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September 29, 2011

Putting a price on environmental damage

  • Ecosystem services accounting provides a pathway to making more-informed decisions.
    Windward Environmental



    Preventing or mitigating natural resource losses is a major focus of environmental regulation.

    Companies faced with environmental liabilities, including natural resource damage claims, often seek ecological projects to offset historical damage to natural resources. These resources are often lost or degraded by land development, infrastructure construction and maintenance, industrial or agricultural operations, or remediation.

    The valuation of these resources, or ecosystem services, is gaining popularity as an approach to environmental resource management. They include both material and intangible benefits provided by functioning natural systems.

    Ecosystem services generally fall into one of four categories: provisioning, such as fisheries; regulating, such as flood control; cultural, such as recreational use; and supporting, such as pollination.

    Historically, losses were addressed through fines or restoration of the damaged area. However, more recently, regulatory agencies have emphasized replacement of lost ecological functions or services, taking into account the overall ecological benefit over time.

    Photo courtesy of Windward Environmental [enlarge]
    Four restoration options for the Woodard Bay Natural Resource Conservation Area were developed using the habitat equivalency analysis tool.

    This change in focus provides companies or landowners the opportunity to better assess the impact of land-management decisions, develop a range of mitigation (i.e., restoration) options, and determine the ecological and financial benefits and costs of those options.

    Valuing an ecosystem

    The value of an ecosystem can be determined using ecosystem services accounting tools such as habitat equivalency analysis, resource equivalency analysis, relative risk assessment, or a market-based approach. These tools quantify losses in ecosystem function and then estimate the potential gains of various restoration options.

    The tools were developed in the 1990s as regulatory agencies became more vigilant in seeking compensation from companies for actions that resulted in the loss of natural resources.

    Typically, the most favorable habitat restoration projects have been those that provide habitat resources and ecological services that are comparable to those lost or injured. However, ecosystem services accounting can identify alternatives that are both more cost-effective and provide for increased functionality — in part because these alternatives can involve ecosystems that are different than those injured. Furthermore, these tools can be coupled with GIS programs to facilitate assessment of the spatial component of a restoration project.

    Ecosystem services accounting

    A recent project completed for the state Department of Natural Resources is an example of the use of ecosystem services accounting. The project involved an assessment of wood waste impacts and a feasibility study to evaluate restoration options for the nearshore area of the Woodard Bay Natural Resource Conservation Area, which encompasses hundreds of acres of undeveloped uplands and tidelands in Henderson Inlet near Olympia.

    From 1928 to 1985, the area was used as a log dump. The project’s overall goal was to select an alternative for restoring or enhancing the area’s aquatic ecosystem structure, function, and processes to protect native species and communities.

    Four restoration options were developed using the habitat equivalency analysis tool. These options were based on site-specific actions that could achieve the restoration goals and priorities for individual species, habitats or ecosystem processes.

    The approach involved:

    • Identifying restoration actions that might achieve one or more objectives for one or more resources.

    • Assigning an ecosystem service value to each action.

    • Compiling individual actions into four alternatives.

    • Aggregating the overall change in ecosystem services for each alternative.

    • Developing preliminary unit costs for the alternatives.

    • Examining the relative ecosystem benefit versus financial costs of the alternatives.

    The alternative that best balanced the overall goals for the site was identified and selected.

    Accounting benefits

    The use of ecosystem services accounting allows companies to reach settlement through the selection of a restoration alternative that is both environmentally responsible and cost-effective. Ecosystem services accounting can help companies make more-informed decisions regarding:

    • Project site selection

    • Mitigation of existing land-use conditions

    • Compensation for potential land-use changes

    • Settlement of natural resource damage claims

    • Evaluation of remediation alternatives

    In addition, these tools provide companies with the ability to identify and compare the benefits of multiple restoration options and determine which components or projects would most appeal to regulatory agencies, trustees, stakeholders, and neighborhood groups, thereby gaining support from the agencies and generating goodwill within the community

    Ron Gouguet and Nancy Musgrove are associates at Windward. Gouguet is an ecological risk assessor and restoration expert with over 15 years’ experience in natural resource damage assessment. Prior to joining Windward, he served as a coastal resource coordinator for NOAA. Musgrove is an environmental scientist with over 25 years’ experience in the assessment, investigation and cleanup of environmental media in aquatic environments.

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