Valuing Ecosystem Services II - Commodifying water

The idea that paying for water is not new and whether or not water should be treated as commodities are widely debated. 

Valuing Water

The valuation of water resources is often driven primarily by capitalistic production and accumulation dynamics. This often goes against the initial aim of the ecosystem services framework and risks leaving out alternative values of the system. This includes not only monetary values of water supply provision, but biophysical and ecological values provided by regulating and cultural services (Castro 2013). Short-term market considerations for water supply often overshadows multi-dimensional functions and services of the hydrological cycle as a whole.

Commodifying Water 

While water should be a public good, there has been immense pressure to market and commodify water through water trading and privatisation as demand outstrips supply. This raises ethical questions on power relations and ultimately result in differential access to the provisioning service of water supply which were often a public good and available free of charge before water commodification (Walsh 2011). The commodification of water thus alters the supply of water and the availability of water to maintain other ecosystem services and environmental flows. An interesting example of this is wetland mitigation banking where ES produced by wetlands are sold as wetland credits by restoring pre-settlement wetland conditions. This marketization of previously public goods often bend to the will of capitalism in a bid to sell nature (Robertson 2003) without understanding integratively the underlying relationships between ecosystem functions and ecosystem service delivery.

In a Friends of the Earth investigative report on 'selling water and biodiversity', it was highlighted that bribes, underinvestment in infrastructure, unaffordable increase in water prices and poor water quality has been characteristics of water supply after privatization and commodification. In 1970s Nigeria, the water market was privatized after inadequate maintanence from the government and transformed water into a tradable commodity. General water supply provision declined as people were priced out of the water market with supply favouring rich communities,   streams/rivers were continually polluted due to industrial development and private companies often fails to manage water sustainably and depletes aquifer and springs.

I believe that using an ecosystem services framework to look at water supply would be beneficial only if attention is not paid predominantly on the economic and monetary valuation of services but instead to the fundamental biophysical and ecological concept of ecosystem functioning and services delivery (Schroter et.al. 2014). The inter-linked relationships within multiple elements of the hydrological cycle should be fully recognized for sustainable management to take place.

Valuing Ecosystem Services

Welcome back! In this post, I will address the economic valuation of ES.

ES Valuation

Viewing ecosystems in monetary terms is an integral part of the ES approach in an attempt to explicitly articulate economic values of certain services as natural capital or goods and services. It aims to a directly encourage the conservation of ecosystems and promote political action from otherwise often sceptical policy makers (Redford and Adams 2009). Valuation of ES can occur in both use and nonuse elements. Use elements are directly beneficial and used by humans, such as fisheries while nonuse elements are indirect impacts such as water quality regulation and carbon sequestration. Valuation of ecosystem services can be conducted via the following four pathways (Brauman et.al 2007):

1) Valuing total ES flow
2) Value of alterations to ES
3) Valuing the distribution of costs and benefits from ES production and delivery

The economic valuation of ES represents natural capital, one of four kinds of capital in 21st century economic theory grounded in the economic concept of substitutability and market environmentalism (Chee 2004).

Source

The mainstreaming of the ES concept since the publication of the Millennium Ecosystem Assessment in scientific literature had led to intense, seemingly obsessive tendency to assign monetary values to ecosystem services using market-based instruments. Gomez-Baggathun et.al. (2010) identified three stages in the historical development in valuing ES in economic terms (Table 1). Conceptualised initially to raising awareness and allow ethical justification for environmental conservation, the ES concept gradually shifted to an emphasis on different ways to cash in ES as commodities on potential markets. What is also interesting is a shift in the concept nature and human-nature relationships, from valuing the physical usage of land and labor to the monetary analysis and exchange values available for monetization. 

Two practical approaches to addressing ES delivery through market-based instruments are markets for ecosystem services schemes and payments for ecosystem services schemes (Simpson 2011).

• Markets for Ecosystem Services - polluter pays principle 
• Payments for Ecosystem Services - compensation from beneficiaries for the maintenance and protection of ecosystem services 

Criticisms of economic valuation of ES

Redford and Adams (2009) identified 7 major problems with the ES concept:

1. Obsession with economic logic - monetary valuation and its implications often outweighs scientific justification for environmental conservation
2. Not all ES sustains human life - raises question of interlinked ecosystem functions
• Promotes an anthropocentric view of ES rather than bio-centric views/intrinsic values of nature (Schroter et.al. 2014)
• Not all ES have desirable outcomes to humans (McCauley 2006); presence of disservices such as diseases and pathogen diffusion
3. Some ES may be provided by unnatural systems as well as natural systems - defeats primary aim of conservation, values provided such as monocultural agriculture are often from unnatural systems (Simpson 2011)
4. Increasing justified to maximize single services at the expense of others - novel ecosystems: anthropogenic construct which effectively delivers ES but lack biodiversity of natural systems
5. Markets may not exist for some ES which does not lend themselves to pricing
6. Power relations neglected in ES concept - rights to ES complicates the design of market-based schemes with problems of power, access and maximization of revenue/profit
• ES often used May not safeguard biodiversity and instead divert attention to economics
7. Unknown impacts of climate change on ES delivery

