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Integrating Ecosystem Services into Public and Private Sector Decision Making


December 3, 2013


This month's seminar features a discussion on how ecosystem services can be factored into a variety of public and private sector decisions in ways that support environmental, social and economic goals. Human well-being and nature are inextricably linked. Yet policies and practices related to human development and ecosystem protection are too often developed separately or even viewed as in opposition. By considering nature in terms of ecosystem services, decision makers can see and value the environment as a series of assets or benefits that humans in fact depend upon.


Janet Ranganathan, Vice President, Science and Research, World Resources Institute


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World Resource Institute Olivia Ferriter: Good afternoon, and welcome. My name is Olivia Ferriter. I'm the Deputy Director of the Office of Policy Analysis, Department of the Interior. Welcome to our seminar series. Today we have a great speaker, one that was going to be with us during October when we actually had our government shutdown, so we were really pleased that we were able to reschedule her for today. Janet Ranganathan is the Vice President for Science and Research at World Resources Institute. She takes a key role in planning quality control, and the evaluation of WRI's research and publications. She's also worked on their efforts to reverse ecosystem degradation. She also developed WRI's US climate policy initiative. Many of us have known Janet over the years through the community of practice on ecosystem services. We really regard her as a thought leader in this arena. Today she is going to talk with us about something that's very timely for the Department of the Interior, as we have a lot of efforts that are underway right now in consideration of ecosystem services. She's going to be talking with us about integrating ecosystem services into public and private sector decision making. She'll give her talk and then we'll have some time for questions. Thank you. Janet Ranganathan: Thanks very much Olivia. It's my pleasure to be here today and to talk to you. Thanks to all those that are joining by phone or by the webinar. Yes, I was actually supposed to talk during the shutdown. I was thinking, "Well, no one's ever gone to that extent to avoid a presentation from me". Janet: I'm kind of relieved I actually got re invited again. I've worked at WRI for almost 20 years. I've worked across the spectrum of programs that they have. I think it's fair to say that I know about most of it. I'm not necessarily a master of all of it. If there's one topic I have a passion about, it's this one. I'll talk a little bit more about why. The World Resources Institute...our mission there...you'll see that's it very focused at the intersection of environment and development. 80 percent of our work is outside the United States, and you'll see that reflected in my presentation today. I will join a lot of international examples. But for an organization whose mission transcends environment and human well being, I don't think there is a better concept than ecosystem services. But to cut it the bridge between the environment and human well being. Introducing ecosystem services into policy planning or decision making can change the conversation from one about, "How do I invest in the protection of nature from development, to how to invest in nature for development." That's a very powerful argument in this world where we are hurtling towards 9.6 billion by 2050. Nature and development...they cannot be pitted against each other. We need to sign ways to integrate both of those objectives. A brief, overview of my presentation. I'm going to give you a little introduction to ecosystem services. We'll dwell on that. Then I'll give several examples of how ecosystem services have been integrated into decisions. I'll back up then a little bit and talk about some of the common barriers that we've identified at the world resource institute that makes that challenging sometimes. I'll then turn to a little information and talk about some of the practical tools that we've developed in WRI to help decision makers, business, governments and others to integrate those services. Lastly, I'll postulate on what I think in the future may be big opportunities to do more around ecosystem services. Where ecosystem services can truly add value to a very existing priorities that are in play. Just briefly talking about ecosystem services. I'll talk about the three categories of ecosystem services, that the Millennium ecosystem assessment...They both coined these categories. But they also conducted a global assessment of them back in 2005. They looked at three categories of ecosystem services. Provisioning, these are the sort of the goods that nature provided us...familiar ones, fresh water, food, timber. They typically have a value in the marketplace and they often factor into decision making. But it's also the regulating ecosystem services, usually the benefits that nature provides through the control of natural processes that benefit us. Such as pollination, storm water protection...you see the wetlands there. And air and water, and climate regulations as well. Thirdly, cultural. The non tangible aesthetic benefits. Janet: I hate to say that's actually from mine. Janet: Can you turn it off for me? Sorry about that. I'm embarrassed. What do we know about the condition of those three categories of ecosystem services? Here you see provision, regulate and cultural services, and do you see which ones were degraded? 