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ECONOMIC VALUE OF ECOSYSTEM SERVICES IN NGĀTI RAUKAWA KI TE TONGA

Ngā Māramatanga-ā-Papa (Iwi Ecosystem Services) Research Monograph Series No. 6

Charles Chrystall, Murray Patterson, Anthony Cole & Nancy Golubiewski 2012

Economic Value of Ecosystem Services in Ngāti Raukawa ki te Tonga

Ngā Māramatanga-ā-Papa (Iwi Ecosystem Services) Research Monograph Series No. 6 (FRST MAUX 0502)

2012

Charles Chrystall1 Murray Patterson2 Anthony Cole3 Nancy Golubiewski1 1

At time of writing in 2008, New Zealand Centre for Ecological Economics School of People, Environment and Planning, Massey University (at time of writing in 2008, Director of New Zealand Centre for Ecological Economics) 3 At time of writing in 2008, Te Wānanga-o-Raukawa 2

Published by Iwi Ecosystem Services Research Team Massey University and Landcare Research/Manaaki Whenua Private Bag 11052 Palmerston North New Zealand

Ngā Māramatanga-ā-Papa (Iwi Ecosystem Services) Research Monograph Series This monograph is part of the Ngā Māramatanga-ā-Papa (Iwi Ecosystem Services) Research Monograph Series. Various other reports, presentations, workshops and teaching materials have also been produced, or will be published in due course, that cover other aspects of the research programme. Collaborators in the research included Massey University, Landcare Research/Manaaki Whenua, Te Wānanga-oRaukawa and Te Rūnanga-o-Raukawa. This, and other published reports in the series, can be downloaded from: http://www.mtm.ac.nz/index.php/knowledge-centre/publications.

“Kei ngaro pērā i te moa ngā tini uri o te taiao” “Restoring cultural, linguistic and biological diversity” Whakatauki courtesy of Keri Opai, Taranaki

ISBN 978-1-877504-05-1 ISSN 1170-8794-

Preface This report aims to identify values of services provided by land-based (as opposed to marine) ecosystems within the rohe of Ngāti Raukawa ki te Tonga (also referred to as the Ngāti Raukawa area/rohe in some places of this report). The authors stress that they do not claim the area used for this study is an accurate representation of the inland portion of the area encompassed by the rohe of Ngāti Raukawa ki te Tonga. Most ecosystem service values are not accounted for in standard economic accounts and, thus, are ‘hidden’ values. The authors believe it is paramount to estimate values for ecosystem services, such that they can be considered by policymakers and citizens alike alongside traditional measures such as GDP. This is a first attempt at a valuation of ecosystem services for this area and, as such, several improvements can be made. The authors are fully aware of the limitations of the methodology used to estimate values. The view is taken that imprecise values are much better than no values for services that are so important to human welfare. The authors wish to acknowledge the funding provided by the Foundation for Research, Science and Technology (Contract number EOI-10106-ECOS-MAU), which enabled this research.

Table of Contents Executive Summary 1. Introduction 1.1 Scope of the Project 1.2 The Importance of Ecosystem Services 1.3 Study Area 2 Methodology 2.1 Classifications 2.1.1 Classification of Value 2.1.2 Classification of Ecosystem Types 2.2 Valuation Approach 2.2.1 Neoclassical Estimation of Total Economic Value 2.2.2 Valuation Methods 2.2.3 Valuation of Flows not Capital Stocks 2.2.4 Limitations to the Valuation Approach 2.3 Methodological Process 2.3.1 Estimates of the Direct Use-Value of Ecosystem Services 2.3.2 Estimates of the Indirect Value of Ecosystem Services 2.3.3 Estimates of the Non-Use (Passive) Value of Biodiversity and Ecosystems 2.4 Exchange Rate and Inflation Conversions 3. Direct and Indirect Use-Value of Ecosystem Services and Biodiversity 3.1 Agricultural Ecosystems 3.1.1 Classification and Description 3.1.2 Value Estimation 3.2 Horticultural Ecosystems 3.2.1 Classification and Description 3.2.2 Value Estimation 3.3 Forest Ecosystems 3.3.1 Classification and Description 3.3.2 Value Estimation 3.4 Scrub Ecosystems 3.4.1 Classification and Description 3.4.2 Value Estimation 3.5 Forest-Scrub Ecosystems 3.5.1 Classification and Description 3.6 Intermediate Agriculture-Scrub Ecosystems 3.6.1 Classification and Description 3.6.2 Value Estimation 3.7 Intermediate Agriculture-Forest Ecosystems 3.7.2 Value Estimation 3.8 Lake Ecosystems 3.8.1 Classification and Description 3.8.2 Value Estimation 3.9 River Ecosystems 3.9.1 Classification and Description 3.9.2 Value Estimation 3.10 Swamp/Floodplain Ecosystems 3.10.1 Classification and Description 3.10.2 Value Estimation 3.11 Estuarine Ecosystems

i 1 1 1 2 3 3 3 4 6 7 8 9 9 9 10 10 11 11 11 12 12 12 12 13 13 13 14 14 14 15 15 15 16 16 17 17 18 18 19 19 19 20 21 21 21 22 22 22 23

