Environmental Valuation & Cost-Benefit News

Forward:
Global warming may dominate headlines today. Ecosystem degradation will do so tomorrow. The Millennium Ecosystem Assessment— the first global audit of the world’s forests, wetlands, and other ecosystems—found that ecosystems have declined more rapidly and extensively over the past 50 years than at any other comparable time in human history. Left unchecked, this degradation jeopardizes not just the world’s biodiversity, but also its businesses. This is because companies depend on the services healthy ecosystems provide such as freshwater, wood, genetic resources, pollination, climate regulation, and natural hazard protection.

This publication provides corporate managers with a proactive approach to making the connection between ecosystem change and their business goals. It introduces the Corporate Ecosystem Services Review—a structured methodology to help businesses develop strategies for managing risks and opportunities arising from their dependence and impact on ecosystems. It is a tool for corporate strategy development and can augment existing environmental management systems.
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Three organizations contributed complementary skills to create the Ecosystem Services Review: The World Resources Institute..., Five member companies of the World Business Council for Sustainable Development—Akzo Nobel, BC Hydro, Mondi, Rio Tinto, and Syngenta ... and The Meridian Institute....

Global climate change and the demands of a growing population are likely to further degrade ecosystems in coming years, increasingly challenging business assumptions and practices. The Ecosystem Services Review offers a promising approach for companies to manage the risks and opportunities that will emerge and, at the same time, to become better stewards of the environment....
Jonathan Lash, President World Resources Institute
Björn Stigson, President World Business Council for Sustainable Development
John Ehrmann, PhD, Managing Partner Meridian Institute

Summary:
Ecosystems provide businesses with numerous benefits or “ecosystem services.” Forests supply timber and wood fiber, purify water, regulate climate, and yield genetic resources. River systems provide freshwater, power, and recreation. Coastal wetlands filter waste, mitigate floods, and serve as nurseries for commercial fisheries.

However, human activities are rapidly degrading these and other ecosystems. The Millennium Ecosystem Assessment—the largest audit ever conducted of the condition and trends in the world’s ecosystems—found that ecosystems have declined more rapidly and extensively over the past 50 years than at any other comparable time in human history. In fact, 15 of the 24 ecosystem services evaluated have degraded over the past half century. The Assessment projected further declines over coming decades, particularly in light of population growth, economic expansion, and global climate change. Left unchecked, this degradation could jeopardize future economic well-being, creating new winners and losers within the business community.

Ecosystem degradation is highly relevant to business because companies not only impact ecosystems and the services they provide but also depend on them. Ecosystem degradation, therefore, can pose a number of risks to corporate performance as well as create new business opportunities. Types of risks and opportunities include:
* Operational:
-- Risks such as higher costs for freshwater due to scarcity, lower output for hydroelectric facilities due to siltation, or disruptions to coastal businesses due to
flooding
-- Opportunities such as increasing water-use efficiency or building an on-site wetland to circumvent the need for new water treatment infrastructure
* Regulatory and legal
-- Risks such as new fines, new user fees, government regulations, or lawsuits by local communities that lose ecosystem services due to corporate activities
-- Opportunities such as engaging governments to develop policies and incentives to protect or restore ecosystems that provide services a company needs
• Reputational
-- Risks such as retail companies being targeted by nongovernmental organization campaigns for purchasing wood or paper from sensitive forests or banks facing similar protests due to investments that degrade pristine ecosystems
-- Opportunities such as implementing and communicating sustainable purchasing, operating, or investment practices in order to differentiate corporate brands
* Market and product
-- Risks such as customers switching to other suppliers that offer products with lower ecosystem impacts or governments implementing new sustainable procurement policies
-- Opportunities such as launching new products and services that reduce customer impacts on ecosystems, participating in emerging markets for carbon sequestration and watershed protection, capturing new revenue streams from company-owned natural assets, and offering eco-labeled wood, seafood, produce, and other products
* Financing
-- Risks such as banks implementing more rigorous lending requirements for corporate loans
-- Opportunities such as banks offering more favorable loan terms or investors taking positions in companies supplying products and services that improve resource use efficiency or restore degraded ecosystems.

