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CA Department of Water Resources/ CIFMCG Workshop. COMPREHENSIVE FLOODPLAIN MANAGEMENT : Promoting Wise Uses of Floodplains. July 2006. Comp FPM Workshop. Ecosystem Evaluation. Workshop Modules. Comprehensive FPM NFIP Overview FPM No Adverse Impact Strategies

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comp fpm workshop

Comp FPM Workshop

Ecosystem Evaluation

workshop modules
Workshop Modules
  • Comprehensive FPM
  • NFIP Overview
  • FPM No Adverse Impact Strategies
  • Natural Floodplain Functions and Societal Values
  • Flood Management Economic Analysis
  • Ecosystem Evaluation Methods
  • Case Study
  • Technical and Financial Assistance
ecosystem evaluation
Ecosystem Evaluation
  • Ecosystem Evaluation Methods
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
ecosystem evaluation5
Ecosystem Evaluation
  • Ecosystem Evaluation Methods
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
ecosystem evaluation methods
Ecosystem Evaluation Methods
  • Monetary values can be assigned to most water management benefits (water supply, flood damage reduction, hydropower, etc.)
  • Multi-objective projects often include ecosystem restoration
  • Problem—how do we evaluate ecosystem benefits?
  • Should ecosystem benefits be monetized?
ecosystem evaluation methods7
Ecosystem Evaluation Methods
  • Cost-effectiveness analysis
  • Tradeoff analyses
  • Benefit-cost analysis
ecosystem evaluation methods8
Ecosystem Evaluation Methods
  • Cost-effectiveness analysis
    • Evaluates cost/unit relationships ($/acre, $/habitat unit, etc.)
    • What alternative provides the “most bang for the buck”?
    • Can be combined with incremental-cost analysis to determine most cost-effective scale of project
    • Avoids monetizing ecosystem benefits
    • Can not be directly combined other monetized benefits (flood damage reduction, water supply, etc.)
ecosystem evaluation methods9
Ecosystem Evaluation Methods
  • Tradeoff analysis
    • Displays all monetary and non-monetary effects of the project
    • Assigns “points” or some other quantitative measure to both monetary and non-monetary benefits
    • Allows both types of benefits to be directly compared with each other
    • Often requires “weighting” of benefits
    • “Weights” often based on judgment
ecosystem evaluation methods10
Ecosystem Evaluation Methods
  • Benefit-cost analysis
    • Requires monetization of all benefits
    • All benefits and costs can be directly compared with each other
    • Ecosystem benefits can be difficult to monetize
ecosystem evaluation11
Ecosystem Evaluation
  • Ecosystem Evaluation Methods/Resources
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
monetizing ecosystem resources
Monetizing Ecosystem Resources
  • Difficulties in monetizing ecosystem resources
    • Reluctance to place dollar amounts on “intrinsic” values
    • Lack of markets & market prices
    • Ecosystem resources are often “public goods”
    • Institutional barriers (P&G)
monetizing ecosystem resources13
Monetizing Ecosystem Resources
  • Ecosystems perform complex functions which provide:
    • Biological support for organisms
    • Goods and services to society
  • If societal goods and services can be identified and measured, then they likely can be valued monetarily
  • Any monetary values placed on ecosystem “human goods and services” MUST NOT be interpreted as the “total” value of the ecosystem!
ecosystem evaluation14
Ecosystem Evaluation
  • Ecosystem Evaluation Methods/Resources
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
resource values
Resource Values
  • Monetization requires identifying resource values
  • Use value: resource contributes to consumer satisfaction or producer profits
    • Visit natural areas for recreation, wildlife viewing, etc.
    • Harvest of natural products (fish, berries, wood, etc.)
    • Protect natural areas for future generations to visit
  • Non-use value: resource is valuable without use
    • Protect natural areas even if there are no plans to visit them
ecosystem evaluation16
Ecosystem Evaluation
  • Ecosystem Evaluation Methods/Resources
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
willingness to pay
Willingness to Pay
  • Resource valuation is based upon “willingness to pay”