3.11.1 Classification and Description 3.11.2 Value Estimation 3.12 Summary of Direct and Indirect Value 3.12.1 Value, By Ecosystem Type 3.12.2 Value, By Ecosystem Services 4 Summary 4.1 Value of Ecosystem Services and Biodiversity 4.2 Methodological and Theoretical Issues References Appendix A Appendix B Appendix C

23 23 24 24 26 28 28 29 31 34 35 36

Executive Summary Ecosystems provide services that, if not vital to human existence, at least contribute to our welfare. Often these ‘ecosystem services’ are taken for granted and not made explicit in standard economic accounts and, are therefore, frequently ignored in public policy decision-making. This report aims to give some ‘visibility’ to the importance of services provided by ecosystems inside the rohe of Ngāti Raukawa ki te Tonga by quantifying their value. This then allows the value of ecosystem services to potentially be compared with standard economic yardsticks such as the GDP of the economy in Ngāti Raukawa ki te Tonga. What are Ecosystem Services? The landscape inside the rohe of Ngāti Raukawa ki te Tonga consists of a number of ecosystem types that provide value to humans. The rohe encloses a total area of 494,339 ha (Golubiewski, 2012). For the purposes of this study we have used the following ecosystem categories: agriculture (334,341 ha), horticulture (10,958 ha), intermediate agriculture-scrub (2,671 ha), intermediate agriculture-forest (33,332 ha), forest (71,999 ha), scrub (7,690 ha), forest-scrub (15,735 ha), lakes (781 ha), rivers (2,493 ha), swamps-floodplains (3,188 ha), and estuaries (46 ha). As this report is part of a broader project that focuses on land-based as opposed to marine ecosystems within the rohe of Ngāti Raukawa ki te Tonga, only land-based ecosystems are considered. Ongoing research, entitled “Manaaki Taha Moana”, examines coastal-marine ecosystem services (see: www.mtm.ac.nz). All these ecosystems deliver ecosystem services that are either directly or indirectly important in terms of human welfare. For example, forest ecosystems provide timber, which is considered to have a direct value. Forests provide other ecosystem services that are important to humans, including several indirect services, for instance, climate control (primarily through carbon sequestration). They also provide erosion control (as soil is held together by the trees’ root structures), water regulation (by moderating runoff and flood events), recreation opportunities, a habitat for species, and so forth. With the exception of timber provision, while none of these ecosystem services are accounted for in standard economic accounts, they are nevertheless important in terms of their contribution to human welfare. The ecological services covered in this analysis include: gas regulation, climate regulation, disturbance regulation, water regulation, water supply, erosion control and sediment retention, soil formation, nutrient cycling, waste treatment, pollination, biological control, refugia, food production, raw materials, genetic resources, recreation, and cultural services. Use Value of Ecosystem Services The total use value (direct plus indirect) of ecosystem services from land inside the rohe of Ngāti Raukawa ki te Tonga is estimated to be $967.6 million. Indirect value is the larger value, at $647.8 million, compared with direct value, at $319.7 million. Most of the value of biodiversity is not included in the system of national accounts (SNAs). Although the majority of food production and raw materials ecosystem services are accounted for in SNAs, as well as a proportion of water regulation services, these only account for an estimated $246.8 million of the total $967.6

million for ecosystem services in the study area. The remaining $720.8 million is ‘hidden’ value. Erosion control and food production are by far the most valuable ecosystem services, at $220.8 million and $210.1 million respectively. Food production is provided mainly by agriculture and horticulture, while erosion control is provided by all the terrestrial (or non-aquatic) ecosystems. Nutrient cycling ($108.9 million) and waste treatment ($103.3 million) are also highly valuable, the former mainly provided by ecosystems with a forest component, and the latter by several ecosystems, both terrestrial and aquatic. Agriculture is the most valuable ecosystem type, at $432.7 million, due mainly to its large spatial presence (67.6% of study area). Agriculture makes the highest contribution to both the direct and indirect values. Forest ($146.3 million) and swamps/floodplains ($138.3 million) are also highly valued, whilst horticulture delivers a high proportion of the total direct value (24 percent). The relatively high value for the swamps/floodplains ecosystem type is largely attributable to its high per hectare value, considering it comprises 14.3 percent of the total value for ecosystem services, yet covers just 0.6% of the study area. Caveats and the Need for Future Research These are only preliminary estimates of the value of services provided by ecosystems within the rohe of Ngāti Raukawa ki te Tonga, using a rapid assessment method. Caution therefore needs to be taken in interpreting these results. Most of the consumer surpluses are not fully estimated, thus it is likely that the value of ecosystem services will be understated, particularly for non-substitutable ecosystem services. Furthermore, the estimates are likely to be conservative as there were gaps in the data used from Costanza et al. (1997) data. The report provides estimates of the direct and indirect use-value provided by ecosystems. Ecosystems also have a non-use (passive) value, which is recognised by economists. This is reflected in the general willingness of an individual and society to pay for the preservation of ecosystem services, for their intrinsic values, future generations, or their possible future use. Future research is therefore needed to estimate passive values. Further research is also needed to adjust the data more specifically for the study area. This would require a thorough biophysical characterisation of ecological services from within the rohe of Ngāti Raukawa ki te Tonga, using local ecological research. This should then form a strong basis for deriving specific costs and valuations of services provided by ecosystems within the rohe. A value comparison with a Gross Regional Product would also be useful, giving an indication of the magnitude of the ecosystem services estimated herein. Unfortunately, Gross Regional Product’s for tribal areas don’t exist in the system of national accounts, and thus cannot be readily obtained. Further research is required to estimate such a value.