Commodification

Apart from the concerns outlined above, many have criticised the ES concept in bringing conservation too close to economic logic and risks 'selling out to nature' (McCauley 2006). I do agree with this to some degree as ES does not exist solely for human exploitation and nature conservation should occur solely to protect the intrinsic natural functioning instead of turning a profit. This leads to widespread debate on whether the ES concept encourages the treatment of natural systems as purely tradable commodities available for human exploitation. Discrete quantification of monetary values of a single service also risks neglecting the complex linkages between ecosystem functions (Gomez-Baggethun and Ruiz-Perez 2011).

I do take a more practical view in that while the ES concept has its pitfalls and may rely too much on economic logic, it does encourage interdisciplinary research on ecosystem science and ecosystem functioning. As we shall discuss, there are successful examples which utilizes the ES concept to reach conservation aims.

Wetlands and Lakes II - Lake Victoria

In this post, I will be discussing ecosystem services delivery at a specific African location. I have chosen to focus on the lake-wetland system at Lake Victoria basin, East Africa. 

Location

Lake Victoria is located in East Africa and its catchment area spans across 6 countries. It is the largest lake in Africa and the second largest freshwater body in the world. Lake Victoria covers an area of 69,000 km2 with its total catchment area spanning over 180,000 km2. Located in the upper reaches of the Nile River, the only outflow of Lake Victoria is the Victoria Nile river within the complex White Nile river basin. Formed 400,000 years ago, the lake is formed by structural uplift around the basin and is one of the Great Lakes of Africa. 

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Ecosystem services

The Lake Victoria basin is characterized by a complex array of rivers, wetlands and satellite lakes which supports the livelihoods of over 25 million people and maintains hydrological balance of the Nile River system downstream. This interdependent relationship is a prime example of the balance between the different types of ecosystem services.

Population within the basin depends on rain-fed and flood recession agriculture from riparian wetlands and satellite lakes as well as hydroelectric power and commercial industry in and around the lake (Balirwa et.al 2003). Products and provisioning services of wetlands are largely understood and extensively exploited by local communities. These services include flood recession cultivation, wetland fisheries, grazing land and potable water resources. This results in Lake Victoria being Africa's largest and most important inland fishery source. However, the regulating services within the basin are often poorly understood/managed and taken for granted (Kansiime et.al 2007). A prime example of this is the water quality and buffer services provided by wetlands and satellite lakes. The presence of riparian wetlands around the lake determines transport characteristics of nutrients and sediments into the lake. Highly productive macrophytic vegetation in wetlands direct absorbs nutrients and filtrates any undesired releases into the lake. Wetlands also serves as a buffer for external impacts, increasing the ecological and hydrological resilience of the lake (Kassenga 1997). 

Threats

Despite the high reliance on provisioning services and importance of regulatory services, management in the Lake Victoria basin can be characterized as being highly extractive for the past 50 years. Overfishing, demographic change, expansion of urban settlements and expansion of intensive agriculture since the 1970s are the major threats to the capabilities of freshwater ecosystems to deliver ecosystem services (Odada et.al. 2009). The fisheries industry at Lake Victoria had been subjected to the introduction of more productive fish species in the early 20th century. Overfishing, increased nutrient runoff and a 'fishing down' process driven by population growth and food demands led to the depletion of native cichlid populations and the domination of the introduced Nile perch in the 1980s (Bilirwa et.al. 2003). The introduced Nile perch dominated over the previously cichlid-dominated ecosystem, leading to the deterioration in services provided by cichlid-phytoplankton feedback loops which previously regulated oxygen depletion. This had led to both a collapse in the fishery industry and a reduction in regulatory services when deep changes in food web structures were revealed and no more economically viable fish stocks were available.

The high variety of ecosystem services delivered by the lake-wetland system also caused dramatic demographic change with population growth within the basin being significantly higher than the rest of Africa (Fig.1). This has led to increased conversion of riparian wetlands into urban settlements and agricultural land, resulting in the loss of wetland vegetation and functioning. Loss of regulatory services from wetlands led to the deterioration of water quality and increased eutrophic status of the main lake due to industrial nutrient runoff and urban discharge (Odada et.al. 2009). Knock-on impacts to human well-being were experienced due to to fact that water abstracted from the lake for direct consumption and industrial use often undergo little to no additional treatment. 

