirect valuation efforts and miss
important intermediate and end services.
To ensure that the services can be readily and
accurately valued, the identification of relevant
ecosystem services, either as a common list or for a
specific analysis, should follow some basic principles.
First, it is important to avoid double counting. All things
that matter should be counted, but only once.30 Second,
the ecosystem services should have concrete outcomes
that can be clearly expressed in terms that the public can
understand. If ecological outcomes are to provide useful
input into valuation, they must be described in terms that
are meaningful to those whose values are to be assessed.
EPA has launched several initiatives to develop
common and useful endpoints for ecological models.
These endpoints, however, are typically not themselves
ecosystem services. The endpoints instead are often
ecological attributes or elements, such as biomass, that
serve as inputs to the production of ecosystem services.
Although these endpoints often link to the Agency's
statutory responsibilities and policy concerns, social
scientists typically cannot use them by themselves to
value effects on ecosystem services. Looking at figure
3, social scientists need information on the ecosystem
services at the right side of the diagram. Most endpoints,
shown in the center column of figure 3, are at least one
step removed and must still be translated into responses
in ecosystem services.
EPA's generic ecological assessment endpoints
(GEAEs) (EPA Risk Assessment Forum, 2003) provide a
valuable example. The GEAEs are based on legislative,
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policy, and regulatory mandates. If expanded to include
landscape-, regional-, and global-level endpoints (see
EPA Risk Assessment Forum, 2003, Table 4.1; Harwell
et al., 1999; EPA Science Advisory Board 2002b),
they can serve as a first step in characterizing relevant
ecological systems and quantifying responses to
stressors. Although the GEAEs are a valuable starting
point, they also illustrate how far EPA must go in
estimating responses in ecosystem services. First, the
GEAEs are expressed in technical terms and not in terms
of concrete outcomes that the public can understand.
These technical terms are certainly appropriate for some
regulatory purposes, but most of the public is unlikely to
be familiar with them. Therefore, they will have limited
use in valuation.
Second, the GEAEs do not necessarily reflect the
things in nature that people care about. Although the
endpoints reflect policy and regulatory needs (EPA Risk
Assessment Forum, 2003, p.5), they depict a narrow
range of ecological outcomes, confined to organism,
population, and community or ecosystem effects.
They do not relate to water availability, aesthetics,
or air quality, but rather to kills, gross anomalies,
survival, fecundity and growth, extirpation, abundance,
production, and taxa richness. These effects are clearly
relevant to biological assessment. However, for anglers
who care about the abundance of healthy fish in a
particular location at a particular time, lost value depends
not on the number of kills or anomalies but rather on the
abundance of healthy fish.
Another important ecological endpoint initiative
is EPA's Environmental Monitoring and Assessment
Program (EMAP). Created in the early 1990s, EMAP is
a long-term program to assess the status and trends in
ecological conditions at regional scales (Hunsaker and
Carpenter 1990; Hunsaker, 1993; Lear and Chapman,
1994). Once again, the endpoints developed in EMAP
are generally not direct measures of ecosystem services.
EMAP does, however, emphasize the importance of
developing endpoints that are understandable and
useful to decision makers and the public. As EPA
has recognized, if an endpoint is to serve as a useful
indicator of ecological health, it "must produce results
that are clearly understood and accepted by scientists,
policy makers, and the public" (Jackson et al., 2000).
One study that used focus groups to examine the value of
EMAP endpoints as indicators of environmental health
similarly concluded that there is a need "to develop
language that simultaneously fits within both scientists'
and nonscientists' different frames of reference, such that
resulting indicators [are] at once technically accurate and
understandable" (Schiller et al., 2001). The committee
agrees with this conclusion and urges EPA to move
further toward this goal.
The Agency is aware of the limitations of current
endpoints. The committee emphasizes the limitations
for two reasons: to highlight the difference between
the Agency's current approach to defining relevant
ecological endpoints and the need to identify effects
on ecosystem services; and to encourage the Agency to
move toward identifying and developing measures of
ecosystem services that are relevant and directly useful
for valuation.
The identification of relevant ecosystem services will
require increased interaction between natural and social
scientists within the Agency. The committee urges the
Agency to foster this interaction through a dialogue
related to the identification and development of measures
of ecosystem services. One means of doing this is to
encourage greater coordination among the Agency's
extramural research programs, including the Decision-
Making and Valuation for Environmental Policy grant
program and the Office of Research and Development's
ecosystem-services research program. A joint research
initiative focused on the development of measures of
ecosystem services will address a critical policy need and
provide a way for the Agency to integrate its ecological
and social science expertise in a very concrete fashion.
3.3.3 Mapping from ecosystem responses to
changes in ecosystem services
Once the underlying ecology is understood and
modeled and the relevant ecosystem services are
identified, ecological production functions still require
a correlation of the ecosystem responses to the relevant
ecosystem services. As noted above, although numerous
ecological models exist for modeling ecological
systems, most of them fall short of estimating effects
on ecosystem services. Many of the models have been
developed to satisfy research objectives, rather than
Agency policy or regulatory objectives. The outputs of
these models have not generally been cast in terms of
direct concern to people and thus are not useful as inputs
to valuation techniques. For example, evapotranspiration
rates, rates of carbon turnover, and changes in leaf area
are important for ecological understanding, but are not
outputs of direct human importance. Some models exist
with outputs directly related to human values and include
models that predict fish and game populations or forest
productivity. These models, however, address only a
limited set of ecosystem services.
3.4 Strategies to provide the ecological
science to support valuation
Although development of a broad suite of ecological
production functions faces numerous challenges, EPA
can employ several other approaches at this time to
gain a better understanding of how ecosystem services
respond to its actions. These approaches include using
indicators that are correlated with ecosystem services
and using meta-analyses. Indicators represent a form of
simplification; meta-analysis is based on information
aggregation.
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3.4.7 Use of indicators
As noted above, an ecological production function
describes the relationship between ecological inputs
and ecosystem services. When a full characterization
of this relationship is not available, some indication of
the direction and possible magnitude of the changes in
the services that would result from an Agency action
might still be obtained using indicators. "Indicators,"
as the term is used here, are measures of key ecosystem
properties whose changes are correlated with changes in
ecosystem services.31 In general, an indicator approach
involves selecting and measuring key predictive
variables rather than denning and implementing a
complete ecological production function. Because of
the complexity of the interactions between economic
and ecological systems, economists frequently take a
similar simplified approach that focuses on effects only
in the relevant markets, assuming that the effects on the
broader market are negligible and can be ignored (Settle
et al., 2002).
Indicators can provide useful information about how
ecological responses to EPA actions or decisions might
affect ecosystem services. If it is known that an indicator
is positively or negatively correlated with a specific
ecosystem service, predicting the change in the indicator
can provide at least a qualitative prediction of the change
in the corresponding ecosystem service. Indicators may
be important even where models exist that can provide
more sophisticated ecological analysis. The use of
large, complex ecological models to make numerous or
rapid evaluations can be difficult, especially given the
quantities of required data and the short time in which
assessments generally must be made (Hoagland and
Jin, 2006). In these situations, simplification can be far
more practical. The use of indicators that simplify and
synthesize underlying complexity can have advantages in
terms of both generating and effectively communicating
information about ecological effects.
Ecologists and environmental scientists have sought
to identify indicators of ecosystem condition that
might be linked to specific services. Many ecosystem
indicators have been proposed (NRC, 2000; EPA, 2002a;
EPA, 2007a), and several states have sought to define
a relatively small set of indicators of environmental
quality. Indicator variables have been established for
specific ecosystems such as streams (e.g., Karr, 1993)
and for entire countries (e.g., The H. John Heinz III
Center for Science, Economics, and the Environment,
2008). The committee acknowledges EPA's work in
developing indicators for air, water, and land and for
ecosystem condition and encourages the Agency to see
where those indicators can be linked to specific services
relevant to the valuation of EPA decisions.
There is currently no agreement on a common set of
indicators that can be consistently applied and serves
the needs of decision makers and researchers in all
contexts (Carpenter et al., 2006). However, there are
guidelines for specific issues. For example, in evaluating
the economic consequences of species invasion, Leung
et al. (2005) have developed a framework for rapid
assessments based on indicators to guide in prevention
and control, simplifying the ecological complexity to a
relatively small number of easily estimated parameters.
One potentially useful approach to indicators is
to incorporate multiple dimensions into a coherent
presentation that describes the status of ecosystems
within a region, especially as the ecosystems relate to
social values and ecosystem services. For example,
"ecosystem report cards," such as those developed for
South Florida (Harwell et al., 1999) and for Chicago
Wilderness (available at http://www.chicagowilderness.
org/pubprod/index.cfm ), use an array of indicators
designed to provide information about the status
and trends associated with the ecological services
provided by the ecosystems. The report card
identifies seven ecosystem characteristics thought to
be important: habitat quality, integrity of the biotic
community, ecological processes, water quality,
hydrological system, disturbance regime (changes
from natural variability), and sediment/soil quality.
These characteristics are then related to the goals and
objectives for the report card.32 The outputs are not
quantitatively valued or monetized, but rather described
by narratives or quantitative/qualitative grades that are
scientifically credible and understandable by the public.
The report card is designed to:
8 Be understandable to multiple audiences
It Address differences in ecosystem responses
across time
8 Show the status of the ecosystem
8 Transparently provide the scientific basis for the
assigned grades on the report card
This simplified approach to ecological modeling
cannot identify all the possible consequences of
EPA actions. The challenge is building ever more
complex models that address a wide array of issues
over multiple spatial and temporal scales. It may well
be that, with accumulated experience, it may be more
practical to adopt the simplified approach of selecting
a few key indicators or ecological processes that are
correlated with specific ecosystem services and can
be valued. The committee advises EPA to continue
research to develop key indicators for use in ecological
valuation. This is likely to be particularly fruitful
when those indicators can be used for key repeated
rule makings or other repeated decision contexts.
Such indicators should meet ecological science and
social science criteria for effectively simplifying
and synthesizing underlying complexity while still
providing scientifically based information about key
ecosystem services that can be valued. Use of the
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chosen indicators should also be accompanied by an
effective monitoring and reporting program.
3.4.2 Use of meta-analysis
A second promising approach to providing information
about effects on ecosystem services is the use of meta-
analysis. Meta-analysis involves collecting data from
multiple sources and attempting to draw out consistent
patterns and relationships from those data about the links
between ecological functions or structures and associated
services. For example, Worm et al. (2006) attempted to
measure the effects of biodiversity loss on ecosystem
services across the global oceans. They combined
available data from multiple sources, ranging from small-
scale experiments to global fisheries. In these analyses, the
impossibility of separating correlation and causation is a
severe limitation. But examining data from site-specific
studies, coastal regional analyses, and global catch
databases allowed these researchers to draw correlative
relationships between biodiversity and decreases in
commercial fish populations - variables that can be valued
and monetized.
In a similar approach, de Zwart et al. (2006) noted
that ecological methods for measuring the magnitude
of biological degradation in aquatic communities are
well established (e.g., Karr, 1981; Karr and Chu, 1999.),
but determining probable causes is usually left to a
combination of expert opinion, multivariate statistics,
and weighing of evidence. As a result, the results are
difficult to interpret and communicate, particularly
because mixtures of potentially toxic compounds are
frequently part of these assessments. To address this
issue the authors used a combination of ecological,
ecotoxicological, and exposure modeling to provide
statistical estimates of probable effects of different natural
and anthropogenic stressors on fish. This approach links
fish, habitat, and chemistry data collected from hundreds
of sites in Ohio streams. It assesses biological conditions
at each site and attributes any impairment (e.g., loss of
one or more of 117 fish species) to multiple probable
causes. When data were aggregated from throughout
Ohio, 50 percent of the biological effect was associated
with unknown factors and model error; the remaining
50 percent was associated with alterations in stream
chemistry and habitat. The technique combines multiple
data sets and assessment models to arrive at estimates
of the loss of fish species based on broad patterns. Like
the Worm et al. (2006) study of the relationship of
biodiversity to ocean productivity, this study aggregates
data from many sources and uses various models to
arrive at estimates that can be easily interpreted and,
at least in the case of game fish species, valued and
monetized. In a similar context, EPA's Causal Analysis/
Diagnosis Decision Information System (CADDIS)
permits scientists to access, share, and use environmental
information to evaluate causes of biological effects found
in aquatic systems (see http://cfpub.epa.gov/caddis).
3.5 Data availability
Data availability is a serious problem in the
development of ecological production functions.
However, data on the structure and function of ecological
systems are becoming more available and better
organized across the country. Part of the increased
availability is simply that Web-based publication now
enables authors to make data and analysis readily
available to other researchers in electronic format.
Also, as government agencies are being held more
accountable, these agencies are increasingly making the
data they collect and use available to constituents. EPA's
National Water-Quality Assessment (NAWQA) program
provides useful data on the nation's waterways and
aquatic systems in a consistent and comparable fashion
(see http://water.usgs.gov/nawqa).
The committee recommends that EPA work with
other agencies and scientific organizations, such as
the National Science Foundation (NSF), to encourage
the sharing of ecological data and the development of
more consistent ecological measures that are useful for
valuation purposes. EPA should also encourage strong
regional initiatives to develop information needed for
valuations. Within the ecological research community,
the NSF's Long-Term Ecological Research (LTER)
program has emphasized organizing and sharing data
in easily accessible electronic datasets. Although these
data have rarely been collected for valuing ecosystem
services, they measure long-term trends and therefore
can be particularly valuable in separating short-term
fluctuations from longer-term patterns in ecological
conditions. Recently, the LTER program has focused on
regionalization, in which data are collected from sites
surrounding a primary site, providing a regional context
for site-based measurements and models.33
EPA also can look to the social sciences for useful
insights into the building of data-sharing capacity. The
social sciences have a lengthy and successful history
of sharing data through repositories such as the Inter-
University Consortium on Political and Social Research
(www.icpsr.umich.edu).
3.5.7 Transferring ecological information from
one site to another
Despite the increasing availability and organization
of ecological data, there is rarely enough available
information to support many desired analyses. In
addition, the costs of collecting extensive data from
all the sites in which EPA is considering action would
be prohibitive. An important issue is the reliability of
transferring ecological information from one site to
another or over different spatial or temporal scales.
The information can include tools or approaches, data
on properties of an ecosystem or its components, and
services or contributions to human well-being provided
by an ecosystem.
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There are no hard and fast rules for when ecological
information can be transferred. Confidence in doing so
depends on the types of information and the systems
in question. Given the complexity of most ecosystems,
the richness of interactions, and the propensity for
non-linearity, extrapolation of ecological information
requires caution. However, certain generalizations are
possible. Information is more likely to be transferable
when there is greater similarity between ecosystem
contexts. Also, aggregate information, such as data on
ecosystem properties, is more likely to be transferable
than information on particular species or the interactions
of particular species. Thus, the ecosystem properties (e.g.,
leaf area index, primary productivity, or nitrogen-cycling
patterns) of an oak-hickory deciduous forest in Tennessee
might be transferable to oak-hickory forests in other parts
of the eastern United States that are at similar stages of
development. To a lesser extent, the information might be
transferable to other types of deciduous forests.
Information may be transferable to other spatial or
temporal scales if the dynamics over time and space
are known for the ecosystems. For instance, if data are
available on how the characteristics of an oak-hickory
forest change as it develops or goes through cycles of
disturbance, data transfers from one point in time to
another should be possible. Similarly, if information is
available on how the properties of the system vary with
spatial environmental variation (e.g., local climate, soil
type, or land-use history), the extension of information
from one spatial context to another should be possible.
EPA and other national and international agencies have
sponsored extensive research on the scaling up of data
from particular sites to regions (Suter, 2006, chapters
6 and 28; Turner et al., 2007). The results from these
analyses are applicable to the transfer of information on
ecological properties and services.
To some extent, the same generalizations apply to
transferring tools such as models, although success
depends on how generally applicable the tool is and how
difficult in terms of data requirements it is to parameterize
for other situations. For example, forest ecosystem models
can often be transferred to other forests using available
information from sources such as LTER sites.
3.6 Directions for ecological research to
support valuation
EPA has briefed the committee on its plans to
redesign a major part of its intramural and extramural
research program to forecast, quantify, and map
production of ecosystem services (see briefings to
the C-VPESS, EPA Science Advisory Board, 2006b
and 2007b). The committee welcomes these efforts
as a way to strengthen the foundation for ecological
valuation. EPA should evaluate the validity of all models
that it develops or uses to assess the reliability of the
biophysical changes or responses that they predict.
The committee notes with concern EPA's limited and
shrinking resources for ecological research (EPA Science
Advisory Board, 2007a). Although the committee has not
received any details about Agency plans, it encourages
the Agency to carefully focus its research program
because the cost of implementing ecological production
functions in multiple places on multiple issues may be
significant. The committee commends EPA for asking
for additional science advice on its Ecological Research
Program Strategy and Multi-year Plan and believes this
advisory activity should be a priority for an SAB panel
of interdisciplinary experts in ecological valuation,
drawing on information in this report.
3.7 Conclusions and recommendations
Implementation of the integrated valuation process
recommended by this report requires the Agency to
predict the ecological responses to its actions, identify
the relevant ecosystem services of importance to the
public, and link the predicted ecological responses to
the effect on those services. Estimating the responses
of relevant ecosystem services to EPA actions is an
essential part of valuation and must be done before the
value of those responses can be assessed.
With regard to predicting the responses of
ecosystems and ecosystem services, the committee
recommends the following:
It EPA should begin each valuation with a conceptual
model of the relevant ecosystem and the ecosystem
services that it generates. This model should serve
as a road map to guide the valuation. EPA should
formalize a process for constructing the initial
conceptual model, recognizing that the process must
be iterative and respond to new information and
multiple points of view. The conceptual model should
reflect the ultimate goal of valuing the effect of EPA's
decision on ecosystems and ecosystem services. The
model and its documentation should also clearly
describe the reasons for decisions about the spatial
and temporal scales of the chosen ecological system,
the process used to identify stressors associated with
the proposed EPA action, and the methods to be used
in estimating the ecological effects. In constructing
the conceptual model, the Agency should involve staff
throughout EPA, as well as relevant outside experts
from the biophysical and social sciences, and seek
information about relevant public concerns and needs.
® EPA should identify and develop measures of
ecosystem services that are relevant to and directly
useful for valuation. This will require increased
interaction between natural and social scientists
within the Agency. In identifying and evaluating
services for any specific valuation effort, EPA should
describe them in terms that are meaningful and
understandable to the public.
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i EPA should seek to use ecological production functions
wherever practical to estimate how ecological responses
(resulting from different policies or management
decisions) will affect the provision of ecosystem
services. (EPA Science Advisory Board 2008b).
' All ecological valuations conducted by EPA should
be supported by ecological models and data sufficient
to understand and estimate the likely ecological
responses to major alternatives being considered by
decision makers. There are many ecological models.
Building on recent efforts within the Agency and
elsewhere, EPA should develop criteria or guidelines
for model selection that reflect the specific modeling
needs of ecological valuation and apply these criteria
in a consistent and transparent way.
! Because of the complexity of developing and using
complete ecological production functions, the
committee advises EPA to continue and accelerate
research to develop key indicators for use in
ecological valuation. Such indicators should meet
ecological and social science criteria for effectively
simplifying and synthesizing underlying complexity
and be associated with an effective monitoring and
reporting program. The Agency can also advance
ecological valuations by supporting the use of
methods such as meta-analysis that are designed
to provide general information about ecological
relationships that can be applied in ecological
valuation.
i EPA should work with other agencies and scientific
organizations, such as the National Science
Foundation, to encourage the sharing of ecological
data and the development of more consistent
ecological measures that are useful for valuation
purposes. EPA should similarly encourage strong
regional initiatives to develop information needed
for valuations. EPA should also promote efforts
to develop data that can be used to parameterize
ecological models for site-specific analysis and
case studies, or that can be transferred or scaled to
other contexts.
i EPA should carefully plan and actively pursue
research to generate ecological production
functions for valuation including research on
ecological services and support for modeling and
methods development by the Office of Research and
Development and the Science to Achieve Results
(STAR) program. It is a high priority to develop
ecological models that can be used in valuation efforts
and to evaluate the validity of those models.
' Finally, the committee advises the Agency to foster
interaction between natural scientists and social
scientists in identifying relevant ecosystem services
and developing and implementing processes for
measuring and valuing them. As part of this effort,
EPA should more closely link its research programs
on evaluating ecosystem services and valuing
ecosystem services, i^
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Methods for assessing value
In advocating an expanded and integrated approach
to valuing the protection of ecological systems and
services, the committee urges the Agency to consider,
pilot, and evaluate a broader set of valuation methods.
This chapter provides an overview of the methods
that the committee discussed for possible use in
implementing its approach, including methods and
approaches for transfer of valuation information.
As noted in chapter 2, the methods considered by
the committee vary in the roles that they might play
in different decision contexts. For example, as noted
previously, benefit assessments for national rule makings
must be conducted under the guidance of Office of
Management and Budget Circular A-4, which implies
that, in that context monetized valuations must be based
on appropriate economic methods. Other valuation
methods can still provide useful information in this
context, but the role of these methods is limited by
the need to follow the guidance in the circular (see
sections 2.3.3 and 6.1). In other, less-prescribed decision
contexts, non-economic valuation methods can play a
larger role in analysis (see sections 6.2 and 6.3). Thus,
as the Agency considers alternative methods that might
be used, it must consider the context of the information
needs defined by the particular policy context in which
the valuation exercise will be done.
4.1 Criteria for choosing valuation
methods
The methods discussed by the committee differ in
a number of important respects. These include: the
underlying assumptions and concepts of value they
seek to measure or characterize; the empirical and
analytical techniques used to apply them; their data
needs (inputs) and the metrics they generate (outputs);
their involvement of the public; the degree to which the
method has been developed or utilized; their potential
for future use at EPA; and the issues involved in
implementing the methods.
Any method used by the Agency must meet relevant
scientific standards. Before relying on any given method
in a particular valuation process, EPA must determine
if there is a scientific basis for the method's use in
that context. Methods that are in their early stages
of development and application to valuation must be
evaluated both for their scientific merit and for their
appropriateness in the given context of interest. Methods
that are well-developed, have been extensively used for
valuation, and have been validated in other contexts
should still be evaluated for their suitability in valuing
ecosystems and services, because a given context may
pose challenges that might not exist in other situations.
In addition, when considering what methods to use
in specific contexts, EPA should consider the specific
policy objectives and whether a given method provides
information relevant to that objective. For example,
methods that focus on biophysical measures of value
may be relevant for objectives defined solely in terms
of biophysical criteria but less suitable when policy
objectives are defined more broadly in terms of human
well-being. In this latter case, methods that allow for
consideration of not only ecosystem services but also the
many other things that contribute to human well-being
(e.g., human health) will be more suitable.
The committee has not developed a full set of criteria
for evaluating methods, nor has it applied criteria
comprehensively to the methods discussed here. The
committee advises EPA to develop criteria and evaluate
methods by those criteria prior to use in valuation. This
will assist the Agency not only in determining when
methods are suitable but also in determining where to
invest scarce resources.
Some suggestions for criteria that EPA should
consider for inclusion are described briefly in section
4.1.1. In developing criteria for evaluating valuation
methods, a distinction should be made between criteria
for evaluating the suitability of a particular method in
a given context (i.e., evaluating the scientific merit and
suitability of the method) and criteria for evaluating
the manner in which the method is actually applied
(i.e., evaluating the implementation of the method). For
example, the question of whether survey methods in
general can appropriately be used to estimate or elicit
value(s) in a particular context is a different question,
requiring different criteria, than the question of whether
a specific survey was properly designed and executed to
estimate or elicit the intended value(s). If not properly
implemented, any method can yield results that are
not useful for the intended purpose. For any individual
method, EPA can develop criteria to ensure that the
method is carefully implemented. Criteria of this type
exist for many of the methods described here, and
committee members have described criteria for many
valuation methods (see valuation method descriptions
on the SAB Web site at http://yosemite.epa.gov/sab/
sabproduct.nsf/WebBOARD/C-VPESS_Web_Methods_
Draft?OpenDocument). The committee recommends that
EPA develop a higher-order list of criteria designed to
evaluate the suitability of specific methods for a specific
valuation context, assuming that any method chosen
would be implemented according to best practices.
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4.1.1 Suggested criteria
While not prescribing the specific criteria that EPA
should use to evaluate methods before using them in a
specific context, the committee offers some suggested
criteria. These draw on the literature cited below, as well
as the committee's own deliberations.
A primary consideration in evaluating a method
should be the extent to which the method seeks to elicit
or measure a concept of value that has a consistent
and transparent theoretical foundation appropriate
for the intended use. Different valuation methods
measure different concepts of value. For a method
to be appropriate in a valuation context, it must seek
to measure a concept of value that is well-defined,
theoretically consistent, and relevant for the particular
valuation context. For example, a method derived
from a biodiversity-based theory of value would not
be relevant in a context where biodiversity is not
important. Similarly, legal requirements may prescribe
a theory of value that must be used in a particular
valuation context (most notably, national rule making).
Thus, the Agency should consider the theory of value
underlying a particular method and its relevance when
evaluating the appropriateness of using that method in a
specific context.
Assuming a method seeks to elicit or measure a
well-defined and relevant concept of value, another
over-arching criterion for evaluation is validity - i.e.,
how well the method measures the underlying
construct that it is intended to measure (Gregory et al.,
1993; Freeman, 2003; Fischhoff, 1997). Although the
underlying construct of value is not directly observable,
it can be estimated through the use of valid methods.
EPA should use criteria to assess the extent to which a
given method is likely to yield a measure, or at least an
unbiased estimate, of the underlying construct of value.
Examples of criteria that provide information about the
validity of a method include:
It Does the method capture the critical features of the
relevant population's values, including how deeply
they are held? Does it yield value estimates that
reflect the intensity of people's preferences or the
magnitude of the contribution to a given goal?
1 Does the method impose demands on respondents
that limit their ability to articulate values in a
meaningful way? For example, does the method
impose unrealistic cognitive demands on individuals
expressing values? Does it allow those individuals
to engage in the process that they would normally
undertake to identify or formulate and then articulate
their values?
1 Does the method yield value estimates for individuals
that those individuals would, if asked, consent to have
used in the proposed way? Fischhoff (2000) suggests
that this form of implied informed consent can help
to ensure the quality of valuation data generated by
a given method and avoid inappropriate use of the
resulting value estimates, by ensuring that individuals
would "stand behind researchers' interpretation of
their responses" (p. 1439). This does not necessarily
require that researchers using the method actually
seek such consent. Rather, it provides a hypothetical
benchmark that can be used in assessing whether a
method is capturing what is intended.
1 Does the method ensure that measured or elicited
values reflect relevant scientific information? A
basic premise of the valuation approach proposed
by the committee is that a method should elicit or
measure values that individuals would hold when
well-informed about the relevant science. This does
not require that all individuals expressing values
know as much as scientific experts in the field, but
rather that they understand as much of the science
as necessary to make informed judgments about
the service(s) they are being asked to value. For
example, they should be aware of the magnitude of
the changes in ecosystem services or characteristics
that would result from the ecological changes being
valued, as well as the implications of those changes
for themselves and for others.
1 Does the method yield value estimates that are
responsive to changes in variables that the relevant
theory suggests should be predictors of value, and
invariant to changes in variables that are irrelevant to
the determination of value? For example, under an
economic theory of value, an increase in the quantity
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Table 3: Methods considered by the committee for possible use in valuation
Method
Formofoutpu./uni.s
Related concepts(s) of
value from table 1
Measures of attitudes, preferences, and intentions
Survey
questions
eliciting
information
about attitudes,
preferences, and
intentions
Individual
narratives and
focus groups
Behavioral
observation
Attitude scales, preference or importance rankings,
behavioral intentions toward depicted environments or
conditions
Qualitative summaries and assessments from transcripts
Inferences from observations of behavior by individuals
interacting with actual or computer-simulated
environments
Attitudes and judgments;
community-based values
Attitudes and judgments;
community-based values
Attitudes and judgments;
community-based values
Economic methods
Market-based
methods
Travel cost
Hedonic pricing
Averting
behavior
Survey
questions
eliciting stated
preferences
Monetary measure of willingness-to-pay (WTP) for
ecosystem services that contribute to the provision of
marketed goods and services
Monetary measure of WTP for ecosystem services that
affect decisions to visit different locations
Monetary measure of marginal WTP or willingness-to-
accept (WTA) as revealed by price for houses or wages
paid for jobs with different environmental characteristics
Monetary or other measure of WTP as revealed by
responses to opportunities to avoid or reduce damages,
for example, through expenditures on protective goods or
substitutes
Monetary or other measures of WTP or WTA as
expressed in survey questions about hypothetical
tradeoffs
Economic value
Economic value
Economic value
Economic value
Economic value
Civic valuation
Referenda and
initiatives
Citizen valuation
juries
Rankings of alternative options, or monetary or other
measure of tradeoffs a community is willing to make, as
reflected in community choices
Rankings of alternative options, or monetary or other
measures of required payment or compensation, based
on jury-determined assessments of public values
Community-based
values; indicator of
economic value under
some conditions
Community-based
values; constructed
values
Decision science approaches
Decision science
approaches
Attribute weights that reflect tradeoffs individuals are
willing to make across attributes, including ecological
attributes, for use in assigning scores to alternative policy
options
Constructed values
-------
Table 3: Methods considered by the committee for possible use in valuation (continued)
Method
Form of output/units
Related concepts(s) of
value from table 1
Ecosystem benefit indicators
Ecosystem
benefit
indicators
Quantitative spatially-differentiated metrics or maps
related to supply of or demand for ecosystem services
Indicators of economic
value and/or community-
based values
Biophysical ranking methods
Conservation
value method
Spatially-differentiated index of conservation values
across a landscape
Bio-ecological value
Embodied
energy analysis
Cost of the total (direct plus indirect) energy required to
produce an ecological or economic good or service
Energy-based value
Ecological
footprint
Area of an ecosystem (land and/or water) required to
support a consumption pattern or population
Bio-ecological value
Cost as a proxy for value
Replacement
cost
Monetary estimate of the cost of replacing an ecosystem
service using the next best available alternative
Lower bound on
economic value only
under limited conditions
Habitat
equivalency
analysis
Units of habitat (e.g., equivalent acres of habitat) or other
compensating changes needed to replace ecosystem
services lost through a natural resource injury
Biophysical value; not
economic value except
under some very limited
conditions
of the good or service being valued should result in an
increase in the magnitude of expressed values. This
form of validity has been termed construct validity
(Fischhoff, 1997; Mitchell and Carson, 1989).
® Are the expressions of value resulting from the
method stable (i.e., reliable) in the sense that they
do not change upon further reflection (Fischhoff,
1997) and are not unduly influenced by irrelevant
characteristics of the researcher, process facilitator,
or group?
® To what extent does the information elicited from
participants in the application of the method (e.g.,
survey respondents or focus group participants)
provide information that can be used to reliably infer
something about the values of the targeted group
within the relevant population?
These criteria would generally be viewed as necessary
for validity, although they are not necessarily sufficient to
guarantee it. Methods can also be evaluated on the extent
to which the resulting value estimates can be transparently
communicated in a useful format to those who will use the
value information. Decision makers and the public should
be able to understand how the value measures relate to and
inform the decision that needs to be made.
4.2 An expanded set of methods
This section provides an overview of, and
introduction to, the wide array of methods considered
by the committee for possible use in implementing
the valuation process proposed in chapter 2. Table
3 provides a listing of these methods, along with an
overview of the form of output from each method
and the concept(s) of value that it seeks to measure
or elicit. Note that, although the concepts of value
discussed in chapter 2 are conceptually distinct from
valuation methods, methods generally seek to measure
specific value concepts, as indicated in Table 3.
Hence, specific methods are generally associated with
specific concepts of value. However, methods can be
complementary, and a given method can sometimes
be used to provide information that could be useful
in assessing other concepts of value. For example,
as discussed in chapter 2, some of the non-economic
methods in Table 3 can be useful in supporting and
improving economic valuation.
The following discussion of methods is illustrative
and introductory rather than comprehensive. The goal
is to provide the reader with sufficient information
about the methods to allow a preliminary assessment
of the role that various methods can play in
-------
implementing the proposed valuation process and to
direct the interested reader to the relevant scientific
literature for further information.
The SAB Web site provides supplemental detailed
discussions of these methods, including their perceived
strengths and weaknesses, that were provided by
individual committee members (http://yosemite.epa.
gov/sab/sabproduct.nsf/WebBOARD/C-VPESS_Web_
Methods_Draft?OpenDocument).34 In addition, federal
agencies have extensively used surveys to elicit value-
related information.35 The SAB Web site provides
a separate, detailed discussion of the use of survey
methods for ecological valuation. This information
(http://yosemite.epa.gov/Sab/Sabproduct.nsf/WebFiles/
SurveyMethods/$File/Survey_methods.pdf) is relevant
to those economic and other methods discussed below
that rely on surveys.
4.2.7 Measures of attitudes, preferences, and
intentions
Social-psychological approaches to assessing the
value of ecosystems and ecosystem services employ
a number of methods to identify, characterize, and
measure the values people hold, express, and advocate
with respect to changes in ecological states or their
personal and social consequences. These methods
elicit value-relevant perceptions and judgments,
typically expressed as choices, rankings, or ratings
among presented sets of alternative ecosystems
protection policies and may include comparisons with
potentially competing social and economic goals.
Individuals making these judgments may respond on
their own behalf or on behalf of others (e.g., society at
large or specified subgroups). The basis for judgments
can be changes in individual well-being or in civic,
ethical, or moral obligations.
Social-psychological value-assessment approaches
have relied most strongly on survey methods. For a
general discussion of the use of surveys in valuation,
see http://yosemite.epa.gov/Sab/Sabproduct.nsf/
WebFiles/S urveyMethods/$File/S urvey_methods.
pdf. Survey questions eliciting information about
attitudes, preferences, and intentions are most often
presented in a verbal format, either in face-to-face
or telephone interviews or in printed questionnaires.
Assessments of values for ecosystems and ecosystem
services can be well-conveyed in perceptual surveys
(e.g., assessments based on photographs, computer
visualizations, or multimedia representations of
targeted ecosystem attributes) and conjoint surveys
(e.g., requiring choices among alternatives that
systematically combine multiple and potentially
competing attributes). Quantitative analyses of survey
responses are usually interpreted as ordinal rankings
or rough interval-scale measures of differences in
assessed values for the alternatives offered. Survey
questions about social and psychological constructs
may be especially useful when the values at issue are
difficult to express or conceive in monetary terms, or
where monetary expressions are likely to be viewed as
ethically inappropriate.
Further reading
Adamowicz, W, P. Boxall, M. Wilhams, and J.
Louviere. 1998. Stated preference approaches
for measuring passive use values: Choice
experiments and contingent valuation. American
Journal of Agricultural Economics 80: 64-67.
Dillman, D.A. 1991. The design and administration
of mail surveys. Annual Review of Sociology 17:
225-249.
Dunlap, R.E., K.D. Van Liere, A.G. Mertig, and
R.E. Jones. 2000. Measuring endorsement of the
New Ecological Paradigm: A revised NEP scale.
Journal of Social Issues 56: 425-442.
Krosnick, J.A. 1999. Survey research. Annual
Review of Psychology 50: 537-67.
Mace, B.L., PA. Bell, and RJ. Loomis. 1999.
Aesthetic, affective, and cognitive effects of
noise on natural landscape assessment. Society &
Natural Resources 12: 225-243.
Malm, W, K. Kelly, J. Molenar, and T.C. Daniel.
1981. Human perception of visual air quality:
Uniform haze. Atmospheric Environment 15:
1874-1890.
Ribe, R.G., E.T. Armstrong, PH. Gobster. 2002.
Scenic vistas and the changing policy landscape:
Visualizing and testing the role of visual
resources in ecosystem management. Landscape
Journal 21: 42-66.
Schaeffer, N.C. and S. Presser. 2003. The science
of asking questions. Annual Review of Sociology
29: 65-88.
Tourangeau, R. 2004. Survey research and
societal change. Annual Review of Psychology
55: 775-801.
Wilson, T.D., D.J. Lisle, D. Kraft, and C.G. Wetzel,
1989. Preferences as expectation-driven
inferences: Effects of affective expectations on
affective experience. Journal of Personality and
Social Psychology 56: 4519-530.
Individual narratives and focus group methods
have also been used in values assessments, but these
methods are generally more appropriately used as
formative tools for the design and testing of formal
quantitative surveys. While surveys are typically
based on quantitative analyses of responses from large
representative samples, individual narrative methods
- including mental-model analyses, ethnographic
analyses, and other relatively unstructured individual
interviews - generally employ small samples of
informants and analyze responses qualitatively. For
example, mental models studies seek to assess how
informed people are about the consequences of specific
decisions and their decision-relevant beliefs. Mental
-------
models studies of risk communication explicitly
compare causal beliefs with formal decision models.36
How people understand relevant causal processes -
that is, in this case, their mental models of ecosystems
and the services they provide - can be critical to their
judgment of the outcomes and effects of environmental
programs and can influence their preferences among
policy alternatives. Similarly, focus groups can be
used to elicit information about values and preferences
from small groups of relevant members of the public
engaging in group discussion led by a facilitator.
Rigorous qualitative analyses of transcripts from
individual narratives (including mental models studies)
or focus groups can expose subtle differences in
individual beliefs and perspectives and the inferential
bases of participants' expressed values. However, the
use of qualitative measures and the uncertainty of
any generalizations of results from small respondent
samples limit the utility of these methods for formal
policy and decision making.
