Natural Capital: Counting it in! by Dr. Allaine Baaco, Western Philippine University (WPU)

1. Western Philippines University
NATURAL CAPITAL:
COUNTING IT IN!
Allaine T. Baaco
Western Philippines University
Puerto Princesa Campus
Western Philippines University

2. Western Philippines University
Overview of presentation
 Understanding the environment
 Defining economic valuation
 SEEA Framework
 Significance of economic valuation of natural
resources in the National Income Accounting
Western Philippines University

3. Western Philippines UniversityWestern Philippines University
Environment
Composed of different
ecosystems.

4. Western Philippines UniversityWestern Philippines University
Ecosystems
A dynamic interaction of plants,
animals, microorganisms community
and the nonliving physical environment
as one unit.

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Ecosystems Services
Benefits people obtain
from ecosystems.

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Ecosystem Benefits
Western Philippines University

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Economic Values
of the Environment
Why?

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IN A WORLD
WHERE
MONEY
TALKS,
ENVIRONMENT
MUST HAVE A
“VOICE” SO
THAT IT CAN
BE HEARD.

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VOICE
,$, £, ¥, €
(ECONOMIC)
~ VALUE

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We consider environmental valuation
Western Philippines University
Resource Allocation
Decisions
• Efficient choice in the
use of scarce
resources
Resource Pricing
• Services
• Damaging impacts
Distributional
Impacts
• Gainers
• Losers
Awareness Raising
• Losses
• Opportunities
Measure
opportunities from
the environmental
changes

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Definition
Economic valuation techniques
re-defines the previous conception of
nature as a complex web of inter-related
and ever-changing relationships into an
image of nature as a provider of
measurable services.
Western Philippines University

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Definition
Economic valuation can generate
estimates of the value of ecosystem
services in monetary terms.
Western Philippines University

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Monetary valuation of Ecosystem
services
Monetary valuation via markets, particularly
provisioning services, are traded in markets
and
Monetary valuation via surrogate markets for
services not traded in the market, particularly
the regulating and support services

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In Accounting…
Western Philippines University
STOCKS
(Natural capital)
FLOWS
(Ecosystems &
abiotic services) VALUE
(Goods & Services)
VALUE
(Maintaining ecological
function)
MISSING
VALUE
(Nature as nature)
MISSING
Figure modified from the natural capital protocol.

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Methodology:
 The SEEA
 Expanding the Systems of National Accounts
(SNA) to the environment
 contains the internationally agreed standard
concepts, definitions, classifications, accounting
rules and tables for producing internationally
comparable statistics on the environment and its
relationship with the economy.

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Environmental Services and human well-being:
Ecosystems & Biodiversity
Service
e.g. wood
that is
harvested
Capacity
(function)
e.g. growth
of biomass
e.g.
photosynthesis
Biophysical
Structure
or process
(functioning)
e.g. wood
supply for
furniture
Benefit(s)
Human well-being
Value
e.g. value of
wood used for
furniture
Cascade Diagram, modified from Haines-Young and Potschin)

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Environmental Services:
 Provisioning services: the
products that can be extracted
from or harvested in ecosystems

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Environmental Services:
 Regulating Services: regulation of
ecological, hydrological and climate processes

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Environmental Services:
 Cultural services: the non-material benefits
from ecosystems (e.g. recreation, education
and research)

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Environmental Services:
 Support services: Ecosystem services that
are necessary for the production of all other
ecosystem services. Some examples include,
production of atmospheric oxygen, and
provisioning of habitat.

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Linking Services to Values
Provisioning
Services
Ecosystem
Regulating
Services
Cultural
Services
Support
Services
Direct use
values
Indirect
use Values
Option
Values
Non-use
Values
Total Economic Value
Step 1. Specification of
boundaries and system
to be valued..
Step 2. Assessment of
ecosystem services in
bio-physical terms
Step 3. Valuation using
monetary or other
indicators..
Step 4. Aggregation of the
different values

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Ecosystem services and valuing methods:
SERVICE VALUE INDICATOR
Timber Opportunity cost
Non-Timber Forest Products Market value of products
Biodiversity Pharmaceutical genetic
material
Carbon sequestration and Carbon Stock Social Cost of Carbon
Water Supply Resource Charge
Water Purification Averting Expenditure Method
Soil protection Replacement of forest for soil
retention
Ecotourism/Recreational Value Travel Cost Method
Oxygen Production Cost of Hospital Oxygen

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Economic valuation enables
agencies to respond more effectively to
an unavoidable cost of economic
development and growth

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Natural inputs
(raw materials)
Economic Activity
ENVIRONMENTAL ASSETS
(Capital stocks, Environmental Quality)
Residuals
(emissions,
waste)
Ameneties,
Health & Safety
Outputs Inputs
Income
Goods/Services
Labor
Capital
Resouces
Service
Function
Resource
Function
Sunk
Function
Policies
Measures
Opportunities
Taxes
Subsidies
Regulations
Investments
Research
Innovation
Trade
Education &
Training
Economic Opportunities & Policy Responses

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Maraming
Salamat po!

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References:
Baaco, A. T. , J. M. Javier, H. G. Lagan, B. Montaño, and R. Sariego. 2015.
Economic Values of Mount Mantalingahan Protected Landscape.
Briones, N. D., A. T. Baaco, J. M. Javier, R. G. Dolorosa and S. Tabayag.
2016. Biodiversity values of Rasa Island Wildlife Sanctuary.
Cambridge Conservation Initiative. 2016. Biodiversity at the Heart of
Accounting for Natural Capital: the Key to Credibility
Dvarskas, Anthony. 2013. SEEA and the Green Economy. United Statistics
Division. July 3, 2013.
European Union. 2013. Mapping and assessment of ecosystems services: An
analytical framework for ecosystem assessment under Action 5 of EU
Biodiversity Strategy to 2020. Discussion paper – Final. April 2013.
Natural Capital Coalition. 2016. Natural Capital Protocol.

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References:
SEEA CF 2012. System of Environmental-Economic Accounting 2012 –
Central Framework. Ed. United Nations, European Union, Food and
Agriculture Organization of the United Nations, International Monetary
Fund, Organisation for Economic Co-operation and Development and The
World Bank. ISBN: 987-92-1-161563-0