Status of Current Work – Measurement and Valuation of Ecological Goods and Services in Canada

The earth’s natural capital provides land, resources and a flow of ecosystem services. Watersheds that cover our landscapes consist of forests, wetlands, grasslands and rivers that act like giant utilities providing ecological services for local communities as well as regional and global processes that we all depend upon for life-supporting services. Ecosystems provide a plethora of services including the storage of flood waters, water capture and filtration by watersheds, air pollution absorption by plants, and climate regulation resulting from carbon storage in trees, plants and soils. However, they are undervalued in our market economy. They are worth billions of dollars per year, but need to be valued more accurately because their loss has massive economic impacts, threatening health, food production, climate stability, and basic needs such as clean air and water. The recognition and valuation of ecosystem services are emerging trends at the global, national and regional level. For example, the United Nations Millennium Ecosystem Assessment (MA) reported on the condition of the world’s ecosystems and their ability to provide services today and in the future.1 The MA found that over the past 50 years humans have changed the Earth’s ecosystems more rapidly and extensively than in any other period in human history. Their assessment concluded that approximately 60 per cent (15 out of 24) of the world’s ecosystem services are being degraded or used unsustainably, including fresh water, air and water purification, and the regulation of regional and local climate. The full costs of these losses are difficult to measure, but the MA concludes that they are substantial.2 Several of the studies that this paper reviews have either adopted the MA framework or used components of the study’s classification system. As communities and governments are beginning to recognize the essential services that natural areas provide, more research and policy options are being explored. This report was commissioned by Environment Canada to review current work that has identified, quantified and valued ecological goods and services (EGS) in Canada. The measurement of the qualitative and quantitative value of ecosystem services may be harnessed to allow for better environmental and economic management and inform better land use, environmental management, and policy decisions. The following sections summarize the state of current EGS work in Canada, including: 1) The ecological goods and services that have been studied, frameworks and methods used, and the outcomes/values reported as well as policy and planning implications. 2) The existing models used to map and value EGS, as well as the data sets and measurement information used to populate these models. 3) A summary table organized by EGS categories with regards to Environment Canada’s responsibilities for water, air, soil, conservation and biodiversity and landscape management. This review on the status of EGS research in Canada demonstrates that interest in defining and valuing ecological goods and services is growing, Regionally, studies have been undertaken to assess the value of EGS in the boreal region including the Mackenzie watershed, the Great Lakes Basin, the southern Ontario Greenbelt, as well as the economic value of nature-related activities across Canada. Watershed and wetland studies have been conducted in watersheds such as Broughton’s Creek in southwestern Manitoba, the Credit Valley in southern Ontario, Lake Winnipeg and Lake Simcoe. The value of conserving natural cover in agricultural regions was assessed in several case studies for the Lower Fraser Valley in British Columbia, Grand River watershed in southern Ontario, the Upper Assiniboine river basin in Saskatchewan, and the Mill River watershed on PEI. In the studies reviewed, carbon storage services and water-related services such as water regulation by wetlands and water filtration services provided by forests had the highest assessed value. Climate regulation through carbon storage and sequestration has become one of the most popular ecosystem services studied. This is because of its importance in terms of the rapid increase of carbon dioxide in the atmosphere and the predicted damages due to climate change. In the studies reviewed, values for carbon storage range from $15 to $820 per hectare. Water regulation and supply services provided by wetlands and forests feature prominently in many of the studies that evaluated non-market EGS. In the case of the assessment of the southern Ontario Greenbelt’s eco-services, water filtration by forests and wetlands was measured as the avoided cost of increased human-built water treatment as a result of additional forest/wetland cover losses in the watersheds. In the Pimachiowin Aki (P.A.) study, water related values were based on contingent valuation transferred from an earlier study where the average willingness to pay for improved water conservation and protection by Manitobans was approximately $420 per household per year. Water supply services were estimated based on the water supply volumetric value from a study of the Assiniboine Aquifer water supply ($40,000 to $80,000 per cubic metre). Applied to the main rivers volume of flow in the P.A. study the potential economic value was estimated between $0.27 to $5.55 billion. Water regulation values reported in the studies reviewed ranged from $408/ha/year to $8, 209/ha/year. The value of recreation and nature-based tourism are both becoming relatively well developed in terms of the availability of EGS research and values. Many jurisdictions or organizations that have begun EGS research begun their work by looking at the more easily obtainable information and readily available economic information related to natural capital and EGS. Often the starting point is to compile values on tourism and recreation because statistics on use, recreational activities/habits, spending and costs are compiled by tourism departments, parks and protected areas. Many of the reports identify data limitations for measurement and valuation of ecosystem goods and services because of a lack of ecological and economic information. This includes a lack of data on the current state of ecosystems and the services they provide, as well as a lack of information on how these services may change under different conditions such as changing land use. Measuring the value of goods or services is fairly straightforward when they have a market-determined value. However, non-market values of ecosystem services are much more difficult to quantify because they do not have established market prices. Suggestions for Future Research: 1) Municipal and provincial as well as conservation/watershed authorities need to begin to identify, measure, and monitor EGS as part of their jurisdictional reporting. All levels of government should develop natural capital accounts as part of an accounting system that includes reporting on:  the annual state and extent of land/water cover including changes over time.  the annual measurement of key and critical EGS including changes over time (e.g. air quality, water quality, carbon storage, waste treatment and flood control)  the annual value of key and critical EGS in terms of market and non-market values that reflect changes over time; and,  an account of the losses in value due to human impact on ecosystems and their EGS including damages incurred that result in a decline in the flow of EGS as well as the cost of restoration and reclamation. 2) The development of a standard approach for the measurement and valuation of EGS for Canada would greatly improve this area of research. A national working group of key academic researchers and practitioners could develop a model that would include models by region/dominant land cover/land use with allowance for regional adaptation. 3) EGS and agricultural land use is a research area that needs to establish a standardized approach to measure the non-market ecosystem services provided by agricultural lands. There is also a need to establish values based on the level of ecosystem services provided, as well as those best management practices that should be rewarded and programs to implement incentive based payments. 4) Promotion of applied EGS research to support policy decision-making. There is a need for studies that look at changes in marginal values (rather than total values), and the impacts that various policies have on ecological goods and services. This would help decision-makers choose between competing policies or resource uses, in light of whether the changes in net benefits from a decision are greater or equal to the costs involved.

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