Given the small number of participants, the goal
of individual narratives and focus groups is rarely
to assess the public's values per se. Rather, these
methods seek to identify the types and range of value
perspectives, positions, and concerns of individual
participants, and to use this information to identify
the ecosystem effects that might be particularly
important to the public. The open-ended nature of
these methods can reveal perspectives and concerns
that more structured methods might miss. Thus,
these methods can provide useful input early in a
valuation process. For example, they are often used
in the early stages of designing a formal survey to
elicit quantitative value information from a broader
representative sample (a "probability sample") of the
relevant population.
Further reading
Bostrom, A., B. Fischhoff, and M.G. Morgan,
2002. Characterizing mental models of
hazardous processes: A methodology and an
application to radon. Journal of Social Issues
48: 85-100.
Brandenburg, A.M., and M.S. Carroll. 1995. Your
place or mine? The effect of place creation on
environmental values and landscape meanings.
Society & Natural Resources 8: 381-398.
Centner, D., and Whitley, E.W. 1997. Mental
models of population growth: A preliminary
investigation. In Environment, ethics, and
behavior: The psychology of environmental
valuation and degradation, ed. M. Bazerman,
D.M. Messick, A.E. Tenbrunsel, and K. Wade-
Benzoni, 209-233. San Francisco, CA: New
Lexington Press.
Kempton, W. 1991. Lay perspectives on global
climate change. Global Environmental Change
1: 183-208.
Merton, R.K., Fiske, M., and Kendall, P.L. 1990.
The focused interview: A manual of problems
and procedures. 2nd ed. London: Collier
MacMillan.
Morgan, M.G., B. Fischhoff, A. Bostrom, C.J.
Atman. 2002. Risk communication: A mental
models approach. Cambridge: Cambridge
University Press.
Satterfield, T., and S. Slovic, eds. 2004. What's
nature worth: Narrative expressions of
environmental values. Salt Lake City:
University of Utah Press.
Zaksek, M., and J. L. Arvai. 2004. Toward
improved communication about wildland fire:
Mental models research to identify information
needs for natural resource management. Risk
Analysis 24: 1503-1514.
Recently, researchers have explored the use of
behavioral observation methods for obtaining
information about people's values. These methods elicit
values information through observations of behavioral
responses by individuals interacting with either actual or
computer-simulated environments. Observing how the
activities of people change as environmental conditions
change can reveal information about the importance of
these changes to those people. Researchers can observe
changes in actual behavior (e.g., visitation rates) or virtual
behavior (e.g., responses in interactive computer simulation
games). Behavioral observation methods are consistent
with other revealed preference methods (see the following
section), but they are still relatively new and untested,
particularly in the context of valuing ecosystem services.
Nonetheless, they show promise for use in this context.
Further reading
Bishop, I. D. and B. Rohrmann. 2003. Subjective
responses to simulated and real environments: A
comparison. Landscape and Urban Planning 65:
261-267.
Gimblett, H.R., T.C. Daniel, S. Cherry, and M. J.
Meitner. 2001. The simulation and visualization
of complex human-environment interactions.
Landscape and Urban Planning 54: 63-79.
Wang, B. and R.E. Manning. 2001. Computer
simulation modeling for recreation
management: A study on carriage road
use in Acadia National Park, Maine, USA.
Environmental Management 23: 193-203.
Zacharias, J. 2006. Exploratory spatial behaviour
in real and virtual environments. Landscape and
Urban Planning 78: 1-13.
4.2.2 Economic methods
Economic valuation methods seek to measure the
tradeoffs individuals are willing to make for ecological
improvements or to avoid ecological degradation,
given the constraints they face. An ecological change
improving a resource that an individual values will
-------
increase that person's utility. The marginal value or
economic benefit of that change is defined to be the
amount of another good that the individual is willing
to give up to enjoy that change (willingness-to-pay)
or the amount of compensation that a person would
accept in lieu of receiving that change (willingness
to accept). Although these tradeoffs are typically
expressed in monetary terms, economic methods that
express tradeoffs in non-monetary terms (such as
conjoint analysis or other choice-based methods) are
increasingly being used.
Economic methods can estimate values not only
for goods and services for which there are markets but
also for non-market goods and services. Economic
methods can also value both use and non-use (e.g.,
existence) values. Thus, economic valuation captures
values that extend well beyond commercial or market
values. However, economic valuation does not capture
non-anthropocentric values (e.g., biocentric values) and
values inconsistent with the principle of trrade-offs (such
as values based on the concept of intrinsic rights).
There are multiple economic valuation methods that
can be used to estimate economic values. These include
methods based on observed behavior (market-based and
revealed-preference methods) and methods based on
information elicited from responses to survey questions
about hypothetical tradeoffs (e.g., stated-preference
methods). Some of these methods are more applicable to
some contexts than to others.
Market-based methods seek to use information
about market prices (or market demand) to infer values
related to changes in marketed goods and services.
For example, when ecological changes lead to a small
change in timber or commercial fishing harvests, the
market price of timber or fish can be used as a measure
of willingness to pay for that marginal change. If the
change is large, the current market price alone is not
sufficient to determine value. Rather, the demand
for timber or fish at various prices must be used to
determine willingness to pay for the change. In general,
market-based methods can value only those services
supplied in well-functioning markets. These methods
have been used to assess the welfare effects of a wide
variety of public policies.
Further reading
Barbier, E.B., and I. Strand. 1998. Valuing
mangrove-fishery linkages. Environmental and
Resource Economics: 12: 151-166.
Boardman, A.E., D.H. Greenberg, A.R. Vining,
and D.L. Weimer. 2006. Cost-benefit analysis:
Concepts and practice. 3rd ed. Upper Saddle
River, NJ: Prentice-Hall.
Freeman, A.M., III. 2003. The measurement of
environmental and resource values. 2nd ed.
Washington, DC: Resources for the Future.
Hufbauer, G., and K.A. Elliott. 1994. Measuring
the costs of protection in the US. Washington,
DC: Institute for International Economics.
McConnell, K.E., and N.E. Bockstael. 2005.
Valuing the environment as a factor of
production. In Handbook of environmental
economics, ed. K-G. Maler and J.R. Vincent.
Amsterdam: North-Holland.
Winston, C. 1993. Economic deregulation: Days
of reckoning for microeconomists. Journal of
Economic Literature.
Revealed-preference methods exploit the
relationship between some forms of individual
behavior (e.g., visiting a lake or buying a house) and
associated environmental attributes (e.g., of the lake
or the house) to estimate value. For example, travel
cost methods (including applications using random
utility models) use information about how much people
implicitly or explicitly pay to visit locations with
specific environmental attributes including, specific
levels of ecosystem services, to infer how much they
value changes in those attributes. Hedonic pricing
uses information about how much people pay for
houses or other directly-purchased items with specific
environmental attributes (e.g., visibility, proximity to
amenities or disamenities) to infer how much they value
changes in those attributes. It also may use information
about the wages people would be willing to accept for
jobs with differing mortality or morbidity risk levels to
infer how much they value changes in those risks. In
contrast, averting-behavior methods use observations
on how much people spend to avoid adverse effects,
including environmental effects to infer how much they
value or are willing to pay for the improvements those
expenditures yield.
Further reading
General
Bockstael, N.B., and K.E. McConnell. 2007.
Environmental and resource valuation with
revealed preferences: A theoretical guide to
empirical models (The economics of non-market
goods and resources) New York: Springer.
Travel costs
Phaneuf, D.J., and V.K. Smith. 2005. Recreation
demand models. In Handbook of environmental
economics, vol. 2, ed. K. Maler and J. Vincent.
Amsterdam: North-Holland.
Randall, A. 1994. A difficulty with the travel cost
method. Land Economics 70: 88-96.
Smith, V.K. andY. Kaoru. 1990. Signals or noise?
Explaining the variation in recreational benefit
estimates. American Journal of Agricultural
Economics 72: 419-433.
Walsh, R.G., D.M. Johnson, and J.R. McKean.
1992. Benefit transfer of outdoor recreation
demand studies, 1968-1988. Water Resources
Research 28: 707-713.
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Hedonic pricing
Cropper, M.L, L. Deck, and K.E. McConnell.
1988. On the choice of functional forms for
hedonic price functions. Review of Economics
and Statistics 70: 668-75.
Mahan, B.L., S. Polasky, and R.M. Adams. 2000.
Valuing urban wetlands: A property price
approach. Land Economics 76: 100-113.
Palmquist, R.B. 2005. Hedonic models. In
Handbook of environmental economics, vol. 2,
ed. K. Ma'ler and J. Vincent. Amsterdam: North-
Holland.
Smith, V.K., C. Poulos, and H. Kim. 2002. Treating
open space as an urban amenity. Resource and
Energy Economics 24: 107-129.
Averting behavior
Dickie, M. 2003. Defensive behavior and damage
cost methods. In A primer on non-market
valuation, ed. P.A. Champ, KJ. Boyle, and T.C.
Brown. Dordrecht: Kluwer Academic Press.
Smith, VK. 1991. Household production functions
and environmental benefit estimation. In
Measuring the demand for environmental
quality, ed. J.B. Braden and C.D. Kolstad.
Amsterdam: North-Holland.
In contrast to revealed-preference methods, stated-
preference methods infer values or economic benefits from
responses to survey questions about hypothetical tradeoffs.
As with social-psychological methods, stated-preference
methods often use focus groups to improve survey designs.
In some cases, survey questions directly elicit information
about willingness to pay or accept, while under some survey
designs (e.g., conjoint or contingent behavior designs)
monetary measures of benefits are not expressed directly.
Rather, quantitative analysis of the tradeoffs implied by
survey responses is needed to derive economic benefit
measures. Although the use of stated-preference methods
for environmental valuation has been controversial, there
is considerable evidence that the hypothetical responses
in these surveys provide useful evidence regarding values
(see related detailed discussion on the use of survey
methods for ecological valuation on the SAB Web site at
http://yosemite.epa.gov/Sab/Sabproduct.nsfAVebFiles/
SurveyMethods/$File/Survey_methods.pdf).
Further reading
Arrow, K., et al. 1993. Report of the NOAA Panel
on Contingent Valuation, Federal Register
58:10 (Jan. 15, 1993), 4601-4614.
Banzhaf, S., D. Burtraw, D. Evans, and A.
Krupnick. 2004. Valuation of natural resource
improvements in the Adirondacks. Washington,
DC: Resources for the Future.
Bateman, I.J., and K.G. Willis, eds. 1999. Valuing
environmental preferences: Theory and practice
of the contingent valuation method in the US,
EU, and developing countries. Oxford: Oxford
University Press.
Carson, R.T. and WM. Hanemann, 2005,
Contingent Valuation in Handbook of
Environmental Economics Vol. II, ed. K. Goran-
Ma'ler and J. R. Vincent Amsterdam: North
Holland, pp. 821-936.
Champ, P., KJ. Boyle and T.C. Brown, eds. 2003.
A primer on non-market valuation. Dordrecht:
Klumer Academic.
Freeman, A.M., III. 2003. The measurement of
environmental and resource values, 2nd ed.
Washington, DC: Resources for the Future.
Haab, T.C. and K.E. McConnell. 2002. Valuing
environmental and natural resources.
Cheltenham, UK: Edward Elgar.
Kanninen, B.J., ed. 2007. Valuing environmental
amenities using stated choice studies. Dordrecht:
Springer.
Kopp, R.J., WW Pommerehne, and N. Schwarz,
eds. 1997. Determining the value of non-
marketed goods: Economic, psychological, and
policy relevant aspects of contingent valuation
methods. Boston: Kluwer Academic Publishers.
Murphy, J.J., P.O. Allen, T.H. Stevens, and
D. Weatherhead. 2005. A meta-analysis of
hypothetical bias in stated preference valuation.
Environmental and Resource Economics, 30:
313-325.
Smith, VK. 1997. Pricing what is priceless:
A status report on non-market valuation of
environmental resources. In The International
Yearbook of Environmental and Resource
Economics, eds. H. Folmer and T. Tietenberg.
Cheltenham, U.K.: Edward Elgar, pp. 156-204
4.2.3 Civic valuation
Civic valuation seeks to measure the values that people
place on changes in ecosystems or ecosystem services
when explicitly considering or acting in their role as
citizens. These valuation methods often seek to value
changes that would benefit or harm the community at large.
They purposefully seek to assess the full value that groups
attach to any increase in community well-being attributable
to changes in the relevant ecosystems and services.
Civic valuation, like economic valuation, can elicit
information about values either through revealed
behavior or through stated valuations. One source of
information based on revealed behavior is votes on
public referenda and initiatives involving the provision
of environmental goods and services (e.g., purchases
of open space). Another source is community decisions
to accept compensation for permitting environmental
damage (e.g., by hosting noxious facilities). Where
revealed values are difficult or impossible to obtain,
citizen valuation juries or other representative groups can
be charged with determining the value they would place
on changes in particular ecological systems or services
when acting on behalf of, or as a representative of, the
citizens of the relevant community.
-------
Referenda or initiatives can provide information
about how members of the voting population value
a particular governmental action involving the
environment. Analysis of referenda or initiatives can
reveal whether the majority of the voting population
feels that a given environmental improvement is
worth what it will cost the relevant government body,
given a particular means of financing the associated
expenditure (and hence, an anticipated cost to the
individual who is voting). In casting their votes,
individuals may consider not only what they personally
would gain or lose but also what the community as a
whole stands to gain or lose if the proposal is adopted.
Similarly, analyses of public votes about whether to
accept an environmental degradation (e.g., through
hosting a noxious facility) seek to determine if the
majority of the voting population in that community
feels that the environmental services that would be
lost are worth less than the contributions to well-being
the community would realize (e.g., in the form of tax
revenues, jobs, or monetary compensation).
These approaches provide information about the
policy preferences of the median voter and, under
certain conditions, provide information about the
mean valuations of those who participate in the voting
process. To the extent that voters consider their own
budget constraints when voting, these valuations reflect
economic values, i.e., willingness to pay or willingness
to accept. As with all economic values, the revealed
economic value reflects both personal benefits and costs,
as well as any altruistic motivation (public regardedness)
individual voters have when casting their votes.
Further reading
Banzhaf, S., W. Gates, J.N. Sanchirico, D.
Simpson, and R. Walsh. 2006. Voting for
conservation: What is the American electorate
revealing? Resources 16. Washington, DC:
Resources for the Future, http://ww.rff.org/rff/
news/features/loader.cfm?url=/commonspot/
security/getfile.cfm&pageid=22017.
Butler, D., and A. Ranney, eds. 1978. Referendums.
Washington DC: American Enterprise Institute.
Cronin, T.E. 1989. Direct democracy: The politics
of referendum, initiative and recall. Cambridge:
Harvard University Press.
Deacon, R., and P. Shapiro. 1975. Private
preference for collective goods revealed through
voting on referenda. American Economic
Review 65: 793.
Kahn, M.E., and J.G. Matsusaka. 1997. Demand
for environmental goods: Evidence from voting
patterns on California initiatives. Journal of
Law and Economics 40: 137-173.
List, J., and J. Shogren. 2002. Calibration of
willingness-to-accept. Journal of Environmental
Economics and Management 43: 219-233.
Lupia, A. 1992. Busy voters, agenda control, and
the power of information. American Political
Science Review 86: 390-399.
Magleby, D. 1984. Direct legislation: Voting
on ballot propositions in the United States.
Baltimore, MD: Johns Hopkins University
Press.
Murphy, J.J., PG. Allen, et al. 2003. A meta-
analysis of hypothetical bias in stated
preference valuation. Amherst: Department
of Resource Economics, University of
Massachusetts.
Sagoff, M. 2004. Price, principle and the
environment. Cambridge: Cambridge University
Press.
Schlapfer, E, A. Roschewitz, and N. Hanley. 2004.
Validation of stated preferences for public
goods: A comparison of contingent valuation
survey response and voting behavior. Ecological
Economics 51: 1-16.
Shabman, L., and K. Stephenson. 1996. Searching
for the correct benefit estimate: Empirical
evidence for an alternative perspective. Land
Economics 72:
433-49.
Vossler, C.A., J. Kerkvliet, S. Polasky, and O.
Gainutdinova. 2003. Externally validating
contingent valuation: An open-space survey
and referendum in Corvallis, Oregon. Journal
of Economic Behavior and Organization 51:
261-277.
In contrast to initiatives and referenda, citizen valuation
juries measure stated rather than revealed value. They also
incorporate elements of the deliberative valuation process
(see chapter 5). The jury is given extensive information
and, after a lengthy discussion, usually asked to agree on a
common value or make a group decision. To date, citizen
juries have typically been asked to develop a ranking of
alternative options for achieving a given goal. Although
citizen juries have been used in other contexts, experience
using citizen juries for ecological valuation is very limited.
Nonetheless, in principle, a jury could be asked to generate
a value for how much the public would, or should, be
willing to pay for a possible environmental improvement,
or, conversely, willing to accept for an environmental
degradation. In contrast to estimates of willingness to pay
derived from economic valuation methods, the estimates
from citizen juries would not reflect the budget constraints
of the individual participants and would reflect community-
based values rather than economic values. To the extent
that a citizen jury engages in group deliberation, resulting
value estimates also would reflect constructed values.
Further reading
Aldred, J., and M. Jacobs. 2000. Citizens and
wetlands: Evaluating the Ely citizens'jury.
Ecological Economics 34: 217-232.
"\
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Alvarez-Farizo, B., and N. Hanley. 2006.
Improving the process of valuing non-market
benefits: Combining citizens'juries with choice
modelling. Land Economics 82: 465-478.
Blarney, R.K., et al. 2000. Citizens'juries and
environmental value assessment. Canberra:
Research School of Social Sciences, Australian
National University.
Brown, T.C., et al. 1995. The values jury to aid
natural resource decisions. Land Economics 71:
250-260.
Gregory, R., and K. Wellman. 2001. Bringing
stakeholder values into environmental policy
choices: A community-based estuary case study.
Ecological Economics 39: 37-52.
Kenyon, W., and N. Hanley. 2001. Economic and
participatory approaches to environmental
evaluation. Glasgow, U.K.: Economics
Department, University of Glasgow.
Kenyon, W., and C. Nevin. 2001. The use of
economic and participatory approaches to
assess forest development: A case study in the
Ettrick Valley. Forest Policy and Economics 3:
69-80.
Macmillan, D.C., et al. 2002. Valuing the non-
market benefits of wild goose conservation:
A comparison of interview and group-based
approaches. Ecological Economics 43: 49-59.
McDaniels, T.L., et al. 2003. Decision structuring
to alleviate embedding in environmental
valuation. Ecological Economics 46: 33-46.
O'Neill, J., and C.L. Spash. 2000. Appendix:
Policy research brief: conceptions of value in
environmental decision-making. Environmental
Values 9: 521-536.
4.2.4 Decision science methods
Decision science valuation methods derive
information about people's values through a
deliberative process that helps individuals understand
and assess tradeoffs among multiple attributes. The
ultimate goal is to have an individual or group assign
scores to alternatives (e.g., different projects) that
can then be used to choose among those alternatives,
recognizing that those alternatives will differ along
a number of relevant dimensions or attributes.
Generally, one alternative will score higher along
some dimensions but not others, suggesting that
tradeoffs must be made when choosing among
alternatives.
Decision science valuation methods are typically
embedded in a decision-aiding process. As part of the
process, an expert facilitator helps the individual or
group decompose the choice problem by identifying
and operationalizing objectives as well as relevant
attributes. For example, people may feel that the value
of a project to protect an estuary depends on attributes
such as the estuary's ability to provide nutrient
exchange and nursery habitat for anadromous fish, the
opportunities it provides for recreation, and the cost
of the project. The facilitator leads the individual or
group through a process by which they assign weights
to each of the attributes. A variety of approaches to
assigning weights have been used, including assigning
importance points, eliciting ratio weights, determining
swing weights, and pricing out attributes. These
weights reflect the tradeoffs that the individual or group
is willing to make across attributes, and hence reveal
information about values.
Once the attribute weights are determined, an
aggregating function (or utility function) is used to
combine the weights and attribute levels into a score (or
measure of multi-attribute utility) for each alternative.
Ranking alternative projects or options based on these
scores can provide information about which option (and
hence which combination of attributes) is viewed as
more valuable.
Further reading
Arvai, J.L., and R. Gregory. 2003. Testing
alternative decision approaches for identifying
cleanup priorities at contaminated sites.
Environmental Science & Technology 37:1469-
1476.
Clemen, R.T. 1996. Making hard decisions: An
introduction to decision analysis. Boston: PWS-
Kent Publishing.
Gregory, R., J.L. Arvai, and T. McDaniels. 2001.
Value-focused thinking for environmental risk
consultations. Research in Social Problems and
Public Policy 9: 249-275.
Gregory, R., S. Lichtenstein, and P. Slovic, P.
1993. Valuing environmental resources: A
constructive approach. Journal of Risk and
Uncertainty 7:
177-197.
Hammond, J.S., R.L. Keeney, and H. Raiffa. 1998.
Even swaps: A rational method for making
trade-offs. Harvard Business Review 76: 137-
138, 143-148, 150.
Hammond, J., R.L. Keeney, and H. Raiffa. 1999.
Smart choices: A practical guide to making
better decisions. Cambridge: Harvard Business
School Press.
Keeney, R.L. 1992. Value-focused thinking. A
path to creative decision making. Cambridge:
Harvard University Press.
Keeney, R.L., and H. Raiffa. 1993. Decisions with
multiple objectives: Preferences and value
tradeoffs. Cambridge: Cambridge University
Press.
Payne, J.W., J.R. Bettman, and E.J. Johnson. 1992.
Behavioral decision research: A constructive
processing perspective. Annual Review of
Psychology 43: 87'-132.
Slovic, P. 1995. The construction of preference.
American Psychologist 50: 364-371.
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4.2.5 Ecosystem benefit indicators
Ecosystem benefit indicators offer quantitative
metrics that are generally correlated with ecological
contributions to human well-being and hence can
serve as indicators for these contributions in a specific
setting. They use geo-spatial data to provide information
related to the demand for, supply (or scarcity) of, and
complements to particular ecosystem services across
a given landscape, based on social and biophysical
features that influence - positively or negatively -
the contributions of ecosystem services to human
well-being. Examples of these indicators include the
percentage of a watershed in a particular land use or of
a particular land type, the number of users of a service
(e.g., water or recreation) within a given area, and the
distance to the nearest vulnerable human community.
Ecological benefit indicators can serve as important
quantitative inputs to valuation methods as diverse
as citizen juries and economic valuation methods.
Ecosystem benefit indicators provide a way to illustrate
factors influencing ecological contributions to human
welfare in a specific setting. The method can be applied
to any ecosystem service where the spatial delivery of
services is related to the social landscape in which the
service is enjoyed. However, although the resulting
indicators can be correlated with other value measures,
such as economic values, they do not themselves provide
measures of value.
Further reading
Boyd, J. 2004. What's nature worth? Using
indicators to open the black box of ecological
valuation. Resources.
Boyd, J., D. King, and L. Wainger. 2001.
Compensation for lost ecosystem services:
The need for benefit-based transfer ratios and
restoration criteria. Stanford Environmental
Law Journal 20.
Boyd, J., and L. Wainger 2002. Landscape
indicators of ecosystem service benefits.
American Journal of Agricultural Economics
84.
Wainger, L., D. King, J. Salzman, and J. Boyd.
2001. Wetland value indicators for scoring
mitigation trades. Stanford Environmental Law
Journal 20.
4.2.6 Biophysical ranking methods
In some contexts, policy makers or analysts
are interested in values based on quantification of
biophysical indicators. Possible indicators include
measures of biodiversity, biomass production,
carbon sequestration, or energy and materials use.37
Quantification of ecological changes in biophysical
terms allows these changes to be ranked based on
individual or aggregate indicators for use in evaluating
policy options based on biophysical criteria previously
determined to be relevant to human/social well-being.
Use of a biophysical ranking does not explicitly
incorporate human preferences. Rather, it reflects either a
non-anthropocentric theory of value (based, for example,
on energy flows) or a presumption that the indicators
provide a proxy for human value or social preference.
This latter presumption is predicated on the belief that
the healthy functioning and sustainability of ecosystems
is fundamentally important to the well-being of human
societies and all living things, and that the contributions
to human well-being of any change in ecosystems can be
assessed in terms of the calculated effects on ecosystems.
Opinion is mixed - among both committee members and
the broader scholarly community - on whether it is an
asset or a drawback that these ranking methods are not
tied directly to human preferences.
The committee discussed two types of biophysical
rankings. The first is a ranking method based on
conservation value. The conservation value method
develops a spatially-differentiated index of conservation
value across a landscape based on an assessment of
rarity, persistence, threat, and other landscape attributes,
reflecting the contribution of these attributes to sustained
ecosystem diversity and integrity. These values can be
used to prioritize land for acquisition, conservation, or
other purposes, given relevant biophysical goals. Based
on geographic information system (GIS) technology,
the method can combine information about a variety of
ecosystem characteristics and services across a given
landscape and overlay ecological information with
other spatial data. Conservation values have been used
in various contexts by federal agencies (e.g., the U.S.
Forest Service, Fish and Wildlife Service, National
Park Service, and Bureau of Land Management),
non-governmental organizations (e.g., The Nature
Conservancy and NatureServe), and by regional and
local planning agencies.
Further reading
Brown, N., L. Master, D. Faber-Langendoen, P.
Comer, K. Maybury, M. Robles, J. Nichols,
and T.B. Wigley. 2004. Managing elements of
biodiversity in sustainable forestry programs:
Status and utility of NatureServe's information
resources to forest managers. National Council
for Air and Stream Improvement Technical
Bulletin Number 0885.
Grossman, D.H., and PJ. Comer. 2004. Setting
priorities for biodiversity conservation in
Puerto Rico. NatureServe Technical Report.
Riordan, R. and K. Barker. 2003. Cultivating
biodiversity in Napa. Geospatial Solutions
November 2003.
Stoms, D.M., PJ. Comer, PJ. Crist and D.H.
Grossman. 2005. Choosing surrogates for
biodiversity conservation in complex planning
environments. Journal of Conservation
Planning 1.
:"JX
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The second group of biophysical methods that the
committee discussed quantify the flows of energy and
materials through complex ecological systems, economic
systems, or both. Ecologists have used these methods
to identify the resources or resource-equivalents needed
to produce a product or service, using a systems or
life-cycle ("cradle to grave") approach. For example,
embodied energy analysis measures the total energy,
direct and indirect, required to produce a good or service.
Similarly, ecological footprint analysis measures the
area of an ecosystem (e.g., the amount of land and/or
water) required to support a certain level and type of
consumption by an individual or population.38
In addition to using these methods to measure required
inputs, some ecologists have advocated using the cost
estimates for embodied energy as a measure of value,
based on an energy (or other biophysical input) theory of
value. Although conceptually distinct, they have found
that these estimates can be of similar magnitude to value
estimates based on economic valuation methods.
Further reading
Embodied energy
Ayres, R.U., 1978. Application of physical
principles to economics. In Resources,
environment, and economics: Applications of
the materials/energy balance principle, ed. R.U.
Ayres, 37-71. New York: Wiley.
Boulding, K.E. 1966. The economics of the
coming spaceship Earth. In Environmental
quality in a growing economy, ed. H. Jarrett,
3-14. Baltimore, MD: Resources for the Future/
Johns Hopkins University Press.
Cleveland, CJ. 1987. Biophysical economics:
Historical perspective and current research
trends. Ecological Modelling 38:47-74.
Cleveland, CJ., R. Costanza, C.A.S. Hall, and
R. Kaufmann. 1984. Energy and the U.S.
economy: A biophysical perspective. Science
225: 890-897.
Costanza, R. 1980. Embodied energy and
economic valuation. Science 210: 1219-1224.
Costanza, R. 2004. Value theory and energy. In
Encyclopedia of energy, vol 6, ed. C. Cleveland.
337-346. Amsterdam: Elsevier.
Costanza, R., S.C. Farber, and J. Maxwell. 1989.
The valuation and management of wetland
ecosystems. Ecological Economics 1: 335-361.
Hall, C.A.S., CJ. Cleveland, and K. Kaufmann.
1992. Energy and resource quality: The ecology
of the economic process. New York: Wiley.
Hannon, B., R. Costanza, and R.A. Herendeen.
1986. Measures of energy cost and value in
ecosystems. The Journal of Environmental
Economics and Management 13: 391-401.
Kaufmann, R.K. 1992. A biophysical analysis of
the energy/real GDP ratio: Implications for
substitution and technical change. Ecological
Economics 6: 35-56.
Ruth, M. 1995. Information, order and knowledge
in economic and ecological systems:
Implications from material and energy use.
Ecological Economics 13: 99-114.
Ecological footprint analysis
Costanza, R., ed. 2000. Forum: The ecological
footprint. Ecological Economics 32: 341-394.
Global Footprint Network. 2008. [cited 2008].
Available from http://www.footprintnetwork.
org/en/index.php/GFN/
Herendeen, R. 2000. Ecological footprint is a
vivid indicator of indirect effects. Ecological
Economics 32: 357-358
Rees, WE. 2000. Eco-footprint analysis: Merits
and brickbats. Ecological Economics 32: 371-
374
Simmons, C., K. Lewis, and J. Moore. 2000. Two
feet - two approaches: A component-based
model of ecological footprinting. Ecological
Economics 32: 375-380
Wackernagel, M., L. Onisto, P. Bello, A. C.
Linares, I. S. L. Falfan, J. M. Garcia, A. I.
S. Guerrero, andM. G. S. Guerrero. 1999.
National natural capital accounting with
the ecological footprint concept. Ecological
Economics 29:375-390.
Wackernagel, M., N. B. Schultz, D. Deumling,
A. C. Linares, M. Jenkins, V. Kapos, C.
Monfreda, J. Loh, N. Myers, R. B. Norgaard,
and J. Randers. 2002. Tracking the ecological
overshoot of the human economy. Proceedings
of the National Academy of Sciences, USA
99:9266-9271.
4.2.7 Methods using cost as a proxy for value
A fundamental principle in economics is the
distinction between benefits and costs. In the context
of ecosystem services, economic benefits reflect what
is gained by increasing the amount of a given service
relative to some baseline, while costs reflect what must
be given up in order to achieve that increase. Costs can
provide information about benefits or value only under
specific and limited conditions. Nonetheless, several
methods based on costs have been used in the valuation
of ecosystem services.
One such method is replacement cost. Under this
method, the value of a given ecosystem service is viewed
as the cost of replacing that service by some alternative
means. For example, some studies have valued clean
drinking water provided by watershed protection by
using the cost savings from not having to build a water
filtration plant to provide the clean water (NRC, 2000
and 2004; Sagoff 2005). This type of cost savings
can offer a lower-bound estimate of the value of an
ecosystem service, but only under limited conditions
(Bockstael et al., 2000). First, there must be multiple
ways to produce an equivalent amount and quality of
the ecosystem service. In the above example, the same
-------
quantity and quality of clean water must be provided by
both the watershed protection and the nitration plant.
Second, the value of the ecosystem service must be
greater than or equal to the cost of producing the service
via this alternative means, so that society would be better
off paying for replacement rather than choosing to forego
the ecosystem service. In the example, the value of the
clean water provided must exceed the cost of providing
it via the nitration plant. When these two conditions are
met, it is valid to use the cost of providing the equivalent
services via the alternative as a lower-bound estimate of
the economic value of the ecosystem service.
Further reading
Bartik, TJ. 1988. Evaluating the benefits of
non-marginal reductions in pollution using
information on defensive expenditures." Journal
of Environmental Economics and Management
15: 111-22.
Bockstael, N.E., A.M. Freeman, et al. 2000.
On measuring economic values for nature.
Environmental Science and Technology 34:
1384-1389.
Chichilnisky, G., and G. Heal. 1998. Economic
returns from the biosphere. Nature 391: 629-
630.
National Research Council. 2000. Watershed
management for potable water supply:
Assessing the New York City strategy.
Washington, DC: National Academies Press.
National Research Council. 2004. Valuing
ecosystem services: Toward better
environmental decision-making. Washington,
DC: National Academies Press.
Sagoff, M. 2005. The Catskills parable. PERC
Report. Bozeman, MT: Political Economy
Research Center.
Shabman, L.A., and S.S. Batie. 1978. The
economic value of coastal wetlands: A critique.
Coastal Zone Management Journal 4: 231-237.
Another cost-related concept is habitat
equivalency analysis (HEA), which has been used
in Natural Resource Damage Assessments under the
Comprehensive Environmental Response, Compensation
and Liability Act and the Oil Pollution Act. HEA
seeks to determine the restoration projects that would
provide ecosystem or other related services (including
capital investments such as boat docks) sufficient to
compensate for a loss from a natural-resource injury
(e.g., a hazardous waste release or spill). In principle, to
determine whether a set of projects provides sufficient
compensation for a loss, HEA should determine the
tradeoffs required to make the public whole using utility
equivalents of the associated losses and gains - i.e.,
it should use a value-to-value approach (see Roach
and Wade, 2006; Jones and Pease, 1997). However,
in practice HEA is often based on a service-to-service
approach specified in biophysical equivalents (e.g.,
acres) rather than utility equivalents (value). Restoring
habitat far from where people live and recreate, however,
may not create value equivalent to nearby lost habitat,
even if the replacement habitat is of the same size.
Although HEA can provide dollar estimates of the
cost of providing replacement services or projects, these
estimates do not necessarily satisfy the two conditions
noted above that are necessary for replacement cost to
provide a lower bound on value. For example, the value of
the ecosystem or other services provided by the restoration
projects may not exceed the cost of providing those
services. Even if it does, several other assumptions are
needed to ensure that HEA will provide an actual estimate
of the economic value of the lost ecosystem services and
these assumptions will often not be met in practice. These
include fixed proportions between services and values, as
well as unit values that are constant over time and space
(Dunfordetal.,2004).
Because costs and benefits are two distinctly different
concepts, the committee urges caution in the adoption of
any methods using costs as a proxy for value. The above
conditions for valid use must be satisfied. Analyses of
costs should not be interpreted as measures of benefits
unless these conditions are met. Nonetheless, when
appropriately applied, methods such as replacement cost
and HEA may be useful to EPA in policy contexts where
there are multiple ways of providing an ecosystem service.
Further reading
Dunford, R.W, T.C. Ginn and W.H. Desvousges.
2004. The use of habitat equivalency analysis in
natural resource damage assessment. Ecological
Economics 48: 49-70.
King, D.M. 1997. Comparing ecosystem services
and values: With illustrations for performing
habitat equivalency analysis. Service Paper
Number 1. Washington, DC: National Oceanic
and Atmospheric Administration.
U.S. National Oceanic and Atmospheric
Administration. 1995. Habitat equivalency
analysis: An overview. Policy and Technical
Paper Series No. 95-1 (revised 2000).
Washington, DC: National Oceanic and
Atmospheric Administration.
U.S. National Oceanic and Atmospheric
Administration. 1999. Discounting and the
treatment of uncertainty in natural resource
damage assessment. Technical Paper 99-
1. Washington, DC: National Oceanic and
Atmospheric Administration, Damage
Assessment and Restoration Program.
U.S. National Oceanic and Atmospheric
Administration. 2001. Damage assessment and
restoration plan and environmental assessment
for the Point Comfort/Lavaca Bay NPL site
recreational fishing service losses. Washington,
DC: National Oceanic and Atmospheric
Administration.
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U.S. National Oceanic and Atmospheric
Administration. Coastal Service Center Web site.
Habitat Equivalency Analysis, http://www.danp.
noaa.gov/library/pdf/heaoverv.pdf
The price of tradable emissions permits under
cap-and-trade systems will almost never meet the
requirements for using cost as a proxy for value. The
price of an emission permit in a well-functioning
market will reflect the incremental cost of pollution
abatement. This price does not reflect the value of
pollution reduction unless one of two conditions is met:
a) the number of permits is set optimally, so that the
incremental cost of pollution equals the incremental
benefit of pollution reduction; or b) there are significant
purchases of permits for purposes of retiring rather than
using the permit, which indicates the willingness-to-pay
for pollution reduction by the purchaser. Absent these
exceptions, the price of tradable emissions permits
should not be used as a proxy for value.
4.3 Transferring value information
This section examines the transfer of value
information from one policy context to another. For
example, values assessed for a change in ecosystem
services in one setting (reflecting a combination of
biophysical and socio-economic conditions) might
be used to estimate values in a different setting, as
illustrated by the CAFO example described in section
2.2.3. Value transfers, especially in the form of benefits
transfer, have been important to EPA valuation efforts,
but there are a number of concerns and conditions that
have important implications for the validity of such
transfers and that have typically not been consistently
or adequately addressed. The following discussion
identifies and addresses concepts and methods that are
important for achieving valid transfer of any measures
or data about ecological values, with specific attention
to the transfer of economic benefits. Parallel conceptual
and methodological issues apply to all values transfers,
and very similar issues are involved in the transfer of
ecological data and information between different policy
contexts (see the discussion in chapter 3.5.1).
4.3.7 Transfer of information about economic
benefits
Economists often use information about economic
benefits derived from a previous valuation study to
assign values to changes in another context. This
process or method is known as benefits transfer. As an
example, suppose that a hedonic property value study
used data from the sales of residential homes in Chicago
(the study site) to estimate the incremental change in
housing prices associated with variations in the air
quality conditions near these homes. Given a variety of
theoretical and statistical assumptions, measures adapted
from the estimates of these price equations can be used
to estimate the marginal value of small improvements
in air quality in another city, such as New York or Los
Angeles (the policy site). The adjustments necessary
to use benefit information from a previous study in a
new context depend on a number of factors, including
the needs of proposed policy application, the available
information about the policy site, and the comparability
of preferences and supply conditions at the study and
policy sites.
