Implementing Ecosystem Services

Within Policy Settings

Suzie Greenhalgh

Royal Society Workshop9 August, 2011

Biodiversity, ES & Well-being

Ecosystem Services Today

• Thinking in silos can lead to policy development & decisions that improves degraded ES BUT inadvertently damages other services

• Post-MEA focus seems to be around

– Valuing ecosystem services

– Creating markets for ecosystem services

• However, the real value of ES is thinking more holistically about our decisions

What Ecosystem Services Offers Decision-making?

• ES can facilitate integrated & holistic policy development

• It provides a consistent set of ES to consider in decision-making

– More structured framework than considering broad environmental, social, cultural & economic impacts

Incorporating ES into Decisions1. Frame the link between development & ES

2. Assess risks & opportunities

3. Explore future trends

4. Choose policy, planning & reporting approaches to sustain ES

Identify the ES in play

Screen the ES for relevance

Assess the condition & trends of the relevant ES

Identify ES risks & opportunities

Assess the need for an economic valuation of

services

NZ examples of ES into Policy

• DOC: Exploring how to link human well-being to ES to biodiversity

• Regional Council draft policy statements– NRC: What we want to achieve for biod & ecosystems

To recognize the true worth & public benefits arising from biodiversity values & ES to Northland’s social & economic well-being.

– WRC: Decline in state of resources impacts ES

• Objective on ES

The range of ES associated with natural resources are recognized & maintained or enhanced to enable on-going contribution to regional well-being.

Business engagement in ES

• Strengthen corporate strategy– Mondi (international paper & packaging group)

• Reduce risk of reputation & supply disruptions– Yves Rocher (global cosmetics firm)

• Strengthen corporate decision-making processes– Eskom (South African power company)

– ERM Ltd (global environmental consultancy)

– AkzoNobel (paints and coatings company)

• Identify new products & services– Syngenta (global agri-business group)

Corporate Ecosystem Services Review

Outline strategies for minimizing risks & maximizing opportunities through internal changes, sector or stakeholder engagement, policy-maker engagement

5. Develop strategies

Identify & evaluate business risks & opportunities that might arise due to the trends in these priority ecosystem services

4. Identify business risks

& opportunities

Research & evaluate conditions & trends in the priority ecosystem services, & drivers of these trends

3. Analyze trends in priority services

Systematically evaluate the degree of a company’s dependence & impact on 20+ ecosystem services

2. Identify priority

ecosystem services

Choose boundary within which to conduct ESR

1. Select the scope

ES, Modelling & Policy

• Example: Assessing policy in Hurunui/Waiau catchments– Baseline: Current carbon price for all sectors already in ETS (ie. not agriculture)– Current carbon price on all sectors– Higher carbon price on all sectors– Nutrient cap– Nutrient cap with current carbon price on all sectors– Nutrient cap with higher carbon price on all sectors

Scenario

Carbon Price on Ag

GHGs($/tCO2e)

Nitrogen Cap

PhosphorousCap

Baseline None None None

Baseline + current GHG price on ag $12.50 None None

Baseline + higher GHG price $25 None None

Nutrient cap (N & P) None 20% reduction 20% reduction

Nutrient cap (N&P) + current GHG price $12.50 20% reduction 20% reductionNutrient cap (N&P) + higher GHG price $25 20% reduction 20% reduction

Net Catchment Revenue Impacts (% change in farm income)

• All regulation reduces farm income

• Nutrient cap has smaller impact than current ETS carbon price

Catchment-level GHG Impacts(% change in GHG emissions)

• Nutrient cap & ETS reduce GHG emissions

• Nutrient cap reduces total GHG emissions more than current ETS carbon price

• Nutrient cap reduces net GHG emissions more than both ETS carbon prices

Nutrient Impacts (% change in N)

• ETS has a relatively small impact on nitrogen losses

Land-use (% change area)

Policy implications of Modelling

• Highlights benefits of looking more ES– Water quality policy alone can result in significant reduction in

GHG emissions– GHG policy alone not as effective at reducing nutrient losses

• Maybe more than “one way to skin a cat”– Given controversy over capping agricultural GHG emissions, a

water quality policy may give you the desired reductions in GHGs

• Still not sufficient as more ES need to be considered to understand true impact of a decision/policy

A Research Snapshot

• Tools & frameworks– Development of ES decision-making framework

– Economic modelling that incorporates multiple ES

– Policy reference guide

– Framework for choosing between policy instruments

• Implementation– Incorporating ES in regional policy

– Integrating ES thinking with resource consents

– Ecosystem Services Review for business

Implementing Ecosystem Services Within Policy Settings

Key Contacts:

General: greenhalghs@landcareresearch.co.nzdaigneaulta@landcareresearch.co.nz

Business:Stancuc@landcareresearch.co.nz

Application to Hurunui CatchmentApplication to Hurunui Catchment

• Growing concern over water use & environmental flows in North Canterbury

• Proposed Hurunui Water Project (HWP) would nearly double area of land that can be irrigated (22 to 42 THA):

• Opponents of HWP contest that additional irrigation would harm local ecosystem & impact river-based recreation opportunities

• Regional Council also considering nutrient loading constraints in same catchment as HWP

• Also need to consider implications of covering agriculture under NZ Emissions Trading Scheme in 2015

ES, Modelling & Policy 2• Example: Increased irrigation in Hurunui catchment

– Baseline irrigation with no carbon price– Baseline irrigation with carbon price– Hurunui Water Project with no carbon price– Hurunui Water Project with carbon price– Hurunui Water Project with nutrient cap but no carbon price