15 out of 24 of the ecosystem services assessed were degraded, a lot of them in the regulating category, but there are also some in the provisioning one. These are the ones that had mixed results. By mixed results, it means they'd increased in some part of the world, and decreased in others. Overall, it was a little mixed. Lastly, the few services...only four had actually been enhanced. Note that three of those are actually, interestingly, services that have a value in the marketplace. Often our interventions in ecosystems are about optimizing or maximizing those services with value in the marketplace, but sometimes at the expense of these other services. The concept of trade offs and thinking about the bundle of ecosystem services that ecosystems provide is a kind of key decision making tool. I have an example up here. In Maryland, we're quite fond of breeding chickens to get eggs. But chickens require a lot of corn, so we devote a lot of land to corn production. Corn production requires fertilizers, and fertilizers create nutrient run off, which trickles down eventually into the Chesapeake Bay and creates dead zones. There's an implicit trade off here. We're producing more eggs, but there are actually some negative impacts on the ecosystem services of the Chesapeake Bay. The question is...let me give you another example here. This is, you'll see there, actually a picture of Brazil. That's the forest frontier, soy bean on the left of the first picture, and primary forest there. We convert primary forest into producing soy beans. There is clearly some benefits there, but there is also a loss of the wealth of ecosystem services that a forest provides. Water regulation, pollination services, climate regulation. The question is, when we make these interventions, do we ask ourselves who wins, and who loses? In our experience, often the poor...if you actually did the social assessment...are the poor more likely to be the losers in these ecosystem services trade offs. Ecosystem services trade offs are also often separated in space. The Chesapeake Bay one. We have eggs here, and we've got a dying bay down here in a different part. Climate regulation...we destroy forests...climate impacts may be in the future, although they're increasingly in today as well. Those are the story of trade offs, to sort of keep that in mind as we go through this presentation. This leads to a key question. If we're managing ecosystems globally in a way that optimizes some services, but actually the increase in those services might not be sustainable over time, how do we do a better job of integrating the full range of services that humans benefit from in any decision? I'm going to now just turn to a few examples, maybe six or seven examples of how we have integrated ecosystem services into decisions. The first one is an example from the US. A lot of you may know this famous New York story. In the '80s, the New York City's water quality was deteriorating, and they had a filtration waiver because of the natural water purification services provided by their watershed. Because of development, road building, wetland draining, the quality of that service started to deteriorate, and so did the quality of the water in New York City. This famous case of, they were going to build a man made filtration plant for about $6 billion, and instead someone had this wonderful idea that no, let's invest in the restoration and maintenance of the Catskill/Delaware Watershed. That's what they did. To that day, they depend on that watershed for the water in New York. I heard that the reason why pizza and bagel tastes so good in New York is because they have such good water. The question then is, well, that was great. It isn't so worn off. Why hasn't that been repeated? Why hasn't it been replicated many times over? One of my colleagues, Todd Gutner, has been working on this issue. He did an interesting exercise using...no that was from the USGS as it happens. We actually identified in the northeast, a number of cities with at least 10,000 populations that were dependent on an upstream watershed, had a filtration waiver for their water. Where the watershed was not so for gone that it was a basket case, but still had the potential to be maintained but was actually suffering pressure from development. They identified a number of places and one of these was Portland, Maine, where they did some analysis. They showed that their watershed was under pressure from development and so they looked at what the cost would be because their filtration waiver was under threat to actually invest in a green infrastructure, a watershed restoration project, versus the gray infrastructure. One of the lessons we immediately found is, unless you can actually communicate the benefits in a sort of standardized way and in this case, standardized in terms of how engineers do evaluation for making a gray infrastructure decision. It's difficult to sort of make this case and so they did. They actually put these numbers in the analysis and they looked at a number of different scenarios but even under the worst case scenario, there was at least a 71 percent savings there between the green infrastructure investment and the gray. Now, gray infrastructure investments, they actually depreciate over time, whereas, green infrastructure investments tend to appreciate over time and provide higher quality and more benefits. Green infrastructure investments also tend to come with co benefits, whereas the gray infrastructure often comes with co costs. Let's move to the next slide just so it'll give you some example of what is this green infrastructure investment. What do they look like? You see on this slide, is actually a number of interventions, reforestation, being one of them, creating wide buffers, conservation easements, cover upgrades, more sustainable management of forests. We talk about some of the interventions that sort of lead to that water quality purification service. Moving on to another example. This is from Belize. Belize, if any of you do dive tourism, you may visit Belize. It has a fairly pristine coral reef. It's a very poor country but it has very pristine coral reef. We started working with them about seven years ago. They actually had a number of marine protected, but they were marine protected areas on the books. They weren't there in practice, so we're actually working with a number of local partners there, said, "Let's see if we can actually raise the profile of the importance of this reef to the Belize economy." Working with partners there, universities and local NGOs, we actually quantified the value of just three of the services from coral reefs. The first one was tourism and recreation and you could see the results there. We gave ranges between high and low, but that tourism and recreation amount, it might seem small to our economy here in the US, but that represented about 12 and one half percent of the Belize GDP. We looked at fisheries. We also looked at shoreline protection and that was even higher. That represented around about 20 percent of the GDP. Just those two services, tourism and recreation and shoreline protection, represented almost a third the chunk of GDP of that country. We had the results. We had a sort of gala. We invited the prime minister. They media were there. We had an impact with this. With the mainstream decision makers, making policy in that country, it had an impact. They enforced some new fish regulations there, about take zones. They imprinted a number of other measures to turn that marine protected area into something that was more real. Then, in