In light of the time and money needed to generate
original value estimates, EPA relies heavily on benefits
transfer. In fact, benefits transfer is the primary method
EPA uses to develop the measures of economic trade-offs
used in its policy evaluations. Most regulatory impact
assessments and policy evaluations rely on adaptation
of information from the existing literature. Recent
examples of policy evaluations that used benefits transfer
methods include EPA's Economic and Benefits Analysis
for the Final Section 316(b) Phase III Existing Facilities
Rule, June 1, 2006 (EPA, 2006b), EPA's Final Report
to Congress on Benefits and Costs of the Clean Air Act,
1990 to 2010. (EPA, 1999), and the economic benefit-
cost analysis of the CAFO regulations.
EPA's heavy reliance on benefits transfer raises
a significant issue regarding its validity: under what
conditions can the findings derived from existing
studies be used to estimate values in new contexts?
Inappropriate benefits transfer often is a weak link
in valuation studies. A number of environmental
economists and other policy analysts have devoted
considerable attention to benefits transfer (e.g., Wilson
and Hoehn 2006).
The evaluations of benefits transfer in the literature
have been mixed. For example, Brouwer (2000)
concludes that "no study has yet been able to show
under which conditions environmental value transfer is
valid" (p. 140). Similarly, Muthke and Holm-Mueller
(2004) urge analysts to "forego the international benefit
transfer" and remark that "national benefit transfer
seems to be possible if margins of error around 50% are
deemed to be acceptable" (p. 334). On the other hand,
Shrestha and Loomis (2003) conclude that, "Overall, the
results suggest that national BTF can be a potentially
useful benefit transfer function for recreation benefit
estimation at a new policy site" (pp. 94-95).
Because benefits transfer constitutes a wide collection
of methods that arise from the specific needs of each
policy application, broad conclusions regarding validity
are not meaningful. Rather, assessment of the validity
of the approach requires case-by-case evaluation of the
assumptions used in the specific application of interest
and must consider the similarities and dissimilarities
between the study site and the policy site(s). For this
reason, overall the committee believes that general
conclusions regarding the validity of the application
of these methods are not possible. However, some
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applications of benefits transfer by EPA have been valid,
while others have not.
4.3.2 Transfer methods
As noted, benefits transfer refers to a collection of
methods rather than a single approach. Values derived
from one or more study sites can be transferred to a
policy site in three ways. The first is the transfer of a
unit value. A unit-value transfer usually interprets an
estimate of the tradeoff people make for a change in
environmental services as locally constant for each unit
of change in the environmental service. For the policy
site, the relevant and available values for these factors
are used to estimate an adjusted measure for the unit
value based on the specific conditions in the policy site
(see Brouwer and Bateman, 2005 for an example in the
health context). As noted above, the required adjustments
will depend on a number of factors.
A second approach is the function transfer approach,
which replaces the unit value with a summary function
describing the results of a single study or a set of
studies. For example, a primary analysis of the value
of air-quality improvements might be based on a
contingent valuation survey of individuals' willingness
to pay to avoid specific episodes of ill health, such
as a minor symptom-day (e.g., a day with mildly red
watering itchy eyes) or one day of persistent nausea
and headache with occasional vomiting (e.g., Ready
et al., 2004). A value function in this context relates
willingness to pay to respondent characteristics and
other factors that are likely to influence it, such as
income, health status, demographic attributes, and the
availability of health insurance. This value function
is then used to estimate willingness-to-pay for
populations with different characteristics. Alternatively,
the original study might estimate a demand function or
discrete choice model based on an underlying random
utility model describing revealed preference choices.
The demand function or discrete choice model is
transferred and then used to estimate economic benefits
at the policy site. In this case, the function being
transferred is an estimated behavioral model rather than
a value function.
Meta-analyses, which statistically combine results
from numerous studies, can also involve a type of
function transfer. Meta-analyses can be undertaken
when there is accumulated evidence on measures
of economic tradeoffs for a common set of changes
in resources or amenities, provided that the benefit
concept that is measured and the resource change that
is valued are consistent across the studies that are
combined in the analysis (Smith and Pattanayak, 2002).
One area with a large number of applications is water
quality relevant to recreation (e.g., Johnston et al.,
2003; Smith and Kaoru, 1990a, 1990b). EPA recently
used this approach in its assessment for the Phase III
component of the 316(b) rules.
Some meta-analyses combine unit values to produce
a weighted average unit value. While this might be
appropriate in some valuation contexts (EPA Science
Advisory Board, 2008a), in the context of ecological
valuation it can be problematic because it ignores the
site-specific variation in the value of ecosystem that stems
from heterogeneity in both ecosystem and population
characteristics. Alternatively, meta-analyses can combine
studies to estimate a meta-regression function, which can
be used to identify both site and population characteristics
as well as methodological characteristics that influence
benefit estimates. Such a function has the potential to be
used for benefits transfer and allows an adjustment for
characteristics of the policy site, if based on a structural
approach that ensures that basic consistency properties
are satisfied in order for the results to yield reliable benefit
estimates (Bergstrom and Taylor, 2006). These approaches
to benefit transfer have not yet been widely used. They
need to be evaluated before it would be possible to describe
a set of practices for applications, for example, in national
rule making (see further discussion in section 6.1).
A third approach to benefits transfer is preference
calibration. It uses information from the study site
to identify the parameters that describe underlying
preferences, with the objective of then using the resulting
preference relationship to estimate benefits at the policy
site (see Smith et al., 2002). With calibration, not all
relevant parameters (in this case relating to preferences)
are estimated directly from the data. Rather, some are
calculated or inferred from available estimates of other
parameters and assumed or observed relationships and
constraints. When the parameters can be calibrated or
estimated from the existing literature, the transfer uses
the calibrated preference function, together with the
conditions at the policy site, to measure the tradeoff for
the change associated with the policy application.
4.3.3 Challenges regarding benefits transfer
Several challenges arise when using benefits transfer.
The first stems from possible differences between the
study and policy sites. Regardless of the type of transfer
method used, economic benefits or economic value
functions derived from a particular ecosystem study site
will not necessarily be relevant for a different policy site.
How people value the preservation or alteration of an
ecosystem depends on two dimensions: their preferences
and the nature of the biophysical system. Differences
in both biophysical characteristics and human values
and preferences dictate that great care must be taken in
deciding whether the valuation of benefits in one context
can be validly used in another context.
Similarities or differences in preferences are likely
to depend on how close the populations in the two cases
are along social and economic dimensions that influence
marginal willingness to pay. For example, income levels
or age profiles are sometimes relevant, as in many cases
of valuing recreational opportunities. The particular
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cultural characteristics of the community also may be
relevant. For example, in locations where salmon are
seen as iconic species reflecting the entire ecosystem
(e.g., Seattle), people are likely to value more highly
both salmon and water quality important for preserving
the salmon.
When only information on willingness to pay per
unit of improvement is available, the analyst must be
sensitive to the types of differences that would render a
transfer inappropriate. If all the differences between the
study site and the policy site are such that one is likely
to have a higher value per unit of improvement than the
other, the value at the study site can provide either a
floor or ceiling for the value at the policy site. When the
information from the study site is in functional terms
(e.g., willingness to pay as a function of income levels
or age), social-economic differences between the study
site and the policy site can be accommodated if these
specifications are valid.
Although it may be possible to adjust for differences
in social-economic characteristics of the populations,
the capacity to adjust for biophysical differences
is typically more limited. For example, even if the
affected populations have identical characteristics
(or adjustments can be made for their differences),
the value of improving the water quality of one
small lake in Minnesota is likely to be quite different
from improving water quality in a small lake in
Texas, because the effects on the overall provision of
ecosystem services are likely to be quite different and
not captured by a single relationship.
The challenge of transferring benefit estimates
is exacerbated by the fact that often few economic
benefit studies are available for use. One consequence
is that analysts sometimes rely on benefits estimates
that are too old to be reliable for new applications. For
example, the regulatory impact assessment conducted
for the concentrated animal feeding operations
(CAFO) rule based its willingness-to-pay estimates
for improved water quality on indices taken from a
contingent valuation survey conducted by Carson
and Mitchell in November 1983, 20 years before
EPA's final CAFO rule was published (see Carson and
Mitchell, 1993). In addition, due to lack of suitable
previous studies, analysts sometimes inappropriately
use values or functions derived from studies designed
for purposes other than those relevant for the policy
site. For example, the Carson and Mitchell study used
in the CAFO rule was not intended to apply to specific
rivers or lakes. Moreover, the water quality index used
by Carson and Mitchell was highly simplified and
not intended to reflect changes in ecosystem services
beyond those related to fishing, boating, and swimming.
An additional challenge stems from the difficulty of
finding the most appropriate unit values to carry over
from the study site to the policy site. In the example
below, illustrating willingness to pay for an improved
fishing catch rate, several different metrics of value
are possible, and the different metrics will have very
different implications for the valuation at the policy site.
The choice of unit values also has to be appropriate to
the scale and context. For example, willingness to pay
for increased wilderness areas in a study site may have
been expressed in terms of dollars per absolute increase
in area (e.g., $100 per taxpayer annually for a 100-acre
increase in area, or $1 per acre). This unit value may be
reasonable for a small, heavily populated municipality,
but far too high for a municipality with substantially
more existing wilderness area.
4.3.4 Improving transfers of value information
The discussion above points to the need for additional
research to develop and improve methods and data
for use in value transfers. While the discussion in
section 4.3.3. focuses on the specific case of benefits
transfer, similar challenges arise with other transfers
of information about values. A number of strategies or
processes can help improve these transfers.
One strategy that can help address the challenges
of determining whether and how to conduct a value
transfer is the use of a screening process. This
procedural approach assumes that a deliberate effort
to examine the similarities and differences between
study sites and the policy site, by both EPA analysts
and those overseeing their work, will help flag
problematic transfers and clarify the assumptions and
limitations of the study-site results. Several procedures
can be considered. One is to contact experts familiar
enough with both the previous and current contexts
to determine whether to proceed with the proposed
transfer. These experts can consider input from a
variety of sources, including the public, and then apply
the criteria that they regard as relevant, even if the set
of criteria is not explicit. Experts knowledgeable in
both the study case and the policy case can suggest
the most appropriate functional forms and unit values
(e.g., Desvousges, Johnson, and Banzhaf, 1998).
Experts may also be able to suggest other existing
valuations that would be better candidates for transfer
of value information.
Another procedure is to make a detailed examination
of the appropriateness of the study case a regular part
of EPA review of analyses using value transfers. Such
oversight of the use of case studies would require
analysts to clarify the assumptions, purposes, and units
of the study-site analysis so that EPA reviewers can
judge the appropriateness of the transfer. Analysts must
also be fully transparent regarding the origin and context,
including the date, of the original valuation.
More thorough cataloguing of existing valuation
studies, with careful descriptions of the characteristics
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Willingness to pay for an improved catch rate: The challenge of choosing a unit
value for economic benefits transfer
Suppose estimates from the literature imply that
the average value of the willingness to pay for a 10%
improvement in the catch rate (i.e., fish caught per unit
of effort) for a sport fishing trip is $5 per trip. This
estimate could be from a study describing specific types
of fishing trips by a sample of individuals or it could be
an average of several studies.
One approach for developing a unit value transfer
would divide $5 by 10% to generate a unit value
of $0.50 for each 1% improvement. This strategy
implicitly assumes the benefit measure is not influenced
by the level of quality - i.e., to be constant for each
proportionate improvement.
Another approach would take the same information
on average tradeoffs and calculate a unit value using
the level of the quality variable, in this case a catch rate
that itself embeds another economic decision variable
- the effort a recreational fisher devotes to fishing. In
this example, the quality or number of fish caught per
hour of effort must be known. Suppose that in the study
providing the estimated economic benefit, the average
number of fish caught with an hour of effort before the
improvement was 2. Thus a 10% improvement means
that the typical recreationist would catch 0.2 more fish
with an hour's effort, implying a unit value of $5 for
every additional 0.2 fish caught per hour of effort, or
(assuming a linear relationship in terms of the catch
rate rather than the proportionate change in this quality
measure) $25 for every additional fish caught per hour
of effort.
Finally, the unit value could be expressed in
terms of improved fishing trips. Suppose the average
recreational trip involves 5 hours of fishing over the
course of a day. Then the improvement of 0.2 fish per
hour implies an average of one more fish caught during
a trip. These additional data might be used to imply that
the improvement makes typical trips yield incremental
economic benefits of $5 per trip (the value of catching
0.2 additional fish per hour for a period of five hours).
There are other ways this estimate could be
interpreted. These examples are not intended to be
the only "correct" ones or the best. They illustrate
that the information on the baseline conditions, the
measurement of quality, and the measurement and
terms of use all can affect how a given set of estimates
is used in a benefits transfer.
For the study site, all three interpretations are simply
arithmetic transformations of the data describing the
context for the choices that yield the tradeoff estimates.
However, the same conclusions do not hold when they
are transferred to a different situation. Suppose the
policy site involves a case where we wish to evaluate
the effects of reducing the entrainment of fish in power
plant cooling towers. Assume further it is known from
technical analysis that this regulation would lead to 5%
improvement in fishing success along rivers affected
by a rule reducing fish entrainment. Table 4 shows
the alternative unit value transfers if these areas have
2000 fishers, each taking about 3 trips per season and
currently they catch 1 fish per hour.
Clearly these examples deliberately leave out some
important information. Trips may be different - longer,
requiring more travel time, or involving different
features such as different species or related activities.
These added features are aspects omitted in the example.
These estimates also do not allow for the possibility that
fishing success induces current recreationists to take
more trips or that people who never took trips may start
taking them after the improvement. Under each of these
possible outcomes, the sources for error in the transfer
compound. Even without such details, these simple
examples illustrate how the aggregate economic benefit
measures can differ by a factor of four.
Table 4: Table of alternative unit value transfers
Constant unit value
fora 1% improvement
Constant unit value
for an extra fish
caught per hour of
effort
Constant value for an
improved trip
•JMlJgQ
$0.50 per 1%
improvement
$25 per additional fish
per hour
$5 per trip
^^^2
5% improvement per
trip
Added fish caught
Improved fishing trips
$0.50x5x3x2000 =
$15,000
$25 x .05 x 1 x 3 x 2000
= $7,500
$5x3x2000 = $30,000
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and assumptions of each, would be helpful in increasing
the likelihood that the most comparable existing
valuations will be identified. This is a compelling
rationale for developing databases of valuation studies.
The establishment and development of a Web-based
platform for data and models focusing on valuation
estimates would be very worthwhile. Comparable to
the Web sites developed and maintained for other large-
scale social science research surveys such as the Panel
Study on Income Dynamics (PSID) and the Health
and Retirement Study (HRS), such a platform could
expand the ability of Agency analysts to search for the
most appropriate study cases and to supplement these
records with related data for transfers. Some efforts
along these lines are currently underway. These include
the Environmental Valuation Reference Inventory
(EVRI), which was developed by Environment Canada
in conjunction with other agencies including EPA (see
http://www.evri.ca/), and a database currently being
developed for recreational use values (see http://www.
cof.orst.edu/cof/fr/research/ruvd/Recreation_Letter.
html). However, a more systematic effort across a wide
range of ecosystems services is needed (see Loomis and
Rosenberger, 2006).
In addition to development and maintenance of a
comprehensive database of existing valuation studies,
more original valuation studies across a wider range of
ecosystem services are needed to increase the Agency's
capacity to conduct transfers. The committee urges the
Agency to support research of this type. This research
will be most useful if conducted with the explicit
intention of developing value estimates that EPA can use
for subsequent transfers. Such an intention can influence
how the original valuation studies are conducted and
documented. For example, Loomis and Rosenberger
(2006) suggest a number of ways of designing original
studies to facilitate benefits transfer, such as the use
of objective, quantitative measures of quality changes
within realistic ranges and the consistent and full
reporting of project details. These same criteria would be
appropriate for any value transfer.
4.4 Conclusions and recommendations
The valuation approach proposed in this report
calls for EPA to consider the use of a broader suite of
methods than EPA has typically employed in the past
for valuing ecosystems and their services. There is a
variety of methods that could be used and the committee
urges EPA to pilot and evaluate the use of alternative
methods, where legally permissible and scientifically
appropriate. Some of the methods considered by the
committee have been used extensively in specific
decision contexts (e.g., the use of economic methods in
national rule making or the use of surveys, as described
in endnote 35), while others are still relatively new and
in the developmental stages. The methods also differ in
a number of important ways, including the underlying
assumptions, the concepts and sources of value they seek
to characterize, the empirical and analytical techniques
used to apply them, their data needs (inputs), and the
metrics they generate (outputs), and the extent to which
they involve the public. For these reasons, the potential
for use by EPA in ecological valuation will be different
for the different methods and in different contexts. The
Committee advises EPA to:
It Only use methods that are scientifically based and
appropriate for the particular decision context at hand.
It Develop a set of criteria to use in evaluating methods
to determine their suitability for use in specific
decision contexts. This is an important first step in
implementing the valuation approach proposed in this
report
H Explicitly identify relevant criteria to be used in
determining whether a contemplated values transfer is
appropriate for use in a specific ecological valuation
context. Both EPA analysts and those providing
oversight of their work must take into account the
differences between study site and policy site to flag
problematic transfers and clarify the assumptions and
limitations of the study site results.
It Support efforts to develop Web-based databases
of existing valuation studies across a range of
ecosystem services, with careful descriptions of the
characteristics and assumptions of each, to assist in
increasing the likelihood that the most comparable
existing valuations will be identified.
It Conduct additional original research on valuation that
is designed to be used in subsequent value transfers. »
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Cross-cutting issues: deliberative processes,
uncertainty, and communications
This chapter addresses three topics important to
multiple stages of ecological valuation: analysis of
uncertainties related to ecological valuation; com-
munication of ecological valuation information; and the
role of deliberative processes.
5.1 Deliberative processes
Deliberative processes, in which analysts, decision
makers, and/or members of the public meet in facilitated
interactions, can be useful in estimating and valuing
the potential effect of EPA actions on ecosystems
and their related services. Such processes can assist
at several steps of an assessment, ranging from
developing conceptual models and determining the
ecosystem services on which the Agency should focus
its assessment to valuing those services. For example,
where the public is not familiar with key ecosystem
services, deliberative processes can provide the public
with expert information that may better enable them to
identify what services are important to them. Similarly,
where the public is not accustomed to valuing particular
ecosystem services, deliberative processes may again
help members of the public estimate the value that they
would place on those services. Deliberative processes
also can increase public understanding and acceptance
of a valuation effort and, where appropriate, permit
the public to play a more active role in shaping and
analyzing options.
Two specific types of deliberative processes of potential
use to EPA in particular valuation efforts are mediated
modeling and constructed value processes. In mediated
modeling, analysts work with members of the public to
develop a model representing a particular environmental
system of interest, ranging from watersheds or local
ecosystems to large regions or even the globe (for example,
Higgins et al., 1997; Cowling and Costanza, 1997; van
den Belt, 2004). Members of the public participate in
all stages of the modeling process, from initial problem
scoping to model development, implementation, and use.
The resulting model can be used for multiple purposes,
including determining the ecosystem services that
are potentially important to the public and evaluating
alternative scenarios or options of interest. If the model
is to be used to consider tradeoffs, the model must
incorporate values drawn from methods described in
chapter 4. Because of public involvement in the modeling
process, the model and any results derived from it are
likely to enjoy buy-in and reflect group consensus.39
Constructed value processes can help in both
estimating values and, in some cases, making policy
decisions. A central premise of constructed value
processes is that people's preferences and values for
complex, unfamiliar goods, such as many ecosystem
services, are multi-dimensional and that people
sometimes construct their preferences and values for
such goods during the process of elicitation. This
premise contrasts with the premise underlying some
valuation methods, most notably economic valuation
methods, that assume preferences are given and that
values or contributions to well-being can be measured
using a single metric such as willingness to pay
or accept.
Constructed value processes can be used either as part
of a valuation process or directly in decision making.
In both situations, constructed value processes involve
a number of steps, including identifying objectives,
defining the attributes to be used to judge progress
toward the objectives, specifying the set of management
options, and measuring changes in relevant attributes
under the options (Gregory et al., 1993; Gregory et al.,
2001; Gregory and Wellman, 2001). Objectives are
diverse and often multi-dimensional. Examples include
maintaining some requisite level of ecological services,
protecting endangered or threatened species, producing
particular resources, increasing tourism or recreational
opportunities, and supplying a sense of pride or awe
(Gregory et al., 2001). The final output is either a
judgment about the current state of the system relative
to an alternative state (if the context is evaluative) or the
selection or identification of a preferred management
option (if the context is decision making). Constructed
value processes draw on inputs from a variety of
disciplines, including economics, ecology, psychology,
and sociology. A discussion of the use of decision
science approaches for ecological valuation appears in
section 4.2.6.
These deliberative processes, if done in a careful way
and supported by appropriate resources, can provide
useful input for valuation by identifying what people
care about.40 Deliberative processes can be especially
useful for providing input in valuation situations where
the public may not be fully informed about ecosystem
services. Such processes involving science, agency, and
members of the public can be helpful for getting an idea
of what an informed public might value. To adequately
address and incorporate relevant science, however, it
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is important that such deliberative processes receive
sufficient financial and staff resources (SAB, 2001).
5.2 Analysis and representation of
uncertainties in ecological valuation
5.2.1 Introduction
All aspects of ecological valuation efforts - from
the estimation of ecological impacts to valuation -
are subject to uncertainty, regardless of the methods
used. Assessment of this uncertainty allows for a
more informed evaluation of proposed policies and
of comparisons among alternative policy options. For
each option, decision makers should have sufficient
information regarding what is known about the
distribution of possible outcomes and associated values
in order to take uncertainty into account when they
make their policy choices. Identifying key uncertainties
can also provide potentially important insights regarding
the design of research strategies that can reduce
uncertainty in future analyses.
When addressing uncertainty in ecological valuation,
four key questions arise: First, what are the major sources
of uncertainty and what types of uncertainty are likely to
arise when using alternative valuation methods? Second,
what methods are available to characterize uncertainty
in ecological valuations? Third, how should information
regarding uncertainty be communicated to decision
makers? Fourth, what types of new research - data
collection, improvements in measurement, theory building,
theory validation, and others - can reduce uncertainty
for particular sources in specific applications? Section
5.2.2 briefly describes the major sources of uncertainty in
the valuation of ecosystems and ecosystem services. The
overview of specific valuation methods available at http://
yosemite.epa.gov/sab/sabproduct.nsf/WebBOARD/C-
VPESS_Web_Methods_Draft?OpenDocument discusses
the uncertainty arising from the use of individual
methods. Section 5.2.3 then discusses two approaches to
characterizing uncertainty regarding ecological values:
Monte Carlo analysis and expert elicitation. Section 5.2.4
addresses the communication of uncertainty information.
Section 5.2.5 discusses how EPA can use uncertainty
analysis to set research priorities.
Historically, efforts to address uncertainty in
ecological valuations and in all economic benefit
assessments that are part of regulatory impact analyses
have been limited. Providing greater information about
uncertainty is consistent with the need for transparency
and can improve decision making. In the context of
regulatory impact analyses, Office of Management and
Budget Circular A-4 explicitly calls for analysis and
presentation of important uncertainties. To assess the
level of confidence to attribute to projections used in
a valuation, decision makers must know the analyst's
judgment of the uncertainty of the valuation and its
component steps, as well as the assumptions underlying
the valuation analysis.
5.2.2 Sources of uncertainty in ecological
valuations
As discussed in chapters 3 and 4, ecological valuation
entails several analytic steps, each potentially subject to
uncertainty. These steps include predicting ecological
impacts of the relevant Agency decision or action,
predicting the effects of these impacts on ecosystem
services, and valuing the consequences of these effects.41
Uncertainties in each stage of the analysis are of
potential importance, and there is no reason - on the
basis of theory alone - to judge one to be more important
than the other. Rather, the relative magnitude of the
uncertainty involved in each step is fundamentally an
empirical question.
At each stage, uncertainty can arise from several
sources.42 First, some of the physical processes might
be inherently random or stochastic. Second, there
can be uncertainty about which of several alternative
models of the process best captures its essential features.
Finally, there are uncertainties involved in the statistical
estimation of the parameters of the models used in
the analysis.
At the biophysical level, for example, any charac-
terization of current or past ecological conditions will
have numerous interrelated uncertainties. Any effort
to project future conditions, with or without some
postulated management action, will magnify and
compound these uncertainties. Ecosystems are complex,
dynamic over space and time, and subject to the effects
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of stochastic events (such as weather disturbances,
drought, insect outbreaks, and fires). Also, our
knowledge of these systems is incomplete and uncertain.
Errors in projections of the future states of ecosystems
are thus unavoidable and constitute a significant
and fundamental source of uncertainty in any
ecological valuation.
All social, economic, or political forecasts are also
based on implicit or explicit theories of how the world
works, either represented by the mental models of the
forecasters or by the models underlying the formal
and explicit methods used in econometric modeling,
systems dynamics modeling, and other forms of
modeling. Theories and their expressions as models are
unavoidably incomplete and may simply be incorrect
in their assumptions and specifications. These sources
of uncertainty compound the uncertainty surrounding
the relevant biophysical relationships and responses to
policy changes.
Uncertainty also arises in determining the value of
the predicted ecological responses. The nature and
interpretation of this uncertainty is different for different
concepts of value. For example, for concepts of value
that assume well-defined preferences (such as economic
value), uncertainty can arise in the estimation of actual
("true") values, for a number of reasons. Valuation
methods are subject to data and theory limitations, and
they unavoidably rely on assumptions that introduce
uncertainty. In addition, analysts are often required
to apply estimated values to contexts that differ
from those in which the values were developed, and
appropriate adjustments might not have been made in
transferring estimates to different contexts. These types
of uncertainty in estimating true values can be assessed
using the methods for probabilistic uncertainty analysis
discussed below. Alternatively, for concepts of value
that are based on the premise that preferences must be
constructed (such as constructed values), uncertainty
reflects the lack of a "true" underlying value. This type
of uncertainty differs qualitatively from the uncertainty
that arises in estimating true but unknown values. As
a result, it is not meaningful to characterize it using a
probability distribution function. Rather, in uncertainty
analysis, the value should be viewed as a parameter that
can be varied to determine the implications of different
values for the ranking of alternative policy options (see
Morgan and Henrion, 1990).
In identifying the types of uncertainty most likely
to be of concern for individual valuation approaches in
specific contexts, two issues are relevant: the sensitivity
of the approach to the potential sources of uncertainty
listed above, and the magnitude of uncertainty thereby
generated. The consequence of data limitations can
be assessed by determining the variation in results
implied by variations in data. Vulnerability to theoretical
limitations is more difficult to assess, but can be gauged
in some cases by comparing predictions based on
alternative models.
5.2.3 Approaches to assessing uncertainty
Probabilistic uncertainty analysis, by its very nature,
is complex, particularly in the context of ecological
valuation. The simplest and probably most common
approach to evaluating uncertainties is some form of
sensitivity analysis, which typically varies one parameter
or model assumption at a time and calculates point
estimates for each of the different parameter values or
assumptions. The results provide a range of estimates of
the "true" value, including lower and upper bounds. No
effort is made to assign probabilities to the calculated
values or estimate the shape of the distribution of values
within the range.
Although sensitivity analysis may be sufficient
for some simple problems, its use in the context of
ecological valuation is likely to give an incomplete and
potentially misleading picture of the true uncertainty
associated with the value estimates. Due to the
number of sources of uncertainty in many ecological
valuations, sensitivity analysis is unlikely to account
for the implications of all the sources of uncertainty.
In addition, sensitivity analysis becomes unwieldy
when the outcomes relevant to the value assessment
themselves consist of multiple interrelated variables.
For example, it is extremely difficult at the biophysical
level to calculate the uncertainty in projecting outcomes
from a complex ecological system composed of multiple
interacting variables subject to the influence of external
stochastic events.
Given the limitations of simple sensitivity analysis,
other approaches to characterizing uncertainty have
been developed. These include Monte Carlo analysis
and the use of expert elicitation. These approaches can
provide a more useful and appropriate characterization
of uncertainty in complex contexts such as ecological
valuation.
Monte Carlo analysis is an approach to characterizing
uncertainty that allows simultaneous consideration of
multiple sources of uncertainty in complex systems.
It requires the development of a model to predict
the system's outputs from information about inputs
(including parameter values). The underlying inputs that
are uncertain are assigned probability distributions. A
computer algorithm is then used to draw randomly from
all of these distributions simultaneously (rather than
one at a time, as in sensitivity analysis) and to predict
outputs that would result if the inputs took these values.
By repeating this process many times, the analyst can
generate probability distributions for outputs that are
conditional on the distributions for the inputs.
Developments in computer performance and software
have substantially reduced the effort required to conduct
calculations for a Monte Carlo analysis once input
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uncertainties have been characterized. Widely available
software allows the execution of Monte Carlo analysis in
common spreadsheet programs on a desktop computer.
In developing probability distributions for uncertain
inputs, uncertainty from statistical variation can also
often be characterized with little additional effort
relative to that needed to develop point estimates. Much
of the needed data already will have been collected
for the development of point estimates (although
characterizing other sources of uncertainty in inputs can
require more effort).
In contrast to sensitivity analysis, Monte Carlo
analysis provides information on the likelihood of
particular values within a range, which is essential to any
meaningful interpretation of that range. Without such an
understanding, the presentation of a range of possible
outcomes may lead to inappropriate conclusions. For
example, a reader may assume that all values within the
range are equally likely to be the ultimate outcome, even
though this is rarely the case. Others may assume that the
distribution of possible values is symmetric. This, also, is
often not the case.
Because of its ability to characterize uncertainty in a
more meaningful way, Monte Carlo analysis has become
common in a variety of fields, including engineering,
finance, and a number of scientific disciplines. It has
been useful in policy contexts. EPA recognized as early
as 1997 that it can be an important element of risk
assessments (EPA, 1997). Circular A-4, in calling for the
analysis and presentation of uncertainty information as
part of regulatory analyses, also notes the potential use
of Monte Carlo analysis. However, efforts to quantify
uncertainties through Monte Carlo analyses rarely have
been undertaken in ecological valuations. More often,
uncertainty has been addressed qualitatively or through
sensitivity analysis.
The reliable application of Monte Carlo methods
requires the specification not only of variances on
key variables, but also of covariances across the
variables. Without appropriate covariances, the method
is unreliable and can lead to biased results. Positive
covariance increases the spread of results, while negative
covariances decrease the spread.
Where Monte Carlo analysis can be reliably used
in the estimation of ecological values, the analysis is
unlikely to address all sources of uncertainty. Thus,
the results will likely understate the range of possible
outcomes that could result from the relevant public
policy. Nonetheless, the ranges produced will still
provide more reliable information about the implications
of known uncertainties than simple sensitivity analysis.
In turn, these ranges can better inform judgments
by policy makers as to the overall implications of
uncertainty for their decisions. The committee therefore
urges EPA to move toward greater use of Monte Carlo
analysis, where feasible, as a means of characterizing
the uncertainties associated with estimating the value of
ecological protection.
A variety of expert elicitation methods can also
provide indications of the amount and nature of
uncertainty associated with estimates of specific values
or predictions regarding the impacts of a given activity
or change (e.g., Morgan and Henrion, 1990; Cleaves,
1994). In its simplest form, an expert elicitation is a
single expert's assessment of the uncertainty of an
estimate, forecast, or valuation, whether it is based
on implicit judgment or a more explicit approach
like the Monte Carlo technique. Policy makers can
elicit more information from the expert, such as the
assumptions underlying his or her analysis or the bases
for uncertainty, to better understand the reliability of the
expert's input and the nature of the uncertainty.
Although an elicitation can rely on a single expert,
the bulk of expert elicitation methods involve multiple
experts, which allows for a comparison of their
judgments and an assessment of any disagreements. If
the experts are of equal credibility, so that no judgment
can be discarded in favor of another, the range of
disagreement reflects uncertainty. If top scientists
strongly diverge in their estimates, forecasts, or
valuations, the existence of a high level of uncertainty is
irrefutable. This relationship, however, is asymmetrical
because narrow disagreement does not necessarily
reflect certainty. The experts may all be equally wrong,
a somewhat common occurrence given that experts
often pay attention to the same information and operate
within the same paradigm for any given issue (Ascher
and Overholt, 1983). When experts interact before
providing their final conclusions (e.g., by exchanging
estimates and adapting them to what they learn from one
another), errors due to incompleteness can be reduced.
For example, biologists may benefit from the kind of
information that atmospheric chemists can provide,
and vice versa. While such interactions run the risk of
"groupthink" - the unjustified convergence of estimates
due to psychological or social pressures to come closer
to agreement (Janis, 1982) - structured group processes
can help reduce the risk.
For many expert elicitation methods, translation
into probabilities is difficult. Simple compilations of
estimates (e.g., contemporaneous estimates of species
populations) from different experts can generate a table
with the range of estimates. However, these compilations
are unable to convey the degree of uncertainty that each
expert would attribute to his or her estimate. Including
confidence intervals can provide this information.
The SAB has been asked to review a draft Agency
white paper on expert elicitation and provide advice
on the utility of using expert elicitation to support
EPA regulatory and non-regulatory analyses and
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decision-making, including potentially in ecological
valuations. Although EPA has historically focused
expert elicitations on human health issues, the approach
may be useful for ecological valuation as well. The
committee suggests that EPA consider using expert
elicitation to obtain estimates of parameters and their
uncertainty for use in Monte Carlo analysis, if suitable
information about the relevant range for the parameter
values is not available based on observation (e.g., field
work or experiments).
5.2.4 Communicating uncertainties in ecological
valuations
It is important not only to analyze the sources and
size of uncertainty involved in a valuation but also
to effectively communicate that uncertainty to both
decision makers and the public - and in a manner
that does not overwhelm the recipient and cause
them to disregard or misinterpret the information. If
improvements in the analysis of uncertainty do not go
hand-in-hand with improvements in the communication
of that uncertainty, the added information can end up
confounding rather than facilitating good decision
making (Krupnick et al., 2006).
In the past, point estimates have been given far
greater prominence in public documents such as
regulatory impact assessments and other government
valuations than discussions of the uncertainty
associated with them. Uncertainty assessments are
often relegated to appendices and discussed in a
manner that makes it difficult for readers to discern
their significance. This result may be inevitable, given
that single-point estimates can be communicated
more easily than lengthy qualitative assessments of
uncertainty or a series of sensitivity analyses. The
ability of Monte Carlo analysis to produce quantitative
probability distributions, however, provides a means
of summarizing uncertainty that can be communicated
nearly as concisely as point estimates. If a summary
of uncertainty is not given prominence relative to an
estimate itself, decision makers will lose both the
context for interpreting the estimate and opportunities
to learn from the uncertainty.
Some resistance to the use of formal uncertainty
assessments such as through Monte Carlo analysis, and
to the prominent presentation of the results, may be
due to the perception that such analysis requires greater
expert judgment and therefore renders the results
more speculative.43 Also, some might argue that, given
the inevitably incomplete nature of any uncertainty
analysis, prominently presenting its results could
incorrectly lead readers to conclude that the results
of an ecological valuation are more certain than they
actually are. Both concerns are generally unfounded.
As described above, developing characterizations
of uncertainty, such as for inputs in a Monte Carlo
analysis, often simply involves making explicit and
transparent expert judgments that already must be
made to develop point estimates for those inputs. To
the extent that an uncertainty analysis is incomplete
in its characterization of uncertainty, that fact can be
communicated qualitatively.
EPA should also consider the use of consistent
language and graphical approaches in reporting
on uncertainty in its valuations. Common usage,
as well as graphical presentation of quantitative
information regarding uncertainties, can help improve
communication and understanding of relevant
uncertainties for both policy makers and interested
members of the public (Moss and Schneider, 2000).
Organizations such as the Intergovernmental Panel on
Climate Change (IPCC) and the Millennium Ecosystem
Assessment have consciously adopted clear and
consistent language, as well as graphical approaches, in
reporting on uncertainty.
5.2.5 Using uncertainty assessment to guide
research initiatives
Over time, additional research related to data
collection, improvements in measurement, theory
building, and theory validation can reduce the
uncertainties associated with ecological valuation. For
example, research can improve our understanding of the
relationships governing complex ecological systems and
thereby reduce the uncertainty associated with predicting
the biophysical impacts of alternative policy options.
Even stochastic uncertainty can sometimes be addressed
by initiating research that focuses on factors previously
treated as exogenous to the theories and models. For
example, an earthquake-risk model based on historical
frequency will have considerable random variation if
detailed analysis of fault-line dynamics is excluded;
bringing fault-line behavior into the analysis can lead to
reductions in such uncertainty (Budnitz et al., 1997).
Assessments of the magnitude and sources of
uncertainty can help to establish research priorities
and to inform judgments about whether policy changes
should be delayed until research reduces the degree
of uncertainty associated with possible changes.
Enhanced uncertainty analyses can provide decision
makers with information needed to make better
decisions. Determining whether the major source
of uncertainty comes from weak data, weak theory,
randomness, or inadequate methods can help guide
the allocation of scarce research funds. Some data
needs will simply be too expensive to fulfill, and some
methods have intrinsic limitations that no amount of
refinement will fully overcome. Uncertainty analysis
can provide insight into whether near-term progress
in reducing uncertainty is likely, based on the sources
of uncertainty and the feasibility of addressing these
limitations promptly. However, it is important to avoid
the pitfall of delaying an action simply because some
uncertainty remains where the benefits of immediate
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action outweigh the value of attempting to further
reduce the uncertainty. Some uncertainty always
will remain.
5.3 Communication of ecological
valuation information
The success of an integrated and expanded approach
to ecological valuation depends in part on how EPA
obtains information about public concerns during the
valuation process and then communicates the resulting
ecological valuation information to decision makers and
the public (Fischhoff, 2009). Although the committee
has not extensively discussed the communication
challenges presented by ecological valuation, it believes
that generally accepted practices for communication of
technical information apply to the valuation context.