Introduction

1.1

Scope of the Project

The specific objective of this research project was to provide a first estimate of the value of ecosystem services provided by land-based ecosystems inside the rohe of Ngāti Raukawa ki te Tonga in 2006 using a rapid assessment methodology. The ‘total economic value’ (TEV) taxonomy promoted by Pearce et al. (1989) and Perrings (1995a) among others, is used in this analysis. The TEV of ecosystem services, like any resource, consists of direct use value (value derived from consumption and production), indirect use value (value derived from supporting or protecting consumptive or productive activities), and passive (non-use) values. Only use values, however, are estimated in this analysis. It is essential to assess the value of ecosystem services so that its value can be appreciated and compared with other yardsticks of progress. For instance, the value of ecosystem services can be compared with the GDP indicator that measures the value of the output of the economy. Only then will the value of ecosystem services become apparent to those decision-makers who are used to dealing with indicators such as the GDP. Costanza et al.’s (1997) analysis was probably the most significant in terms of its impact on the policy community, showing that world ecosystem services were, surprisingly, more than double the world GDP, in terms of their contribution to human welfare. 1.2

The Importance of Ecosystem Services

Section 1.2 (The Importance of Ecosystem Services) follows that of McDonald & Patterson (2008). Authors such as de Groot (1992), Costanza et al. (1997), Daily (1997) and de Groot et al. (2002), argue that once the functions of an ecosystem are known, the nature and extent of their value to human society can be analysed and assessed by the goods and services they provide. This concept of value is inherently anthropocentric: it is the presence of human beings as valuing agents that permits the translation of ecosystem services into value-laden entities. de Groot et al. (2002) suggest it is convenient to group ecosystem functions into four primary categories: •

Regulation functions: These regulate essential ecological processes and lifesupport systems via the biogeochemical cycles and various other biospheric processes. They maintain a healthy environment by providing clean air, water and soil, and biological control services.

•

Habitat functions: These provide refuge and reproduction habitat to wild plants and animals and thereby contribute to the in situ conservation of biological and genetic diversity and evolutionary processes.

•

Production functions: These refer to the conversion of energy, carbon dioxide, water and various nutrients into carbohydrate through the processes of photosynthesis. These functions provide many ecosystem goods for human consumption, including food, wood, fibre, genetic material and energy.

•

Information functions: These acknowledge that biodiversity contributes to human welfare because of its religious, spiritual or cultural importance. This includes opportunities for reflection, spiritual enrichment, cognitive development, recreation and aesthetic experience.

Ecosystems are also of value to humans because of passive (non-use) values. People often desire to preserve ecosystems, irrespective of whether they actually ‘use’ them. Neoclassical economists tend to classify passive value into three subcategories: option, existence, and bequest value. The distinctions between these types of value depend on whether the valuer intends to use the resource at a later date (option value), preserve it for a future generation (bequest value), or just wants to save it for its own sake (existence value). de Groot (1992), Patterson and Cole (1999), and de Groot et al. (2002) acknowledge that as their definition depends on the existence of a human valuer, passive values are essentially anthropocentric. 1.3

Study Area

The study area for this report (totalling 494,339 ha.) is taken from Golubiewski (2012), and is defined by the water catchments that encompass a general approximation of the Ngāti Raukawa rohe (tribal boundary), as shown below.

Methodology

Section 2 (Methodology) is similar to that of McDonald & Patterson (2008). This section outlines the methodology used in calculating the value of ecosystem services from within the rohe of Ngāti Raukawa ki te Tonga. 2.1

Classifications

Section 2.1 (Classifications) follows McDonald & Patterson (2008), except for subsection 2.1.2 (Classification of Ecosystem Types). A number of definitions and classification systems are used in this report, drawn from literature research. To date, there is no one accepted convention for classifying ecosystem services and their value. 2.1.1

Classification of Value

The value of the study area’s biodiversity was measured according to the Total Economic Value (TEV) taxonomy. By definition, TEV is the sum of direct, indirect and passive value i.e.: TEV = DV + IV + PV 1.

Direct Value (DV). This is the value of all goods and services derived from the direct use of biodiversity. Usually direct use value is measured by the System of National Accounts (SNA) and therefore included in GDP calculations, as it involves commodities traded on commercial markets. Occasionally, direct use value is not recorded in the SNAs, as it involves no commercial transaction (e.g. the use of firewood obtained free-of-charge from forests).

Indirect Value (IV). This is the value derived from biodiversity from supporting or protecting direct use activities. Biodiversity functions that have indirect use value include: climatic regulation, disturbance regulation, erosion control, soil formulation, nutrient cycling, waste treatment, pollination, biological control and refugia.