Unfortunately, companies often fail to make the connection between the health of ecosystems and the business bottom line. Many companies are not fully aware of the extent of their dependence and impact on ecosystems and the possible ramifications. Likewise, environmental management systems and environmental due diligence tools are often not fully attuned to the risks and opportunities arising from the degradation and use of ecosystem services. For instance, many tools are more suited to handle “traditional” issues of pollution and natural resource consumption. Most focus on environmental impacts, not dependence. Furthermore, they typically focus on risks, not business opportunities. As a result, companies may be caught unprepared or miss new sources of revenue associated with ecosystem change.

The Corporate Ecosystem Services Review (ESR) is designed to address these gaps. It consists of a structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems. It is a tool for strategy development, not just for environmental assessment. Businesses can either conduct an Ecosystem Services Review as a stand-alone process or integrate it into their existing environmental management systems. In both cases, the methodology can complement and augment the environmental due diligence tools companies already use.

The Ecosystem Services Review can provide value to businesses in industries that directly interact with ecosystems such as agriculture, beverages, water services, forestry, electricity, oil, gas, mining, and tourism. It is also relevant to sectors such as general retail, healthcare, consulting, financial services, and others to the degree that their suppliers or customers interact directly with ecosystems. General retailers, for example, may face reputational or market risks if some of their suppliers are responsible for degrading ecosystems and the services they provide.

This publication describes the five steps for performing an Ecosystem Services Review. It provides an analytical framework, case examples, and helpful suggestions for each step. It concludes by highlighting a number of resources managers can use when conducting an Ecosystem Services Review, including a “dependence and impact assessment” spreadsheet, scientific reports, economic valuation approaches, and other issue-specific tools.

Global degradation of ecosystems and the services they provide threatens to alter the landscape in which business operates. The Ecosystem Services Review is a proactive approach for companies to manage the risks and opportunities that are emerging. Furthermore, by helping companies make the connection between healthy ecosystems and the bottom line, it will encourage not only more sustainable business practices, but also corporate support for policies to protect and restore ecosystems.

Background:
...
Earlier this decade, [Allegheny Power] ... a U.S.-based electric utility wanted to divest its 4,800-hectare Canaan Valley property in West Virginia. Traditional approaches appraised the real estate at $16 million. Believing the property—with its pristine forests, marshes, and abundant wildlife—was worth more, the company commissioned an economic valuation of the marketable environmental benefits provided by the site, including its ability to sequester carbon and its wetlands. The eco-assessment boosted the total value to nearly $33 million. Allegheny Power subsequently sold Canaan Valley to the U.S. government—which merged it with an existing wildlife refuge—for the traditional appraisal price of $16 million. Using "bargain sale” provisions in the federal tax code, however, the company was able to claim a charitable contribution of $17 million for the property’s environmental value, yielding several million dollars in tax-related savings.

Contents:
Summary iv
Chapter I: Background 1
Ecosystem change as source of business risk and opportunity 1
Introducing ecosystem services 3
Linking ecosystem services and business goals: the ESR 8
Chapter II: Methodology 11
Overview 11
Step 1: Select the scope 13
Step 2: Identify priority ecosystem services 14
Step 3: Analyze trends in priority ecosystem services 20
Step 4: Identify business risks and opportunities 24
Step 5: Develop strategies for addressing risks and opportunities 30
Next steps 32
Chapter III: Resources 33

World Resources Institute – WRI; 10 G Street, NE (Suite 800), Washington DC 20002, United States; Tel: +1 202 729 76 00, Fax: +1 202 729 76 10; Web: www.wri.org
Meridian Institute; PO Box 1829, 105 Village Place, Dillon CO 80435, United States; Tel: +1 888 775 83 40, Fax: +1 970 513 83 48; Web: www.merid.org
World Business Council for Sustainable Development – WBCSD; Chemin de Conches 4, 1231 Conches-Geneva, Switzerland; Tel: +41 22 839 31 00, Fax: +41 22 839 31 31; Web: www.wbcsd.org ISBN-978-1-56973-679-1

World Business Council for Sustainable Development (WBCSD) www.wbcsd.org
http://www.wbcsd.org/DocRoot/WvmvdJDHdLmBAIciWrow/corporate_ecosystem_services_review.pdf

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Volkswagen unveiled a hatchback in Europe this week that gets even better mileage than the Prius. The VW Golf TDI Hybrid gets 69 miles per gallon in the European fuel economy test cycle, according to Volkswagen. Toyota claims 54 mpg for the Prius in the same test.