Section 5.3.1 discusses general practices of particular
relevance to valuation. Section 5.3.2 addresses the
special communication challenges that arise for
ecological valuation.
Three essential functions of communication in
valuing the protection of ecological systems and
services are:
® Communication among and between technical experts
and the public within the valuation process itself
® Communication of valuation information by analysts
to decision makers
® Communication of the results of the valuation and
decision making processes to interested and affected
members of the public.
Although these communication functions may appear to
be separate steps, they overlap. The success of the overall
valuation process and any communication step within
it, for example, depends on understanding how decision
makers use valuation information. Spokespersons must
understand how different public groups and experts
frame valuation issues before they can effectively
communicate the results of a formal valuation analysis.
5.3.1 Applying general communication
principles to ecological valuation
Effective communication should be designed for
the relevant audience of the valuation information. The
potential pool of interested parties include decision
makers, interested and affected members of the public,
and experts in social, behavioral, and economic sciences
and ecological sciences. A broad public audience is
likely to be interested in better understanding the value
of protecting ecological systems and services. Also
important is an intermediate audience of analysts,
who serve as important mediators for valuation
information through their analyses and activities.
This latter audience needs to access not only value
estimates but also technical details and models. To
support decisions effectively, communications must
be designed to address a recipient's goals and prior
knowledge and beliefs, taking into account the effects
of context and presentation (Morgan et al., 2002). The
committee recommends that EPA formally evaluate the
communication needs of the users of valuations and
adapt valuation communications to those needs.
As discussed earlier, an effective communication
strategy also requires interactive deliberation and
iteration (NRC, 1996). Effective communication of
values requires systematic interactions with interested
parties, where the interaction will differ depending
on the technical expertise and focus of the parties. In
general, interactive processes are critical for improving
understanding, although reports (such as EPA's Draft
Report on the Environment) are also important,
especially in the context of assessment.
Basic guidelines for risk and technical communication
are generally applicable to communicating ecological
values. Linear graphs, for example, are likely to convey
trends more effectively than tables of numbers (Shah and
Miyake, 2005), and text that incorporates headers and
other reader-friendly attributes will be more effective
than text that does not (Schriver, 1989). In developing
effective communication approaches for ecological
valuation, EPA can look to guidelines developed for
risk and technical communication. Two useful examples
of such guidelines are the communication principles in
EPA's Risk Characterization Handbook (EPA, 2000d)
and the guidelines for effective web sites (Spyridakis,
2000). The principles in the Risk Characterization
Handbook include transparency, clarity, consistency, and
reasonableness. Spyridakis, in turn, provides guidance in
five categories: content, organization, style, credibility,
and communicating with international audiences.
Spyridakis provides a concise table for communicating
information via Web sites and provides generally
accepted guidance useful for communication of valuation
information, including: (a) selecting content that takes
into account the reader's prior knowledge; (b) grouping
information in such a way that it facilitates storing that
information in memory hierarchically; (c) stating ideas
concisely; and (d) citing sources appropriately, and
keeping information up to date.
As in the case of any type of communications, it
is difficult to predict the effects of communicating
ecological valuations. Good communications practice
requires formative evaluation of the communications as
part of the design process. Testing messages after the
fact will enable assessments of effectiveness, leading
to continued improvement in communications (e.g.,
Scriven, 1967; Rossi et al., 2003). The committee
recommends that EPA evaluate its communication
of ecological valuations to assess the effects of the
communication and to learn how to improve upon
Agency communication practices.
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5.3.2 Special communication challenges related
to ecological valuation
Although application of these general communication
principles will improve communications of ecological
valuations, special challenges arise in this context.
First, communicating the value of protecting ecological
systems and services requires conveying not only value
information (in terms of metrics such as monetized values
and rating scales), but also information about the nature,
status, and changes to the ecological systems and services
to which the value information applies. The EPA Science
Advisory Board review of EPA's Draft Report on the
Environment (EPA Science Advisory Board, 2005) and
other reports (e.g., Schiller et al., 2001; Carpenter et al.,
1999; Janssen and Carpenter, 1999) emphasize that people
need to understand the underlying causal processes in
order to understand how ecological changes affect the
things they value, such as ecosystem services.
The causal processes can be conveyed using
such visual tools as mapped ecological information,
photographs, graphs, and tables of ecological indicators.
To the extent that such visual outputs - especially outputs
from integrated geographic information systems using
best cartographic principles and practices (Brenner,
1993) - can be interactive, the outputs will facilitate
sensitivity analysis that can address audience questions
about scale and aggregation and may be more effective
as communication tools. The EPA Science Advisory
Board has proposed this kind of framework for reporting
on the condition of ecological resources. EPA's Draft
Report on the Environment (EPA, 2002a) and Regional
Environmental Monitoring and Assessment Program
reports illustrate a range of representational approaches.44
Second, the many uses and definitions of the term
"value" complicate the communication of ecological
values. The broad usage of the term in this report
includes all the concepts of value described in Table 1.
Context and framing can strongly influence how people
rank, rate, and estimate values (Hitlin and Piliavin, 2004;
Horowitz and McConnell, 2002), as well as how they
interpret value-related information (e.g. Lichtenstein and
Slovic, 2006).
As discussed elsewhere in this report, value measures
are required or useful in a variety of regulatory and non-
regulatory contexts, ranging from national rule making,
to site-specific decision making and prioritization
of environmental actions, to educational outreach in
regional partnerships. In some cases monetization is
required, whereas in others (e.g., educational outreach
by regional partnerships), narratives and visual
representations of values may play a more important
role. Little direct evidence exists about how people
perceive alternative value measures.
One mechanism for mitigating disconnects when
reporting ecological values in different metrics is to
employ an iterative, interactive approach to eliciting,
studying, and communicating values and tradeoffs,
where values are represented in multiple ways. Verbal
quantifiers (e.g., "many" or "very likely"), for example,
may make technical information more accessible, but the
wide variability with which these terms are interpreted
(Budescu and Wallsten, 1995) makes it critical to make
the underlying numerical information readily available.
Appropriate use of graphical and visual approaches,
including geographic information systems, can aid
interpretation of quantitative information. Visualization
can facilitate new insights (MacEachren, 1995).
Third, much remains to be learned about how
particular representations of non-monetized and
monetized values, such as narrative, numerical attitude
ratings, graphics, or other visual information, influence
decision makers or the public in either value elicitations
or presentations of cost-benefit analyses. Survey
and decision research suggest that perceptions - and
expressions - of values depend on format as well as
context and specific content.45 For example, including
graphics in otherwise equivalent sets of information
demonstrably influences expressed values (Chua, Yates
and Shah, 2006; Stone et al, 2003). Asking people for
ecological value in dollars can produce different results
than using other response scales (e.g., Schlapfer, Schmitt
and Roschewitz, 2008).
Finally, in many circumstances, interactive
communication of ecological valuation information is
likely to be more effective than static displays. Interactive
communication allows users to manipulate the data
or representations of the data, such as with sliders on
interactive simulations. Interactive visualization has the
potential to allow users to tailor displays to reflect their
individual differences and questions. Even with exactly
the same presentation, people's understandings of content
vary because of differences in educational or cultural
background, and different intellectual abilities. Interactive
exploration tools give the audience a chance to investigate
freely the part in which they are interested or about which
they have questions.
As Strecher, Greenwood, Wang, and Dumont
(1999) argue, the advantage of interactivity include
that it supports: active (rather than passive) audience
participation; tailoring information for individual
users; assisting the assessment process; and visualizing
risks under different scenarios (allowing users to ask
"what if" questions). Interactivity is a good solution
if the complexity of the visualization has the potential
to overwhelm users (Cliburn, Feddema, Miller, and
Slocum, 2002). Interactive visualization nonetheless
poses challenges as well. 3-D visualization, which has
become increasingly popular in visualization practice
(Encarnacao et al., 1994), both necessitates interactivity
and at the same time challenges it because of the sheer
computational power required.
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5.4 Conclusions and recommendations
Deliberative processes can play an important
role in the valuation process and the committee
makes the following recommendations regarding
their use:
® EPA should consider using carefully conducted
deliberative processes to provide information about
what people care about.
It Particular attention should be paid to deliberative
processes where the public may not be fully
informed about ecosystem services. Deliberative
processes involving scientists, agency personnel, and
members of the public can be helpful for getting an
idea of what an informed public might value.
® EPA should ensure that deliberative processes receive
the financial and staff resources needed to adequately
address and incorporate relevant science and best
practices.
A recent report of the National Research Council
also examines public participation in environmental
assessments and is a useful source for additional
recommendations on the potential role of deliberative
processes in the valuation process (NRC, 2008).
Providing information to decision makers and
the public about the level of uncertainty involved in
ecological valuation efforts is critical for the informed
evaluation of proposed policies and alternative
policy options. The committee makes the following
recommendations to ensure the effective analysis and
representation of uncertainties in ecological valuations:
It In assessing uncertainty, EPA should go beyond simple
sensitivity analysis and make greater use of approaches,
such as Monte Carlo analysis, that provide more useful
and appropriate characterization of uncertainty for the
complex contexts of ecological valuation. Sensitivity
analysis is unlikely to account for all sources of
uncertainty in ecological valuation and can become
unwieldy when value outcomes consist of multiple
interrelated variables. EPA should also consider using
expert elicitation to obtain estimates of parameters and
their uncertainty for use in Monte Carlo analysis, if
suitable information about the relevant range for the
parameter values is not available based on observation.
It The Agency should not relegate uncertainty analyses
to appendices but should ensure that a summary
of uncertainty is given as much prominence as the
valuation estimate itself. EPA should also explain
qualitatively any limitations in the uncertainty
analysis. EPA should also explain limitations in the
valuation exercise due to uncertainties.
H EPA should invest in additional research designed to
reduce the uncertainties associated with ecological
valuation through data collection, improvements in
measurement, theory building, and theory validation.
Assessments of the magnitude and sources of
uncertainty can help to establish research priorities
inform judgments about whether policy changes
should be delayed until research reduces the degree
of uncertainty associated with possible changes.
The Agency, however, should not delay a necessary
action simply because some uncertainty remains,
because uncertainty always will remain.
The success of ecological valuations also depends
on how EPA obtains information about public concerns
during the valuation process and then communicates
the resulting ecological valuation information to
decision makers and the public. To promote effective
communications, the committee recommends the
following steps:
® EPA should evaluate the users of valuation
information and their needs and adopt
communications that are responsive to those needs.
H In communicating ecological valuation information,
the Agency should follow basic guidelines for
risk and technical communication. EPA's Risk
Characterization Handbook (EPA, 2000d) provides
one set of useful guidelines, including transparency,
clarity, consistency, and reasonableness.
H EPA should evaluate its communication of ecological
valuations to assess its effects and to learn how to
improve upon its practices.
It To the extent feasible, the Agency should
communicate not only value information but also
information about the nature, status, and changes
to the ecological systems and services to which
the value information applies. Visual tools such as
mapped ecological information, photographs, graphs,
and tables of ecological indicators can be very useful
in conveying causal processes.
It Where appropriate, the Agency should employ an iterative,
interactive approach to communicating values. »
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Applying the approach in three EPA
decision contexts
This chapter discusses implementing the C-VPESS
ecological valuation approach in three specific EPA
decision contexts: national rule making, regional
partnerships, and site-specific decision making. The
committee believes that improved ecological valuation in
each context can contribute to improved policy analysis
and decisions. The committee examined a number of
illustrative examples for each decision context and used
these examples to inform its views about application of
the approach advocated in this report.
The discussions below elaborate on the three key
features of the valuation approach advocated in this
report as they relate to the specific decision contexts:
It Identifying and focusing early in the process on the
impacts that are likely to be most important to people
It Predicting ecological changes in value relevant terms
It Using multiple methods in the valuation process.
The discussions are meant to be illustrative rather
than comprehensive and the exclusion of a particular
method from discussion in a specific context is not
intended to suggest inappropriateness. Note that the
general principles and concepts used in the discussions
below are described in more detail elsewhere in this
report (see, for example, chapter 4 and descriptions of
valuation methods and survey issues and best practices,
links available on the SAB Web site at http://yosemite.
epa.gov/sab/sabproduct.nsf/WebBOARD/C-VPESS_
Web_Methods_Draft?OpenDocument).
6.1 Valuation for national rule making
6.1.1 Introduction
This section examines the application of the
expanded, integrated approach to ecological valuation
in the context of national rule making. Executive
Orders and implementation guides often specifically
require assessment and analysis of the benefits and
costs of national rules to follow prescribed economic
methods. Thus, this section is focused on the application
of valuation using economic methods. In addition, it
discusses the role that the other methods described in
chapter 4 can play in this context. As background for this
discussion, the committee examined three examples of
previous Agency economic benefit assessments:
® The Agency's assessment for the final effluent
guidelines for the aquaculture industry (EPA, 2004a)
® The Agency's assessment for the 2002 rule making
regarding concentrated animal feeding operations
(CAFOs) (EPA, 2002b; chapter 2 also discusses this
benefit assessment)
It The prospective analysis of the benefits of the Clean
Air Act Amendments of 1990 (EPA, 1999).46
Brief descriptions of the three benefit analyses are
presented later in this section. These examples provide
insights reflected in the discussion and recommendations
throughout this section.
6.7.2 Valuation in the national rule making
context
As noted previously, valuation by EPA in the
national rule making context is typically subject to
constraints imposed by statute, executive order, and/
or guidance from the Office of Management and
Budget (OMB). Most of the environmental laws
administered by the Agency require that regulations
such as environmental quality standards and emissions
standards be based on criteria other than economic
benefits and costs. In some cases, the legislation
explicitly precludes consideration of costs or benefits
in the standard-setting process. For example, under the
Clean Air Act, primary ambient air quality standards
for criteria air pollutants must be set to protect human
health with an adequate margin of safety. Even where
a law, such as the Safe Drinking Water Act, allows
consideration of benefits and costs, adherence to a strict
"benefits must exceed costs" criterion is not required.
However, even when national EPA rules are
not determined by a strict benefit-cost criterion,
assessments of the benefits and costs of EPA actions,
conducted under prescribed procedures, can be
important for a number of reasons. First, Executive
Order 12866 (as amended by Executive Order 13422),
requires federal agencies to "assess both the costs
and the benefits of the intended regulations, and ...
propose or adopt a regulation only upon a reasoned
determination that the benefits of the intended
regulation justify its costs" (Executive Order 12866,
October 4, 1993). These assessments are commonly
referred to as regulatory impact assessments (RIAs).
They generally evaluate, in economic terms, the
form and stringency of the rules that are established
to meet some other objective, such as protection of
human health.
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Second, in some cases, an assessment of economic
benefits and costs can be mandated by law. For example,
Section 812 of the Clean Air Act Amendments of 1990
requires the Agency to develop periodic reports to
Congress that estimate the economic benefits and costs
of various provisions of the Act. Finally, the benefit
and cost estimates developed in national rule making
can help in setting research or legislative priorities. In
summary, a complete, accurate, and credible analysis
of the benefits and costs of a given rule can have broad
impacts, even if the analysis does not determine whether
a currently proposed rule should be promulgated.
In conducting RIAs, EPA is subject to requirements
specified by OMB guidance, and all EPA benefit
assessments are subject to OMB oversight and approval.
As noted in chapter 2, OMB's Circular A-4 (OMB,
2003) makes it clear that Executive Order 12866
requires an economic analysis of the benefits and costs
of proposed rules conducted in accordance with the
methods and procedures of standard welfare economics.
In the context of national rule making, the terms benefit
and cost thus have specific meanings. To the extent
possible, EPA must assess the benefits associated with
changes in goods and services as the result of a rule,
judged by the sum of the individuals' willingness to
pay for these changes. Similarly, the costs associated
with regulatory action are to be evaluated as the losses
experienced by people, and measured as the sum of
their willingness to accept compensation for those
losses. EPA must begin the analysis by specifically
describing environmental conditions in affected areas,
both with and without the rule. EPA must then value
these changes based on individual willingness to pay and
to accept compensation, aggregated over the people (or
households) experiencing them. Although other valuation
methods described in chapter 4 may yield monetary
estimates of value, monetizing values using multiple
methods and then aggregating the resulting estimates
would mean combining estimates that are based on
quite different theoretical constructs, as well as diverse
underlying assumptions. Thus, for both theoretical and
empirical consistency - as well as compliance with
OMB guidance - monetization of benefits in the context
of an RIA should be based on economic valuation.
Circular A-4 recognizes that it may not be possible
to express all benefits and costs in monetary terms. In
these cases, it calls for measurement of these effects in
biophysical terms. If that is not possible, there should
be a qualitative description of the benefits and costs
(OMB, 2003, p. 10). Circular A-4 is clear about what
should be included in regulatory analyses, but it does
not preclude the inclusion of information drawn from
non-economic valuation methods. Nonetheless, it implies
that when conducting ecological valuation in the context
of national rule making, EPA must seek to monetize
benefits and costs using economic valuation methods as
much as possible.
Although economic valuation methods are well-
developed and there is a large literature demonstrating
their application, applying these methods to the
ecological benefits of a national-level rule raises
significant challenges. A key challenge is the difficulty
of deriving a national estimate of the effect of an EPA
rule on ecosystems and the services derived from
these ecosystems. Such a national estimate requires
information about changes in stressors resulting from
the action, as well as information about how the
changes in stressors will affect ecosystems and the flow
of services nationally. In many rule-making contexts,
predicting the changes in stressors is difficult. Often,
the rule prescribes adoption of a particular technology
or a particular behavior (e.g., adoption of best
management practices) rather than a specific change in
stressors (e.g., discharge limits). The aquaculture rule
associated with the Clean Water Act, described in text
box 1, provides an example. In those cases, to estimate
associated benefits, EPA must predict the changes in
stressors that would likely result from the required
behavioral change.
A rule will often involve many stressors with
complex interactions, which greatly complicates the
development of quantitative estimates of changes in
stressors. The CAFO rule, described in chapter 2 and
below, is an illustration.
Changes must also be defined relative to a baseline,
and few national-level databases useful for this purpose
exist. For example, in the RIA for the aquaculture rule, it
was difficult to quantify the changes in stressors because,
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in some cases, baseline data on stressor levels were not
available.
Even if changes in stressor levels can be predicted
at the national level, mapping these into national-
level changes in ecosystem characteristics or services
using ecological production functions is generally
very difficult. There may be a long chain of ecological
interactions between the stressors and the ecosystem
services of interest - and often many of links in that
chain are not fully understood by scientists, particularly
at the level required for comprehensive national
analysis. Scientific knowledge is especially lacking
on the ecological impacts of substances such as heavy
metals, hormones, antibiotics, and pesticides. However,
these substances can have important and far-ranging
impacts at the national level. In addition, the nature and
magnitude of impacts can be very site-specific because
Title III of the Clean Water Act gives EPA authority to issue effluent guidelines that govern the setting
of national standards for wastewater discharges to surface waters and publicly owned treatment works
(municipal sewage treatment plants). The standards are technology-based, i.e., they are based on the
performance of available treatment and control technologies. The proposed effluent guidelines for the
concentrated aquatic animal production industry (aquaculture) would require that all applicable facilities
prevent discharge of drugs and pesticides that have been spilled. In addition, facilities must minimize
discharges of excess feed and develop a set of systems and procedures to minimize or eliminate discharges of
various potential environmental stressors. The rule also includes additional qualitative requirements for flow-
through and recirculating discharge facilities and for open water system facilities (EPA, 2004a).
The Agency identified the following potential ecological stressors that might be affected by the rule:
solids; nutrients; biochemical oxygen demand from feces and uneaten food; metals (from feed additives,
sanitation products, and machinery and equipment); food additives for coloration; feed contaminants (mostly
organochlorides); drugs; pesticides; pathogens; and introduction of non-native species. Some of these (e.g.,
drugs and pathogens) were thought by the Agency to be very small in magnitude and not require further
analysis. To this list, C-VPESS would add habitat alteration from changes in water flows.
For most of these stressors, it is not possible to specify the change that would result from the rule for two
reasons. First, the rule called for adoption of "best management practices" rather than imposing specific
quantitative maximum discharge levels. Second, for most of these stressors, baseline data on discharges in the
absence of the rule were not available.
The Agency analyzed the effects of the rule on dissolved oxygen, biochemical oxygen demand, total
suspended solids, and nutrients (nitrogen and phosphorus). There appear to have been three reasons why the
remaining endpoints were not quantified:
The Agency lacked data on baseline stressor levels.
The rule called for adoption of "best management practices" rather than imposing specific quantitative
maximum discharge levels, and the Agency lacked information on how these requirements would change
the levels of stressors.
The Agency did not use a model capable of characterizing a wide range of ecological effects. The
Agency used QUAL2E rather than the available AQUATOX model. The choice of QUAL2E appears to
have been driven largely by the ability to link its outputs with the Carson and Mitchell valuation model
(1993).
The Agency estimated benefits for recreational use of the waters and non-use values. To estimate these
values, the Agency estimated changes in six water quality parameters for 30-mile stretches downstream from
a set of representative facilities and calculated changes in a water quality index for each facility. The Agency
then used an estimated willingness-to-pay function for changes in this index taken from Carson and Mitchell.
Carson and Mitchell had asked a national sample of respondents to state their willingness to pay for changes
in a water quality index that would move the majority of water bodies in the United States from one level
on a water quality ladder to another, resulting in improvements that would allow for boating, fishing, and
swimming in successive steps. The aggregate willingness-to-pay for the change in the water quality index for
each representative facility was then used to extrapolate to the population of facilities of each type affected by
the rule.
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they vary substantially both within and across regions Even if the national impact of the rule can be
of the country. As a result, predictions of biophysical estimated, the Agency must then seek to monetize
impacts in one region generally cannot readily be the value of that impact using economic valuation
transferred to other regions where the characteristics techniques if possible. Because EPA generally does not
of the relevant ecosystems, as well as the affected have the time or resources required to conduct significant
population, are different. original economic valuation research for specific national
In December 2000, in response to structural changes in the industry, EPA proposed a new rule to govern
discharges from CAFO facilities. The new rule, which was finalized in December 2003, requires facilities
to implement comprehensive nutrient management plans designed to reduce the runoff of pollutants from
feedlots and from the land application of manure. The rule focuses on the largest operations that represent the
greatest environmental threats.
Manure from livestock operations produces a variety of potential pollutants that can migrate to ground
water, streams, rivers, and lakes. These pollutants include nitrogen, phosphorus, sediments and organic
matter, heavy metals, salts, hormones, antibiotics, pesticides, and pathogens (over 150 pathogens found
in manure are human health risks). CAFO facilities also release a variety of gases and material into the
atmosphere including particulates, methane, ammonia, hydrogen sulfide, odor-causing compounds, and
nitrogen oxides.
Of the water-polluting materials covered in the CAFO rule, excess nutrients can directly affect human
water supply through excess nitrates, adversely affect agriculture through excess salts in irrigation waters,
and cause eutrophication of water bodies, anoxia, and toxic algal blooms. These latter effects can result in
fundamental changes in the structure and functioning of aquatic ecosystems, including cascading effects that
reduce water quality and species diversity. Uncontrolled releases of animal wastes have resulted in massive
fish mortality.
Pathogens in polluted waters are a health hazard, both directly and through the food chain. The potential
human health impacts of antibiotics and hormones in wastes have not been well identified but are of concern.
Of all the potential environmental impacts, the CAFO economic benefits analysis focused to a large extent
on the nutrient runoff from land where manure has been applied and the economic benefits that would accrue
from the manure management requirements of the CAFO rule. To estimate the benefits, the analysis utilized
the GLEAMS model (Groundwater Loading Effects of Agricultural Management Systems). The outputs
include nutrients, metals, pathogens, and sediments in surface runoff and ground-water leachate. This model
was applied to model farms of different sizes, animal types, and geographic regions. From this model the
reductions in pollutant loading of nutrients, metals, pathogens, and sediments were estimated for large- and
medium-sized CAFO.
Seven categories of economic benefits were estimated: water-based recreational use (by far the largest
category), reduced numbers of fish kills, increased shellfish harvest, reduced ground water contamination,
reduced contamination of animal water supplies, reduced eutrophication of estuaries, and reduced water
treatment costs. Reductions in fish kills and animal water supply contamination were valued using
replacement cost. Increased shellfish harvests were valued using estimated changes in consumer surplus.
Water-based recreation was valued using the Carson and Mitchell (1993) study. Ground water contamination
was valued using economic benefits transfer based on a set of stated-preference studies. There was no
national estimate of the economic benefits of reduced eutrophication of estuaries, but there was a case study
on one estuary focusing on recreational fishing and using economic benefits transfer based on revealed-
preference random utility models.
A number of potential impacts were not included in the economic benefits analysis relating to the water
quality improvements of the rule including human health and ecological impacts of metals, antibiotics,
hormones, salts, and other pollutants; eutrophication of coastal and estuarine waters due to nitrogen
deposition from runoff; nutrients and ammonia in the air; reduced exposure to pathogens due to recreational
activities; and reduced pathogen contamination of drinking water supplies. These impacts were not monetized
mainly because of a lack of models and data to quantify the impacts and, in some cases, the lack of methods
to perform the monetization.
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assessments of benefits and costs, the Agency typically
must rely heavily on benefits transfer, i.e., using results
from previous studies and adapting those results for
the specific valuation context of interest. However,
most of the previous ecological valuation studies that
might serve as study sites for benefits transfer are not
national in scope and generally have focused on only
a limited number of ecosystem characteristics or
services. Because they were designed for different
purposes, previous studies have not selected either
the study sites or the assessed services to facilitate
national assessments of ecological benefits that might
be important in a rule making context. Rather, they
usually have involved specialized case studies selected
because data were available or a specific change was
readily observable. In addition, the studies generally
measure tradeoffs for small, localized changes affecting
a limited regional population.47
Perhaps the most relevant area for which considerable
economic valuation has been conducted is recreation
demand. Many economic valuation studies have estimated
the recreation benefits stemming from hypothetical
or predicted changes in environmental characteristics
of recreation sites. For example, several studies have
used random utility models (a revealed-preference
approach) to link physical descriptors of water quality to
recreation behavior and estimate the willingness-to-pay
or willingness-to-accept per recreational trip for a given
change in water quality.48 However, these studies value
only localized changes and cannot be directly used to
provide national-level benefit estimates.
Previous studies have also estimated the benefits
associated with changes in ecological services that
affect the well-being of homeowners living near the
ecological systems. Examples include water regulation,
flood control, and the amenities associated with healthy
populations of plants and animals. The willingness of
residents to pay for these services is capitalized into
housing prices and can be estimated using hedonic
property value methods. Examples illustrating this
approach to valuing ecosystem services include Leggett
and Bockstael (2000), Mahan et al. (2000), Netusil
(2005), and Poulos et al. (2002). Estimates from such
studies could also be candidates for use in an economic
benefits transfer. However, as with the recreation studies,
these studies are almost exclusively local rather than
national in scope, which makes extrapolation to national-
level benefit assessments difficult. Some exceptions that
do provide national-level benefits assessments are Chay
and Greenstone, 2005, and Deschenes and Greenstone,
2007. If sufficient high-quality original valuation studies
are available, it might be possible to combine estimates
of economic benefits from local studies in meta-analyses
for use in benefits transfer (e.g., Smith and Pattanayak,
2002; Bergstrom and Taylor, 2006; and chapter 4).
However, using meta-analysis to estimate benefits at a
specific policy site can raise a number of issues. These
include issues of consistency and those related to the
scope of the resource changes valued in the original
studies (e.g., whether they valued localized changes or
changes at the national level). A meta-analysis of studies
that valued localized changes can, at best, generate
values for similar localized changes. It cannot generate
values for changes that would occur at the national level
unless individuals care only about localized effects.
Therefore, even structurally based meta functions from
local studies generally do not provide a functional
relationship that can be used to estimate benefits at the
national level, based on characteristics of the affected
population. For example, using a meta function of unit
values for a localized ecosystem change to predict
average willingness-to-pay per person (e.g., evaluating
the meta function using mean population characteristics)
and then multiplying the resulting value by the relevant
national population would generally not provide a valid
measure of national-level benefits.
Despite the challenges described, the Agency has, in
some cases, generated defensible estimates of economic
benefits at the national level for a limited set of ecosystem
services. For example, in the prospective benefit
assessment of the Clean Air Act Amendments, described
in text box 3, EPA used the best available economic and
ecological models to estimate commercial forestry and
agricultural benefits. However, in other cases, the Agency's
efforts to provide monetized ecological benefit estimates
using benefits transfer have generated benefit estimates that
are much less defensible or have led the Agency to focus
on a very limited set of ecosystem services.
Chapter 2 of this report addresses the benefit
assessment for the CAFO rule and highlights the
committee's concern about EPA's approach. As discussed
in that chapter, EPA estimated recreational benefits using
a water quality survey conducted in the early 1980s
(Carson and Mitchell, 1993). The principal advantage of
this approach was that it utilized a national survey and
presented a simple willingness-to-pay relationship for
improvements in water quality that allowed national-
level benefits to be estimated relatively quickly without
new research. This study was also used in the assessment
of EPA's aquaculture rule (in text box 1). However, in
addition to being more than 20 years old, the survey
was not designed for those uses. The water quality
index employed in the study was highly simplified and
only reflected ecological services related to fishing,
swimming, and boating. Thus, the benefits transfers were
considerably outside the domain of what was envisioned
in the design of the original survey and what could have
been known by the people who responded to it in the
early 1980s.
The desire to use value estimates from the Carson and
Mitchell study apparently also influenced the choice of
ecological models used to predict water quality impacts.
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In both the CAFO and aquaculture assessments, EPA and dissolved oxygen, it is not capable of ascertaining
chose to use the QUAL2E water quality model (Barnwell the impacts of total suspended solids, metals, or organics
and Brown, 1987) apparently because it could readily be on the benthos and the resulting cascading effects on
linked to this valuation study. Although this model can aquatic communities that might have important water
estimate the interactions among nutrients, algal growth, quality impacts.
The first prospective benefit-cost analysis mandated by the 1990 Clean Air Act Amendments included
estimates of the ecological benefits resulting from the expected reductions in air pollutants (EPA, 1999).
The Agency included qualitative discussions of several potential ecological effects of atmospheric pollutants
based on a review of the peer-reviewed literature (chapter 7, and pp. E-2 to E-9), including acid deposition,
nitrogen deposition, mercury and dioxins, and ozone.
The Agency used two criteria to narrow the scope of work for quantification of impacts: First, the endpoint
must be an identifiable service flow. Second, a defensible link must exist between changes in air pollution
emissions and the quality or quantity of the ecological service flow, and quantitative economic models must
be available to monetize these damages.
The Agency provided estimates of three categories of economic benefits related to ecosystems based on
standard economic models and methods: a) benefits to commercial agriculture associated with reductions in
ozone; b) benefits to commercial forestry associated with reductions in ozone; and c) benefits to recreational
anglers in the Adirondacks lake region due to reductions in acidic deposition.
For agriculture, the Agency used crop-yield loss functions to estimate changes in yields, which were then
fed into a model of national markets for agricultural crops (AGSIM) to estimate changes in consumers' and
producers' surplus.
For commercial forestry, the PnET-II model was used to estimate the effects of elevated ambient ozone
on timber growth. The PnET-II model relates ozone-induced reductions in net photosynthesis to cumulative
ozone uptake. Analysis of welfare effects used the U.S. Department of Agriculture Forest Service Timber
Assessment Market Model (EPA, 1999, pp. 92-93) to translate the increased tree growth from a reduction in
ozone to an increase in the supply of harvested timber and computed the changes in consumers plus producer
surplus based on the associated price changes. Because of the lack of data and relevant ecological models, the
Agency did not quantify or monetize aesthetic effects, energy flows, nutrient cycles, or species composition
in either commercial or non-commercial forests.
To estimate the recreational economic benefits of reducing acid deposition in Adirondacks lakes, the
Agency used a published study of recreational angling choices of households in New York, New Hampshire,
Maine, and Vermont (Montgomery and Needelman, 1997). Measured pH of lakes was used as an indicator
of the level of ecological services from each lake. The literature on the economics of recreational angling
shows that likelihood of success as measured by numbers of fish caught is a major determinant of demand
for recreational angling (Phaneuf and Smith, 2005; Freeman, 1995). To the extent that populations of target
species are correlated with pH levels, pH is a satisfactory proxy for fish populations and angling success
rates. There was no attempt to quantify other ecosystem services of water bodies likely to be affected by acid
deposition.
The Agency also presented an estimate of the economic benefits of reducing nitrogen deposition in coastal
estuaries along the east coast of the United States. Although the Agency was able to estimate changes in
nitrogen deposition for the three estuaries covered in the prospective analysis, it was not able to establish the
necessary ecological linkages to quantify the effects on recreational and commercial fishing. The assumed
avoided costs were the costs of achieving equivalent reductions in nitrogen reaching these water bodies through
control of water discharges of nitrogen from point sources in these watersheds. As noted in chapter 4 of this
report, avoided cost is a valid measure of economic benefits only under certain conditions, including a showing
that the alternative whose costs are the basis of the estimate would actually be undertaken in the absence of
the environmental policy being evaluated. Because it was not possible to make this showing in the case of
controlling nitrogen deposition, the Agency chose not to include the avoided cost benefits in its primary estimate
of economic benefits, but only to show them as an illustrative calculation.
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The committee also notes that EPA has concentrated
on a limited set of ecosystem services because of
its focus on monetization. Estimating some of the
ecological benefits of a given rule certainly provides
better information than not estimating any of them, and
the committee commends the Agency for its efforts to
provide some information about ecological benefits. In
addition, if the benefit estimates derived from a limited
set of services are sufficiently large to "justify" the costs
(as required by Executive Order 12866) and the only
objective of the analysis is to make this determination,
omitting detailed consideration of other impacts can
save scarce resources without affecting the conclusion.
However in some cases, the benefits from a limited
set of services might not justify the costs, but a more
complete assessment of benefits very well might. In
these cases, focusing on only a subset of services could
lead to incorrect conclusions or inferences about relative
benefits and costs. Perhaps more importantly, even if
estimated benefits based on a limited set of services are
sufficient to justify costs, a more complete assessment
of benefits could provide useful information about
whether a more stringent rule is warranted. In addition,
representing the benefits from a limited set of ecosystem
services as the total economic benefits associated with a
rule can be misleading and confusing to policy makers
and the public if they have a broader conception of the
rule's possible benefits.
6.7.3 Implementing the proposed approach
While recognizing the many challenges posed by
ecological valuation in the context of national rule
making, the committee believes that the valuation
approach proposed in this report can be usefully
applied in this context and can improve on the Agency's
current approach to these challenges. Implementing the
proposed approach would entail some short-term steps
that could be incorporated into EPA's valuation processes
using the existing knowledge base, as well as some
longer-term strategies for research and data/method
development that would improve ecological valuation for
national rule makings in the future.
6.1.3.1 Implementation in the short run
A key premise of the committee's approach is
that valuation should include early identification
of the socially important impacts of an EPA rule.
This requires information about both the potential
biophysical effects of the Agency's actions and the
ecological services that matter to people. As discussed
in chapter 3, the Agency should develop a conceptual
model early in the valuation process and then use that
model to guide the valuation process. Conceptual
models can allow the Agency to take a broad view
of the complexities involved in ecological changes
and ensure that impacts that are potentially important
to people are included in the analysis. It should be
standard practice for the Agency to develop such a
conceptual model before other analytical work begins
on an ecological benefit assessment.
Development of a conceptual model requires both
an interdisciplinary team of experts and input about
what matters to the public. To determine the relevant
ecological effects to include in the conceptual model,
EPA can draw on technical studies of impacts and their
magnitudes. It can also solicit expert opinion regarding
the physical and biological effects of a regulatory
change. Figure 4, developed by the committee, illustrates
that CAFOs can affect ecosystems in multiple ways
and at multiple scales. The environmental effects of
CAFOs extend beyond water quality impacts. For
example, CAFOs generate interactive pollutants that
affect air as well as water. The figure, however, does
not provide a full conceptual model that maps EPA
actions or decisions to potential ecological responses
and ecosystem services. Instead, it provides a starting
point for constructing a comprehensive overview of the
potential ecological services that might be affected by an
EPA rule.
The conceptual model should reflect not only
ecological science but also information about the
changes that are likely to be of greatest importance to
people. This information cannot be derived deductively.
Rather, it requires input about public concerns and
preferences. Although Circular A-4 requires use of
economic valuation methods to estimate benefits and
costs, at this early stage, EPA can use a variety of
methods to identify the public concerns associated with a
given rule. For example, EPA can glean this information
from the existing knowledge base or actively solicit it
through an interactive process. Approaches using the
existing knowledge base might include:
® Inventorying the reasons invoked in similar rule-
making processes in other jurisdictions (e.g., state
and local)
HI Inventorying the concerns expressed in public
hearings at various governmental levels or in previous
participatory processes through, for example, content
analysis of transcripts (perhaps with weightings based
on the frequency of concerns raised)
9 Studying previously conducted surveys providing
information about related public concerns
It Analyzing relevant initiatives, referenda, or
community decisions revealing preferences for
various types of ecosystem services or the avoidance
of various risks
An important consideration in identifying socially
important impacts is the extent to which the public
understands the role that ecosystems play in providing
services that contribute to human well-being. When
relying on information from public expressions of
preferences (e.g., surveys, public hearings, community
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decisions) to identify socially important impacts,
the Agency should assess whether the public, when
expressing preferences, was aware of and understood the
ecosystem services sufficiently well to provide informed
responses. Many ecosystem services - although well
known to the scientific community - are little known
or misunderstood by the general public (Weslawski
et al., 2004). This is more likely for intermediate
services than final services. For example, the public
generally does not understand or appreciate the full
chain of connections described in figure 4. Nor does
the public typically understand the organisms and
processes involved in breaking down waste products
or the services provided by those processes. While the
public need not understand all of the underlying science
and associated linkages, they need to understand
the magnitude and nature of changes they are being
asked to value. Lack of public understanding can be
more problematic in national-level analyses, where
ecological impacts and vulnerabilities can vary
substantially across locations. For this reason, it is
important that queries regarding preferences and values
be framed in terms of impacts that people understand
and can value (see discussions in sections 2.1.4 and
3.3.2).