Passive Value (PV). This is the value not related to the actual use of biodiversity. It is therefore sometimes termed non-use value. Passive value can be decomposed into three component parts: •

Option Value: the willingness to pay for the preservation of biodiversity against some probability that an individual will make use of the biodiversity at a later date.

•

Existence Value: how much an individual is willing to pay to preserve biodiversity, even though that individual may never intend to use that biodiversity. For example, an individual may wish to preserve tuataras on an offshore island of New Zealand, but have no intention or inclination of ever visiting such an island because of its isolation.

•

Bequest Value: the willingness to pay to preserve biodiversity so that future generations can gain the benefit from that biological resource.

2.1.2

Classification of Ecosystem Types

The direct and indirect values of ecosystem services were measured according to various standard ecosystems. The study area was divided into eleven ‘standard ecosystems’ covering both the ‘terrestrial’ and ‘aquatic’ environments. These ecosystem types encompass culturally derived and self-regenerating aspects of the land cover. Standard Ecosystems The eleven standard ecosystem types used in this report were chosen in accordance with the valuation methodology used herein, which follows Cole & Patterson (1997), and Costanza (1997). Areas for the standard ecosystem types were derived by aggregating Golubiewski’s (2012) land-use land-cover categories, which were designed for the purposes of a different project, and hence the aggregations are not always natural fits for the standard ecosystem types. The standard ecosystem types are defined below, with Golubiewski’s (2012) categories indicated in parenthesis. The terrestrial ecosystems found inside the rohe of Ngāti Raukawa ki te Tonga were divided into the following seven types: •

Agriculture (High Producing Exotic Grassland, Low Producing Grassland). This is land used for pastoral farming, and includes intensively managed plains, terraces, low hill country and extensively managed grasslands. This ecosystem type is the largest in area, accounting for an estimated 334,341 ha, or 67.6 percent of the study area.

•

Horticulture (Short-rotation Cropland, Orchard and Other Perennial Crops, Vineyard). This is land primarily used for orchards, kiwifruit, vineyards, horticulture and market gardens. This ecosystem type covers an estimated 10,958 ha.

•

Forest (Podocarp-broadleaved forest, Coastal Forest, Podocarpbroadleaved/Beech forest, Indigenous Forest, Beech forest, Beech/Broadleaved forest, Broadleaved forest, Other Exotic Forest, Afforestation, Forest Harvested, Pine Forest – Closed Canopy, Pine Forest – Open Canopy, Major Shelterbelts, Deciduous Hardwoods). This refers to both exotic and indigenous forest. Exotic (mainly commercial) plantations cover pinus radiata, pseudotsuga menziesii, eucalyptus spp and other types. Indigenous forest includes tall forest canopy species mainly located in protected areas such as national parks and state forest parks (e.g. podocarp, broadleaf, beech, and so on). This ecosystem type is the second largest in area, accounting for an estimated 71,999 ha, which amounts to 15 percent of the study area.

•

Scrub (Manuka and or Kanuka, Fernland, Grey Scrub, Gorse and Broom). This consists of both native and exotic scrub communities made up of mixed broad-leaved shrubs, manuka, kanuka, bracken, ferns, and gorse. This ecosystem type covers an estimated area of 7,690 ha.

•

Forest-Scrub (Beech/Podocarp-broadleaved forest, Matagouri). This consists of formations of trees in combination with scrub species. The tree species are mainly beech, podocarps or broadleaves. This land is often protected and is

rarely used for commercial purposes. This ecosystem type covers an estimated 15,735 ha. •

Intermediate Agriculture-Scrub (Tall Tussock Grassland, mixed exotic shrubland). This land is predominately used for less intensive pastoral farming. The vegetative cover consists of a mixture of scrub with grasslands. This ecosystem type covers an estimated 2,671 ha.

•

Intermediate Agriculture-Forest (Subalpine Scrub, Sub Alpine Shrubland, Broadleaved Indigenous Hardwoods). This land is predominately used for pastoral farming with some commercial forestry, and consists of admixtures of subalpine scrub, sub alpine shrubland, broadleaved indigenous hardwoods with grasslands. This ecosystem type is the third largest in area, accounting for an estimated 33,332 ha, or 6.7% of the study area.

The aquatic ecosystems found within the rohe were divided into four classes: •

Lakes (Lake and Pond). Lakes here consist of lakes and ponds. Lakes/ponds are natural bodies of standing fresh water and normally consist of distinct zones that provide a variety of habitats and ecological niches. This ecosystem type covers an estimated 781 ha.

•

Rivers (River). Rivers refer to a natural flow of freshwater along a definite course usually into the sea. Rivers within the rohe cover an estimated area of 2,493 ha.

•

Swamps/Floodplains (Herbaceous Freshwater Veg, Flaxland, River and Lakeshore gravel and rock, WONI wetland). These are all wetlands excluding tidal marsh and mangrove swamps. They are communities dominated by herbaceous species ocuuring in a freshwater habitat inundated by water for most of the year. This ecosystem type represents an estimated 3,188 ha.

•

Estuaries (Estuarine Open Water). This consists of areas of open water without emerging vegetation, where saline waters mix with freshwater. The study area’s estuarine ecosystem has been estimated to cover 46 ha. This is the smallest area of any ecosystem type.