It's a concept vehicle...now, but [is] in the "near term future" for European customers, [and could eventually be sold in the U.S.] a VW spokesman said.
...
A non-hybrid 2006 Volkswagen Jetta diesel sedan gets 33 mpg in combined city and highway driving, according to current EPA estimates. A 2007 Toyota Camry Hybrid, a similarly-sized car, gets just one mile per gallon more. And the Jetta diesel gets much better highway fuel economy - 38 mpg - than the Camry.
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For the U.S. passenger car market, there's an additional cost hurdle: It's harder for diesel engines to meet strict clean-air requirements here....

But with new ultra-clean diesel fuel now readily available at American gas stations and new exhaust-cleaning technology in cars, various automakers hope to introduce a new generation of clean-diesel cars here over the next couple of years.

But like hybrids, these new diesels will be more expensive than similar gas-powered cars. The mark-up may not be quite as much, though.

Volkswagen estimates that the 2009 Jetta diesel will cost about $2,000 more than the gas-powered version. Official pricing hasn't been announced yet....

Manufacturers almost always add unrelated equipment to hybrids,... but hybrids usually cost at least $2,500 more than non-hybrid versions of the same vehicle.
...
Diesel engines [also] last longer than gas engines.

Hybrids, on other hand, generally do worse than other cars in resale value, according to Kelley Blue Book.

Diesel fuel generally costs less than gas [in Europe].
...
If ...VW were to ramp up production, that could bring down the per-unit costs

By Peter Valdes-Dapena
FOR FULL STORY GO TO:
http://money.cnn.com/2008/03/06/autos/volkswagen_diesel_hybrid/?postversion=2008030712
CNNMoney.com
Last Updated: March 10, 2008

Abstract: Interest in biofuels is growing worldwide as concerns about the security of energy supply and climate change are moving into the focus of policy makers. With the exception of bioethanol from Brazil, however, production costs of biofuels are typically much higher than those of fossil fuels. As a result, promotion measures such as tax exemptions or blending quotas are indispensable for ascertaining substantial biofuel demand. With particular focus on developing countries, this paper discusses the economic justification of biofuel promotion instruments and investigates their implications. Based on data from India and Tanzania, we find that substantial biofuel usage induces significant financial costs. Furthermore, acreage availability is a binding natural limitation that could also lead to conflicts with food production. Yet, if carefully implemented under the appropriate conditions, biofuel programs might present opportunities for certain developing countries.
Keywords: Renewable energy; Environmental policy; Economic development

by Jörg Peters and Sascha Thielmann; Division “Environment and Resources”, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI Essen), Hohenzollernstr. 1-3, 45128 Essen, Germany; Tel.: +49 201 8149 247; fax: +49 201 8149 200.

Energy Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 36, Issue 4; April, 2008; Pages 1538-1544
http://dx.doi.org/10.1016/j.enpol.2008.01.013

Abstract: Arik Levinson and M. Scott Taylor use theory and empirics to examine the effect of environmental regulations on trade flows. A simple model demonstrates how unobserved heterogeneity, endogeneity, and aggregation issues bias standard measurements of this relationship. A reduced-form estimate of the model, using data on U.S. regulations and trade with Canada and Mexico for 130 manufacturing industries from 1977 to 1986, indicates that industries whose abatement costs increased most experienced the largest increases in net imports. For the average industry, the change in net imports we ascribe to regulatory costs amounting to 10% of the total increase in trade volume over the period.

by Arik Levinson and M. Scott Taylor, both of Georgetown University, U.S.A. and University of Calgary, Canada