Fig 1 Changes in population density between 1970 and 1990
- large scale conversion of riparian wetlands to urban settlements

Trade-offs

The economic valuation of ecosystem services are integral to the ecosystem services concept which also reveals the nature and inevitability of trade-offs. Trade-offs occur when management choices changes the relative magnitude and type of ecosystem services provided. Ecosystem services delivery are often in conflict with the need to meet increasing demands and the need to maintain ecosystem biodiversity and functioning. Large loss of forests and gains in agricultural land in upland regions and the increase in vegetation production and loss of intact wetlands in the lowlands led to increased food production and food provisioning services but was succeeded by a simultaneous decline in other provisioning services and the majority of regulating services (Swallow et.al. 2009). Furthermore, the introduction of invasive Nile perch dramatically boosted economic activity of the area initially but led to the overfishing and the eventual demise of native biodiversity and the fishery industry (McCauley 2006). 

Using a bio-economic model of the fishery industry including wetland-water quality interactions, Simonit and Perrings (2011) concluded that if wetlands in sub-basins were reduced by 60%, nutrient enrichment will lead to an expected loss of $1.98 mil USD/year and $216 USD per ha per year in fishery production. This reflects the inevitability of management decisions resulting in trade-offs among ES which may have varying economic implications. There should therefore be better monitored agricultural development along with informed and integrated water and land management practices in order to resolve conflict between development and ecosystem integrity.

Before I begin...

Before I begin, I found this short video produced by Wetlands International illustrating how wetlands can support livelihoods of farmers and people in Malawi and Zambia. Although filmed in Central Africa, the dependency of livelihoods on wetland/lake resources and the inadequate management of trade-offs are evident across the continent. Enjoy the video! I hope it is a good introduction to some specific threats wetlands and its valuable ecosystem services are facing. 

In the next post, I will introduce a case study of ecosystem services delivery at Lake Victoria. 

Wetlands and Lakes I

After looking at the general principles of ecosystem services and the distribution of water resources in Africa, I aim to explore in detail hydrologic services with particular attention paid to lakes and floodplain wetlands.

Wetlands

Characterized as 'natural assets' (Barbier 2012), wetlands are some of the most hydro-ecological productive and diverse ecosystem. Wetlands can be characterized by unique characteristics (Maltby and Acreman 2011):

1. Presence of surface water or within root zone
2. Unique soil/sediment characteristics compared with adjacent non-wetlands
3. Presence of adaptive vegetation to varying degree of wetness

Source

Wetlands are widely distributed across the floodplains of Sub-saharan Africa within all major river basins (Rebelo 2010). Hydrological processes initiates ecosystem functions which drives biogeochemical interactions and subsequently modulates the performance of ecosystem services beneficial to human well-being. Due to high connectivity in the hydrological cycle, ecosystem system delivery and beneficiaries extend well beyond the boundaries of wetlands/lakes, supporting the livelihoods of rural and urban citizens alike and ensuring food and water security while having substantial impacts on poverty alleviation and international development. Irrespective of size/catchment area, wetlands of all sizes are capable of delivering pivotal ecosystem services (from water quality regulation to recreation) along hydrological pathways and trade-offs can only be fully understood if all scales are consulted (Blackwell and Pilgrim 2011). 

Schuyt (2005) identifies 4 categories of ecosystem functions:

1. Regulating functions - climate regulation, water regulation, nutrient regulations
2. Carrier functions - space for human settlement, energy production, agricultural production
3. Production functions - food production, water supply, support for raw materials (eg. timber)
4. Informal functions - recreation, tourism, spiritual health, scientific studies

Interdisciplinary involvement in research between
wetland and ecosystem services delivery (Source)

Lakes

Closed water bodies of fresh/brackish water also provides an entire suite of ecosystem services  beneficial to human well-being (Schallenberg et.al. 2013). Wetlands, lakes and rivers are integral and interrelated parts of the hydrologic cycle. Ecosystem delivery or dis-service in a lake/river will no doubt influence the ecosystem services delivery in wetlands. Similarly,  reduced services by wetlands will have knock-on impacts to services in lakes. 

Threats

Threats to ecosystem services often arises from the inherent trade-offs after alteration of the natural environmental conditions. Trade-offs arise from distributional effects after the wetland/lake ecosystem is altered and the natural hydrological state changed.  Freshwater ecosystem services are determined by geographic location, timing of flow, quantity of flow and water quality. Modulated by regional climate, any changes to the hydrological conditions, whether anthropogenic or not, will risk compromising the integrity of the wetland/lake. Although wetlands only cover less than 3% of global land mass, they deliver over 40% of renewable ecosystem services each year (Zedler and Kercher 2005). Despite the variety of ecosystem services provided, wetlands has been subjected to increasing anthropogenic development with little consideration of service trade-offs. Hard engineering approaches for irrigation/agricultural expansion is the main threat to wetlands ecosystem services in Africa. Decision-makers often favour short term economic gains rather than long term benefits of human well-being from ecosystem services (Shuyt 2005).