Nine additional terrestrial land-use land-cover categories from Golubiewski (2012) are not considered in this analysis: Alpine Gravel and Rock, Built-up Area, Transport Infrastructure, Coastal Sand and Gravel, Dump, Landslide, Surface Mine, Herbaceous Saline Vegetation, and Urban Open Space. Lack of valuations was the primary reason why these land cover types were not valued. Together, these land-use types cover an estimated 9,029 ha, or 1.8% of the study area.

2.1.3

Classification of Ecosystem Services

Table 2.1

Definition and Examples of Ecosystem Services

Ecosystem Service

Definition

Examples CO2/O2 balance, O3 for UV protection and SOx levels

4 Water regulation

Regulation of atmosphere chemical composition Regulation of global temperature, precipitation, and other biologically mediated climatic processes at global or local levels Capacitance, damping, and integrity of ecosystem response to environmental fluctuations Regulation of hydrological flows

5 Water supply

Storage and retention of water

6 Erosion control and sediment retention 7 Soil formation

Retention of soil within an ecosystem Prevention of loss of soil by wind, runoff or other removal processes. Storage of silt in lakes and wetlands Soil formation processes Weathering of rock and the accumulation of organic material

8 Nutrient cycling

Storage, internal cycling, processing and acquisition of nutrients

N, P and other elemental or nutrient cycles

9 Waste treatment

Recovery of mobile nutrients and removal or breakdown of excess or xenic nutrients and compounds Movement of floral gametes

Waste treatment, pollution control, detoxification

1 Gas regulation 2 Climate regulation

3 Disturbance regulation

10 Pollination 11 Biological control 12 Refugia 13 Food production 14 Raw materials

15 Genetic resources 16 Recreation 17 Cultural

Trophic-dynamic regulations of populations Habitat for resident and transient populations That portion of gross primary production extractable as food That portion of gross primary production extractable as raw materials Sources of unique biological materials and products Providing opportunities for recreational activities Providing opportunities for noncommercial purposes

Greenhouse gas regulation, DMS production affecting cloud formation

Storm protection, flood control, drought recovery, and other aspects of habitat response to environmental variability mainly controlled by vegetation structure Provisioning of water for agricultural, industrial processes or transportation Provisioning of water by watersheds, reservoirs, and aquifers

Provisioning of pollinators for the reproduction of plant populations Keystone predator control of prey species, reduction of herbivory by top predators Nurseries, habitat for migratory species, regional habitats for locally harvested species or overwintering grounds Production of animals, fish, fruit and vegetables for human consumption The production of timber, fibres (e.g. wool) or fodder

Medicine, genes for resistance to plant pathogens and crop pests Eco-tourism, sport fishing, and other outdoor recreational activities Aesthetic, artistic, educational, spiritual and/or scientific values of ecosystems

Source: Based on Table 1 from Costanza et al . (1997)

The concept of ecosystem services has emerged over the last decade as a powerful mechanism for understanding how ecosystems directly and indirectly contribute to human welfare (de Groot, 1987, 1992; Daily, 1997; de Groot et al., 2002). Ecosystem services can be defined as ecosystem goods (such as food) and services (such as climate regulation) that benefit humans. For simplicity, these ecosystem goods and services are usually collectively referred to as ecosystem services (Table 2.1). 2.2

Valuation Approach

Section 2.2 (Valuation Approach) follows McDonald & Patterson (2008). The standard neoclassical valuation approach based on marginal analysis and used in this study has been widely used in valuing environmental assets; readers are advised to refer to texts such as Kerr and Sharp (1987) and Mitchell and Carson (1984).

2.2.1

Neoclassical Estimation of Total Economic Value

In the context of neoclassical theory, valuation is a matter of how marginal changes in the quantity or quality of biodiversity impact on human welfare. A change in the quantity or quality of the habitat can be measured in terms of its effect on human welfare, and classified in terms of direct, indirect and passive value. Figure 2.1

Estimation of the Consumers and Producers Surplus for a Substitutable Ecosystem Service

As the quality (or quantity) of biodiversity changes, the marginal costs are measured by the supply curve and marginal benefits are measured by the demand curve. Figure 2.1 schematically represents the supply and demand curves for a substitutable commodity or ecosystem service. However, it should be noted that unlike most market-commodities, many ecosystem services are non-substitutable, and therefore Costanza et al. (1997) suggest the supply and demand curves are more like those schematically represented by Figure 2.2. Notably, for a nonsubstitutable ecosystem service the demand curve approaches infinity at low levels of an ecosystem service. This is because human survival requires a minimum level of most ecosystem services, which cannot be substituted for. It should also be noted that the supply curve for a non-substitutable ecosystem service, as portrayed in Figure 2.2, is near vertical. This indicates the supply of the ecosystem service cannot readily be varied by human intervention.

