Rural communities in Pacific island countries (PICs), which rely directly and acutely on nature’s goods and services for food and materiale, face a range of interlinking threats to their management of natural resources. These threats are exacerbated by climate change-related risks and a backdrop of rapid socio-economic transition. Environmental economists have developed robust methods for the economic valuation of the contributions of nature to human well-being, conceptualised through the ecosystem services framework. This framework categorises ecosystem services as (i) provisioning (biological products); (ii) regulating (benefits from ecosystem functions and processes) and (iii) cultural (non-material benefits, such as recreation and spiritual values). Expressing ecosystem service values in monetary terms helps consistently frame trade-offs between policy options that have multiple assessment criteria. Ecosystem service valuation commonly incorporates a spatial component to quantify flows of benefits from specific ‘ecosystem assets’ in a landscape.
We set out to estimate the value of aggregated flows of ecosystem services from Vanuatu’s ecosystem assets, to determine the total ecosystem service value (TESV) of its terrestrial and coastal marine ecosystems, including its forests, subsistence gardens and coral reefs. Knowing the TESV is useful in assessing changes or trends in the contributions of ecosystems over time as a result of policy or external factors such as climate change; estimating the cost-effectiveness of ecosystem-based climate change adaptation options; assessing benefit trade-offs involved in land-use trends; and determining appropriate rates for payments for ecosystem service (PES) schemes, where communities can be compensated for protecting habitat functions for the benefit of society.
Our method used both a spatial component, to determine ecosystem type and extent, and a valuation component, to determine the monetary value of the array of ecosystem services from those ecosystems. Our spatial component used both previously configured satellite data to determine the ground cover and datasets from the UN to determine the extent of coral reefs and seagrass. The valuation component established a set of ecosystem service value coefficients compiled from existing literature, but leaning heavily on a database catalogued for The Economics of Ecosystems and Biodiversity. The TESV is the product of the ecosystem extent and the ecosystem service value coefficient. Importantly, our method included valuations of ‘consumer surplus’ – the difference between what someone would be willing to pay and its price in a market, or shadow price in a proxy market. Since many ecosystem services are free at point of use (they are public goods, or common pool resources) people can enjoy increases in welfare without actual or notional increases in exchange. Thus, economic valuation of ecosystem services can return values greater than GDP. We also only evaluated final ecosystem services, to avoid double-counting of intermediate services, whose value-added is embedded in the final service.
We found the value of Vanuatu’s ecosystem services to be considerable – between $1,963 million (m) and $11,537 m (median $2,901 m) per year (2016 US dollar values). In comparison, Vanuatu’s GDP for 2016 was estimated at $804.3 m – smaller by a factor of 2½ – 17. The most valuable ecosystems are its forests and subsistence gardens. We estimate the contribution of subsistence gardens alone to be between $4,878 and $9,029 per person per year, while the equivalent 2016 estimate from published national accounts is only $430. This discrepancy suggests there is undervaluation of the contribution of subsistence agriculture to Vanuatu, which warrants further research to calibrate, particularly as this value includes no estimates of associated cultural values.
Nature’s contributions to people far outweigh formal measures of economic output. This gulf between GDP and our TESV estimate might, in part, explain the disparity between Vanuatu’s global ranking in terms of GDP per capita (126th out of 192) and its position of fourth in the most recent Happy Planet Index. Critiques of GDP as a proxy measure for human well-being, are well–developed, encompassing environmental, distributional, and feminist critiques, particularly pertinent to PICs. Alternatives are being explored by governments, including in Vanuatu. However, progress in codifying and embedding these alternatives into policy is slow and GDP remains a pervasive measure in driving policy decisions; perhaps because alternative measures tend not to support political imperatives.
Our assessment provides a snapshot of ecosystem service benefits at a point-in-time. Repeated application can enable an understanding of longitudinal trends in benefit as a result of land-use change. As such, our approach can inform scenario-based planning, which is relevant in light of projected risks from climate change. Our valuation also contributes towards achievement of the SDGs, specifically target 15.9, which aims to integrate ecosystem values into planning and national accounts. Finally, our valuations can demonstrate to program sponsors the value of a range of co-benefits associated with habitat conservation, which could be potentially monetised through PES projects.
In undertaking our valuation, a number of context-specific sensitivities and challenges were evident, which, if not acknowledged, could result in misleading valuations, provide misguided support for perverse policy responses and erode confidence in valuations. For example, there were key data gaps, risking undervaluation of ecosystem services, as there remains a dearth of valuation data for PICs. There is also limited data on ecosystem integrity, which influences the quality of ecosystem service flows from particular land uses. Finally, understanding the customary values of ecosystem services challenges valuation methods based on individual willingness to pay.
Our study demonstrated, for Vanuatu, estimating well-being using GDP alone underestimates important contributions of ecosystem assets, potentially leading to misdiagnoses of community threats and pursuit of maladaptive land-use policy. Whilst further development of ecosystem accounting, through the SEEA Central Framework, and the incorporation of ecosystem flows into ‘green GDP’ will start to close this gap, it is imperative to consider locally-specific consumer surplus values, associated with non-market spill-overs, in policy and program design. Not considering the full gamut of ecosystem service values will also likely have distributional consequences, backing policy that promotes monetary exchange of what would otherwise be customary goods and services, such as housing, food and materials.
Prosaic economic development pathways have tended towards running down natural capital. PICs rural communities, which rely on nature for the provisioning of their immediate needs, and who experience close cultural connections to their traditional land and ocean resources, require the continuation of healthy ecosystem functions and processes. Ecosystem service valuation will provide a vital role in highlighting and quantifying these values to support community-led sustainable development.
Andrew Buckwell and Christopher Fleming, Griffith Business School, James C. R. Smart, Australian Rivers Institute and School of Environment and Science, Dan Ware and Brendan Mackey, Griffith Climate Change Response Program.
This article is based on our work that can be found at: Buckwell, A., Fleming, C., Smart, J. C. R., Ware, D., & Mackey, B. (2020) Challenges and sensitivities in assessing total ecosystem service values: Lessons from Vanuatu for the Pacific, Journal of Environment and Development, In Press.
The research was made possible by funding through the Pacific Ecosystem-based Adaptation to Climate Change (PEBACC) project, a five-year initiative implemented by the Secretariat of the Pacific Regional Environment Programme (SPREP) in partnership with the governments of Fiji, Solomon Islands and Vanuatu and the funding support of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety. Research specific to the Republic of Vanuatu is enabled by a Research Agreement between the Vanuatu National Cultural Council and Griffith University through the Griffith Climate Change Response Program.