the January that followed the launch that we did there, we did it in the fall. It just so happened in January of that year, the following year, I think it was on New Year's Day, there was a cargo ship close to Belize. I don't know if they're having a party or what, but the captain put that cargo ship on auto pilot and it cruised right into these beautiful reefs. That wasn't the first time that such an instant had happened in Belize, but it was the first time that there's a real outcry about this. Using some of the evaluation results and adapting those, they actually claimed damages against the shipping company. Though that claim was the first of its kind, went all the way up to the Supreme Court in Belize and ended in a six million dollar settlement, so an interesting example of some of the results of evaluation there. This third example is actually from BC Hydro. BC Hydro is a hydro electric power company in British Columbia in Canada. You will see one of its dams there on the Camel River. Now, BC Hydro actually shares that river with other users of the ecosystem services provided by that river, the First Nations, the cultural and aesthetic values that they use Oceans and Fisheries Canada for fishing, recreation, water provision. In the 90's, I think it's fair to say that BC Hydro was at loggerheads with many of those other users of the river. BC Hydro could be in compliance with one of requirements of those users and be out of compliance with the other. How did it manage these issues? It was just not the bunch popular guy. The instigation of the British Columbia province, they launched an integrated water planning system. With the help of some outside consultants, they actually developed a scenario based modeling exercise, where they basically modeled two variables of how you operate the dam, so the height and the volume of water and the flow rate. Based on those two variables and this model, they were able to look at a number of scenarios about how you change those two variables, what the impact was on the various ecosystem services that the other users enjoy. They brought the other stakeholders to the table with a very participatory planning system. After they've gone through a number of these scenarios, it just so happened they settled on the model T scenario. Maybe it wasn't optimized for any of the service users, but it was something that all the stakeholders agreed that they could live with and that actually became the integrated plan for the dam for the next eight or nine years. I think it's been updated and they had a monitoring system to make sure that the services flowed as they expected with the model. An interesting example there and it's been applied in other places there. The next interesting example is from Allegheny Energy another energy company here in the US, and I actually don't think this one's been replicated but I'll talk about it anyway because it's quite interesting. Allegheny Energy was sitting on a 4,800 hectare piece of relatively pristine land in the Canaan Valley in West Virginia and they actually wanted to divest that, and so they had a sort of conventional appraisal of this piece of land. It came in at about 16 million, a traditional asset valuation. They were a little disappointed with the valuation. They felt that it was, you know, that they'd managed it well. It was pretty pristine it should be worth more. They actually contacted someone at the Electric Power Research Institute to do a non conventional eco asset appraisal, Jethro Fox actually. Looking at it from the perspective of the value of ecosystems and ecosystem services that valuation soared from 16 million to 33 million. As it happened they actually eventually decided to sell the land to the US Fish and Wildlife because they wanted this tract to add to an existing wildlife refuge. They sold it to them for the original price, the traditional asset of 16 million, but actually under the US Tax Code a bargain sales provision, they actually claimed a charitable contribution for the difference between the 16 and the 33, the 17 million as a sort of tax credit. At a recent presentation someone challenged me and said I think that was overturned and I actually followed up and I was told, no that it had actually stuck so it's an interesting example there. The next example comes from comparing the economic benefits of mangroves and aquaculture in Thailand. In the last two decades we've lost an astonishing 30 percent of mangroves globally, for me that's like 20 years you can lose 35 percent that's just astonishing. What's behind that, why are we losing so many mangroves? If you took satellite images, I don't have then here to show you, if you took them of Latin America and Southeast Asia you'd find all these little tiny squares that had replaced the mangroves and they're actually aquaculture. Just looking at the economics from a landowner of mangroves it makes complete sense here. The economic value per hectare of land for just mangroves is about $823 per hectare per year. If he converts that to shrimp farm he makes a whopping $8,340. That's what's driving the conversion of mangroves globally. It's the same in Latin America. However if you actually include some of other ecosystem services that mangroves provide, they provide a spawning ground that supports offshore fisheries. Like wetlands they also provide storm protection service which are increasingly becoming important as we face more extreme weather conditions. They provide carbon sequestration. They provide other sort of non marketed goods. Including that in there and subtracting some of the subsidies that aquaculture enjoys gives mangroves a significant advantage over shrimp farms, even without taking into account the restoration costs of mangroves, sorry of aquacultures. Until recently the typical life of aquaculture was about five to seven years after which time the fish yield starts to fall off, because of all the chemicals and antibiotics that they're adding, and then they're basically abandoned and they find another pool. Even without those restoration costs in from a societal perspective mangroves are the better bet, but that's not what's driving decisions, so how do we change policies on this? The next example is a little bit overwhelming but I'm going to give some credit to the UK here, they've actually took an attempt, a prototype attempt, at creating a set national accounts for the health of their ecosystems. You see different ecosystems along the top and then you see the three types of services I talked about earlier, provisioning, the cultural and the regulating, and the darkness of the color, you can't read that, but