Figure 2.2

Estimation of the Consumers and Producers Surplus for a NonSubstitutable Ecosystem Service

Price

Supply = Marginal Cost

Consumers’ Surplus

b Demand = Marginal Benefit Producers’ Surplus

q Quantity

The total economic value generated by ecosystem services is the sum of the Consumer Surplus and the Producers Surplus bounded by the area a, b, and c in Figures 2.1 and 2.2. Interestingly, total economic value can be greater or less than the price times quantity estimates, used in the GDP measurement. 2.2.2

Valuation Methods

Much of the direct value of biodiversity can be measured by using market values that are recorded in the System of National Accounts (SNAs) maintained by Statistics New Zealand, including, for example, food, fibre and forestry products. However, some direct uses, all indirect uses, and all passive values of biodiversity are not subject to market transactions, and therefore have no market value. In these instances, non-market valuation techniques need to be used to apply a value to these biodiversity services. In this analysis, in the virtual absence of suitable New Zealand studies, a wide range of overseas studies were used to estimate non-market values. These overseas studies for the most part used the following non-market valuation methods: •

Willingness-To-Pay (WTP) surveys ask individuals how much they are willing to pay to gain the benefit of using biodiversity, given variations in the quality and quantity supplied. The WTP method was the most frequently used method in this report.

•

Replacement Cost Method was also frequently used. It attempts to measure the cost of replacing the loss of a biodiversity service with an equivalent service.

•

2.2.3

Willingness-To-Accept-Compensation (WTA). Surveys ask individuals to nominate how much they would need to be compensated to accept the loss of a biodiversity service. Evidence shows WTA estimates are usually higher than WTP essentially because WTP is bounded by an individual’s income, whereas WTA has no practical upper bound (Goodstein, 1995). Valuation of Flows not Capital Stocks

The idea of natural capital has emerged over the last decade as a powerful analytical concept, both in neoclassical resource economics and ecological economics (Jansson et al. 1994). As Folke et al. (1994) show, its measurement is pivotal to operationalising the concepts of both weak and strong sustainability, and in the analysis of intergenerational equity issues. Biodiversity is defined in this study as the sum total of all species, communities and ecosystems, and as such, is a major component of natural capital, along with abiotic natural capital stocks such as fossil fuels. It is important to note that this study does not measure the value of biodiversity stock (capital). This would be a very difficult task, fraught not only with operational problems, but also with theoretical problems such as the issue of the valid aggregation of heterogeneous items of biodiversity (Faucheux and O’Conner, 1998). Instead, this study measures the flow of values derived from biodiversity stock, on an annual basis. This is consistent with the way economists use the GDP indicator to measure the flow of goods and services produced in the market economy from manufactured capital stock. 2.2.4

Limitations to the Valuation Approach

It is largely beyond the scope of this study to discuss the well-known limitations of the neoclassical approach to the valuation of ecosystem services. Instead, for a fuller discussion readers are directed to texts such as Blamey and Common (1994), Norton (1995) and More et al. (1996). Nevertheless, it is important to remind readers that the method is essentially anthropocentric, with values being determined by the subjective preferences of human valuers. There are significant operational problems in validly and reliably measuring these preferences, particularly as preferences are predicated on short-term perceptions and often-incomplete ecological knowledge. Costanza (1991) points out arguably the most significant limitation: human beings generally assign a higher value to species of direct commercial value, and/or species that are easy to empathise with, whereas less visible species are often ignored. 2.3

Methodological Process

Section 2.3 (Methodological Process) follows McDonald & Patterson (2008), except Table 2.2 (Spatial Coverage of Terrestrial and Aquatic Ecosystem Types within the rohe of Ngāti Raukawa ki te Tonga), and except with respect to passive values, which were not estimated in this study (this particularly applies to sub-section 2.3.3 and Figure 2.3). The methodological process for deriving the total value of ecosystem services for the study area is described in Figure 2.3 below.

Figure 2.3

Step 1

Methodological Process for Estimation of Total Ecosystem Services Value from within the rohe of Ngāti Raukawa ki te Tonga

Identify all ecosystems

Step 2

Create an inventory of ecosystem types

Step 3a

Value direct uses (e.g. food production, raw materials, etc.)

Step 3b

Value indirect uses (e.g. refugia, gas regulation, etc.)

Step 4

Total ecosystem services valuation

2.3.1

1. Quantify ecosystem coverage (ha). 2. Identify ecosystem services (e.g. climate regulation, cultural, etc.).

1. From NZ’s SNAs and other economic statistics. 2. Literature search for noncommercial values.

Using literature from abroad ($/ha).

Estimates of the Direct Use-Value of Ecosystem Services

Estimation of the direct use-value of the study area’s ecosystem services involved steps 2, 3(a) and 4 of the methodological process. Ecosystem services that provide direct value include water regulation (e.g. supplying water to industry), food production, raw materials production, recreation and cultural services. Nearly all food production and raw materials production (e.g. wool and wood products) have market values and hence these values can be obtained from the System of National Accounts (SNAs) published by the Department of Statistics (1996). Some water supply in New Zealand is undertaken on a commercial basis, but it proved too difficult to obtain this value from the SNA, in the time available for the project. However, it was assumed that 20 percent of water supplied to agriculture, industry and households is on a paid-for basis and therefore included in the SNAs. Recreation, cultural services, and most of the water regulation do not usually have a market value. For these unpriced direct use values, reliance was placed on literature estimates, particularly worldwide averages from Costanza et al. (1997). 2.3.2

Estimates of the Indirect Value of Ecosystem Services

Estimation of the indirect use-value of the region’s ecosystem services and biodiversity was undertaken in steps 2, 3(b) and 4 of the methodological process. Step 2 involved quantifying the total spatial coverage (in hectares) of the terrestrial and aquatic ecosystem types. These estimates are summarised in Table 2.2 below.

