Somewhere between $7.4 billion and $61.7 billion.

It’s a wide range, but a new study suggests that somewhere in there is the annual monetary benefit provided by all the natural ecosystems in the Puget Sound region — although it may be a low estimate.

See Associated Press story, or download the report, A New View of the Puget Sound Economy (PDF 2.1 mb).

While the numbers don’t have much meaning because of the wide range, this study by Earth Economics is the first time anyone has really tried to quantify the monetary benefit of natural systems in Puget Sound. Economic value is one way to justify expensive restoration efforts, so the study will probably be of interest to many policymakers.

The “natural asset value” — said to be comparable to the “capital asset value” for real property and real estate — was calculated at more than $243 billion.

I have to say that Dave Batker, author of study, has developed an interesting methodology for calculating these values. He examined the functions of working ecosystems, such as purifying drinking water and providing flood protection.

The next step was to determine the most appropriate way to value each commodity. Among the possible valuation models, with examples:

• Replacement cost: What would it cost to build a man-made water-treatment system to do what a natural system can do?
• Avoided cost: How much would you have to pay for flood damage if the natural system wasn’t there to take that flow of water?
• Factor income: Good water will increase the growth of fish, which provides real dollars to the fishing industry.
• Travel costs: Natural systems provide recreation opportunities, and people would pay more to travel to other places to get that experience.
• Hedonic pricing: How much more value is there to living on a well maintained shoreline than somewhere else?

Where Batker struggles with the numbers is when he applies these models to the landscape. His broad-brush approach is like looking at Puget Sound from outer space and trying to calculate the complex economic activities going on at ground level.

From the study:

Using Geographic Information System (GIS) data for the Puget Sound Basin, the acreages of forest, grass and shrub, agriculture and pasturelands, wetlands, urban areas, lakes, ponds, rivers and streams, marine and estuarine waters, eel grass and ice and rock were multiplied by the estimated value production per acre, where reasonable values could be found, for each identified ecosystem services. Peer reviewed journal articles were reviewed for each GIS classification and the values associated with each ecological service. The high and low values for each ecosystem type and ecological service were selected to provide the high and low range estimates.

I think Batker took his analysis about as far as he could on the scale at which he was working. But his methodology could be a good starting point if someone wants to examine the value of natural systems at a more detailed level.

Many people would agree with his conclusion:

What can clearly be concluded is that even with the incomplete estimates that we present, the value of the annual flow of ecosystem services to residents of the Puget Sound is vast, in the billions of dollars annually. The value of this flow of benefits, analogous to a “capital asset” value of the Puget Sound basin is also vast. The “asset” value of Puget Sound ecosystems is at least on the order of hundreds of billions, and into the trillions of dollars if their value to future residents is counted.

The natural assets of the Puget Sound basin are not immutable. They can and are being lost. This threatens our economy and quality of life.

Share on Facebook

Tweet This Post 

Tags: Earth Economics, Puget Sound

This entry was posted on Friday, July 25th, 2008 at 4:43 pm and is filed under Education, Land use, Puget Sound, Research, User groups. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.