the darkness of the color tells you the importance of that. Under mountains there you might see a dark color for wild species diversity, so dark means that that habitat, or ecosystem, is important for providing that service. Then the little arrows in the circles tell you the direction of the trend, so since 1980 has that service been increasing or decreasing? It's an interesting attempt to develop a sort of natural capital accounts here. I think the saying here, Stiglitz says, "What we measure affects what we do", and if our measurements are flawed or they're missing key things they just don't get managed and they don't get distorted, I mean it's almost the story of the mangrove one that I just gave you. What are some of the barriers and strategies that we found at WRI to integrate ecosystem services into decisions. We've sort of brought it down to three things. Firstly there's a sort of weak case for making the link between healthy ecosystems and human wellbeing. The second one is that there's often insufficient incentives, so it may not pay, just like it might not have paid for the owner of those mangroves to manage their land for the range of ecosystem services that society depends upon. Also those that degrade ecosystem services often don't pay the consequences, that's often talked about in the trade off, that trade offs are often separated in space and in time so it makes it difficult to attribute accountability here. The third one and I think this may be a particular issue for the US government, is the fragmentation of authority. The management of ecosystems and their services is often managed across a whole slew of agencies that don't necessarily have the mandate to work together. Often the government agencies I find mirror the academic silos, so you know fish, biology, agriculture, forestry, fisheries then you have the same agencies and in fact you often have the same policies, I mean their policies often line up with those. You have a Clean Water Act and you have an Agriculture Bill, for me food is water. I mean these two things are sort of separated. Developing a more integrated approach to the management of ecosystems is quite a challenge in a country like this that has very mature regulations and policies and agencies that often mirror the silos of the scientific disciplines. When we go to Kenya or Rwanda or other countries where it's not quite so mature it's often easier to work with them on this ecosystem service approach. Underneath here, I won't go into too many details, we talk about some of the strategies for dealing with those, about dealing with the weak case, putting in place the incentives and dealing with the fragmentation of authorities. Go back to the examples I just talked about. What I'm trying to do here is talk about, the green infrastructure one in Portland, Maine very much about making the case, putting the numbers in a standard format that your standard engineer and economist is familiar with. Advancing policies and markets through payments for ecosystem services in that particular case, sort of matching those. Integrated planning one, very much about managing the trade offs through stakeholder integrated resource planning. Talk a little bit now about the practical guidance that we've developed to help with these decisions, this is one of our first guides that we developed that was targeted at business. We actually pilot tested it before releasing it with about eight different corporations. We know it's being used by at least 300 corporations now to conduct ecosystems services assessment, and it provides a tool for looking at both the business risk and equally as important the business opportunities of more effectively managing ecosystem services either in their own operations or in their supply chain, or upstream. This one was a guide that we developed that was focused on the public sector. It follows sort of the same approach as the business one. This is a more recent one that provides guidance, basically six steps on how to integrate ecosystem services into social and environmental impact assessments. This one here was some of the lessons learned from doing coastal economic valuations and to save you from reading it, I'll say that actually assumptions and precision and methodology were less important than transparency around those assumptions and conservatism in the estimates that were developed. This is the most recent one actually that builds one nine case studies in the US including the Portland, Maine one to talk about how to integrate, how to use natural infrastructure as a way to providing water purification services in the United States. It also looks at it in combination with engineered solutions too. All of these are freely available on WRI's website. Turn to the last section which is about thinking forward about promising opportunities to scale up the integration of ecosystem services into decision making. I've identified a few but I'd also like to hear from others during the question time. The first one, and perhaps the most significant issue, is addressing the food security issue. Ironically the food sector, agriculture is the most significant factor globally in the degradation in ecosystem services. It also happens to be the sector that is most dependent on often the same ecosystem services in which it degrades, whether it's water filtration, pollination, climate regulation all of those services. How do we tackle this issue of food security over the long term by both increasing yield but in a way that's sustainable, that doesn't undermine the capacity of ecosystems to continue to support that production? Climate change I know this is an important one, I spoke with Olivia earlier, for you guys in thinking about it for the assets of the Department of the Interior. But I think an ecosystems service approach can bring a very systematic approach to thinking about the risks, and perhaps the opportunities in some cases, associated with climate change, because climate change the rubber hits the road when it impact ecosystems and it alters both the timing, the quality, the quantity of the flow of the services. How do we use this in doing those assessments? Natural wealth accounting, I touched on that earlier with the UK example. It's inconceivable to me that a country would have a set of national accounts where they would deforest their forests, they'd cut down their forests, they'd pollute their waters, they'd drain their wetlands and all of those things would show up as positive in the national accounts. It defies reason to me particularly as we move into this area of resource scarcity. We've got to do a better job of