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Copenhagen Consensus Center

Post-2015 Consensus: Biodiversity Perspective, McVittie

Perspective Paper


This perspectives paper explores in greater depth part of the cost-benefit analysis undertaken by Markandya, particularly for Sustainable Development Goal 15.2: By 2020, promote the implementation of sustainable management of all type of forests, halt deforestation, restore degraded forests, and increase afforestation and reforestation by x% globally.

Whilst the implementation costs of measures to achieve the Aichi targets have been estimated during a specific programme of work, the same is not the case for the benefits. Looking at ecosystem services for both tropical and temperate forest biomes, we find that the largest category for tropical forest is provisioning services (43% of value) while for temperate forest 49% relates to cultural services (largely recreation).

The majority of tropical forest valuations use market value type estimates. By contrast, nearly 60% of the temperate forest values are from stated preference techniques (contingent valuation, choice experiments). This raises a number of important issues; arguably the key ones with respect to the use of these extant values are passive use values and non-marginal values.

The estimates collected for valuation databases typically reflect marginal changes in the provision of ecosystem services. They are not appropriate for estimating the total value of an ecosystem. Put simply, can we defensibly use a $/ha value originally elicited for changing forest extent at one site by 10ha to value changes totalling thousands of hectares on a global scale? Nevertheless, existing value estimates are likely to be the only reasonable source for global cost-benefit analysis.

We can estimate benefits on a regional basis by using spatial variables to account for differences.  Value functions can be used to allow for the impact of different variables. For example, smaller sites have higher values per hectare, consistent with diminishing marginal utility, and the extent of urban areas within 50 km also increases per ha values of forest. Values across regions also reflect variables such as income levels.

The total losses from deforestation from 2000 to 2050 reported by Markandya range from US$334bn to US$1,118bn, compared to a total undiscounted value of US$1,322bn implied by the value functions in this paper. However, a key aspect of the current analysis is that by using regional estimates of value it is possible to explore the distributional aspects of policy intervention. For tropical forest the loss in the value of ecosystem benefits from deforestation reflects both the relative biome extent across regions and also the greater variability in per ha values, whereas losses in OECD countries are relatively high despite modest changes in forest extent.

There are 17 countries with forest extent greater than 40 million ha each (>1% of total global forest) accounting for a cumulative 76.6% of global area. An approach to allocating costs across regions would be to use the number of countries from that list of 17 in each region.  It would be reasonable to assume that the incidence of costs, particularly where these are to create capacity not currently present, will fall disproportionately on some regions and most likely the least developed and those with large forest resources.

Using an equal allocation of costs across regions, BCRs range from 0.9 for the upper cost estimate in sub-Saharan Africa (the only case below unity) to 5.9 for lower costs in Russia and Central Asia. If legal and enabling costs are allocated across non-OECD countries, the BCRs for the OECD rise to over 200, but ratios for other regions fall only modestly. However, it can be argued that the analysis remains partial in that it does not explicitly consider spillover effects such as those due to carbon sequestration and passive use values. Consequently there is the potential for those OCED nations experiencing the highest benefits both from policy action within their nations and also from passive use and carbon spillovers to transfer resources to ensure those benefits are achieved.