EPA can also at least partially mitigate information
problems in national assessments by seeking
public input through an interactive or participatory
process. Such a process could take a number of
forms, including focus groups, active solicitation
of comments on a preliminary list of potentially
important ecosystem services, or mediated modeling.
A participatory process could also educate the
participants about the underlying science and thus
increase the likelihood that individuals expressing
value judgments are well-informed. Although time
and resource constraints may preclude use of a
participatory process in many contexts, the committee
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suggests that EPA pilot the use of such processes (e.g.,
by holding open meetings with the public and Agency
staff) to aid in identifying ecological changes that are
important both biophysically and socially.
When properly conducted, the development of the
conceptual model should identify a list of ecosystem
effects or changes in ecosystem services that are
potentially important to people, as well as the associated
complexities, interactions, variability, and sources
of uncertainty, including gaps in information. The
Agency should ensure that the call for monetization,
coupled with the need to generate national-level benefit
estimates, does not unduly restrict the types of ecological
changes considered in the benefit assessment or lead to
inappropriate application of economic valuation methods
or benefits transfer.
Toward this end, once EPA has identified a list
of potentially important changes in ecosystems and
their services, the Agency should assess the extent to
which each of these can be monetized, quantified, or
characterized. More specifically, the Agency should
categorize potentially important effects identified in the
conceptual model into five categories:
VI Category 1: Effects for which benefits can be assessed
and monetized using available ecological models and
appropriate economic valuation methods, including
benefits transfer.
8 Category 2: Effects for which benefits cannot be
monetized, but that can be quantified in biophysical
terms using available ecological models and for
which some indicator(s) of economic benefits exist.
8 Category 3: Effects that can be quantified in
biophysical terms but for which no indicators of
economic benefits exist.
8 Category 4: Effects that can be qualitatively described
and generally related to benefits based on available
ecological and social science, even if they cannot be
quantified.
8 Category 5: Effects that are likely to generate
important non-economic values.
Categories 1 through 4 are designed to provide as
much information as possible about economic benefits, as
required by Circular A-4 (p.18). They thus fit conceptually
within a benefit-cost framework. Category 5 corresponds
to supplemental information about other values that
could be of interest to policy makers and the public but
are not based on the principles that underlie benefit-cost
analysis. Thus, category 5 is conceptually distinct from
categories 1-4. Note that some effects might fall into
multiple categories. For example, a rule that affects a
given fish population might have benefits not only for
commercial fishing that can be monetized (category 1)
but also cultural value to native populations that could be
included in category 5.
In compliance with the OMB circular, EPA should try
to include benefits in category 1 to the extent possible,
and it is important for EPA to support the research
needed to include more benefits in that category in the
future. Nonetheless, explicit identification of benefits
in categories 2 through 4 can help ensure that these
effects receive sufficient attention in benefit assessments,
even though they cannot be monetized with currently
available data and models.
The analysis of economic benefits and other values
under the committee's proposed approach differs
across these different categories. With regard to the
first category, estimation of monetized benefits requires
three elements: a prediction of the change in relevant
stressors resulting from the rule, a prediction of how
that change will affect the ecosystem and ultimately
the provision of ecosystem services, and an estimation
of the benefits associated with the effect. To do this,
the conceptual model must be linked with one or more
ecological models that capture the essential linkages
embodied in the conceptual model and are parameterized
to reflect the range of relevant scales and regions. These
ecological models must generate outputs that can be
used as inputs in a benefits transfer or other economic
valuation method. Because many existing ecological
models do not satisfy this requirement, in the short run
this requirement represents a significant constraint on
the ecosystem effects for which benefits can be assessed
and monetized and highlights the need for research to
develop new ecological models.
Although in principle economic valuation methods
can fully capture the benefits associated with changes
in ecological systems and services, in practice there
are significant limitations that can make this very
difficult, particularly at the national level. However,
even when benefits cannot be monetized using available
ecological models and reliable information about
economic values, the associated ecological changes
may still be quantifiable. Here again, EPA should focus
on quantifying all of the ecological changes that are
potentially important to people. If EPA is not limited
to effects for which the benefits can be monetized,
the Agency can choose from among a broader set of
ecological models, because the ecological models
used need not directly link to existing information
about economic benefits. As with monetized benefits,
EPA can address the site-specificity of ecological
impacts by using a bottom-up approach, and - if the
relevant information about the joint distribution of the
characteristics of ecosystems and human populations
exists - aggregate the resulting estimates to the
national level.
When monetization of benefits is not possible, the
Agency should also seek to identify scientifically-based
indicators of those benefits to the extent possible, i.e.,
it should seek to identify indicators in category 2.
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Some of the valuation methods discussed in chapter 4
might be useful for this purpose. To the extent these
methods generate biophysical and other measures that
economic theory suggests are likely to be correlated
with economic benefits, such measures can provide
useful information about benefits when direct monetary
estimates of those benefits are not available. For
example, economic theory suggests that total economic
benefits associated with an increase in wetlands in a
specific area will depend, among other things, on the
number of people who visit the area for recreational
purposes. Other things being equal, the more people
who visit the area, the higher the benefit associated
with an increase in wetlands acreage. Likewise, the
more people who live in the vicinity of an affected
ecosystem, the greater the benefit associated with
protecting that ecosystem. Similarly, if all other factors
are equal, the more people who judge the protection of
a given ecosystem service to be "somewhat important"
or "very important" in a survey of attitudes and
judgments, the higher the aggregate willingness-to-pay
to protect that service is likely to be. Although these
indicators do not typically reflect tradeoffs people are
willing to make and hence would not provide monetary
estimates of benefits that can be compared to cost, they
can provide important information or signals about
public preferences linked to possible benefits.
Care must be taken to avoid misinterpreting these
indicators. For example, just because a large population
lives in the vicinity of an affected ecosystem does not
necessarily mean that a change in that ecosystem has a
large value. If the change relates to a service that is not
important to people, the value of that change (e.g., the
willingness to pay for it) would be low regardless of the
number of people living in the vicinity. To draw correct
inferences, EPA needs information not only about the
number of people affected but also about the importance
that individuals attach to the service, as revealed through
surveys or other methods.
If ecological effects can be quantified but indicators
of the associated benefits are not available (category
3), EPA should report the effects in the most relevant
biophysical units and discuss the basis for and expected
direction of their link to possible benefits . For
potentially important benefits for which quantification
of the associated ecological changes is not possible
(category 4 above), the Agency should characterize the
changes as carefully as possible. It should discuss in
detail why the changes are potentially important but
not quantifiable, citing relevant literature. A carefully
developed and scientifically based conceptual model
can serve as the basis for a qualitative but detailed
description of the ecological impacts of a given
change. A simple summary of possible impacts is not
sufficient. EPA should also provide justification based
on the conceptual model and associated theoretical and
empirical scientific literature. To the extent possible,
the Agency should use the existing literature to draw
inferences about the likely magnitude or importance of
different effects, even if only qualitatively (e.g., high,
medium, low).
Although benefit-cost analysis requires the use of
economic valuation to estimate benefits, regulatory impact
assessments need not be limited to information generated
for use in comparing benefits and costs. Information
about other sources of value that are not fully captured
by the theoretical framework underlying benefit-cost
analysis (category 5 above) can still be of interest to
policy makers when making decisions on ecological
protection. For example, the spiritual or cultural value
of some ecosystems and services may be an important
consideration not adequately captured by direct measures
or indicators of economic benefits. Several of the valuation
methods described in chapter 4 can provide information
about these other sources of value.
An additional complexity, beyond the five categories
for characterizing effects, arises from the national scale
analysis required for most rule makings. Even when
ecological models directly link to valuation, using
these models to generate national-level estimates of the
biophysical impacts of an EPA rule is very challenging,
given the variability of ecosystem impacts within and
across regions. The SAB has noted and discussed this
point in other benefit assessment contexts, including
the impact of Superfund sites (EPA Science Advisory
Board, 2006c). To address variability across sites within
a national assessment, the Agency should explore
the use of a bottom-up approach to valuation. Under
this approach, a number of case studies that reflect
different types of ecosystems could be conducted.
If information is available in a given rule making
about the distribution of the ecosystem types and
populations affected, EPA could aggregate these case
studies to provide national-level estimates of changes
in ecosystem services resulting from the rule. Even
without full information about the distribution of
ecosystem types and populations, the case studies could
still provide information about the range of impacts and
their dependence on ecosystem characteristics. This
information could be useful not only for the specific
policy decision at hand, but also in guiding future
research. For example, it could suggest key ecosystem
characteristics that would be useful in categorizing
ecosystems for future valuation analyses and for which
additional distribution information is needed.
Once changes in ecosystem services are estimated,
those changes must still be valued to generate national
benefit estimates. The appropriate valuation approach
will depend on the nature of the ecosystem services.
For services that generate only local benefits, benefits
transfer based on comparable previous studies of
localized impacts can be used, provided the benefits
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transfer is conducted appropriately (see discussion in
section 4.3). The local or regional benefit estimates
can then be appropriately aggregated to the national
level. However, for ecosystem services for which
local impacts generate broader national benefits,
use of localized studies for benefits transfer can be
problematic, as noted above. For these services,
benefits transfer should instead be based on studies
that have generated value information at the national
level, such as national surveys of willingness to pay for
national-level changes in ecosystem services. However,
few surveys of this type exist. To date, EPA has relied
primarily on the national water quality survey of Carson
and Mitchell (1993), which was conducted over 20
years ago.49 Additional research is needed to generate
estimates of economic benefits and other values that
could appropriately be used for transfers of ecological
values in national assessments.
In addition to its implication for how ecological
valuations are conducted, the committee's valuation
approach also has implications for reporting value
estimates in national benefit assessments. To increase
transparency EPA should document in economic benefit
assessments and RIAs the conceptual model used to
guide the analysis and how decisions underlying the
model were made. The assessments should describe how
the ecosystem services were identified and the rationale
for key choices regarding the focus of the assessment.
Consistent with the guidance in Circular A-4,
benefit assessments should also clearly identify the five
categories of values outlined above. If methods other
than economic valuation are used to provide quantitative
or qualitative information about benefits, the RIA should
include a discussion of the extent to which the methods
provide indicators of willingness to pay or to accept. If
non-economic methods are used to capture sources of
value other than those typically reflected in willingness
to pay, the RIA should describe the methods used.
When monetized economic benefits are aggregated,
the resulting sum should always be described as "total
economic benefits that could be monetized" rather than
"total benefits." In the past, EPA has sometimes reflected
non-monetized benefits in aggregate measures of benefits
by including an entry such as +X or +B in the summary
table of benefits and costs to indicate the unknown
monetary value that should be added to the benefits if
the value could be determined. Although this approach
indicates that the measure of monetary benefits
is incomplete, the +X or +B designation provides
insufficient information and can be easily overlooked in
using the results of the benefit assessment. Designating
the sum as "total economic benefits that could be
monetized" provides a continual reminder of what is,
and is not, included in this measure. EPA can provide
a more accurate and complete indication of total
benefits as called for by Circular A-4 by including key
quantified but non-monetized impacts that are measured
in biophysical units or in terms of expressed social
importance or attitudes, if economic theory suggests
those measurements are likely to be correlated with
benefits, along with indicators of economic benefits and
a detailed description of the non-quantifiable impacts.
Because of the difficulties of estimating the
biophysical impacts of an EPA rule and the associated
values, the Agency must also characterize the
uncertainty associated with its assessment. EPA
should include a separate chapter on uncertainty
characterization in each assessment. This chapter
should discuss the scope of the assessment, the
different sources of uncertainty (e.g., biophysical
changes and their impacts; social information
relevant to values; valuation methods, including
transfer of willingness-to-pay or willingness-to-
accept information), and the methods used to evaluate
uncertainty. At a minimum, the chapter should report
ranges of values and statistical information about the
nature of uncertainty for which data exist. For each
type of uncertainty, EPA should report information
similar to that reported in the Agency's prospective
analysis of the benefits and costs of the Clean Air
Act Amendments (EPA, 1999) and should provide a
summary of this information in the executive summary
of the assessment. Specifically, EPA should report
potential sources of errors, the direction of potential
bias for the overall monetary benefits and other value
estimates and the likely significance relative to key
uncertainties in the overall assessment.
6.1.3.2 Research needs for improvements in
future valuation
EPA can take the steps suggested above in the short
run to improve ecological valuation, but additional
improvements will require longer-term investments in
research in at least three areas: national-level databases
to support prediction of ecological impacts; means of
mapping changes in stressors to changes in ecosystem
services; and transfers of value-related information.
Research is needed to develop national-level
databases to predict ecological impacts (including
baseline data on ecological conditions) and to value
those impacts (including data on affected human
populations). The current availability of national-level
databases with this information is limited. In addition,
research is needed on the joint distribution of relevant
ecosystem and human population characteristics across
local or regional sites that can be used to aggregate
case studies in a bottom-up approach to national-level
assessments. As noted above, case studies provide a
means of incorporating heterogeneity regarding both
ecological impacts and values. However, to generate
national-level estimates for use in national rule
making, results from case studies must be aggregated
using weights that reflect the distributions of the
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relevant combinations of biophysical and population
characteristics. Research to identify both the key relevant
characteristics and their joint distributions is needed.
As discussed in chapter 3, research is needed to
develop ecological production functions and associated
models that can map changes in stressors to changes
in ecosystem services. In the past, EPA has often
been unable to estimate certain values because the
Agency was not able to predict how a given rule
would change stressors and how those changes would
in turn affect ecosystem services. Both baseline data
and the development of ecological models that focus
on ecosystem services, as well as other ecosystem
characteristics of importance to people, are needed.
The datasets and models should support aggregate,
national-level assessments.
Finally, additional research related to benefits transfer
and transfers of other value-relevant information is
needed, including both research on methodological
issues that arise in transferring values across different
contexts, as well as additional original valuation
studies that the Agency can use for this purpose. These
new studies should focus on value estimates that can
be applied in multiple contexts (e.g., recurring rule
makings) and across a broader geographical scale.
Loomis and Rosenberger (2006) suggest features of
study design that facilitate the use of a study's results
in benefits transfer. These include use of objective
quantitative measures of quality: measured in policy-
relevant physical units; the evaluation of realistically
small changes; the provision of information about
relevant baselines; and the full and consistent reporting
of results. New studies should also expand the range
of ecosystem services valued so that transfers can be
applied to a wider range of services and/or ecological
impacts.
In addition to localized studies that could be used
as study sites, national-level studies are also needed for
ecological valuation in national rule making. National
economic valuation surveys (such as the one conducted
by Carson and Mitchell [1993]) that have recent data and
a specific focus on ecosystem services have the potential
to contribute significantly to the Agency's ability to
conduct ecological benefit assessments to support national
rule making, provided they are conducted in accordance
with state-of-the-art survey procedures (see SAB Web
site at http://yosemite.epa.gov/Sab/Sabproduct.nsf/
WebFiles/SurveyMethods/$File/Survey_methods.pdf for
detailed information about the use of survey methods for
ecological valuation.). Because conducting surveys for
individual rule makings is prohibitively costly in both time
and resources, the Agency should focus on conducting
a limited number of surveys designed to provide value
information usable in multiple rule makings.
Toward this end, the Agency should develop
a research program (both internally and through
extramural grants) focused on developing methods and
value estimates specifically for use in recurring rule
makings (e.g., for rule making associated with National
Ambient Air Quality Standards or Effluent Guidelines).
In past years, EPA has targeted some of its Science To
Achieve Results (STAR) grant resources toward benefits
transfer, but a larger and more concerted effort focused
on ecological valuation and the use of transfers in
national rule making is clearly needed.
6.7.4 Summary of recommendations
To develop more comprehensive estimates of the
value of ecological changes associated with national
rules and regulations, the Agency needs a broader
approach to ecological valuation than it has typically
used in the past. The expanded approach to valuation
proposed in this report can and should be applied to
national rule making. This would entail challenges,
but important opportunities for improvement as
well. EPA can implement some of the committee's
recommendations using the existing knowledge base.
Other recommendations call for research to enhance
the Agency's future capacity to conduct high-quality,
scientifically-based ecological valuation for national
rule making.
The Agency can improve ecological valuation for
national rule making in the short run by incorporating
the following recommendations:
It The Agency should begin each valuation exercise
with the development of a conceptual model of the
ecological system being analyzed and the ecosystem
services that it generates. This model should serve as
a guide or road map for the assessment.
VI EPA should develop the model using input about
both the relevant science and public preferences and
concerns to ensure that it incorporates important
ecological functions and processes as well as related
ecosystem characteristics and services that are
potentially important to people. Public concerns can
be identified through a variety of methods, drawing
on either existing knowledge or an interactive process
to elicit public input.
VI Once the Agency has identified a list of potentially
important ecological effects and associated services, it
should categorize those effects according to the extent
to which they can be quantified and monetized at the
national level using economic valuation techniques
including benefits transfer.
VI To address site-specific variability in the impact of
a rule, the Agency's assessments should include
case studies for important ecosystem types.
Aggregation across these case studies can be carried
out if information about the joint distribution of
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ecosystem types and characteristics of affected human
populations is available. This bottom-up approach
would establish separate estimates for each locality or
region and then aggregate them to obtain a national
estimate.
VI For ecosystem services for which the benefits are
primarily local, EPA can rely on scientifically-sound
benefits transfer using prior valuations at the local
level. However, for services valued more broadly,
the Agency should draw from studies with broad
geographical coverage (in terms of both the changes
that are valued and the population whose values are
assessed).
It EPA should report aggregated monetized economic
benefits as "total economic benefits that could be
monetized" rather than "total benefits" ) (category 1
on page 74)
VI To assess the benefits associated with effects that
cannot be monetized for national rule making using
scientifically sound valuation methods (including
benefits transfer), EPA should:
• provide a scientific basis for the importance of any
projected ecological changes, whether they are
monetized or not
• include characterization of potentially important
effects related to categories 2, 3, and 4 discussed on
page 74:
* Category 2: Effects for which benefits cannot
be monetized, but that can be quantified in
biophysical terms using available ecological
models and for which some indicator(s) of
economic benefits exist.
* Category 3: Effects that can be quantified in
biophysicial terms but for which no indicators of
economic benefits exist.
* Category 4: Effects that can be qualitatively
described and generally related to benefits based
on available ecological and social science, even if
they cannot be quantified.
VI EPA should also consider assessing values associated
with effects that are likely to generate important non-
economic values (based, for example, on moral or
spiritual convictions) (category 5 on page 74). Even
though these values do not properly fit within a formal
economic benefit-cost analysis, they can provide
important additional information to support decision
making. When such value estimates are included in
RIAs, the RIA should discuss both the valuation method
and the results in a separate section.
VI EPA should include a separate chapter on uncertainty
characterization in each assessment.
To enhance the Agency's capacity to conduct future
ecological valuations, EPA should support research
specifically designed to facilitate ecological valuation
for national rule making, particularly for recurring rule
makings. The committee recommends that EPA focus on
at least three areas of research:
VI EPA should support the development of national level
databases to support valuation, including data on the
joint distribution of ecosystem and human population
characteristics that are important determinants of the
value of ecological changes.
VI EPA should support the development of quantitative
ecosystem models and baseline data on ecological
stressors and ecosystem service flows that can support
national-level predictions of the consequences of
changes in ecological stressors on the production of
ecosystem services.
VI EPA should support the development of additional
methodological and original valuation studies
designed to enhance national-level ecological values
transfer, including national surveys relating to
ecosystem services with broad (rather than localized)
effects that can generate value estimates for use in
multiple rule making contexts.
6.2 Valuation in regional partnerships
6.2.7 EPA's role in regional-scale
value assessment
Significant opportunities exist to use regional-scale
valuations of ecosystem services to guide decision
making by EPA and sub-national governments to protect
and restore the environment. Many important ecological
processes take place at a landscape scale. For example,
habitat connectivity on landscapes, water and nutrient
flows through watersheds, and patterns of exposure and
deposition from air pollution in an airshed pose issues
larger than a particular site and thus require regional-
scale analysis.
An increase in data and methods, supported by EPA
research, has also opened new frontiers for regional-
scale analysis of ecosystems and their services. Publicly
available, spatially explicit data on environmental,
economic, and social variables have increased
dramatically in recent years. At the same time, the ability
to display data visually in maps and to analyze spatially
explicit data using a variety of analytical models and
statistical methods has expanded. An active EPA
program in ecological research is underway for regional-
scale analysis of ecosystems and services. As part of that
program, EPA has funded research relating to restoration
of water infiltration in urbanizing watersheds in
Madison, Wisconsin, restoration of multiple ecosystem
functions for the Willamette River in Oregon, decision-
support tools to meet human and ecological needs in
New England rivers, and the provision of multiple
services from agricultural landscapes in the upper
Midwest. As discussed in section 6.2.3.2, EPA Region
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4: Southeast has developed a tool for regional ecological
assessment. Other regions have also undertaken
assessments of ecosystem services.
There is great potential - largely untapped to date - to
use this type of analysis to aid regional decision making.
Municipal, county, regional, and state governments make
many important decisions affecting ecosystems and the
provision of ecosystem services. Examples include land-
use planning and watershed management. Unfortunately,
local and state governments rarely have the technical
capacity or the necessary resources to undertake
regional-scale analyses of the value of ecosystems or
their services or to incorporate these values into their
decision making processes.
Regional partnerships among EPA, other govern-
mental agencies, and the private sector offer the
potential for expanding national, state, and local
capacity to value and protect ecosystems and their
services. EPA regional offices have many opportunities
to collaborate at a regional scale with local and state
governments, regional offices of other federal agencies,
non-governmental environmental organizations, and
private industry. Through collaborating with such
groups, EPA can enhance environmental protection
by engaging the public, gaining access to regional
expertise, and promoting effective decision making
on important regional-scale environmental decisions.
Local and state partners can gain from access to EPA
technical expertise and resources. Such partnerships
can expand the knowledge base for decision making
and improve the analysis of the value of ecosystems
and services.
Unlike national rule making, where specific statutes
or regulatory mandates often constrain analysis, regions
have more freedom to use novel approaches to valuing
ecosystems and their services. Such use, even on a pilot
basis, may lead to improved methods and practices of
valuation with potential positive impacts well beyond the
region that pioneers the innovations. For example, EPA
can use regional-level partnerships as a mechanism for
testing and improving various valuation methods that
might ultimately be used at the national level.
Because of the absence of legal or statutory
requirements that EPA value ecosystems or services
at the regional scale, there have been few regional
ecological valuation efforts to date. In addition,
regional offices may have lacked the time, resources,
and expertise to undertake some of the crucial steps
recommended in this report for valuing ecosystems
and their services. For example, few regional offices
have economists or other social or behavioral scientists
on staff who can work on valuations. Partly for these
reasons, many of the potential advantages of regional
partnerships for valuing ecosystems or their services
have not been realized to date.
To analyze opportunities for regional partnerships
for valuation, the committee, through the SAB Staff
Office, surveyed regional offices for examples of
where the Agency or other governmental agencies have
engaged in regional valuation efforts (EPA Science
Advisory Board Staff, 2004). This section explores
three case studies from Chicago; Portland, Oregon; and
the Southeast. The case studies illustrate several general
lessons about regional-scale analysis of the value of
ecosystems and services and the potential usefulness of
regional partnerships.
6.2.2 Case study: Chicago Wilderness
Chicago Wilderness is an alliance of more than
180 public and private organizations. The overall goal
of Chicago Wilderness, as stated in its Biodiversity
Recovery Plan, is "to protect the natural communities
of the Chicago region and to restore them to long-
term viability, in order to enrich the quality of life of
its citizens and to contribute to the preservation of
global biodiversity" (Chicago Wilderness, 1999, p. 7).
Chicago Wilderness is a bottom-up organization. No
single decision maker or agency controls or guides
Chicago Wilderness. It pursues objectives, as defined by
its members, through consensus. Chicago Wilderness
pursues its goals and objectives by promoting a green
infrastructure to support biodiversity and to maintain
ecosystems and services linked to quality of life in the
Chicago metropolitan area.
As a member of Chicago Wilderness, EPA Region 5
(serving Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin, and 35 Tribes) has provided technical and
financial assistance and facilitates the partnership. EPA
expertise in Region 5, particularly in natural sciences,
has contributed to quantifying ecosystem services and
understanding how potential stressors affect ecosystems
and the provision of services. Chicago Wilderness
has produced several reports, as well as a Biodiversity
Recovery Plan and a green infrastructure map for the
region.50 The Chicago Wilderness Web site (http://www.
chicagowilderness.org/) contains a chronology and links
to many relevant documents, including the Biodiversity
Recovery Plan.
Chicago Wilderness has been interested in valuing
ecosystems and services, but has only begun to explore
the opportunities. Although no specific legal authority
mandates valuation of ecosystems or services as part
of the work of Chicago Wilderness, quantifying values
associated with the conservation of green space and
biodiversity could help Chicago Wilderness meet its
own stated objectives and communicate its analysis to
other groups and the general public. The possible uses
of valuation identified by Chicago Wilderness members
include:
H Informing decisions on the establishment of green
infrastructure, including priorities for acquisition of
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land by, for example, forest preserve districts or soil
conservation districts
It Assessing the value of preserving ground water and
ecosystem services related to clean water
9 Assessing the relative value of conventional versus
alternative development and demonstrating conditions
in which development decisions that have positive
impacts on the environment might be in the financial
interest of the developer
VI Communicating effectively with residents of
the Chicago region regarding the value of green
infrastructure and biodiversity and how these relate to
residents' quality of life
It Assessing the relative value of investing in different
research projects to establish priorities for funding
decisions
Members of Chicago Wilderness, however, possess
only limited technical expertise and practical experience
in valuing the protection of ecological systems and
services. EPA Region 5 also has limited capacity to value
ecosystem services.
In sum, Chicago Wilderness, like many regional
partnerships, would gain much from the ability to
analyze the value of ecosystems and services, but it is
constrained by lack of expertise and resources.
6.2.2.7 An example of how valuation could
support regional decision making
Valuation of ecosystems and services is most
useful when done in the context of specific decisions
affecting the environment. The committee therefore
chose a specific decision context - county open
space referenda in the Chicago metropolitan area - to
explore how this report's approach to valuation could
support regional decisions.
Voters in four counties in northeastern Illinois have
passed referenda authorizing bonds to purchase land
for open space preservation or watershed protection. In
November 1997, voters in DuPage County passed a $70
million open space bond. In November 1999, voters in
Kane County and Will County passed bond issues totaling
$70 million for open space acquisition or improvement.
In 2001, the voters in McHenry County passed a $68.5
million bond for watershed protection. Although these
multi-million dollar bond proposals have provided
substantial funding to preserve open space and ecological
processes in the region, the funds are insufficient to
protect all worthwhile open space and watersheds. Given
this shortfall, input about the most important lands to
purchase or management actions to undertake to maintain
or restore natural communities would help ensure that
counties invest these funds wisely.
This section of the report looks at how valuation
could help inform conservation investments under the
local county bonds. The section examines three sources
of values derived from protecting natural systems:
VI Conservation of species and ecological systems
VI Water quality and quantity
VI Recreation and amenities
The discussion of water quality and quantity focuses
on McHenry County because the bond issue there related
directly to watershed protection. Following the process
outlined in chapter 2 of this report, the section explores:
the role of public involvement and input in determining
ecosystem services of interest, predicting ecological
impacts in terms of effects on these ecosystem services,
and assessing and characterizing the values of these
effects on the ecosystem services.
6.2.2.2 Public involvement, scientific and
technical input, and public participation
The planning documents and activities of Chicago
Wilderness illustrate several of the themes from chapter
2 of this report, including broad public involvement and
interdisciplinary collaboration. Chicago Wilderness has
made extensive efforts to engage the local community
in determining the most important features of regional
ecosystems and services. Two of the strengths of the
organization are the broad range of groups involved and
its commitment to open processes. Chicago Wilderness
participants themselves define the objectives, goals, and
priorities of the organization. As a result of the open,
democratic process and the efforts to include multiple
views and voices, the group's goals and objectives
largely reflect what people in the region view as
important to conserve. Engaging local communities is
a vital first step in the process of valuing ecosystems
and services. Engagement helps to focus scarce agency
resources on issues of prime local importance, as well as
to promote partnership and dialogue.
The inclusive planning process followed by Chicago
Wilderness has included developing a common
statement of purpose, setting up three working groups
(steering, technical, and advisory committees), and
working through nine planning steps (from visioning,
development of inventories, assessment of alternative
actions, to adopting a plan). In its early stages, Chicago
Wilderness conducted workshops and meetings to
define implementation strategies and to prioritize
among its long- and short-term goals, which focus on
the restoration and conservation of biodiversity. For
priority setting, several of the workshops used valuation
exercises to derive qualitative rankings of importance.
Chicago Wilderness also referenced other valuation
measures, such as polls and The Nature Conservancy's
global rarity index.51
Chicago Wilderness conducted eight workshops
to assess status and conservation needs for natural
communities in the area: four workshops on species,
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addressing birds, mammals, reptiles, amphibians, and
invertebrates; and four consensus-building workshops on
natural communities, addressing forests, savanna, prairie,
and wetlands. The natural-communities workshops
developed overall relative rankings based on the amount
of area remaining, the amount protected, and the quality
of remaining areas (incorporating fragmentation and
current management). The workshops assessed relative
biological importance for community types, based on
"species richness, numbers of endangered and threatened
species, levels of species conservation, and presence
of important ecological functions (such as the role of
wetlands in improving water quality in adjacent open
waters)" (Biodiversity Recovery Plan, chapter 4, p. 41).
The workshops identified visions of what the areas
should look like in 50 years.
Two different groups of scientists and land
managers developed a classification scheme for
aquatic communities based on physical characteristics.
The groups assigned recovery goals (i.e., protection,
restoration, rehabilitation, and enhancement) to
streams and priority levels (i.e., exceptional, important,
restorable, and other, based on Garrison, 1994-95) to
lakes. The groups assessed streams using the index
of biotic integrity, species or features of concern, the
macroinvertebrate biotic index, and abiotic indicators.
The groups also assessed threats and stressors to streams,
lakes, and near-shore waters of Lake Michigan.
One disadvantage of Chicago Wilderness' broad
engagement of local communities is the time-consuming
nature of community involvement processes. The
organization is not well placed to make rapid analyses
or provide feedback on decisions that occur over a short
time period.
6.2.2.3 Predicting ecological impacts in terms of
changes in ecosystem services
Because Chicago Wilderness is committed to the
value of protecting biodiversity, it is interested in
predicting impacts on the conservation of species
and ecological systems at the landscape scale. It has
collected spatially explicit information relevant to land
use, open space, recreation, biodiversity conservation,
water quality, and water quantity. It has also
successfully applied a variant of the conservation value
method to identify and prioritize conservation actions
through spatial representation and analysis of unique
and threatened species and ecosystems. Use of the
method demonstrates how conservation science can be
used for planning, and how a transparent approach to
mapping conservation goals can be useful in a regional
partnership.
However, for this spatially-explicit information to
be relevant to decisions affecting ecosystems, Chicago
Wilderness needs cause-and-effect relationships that
can predict how policy choices will affect ecosystems
and services. It does not have the information to
estimate ecological production functions. Although it
can be effective in providing descriptive information
- particularly in the form of maps - it is limited in
its ability to analyze alternative policies and make
recommendations about which alternatives are
preferable. For example, Chicago Wilderness would
be able to provide only limited guidance to a decision
maker in McHenry County concerning how to invest
the $68.5 million approved by voters for watershed
protection in a way that would maximize the value of
ecosystems and services, because it would not be able to
martial information about how particular actions affect
systems and services.
Possible ecological impacts and provision of
services from the protection or restoration of
watersheds
Watersheds figure prominently in Chicago Wilderness'
work. The protection or restoration of watersheds
can have a number of impacts on ecosystem services,
including water quality, water quantity, and the support
of ecological communities.
Surface water
It Availability - More water will be retained in
the watershed because there is less runoff from
impervious surfaces.
VI Periodicity of flows - Changes in the hydrograph are
mitigated because precipitation will be captured in the
soil and vegetation, and subsequently released more
slowly.
VI Maintenance of minimum flows - There is a greater
chance of maintaining adequate minimum flows
because of the dampening effects of intact watersheds
and continuation of subsurface flows.
VI Flooding - Flooding is reduced because of the
retention capabilities of the intact watershed.
Subsurface water
VI Availability for domestic and industrial use -
Availability will be increased because percolation and
subsurface recharge will be enhanced by natural soil
surface and vegetation.
VI Maintenance of wetlands - Those habitats that
depend on the water table or subsurface flow will be
enhanced because natural percolation and recharge
processes will be maintained.
Water quality
VI Pollution dilution - Increased flows will dilute
concentrations of organic and inorganic pollutants.
VI Assimilation of biotic pollutants - Increased
stream flows will permit greater opportunity for the
assimilation of biological materials.
8 Biological communities - Habitats that depend on
increased quantities of water in the watershed and
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containing protected species will enjoy increased
persistence.
'9. Specific habitats - Increased water quantity and
more uniform stream flows will support regionally
important ecological communities, e.g., in-stream
communities, bottomland forests, wetlands, and wet
prairies.
For illustrative purposes, suppose Chicago
Wilderness wished to characterize impacts in McHenry
County on three ecosystem services: minimizing
flooding, maintaining or increasing groundwater
recharge, and maintaining or increasing wetland
communities. To predict impacts related to flooding,
Chicago Wilderness could make use of a geographic
information system (GIS) database it developed that
includes layers depicting rivers, streams, wetlands,
forest lands, and floodplains. As a first approximation,
Chicago Wilderness could use historical records of
flooding in McHenry County watersheds to identify
watersheds with the greatest potential for flooding.
It could then evaluate the potential for restoring
floodplain forests and wetlands for mitigating flooding.
To estimate whether a development option would
adequately maintain or increase groundwater resources,
it could use the maps of aquifers and soils in the GIS
database that describe run-off and percolation rates for
each soil type. Watersheds could be compared in terms
of potential for aquifer recharge. Chicago Wilderness
could then consider the effects of alternative land use
decisions on recharge (Arnold and Friedel, 2000).
To address whether wetland communities would be
maintained or increased, topographic maps and GIS
data on rivers, streams, floodplains, forests, wetlands,
and land cover could be used to rank watersheds within
McHenry County in terms of potential wetlands minus
current wetlands. The potential for expanding existing
wetlands or restoring wetlands within watersheds could
then be measured.
A number of GIS data files for McHenry County
thus could assist in understanding how the protection
of a given part of a watershed contributes to ecosystem
processes and services. What is often lacking, however,
is a cause and effect relationship that could be used to
predict how alterations in management or policy would
change the provision of ecosystem services. It might be
possible to transfer results from studies of ecological
services from other regions. For example, Guo et al.
(2000) measured the water flow regulation provided by
various forest habitats in a Chinese watershed. If these
relationships are transferable, estimates of the effect of
a policy of restoring forest habitat on water flow could
be generated. Changes in water flow could then be
used to predict impacts on aquatic organisms and their
production functions such as waterfowl, fisheries, and
wildlife viewing (Kremen, 2005).
In trying to predict how policy choices will affect
ecosystems and the provision of services, experts must
be careful not to substitute their own values for those of
the public. Different judgments used in models may give
rise to different recommendations.
6.2.2.4 Valuation of changes in ecosystems and
services
Government decisions about what lands to conserve
can involve tradeoffs among different ecosystem services
of importance to the public. A study conducted in the
Chicago metropolitan area, for example, found a tradeoff
between desires to locate open space access close to
people's homes and desires to locate open space to
conserve species (Ruliffson et al., 2003). When there
are such tradeoffs among different services, decision
makers need information about the value of various
aspects of ecosystems and services in order to determine
what alternatives are more beneficial for the community.
This information about relative values goes beyond
understanding the ecological impacts of the management
and policy alternatives and also reflects people's
concerns and desires.
This section begins with a discussion of the potential
contributions that valuation could make to Chicago
Wilderness and briefly examines possible valuation
methods that could be applied for different types of
ecosystem services. This discussion goes well beyond
what Chicago Wilderness has actually done in the
valuation realm. The organization has conducted very
few quantitative valuation studies and largely lacks the
resources and the expertise to do so.
In one sense, however, Chicago Wilderness
carried out an important valuation exercise at its very
outset when it engaged its member organizations
and gathered feedback on what the community felt
was important. This process resulted in an important
statement about the values held by the collection of
organizations that constitute Chicago Wilderness. As
noted earlier, its overall goal is "to protect the natural
communities of the Chicago region and to restore them
to long-term viability, in order to enrich the quality of
life of its citizens and to contribute to the preservation
of global biodiversity."
Given this clear goal statement, formal valuation
studies that try to value the benefits of alternatives
in monetary terms may be of secondary importance.
Of primary importance is to understand how various
potential strategies contribute to the protection and
restoration of natural communities and the ecosystem
services they provide. As noted earlier, Chicago
Wilderness has used a variant of the conservation
value method to identify and prioritize conservation
actions that would contribute to this goal through
spatial representation and analysis of biodiversity
and conservation values. Not surprisingly, Chicago
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Wilderness has devoted most of its attention to
biophysical measures of the status of natural
communities. It has devoted much less attention to
quantitative measures of value, monetary or otherwise.
With a clearly stated overall goal "to protect the
natural communities of the Chicago region and to
restore them to long-term viability," economic analysis
may be largely restricted to estimating the cost of
various potential strategies to achieve that objective.