that. The World Bank is actually working with eight different countries, none of them developed unfortunately, to actually do a better job of integrating natural assets into the national economic accounts. Green infrastructure investments, we talked about that, but it isn't just about water there's a whole slew of other green infrastructure investments. Instead of building seawalls and levies we can capitalize on the natural protection services of wetlands and mangroves and coral reefs. We can build roof gardens to actually reduce the need for storm water protection downstream, there's a whole slew of potential opportunities here especially as we think about climate adaptation to this map which is showing some of the cities in the United States that already investing in reforestation and forest management to avoid the water service downstream. This was an interesting turn in 2010 when the IFC Reform revised its performance standards which apply to all this. I think it's something like 130 billion investments in supporting private sector development in developing countries. They incorporated in the performance times six requirement for the project investments to actually assess the dependency and impact on ecosystem services. More importantly is that there are over 80 equator banks which represent about 70 percent of global project finance that actually use the same performance standard. We're going to start to see more ecosystem services assessments done in project financing. Ecosystem restoration, perhaps one of my most favorite opportunities, we've lost something like...If you actually map the extent of forest globally before human influence and you map where they are now. We've lost about 47 percent of forest since that time. Some of that land was being put to agriculture use. Some is being developed on for human settlements. But a large part of it is sitting there degraded globally. We've estimated and we've mapped this WRI. We actually spent at least two billion hectares of land. It's the size bigger than South America almost, Brazil, that have some form of restoration potential there. Again, in restoring that land and it's becoming more of a political issue in many countries now. They develop targets around this. How do you sort of restore that land? It's about bringing the ecosystem services back, often the regulating ecosystem services in order to sort of bring back the provisioning services. In Indonesia, we're talking to Indonesian government. Right now, a lot of the economic development in Indonesia is driven by palm oil. It can flourish to create pal oil plantations and yet there is at least 30 million hectares of degraded land in Indonesia. How do you create the policies to put in place to drive palm oil development onto the degraded lands instead of the pristine forest? This is being done before. I put the example here of South Korea. After the South Korean war, they invested heavily in restoring their forest which is all deep about 35 percent of their original cover. It's now backed up to about 70 percent, South Korea in 2000. Similarly in Costa Rica, they went down to about 40 percent of forest cover in 1980s. They're backed up to about 50 percent today and increasing. I'd love to take the act of forestry but I'm out of time. If I have some time and minute and when I'm on the questions, I might mention that. But sort of last it to end on the post 2015 development agenda. In 2000, the world's leaders agreed to set millennium development goals. They're there on the left hand side. Those goals now, some would mean successful, but they're going to be revisited in this discussion now around the creation of a second global sustainable development goals that this time will actually integrate environment. It's just one of those. It was number seven. It's one that we probably done being least successful in, but in going forward to the sustainable development goals in which environment is integrated across the board. This is going to be a very interesting source of international financing because the millennium development goals did a very good job at focusing development aid on these goals. We can actually focus development aid in the next 20 years in sort of the human needs while bringing this ecosystem services perspective, that will be good. I'm going to just end on one last thought. Imagine for a moment that the earth is a business. Planet earth has been in this integrated global conglomerate. It provides goods and services with people all over the world. This has been on business such a long time and has such huge capital assets that until recently in the wake of a number of business scandals, no one would actually thought to go and take a look doing order in these assets. Long comes a millennium ecosystem assessment and they conduct an order of the assets of this business. What they find is quite disturbing. Globally, 15 out of 24 business divisions are in the red, five have mixed results, and only four profitable. The qualified order to the opinion on this business is that this got complete absence of internal controls. Capital accounts are un depreciated and undervalued and depleted for short term gain. There's an extensive use of off balance sheet assets and liabilities. Business units are pitied against each other, that's the trade off. There are no efficient transfer prices, complete under investment in RND and no long term plan, and the CEO is missing in action. I'll just leave you with that last thought. Thank you very much. Olivia: Thank you, Janet. That was very thought provoking. We're going to start with some questions in the room and then we'll go to some questions on the phone. Anybody, comments? Rob? Rob Winter: Rob Winter of Bureau of Land Management. Thanks very much for an excellent presentation. I wonder if you can take a couple of minutes given what I presume is primarily our governmental audience and talk a little bit more about the guidance or the advice that you've given during the public sector integrating ecosystem services into public sector decisions. Janet: Yes, the guidance that we've developed. Rob: Or any suggestions along the requirements. Janet: I think the key is to find the right entry point for bringing the ecosystem services approach to bear. I've given a number of examples here. If you just show up at the government door in this country and say, "We've got this ecosystem services approach, would you like it?" It just didn't work. It didn't take off. In fact, our ecosystem services work at WRI. We've refrained that. We now talk about it in relation to sort of food, water, and increase in labor. I think you could also