  • Three measures of “willingness to pay”
    • Revealed willingness to pay
    • Imputed willingness to pay
    • Expressed willingness to pay
willingness to pay18
Willingness to Pay
  • Revealed willingness to pay -- willingness to pay can be estimated using market-related transactions
willingness to pay19
Willingness to Pay
  • Revealed willingness to pay methods
    • Market price method: prevailing prices for goods and services traded in markets
    • Examples: prices paid for berries, fish, wood products, etc.
    • Productivity method: estimate changes in net income if natural resources is used in production process
    • Examples: improved reservoir water quality may decrease treatment costs and/or increase productivity for a firm using water supplies)
willingness to pay20
Willingness to Pay
  • Revealed willingness to pay methods (cont’d):
    • Hedonic pricing method: estimates the value of environmental amenities that affect the prices of other goods
    • Example: homes located next to parks or open spaces can have higher property values
    • Travel cost method: estimates value of recreation benefits based upon consumer’s expenditures to visit a site
    • Example: recreation surveys to determine distance traveled and related expenses
willingness to pay21
Willingness to Pay
  • Imputed willingness to pay methods – willingness to pay can be approximated by the cost of avoiding damage or replacing ecosystems
willingness to pay22
Willingness to Pay
  • Imputed willingness to pay methods:
    • Damage costs avoided method: estimate the value of property protected or the cost of actions taken to avoid damage
    • Example: damage to properties that would suffer flood damage if a wetland were lost to development
willingness to pay23
Willingness to Pay
  • Imputed willingness to pay methods (cont’d):
    • Replacement cost method: uses the cost of replacing an ecosystem or its services as an estimate of its value
    • Example: the value of a wetland to be lost can be estimated by the cost to purchase an existing functioning wetland or by restoring a degraded wetland)
willingness to pay24
Willingness to Pay
  • Imputed willingness to pay methods (cont’d):
    • Substitute cost method: uses the cost of providing substitute services as a measure of value
    • Example: the value of a wetland to be lost can be estimated by the cost of providing structural infrastructure (levees, floodwalls, etc.)
willingness to pay25
Willingness to Pay
  • Expressed willingness to pay -- willingness to pay can be determined by asking people what they would be willing to spend for ecosystem amenities
willingness to pay26
Willingness to Pay
  • Expressed willingness to pay methods:
    • Contingent valuation: surveys are used to ask people how much they would be willing to spend for environmental amenities
    • Example: How much would you be willing to pay to restore Hetch Hetchy Valley?
willingness to pay27
Willingness to Pay
  • Expressed willingness to pay methods (cont’d):
    • Contingent choice: surveys to ask people to state a preference between one group of environmental amenities (with a given cost) and another set of environmental amenities (with a different cost)
    • Example: would you be willing to spend $ x for Project A or $ y for Project B?
willingness to pay28
Willingness to Pay
  • The Corps and the Bureau do not currently accept monetary values for ecosystem benefits
  • Both agencies are investigating ecosystem benefit valuation methods
  • The Corps uses cost-effectiveness and tradeoff analyses to determine the best ecosystem restoration proposal
ecosystem evaluation29
Ecosystem Evaluation
  • Ecosystem Evaluation Methods/Resources
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
benefit transfers
Benefit Transfers
  • Benefit estimates developed by other studies
  • Benefit transfers are most reliable when:
    • original and current study site have similar socioeconomic and environmental characteristics
    • environmental change is very similar for the two sites
    • original valuation study used sound valuation techniques
ecosystem evaluation31
Ecosystem Evaluation
  • Ecosystem Evaluation Methods/Resources
  • Monetizing Ecosystem Resources
  • Resource Values
  • Willingness to Pay
  • Benefit Transfers
  • Example Analyses
slide33