Table 2.2

Estimates of the Spatial Coverage of Inland Terrestrial and Aquatic Ecosystem Types within the rohe of Ngāti Raukawa ki te Tonga

Ecosystem Type

Land Area (ha)

Agriculture Horticulture Forest Scrub Forest-Scrub Intermediate Agriculture-Scrub Intermediate Agriculture-Forest Lakes Rivers Swamps/Floodplains Estuaries

334,341 10,958 71,999 7,690 15,735 2,671 33,332 781 2,493 3,188 46

Step 3(b) involved matching ecosystem services from Costanza et al. (1997) with the Region’s ecosystem types. For example, the ecosystem type “agriculture” was considered to deliver the same value of ecosystem services as Costanza et al.’s (1997) global “grass/rangelands” ecosystem type. In this way, the indirect values ($ per ha) were considered to be gas regulation ($USA1994 7/ha), disturbance regulation ($USA1994 3/ha), and so on. Local differences peculiar to the Region were also accounted for by various adjustments. Step 4 involved multiplying the total hectares for a given ecosystem type (from Step 2), by a vector of ecosystem service values (from Step 3(b)). This multiplication of hectares by $/hectares then enabled the calculation of an estimate of the total indirect value ($) of the Region’s biodiversity. 2.3.3

Estimates of the Non-Use (Passive) Value of Biodiversity and Ecosystems

Estimation of Non-Use (passive) values was not undertaken, due to difficulties in acquiring the necessary data in the time available for the project. 2.4

Exchange Rate and Inflation Conversions

Overseas currency was converted into New Zealand equivalent currency using exchange rates. This method does not always reflect the purchasing power of respective currencies and may also be influenced by short-run market aberrations. Values were converted to 2006 dollars via the implicit price index, which we believe is better suited for conversion of values for ecosystem services than the consumer or producer price indices.

Direct and Indirect Use-Value of Ecosystem Services and Biodiversity

3.1

Agricultural Ecosystems

3.1.1

Classification and Description

The agricultural ecosystem is the largest ecosystem within the rohe of Ngāti Raukawa ki te Tonga, accounting for 334,341 ha, or 67.6 percent of the study area. For the most part this agriculture is based on exotic grass species that have replaced the natural vegetation that existed prior to European and Māori settlement. The agricultural ecosystem within the rohe consists of land used for pastoral farming. Golubiewski (2012) describes the spatial presence of different land-use land cover categories. Since aggregations of these categories were used to define areas for our ecosystem types, we can describe the spatial presence for our ecosystem types. Summarising from Golubiewski (2012), this category includes high and low producing exotic grassland. The greater Ngāti Raukawa area is dominated by high producing grassland, which comprises approximately two thirds of the study area. High producing grassland is especially prevalent in the low lands, bordered by low producing grassland at the foothills and coast. 3.1.2

Value Estimation

The agriculture ecosystem category delivers $432.7 million of direct plus indirect value (see Table 3.1). Erosion control is the highest valued service provided. Erosion may destroy land and reduce the productivity capacity of soils. It may also increase sediment levels in waterways, hence reducing water quality. This, in turn, reduces their capacity to pass floodwaters. Nevertheless, pastoral coverage, along with good land management practices, has proved successful in controlling erosion. It is this erosion control service that is being valued here. Commercial food production is the next most important service delivered by agricultural ecosystems, and is valued at $130.3 million. This is not surprising, given that agricultural ecosystems are managed with the primary intent of producing food. Wool production, included in the ’raw materials’ ecosystem service, is also a significant commercial output of the agriculture ecosystem. Food and wool production are both measured directly by SNAs, unlike waste treatment which represents the second largest indirect contribution ($64.4 million) made by agriculture ecosystems. Without assimilation of wastes by agricultural ecosystems there would be considerable ecological impacts, such as eutrophication of waterways, death of aquatic species, toxification of soil environments, etc. A wide range of xenic wastes are assimilated by agricultural ecosystems, including animal excrement, fertilisers, chemicals, dairy shed waste, and so forth. The remaining ecological services provided by agricultural ecosystems constitute $56.8 million, or 21 percent of the total for this ecosystem type. This is made up of $18.5 million for pollination services, $17 million for biological control, $11.7 million for raw materials, $5.2 million for gas regulation, and $4.4 million all together for recreation, water regulation and soil formation.