say the same for climate adaptation. Thinking about what are the existing sort of political priorities that are in play whether it's food security, water security, energy security, climate adaptation and then talk about how an ecosystem serves approach can help you achieve those objectives more effectively. Looking at ecosystem services, this is really important too. I don't think I made this point in the presentation. It's really important. Ecosystem services have this two way street. We often think about how does this development or agriculture bill or whatever impacts the ecosystems. What the ecosystem service approach does besides is it also turns and arises. Our policy of judges also depends on the supply of the ecosystem services bringing that of two way street to it, so the work that we've done with corporations and with being more successful for sure engaging corporation on this than government. It's about the opportunities emerged in that dependency and how they can actually increase the flow of ecosystem service and maybe create new markets around them in some cases. With government so, it's not how do you sort of coordinate across the agencies, how do you get them back on board. I went to Missouri River presentation and I heard the Fish and Wildlife come up and talk and the army co of engineer and the US department, they had all different objectives with that river and the restoration of it. How we coordinate with some also because what Fish and Wildlife might do, the river is really wide. The birds can land and skim. The army co of engineers says, "We want it really deep, so we got navigation there." How do we put in place these coordinating mechanisms to sort of manage those tradeoffs much like in a BC Hydro example? I guess my advice is yes, think about of how you integrate this into existing policy objectives into existing policies as well. I don't think you necessarily need to quit a whole slew of policies. There's a way to integrate ecosystem services and I actually have some examples up there into already existing policies. Olivia: We'll take one more in the room and then we'll go to the phone. Dan Vinavich: Thank you. Dan Vinavich of the Policy Office. Just kind of little point that you're making about Belize, you mentioned that the ricks provided shoreline protection and I thought you said that it contributes one third of the country's GDP. How is that possible? Janet: It's a small island nation much the development is sort of costal. It's hit by sitting there in the Caribbean. Much of the infrastructure is potentially at risk from damage. I can send you the...Actually, give me your little card at the end and I'll send you the details of the evaluation of how they actually qualified those impacts. Dan: That's an amazing percent. Janet: Interestingly, on the mangrove in Thailand, the shoreline protection came up as the most...I didn't show the breakdown but same thing that the shoreline protection service was the most significant valued ecosystem services. Audience Member: I think what they're doing is counting the value of infrastructure. Janet: Yes, exactly avoided cost. Audience Member: My question is very similarly based to theirs which was how were you actually calculating those costs because it seems like that's a huge driver and a lot of these decisions. I'm just wondering how if there's a typical process you use to calculate that? Janet: I would refer you to the detail with the specific study. I wasn't the economist involved in that but I think it was replacement cost on that. On the Portland, Maine example, it's a very different kind of evaluation method there. I guess I should also say it's fair to say that my colleagues would characterize me as a skeptic about putting a dollar value on ecosystem. I often say a lot of the work we've done in corporations on the integrating ecosystem, it's their decision. Never put a dollar value on those. One of the reasons I'm kind of skeptic, skeptical somewhat, is because we get into this whole discussion around the argument over is it X or X plus Y. I feel that that's kind of important for one thing to happen. It's a distraction. In fact, the reason right now is zero. We can talk about whether is X or X plus Y. Sometimes you don't even need to do that to know that it's important, just understanding that there's a dependence of this downtown city for water on this watershed of pier that that's sufficient. Of course, when you get into deciding on how are we going to do that, probably build a membrane filter then you need to sort of put the numbers on it for it to be an accepted methodology to be compared on likelihood like. Olivia: We take another question from the room and folks on the phone, if you have questions let us know. Audience Member: Hi Janet, thanks for a great presentation. I saw that one of the business divisions that ecosystem assess were noted as enhanced was carbon sequestration. I'm curious about the methodology there too. Is that because there's so much CO2 out there at sequester that processes smoke any longer and we actually enhancing our ability to sequester carbon. It's counterintuitive. The millennium ecosystem is absolutely enhanced... Janet: Because they looked at flows and not stocks, so that's why. If they'd looked at stocks, it would be a very different matter. Olivia: Do we have any on the phone, Christian? Did you have a question? Audience Member: Thank you for the very intriguing presentation. I was wondering if there was another opportunity, a lot of communities in the US there's an interest in urban farming as a way to maybe take pressure off of other lands as being developed for massive farm. I was wondering if WRI has six floored tradeoffs in those kinds of situations often which our decisions made at the local government level. Janet: The question is about the role of urban farming and dealing with the food challenge? Audience Member: Food challenge, water supply, all of those related services so that we become more self sufficient and less dependent on this massive... Janet: To be fair, I've not looked at the potential contribution of urban farming. Last night in South Africa, we launched a big report on how to address the food gap between now and 2050. There's a 69 percent increase in production of calories from 2010 to 2050 just based on the business issue. We have a 69 percent shortfall. We developed their menu of solutions with dealing with this food security gap. Each of those solutions has to do...they have to pull off the closure of that gap while using more sustainably, well not contributing more greenhouse gas emissions from agriculture about third globally