Hamilton City Flood Damage Reduction and Ecosystem Restoration Project(USACE/State Reclamation Board)

objectives
Objectives
  • Reduce the risk to public safety from flooding
  • Reduce damage due to flooding
  • Reconnect river and its floodplain
  • Increase quantity and quality of riparian and related floodplain habitat
final plan selection
Final Plan Selection
  • Criteria: Maximize total non-monetary and monetary benefits over total costs
  • Two Methods:
    • Tradeoff Analysis (Engineering Circular 105-2-404)
    • Cost-Effectiveness/Incremental-Cost Analyses
tradeoff analysis
Tradeoff Analysis
  • Combines monetary and non-monetary benefits
  • “Proportion of maximum” method
  • Equal weight to monetary and non-monetary factors:
    • 0.50 monetary (flood damage reduction and costs)
    • 0.50 non-monetary (ecosystem restoration)
tradeoff analysis42
Tradeoff Analysis
  • Monetary weights assigned in proportion to maximum annual costs and benefits:
    • Maximum annual flood damage reduction benefits = $577,000
    • Maximum annual costs = $3,048,000
    • $577,000/$3,048,000 = 0.08/0.42
    • 0.08 + 0.42 = 0.50
tradeoff analysis43
Tradeoff Analysis

Alt 6 Example = 0.1836 = (0.9477 x 0.5) + (1.0000 X 0.08) + (-0.8816 X 0.42)

cost effectiveness incremental cost analyses for combined plans
Cost-Effectiveness/Incremental-Cost Analyses for Combined Plans
  • Based upon “remaining costs” to allow monetary and non-monetary benefits to be merged for Cost-Effectiveness and Incremental-Cost Analysis
  • Remaining costs =

Total Project Costs – Flood Damage Reduction Benefits

cost effectiveness analysis
Cost-Effectiveness Analysis

Best Buy Plans—provide the greatest increase in outputs for the least increase in cost and have the lowest incremental cost per unit of output relative to the other cost-effective plans

recommended plan
Recommended Plan
  • Construct 6.8 miles of setback levee (90% x 75-yr)
  • Remove most of “J” levee
  • Restore 1,500 acres of native habitat
project area
Approximately 1 million acres in Glenn, Colusa, and northern Yolo counties

Primary land use is irrigated crops, some grazing in the foothills

Lies within the Pacific Flyway

Project Area
slide53
Annual flood season from October to March

Due to inadequate conveyance of several streams leading out of the Coastal Range

Peak flow and flood area during 1995 and 1998 floods

Flood Problem

objectives54
Objectives
  • Work with landowners, other local interested parties, and public agencies
  • Minimize property damage from flooding
  • Maximize landowner benefits
  • Enhance and protect environmental resources
  • Improve long-term watershed health
alternatives
Alternatives
  • No Action
  • Structural Alternative:
    • Detention basins in the upper watershed
    • Rice field spreading basins
    • Wetland creation behind detention basins
    • Channel modifications
    • Stream restoration in lower watershed
alternatives56
Alternatives
  • Nonstructural Alternatives
    • Rangeland management
    • Reforestation
    • Floodplain management (elevating structures)
  • Combined Alternative: includes structural and nonstructural measures
project benefits
Project Benefits
  • Avoided flood damage
    • Structures and agriculture
    • Estimated using US Army Corps of Engineer’s Flood Damage Assessment (FDA) program
  • Environmental benefits
    • Habitat services
    • Recreation
habitat services
Habitat Services
  • Improved water quality through erosion control and wetlands
  • Improved biodiversity including T&E and special status species:
    • Giant Garter Snake
    • Valley Elderberry Longhorn Beetle
    • Anadromous fishes
  • Improved carbon sequestration
  • Improved aesthetics from rangeland management and reforestation
monetizing habitat services
Monetizing Habitat Services
  • Markets do not usually exist, therefore there are no prices to indicate value
  • Credit Banks have emerged for restoring, enhancing, and preserving wetlands, woodlands, and endangered species habitat
  • Legally recognized and intended to protect the ecological services that habitats provide
  • Credit Bank prices are a reasonable “imputed” estimate for the economic value of project habitats
mitigation bank prices
Mitigation Bank Prices
  • The service area of the Wildlands, Inc., Sheridan mitigation bank overlaps the district boundaries
  • Prices from the Sheridan bank were used to estimate value for wetlands and riparian habitat
  • Range of values were developed:
    • Lower bound-- estimated project restoration costs (about $9,000/acre)
    • Upper bound -- Sheridan bank prices (about $50,000/acre, including long-term O&M)
ecosystem valuation methods
Ecosystem Valuation Methods
  • Websites
    • www.ecosystemvaluation.org
    • www.nps.gov/ncrc/portals/rivers/projpg/econ.htm
    • www.epa.gov/owow/wetlands/economics.html
    • www.books.nap.edu/catalog/11139.html National Academies Publication Valuing Ecosystem Services
    • www.economics.water.ca.gov/documents.cfm
to summarize
To Summarize…
  • Ecosystem evaluation methods
    • Cost-effectiveness analysis
    • Tradeoff analyses
    • Benefit-cost analysis
  • Types of Values
    • Use
    • Non-use
to summarize64
To Summarize…
  • Willingness to Pay
    • Revealed willingness to pay
    • Imputed willingness to pay
    • Expressed willingness to pay
  • Benefit transfers
what s next
What’s Next?
  • Case study