Cost-effectiveness analysis addresses how best to
pursue a specific objective, given a budget constraint.
Information about how potential strategies contribute to
the protection and restoration of natural communities
and about the cost of these strategies is the main
information needed. There is no need to estimate
the value of protecting natural communities or other
ecosystem services.
Of course, things are rarely so clear. Even with a single
overall goal, there are often multiple dimensions and
tradeoffs among those dimensions that require an analyst
to go beyond cost-effectiveness analysis. For example, in
protecting natural communities, there may be tradeoffs
between protecting one type of natural community versus
another. When there are multiple natural communities
or ecosystem services of interest, it becomes important
to address questions of value - a practical matter
when investment of bond monies is at stake. Is it more
valuable to allocate resources to restoring upland forest
or wetlands? Is it more valuable to mitigate flood risk or
improve water quality? Such questions can be addressed
only by comparing the relative value attached to different
natural communities or services.
Economic valuation of the protection of natural
communities may be important for Chicago Wilderness
and the public at large for several reasons. First,
when there are multiple sources of value generated
by protecting natural communities (e.g., species
conservation, water quality, flood control, recreational
opportunities, aesthetics, etc.), monetary valuation
provides a way to establish the relative importance of
various sources of value. With prices or values attached
to different ecosystem services, one can compare
alternatives based on the overall economic value
generated. Second, some biological concepts such as
biodiversity are multi-faceted. How one makes tradeoffs
among different facets of biodiversity conservation or
among different natural community types is ultimately
the same question as how one makes tradeoffs among
multiple objectives. Establishing prices on different
components of biodiversity or on different natural
communities allows for analysis of tradeoffs among
components and an assessment of the overall value of
alternatives. Finally, monetary valuation may facilitate
communication about the importance of protecting
and restoring natural communities in terms readily
understood by the public.
Non-monetary valuation can also be useful. If
decisions involve tradeoffs among different natural
communities or services, surveys containing attitude
questions may be helpful. In some cases, people may
find it easier to say whether they think it more important
to provide additional protection of forests versus
wetlands than to state the monetary value of protecting
forests rather than wetlands.
People may value natural communities because of
the ecosystem services they provide or because of their
existence or intrinsic values. Of these two sources of
value, the ecosystem services are generally the easier
to value. Consider how Chicago Wilderness might
value protecting wetlands and other watershed lands for
flood control and water quality. To measure the value
of flood control, it might measure avoided damages.
Several studies of the value of preserving wetlands for
flood control have been undertaken in Illinois, including
studies of the Salt Creek Greenway (Illinois Department
of Conservation, 1993; USAGE, 1978) and the value
of regional floodwater storage from forest preserves in
Cook County (Forest Preserve District of Cook County,
Illinois, 1988). The Cook County study found estimated
flood control benefits of $52,340 per acre from forest
preserves. The value of providing clean drinking water
to the public is extremely high, far exceeding the costs
of supplying it either by natural or human-engineered
means. Because the question is how, not whether, to
supply clean drinking water, replacement cost (e.g., the
cost of building a filtration system to replace lost water
purification services provided by wetlands) can be used
to value the contribution of ecosystems to the provision
of clean drinking water.
A large literature in environmental economics
exists on estimating the values of various recreational
opportunities and environmental amenities created by
the natural environment. As discussed below, typical
methods used to estimate the monetary value of
recreation and environmental amenities include hedonic
property price analysis, travel cost, and stated preference.
A smaller literature uses referenda voting to infer values
for open space and other environmental amenities.
Hedonic property price analysis is a common method
for estimating the value of environmental amenities,
especially in urban areas because of the availability of
large data sets on the value of residential property values.
Analysts have used the hedonic property price model
to estimate the value of air quality improvements (e.g.,
Ridker and Henning, 1967; Smith and Huang, 1995),
living close to urban parks (e.g., Kitchen and Hendon,
1967; Weicher and Zeibst, 1973; Hammer et al., 1974),
urban wetlands (Doss and Taff, 1996; Mahan et al., 2000),
water resources (e.g., Leggett and Bockstael, 2000), urban
forests (e.g., Tyrvainen and Miettinen, 2000), and general
environmental amenities (e.g., Smith, 1978; Palmquist,
1992). Although Chicago Wilderness has not used this
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method to date, the large number of residential property
sales in the Chicago area and spatially explicit databases
on many environmental attributes offers great potential to
use hedonic property price analysis to estimate the values
of environmental amenities.
A large literature has used the travel cost method to
value recreation sites. With the large number of visitors
to Lake Michigan beaches, forest preserves, and parks
in the Chicago metropolitan area, Chicago Wilderness
could also apply travel cost to estimate the value of
recreational activities. Several studies have applied
the travel cost method in urban areas (e.g., Binkley
and Hannemann, 1978; Lockwood and Tracy, 1995;
Fleischer and Tsur, 2003).
Stated-preference methods can also be used to
estimate the value of recreational opportunities and
environmental amenities. In one such study completed
for Chicago Wilderness, Kosobud (1998) used a
contingent valuation survey to estimate willingness to
pay for the recovery or improvement of natural areas
in the Chicago region. Kosobud found an average
willingness to pay for expanded natural areas of
approximately $20 per household per year. Extrapolating
over the number of households in the region, expansion
of natural areas in the region would generate about $50
million per year in benefits.
Finally, there is a small but growing literature that
estimates values from voting behavior in referenda
involving environmental issues. In particular, studies
have analyzed the value of open space using results of
voting on open-space referenda (Kline and Wichelns,
1994; Romero and Liserio, 2002; Vossler et al., 2003;
Vossler and Kerkvliet, 2003; Schlapfer and Hanley, 2003;
Schlapfer et al., 2004; Howell-Moroney, 2004a, 2004b;
Solecki et al., 2004; Kotchen and Powers, 2006; Nelson et
al., 2007). As noted earlier, several counties in the Chicago
metropolitan area have passed referenda authorizing
bonds to purchase open space or protect watersheds.
Although the number of referenda is relatively small,
making it difficult to generalize or make comprehensive
statements about values, analysis of these referenda could
provide insights into the values different segments of the
public place on various environmental amenities.
The only methods currently accepted by economists
for estimating non-use values, such as the existence
value of natural communities or biodiversity, are stated-
preference methods such as contingent valuation and
conjoint analysis. To estimate the existence value of
protecting species and ecological systems, Chicago
Wilderness could survey respondents in the Chicago
area. Alternatively, it could attempt to use economic
benefits transfer by applying the results of relevant
surveys done in other locations. The advantage of
obtaining a monetary value for the conservation of
species and ecological systems through contingent
valuation or conjoint analysis is that it would allow
Chicago Wilderness to calculate a total economic value
for alternative strategies. Without contingent valuation or
conjoint analysis, non-use value could not be included,
and only a partial economic value estimate for each
strategy could be derived.
Any effort to estimate a monetary non-use value
raises the question of whether monetary values fully
reflect the values held by Chicago residents related to
the protection of natural communities. In discussing
the importance of protecting biodiversity, Chicago
Wilderness emphasizes that a survey of Chicago focus
groups found that "responsibility to future generations
and a belief that nature is God's creation were the two
most common reasons people cited for caring about
conservation of biodiversity" (Biodiversity Recovery
Plan, p. 14). Contingent valuation of the bequest value
of biodiversity might be consistent with measuring
responsibility to future generations, although the
respondents in the focus group were presumably
thinking in moral rather than monetary terms. Strong
differences of opinion exist on whether it is appropriate
to try to capture such notions as stewardship or moral
values in monetary terms using stated preference
methods (Sunstein et al., 2002; Sen, 1977).
Citizen juries or decision-science methods also
provide a useful means of evaluating tradeoffs among
potential strategies in the Chicago Wilderness context.
With citizen juries, experts could work with a small
group of selected individuals in the Chicago area to
determine comparative values for parcels of land through
a guided process of reasoned discourse. These methods
might enable participants to develop more thoughtful
and informed valuations, better analyze tradeoffs among
multiple factors, and engage in a more public-based
consideration of values. Decision science methods could
provide either monetary comparisons of the values of
alternative properties or weights that could be used to
aggregate multiple layers of data.
Monetary values derived through citizen juries or
decision science approaches may differ considerably
from traditional economic measures based on individual
welfare, for various reasons. Monetary values derived
through citizen juries, for example, may differ both
because of the consent-based choice rules employed and
the explicitly public-regarded nature of the valuation
exercise. Recent analysis suggests that deliberative
valuations, in which a small, select group of individuals
explores the values that should guide collective decisions
through a process of reasoned discourse, may aggregate
individual values in a manner that systematically departs
from the additive aggregation procedures of standard
benefit-cost analysis (Howarth and Wilson, 2006).
Although valuation information could be of great use
to decision makers in evaluating alternative strategies
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and in communicating consequences of the alternatives
to the public, Chicago Wilderness has undertaken very
little valuation research or analysis. Despite some
attempts to collect information about the value of
protecting natural communities and ecosystem services
(e.g., Kosobud, 1998), Chicago Wilderness' efforts have
not been comprehensive or systematic. This contrasts
with its major efforts to garner broad public involvement
and input in setting the goals for the organization and
its large-scale effort to collect technical and scientific
knowledge to characterize the status of ecosystems and
species. In part, the lack of valuation activity has been
the result of the mix of expertise of the individuals
involved in Chicago Wilderness. In part, the lack of
valuation activity is the result of the organization's
choice regarding the set of activities most important
to it (which is a different sort of revealed preference).
Chicago Wilderness is interested in using economic and
other social-science approaches to study the value of
protecting natural communities but has not yet enjoyed
the right mix of expertise and circumstances to make this
a reality.
6.2.3 Other case studies
6.2.3.1 Portland, Oregon's assessment of the
value of improved watershed management
In the early 2000s, Portland, Oregon, decided to
analyze the ecosystem benefits and ecosystem-service
values that would result from improved watershed
management. Portland officials hoped to find more
effective approaches to watershed management that
could both save the city money and improve the
well-being of its citizens. The city was particularly
interested in impacts on flood abatement, water quality,
aquatic species (salmon in particular), human health,
air quality, and recreation. The city's Watershed
Management Program requested David Evans and
Associates and ECONorthwest to undertake the study,
completed in June 2004 (David Evans and Associates
and ECONorthwest, 2004). Although not an example
of a regional partnership with EPA, the project provides
one of the best examples of the kind of landscape-
scale analysis of the value of ecosystems and services
recommended by this report.
City officials realized that they understood only
a portion of the contributions to well-being from
improved watershed management. To be able to
make more intelligent decisions about watershed
management, these officials wished to have a more
complete accounting. The project aimed to expand
the range of ecological changes that were valued,
focusing on those changes in ecosystems and services
likely to be of greatest concern to the population. The
study monetized the economic benefits from a variety
of ecosystem services, including flood abatement,
biodiversity maintenance (represented by improvement
of avian and salmon habitat), air quality improvement,
water quality improvement (measured by reduction of
water temperature), and cultural services (which the
study defined as including the creation of recreational
opportunities and increase of property values).
The project commissioned both biophysical and
economics analyses. The biophysical analyses included
studies of hydrology and flooding potential, water
quality, water temperature, habitat for salmon and other
aquatic species, habitat for birds and other terrestrial
species along riparian buffers, and air quality impacts
(ozone, sulfur dioxide, carbon monoxide, carbon, and
particulates). The economic analyses included studies
of the impact of ecosystem changes on property values
(including public infrastructure and residential and
commercial property), flood risks, recreation, and
human health.
The project used an approach that closely resembles
the ecological production function approach advocated
in this report The approach linked management changes,
such as flood project alternatives, to a range of ecological
changes. These ecological changes were then analyzed
for their effect on various ecosystem services. Finally,
the analysis attempted to economically value the changes
in ecosystem services. Although conducted by separate
teams, the project closely linked the ecological analyses
and economic valuation.
Of particular note was the emphasis on estimating
the change in values that would occur under various
management alternatives. Rather than provide a
static description of current conditions, which is the
predominant form of information collected by Chicago
Wilderness, Portland's approach tried to estimate cause-
and-effect relationships that would allow the systematic
appraisal of alternative policy or management decisions.
This focus, along with a systems approach capable of
incorporating multiple economic benefits, made this an
effective vehicle to study the net economic benefits of
alternative management options.
The Portland study illustrates a number of good
practices in conducting an integrated, regional-level
analysis. The project solicited input from the public
and important stakeholder groups in the design of
the project so that it captured the impacts of greatest
interest to the public. The project presented its results
with a graphical interface that allowed stakeholders
to run scenarios and see the resulting impacts based
on underlying biophysical and economic models. The
analysis effectively deployed existing methods and
estimates, although it did not attempt to develop or test
new approaches or methods.
The project also illustrates some of the potential
problems and limitations in undertaking detailed
quantitative landscape-scale analysis. Inevitably, there
are gaps in data and understanding in this type of
analysis. Gaps in understanding include how changes
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in management actions will affect ecological systems,
and how this will affect the provision of ecosystem
services and consequent value. For example: How will
songbird populations change in response to changes in
the amount and degree of habitat fragmentation? What is
the value to residents of Portland of changes in songbird
populations? Because of a lack of local information,
the study often had to use economic benefits transfer,
drawing on cases quite different from the Portland
context to generate estimates of values.
The project was commissioned by the City of
Portland and although it had minimal EPA involvement,
the project is a good example of the type of systematic
and integrated approach to valuing the protection of
ecosystems and services recommended by this report.
The project aptly illustrates the sequence of steps, from
public input, to characterizing change in ecosystem
functions under various policy and management options,
to valuation of services under these alternatives. The
project shows the great potential that this type of analysis
offers in providing important and useful information to
decision makers.
6.2.3.2 Southeast ecological framework project
The Southeast ecological framework (SEF) project
represents a regional geographic information system
(GIS) approach for identifying important ecological
resources to conserve. The Southeast region, which
encompasses Alabama, Florida, Georgia, Kentucky,
Mississippi, North Carolina, South Carolina, and
Tennessee, is one of the fastest growing regions in
the country, yet it still harbors a significant amount
of globally important biodiversity and other natural
resources. The SEF seeks to enhance regional planning
across political jurisdictions and help focus federal
resources to support state and local protection of
ecologically important lands. The Planning and Analysis
Branch of EPA Region 4 and the University of Florida
completed the work in December 2001.
The SEF created a new regional map of priority
natural areas and connecting corridors, along with GIS
tools and spatial datasets. The project also identified 43
percent of this land that should be protected and managed
for its specific contributions to human well-being. The
project developed additional applications for conservation
planning at the sub-regional and local scales.
The SEF offers a good tool to carry out regional
analysis of ecological components, particularly habitat
conservation. The SEF focused narrowly on conservation
value, defined as the ability to sustain species and
ecological processes. Because of its focus, the level of
scientific knowledge underpinning the SEF is, in general,
far higher than in the other case studies examined here.
The SEF, however, does not reflect the broad,
integrated approach to valuation recommended by this
report. The SEF focuses almost exclusively on habitat
conservation rather than on a broad suite of ecosystem
services. The SEF did not undertake extensive public
involvement to determine its objective; it started with a
focus on habitat conservation. It also did not attempt to
combine its ecological analysis with an effort to value the
protection of ecosystems or services in monetary or other
terms. An important challenge facing regional analysis,
particularly at a broad scale like the eight-state Southeast
region, is how to incorporate all of these essential
elements - a rigorous ecological approach capable of
showing the range of ecological impacts from alternative
policy and management decisions, public involvement and
input on what consequences are of greatest importance to
them, and rigorous evaluation of changes in value under
alternative decisions.
6.2.4 Summary and recommendations
Regional-scale analysis holds great potential to
inform decision makers and the public about the
value of protecting ecosystems and services. Recent
increases in publicly available, spatially-explicit data
and a parallel improvement in the ability to display
and analyze such data make it feasible to undertake
comprehensive regional-scale studies of the value of
protecting ecosystems and services. Municipal, county,
regional, and state governments make many important
decisions affecting ecosystems and the provision of
ecosystem services at a regional scale, but local and state
governments rarely have the technical capacity or the
necessary resources to undertake regional-scale analyses
of the value of ecosystems or services. Regional-scale
partnerships between EPA regional offices, local and state
governments, regional offices of other federal agencies,
environmental non-governmental organizations, and
private industry could aid both EPA and regional partners.
Such partnerships offer great potential for improving the
science and management for protecting ecosystems and
enhancing the provision of ecosystem services.
At present, however, this potential is largely
unrealized. Valuation of ecosystems and services
has not been a high priority for EPA regional offices
largely because of tight agency budgets and the lack
of specific legal mandates and authority. To date,
regional offices have not undertaken the valuation
of ecosystems and services at a regional scale in a
comprehensive or systematic fashion. As the case studies
have shown, however, various regional EPA offices and
local governments have pursued some innovative and
promising directions despite limited budgets and lack of
specific mandates.
The committee sees great value in undertaking a
comprehensive and systematic approach to valuing
ecosystems and services at a regional scale. Realizing
the great potential of regional-scale analyses, however,
will require a significant increase in resources for
regional offices and, in some cases, a somewhat different
mode of operation. To reach the potential for regional-
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scale analysis of the value of ecosystems and services,
the committee recommends that:
® EPA should encourage its regions to engage in
valuation efforts to support environmental decision
making, following the recommendations of this report.
® EPA regional staff should be given adequate
resources to develop expertise necessary to undertake
comprehensive and systematic studies of the value
of protecting ecosystems and services. Increased
expertise is needed in several areas:
• Economics and social science: Expertise is very
limited at the regional level to undertake economic
or other social assessments of value. A pressing
need exists to increase expertise in this area among
regional offices.
• Public involvement processes.
• Ecology: Regional staffs have greater expertise
in ecology than in public involvement processes
economics, or other social sciences, but doing
systematic valuations of ecosystem services will
require additional ecological staff. Of greatest
utility would be ecologists with expertise in
assessing impacts on ecosystem services through
ecological production functions to evaluate
alternative management options.
It A systematic and comprehensive approach to valuing
the protection of ecosystems and services requires that
ecologists and other natural scientists work together
with economists and other social scientists as an
integrated team. Regional-scale analysis teams should
be formed to undertake valuation studies. Teams
composed of social scientists and natural scientists
should participate from the beginning of the project to
design and implement plans for public involvement,
ecological production functions, and valuation.
It Gathering public input is of great importance in
establishing the set of ecological consequences
of greatest importance to the community. Where
feasible, all regional-scale analyses of the value of
ecosystems and services should involve the public at
an early stage to ensure that subsequent ecological,
economic, and social analyses are directed toward
those ecosystem components and services deemed
of greatest importance by affected communities.
Generally, the process should proceed bottom-up,
as opposed to top-down. Rather than asserting what
is valuable, EPA must seek to understand what
an informed public views as being valuable. An
important question that should be addressed by EPA
regional offices is how to develop effective public
involvement at broader regional scales.
It Some EPA staff have expressed a desire to be
provided a value for an ecosystem component or
service that they can then apply to their region (e.g., a
constant value per acre of wetland or wildlife habitat).
Such short cuts to the valuation process are uninformed
by local social, economic, and ecological conditions
and can generate results that are not meaningful. This
approach to valuation should be avoided.
It Regional staffs need to be able to learn effectively
from valuation efforts being undertaken by other
regional offices and by work within EPA's Office of
Research and Development. EPA regional offices
should document valuation efforts and share them
with other regional offices, The National Center
for Environmental Economics, and EPA's Office of
Research and Development (which should in turn
collaborate with the regional offices). Each regional
office should also publish its studies.
It Future calls by the Agency for extramural research
should incorporate the research needs of regional
offices for systematic valuation studies. Doing so will
maximize the probability that future grant funding
will be useful for EPA's regional offices.
It Regional staff should form partnerships with local
and state agencies or local groups where doing so
advances the mission of EPA directly or indirectly by
promoting the ability of partner organizations to value
the effect of their actions on ecosystems and services
and to protect environmental quality.
6.3 Valuation for site-specific decisions
6.3.1 Introduction
The Environmental Protection Agency makes many
decisions at the local level, including the issuance of
permits (air, water, and waste), policies that influence the
boundaries for establishing permits (e.g., impaired water
bodies designations), and administrative orders related to
environmental contamination. The social and ecological
implications of such decisions, like the decisions
themselves, generally are local in nature, affecting
towns, townships, and counties rather than entire states
or regions. Therefore, the decision processes need to rely
on valuation approaches that also are local in nature and
are robust enough to adapt to a range of local ecological
conditions and public interests.
In this section, the committee focuses on the
regulatory processes associated with one set of local
decisions: the remediation and redevelopment of
historically contaminated sites. That focus includes
the Superfund program and its efforts to assess the
contributions to human well-being from ecosystem
services related to site remediation and redevelopment
efforts (Davis, 2001; Wilson, 2004). As part of this
committee's study, the SAB staff, with assistance from
the Agency's National Regional Science Council,
surveyed the regional offices to assess their needs for
valuation information. Seven of the eight responding
regions indicated that they need information to help
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value the protection of ecosystems in the management
and remediation of contaminated sites (EPA Science
Advisory Board Staff, 2004). The discussion that follows
is applicable to any remediation and redevelopment
processes for contaminated properties that contain the
following elements:
It Identification, selection, and prioritization of sites
It Site characterization - establishment of site condition
H Site assessment - evaluation of risks and impacts
It Selection of remedial and redevelopment approaches
It Performance assessment of clean up and
redevelopment
It Public communication of assessment results as well
as proposed actions and outcomes
This section explores how valuation methods can
positively influence individual steps in a remediation
and redevelopment process and lead to a better
outcome. As appropriate, the section identifies and
discusses individual valuation approaches or methods
relevant to specific steps. The section builds on a
white paper funded by EPA's Superfund Program to
evaluate the potential of valuation for redevelopment
of contaminated sites (Wilson, 2004). The white paper
assessed the improvement in ecosystem services and
implied ecological value from the remediation and
redevelopment of Superfund sites. Although the Wilson
paper did not perform a formal valuation for any
redeveloped property, it provides a useful starting point
for exploring the utility of valuation methods in the
remediation and redevelopment process. For his analysis,
Wilson reviewed approximately 40 Superfund cases
before selecting three case studies that represent urban
(Charles-George landfill), suburban (Avtex Fibers), and
exurban (Leviathan Mine) environments. This section
analyzes and relies on these same three cases, as well as
an additional urban example, the DuPage landfill, which
provides a useful counterpoint to the Charles-George
landfill example. The DuPage example shows how an
early focus on ecosystem services can better identify
potential ecosystem services that can be targeted during
the remediation and restoration phases. A brief overview
of each of these cases appears in section 6.3.2.
6.3.2 Opportunities for using valuation to inform
remediation and redevelopment decisions
The Superfund process and its individual steps or
stages are well defined (EPA CERCLA Education
Center, 2005). Superfund and related remediation
processes are focused on first defining a problem, then
characterizing and assessing its potential and actual
human health and environmental impacts, and finally
developing and executing a technical strategy to alleviate
or avoid those impacts. Since 1985, EPA's Brownfield
Program has integrated consideration of upstream
redevelopment into the remediation process (EPA,
2004b). The Agency developed the reuse assessment tool
to integrate land use into the Superfund process (Davis,
2001). Integrating remediation and redevelopment
demonstrates the need to consider ecological valuation
into all steps and stage from the very beginning.
Figure 5 illustrates how valuation information can be
integrated into the traditional process for remediation
and redevelopment. In the committee's view, EPA
and the community should define at the outset what
the potential site should be after remediation and
redevelopment and what ecological services are to be
preserved, restored, or enhanced for use by the local
community. This differs from the more traditional
practice. This practice initially focuses on the type,
degree, and extent of chemical contamination, and then
on the human and ecological receptors currently exposed
and therefore at risk under current chemical conditions.
In the traditional approach, the data collection for
site characterization captures the degree and pattern of
chemical contamination but does not collect information
about the ecological condition of the site or the value
of any services associated with the site in its current
or proposed future conditions. In the traditional
approach, moreover, the conceptual model that defines
the exposure pathways to key receptors and therefore
guides the design of the risk analysis is based on current
rather than future conditions. This can lead to a risk
assessment that selects receptors that are sensitive under
current conditions but may not be sensitive or important
under alternative future uses. This logic focuses remedy
evaluation and selection on controlling the risks under
current use. In the end, the traditional approach assumes
that risk reduction and management, rather than the
optimized reuse value for the community, are the
ultimate performance goals. Such an approach may
leave the community feeling that the risk is gone but still
dissatisfied with the values gained by the cleanup.
Integrating future use considerations into the
remediation process and focusing on value generation
will lead to outcomes that better satisfy the public. To
accomplish this metamorphosis, it is essential to find
ways to introduce estimates of ecosystem services
and values into management strategies and associated
analytical processes. Early recognition of future uses
and the ecosystem services that matter to people can
inform site assessment and the ultimate selection of
remedial actions and redevelopment options. Identifying
expected or actual contributions to human well-being
can also lead to more effective communication with the
affected public. The rest of this section discusses the
opportunities and utility of adapting valuation methods
to this more integrated and forward-looking assessment
and redevelopment process.
Valuation methodologies are important first in
identifying how a site and its current or potential
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Figure 5: Integration of valuation information with the traditional remediation and
redevelopment process
Value Inputs
Future use analysis
including ecological and
commercial uses
Align analytical endpoints
with future use and
ecosystem services
Consider opportunities
to integrate remedial and
redevelopment actions
Compare cost and benefits
of remedial alternatives
Communicate proposed
actions and expected
outcomes to public
Document benefits
delivered
Site
Identification
i
Site
Characterization
i
Site
Assessment
I
Remedy
Selection
Remedial
Action Defined
Site
Redevelopment
Performance
Assessment
Change to Current Practice
Data collected could include
ecological condition and
community preference for
ecosystem services from
future use options
Assessment focuses on
risks relevant to planned
future uses and ecosystem
services
Remedy optimized for
redevelopment and
consideration of ecological
reuse
More cost-effective
redevelopment strategies
Greater public understanding
of benefits and support for
project
Lessons learned captured
to improve future project
execution
ecosystem services matter to the surrounding
community. EPA should use valuation methods
to determine how the site has contributed and can
contribute to human well-being and how potential
effects on ecological components may diminish those
contributions. When the ecosystem services that
matter to people are well-defined and when ecological
risk assessments are coupled with these services, the
remediation and redevelopment plan can target what
matters to the local community. A key recommendation,
therefore, is that EPA consider ecosystem services
and their contributions to human well-being and
other values from the earliest stages of addressing
contaminated properties.
Even as early in the management process as site
selection or prioritization, tools that can compare
the potential of sites to provide ecosystem services
could be informative. The contribution of ecological
protection to human well-being should be considered
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in the design of any site characterization plan. A typical
site characterization focuses on the aerial extent of
chemicals and their range of concentration in site media
(e.g., ground and surface water, soil, and biological
tissue). A plan that also collects information to define
and assess ecosystem services would better align
ecological-risk assessments with economic benefits and
other contributions to human well-being. Aligning risk
assessments and assessments of contributions to human
well-being should be a critical objective for the Agency.
Alignment will help ensure that remedial actions
address the restoration of contributions to human well-
being derived from important ecosystem service flows
that have been diminished or disrupted. Aligning risk
assessment endpoints with ecosystem services should
also result in multiple benefits, including:
HI Improved alignment with community goals
H Improved ability to perform meaningful assessments
of economic benefits and other contributions to
human well-being
H Improved ability to communicate proposed actions
H Improved ability to monitor and demonstrate
performance
Successfully remediating and redeveloping
contaminated sites depends in great part on the degree
to which efforts either protect or restore ecosystem
services that contribute to human well-being. If values
have been broadly explored and effectively integrated
into site assessment and remedy-selection processes,
appropriate measures of performance will be apparent.
Ecological measures of productivity or the aerial extent
of conditions directly linked to valued ecosystem
services will be useful in tracking the performance of
remediation and redevelopment processes. Advancing
the Agency's capability to evaluate performance both in
real time and retrospectively will help the Agency better
justify its overall performance record in the remediation
and redevelopment of contaminated sites.
Finally, the remediation and redevelopment of a
property encompasses more than just the science and
engineering that historically have underpinned the
remediation process. Effective communication with
members of the public actively participating in the
From the late 1950s until 1967, the Charles-George Reclamation Trust Landfill, located one mile
southwest of Tyngsborough and four miles south of Nashua, New Hampshire, was a small municipal dump.
A new owner expanded it to its present size of approximately 55 acres and accepted both household and
industrial wastes from 1967 to 1976. The facility had a license to accept hazardous waste from 1973 to
1976 and primarily accepted drummed and bulk chemicals containing volatile organic compounds (VOCs)
and toxic metal sludges. Records show that over 1,000 pounds of mercury and approximately 2,500 cubic
yards of chemical wastes were landfilled. The state ordered closure of the site in 1983. That same year, EPA
listed the site on the National Priorities List (NPL) and the owner filed for bankruptcy. Samples from wells
serving nearby Cannongate Condominiums and some nearby private homes revealed VOCs and heavy metals
in the groundwater. Approximately 500 people lived within a mile of the site in this residential/rural area;
2,100 people lived within three miles of the site. The nearest residents were located 100 feet away. Benzene,
tetrahydrofuran, arsenic, 1,4-dioxane, and 2-butanone, among others, had been detected in the groundwater.
Sediments had been shown to contain low levels of benzo(a)pyrene. People faced a potential health threat by
ingesting contaminated groundwater. Flint Pond Marsh, Flint Pond, Dunstable Brook, and nearby wetlands
were threatened by contamination migrating from the site.
EPA's involvement at the site began with groundwater testing conducted by an EPA contractor during 1981
and 1982. The site was proposed for the NPL on October 23,1981, and finalized on the NPL in September
1983. In September 1983, EPA also allocated funds for a removal action at the site to replace the state's
Department of Environmental Quality Engineering temporary water line with another temporary but insulated
water line. Other removal work included construction of a security fence along the northwestern entrance to
the landfill, regrading and placement of soil cover over exposed refuse, and installation of twelve gas vents.
A remedial investigation and feasibility study was also begun in September 1983. The basis for the removal
action was documented in the first record of decision issued on December 29, 1983.
EPA Web site history
http://yosemite.epa.gov/rl/npLpad.nsf/f52fa5c31fa8f5c885256adc0050b631/ABD286D719D254878525690
D00449682?OpenDocument
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The 40-acre tract of land that is the Blackwell Landfill was originally purchased by the DuPage County
Forest Preserve District (FPD) in 1960 and is centrally located within the approximately 1,200-acre
Blackwell Forest Preserve, about 30 miles outside Chicago, Illinois. The landfill was constructed as a
honeycomb of one-acre cells lined with clay. Approximately 2.2 million cubic yards of wastes were deposited
in the landfill between 1965 and 1973. The principal contaminants of concern for this site were the volatile
organic compounds (VOCs) 1,2-dichloroethene, trichloroethene and tetrachloroethene, detected in onsite
groundwater at or slightly above the maximum contaminant level (MCL). Landfill leachate contained all
kinds of VOCs and semivolatiles including benzene, ethylbenzene toluene, and dichlorobenzene, as well
as metals such as lead, chromium, manganese, magnesium, and mercury. VOCs and agricultural pesticides
had also been detected in private wells down gradient of the site but at low levels. Some metals (manganese
and iron) had been detected above the MCLs in down-gradient private wells. Post-remediation, the site now
consists mainly of open space, containing woodlands, grasslands, wetlands, and lakes, used by the public for
recreational purposes such as hiking, camping, boating, fishing, and horseback riding. There are no residences
on the FPD property, and the nearby population is less than 1,000 people. The landfill created Mt. Hoy, which
is approximately 150 feet above the original ground surface.
EPA Web site history
http://cfpub.epa.gov/supercpad/cursites/csitinfo.cfm ?id=0500606
remedial and redevelopment process and with the
general public is a critical element in the success of
the management process. Both of these audiences
bring values to the table when they evaluate proposed
actions or the results of any action taken. A strong
alignment between the ecosystem services valued by
these audiences and expected or actual outcomes will
facilitate effective remediation and redevelopment.
6.3.3 Illustrative site-specific examples
The following analysis applies the general
recommendations of chapter 2 to the site-specific
level. The committee illustrates these site-specific
recommendations with lessons gleaned from a series
of Superfund examples in urban (Charles-George and
DuPage landfills), suburban (Avtex Fibers) and ex-urban
(Leviathan Mine) contexts. The backgrounds on each of
these cases appear in text boxes 4-7.
6.3.3.7 Determining the ecosystem services
important to the community.
The urban examples of the Charles-George and
DuPage County landfills show the value of engaging
with the community at an early stage to determine the
ecosystem services of importance to them. Although
neither landfill apparently used formal valuation methods
at the outset, DuPage County's focus on ecosystem
services and the inclusion of additional experts (i.e.,
forestry experts) led to a more positive outcome.
At the Charles-George landfill, EPA did not consider
ecological values or future uses at the start. The human
health risks at this site were so salient at the time that they
were the focus of subsequent decisions. EPA addressed
the health and safety risks by capping the landfill site
and extending the water system from the city of Lowell,
Massachusetts, to the affected community. Although
EPA published the record of decision more than 20 years
ago, the site is still a fenced-off no-man's land, and the
potential for ecosystem services remains untapped.
By contrast, the remediation and redevelopment of
the DuPage County landfill site appears to have been
motivated largely by the need to address existence
values (e.g., the presence of hawks and other rare birds)
and recreational values (e.g., hiking, bird watching,
boating, camping, picnicking, and sledding). The
remediation effort succeeded, and the site is now part
of the Blackwell Forest Preserve. Listed as a Superfund
site in 1990, "a once dangerous area is now a community
treasure, where visitors picnic, hike, camp, and take boat
rides on the lake" (EPA, 2004c).
The urban examples show that even the most
rudimentary dialogue about future use can lead to an
outcome with greater service to the community. At the
DuPage landfill site, a qualitative focus on the utility
of ecosystem services led to the recognition that in a
very flat landscape, even a 150-foot hill, if properly
capped and planted, would be a welcome refuge
for people as well as wildlife. The DuPage Forestry
District understood the ecological potential of the area,
particularly for hawks, and recognized that, where hawks
abound, birders will come to watch them. The difference
was one not of methodology but of conception.
In working with the Avtex Fibers site (described
in text box 6), a suburban location, EPA also engaged
key members of the public. After the site was listed
and a management process established, EPA undertook
a clear effort to engage the public through a multi-
stakeholder process in the development of the master
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The Avtex Superfund site consists of 440 acres located on the bank of the Shenandoah River within the
municipal boundaries of Front Royal, Virginia. The site is bordered on the east by a military prep school,
on the south by a residential neighborhood, and on the west by the Shenandoah River. From 1940 to its
closure in 1989, industrial plants on the site manufactured rayon and other synthetics. Tons of manufacturing
wastes and byproducts accumulated on the site, infiltrated into groundwater under the site, and escaped
into the Shenandoah River. The Avtex Fibers site was proposed for inclusion on the National Priorities
List on October 15, 1984, and the site was formally added to the list on June 10, 1986. EPA began removal
activities at the site in 1989 to address various threats to human health and the environment. The cleanup
and restoration plan called for most remaining wastes to be consolidated on site, secured with a protective
material where needed, and covered by a thick cap of soil and vegetation.
Front Royal is close to the Appalachian Trail, Shenandoah National Park, and George Washington National
Forest, and a number of significant Civil War sites, making it a major tourist center for the Blue Ridge
Mountains. Biologically, the Avtex site contains some residual forested areas, open meadows, small wetland
areas, and more than a mile and a half of frontage along the Shenandoah River. The proposed master plan for
redevelopment, created through a formal multi-stakeholder process, divides the site into three areas: a 240-
acre river conservancy park along the Shenandoah River combining ecological restoration and conservation of
native habitats; a 25-acre active recreation park with boat landings, picnic shelters, and a developed recreation
area including a visitor center and soccer fields; and a 165-acre eco-business park, featuring the refurbished
historic former Avtex administration building. Cleanup of the Axtex site is ongoing, and the redevelopment
plan is being actively pursued by local government agencies and private industry groups.
EPA Web site history
http://www.epa.gov/superfund/accomp/success
/avtex.htm
Stakeholders'Avtex Fibers Conservancy Park Master Plan
http://www.avtexfibers.com/Redevelopment/avtexWEB/avtex-Mp.html
In May 2000, the EPA added the Leviathan Mine site in California to the National Priority List of
Superfund sites. The site is currently owned by the state, but from 1951 until 1962 the mine was owned and
operated by the Anaconda Copper Mining Company (a subsidiary of ARCO) as an open pit sulfur mine. The
mine property is 656 acres in a rural setting near the Nevada border, 24 miles southeast of Lake Tahoe. The
mine itself physically disturbed about 253 acres of the property plus an additional 21 acres of National Forest
Service land. The site is surrounded by national forest. In addition, it lies within the aboriginal territory of the
Washoe Tribe and is close to several different tribal areas.
The mine has been releasing hazardous substances since the time that open pit mining began in the 1950s.
Releases occur through a number of pathways, including surface water runoff, groundwater leaching, and
overflow of evaporation ponds. In particular, precipitation flowing through the open pit and overburden and
waste rock piles creates acid mine drainage (AMD) in the form of sulfuric acid, which leaches heavy metals
(such as arsenic, cadmium, copper, nickel, and zinc) from the ore. These releases are discharged into nearby
Leviathan Creek and Aspen Creek, which flow into the East Fork of the Carson River. Pollution abatement
projects have been underway at the site since 1983. Despite these efforts, releases continue today.