right now, global greenhouse gas emissions. We're all providing raw livelihoods. We got climate change going on. Urban farming wasn't there. I think it's going to be maybe usual in some places in there, maybe a lot of co benefits of it. I don't think it's going to do much for the most part to fill that huge gap. We're going to do things like between fuel and fork, 27 percent of calories are wasting globally. Even in just cutting that in half, we do see that 69 percent shortfall by about 20 percent. There are many other sort of solutions that will get you to scale. I'm not sure that's going to sort of deal with this huge challenge we got ahead but I think there are a lot of good reasons to why we want to that. It's good to be out and they grown things. I actually have my allotment here and I do it as well but I don't think it's going to put then. I don't think so in the huge challenge we've got on feeding the world's population particularly as more and more people adopt in China, India and Brazil, the Western die, it's going to kill us and our environment. Olivia: We have a question on the phone. Audience Member: Here's a question from the Internet. Are you planning to help others individual US States improve their ecosystem? Janet: Sorry could you speak up a bit? Audience Member: Are you planning to help other US States improve their ecosystems? Janet: WRI has a project on green infrastructure for water that we're working with, with pilot testing that approach that we showed you with Portland, Maine for nine other cities. That's more or less the extent of our work on ecosystem services. There are many other groups in the US working on this. Interestingly, I looked at the mission statements...what I showed you for WRI mission statement, our mission statement for the last 30 years. If you look at the mission statement of the conservation international TNC, they've changed it recently to very much reflect more of the sustainable development vision. I think there you're going to see more and more of this, the traditional conservation NGOs, doing this kind of work in the US. Olivia: Do we have any more from the...none yet? Any other questions in the room? Ben: Hi. Ben of Associate's Office, just a quick terminological question. I'm a lawyer, not an economist but during your presentation which I thought was great, I kept on thinking about the terms I've learned in college, internalizing externalities, is that what this is all about? You're just not using the jargon because people don't know what that means or is there a distinction between what you're talking about in that economic concept? Janet: I think that's a very fair conclusion. We're just recently involved in a dialogue that the Rockefeller Foundation organized on how to integrate ecosystem services. My colleague who'd not work on ecosystem service at all, she was asked to convene and organize this. She's spent ages reading all this stuff and that was a conclusion that she came to, that this is all about externalities. I said, "I hadn't thought about it like that because I always think of externalities as bad things." In this case, it's the opposite. Often, these externalities of ecosystem services that don't have a value in the market place. There are good thing, so it's about internalizing those benefits because if they are not in the decision making process, the get traded off. Ben: It's just not about avoiding the bad stuff but also exploring the good stuff. Janet: Exactly. Yes, it's good externalities. But because there are external decision making and they don't get factored in until they're gone or it's too late. Olivia: We'll take another question from the Internet. Audience Member: How is corruption accounted for in the cost benefit tables of ecosystem services in developing countries? Janet: Where's my economist friend, Ben? I think that the issue of corruption is a huge problem. I have to sort say though that I came to this interesting conclusion one night when I was thinking in bed that actually those countries, I won't name them because it might not be good in the government office to that, that have the most corrupt and cronies governments, actually have the most preserved ecosystems in their countries. I'm thinking of Central Africa where I worked specific. They're sitting on some of the most pristine ecosystems left on this planet because they're corrupt and crony. Instead of investing their country's money into infrastructure and improving people's lives and building roads and opening up those ecosystems, they scourge the money away in offshore accounts. The ecosystem is there and now actually...There's this sort of irony here. The question now is how do we help those countries develop in ways that leave off the interest of that nature assets and not follow the pathway of the West which liquidize those in order to move to sort of manufacturing source. Can I have someone to help me with this question? Audience Member: is not corruption but lack of development. Janet: But the lack of development is... Audience Member: ...is due to corruption. Janet: Correct. Dealing with corruption, I'm a big fan of some light is the best disinfectant, so transparency and accountability. That's why it's good that the World Bank flew its WAVES initiative for accounting ecosystem services. It's just creating more transparency about just what's happening, what we're doing to stew those. Tom Buzan: I'm Tom Buzan with Fish and Wildlife Service. I wonder if you could expand on the concept of natural wealth accounting. We take for granted the United States is a rich country in forest, soil, water, wildlife, but I'm not sure that we have a good accounting of our wealth. I know in my area of fish and aquatic habitat, we don't. Are there models that we could look to, where they're doing a good job of accounting for natural wealth? Janet: I showed you the UK example. It was quite confusing and complex. We have to do a much better job of sort of simplifying that down and developing some more standardized set of accounts. That would sit on par with GDP, productivity, employment rates, inflation, and then we have one for natural assets. I don't think any country's a good model of having done that yet. The WAVES initiative is sort of experimenting with that. The European Union has made this commitment. The UK's effort was part of that. There's a real opportunity here on this. I think that the US...its comparative advantage may be natural assets. Same for Canada, too. I'm disappointed that none of those countries...the eight pilot test countries...the biggest one's actually Indonesia, all of the others are fairly small. We need