Scenario

Maximum Irrigated

Area(‘000 ha)

Carbon Price on Ag

GHGs($/tCO2e)

Nitrogen Cap

PhosphorousCap

Baseline 22 None None None

Baseline + GHG Price of $20/tCO2e 22 $20 None None

Baseline + GHG Price of $40/tCO2e 22 $40 None None

HWP with no GHG Price 41.4 None None None

HWP + GHG Price of $20/tCO2e 41.4 $20 None None

HWP + GHG Price of $40/tCO2e 41.4 $40 None None

HWP + Nitrogen and Phosphorous Leaching Capped at Baseline levels 41.4 None

Baseline Levels

Baseline Levels

Baseline Results

0

20

40

60

80

100

120

Hills Plains Foothills

thou

sand

hec

tare

s

Baseline Enterprise Area

DOC

Scrubland

Dryland Other Pasture

Dryland Sheep and Beef

Dryland Dairy

Forest

Irrigated Arable

Irrigated Other Pasture

Irrigated Sheep and Beef

Irrigated Dairy

Net Revenue ($)

Total GHGs (tons)

Net GHGs (tons)

N Leaching (tons)

P Leaching (tons)

$153,191,968 804,148 606,509 1,752 22.5

• Nearly all irrigation in high-production plains area

• Sheep and beef dominant enterprise in Hurunui, with dairy and pine plantations in plains

• Net GHGs lower because of sequestration in native vegetation on scrub and DOC land

Net Catchment Revenue Impacts

-20% -15% -10% -5% 0% 5% 10%

BASE_20

BASE_40

IRR

IRR_20

IRR_40

NP+CAP

• Implementing irrigation scheme increases revenue relative to baseline

• Adding carbon price reduces revenue for all scenarios as farmers ‘taxed’ for GHG intensive production

• Capping N and P at baseline levels with irrigation scheme still results in economic gains

Change in Aggregate Enterprise Area

• Implementing irrigation scheme shifts forest and scrub to dairy and arable land– Aggregate area of

Sheep and beef change minimal, but shift does occur from dryland to irrigated

• Adding carbon price promotes expansion of forests as receive payments for carbon sequestration

• Arable crops still viable option for irrigation scheme with carbon price as less GHG intensive-200% -100% 0% 100% 200% 300% 400% 500%

BASE_20

BASE_40

IRR

IRR_20

IRR_40

N+P CAP

Arable

Forest

Dairy

Sheep and Beef

Other Pasture

Scrubland

Catchment-level GHG Impacts

-200% -150% -100% -50% 0% 50% 100%

BASE_20

BASE_40

IRR

IRR_20

IRR_40

NP+CAP

% Chg Net GHG Emissions

% Chg Total GHG Emissions

• Implementing irrigation scheme increases emissions by 19-64% from increased intensity and deforestation

• Adding carbon price reduces emissions below baseline for all scenarios

• Capping N and P at baseline levels results in net GHG emissions as landowners increase area of pine plantations

Breakout of GHGs (tons CO2e)

-800

-600

-400

-200

0

200

400

600

800

1000

BASE BASE_20 BASE_40 IRR IRR_20 IRR_40 N+P CAP

thou

sand

tCO

2e

Forest C Sequestration

CO2 Electricity

CO2 Fuel

N2O Fertilizer

CH4 Manure Management

N2O Grazing

CH4 Enteric Fermentation

N2O Animal Waste Mgmt Systems

• Proportion of emissions roughly match latest national GHG inventory figures

• Annual forest carbon sequestration in baseline is all from native vegetation as model assumes same proportion of pine cut per annum is re-planted

• Additional forest sequestration in policy scenarios is from new pine or less conversion of scrub to pasture

Nutrient Impacts

-30% -20% -10% 0% 10% 20% 30%

BASE_20

BASE_40

IRR

IRR_20

IRR_40

NP+CAP% Chg P

% Chg N

• Implementing irrigation scheme increases N by 19% and P by 3% from more intensive land use

• Adding carbon price reduces nutrient loadings, but need close to $40/tCo2e to get near baseline levels for increased irrigation scenarios

Summary• NZ-FARM can estimate economic & some ES impacts

from various policy & land mgt decisions• Hurunui results demonstrates importance of

acknowledging trade-offs– may not be a ‘win-win’ situation when considering expansion of

irrigation along with improvement/preservation of environmental quality

• Model currently tracks water use, nutrients & GHGs but more ES could be added– Considering adding qualitative aspects to model

results/discussion to at least indicate likely directional change of other ES

NZ-FARM – Key ComponentsNZ-FARM – Key Components• Land-use/enterprises:

– Pastoral: dairy, sheep, beef, deer, pigs– Arable: wheat, barley, maize– Horticultural: potatoes, grapes, berryfruit– Forestry: pine, eucalyptus, native– Other: scrub and Dept of Conservation land

• Environmental outputs:– Nutrients: Nitrogen and Phosphorous – Water use– GHGs for farm and forest activities– Exploring water yield, sediments & pollination

• Endogenous farm practices:– Change enterprise or land use– Adjust fertilizer and stocking rates– Add dairy feed pad or apply DCDs– Enter forest carbon sequestration programme

Aligned Activities:Policy Choice Framework

• Freshwater Values, Monitoring & Outcomes Programme• To determine appropriate policy response(s) to an issue• 3 stages:

Stage 1: Primary instrument selection– Clarify cost/benefit justification for govt intervention

Stage 2: Land holder impacts– Landholder responses to policy instrument & its design

Stage 3: Organisational responses– Impact on the organisation implementing proposed policies &

what this means for achieving the policy objective.