The releases of hazardous substances from the mine have significantly injured the area's ecosystem and
the services it provides. In the 1950s, structural failures at the mine that released high concentrations of AMD
into streams resulted in two large fish kills, and the trout fishery downstream of the mine was decimated
during this time. More recently, data have documented elevated concentrations of heavy metals in surface
water, sediments, groundwater, aquatic invertebrates, and fish in the ecosystem near the site. This suggests
(continued)
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that hazardous substances have been transmitted from abiotic to biotic resources through the food chain,
thereby affecting many trophic levels. A recent assessment identifies seven categories of resources potentially
impacted by the site: surface water resources, sediments, groundwater resources, aquatic biota, (including the
threatened Lahontan cutthroat trout), floodplain soils, riparian vegetation, and terrestrial wildlife (including
the threatened bald eagle). These uses, in turn, help support recreational uses (including fishing, hiking, and
camping); and tribal uses (including social, cultural, medicinal, recreational, and subsistence).
The process of determining compensatory damages and developing a response plan involves a number
of different stages for which information about the value of these lost services would be a useful input.
For example, in accordance with the Natural Resource Damage Assessment (NRDA) regulations under the
Comprehensive Environmental Response, Compensation and Liability Act, the trustees for the site conducted
a pre-assessment screening to determine the damages or injuries that may have occurred at the site and
whether a natural resource damage assessment should be undertaken. This required a preliminary assessment
of the likelihood of significant ecological or other impacts from the contamination (corresponding to step 2 in
figure 1 of this report).
The decision was made in July 1998 to move forward with a Type B NRDA and thus to assess the value
of the ecosystem services that have been lost as a result of the site contamination. A Type B assessment
involves three phases: an injury determination to document whether ecological damages have occurred; a
quantification phase to quantify the injury and reduction in services (corresponding to step 4 of figure 1); and
a damage determination phase to calculate the monetary compensation that would be required (corresponding
to step 5 of figure 1).
In the Leviathan Mine case, the trustees proposed using resource equivalency analysis based on a
replacement cost estimate of the lost years of natural resource services to determine damages for all affected
services other than non-tribal recreational fishing. For this latter ecosystem service, they proposed using
economic benefit transfer to estimate the value of lost fishing days. In the decision by EPA whether to list the
site on the NPL and in the subsequent record of decision selecting a final remedy for the site, information about
the value of the ecological improvements from cleanup could play an important role, although these decisions
have often been based primarily on human health considerations.
EPA Web site history
http://www.epa.gov/superfund/sites/npl/narl580.htm
Leviathan Mine National Resource Damage Assessment Plan,
http://www.fws.gov/sacramento/ec/Leviathan%20NRDA%20Plan%20Final.pdf
plan. Although there was some consideration of
ecosystem services, EPA does not appear to have
engaged in any systematic efforts to assess the services
that people cared the most about.
For sites like Avtex Fibers, deliberative group processes
involving the public and relevant experts, including
historians, could help identify and document ecosystem
services of most concern to the public. In framing the
dialogue with members of the public, methods such as
ecosystem benefits indicators or the conservation value
method might help EPA's site managers understand the
ecosystem-service potential of future uses. Those methods
could also provide inputs for further valuation using other
methods described in chapter 4 (e.g., economic methods
or decision science approaches).
The Leviathan Mine case, described in text box 7,
illustrates how EPA often must consider a complex
array of competing interests. The Agency in this
case faces a clear dichotomy between the ecosystem
services valued by the full-time resident population
of American Indians and by occasional recreational
users. Recreational users would gain from services
associated with hiking, fishing, and camping. The
Washoe Tribe, however, values the ecosystem as
a provisioning service for food as well as for its
spiritual and cultural services.
The Leviathan Mine case also highlights the need
to consider the existence or intrinsic values of an
ecosystem. The ecosystem near the Leviathan Mine
provides a habitat for threatened species such as the
Lahontan cutthroat trout and bald eagle. In considering
site restoration or remediation, or in measuring
damages from contamination at the mine, the Agency
could miss the primary sources of value if it limited
consideration to use value and did not consider
existence or intrinsic value.
For the Leviathan Mine example, EPA could obtain
information about the impacts of greatest concern to
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affected individuals in at least three ways. The first
would be to gather information about the relative
importance of the various services directly from
affected individuals through focus groups, mental
models, mediated modeling, deliberative processes,
or anthropological or ethnographic studies based on
detailed interviews. The second approach would be
to gather basic information that could indicate the
importance of different services. This information
might be of the type used to construct ecosystem benefit
indicators: water use data for the Washoe tribe and
others in the vicinity of the site (e.g., sources, quantities,
and purposes), harvesting information for the Washoe
(e.g., what percent of their harvesting of nuts, fish, etc.,
comes from the area affected by the site), recreational
use data (e.g., the number of people visiting the local
national forest for hiking, camping, fishing, and wildlife
viewing), data on flooding potential and what is at risk
in the vicinity of the site, and data on spiritual/cultural
land-use practices by the Washoe. The third approach
would be to review related literature and previous studies
to learn about impacts of concern in similar contexts.
For example, previous social/psychological surveys not
specific to this site or other expressions of environmental
preferences (e.g., outcomes of referenda or civil court
jury awards) might provide insight into what people are
likely to care about in this context. Similarly, previous
contingent valuation studies of existence value might
provide some, at least partial, indication of the likely
importance of impacts on species such as bald eagles.
Likewise, previous studies of the value of recreational
fishing (e.g., from travel cost models) could be coupled
with use data to provide an initial indication of the
importance of the impact on recreational fishing.
6.3.3.2 Involving interdisciplinary experts
appropriate for valuation.
Interactions among experts and the affected public
form a key component of any program of hazardous
site assessment, planning, and implementation. Ideally,
collaboration among all relevant experts, including
physical, chemical, and biological scientists (e.g.,
ecologists and toxicologists) and social scientists (e.g.,
economists, social psychologists, and anthropologists),
as well as communication with affected publics,
must begin very early in the planning stages of
remediation and redevelopment and continue throughout
implementation and post-project monitoring and
evaluation. Key areas for collaboration among experts
are the development of alternative management scenarios
and the translation of physical and biological conditions
and changes into value-relevant outcomes that can be
communicated to the public.
The Leviathan Mine illustrates the need for
collaboration among multiple disciplines to understand
how the population's values are affected. Because of
the unique cultural and spiritual values associated with
the site, anthropologists could play an important role
in characterizing the value of the ecosystem services
to the Washoe Tribe. Economists or others seeking to
estimate existence value for an affected species would
need to work closely with ecologists to determine the
likely impact of any change or proposed project on that
species so that the change could be readily valued.
6.3.3.3 Constructing conceptual models that
include ecosystem services
Ecological assessments associated with the
remediation and redevelopment of contaminated
property will better aid decision making if they
incorporate ecological production functions that link
remediation and redevelopment actions to ecosystem
services. None of the four sites chosen by the committee
conducted such assessments. Both the DuPage County
landfill and the Aztex Fibers cases appear to have
qualitatively considered ecosystem services, with
commendable results, illustrating how more formal
assessments using ecological models and production
functions could further improve site-specific remediation
and redevelopment efforts.
Although it is now standard practice to develop
a conceptual model in performing ecological risk
assessments for contaminated sites, EPA's analyses of
adverse impact have generally not linked to ecosystem
services. The primary focus of the Agency's remediation
efforts has been to control anthropogenic sources of
chemical, biological, and physical stress that could lead
to adverse impacts to human health or the environment.
Developing conceptual models that incorporate the
linkage between ecological endpoints and community-
identified services would better guide both for the
valuation of ecological protection and site remediation
and redevelopment.
The Avtex Fiber case highlights what EPA could
gain from developing the capacity to use conceptual
models that integrate ecological effects and ecosystem
services. A noteworthy feature of the Avtex Fiber
process was the development of a master plan, which
included some consideration of ecosystem services.
For example, early concerns about contamination of
groundwater and the discharge of toxic substances
into the Shenandoah River focused attention on
water quality. Aquatic basins constructed to contain
contaminants on site were designed to restore
important ecosystem services, including safe habitat
for waterfowl, runoff control, and water purification
services. In this regard, the plan implied but failed
to quantify or document a rudimentary ecological
production function.
The development of a conceptual model that
incorporated ecosystem services would have
systematically facilitated greater integration of
ecosystem services into remedial design and future
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uses. Recreational and aesthetic services were clearly
important considerations for many features of the
plan. However, because no comprehensive ecological
model identifying ecosystem services apparently
guided redevelopment at the site, it is unclear whether
the particular pattern of restored forests and wetlands,
recreation areas, and industrial parks produced the
most valuable protection for ecosystem services.
Different siting and design of soccer fields, for
example, might have provided the same recreational
value while achieving greater wildlife habitat, water
quality, or aesthetic values for visitors, nearby
residents, or both. The master plan's declared green
focus for the industrial park implied that ecological
concerns were important in the selection of industrial
tenants and in the siting and design of facilities,
but no ecological model for achieving this goal,
or monitoring progress toward it, was presented.
This omission leaves open the prospect that future
industrial, recreational, and tourist developments and
uses at the Avtex site might simply substitute one set
of damages to ecosystems and ecosystem services for
another.
6.3.3.4 Predicting effects on relevant ecosystem
services
As discussed in chapter 3, development of a
conceptual model should be followed with predictive
analyses of the effects of EPA's actions on ecosystem
services. Expanding ecological risk assessments to
include assessments of the services that matter to people
may present technical challenges, given the current focus
of ecological risk assessments on toxicological data for
a limited range of species and for toxic responses from
individuals in those species. Such data will rarely link
well to the ecosystem services that matter to a particular
site-specific decision.
The Agency will need to develop its capacity to adapt
and apply models that incorporate ecological production
functions. These models are the real bridge between risk
estimates and subsequent injury or damage projections
and provide a major piece of the puzzle to quantify and
value the impacts of chemical exposures under different
remedial and restoration alternatives.
Incorporating ecological production functions into
EPA's risk assessments will be important not only for
EPA decisions on site remediation and redevelopment
but also for natural resource damage assessments
(NRDAs). Although trustee agencies, such as the
National Oceanic and Atmospheric Administration and
the U.S. Fish and Wildlife Service, are the regulatory
leads for NRDAs, the ecological risk assessments and
conceptual models produced by EPA in the remediation
process are often the basis for damage assessment. If
EPA could effectively conduct assessments that use
ecological production functions to predict impacts on
ecosystem services, those assessments would enhance
the ability of resource trustees to assess injury, define
restoration goals, and calculate damages. Predictive
ecological production functions can play a critical role in
such assessments.
The Leviathan Mine example illustrates how
ecological impacts and damages are currently
assessed. The Leviathan Mine natural resource
damage assessment plan gives detailed information
on concentrations of key pollutants (particularly
heavy metals such as cadmium, zinc, copper, nickel,
and arsenic) in surface water samples, groundwater
samples, sediment samples, samples of fish tissues,
and insect samples at various distances from the mine
site. These concentration levels can be compared
to concentration levels at reference sites (because
historical information for the site itself is not available),
toxicity data from the literature, and existing regulatory
standards (e.g., water quality criteria or drinking
water standards) to evaluate the potential for impact.
Importantly, none of these comparisons is a direct
demonstration of injury, which can only be measured
through field observation and tests. EPA must rely on
surrogates to estimate impact.
Once the impacts on water quality, sediments, etc.,
have been determined, ecological production functions
could translate these impacts into predicted changes in
ecosystem services. If recreational fishing is important,
for example, EPA must estimate the site's impact on
the fish population in the nearby water body. Such
an analysis would require estimating the impacts of
changes in water quality, streambed characteristics, bank
sediments, and riparian vegetation on fish population,
both directly and through impacts on the insects on
which fish feed. If elevated levels of arsenic, copper,
zinc, or cadmium exist in insects and fish tissue, EPA
must also be able to use this information to predict an
overall impact on the fish population.
EPA has already developed complex ecological risk
assessment modeling tools (e.g., TRIM, EXAMS, and
AQUATOX) to estimate the fate and effects of chemical
stresses on the environment. In some cases, EPA
has even coupled such exposure-effects models with
ecological production models to estimate population
level effects (Nacci and Hoffman, 2006; Nacci et al.,
2002).
In many cases, an ecological model that links
ecological processes at a site to ecosystem services of
interest to that site do not currently exist, although it
might be possible to adapt models from the literature
to fit local conditions with site-specific field data if the
scale and ecological components of the site are similar
(using the criteria for selecting among existing models
described in section 3.3.1). In the absence of such a
site-specific model, EPA might look to the scientific
literature for guidance on how sensitive the insects and
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As described by Efoymson et al. (2003), "Net environmental benefits are the gains in environmental
services or other ecological properties attained by remediation or ecological restoration, minus the
environmental injuries caused by those actions. Net environmental benefit analysis (NEBA) is a methodology
for comparing and ranking the net environmental benefit associated with multiple management alternatives.
A NEBA for chemically contaminated sites typically involves the comparison of the following management
alternatives: (1) leaving contamination in place; (2) physically, chemically, or biologically remediating
the site through traditional means; (3) improving ecological value through onsite and offsite restoration
alternatives that do not directly focus on removal of chemical contamination; or (4) a combination of those
alternatives.
NEBA involves activities that are common to remedial alternatives analysis for state regulations and the
Comprehensive Environmental Response, Compensation and Liability Act, response actions under the Oil
Pollution Act, compensatory restoration actions under Natural Resource Damage Assessment, and proactive
land management actions that do not occur in response to regulations, i.e., valuing ecological services or
other ecological properties, assessing adverse impacts, and evaluating restoration options."
Figure 6, taken from Efroymson et al. (2003), "depicts the high-level framework for NEBA. It includes
a planning phase, characterization of reference state, net environmental benefit analysis of alternatives
(including characterizations of exposure of effects, including recovery), comparison of NEBA results,
and possible characterization of additional alternatives." Dashed lines indicate optional processes; circles
indicate processes outside the NEBA framework. Only ecological aspects of alternatives are included in this
framework. "The figure also depicts the incorporation of cost considerations, the decision, and monitoring
and efficacy assessment of the preferred alternative, although these processes are external to NEBA."
Because NEBA is a framework, the needed resources, data inputs, and limitations are associated with
whatever ecological models and valuation tools are selected.
Currently, NEBA is being applied at a local scale, although the size of some contaminated properties
and their impacts can extend to the regional scale (e.g., impact of releases from a contaminated site to a
watershed). NEBA should be highly adaptable to different levels of data, detail, scope, and complexity.
fish species are to these types of stressors. It could then
ask expert ecologists to judge the likely magnitude
of the impacts in the specific case. As for transfer of
ecological benefits, however, scientists must take into
account the differences between the reference site and
the contaminated site and define and communicate
the assumptions and limitations of transferring the
information.
The Leviathan Mine Natural Resource Damage
Assessment Plan also suggests studying the fish
population downstream from the mine and comparing
it to the population in a reference location, assuming
an appropriate reference site can be identified. More
generally, it suggests comparing riparian vegetation,
the composition of the benthic community, and
wildlife populations near the mine and at an acceptable
reference site. Such a comparison can help frame
the types of damages resulting from the mining
activity. Because reference sites and exposed sites
may differ for a number of reasons not related to the
contamination, such a comparison may not directly
estimate the injury and will not take into consideration
the impact of proposed remedial actions. Decisions
about remediation and restoration require analysis
of proposed actions, and it may not be reasonable
to assume that remedial actions will be 100 percent
effective in restoring relevant ecosystem services to
their original level.
Comparative analyses of remedial actions using
ecological production functions are needed and
can be facilitated through comparative tools such
as net environmental benefit analysis (Efroymson
et. al., 2004). This analysis provides a framework
for using valuation tools to compare alternative
remedial strategies based on net impacts on ecological
services.
6.3.3.5 Defining, cataloging, and accounting for
ecosystem services
Accounting rules are needed to avoid double
counting or undercounting the contributions to human
well-being from ecosystem services. Ecosystems and
their numerous components are linked in an intricate
and complex network of biological, chemical, and
energy flows. A focus on isolated impacts to individual
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Figure 6: Framework for net environmental benefit analysis (from Efroymson et al., 2003).
Integrated problem formulation
• Management and assessment goals
•Assessment endpoints (ecological services, other properties) and measures of effects
•Adverse or beneficial agents
• Temporal measures of exposure and effects
• Spatial measures of exposure and effects
• Reference state
• Comparative metrics
• Conceptual model
•Analysis plan
T
Characterization of reference state(s) (services or other ecological properties)
ecological characterization of
uncontaminated state
ecological characterization of contaminated
state (natural attenuation alternative)
Net Environmental Benefit Analysis of Management Alternatives
NEBAof
remedial
alternative
NEBAof ecological
restoration
alternative
NEBAof combined remediation
or restoration or natural
attenuation
Integration of NEBA results to
produce improved management
alternatives
Division of net
benefit by cost
Comparison (ranking) of NEBA results,
relative to each reference state
Decision
Monitoring and
efficacy
assessment
organisms or components and their associated
services can lead to double counting or undercounting
contributions to human well-being generated by
Agency actions.
For example, the listing of services (aquatic biota
and habitat, riparian vegetation, terrestrial wildlife,
recreational uses, and tribal uses) in the Leviathan
Mine case does not seem to be useful for sorting out
the different services to be valued. The listing fails
to identify mutually exclusive services and presents
a high likelihood of double counting. It also does not
adequately distinguish between inputs and outputs.
The significance of protecting habitat and riparian
vegetation, for example, is not clearly addressed.
Is it because society cares about the populations
they support? Or is it because these populations
are an input into something else of value, such as
recreation? Consider insect populations. If society
cares about the insects for their own sake, the insects
generate unique existence value. If they are valued
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as a food source for fish and society cares about fish,
there is value in the change in fish brought about by
the change in insects. But in the latter case, insects
should not be valued separately.
A better delineation of ecosystem services might
involve identifying directly experienced, measurable,
and spatially and temporally explicit services. For the
Leviathan Mines example, such a list of ecosystem
services might consist of the following:
It Water used by Washoe Tribe members and others for
washing and drinking
8 Non-consumptive uses of wildlife (e.g., viewing bald
eagles and other species)
8 Harvesting (hunting, fishing, and collecting fish) by
Washoe tribal members
8 Cultural, spiritual, and ceremonial values of land used
by Washoe tribal members
VI Flood control (e.g., reduction in flooding from
snowmelt or runoff)
VI Recreational services (e.g., fishing, hiking, and
camping)
6.3.3.6 Expanding valuation methods
The typical comparison of remedial strategies
currently includes two tests: whether a remediation
action controls risk to an acceptable level, and if so,
whether it is cost effective. Under this scheme, if a
proposed remediation action is adequate with regard to
risk reduction, the least costly alternative is the obvious
choice. Such an approach decouples remediation and
redevelopment, delays the development process, and
may not maximize what matters to the public.
If remediation and redevelopment alternatives are
to be compared based on their contributions to human
well-being, EPA must be able to value the effect of
each alternative on ecosystem services. As mentioned
previously, NEBA offers a conceptual framework for
comparing remedial and redevelopment alternatives
on the basis of their net contributions to human well-
being, whether monetized or non-monetized. Chapter 4
in turn describes a broad range of methods for valuing
ecosystem services.
Habitat equivalency analysis (HEA) provides
one approach for comparing contributions to human
well-being associated with different remedial and
redevelopment alternatives. HEA reports results in
ecological units over time (e.g., discounted service acres
years). The cost of creating or replacing those ecological
units in monetary terms provides a replacement cost.
Although these approaches do not provide direct measures
of the value of the ecosystem services, they support a
comparison of the services provided under different
options. Alternatively, impacts of alternatives could be
compared purely in ecological or biophysical terms
through a method such as the conservation value method
EPA could also compare remediation and
redevelopment alternatives using economic valuation.
For example, EPA could use hedonic pricing studies
to determine the economic impacts of the cleanup and
redevelopment options on adjacent residential property
values. New contingent valuation studies or studies
using travel cost models could capture in monetary terms
recreational or aesthetic values. Models might be used
to compare expected gains to the local economy across
the feasible set of redevelopment scenarios. Ecosystem
benefit indicators, as discussed above, might also be
used to evaluate the impacts of different remediation or
redevelopment options.
If members of the public are involved in testing
remediation and redevelopment alternatives, EPA
could use decision-aiding processes to assess their
preferences for or weighting of alternatives. Formal
social-psychological surveys of potential recreational
users, visitors, and tourists could measure the relative
preferences of these groups among remediation and
redevelopment plans. Parallel economic or monetary
assessments, perhaps using contingent valuation or travel
cost methods, could extend and cross-validate survey
results. Decision science methods could provide weights
to facilitate analyses of tradeoffs among recreation,
tourism, and industrial development at a site.
6.3.3.7 Communicating information about
ecosystems
EPA should explicitly address ecosystem services
in communications about site remediation and
redevelopment. Managers will be able to better
communicate the reasoning behind their selection
of preferred options if analyses effectively integrate
ecosystem services and their contributions to human
well-being. A focus on the ecosystem services that
matter to the public should also lead to greater public
understanding of the potential advantages of the options
for remediation and redevelopment. Finally, performance
measures defined in terms of contributions to well-being
that the interested public understands and accepts as
important should help facilitate communications about
progress in the remediation and redevelopment process.
Scientific information can be complex and difficult
to understand; visual communication approaches
can help. For example, EPA might use perceptual
representations (e.g., visualizations of revegetation
options as viewed from adjacent homes and prominent
tourist and recreation sites and passageways) to improve
public understanding of the implications of the various
restoration and redevelopment alternatives under
consideration. Consider the restoration plan for the
Avtex site, which included replanting and encouraging
re-growth of three different forest types on appropriate
locations within the site. Accurate visualizations of the
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reforestation projects, including their expected growth
over time, would have been useful for communicating
the implications of alternative plans. Effectively
developing and using such visualizations would require
collaboration between forest ecologists and visualization
experts (such as landscape architects). These
collaborations could lead to the creation of accurate
and realistic representations of how the different forests
would look from significant viewpoints at different
stages of the restoration program for each management
alternative. Psychologists, communications experts, and
other relevant social or decision scientists might create
appropriate vehicles and contexts for presenting the
visualizations to relevant audiences. Computer graphics
experts might also be helpful. Further interdisciplinary
collaboration would be required if the visualizations
were to be accompanied by information about expected
wildlife or other ecological effects associated with
each visualized forest condition. While this example
may seem to be an intricate, exhaustive process, many
contaminated properties are under redevelopment for
years (or decades in the case of Superfund projects).
With proportional resource allocations, this level of
effort may be appropriate.
6.3.3.8 Fostering information-sharing about
ecological valuations at different sites
The committee recommends that EPA pursue the
broad and rapid transfer of experience within the Agency
of integrating valuation concepts and techniques into the
remediation and redevelopment of contaminated sites.
The Agency can build its capacity to utilize valuation to
inform local decisions through a systematic exchange of
information about site-specific valuations. The lessons
learned from trial efforts, whether successes or failures,
need to be shared widely across the Agency with the
regions, program offices, and tool-builders in research
organizations. The Agency can catalog and share such
experiences in a number of ways, such as reports,
databases, or computer-based networks of users sharing
best practices. The Agency is in the best position to know
how to take advantage of the knowledge infrastructure
provided by existing information exchange systems.
Regardless of how it is done, information should be
shared broadly.
6.3.4 Summary of recommendations for
valuation for site-specific decisions
Incorporation of ecological valuation into decisions
about site remediation and redevelopment can help
maximize the ecosystem services provided in the
long run by such sites and the sites' contributions to
local well-being. To effectively value the protection
of ecological systems and services in this context, the
committee recommends that EPA:
It Provide regional offices with the staff and resources
needed to incorporate ecological valuation into the
remediation and redevelopment of contaminated sites.
® Determine the ecosystem services and values
important to the community and affected parties at
the beginning of the remediation and redevelopment
process.
® Involve the mix of interdisciplinary experts
appropriate for valuation at different sites.
It Construct conceptual models that include ecosystem
services.
It Adapt current ecological risk assessment practices
to include ecological production functions to predict
effects on relevant ecosystem services.
It Define ecosystem services carefully and develop a
standard approach for cataloging and accounting
for ecosystem services for site remediation and
redevelopment.
It Expand the variety of methods the Agency uses
to assess the value of services lost or gained from
current conditions or through proposed Agency
action.
® Communicate information about ecosystem
services in discussing options for remediation and
redevelopment of sites with the public and affected
parties.
It Create formal systems and processes to foster
information-sharing about ecological valuations at
different sites. *
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EPA's mission to protect human health and the
environment requires that the Agency understand and
protect ecosystems and the numerous and varied services
they provide. Ecosystems play a vital role in our lives,
providing such services as water purification, flood
protection, disease regulation, pollination, recreation,
aesthetic satisfaction, and the control of diseases, pests,
and climate. EPA's regulations, programs, and other
actions, as well as the decisions of other agencies with
which EPA partners, can affect ecosystem conditions
and the flow of ecosystem services at a local, regional,
national, or global scale. To date, however, policy
analyses have typically focused on only a limited set of
ecological factors.
Just as policy makers at EPA and elsewhere need
information about how their actions might affect
human health in order to make good decisions, they
also need information about how ecosystems contribute
to society's well-being and how contemplated actions
might affect those contributions. Such information
can also help inform the public about the need for
ecosystem protection, the extent to which specific policy
alternatives address that need, and the value of the
protection compared to the costs.
7.1 An expanded, integrated valuation
approach
The committee advises EPA to use an "expanded
and integrated approach" to ecological valuation. EPA's
valuations should be "expanded" by seeking to assess
and quantify a broader range of values than EPA has
historically addressed and through a larger suite of
valuation methods. The valuations should be "integrated"
by encouraging greater collaboration among a wide
range of disciplines, including ecologists, economists,
and other social scientists, at each step of the valuation
process.
The concept of value is complex. People may use
many different concepts of value when assessing the
protection of ecosystems and their services. Values, for
example, can reflect people's preferences for alternative
goods and services (as measured, for example, by
economic methods, attitude surveys, and decision-
science methods) or potential biophysical concerns (for
example, biodiversity or energy flows).
To date, EPA has primarily sought to measure
economic benefits, as required in many settings by
statute or executive order. In addition, the Agency's
valuation assessments have often focused on those
ecosystem services or components for which EPA
has concluded that it could relatively easily measure
economic benefits, rather than on those services or
components that may ultimately be most important
to society. Such a focus can diminish the relevance
and impact of a value assessment. The committee
therefore advises the Agency to identify the services and
components of likely importance to the public at an early
stage of a valuation and then to focus on characterizing,
measuring, and assessing the value of the responses of
those systems and components to EPA's actions. The
committee concludes that information based on some of
the other concepts of value may also be a useful input
into decisions affecting ecosystems, although members
of the committee hold different views regarding the
extent to which specific methods and concepts of
values should be used in particular policy contexts. The
methods discussed in this report are at different stages of
development and validation and are of varying potential
use depending on the policy context.
EPA should generally seek to measure the values
that people hold and would express if they were well
informed about the relevant ecological and human well-
being factors involved. The committee therefore advises
EPA to explicitly incorporate that information into the
valuation process when changes to ecosystems and
ecosystems services are involved. Valuation surveys, for
example, should provide relevant ecological information
to survey respondents, and valuation questions should
be framed in terms of services or changes that people
understand and can value. Likewise, deliberative
processes should convey relevant information to
participants. The committee also advises EPA to consider
public education efforts where gaps exist between public
knowledge and scientific understanding.
All steps in the valuation process, beginning with
problem formulation and continuing through the
characterization, representation, and measurement of
values, also require information and input from a wide
variety of disciplines. Instead of ecologists, economists,
and other social scientists working independently,
experts should collaborate throughout the process.
Ecological models need to provide usable inputs for
valuation, and valuation methods need to address
important ecological and biophysical effects.
Of course, EPA conducts ecological valuations within
a set of institutional, legal, and practical constraints.
These constraints include substantive directives,
procedural requirements relating to timing and
oversight, and resource limitations (both monetary and
personnel). For example, the preparation of regulatory
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impact analyses (RIAs) for proposed regulations
is subject to OMB oversight and approval. OMB's
Circular A-4 makes it clear that RIAs should include an
economic analysis of the benefits and costs of proposed
regulations conducted in accordance with the methods
and procedures of standard welfare economics. At the
same time, the circular recognizes that it might not be
possible to monetize all potentially important benefits. In
such cases, the circular instructs the Agency to quantify
and report effects in value-relevant biophysical units,
or, when quantification is not possible, describe the
effect and associated value qualitatively. Regional and
site-specific programs and decisions, which are not
subject to the same legal requirements as national rule
makings, can offer useful opportunities for testing and
implementing a broader suite of valuation methods.
The remainder of this chapter summarizes the
recommendations set out in the earlier chapters of
this report. Some of these recommendations can
be implemented in the short run, using the existing
knowledge base, while others require investments in
research and data or method development.
7.2 Early identification of how actions
may contribute to human welfare
As part of an expanded, integrated approach to
ecological valuation, EPA should identify early in the
valuation process the ecological responses that are
likely to be of greatest importance to people, using
information about ecological importance, human and
social consequences, and public concerns. EPA should
then focus its valuation efforts on those responses. This
will help expand the range of ecological responses that
EPA characterizes, quantifies, or values. To ensure early
identification of the ecological responses of most public
importance, EPA should:
It Begin each valuation by developing a conceptual
model of the relevant ecosystem and the ecosystem
services that it generates. This model should serve as
a road map to guide the valuation.
® Involve staff throughout EPA, as well as outside
experts in the biophysical and social sciences, in
constructing the conceptual model. EPA should also
seek information about relevant public concerns
and needs.
It Incorporate new information into the model, in an
iterative process, as the value assessment proceeds.
7.3 Prediction of ecological responses
in value-relevant terms
Another important aspect of an expanded, integrated
approach to ecological valuation is that the Agency
should predict ecological responses to governmental
actions in terms that are relevant to valuation.
Prediction of ecological responses is a key step in
valuation efforts. To predict responses in value-relevant
terms, EPA should focus on the effects of decisions on
ecosystem services or other ecological features that are
of most concern to people. This in turn will require the
Agency to go beyond predicting only the biophysical
effects of decisions and to map those effects to
responses in ecosystem services or components that the
public values.
Unfortunately, the science needed to do this has
been limited, presenting a barrier to effective valuation
of ecological systems and services. To better estimate
ecological responses in value-relevant terms in the
future, EPA should:
It Identify and develop measures of ecosystem services
that are relevant to and directly useful for valuation.
This will require increased interaction within EPA
between natural and social scientists. In identifying
and assessing the value of services, EPA should
describe them in terms that are meaningful and
understandable to the public.
It Where possible, use ecological production functions
to estimate how effects on the structure and function
of ecosystems, resulting from the actions of EPA
or partnering agencies, will affect the provision of
ecosystem services for which values can then be
estimated.
It Where complete ecological production functions do
not exist,
• Examine available ecological indicators that are
correlated with changes in ecosystem services
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to provide information about the effects of
governmental actions on those services.
• Use methods such as meta-analysis that can
provide general information about key ecological
relationships important in the valuation.
It Support all ecological valuations by ecological
models and data sufficient to understand and
estimate the likely ecological responses to the major
alternatives being considered by decision makers.
7.4 Valuation
Central to an expanded, integrated valuation
approach is the need to carefully characterize and, when
possible, quantify and value the responses in ecosystem
services or components. Three steps may be useful in
this regard. First, EPA should consider the appropriate
use of a broader suite of valuation methods than it has
historically employed. As summarized in Table 3 at
pages 42-43, the Committee looked at the possible use
of not only economic methods, but also such alternative
methods as measures of attitudes, preferences, and
intentions; civic valuation; decision science approaches;
ecosystem benefit indicators, biophysical ranking
methods; and cost as a proxy for value. An expanded
suite of valuation methods could allow EPA to better
capture the full range of contributions stemming from
ecosystem protection and the multiple sources of value
derived from ecosystems - although it is important to
recognize that different methods may measure different
things and thus not be directly additive or comparable.
Even when the Agency is required or chooses to base
its assessment on economic benefits, other valuation
methods may be useful in supporting, extending, and
improving the basis and rationale for Agency decisions.
In considering what methods to use in specific
contexts, EPA should keep in mind that many Agency
actions affect not only ecosystems and ecosystem
services but also other things that contribute to human
well-being - e.g., human health. In these cases,
valuation methods that focus solely on ecological
effects will necessarily provide an incomplete picture
of the consequences of EPA's actions, and the Agency
should ensure that it uses valuation methods that capture
information on the widest possible range of effects of
Agency actions.
To move toward the possible use of a broader suite of
valuation methods, EPA should:
VI Pilot and evaluate the use of alternative methods
where legally permissible and scientifically
appropriate.
VI Develop criteria to determine the suitability of
alternative methods for use in specific decision
contexts. Given differences in premises, goals,
concerns, and external constraints, appropriate uses
will vary among methods and contexts. As discussed,
different methods are also at different stages of
development and validation.
EPA also should more carefully evaluate the
appropriate use of value transfers. EPA should identify
relevant criteria for determining the appropriateness
of value transfers. These criteria should consider
similarities and differences in societal preferences
and the nature of the biophysical systems between
the study site and the policy site. Using these criteria,
EPA analysts and those providing oversight should
flag problematic transfers and clarify assumptions and
limitations of the study-site results.
7.5 Other cross-cutting issues
7.5.7 Deliberative processes
Deliberative processes, in which analysts, decision
makers, and/or members of the public meet in facilitated
interaction, can be potentially useful in several steps
of the valuation process. The committee particularly
recommends that EPA consider using carefully-
conducted deliberative processes to provide information
about what people care about - especially where the
public may not be fully informed about ecosystem
services. Where EPA uses deliberative processes, it
should provide the processes with the financial and staff
resources needed to adequately address and incorporate
relevant science and best practices.
7.5.2 Uncertainty
Because an understanding of the uncertainties
underlying all aspects of ecological valuation will
enable more informed policy making, the committee
recommends that EPA more fully characterize and
communicate uncertainty. In this regard, EPA should
VI Go beyond simple sensitivity analysis in assessing
uncertainty, and make greater use of approaches, such
as Monte Carlo analysis, that provide more useful
and appropriate characterizations of uncertainty in
complex contexts such as ecological valuation.
VI Provide information to decision makers and the
public about the level of uncertainty involved in
ecological valuation efforts. EPA should not relegate
uncertainty analyses to appendices but should
ensure that a summary of uncertainty is given as
much prominence as the valuation estimate itself,
with careful attention to how recipients are likely
to understand the uncertainties. EPA should also
explain qualitatively any limitations in the uncertainty
analysis.
While EPA should improve its characterization
and reporting of uncertainty, the mere existence of
uncertainty should not be an excuse for delaying actions
where the benefits of immediate action outweigh the
value of attempting to further reduce the uncertainty.
Some uncertainty will always exist.
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7.5.3 Communication of valuation information
The success of ecological valuations also depends
on how EPA communicates ecological valuation
information to decision makers and the public. To
promote effective communications, the committee
recommends that EPA design communications that are
responsive to the needs of the users of the valuation
information and follow basic guidelines for risk and
technical communications. EPA's Risk Characterization
Handbook provides one set of useful guidelines,
including transparency, clarity, consistency, and
reasonableness. To the extent feasible, EPA should
communicate not only value information but also
information about the nature, status, and changes to the
ecological systems and services.
7.6 Context-specific recommendations
The use of an expanded, integrated approach can
improve ecological valuation in multiple settings.
Valuation of ecological systems and services, for
example, is critical in national rule makings, where
executive orders often require cost-benefit analyses
and several statutes require weighing of economic
benefits and costs. Regional EPA offices can find
valuation important in setting program priorities and
in assisting other governmental and non-governmental
organizations in choosing among environmental options
and communicating the importance of their actions to
the public. Finally, ecological valuation can help EPA to
enhance the cleanup of hazardous waste sites and make
other site-specific decisions.
7.6.7 National rule making
Applying an expanded and integrated valuation
approach to national rule making will entail some
challenges but offers important opportunities for
improvement as well. EPA can implement some, but
not all, of the committee's recommendations using the
existing knowledge base. The committee also recognizes
that EPA must conduct valuations for national rule
making in compliance with statutory and executive
mandates. In the short run, EPA can take several actions
to improve valuations for national rule making:
VI EPA should develop a conceptual model at the
beginning of each valuation, as discussed above,
to serve as a guide or road map. To ensure that
the model captures the ecological properties and
services that are potentially important to people,
EPA should incorporate input both from relevant
science and about public preferences and concerns.
EPA can identify public concerns through a variety
of methods, drawing on either existing knowledge or
interactive processes designed to elicit public input.
VI The Agency should address site-specific variability
in the impact of a rule by producing case
studies for important ecosystem types and then
aggregating across the studies where information is
available about the joint distribution of ecosystem
characteristics and human populations affected
by them.
It EPA should not compromise the quality of its
valuations by inappropriately applying value
transfers. Where the values of ecosystem services
are primarily local, the Agency can rely on scientifi-
cally-sound value transfers using prior valuations at
the local level. However, for services valued more
broadly, EPA should draw from studies with broad
geographical coverage (in terms of both the changes
that are valued and the population whose values
are assessed).
VI EPA should pilot and evaluate the use of a broader
suite of valuation methods to support and improve
RIAs. Although OMB Circular A-4 requires RIAs
to monetize benefits to the extent possible using
economic valuation methods, other methods could be
useful in the following ways:
• Helping to identify early in the process the
ecosystem services that are likely to be of concern
to the public and that should therefore be the focus
of the benefit-cost analysis
• Addressing the requirement in Circular A-4 to
provide quantitative or qualitative information
about the possible magnitude of benefits (and
costs) when they cannot be monetized using
economic valuation
• Providing supplemental information outside the
formal benefit-cost analysis about sources and
concepts of value that might be of interest to EPA
and the public but not fully reflected in economic
benefits.