this in this country too. It has been done. The Heinz Foundation did some of this work with Tony Genitis, but they were one offs, and they weren't integrated and therefore given the credibility and legitimacy of the standard national economic indicators. The Treasury should lead on this and you should support it. Adam Stearn: I have a quick question. Adam Stearn, Office of Policy Analysis. In terms of the various ways you were talking about getting your foot in the door when having negotiations with other countries or corporations, and helping them with ecosystem services. I was wondering if you could talk about how climate change adaptation...where does that fit into all of those in terms of are people more receptive to climate change, compared to other factors of getting your foot in the door of ecosystem services? Or is that still kind of a tough sell? I'm curious to know... Janet: Are you asking me what people think...whether they believe in climate change and the science? Adam: Just in these discussions, when you're talking about ecosystem services, climate change adaptation, something people are definitely getting behind and are like yes, I want to do this for this reason. Or these other reasons are easier to kind of sell when talking about ecosystem services. Janet: Good question. Briefly on the climate change, I always cease to not be amazed at...the only time I have conversations about whether climate change is happening is in the US. The rest of the time it's about the what and how and how do we deal with it and so on. Just a point about that. Even here the tide's changing on that. In terms of integrating ecosystem services and it becoming mainstream, I think we're moving real fast on that. We took stock of our own work about 18 months ago to see how we'd fared. We said, OK, since we started...it was just shortly after the Millennium Ecosystem Assessment. At that point you could say, ecosystem services is not a household term. The Millennium Ecosystem Assessment did a good job of mainstreaming it in part of the scientific community. We came along then and said no, no, we want to actually mainstream this in public and private sector. After seven years of trying that, I'd say we've started to make good inroads now on the private sector. The World Business Council for Sustainable Development, they recently launched this Action 2020. One of the Action 2020 items was about companies doing ecosystem services, dependency impacts and investing in green infrastructure. It's starting to be mainstream there. With governments, much harder nut to crack. Which is why I'm saying, don't even use the term ecosystem services. Sometimes it kind of gets in the way. It's a very clunky concept. Try to relate to national policies, which is why now we've reframed our own work around food and water to make it resonate more effectively as an entry point to working with governments. Maybe I shouldn't have given up so quickly. Having done that, I've now seen that ecosystem services definitely starting to catch on here. There's so many events and things. I used to be able to keep up with everything that was going on here, but no. It's just all over the place now. It's a good concept. Olivia: We'll take one more question from the Internet. Audience Member: We have a question and we also have an invitation from one of our viewers to come to the US state of Georgia. Janet: I'd love to come there. I'll get my ticket and be there. Audience Member: The question is "Does the NEPA processes compel us to look at ecosystem services in a manner similar to what's being presented here?" Janet: I'm not an expert on NEPA. I think maybe Olivia, you might answer that question? Olivia: I think the jury might be still out on that. Perhaps we'll be getting some guidance. Particularly I think we're still awaiting guidance on incorporating adaptive management into NEPA. Guidance on incorporating climate change adaptation into NEPA. Maybe ecosystem services will also follow. Another question? Audience Member: We have one more question. How's the cost of human conflicts or wars and rebellions accounted for in the cost benefit tables of ecosystem services? Janet: I'm not sure that it is. I will say that when we make decisions that trade off ecosystem services...and let me give you a specific example. The US biofuels policy, which my own country, Europe, also has subscribed to. I don't think anyone did an ecosystem services trade off or assessment of that. You know, what ecosystem services do biofuels depend upon, and what do they impact? I've heard that 40 percent of the corn harvest in this country is now diverted to biofuels. Who was depending on that corn, what was that corn used for? It was used for food. It's not there now. The demand for corn hasn't suddenly gone down. In fact it's going up as we need more feedstock to feed more meat eaters in China and India and Brazil. There's some interesting trade offs going on with that policy? Now a farmer in the US might have grown corn and soy. Now he grows two rotations of corn because it's more profitable and he gets that subsidy. Global demand for soy now...price of soy goes up. It becomes profitable for a rancher in the Serrado to sell out to soy bean. But the rancher doesn't take the money and retire. He now has more money and he actually buys land in the Brazilian Amazon. Meanwhile the price of corn and feedstock starts to soar. We had this big price glitch. I'm going to get to the conflict issue there, but we started to have riots on the street in Mexico over the price of tortillas. That's the sort of seeds of conflict that are here. I spoke to someone at Irish Aid, and they were involved in this too. They said that biofuels policy undermined almost 10 years of development work there, because they were very focused on this issue of food hunger and hunger. Where was the trade off analysis there? In this globally connected world, what we do in one country has these sort of ripple impacts. And again the trade offs, who wins? Who wins with the biofuel policy, and who loses? Those poor people that spend a significant portion of their income on buying food for their families. No, we're not factoring these things that can lead to conflict into our policy decisions, let alone our project investments. Olivia: Thank you very much, Janet. That was terrific. Janet: Thank you. Olivia: I hope you'll join us on Monday. We have another seminar. Same time, same place. It'll be Mark Schaffer from the US Fish and Wildlife Service. He's going to be talking about the new national climate adaptation plan for fish, wildlife and plants. Thank you. Transcription by CastingWords