International Economic Review via Blackwell Publishing www.Blackwell-Synergy.com
Volume 49, Issue 1; February, 2008; Pages 223-254
doi:10.1111/j.1468-2354.2008.00478.x
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-2354.2008.00478.x

Abstract: This viewpoint article offers the proposition that purpose-grown biomass buried in landfills constitutes a “virtual” biofuel that is more practical, economic, and immediate than the use of actual biofuels from cellulosics. While not a permanent solution, it may be a useful bridge to the hoped-for era of actual biofuels prior to the time technology for economically converting cellulosics to actual liquid biofuels is realized.

Keywords: Biofuels; Landfill; Cellulosic

by Harry D. Saunders; Decision Processes Incorporated, 2308 Saddleback Drive, Danville, CA 94506, USA; Tel.: +1 925 743 8400; fax: +1 925 743 8406.

Energy Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 36, Issue 4; April, 2008; Pages 1247-1250
http://dx.doi.org/10.1016/j.enpol.2007.12.024

Abstract: Solar dryers use free and renewable energy sources, reduce drying losses (as compared to sun drying) and show lower operational costs than the artificial drying, thus presenting an interesting alternative to conventional dryers. This work proposes to study the feasibility of a solar chimney to dry agricultural products. To assess the technical feasibility of this drying device, a prototype solar chimney, in which the air velocity, temperature and humidity parameters were monitored as a function of the solar incident radiation, was built. Drying tests of food, based on theoretical and experimental studies, assure the technical feasibility of solar chimneys used as solar dryers for agricultural products. The constructed chimney generates a hot airflow with a yearly average rise in temperature (compared to the ambient air temperature) of 13 ± 1 °C. In the prototype, the yearly average mass flow was found to be 1.40 ± 0.08 kg/s, which allowed a drying capacity of approximately 440 kg.

Keywords: Solar chimney; Solar drying; Technical feasibility

by André G. Ferreira 1, Cristiana B. Maia 2, Márcio F.B. Cortez 3 and Ramón M. Valle 3
1. Departamento de Ciências Exatas e Tecnologia, Centro Universitário de Belo Horizonte, Av. Professor Mário Werneck, 1685. Buritis, Belo Horizonte, Minas Gerais, CEP 30455-610, Brazil; Tel.: +55 31 3498 0196; fax: +55 31 3378 9294
2. Pontifícia Universidade Católica de Minas Gerais, Av. Dom José Gaspar, 500 – Coração Eucarístico, Belo Horizonte, Minas Gerais, CEP 30535-901, Brazil
3. Departamento de Engenharia Mecânica, Universidade Federal de Minas Gerais, Av. Antônio Carlos, 6627 – Campus Pampulha, Belo Horizonte, Minas Gerais, CEP 31270-901, Brazil

Solar Energy via Elsevier Science Direct www.ScienceDirect.com
Volume 82, Issue 3; March, 2008; Pages 198-205
http://dx.doi.org/10.1016/j.solener.2007.08.002

Abstract: The merger of police services in the UK has been suggested on the grounds that efficiency improvements will be possible. This paper applies a public good model of the police service to evaluate the potential efficiency gains from mergers of police services in England and Wales. It uses a non-parametric method suggested by Bogetoft and Wang (2005). We construct a dataset that reflects the public good nature of police service and allows for the exogenous imposition by government on the level of police service budgets. Our main finding is that English and Welsh police service mergers could lead to increases in police staff resource efficiencies between 10 per cent and 70 per cent. Hence, we confirm the government's decision to merge English and Welsh police services.

by Richard Simper and Thomas Weyman-Jones, both of Department of Economics, Loughborough University, England and; Email: r.simper@lboro.ac.uk; t.g.weyman-jones@lboro.ac.uk

Annals of Public and Cooperative Economics via Blackwell Publishing www.Blackwell-Synergy.com
Volume 79, Issue 1; March, 2008; Pages 3-33
doi:10.1111/j.1467-8292.2007.00350.x
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-8292.2007.00350.x