VI To ensure that RIAs do not inappropriately focus
only on impacts that have been monetized, EPA
should also report on other ecological impacts in
appropriate units where possible, as required by
Circular A-4. The Agency should label aggregate
monetized economic benefits as "total economic
benefits that can be monetized," not as "total
benefits."
VI EPA should include a separate chapter on uncertainty
characterization in each RIA or value assessment.
7.6.2 Regional partnerships
The committee sees great potential in undertaking a
comprehensive and systematic approach to estimating the
value of protecting ecosystems and services at a regional
scale, in part because of the effectiveness with which
EPA regional offices can partner with other agencies and
state and local governments. Regional-scale analyses hold
great potential to inform decision makers and the public
about the value of protecting ecosystems and services, but
this potential is at present largely unrealized. The general
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recommendations of this report provide a guide for
regional valuations. Regional valuations are a particularly
appropriate setting in which to test alternative valuation
methods because there are generally fewer legal or
regulatory restrictions on what methods can be used.
In addition to recommending that regional offices adopt
the general recommendations of this report in conducting
ecological valuations, the committee advises EPA to:
H Encourage its regions to engage in valuation efforts to
support decision making both by the regions and by
partnering governmental agencies.
It Provide adequate resources to EPA regional staff
to develop the expertise needed to undertake
comprehensive and systematic studies of the value of
protecting ecosystems and services.
H Ensure that regions can learn from valuation efforts
by other regions. EPA regional offices should
document valuation efforts and share them with
other regional offices, EPA's National Center for
Environmental Economics, and EPA's Office of
Research and Development.
7.6.3. Site-specific decisions
Incorporation of ecological valuation into local
decisions about the remediation and redevelopment
of contaminated sites can help enhance the ecosystem
services provided by such sites in the long run and thus
the sites' contributions to local well-being. The general
recommendations of the report again provide a useful
guide for such site-specific valuations. The committee
also advises the Agency to:
® Provide regional offices with the staff and resources
needed to effectively incorporate ecological
valuation into the remediation and redevelopment of
contaminated sites.
H Determine the ecosystem services and values
important to the community and affected parties
at the beginning of the remediation and
redevelopment process.
It Adapt current ecological risk assessment practices
to incorporate ecological production functions and
predict the effects of remediation and redevelopment
options on ecosystem services.
® Communicate information about ecosystem
services in discussing options for remediation and
redevelopment with the public and affected parties.
It Create formal systems and processes to foster
information-sharing about ecological valuations at
different sites.
7.7 Recommendations for research and
data sharing
EPA should use its research programs to provide the
ecological information needed for valuation, develop
and test valuation methods, and share data. As an over-
arching recommendation, the report advises EPA to more
closely coordinate its research programs on the valuation
of ecosystem services and to develop links with other
governmental agencies and organizations engaged in
valuation and valuation research. It advises, at a more
general level, fostering greater interaction between
natural scientists and social scientists in identifying
relevant ecosystem services and developing and im-
plementing processes for measuring and estimating
their value. Although the committee has identified those
research areas that it believes are important in advancing
EPA's ability to conduct valuations of ecological systems
and services, the committee has not attempted to rank
or prioritize among all of its research recommendations.
EPA should develop a research strategy, building on the
recommendations in this report, that identifies "low-
hanging fruit" and prioritizes studies that are likely
to have the largest payoff in both advancing valuation
methods and providing valuation information of
importance to EPA in its work.
To develop EPA's ability to determine and quantify
ecological responses to governmental decisions, the
Agency should:
It Support the development of quantitative ecosystem
models and baseline data on ecological stressors
and ecosystem service flows that can support
valuation efforts at the local, regional, national, and
global levels.
H Promote efforts to collect data that can be used to
parameterize ecological models for site-specific
analysis and case studies or that can be transferred or
scaled to other contexts.
It Carefully plan and actively pursue research to
develop and generate ecological production functions
for valuation, including Office of Research and
Development and STAR research on ecological
services and support for modeling and methods
development. The committee believes that this is a
research area of high priority.
8 Given the complexity of developing and using
complete ecological production functions, continue
and accelerate research to develop key indicators
for use in ecological valuation. Such indicators
should meet ecological and social science criteria for
effectively simplifying and synthesizing underlying
complexity and link to an effective monitoring and
reporting program.
To develop EPA's capabilities for estimating the value
of ecological responses to governmental decisions, EPA
should:
It Support new studies and the development of new
methodologies that will enhance the future use of
ecological value transfers, particularly at the national
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level. Such research should include national surveys
related to ecosystem services with broad (rather than
localized) implications so that value estimates might
be usable in multiple rule-making contexts.
It Invest in research designed to reduce uncertainties
associated with ecological valuation through data
collection, improvements in measurement, theory
building, and theory validation.
It Incorporate the research needs of regional offices for
systematic valuation studies in future calls by EPA for
extramural ecological valuation research proposals.
To access and share information to enhance the
Agency's capabilities for ecological valuation,
EPA should:
® Work with other federal agencies and scientific
organizations such as the National Science
Foundation to encourage the sharing of ecological
data and the development of more consistent
ecological measures that are useful for valuation
purposes. A number of governmental organizations,
such as the United States Department of Agriculture
and the Fish & Wildlife Service, are working on
biophysical modeling and valuation, and EPA could
usefully partner with them.
' Support efforts to develop Web-based databases of
existing valuation studies that could be used in value
transfers. The databases should include valuation
studies across a range of ecosystems and ecosystem
services. The databases should also carefully describe
the characteristics and assumptions of each study,
in order to increase the likelihood that those studies
most comparable to new valuations can be identified
for use.
' Support the development of national-level databases
of information useful in the development of new
valuation studies. Such information should include
data on the joint distribution of ecosystem and
human population characteristics that are important
determinants of the value of ecosystem services.
' Develop processes and information resources so
that EPA staff in one region or office of the Agency
can learn effectively from valuation efforts being
undertaken elsewhere within the Agency. »t
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Appendix A: Web-accessible materials
on ecological valuation developed by or
for the C-VPESS
The SAB Web site provides three sets of materials
that supplement this report:
1. More detailed information on methods potentially
useful for ecological valuation, as described in
chapter 4 of this report.
2. A discussion of survey issues relevant to ecological
valuation, including current best practices and
recommendations for research
3. A summary of an SAB 2005 workshop on "Science
for valuation of EPA's ecological protection decisions
and programs."
These materials do not represent the consensus
views of the committee, nor have they been reviewed
and approved by the chartered Science Advisory Board.
They are provided to extend the discussion of methods
in chapter 4 of the main report and to encourage
further deliberation within EPA and the broader
scientific community about how to meet the need for
an integrated and expanded approach for valuing the
protection of ecological systems and services.
Methods potentially useful for
ecological valuation
The SAB Web site provides descriptions of methods
and approaches prepared by members of the C-VPESS
as resources for the committee and others interested
in ecological valuation (http://yosemite.epa.gov/sab/
sabproduct.nsf/WebBOARD/C-VPESS_Web_Methods_
Draft?OpenDocument). Methods are described with
specific reference to how they might be used by the EPA
for valuing the protection of ecological systems and
services within the valuation approach recommended by
the committee. Some of the methods have already been
used extensively in EPA policy and decision making.
Some appear never or only rarely to have been used by
the Agency, but are widely used by other agencies. Some
are less proven in policy making contexts and should be
considered experimental. All of the methods described have
both conceptual and practical strengths and limitations.
The descriptions of these methods and approaches
and of their utility for ecological valuation at EPA do
not represent the consensus views of the committee, nor
have they been reviewed and approved by the chartered
Science Advisory Board. They are offered to extend
and elaborate the very brief descriptions provided in
chapter 4 of the main report and to encourage further
deliberation within EPA and the broader scientific
community about how to meet the need for an integrated
and expanded approach for valuing the protection of
ecological systems and services.
The descriptions provide suggestions for further
reading, potential applications of the methods, and future
research opportunities. The descriptions of specific
methods and approaches are supplemented by a separate
Web-accessible discussion (http://yosemite.epa.gov/Sab/
Sabproduct.nsf/WebFiles/SurveyMethods/$File/Survey_
methods.pdf) of the use of survey techniques employed in
some valuation methods.
Members of the C-VPESS do agree that EPA should
carefully characterize and, when possible, quantify and
value the responses in ecosystem services or components.
They agree that a wider range of valuation methods
can play a potential role throughout the expanded and
integrated valuation process the committee envisions.
An expanded suite of valuation methods could allow
EPA to better capture the full range of contributions
stemming from ecosystem protection and the multiple
types of value derived from ecosystems. At the same
time, it is important to recognize that different methods
may measure different values and thus not be additive or
comparable. Even when the Agency is required or chooses
to base its valuation assessment on economic values,
however, use of additional methods may be useful in
supporting, improving, or extending the valuation.
The descriptions of methods and approaches
generally include the following kinds of information:
® Brief description of the method
H Status of the method
It Conceptual and practical strengths and limitations
It Treatment of uncertainty
It Research needs
It Key references
Methods and approaches described include:
It Measures of attitudes, preferences, and intentions
• Surveys of attitudes, preferences, and intentions
• Focus groups
• Individual narratives
* Mental model approaches
• Emerging methods
® Economic methods
• Market-based methods
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• Non-market methods - revealed preference
* Travel cost
* Hedonics
* Averting behavior models
• Non-market methods - stated preference
• Combining revealed and stated preference methods
It Civic valuation
• Referenda and initiatives
• Citizen valuation juries
® Decision science methods
It Ecosystem benefit indicators
® Biophysical ranking methods
• Conservation value method
• Rankings based on energy and material flows
® Methods using cost as a proxy for value
• Replacement costs
• Tradable permits
• Habitat equivalency analysis
® Deliberative processes
• Mediated modeling
• Constructed value approaches
Survey issues for ecological valuation:
Current best practices and recommendations
for research
This document provides an introduction for EPA
staff to questions posed to the C-VPESS pertaining
to survey use for ecological valuation. It gives an
overview of how recent research and evolving practice
relating to those questions might assist the Agency.
The document provides a definition of survey research,
discusses survey design, identifies elements of a
well-designed survey, addresses assessment of survey
accuracy, and discusses challenges in using surveys for
ecosystem protection valuation. The document can be
found at the SAB Web site at: http://yosemite.epa.gov/
Sab/Sabproduct.nsf/WebFiles/SurveyMethods/$File/
S urvey_methods .pdf.
Science Advisory Board workshop summary:
Science for valuation ofEPA's ecological
protection decisions and programs. Summary
of workshop held December 13-14, 2005,
Washington, DC
This document summarizes a public workshop held
on December 13-14, 2005, in Washington, D.C., on
"Science for valuation of EPA's ecological protection
decisions and programs." The purpose of the workshop
was to discuss the initial work of the SAB's C-VPESS;
to provide an opportunity for members of the SAB, the
Advisory Council on Clean Air Compliance Analysis,
and Clean Air Scientific Advisory Committee to learn
from each others' work relating to ecological valuation;
and to feature feedback and insights from Agency
clients and outside subject matter experts. The agenda
included presentations and discussions with advisory
committee members, Agency personnel, and invited
speakers.. The workshop summary can be found on
the SAB Web site at: http://yosemite.epa.gov/Sab/
Sabproduct.nsf/WebFiles/EcoWorkshop/$File/sab_
wksp_summary_ 12_13 -14_05 .pdf.
Appendix B: Table of acronyms
AMD
BTF
CAPO
CERCLA
C-VPESS
EVRI
FPD
GEAE
GDP
GIS
GPRA
Acid mine drainage
Benefit transfer
Concentrated animal feeding operation
Comprehensive Environmental Response,
Compensation, and Liability Act
Committee on Valuing the Protection of
Ecological Systems and Services
Environmental Valuation Reference
Inventory
Forest Preserve District
Generic ecological assessment endpoints
Gross domestic product
Geographic Information System
Government Performance and Results Act
HEA
LTER
NCEE
NEBA
NPL
NRC
NRDA
NSF
OMB
RIA
STAR
VOC
Habitat equivalency analysis
Long-term Ecological Research
National Center for Environmental
Economics
Net Environmental Benefit Assessment
National Priorities List
National Research Council
Natural Resource Damage Assessments
National Science Foundation
Office of Management and Budget
Regulatory Impact Analysis
Science to Achieve Results
Volatile organic compound
-------
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1. Laws include: the Clean Air Act, Clean Water Act,
Comprehensive Environmental Response, Compensation,
and Liability Act, Federal Insecticide, Fungicide and
Rodenticide Act, Toxic Substances Control Act, and
Resource Conservation and Recovery Act.
2. Although C-VPESS was initiated by the SAB, senior
EPA managers supported the concept of this SAB project
and participated in the initial background workshop that
launched the work of the C-VPESS.
3. The SAB Staff Office published a Federal Register notice
on March 7, 2003, (68 FR 11082-11084) announcing the
project and calling for the public to nominate experts in
the following areas: decision science, ecology, economics,
engineering, law, philosophy, political science, and
psychology with emphasis in ecosystem protection. The
SAB Staff Office published a memorandum on August 11,
2003, documenting the steps involved in forming the new
committee and finalizing its membership.
4. The committee developed the conclusions in this report after
multiple public meetings, teleconferences and workshops
including: (a) an Initial Background Workshop on October
27, 2003, to learn the range of EPA's needs for science-based
information on valuing the protection of ecological systems
and services from managers of EPA Headquarters and
Regional Offices; (b) a Workshop on Different Approaches
and Methods for Valuing the Protection of Ecological
Systems and Services, held on April 13-14, 2004; (c) an
advisory meeting focused on support documents for national
rule makings held on June 14-15, 2004; (d) an advisory
meeting focused on regional science needs, in EPA's Region
9 (San Francisco) Office on Sept. 13, 14, and 15, 2004; (e)
advisory meetings held on January 25-26, 2005, and April
12-13, 2005, to review EPA's draft Ecological Benefits
Assessment Strategic Plan; and (f) a Workshop on Science
for Valuation of EPA's Ecological Protection Decisions and
Programs, held on December 13-14, 2005, to discuss the
integrated and expanded approach described in this paper.
The committee also discussed text drafted for this report at
public meetings on October 25, 2005; May 9, 2006; October
5-6, 2006, and May 1-2, 2007, and on ten subsequent public
teleconferences.
5. The committee also notes a report published shortly before
this report was finalized (United Kingdom Department for
Environment, Food and Rural Affairs, 2007).
6. Likewise, this definition would not include goods or
services such as recreation that are produced by combining
ecological inputs or outputs with conventional inputs (such
as labor, capital, or time). In addition, Boyd and Banzhaf
(2006) advocate defining changes in ecosystem services in
terms of standardized units or quantities, which requires
that they be measurable in practice. Such an approach is
consistent with the concept of "green accounting," which
extends the principles embodied in measuring marketed
products to the measurement and consideration of the
production, or changes in the stock, of ecological or other
environmental "products" (Nordaus and Kokkelenberg,
1999).
7. Even the term "values" itself means very different things
within different disciplines. For example, economists
associate values with changes, while other disciplines
associate values with beliefs or mental structures that
influence behavior or provide a "moral compass." For
discussions of the concepts of value used within different
disciplines, see Dietz et al., 2005; Fischoff, 1991, 2005;
and Hitlin and Piliavin, 2004.
8. There is controversy over the meaning of intrinsic value
(Korsgaard, 1996). Many people take intrinsic value to
mean that the value of something is inherent in that thing.
Some philosophers have argued that value or goodness is
a simple non-natural property of things (see Moore, 1903
for the classical statement of this position), and others have
argued that value or goodness is not a simple property of
things but one that supervenes on the natural properties to
which we appeal to explain a thing's goodness. This view
is defended by, among others, contemporary moral realists;
see McDowell (1985), Sturgeon (1985), Sayre-McCord
(1988), and Brink (1989).
9. Although table 1 lists concepts of value considered by
the committee, these value concepts are not mutually
exclusive. For example, values expressing attitudes or
judgments can be based on the same utilitarian goals
as those underlying economic values or on the same
considerations that underlie civic values. Likewise,
constructed preferences can relate to self-interested
attitudes or judgments (as economic values do) as well as
expressed civic values.
10. Some members of the committee argued that in a broader
definition, "economic" should refer to all methods of
assessing tradeoffs and contributions to human well-being,
not just those based on willingness to pay or willingness to
accept. However, in this report, "economic values" include
only values reflecting preference-based tradeoffs.
11. Monetized measures of economic output form the basis
of national income accounts. While historically these
have included only marketed outputs (such as agriculture
and manufacturing), in principle the contributions of
ecosystems and other natural assets to national income
or aggregate output could be defined. A number of
researchers have examined efforts to expand the national
accounts to include these types of contributions (Nordhaus
and Kokkelenberg, 1999). In the context of national
income accounts, "value" is typically defined in terms
of the dollar value of output, computed using prices and
quantities. However, given the committee's focus on
valuing changes resulting from EPA decisions or actions,
this report defines economic values in terms of tradeoffs,
consistent with standard welfare economics.
12. See, for example, Seidl (2002) for a survey of the preference
reversal literature.
13. Environmental values are often defined in terms of a set of
guiding principles, concepts or beliefs that guide decisions
and evaluations. For a recent survey on environmental
values, see Dietz et al. (2005).
14. Under GPRA, the Office of Management and Budget
requires EPA to periodically identify its strategic goals and
describe both the social costs and budget costs associated
with them. EPA's strategic plan for 2003-2008 described the
current social costs and willingness-to-pay or willingness-
to-accept analyses of EPA's programs and policies under
each strategic goal area for the year 2002 (EPA, 2003).
-------
This analysis repeatedly points out that EPA lacks data and
methods to quantify willingness-to-pay or willingness-
to-accept associated with the goals in its strategic plan. In
addition, GPRA established requirements for assessing the
effectiveness of federal programs, including the outcomes of
programs intended to protect ecological resources. EPA must
report annually on its progress in meeting program objectives
linked to strategic plan goals and must engage periodically
in an in-depth review [through the Program Assessment
Rating Tool (PART)] of selected programs to identify their
net contributions to human welfare and to evaluate their
effectiveness in delivering meaningful, ambitious program
outcomes. Characterizing ecological contributions to human
welfare associated with EPA programs is a necessary part of
the program assessment process.
15. These interviews were conducted by one committee
member, Dr. James Boyd, in conjunction with the
Designated Federal Officer Dr. Angela Nugent, over the
period September 22, 2004, through November 23, 2005.
In seven sets of interviews, Dr. Boyd spoke with staff from
the Office of Policy, Economics and Innovation, Office of
Water, Office of Air and Radiation, and the Office of Solid
Waste and Emergency Response.
16. NCEE is typically brought in by the program offices to
help both design and review RIAs. NCEE can be thought
to provide a centralized "screening" function for rules
and analysis before they go to OMB. NCEE is actively
involved in discussions with OMB as rules and supporting
analysis are developed and advanced.
17. In addition, Circular A-4 states (p. 27) "If monetization
is impossible, explain why and present all available
quantitative information" and "If you are not able to
quantify the effects, you should present any relevant
quantitative information along with a description of the
unquantified effects, such as ecological gains, improvements
in quality of life, and aesthetic beauty" (p. 26).
18. The committee reviewed and critically evaluated the CAFO
Environmental and Economic Benefits Analysis at its June
15, 2004, meeting. As stated in the Background Document
for SAB Committee on Valuing the Protection of Ecological
Systems and Services for its session on June 15, 2004, the
purpose of this exercise was "to provide a vehicle to help
the Committee identify approaches, methods, and data for
characterizing the full suite of ecological values' affected by
key types of Agency actions and appropriate assumptions
regarding those approaches, methods, and data for these
types of decisions." The committee based its review on
EPA's final benefits report (EPA, 2002b) and a briefing
provided by the EPA Office of Water staff.
19. In December 2000, EPA proposed a new CAFO rule
under the federal Clean Water Act to replace 25-year-old
technology requirements and permit regulations (66 PR
2959). EPA published its final rule in December 2003
(68 FR 7176). The new CAFO regulations, which cover
over 15,000 large CAFO operations, reduce manure and
wastewater pollutants from feedlots and land applications
of manure and remove exemptions for stormwater-only
discharges.
20. The potential "use" benefits included in-stream uses
(commercial fisheries, navigation, recreation, subsistence,
and human health risk), near-stream uses (non-contact
recreation, such as camping, and nonconsumptive, such as
wildlife viewing), off-stream consumptive uses (drinking
water, agricultural/irrigation uses, and industrial/commercial
uses), aesthetic value (for people residing, working, or
traveling near water), and the option value of future services.
The potential "non-use" values included ecological values
(reduced mortality/morbidity of certain species, improved
reproductive success, increased diversity, and improved
habitat/sustainability), bequest values, and existence values.
21. These benefits were recreational use and non-use of
affected waterways, protection of drinking water wells,
protection of animal water supplies, avoidance of public
water treatment, improved shellfish harvest, improved
recreational fishing in estuaries, and reduced fish kills.
22. These include reduced eutrophication of estuaries; reduced
pathogen contamination of drinking water supplies;
reduced human and ecological risks from hormones,
antibiotics, metals, and salts; improved soil properties from
reduced over-application of manure; and "other benefits".
23. EPA apparently conducted no new economic valuation
studies (although a limited amount of new ecological
research was conducted) and did not consider the possible
benefits of developing new information where important
benefits could not be valued in monetary terms based on
existing data.
24. For example, while the report notes the potential effects
of discharging hormones and other Pharmaceuticals
commonly used in CAFOs into drinking water sources
and aquatic ecosystems, the nature and possible ecological
significance of these effects is not adequately developed
or presented. Similarly, the report does not adequately
address the well-known consequences of discharging
trihalomethane precursors into drinking-water sources.
25. EPA used estimates based on a variety of public surveys
in its benefit transfer efforts, including: a national survey
(1983) that determined individuals' willingness to pay for
changes in surface water quality relating to water-based
recreational activities (section 4 of the CAFO Report); a
series of surveys (1992, 1995, 1997) of willingness to pay
for reduced/avoided nitrate (or unspecified) contamination
of drinking water supplies (section 7); and several studies
(1988, 1995) of recreational fishers' values (travel cost,
random utility model) for improved/protected fishing
success related to nitrate pollution levels in a North
Carolina estuary (section 9).
26. Although EPA later prepared more detailed conceptual
models of the CAFO rule's impact on various ecological
systems and services, EPA did not prepare these models
until after the Agency finished its analysis.
27. Contamination of estuaries, for example, might negatively
affect fisheries in the estuary (a primary effect) but might
have an even greater impact on offshore fisheries that have
their nurseries in the estuary (a secondary effect).
28. The goal of EPA's analysis was a national-level
assessment of the effects of the CAFO rule. This
involved the effects of approximately 15,000 individual
facilities, each contributing pollutants across local
watersheds into local and regional aquatic ecosystems.
A few intensive case studies were mentioned in
the report and used to calibrate the national scale
models (e.g., NWPCAM, GLEAMS), but there was
no indication that these more intensive data sets were
strategically selected or used systematically for formal
sensitivity tests or validations of the national-scale
model results.
29. This could include either a robust public involvement process
following Administrative Procedures Act requirements (e.g.,
publication in the Federal Register), or some other public
involvement process (see EPA's public involvement policy
[EPA Office of Policy, Economics and Innovation, 2003] and
the SAB report on science and stakeholder involvement [EPA
Science Advisory Board, 2001]).
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30. In theory, one can value a final product either directly
(output valuation) or indirectly as the sum of the derived
value of the inputs (input valuation), but not both, because
separately valuing both intermediate and final products
leads to double counting. In some cases, it may be easier
or more appropriate to value the intermediate service,
while in other cases the change in the final product can be
directly valued.
31. Indicators therefore provide information on the direction
and possible magnitude of the impact or response of an
ecosystem to a stressor, rather than on merely the stressor
itself.
32. Note that these essential ecosystem characteristics are very
similar to the seven ecological indicators in EPA's report on
assessing ecological systems (EPA Science Advisory Board
2002b): landscape condition, biotic condition, chemical and
physical characteristics, ecological processes, hydrology and
geomorphology and natural disturbance regimes.
33. The NSF has recently emphasized engaging social
sciences in LTER, increasing the potential usefulness of
LTER in building EPA's capacity for ecological valuations.
Although most LTERs are in pristine areas, two urban sites
and an agricultural site could be of special value to the
Agency.
34. These supplemental materials were compiled by the
committee as background information, but they do not
necessarily represent the consensus views of the committee,
nor have they been reviewed and approved by the chartered
Science Advisory Board (see appendix A for more detail).
35. The U.S. federal government is one of the largest
producers of survey data, which form the basis of many
government policy making decisions (see the table on page
120.).
36. This comparison of causal beliefs with formal decision
models entails three steps. First is the construction of
an expert decision model, generally through systematic,
formal decision analysis involving scientists and other
topical experts, individually or in groups. Following this is
the analysis of semi-structured interviews with individuals
from the population of interest, and comparison of these
to the decision model. Third is the design and fielding of a
survey to test the reliability of findings from the interviews
in a representative sample of the population of interest or
the public at large. The interviews and surveys employ
mixed methods, and assess both how decision makers
intuitively structure and conceptualize their environmental
mitigation decisions, as well as how they react to
structured stimuli and questions (Morgan et al., 2002).
37. The discussion here deals with indicators that are based on
a narrowly-defined objective. More generally, a number
of "sustainability indicators" have been developed, which
aggregate measures reflecting a variety of factors deemed
relevant to this broad goal. See Parris and Kates (2003) for
a discussion of sustainability indicators and the challenges
that arise in their use.
38. Both embodied energy analysis and ecological footprint
analysis use a consistent set of accounting principles
based on input-output analysis to compute these costs.
An alternative biophysical method, emergy, on the other
hand, also seeks to measure the energy cost of producing
a good or service, but it does not follow these principles,
and hence, does not generally satisfy basic adding-up
properties. Rather, it focuses on converting inputs of
varying quality to a common energy metric - usually solar
energy equivalents - so that they can be combined into a
cost estimate measured in those units.
39. People using models may sometimes find that the implications
of their models are surprising and unacceptable to them. For
example, Slovic et al. (1982) found that people preferred a
convex function (their general model) to express the value of
varying numbers of lives lost, yet made choices in violation
of this abstract model. They had not realized that the abstract
model implied choices that were unacceptable to them. In the
view of Slovic and others, modeling needs to be interactive
and mixed with examples of the model's specific implications.
40. While stakeholder processes are sometimes used as a
decision mechanism per se, the C-VPESS considered
them only as a way of providing informed input from
the public into valuation processes. A 2001 SAB report
assessed stakeholder processes involving environmental
science and concluded that they are appropriate as a
decision making mechanism per se in only a modest
subset of environmental regulatory decisions under select
conditions, if at all (SAB, 2001).
41. Valuations also require a variety of other predictions,
including predicting the anthropogenic response to EPA
actions or decisions. Valuations sometimes ignore the need
for such predictions. For example, many valuations assume
that the regulated community will comply fully with
regulations and not adjust other behavior in response to
the regulation. In many cases, this assumption is incorrect.
Where valuations do incorporate additional predictions,
however, they again are subject to uncertainty.
42. For a more detailed discussion of the sources and possible
typologies of uncertainty, see Krupnick, Morgenstern et al.
(2006).
43. Depending on the context, explicit reporting of
uncertainties may be perceived as indicating dishonesty
or incompetence (Johnson, 2003; Johnson and Slovic,
1995, 1998) and are sometimes treated in public policy
discussions as indicating junk science (e.g., Freudenberg
et al., 2008). Despite these perceptions, it is important
to convey that uncertainties are inherent in all science
and that good science acknowledges the remaining
uncertainties. Experts communicating uncertainty to policy
makers or the public should beware of unintended effects
and design and test their communications accordingly.
44. The discussion of value in the National Research Council
report (2001) and SAB review of the EPA's Draft Report
on the Environment (EPA SAB, 2005) and related
literature (e.g., Failing and Gregory, 2003) tends to focus
more on qualitative rather than quantitative expressions.
However, issues of scale and aggregation are important.
Both the NRC report (2001) and the SAB review of the
EPA's Draft Report on the Environment (EPA SAB, 2005)
emphasize the importance of using regional and local
indicators. Over-aggregating information can obscure
critical ecological threats or problems. In general, allowing
sensitivity analysis on disaggregated data is desirable if the
data are aggregated at a regional or higher level. So while
some authors recommend simple summary indicators (e.g.,
Schiller et al., 2001; Failing and Gregory, 2003), others
emphasize disaggregating indicators (EPA SAB, 2003).
45. For more information, see the analysis of survey
techniques available on the SAB Web site at http://
yosemite.epa.gov/sab/sabproduct. nsf/WebBOARD/C-
VPESS_Web_Methods_Draft?OpenDocument.
46. This analysis evaluated the benefits and costs of amendments
to the Clean Air Act passed by Congress in 1990. Its effort to
evaluate the ecological benefits of these amendments raises
many of the same issues that arise in evaluating the benefits
of national rules. The prospective analyses compare the
sequence of increasingly stringent rules called for under the
-------
1990 Clean Air Act Amendments with a situation where the
rules were held constant at their 1990 levels (e.g., with the
regulatory regime prior to the amendments).
47. The one exception is the national survey on water quality
conducted in the 1980s by Carson and Mitchell (1993),
but this survey is not appropriate for use by the Agency in
valuing ecosystem services, for reasons discussed later in
section 6.1.2 and in endnote 49.
48. Random utility models are a form of discrete choice model
in which each individual's choice of a recreation activity to
take part in or recreation site to visit is assumed to depend
on the characteristics of the available activities or sites as
well as the individual's socio-economic characteristics and
variables reflecting preferences. The estimated parameters
of the model can be used to calculate the values revealed
by the choices made. For more information, see the section
on travel cost models available on the SAB Web site at
http://yosemite.epa.gov/Sab/Sabproduct.nsfAVebFiles/
Non-MarketRevealedPref/$File/Nonmarket-revealed-
pref-03-09-09.pdf.
49. A more recent national survey regarding willingness to pay
for water quality improvements was conducted in 2004
(see Viscusi et al., In press). This research was funded by
EPA and used a nationally-representative web-based panel
of over 4000 respondents from the Knowledge Network.
Participants in the survey were asked questions designed
to reveal their willingness to pay to increase the percentage
of water in their region that was rated "good" according to
the EPA's National Water Quality Inventory ratings. EPA's
rating scale is based primarily, albeit not exclusively, on
end uses relating to swimming and fishing. Carson and
Mitchell (1993) used the water quality ladder to describe
Examples of federal surveys (see endnote 35)
Continuously Funded Surveys
Survey of Income and Program Participation
Consumer Expenditure Surveys
Survey of Consumer Attitudes and Behavior
Health and Nutrition Examination Surveys
National Health Interview Survey
American National Election Studies
Panel Study of Income Dynamics
General Social Survey
National Longitudinal Survey
Behavioral Risk Factor Surveillance System
Monitoring the Future
Continuing Survey of Food Intake by Individuals
National Aviation Operations Monitoring System
National Survey of Drinking and Driving
National Survey of Family Growth
National Survey of Fishing, Hunting, and Wildlife-
Associated Recreation
National Survey of Child and Adolescent Well-Being
Survey of Earned Doctorates
National Survey on Drug Use and Health
Youth Risk Behavior Surveillance System
National Crime Victimization Survey
Schools and Staffing Survey
Educational Longitudinal Survey
Current Employment Statistics Survey
Other Major Federally-Funded Surveys
National Survey of Distracted and Drowsy Driving
National Survey of Veterans
National Survey of Children's Health
National Survey of Recent College Graduates
National Survey of Speeding and Other Unsafe Driving
Actions
Agency Sponsor
Census Bureau
Census Bureau
National Science Foundation
National Center for Health Statistics
National Science Foundation
National Science Foundation
National Science Foundation
National Science Foundation
Bureau of Labor Statistics
Centers for Disease Control and Prevention
National Institute of Drug Abuse
Department of Agriculture
National Aeronautics and Space Administration
National Highway Traffic Safety Administration
National Center for Health Statistics
Census Bureau
Department of Health and Human Services
National Science Foundation
Department of Health and Human Services
Department of Health and Human Services
Bureau of Justice Statistics
National Center for Educational Statistics
National Center for Educational Statistics
Bureau of Labor Statistics
Years
1984-present
1968-present
1953-present
1959-present
1970-present
1948-present
1968-present
1972-present
1964-present
1984-present
1975-present
1985-present
2002-present
1991 -present
1973-present
1991 -present
1997-present
1958-present
1971 -present
1990-present
1973-present
1987-present
2002-present
1939-present
Agency Sponsor
National Highway Traffic Safety Administration
Department of Veteran Affairs
Health Resources and Services Administration's Maternal and
Child Health Bureau
National Science Foundation
Department of Transportation
-------
with a quantitative scale changes in water quality. The
scale was defined as an index with associated activities that
related primarily to recreational uses. Viscusi et al. provide
a definition of ratings of water quality as good based on
standards used by EPA and the states. No scale is used to
quantitatively link the rating to a measure of water quality
conditions. Their description includes recreation and other
services supported by "good" conditions, but there is not
an explicit link to specific ecosystem services or to specific
water bodies. In addition, the water bodies are described
using geographical designations - national versus regional
water bodies. Thus, the study does not clearly link values
to specific changes in ecosystem services.
50. See the table below that lists major Chicago Wilderness
reports and a its chronology of valuation efforts.
51. In one 1996 poll, only two out of ten Americans had
heard of the term "biological diversity." Yet when the
concept was explained, 87% indicated that "maintaining
biodiversity was important to them" (Belden and
Russonello, 1996, as cited in the Chicago Wilderness
Biodiversity Recovery Plan, p. 117).
Major Chicago Wilderness reports and chronology of valuation effort (see endnote 50)
Decision/document
Biodiversity Recovery Plan
1999 (Award from APA in 2001 for best
plan)
Chicago Wilderness Green Infrastructure Vision
Final report, March 2004
Green Infrastructure Mapping
2002
A Strategic Plan for the Chicago Wilderness Consortium
17 March 2005
Chicago Wilderness Regional Monitoring Workshop final report by Geoffrey Levin
February 2005
Center for Neighborhood Technology (CNT) - green infrastructure valuation calculator
Copyright 2004-2007
-------
Key to photos
Front cover
Chapter 1
Glacial ecosystems
provide wilderness
tourism and eco-tourism
opportunities (p.31), a
large percentage of the
world's available fresh
water, and habitat for
sea life.
Chapter 2
Ecosystems supporting
bees play a vital role in
human life, such as food
plant pollination (p. 8).
Horses rely on grasslands
for forage, an ecosystem
service (p. 8).
There is an increasing
recognition of the impact
of land conversions that
lead to loss of wetlands
and biodiversity (p. 8).
Chapter 3
Global warming has
impact on arctic species
and poses a growing
threat for biodiversity
(p. 8).
Some authors call
for a common list of
ecosystem services.
Such a list might include
wilderness as a land
cover type (p. 34).
Recreational fishing is
an ecosystem service
(p. 69).
Chapter 4
Lakes provide ecosystem
services, such as
recreation, as well as less
well recognized services,
such nutrient-cycling
supporting aquatic
species (p, 30).
Carbon sequestration
has been studied as
an ecosystem service.
Agricultural systems
contain carbon in soil,
roots, and above-ground
biomass (p. 31).
Wetlands provide
regulating services such
as flood protection, water
purification, air quality
maintenance, and climate
control (p. 82).
Chapter 5
Scientists are defining
ecological production
functions for certain
ecosystem services, such
as pollination (p.31).
Agricultural ecosystems
provide food, fiber,
forage, and fuel, essential
services for human life
(p. 8).
When ecological
changes leads to a small
change in commercial
fishing harvests, the
market price of fish can
be used as a measure of
willingness to pay for
that marginal change
(p. 46).
Social-psychological
approaches have been
used to study human
perception of visual air
quality (p. 44).
Native plants, such
as wildflowers, are
reservoirs of genes
that may be useful for
ecosystem survival.
Conservation value
methods study impacts
on biodiversity (p. 50).
Invertebrate fauna in
wetlands provide food
for waterfowl and help
with water treatment,
biological control, and
erosion control, indirect
services often not
generally recognized or
understood (p. 8).
Scientists, the public, and
decision makers have
engaged in deliberative
processes to assess the
value of protecting forest
resources (p. 55).
Changes in leaf area
are one of many factors
related to complex
ecological effects. Any
study of current or past
ecological conditions
will have numerous
interrelated uncertainties
(p. 59).
Chapter 6
Chapter 7
For national rule making,
EPA can use research at
local and regional scales
(such as watersheds) to
support national-scale
analyses (p.20).
Economists have used
hedonic, travel cost,
and stated preference
analyses to study
recreational values of
environmental amenities
Another approach
examines referenda
voting to infer values
for open space and other
environmental amenities
(p. 45-48).
Analyses for site
restoration should
identify directly
experienced, measurable,
and spatially and
temporally explicit
ecosystem services, such
as viewing bald eagles
and other species (p. 94).
Supporting services
maintain basic ecosystem
processes and functions
such as providing habitat
for wolves (p. 12).
Provisioning services
provide products such
as food, fuel, fiber,
biochemicals, genetic
resources, and fresh
water (p. 12).
Besides formal
benefit-cost analysis,
EPA should provide
information about
important types of value
that may not be fully
reflected in economic
values, such as the value
of wilderness (p. 23).
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Photos by Eric Vance and other photographers, U.S. EPA, courtesy of U.S. EPA.
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United States
Environmental Protection
Agency
Science Advisory Board
U.S. Environmental Protection Agency
Mailcode 1400F
1200 Pennsylvania Avenue, NW
Washington, DC 20460
http://www.epa.gov/sab
EPA-SAB-09-012
May 2009
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