Table 3.1

Direct and Indirect Value Provided by Agricultural Ecosystems within the rohe of Ngāti Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Erosion Control Food Production Gas Regulation Pollination Raw Materials Recreation Soil Formation Waste Treatment Water regulation Total

17.0 181.4 130.4 5.2 18.5 11.7 1.5 0.7 64.4 2.2 145.8

3.2

Horticultural Ecosystems

3.2.1

Classification and Description

Indirect Value $NZ 2006

287.2

This ecosystem type represents a mixture of human made and maintained ecosystems. Overall, this ecosystem type covers an estimated 13,032 ha, or 2.6 percent of the study area. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. Short rotation cropland, orchard and other perennial crops are generally confined to low lying areas in the east, the latter also found in the proximity of Palmerston North. Vineyards occur in the southern end of the study area at nine locations, and at one site south of Palmerston North. 3.2.2

Value Estimation

The combined direct and indirect use value of horticultural ecosystems within the rohe of Ngāti Raukawa ki te Tonga is estimated to be $76.9 million (See Table 3.2). Not surprisingly, almost all ($75.3 million) of the value derived from the study area’s horticultural ecosystem comes from food production. Smaller contributions of $0.8, $0.7 and $0.4 million are made by erosion control, biological control and pollination services respectively.

Table 3.2

Direct and Indirect Value Provided by Horticultural Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Erosion Control Food Production Pollination Total

0.6 0.7 75.3 0.3 75.3

3.3

Forest Ecosystems

3.3.1

Classification and Description

Indirect Value $NZ 2006 million

1.6

In sum, this ecosystem covers an estimated 71,999 ha, or 14.6 percent of the study area, including both indigenous and exotic forest. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. A diverse range of indigenous forest types are found in the area. In total, they comprise 12.6 percent of the study area, though this includes some forest allocated to other ecosystem types (e.g. forest-scrub). Indigenous forest is mostly found in hill country along the eastern edge, especially in the southeastern corner, and on Kapiti Island, which is covered in indigenous forest. Indigenous forests primarily comprise podocarp-broadleaved and beech forest. Exotics are primarily forestry plantations (mostly Pinus radiata), which cover 4.7 percent of the study area, especially in the central western lowlands. 3.3.2

Value Estimation

Forest ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga deliver an estimated $146.3 million of direct and indirect use value (See Table 3.3). This is the second largest contribution to biodiversity of any ecosystem type. As with agriculture, forest ecosystems deliver significant ecosystem service value because of their large spatial extent. Forest ecosystems provide a number of ecosystem services that are of regional importance, in particular, nutrient cycling, raw materials (timber production), climate regulation, erosion control and waste treatment. Nutrient cycling is the largest ecosystem service provided by forests, and is valued at $57.5 million. Production of timber (raw materials) is the second largest ecosystem service provided by forests, amounting to $28.8 million. This is mostly attributable to Pinus radiata. By storing and regulating the flow of carbon, forests also play a crucial role in climate regulation. Climate regulation provides an estimated $22.5 million of services. Erosion control and waste treatment services are also highly valuable, accounting for $19.5 and $11 million respectively.

Forest ecosystem service value is delivered, to a lesser extent, by genetic resources, recreation, soil formation, water supply, disturbance regulation, water regulation, biological control, and cultural (aesthetic, educational, scientific values) services. Together, these less significant ecosystem services provide $7 million of direct and indirect use value. Table 3.3

Direct and Indirect Value Provided by Forest Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Climate Regulation Cultural Disturbance Regulation Erosion Control Genetic Resources Nutrient Cycling Raw Material (timber/fire wood) Recreation Soil Formation Waste Treatment Water Regulation Water Supply

0.3 22.5 0.3 0.3 19.5 2.0 57.5 28.8 1.7 1.6 11.0 0.3 0.5

Total

3.4

Scrub Ecosystems

3.4.1

Classification and Description

Indirect Value $NZ 2006 million

115.2

The scrub ecosystem type includes both native and exotic species, covering a total area of 7,690 ha. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. Several scrub and shrubland land covers occur in the study area. By far the most prominent, however, are Manuka and/or Kanuka, and Gorse or Broom. Gorse and broom have a high occurrence in the lower parts of the western hill country and the northwest, central lowlands, but, as with Manuka and/or Kanuka, occur in many places throughout the area. 3.4.2

Value Estimation

The combined direct and indirect use values of services provided by scrub ecosystems are estimated to be $7.2 million (see Table 3.4). This is the third lowest value of all the ecosystem types, comparing favourably only to intermediate

agriculture-scrub ($2.1 million) and estuaries ($2.4 million), whilst considerably less than lakes ($14.6 million), the fourth lowest. Erosion Control is the highest valued service delivered by the scrub ecosystem. This amounts to $2.1 million. Scrub often plays an important role in watershed protection on land that would otherwise be subjected to significant loss. Climate regulation is has the second highest value, contributing $1.5 million. Scrub ecosystems have minor roles in regulating climate through carbon storage and, to a lesser extent, in their reflectance (albedo). Waste treatment services, to the value of $1.5million, are the third highest valued function delivered by scrub. This includes the capture of nutrients and over a longer period, the breakdown of xenic wastes. The combined value of the remaining services (biological control, cultural, soil formation, food production, raw materials, recreation) is $2.1 million. Table 3.4

Direct and Indirect Value Provided by Scrub Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Climate Regulation Cultural Erosion Control Food Production Raw Material Recreation Soil Formation Waste Treatment

0.1 1.5 0.0 2.1 0.9 0.4 0.6 0.2 1.5

Total

1.9

3.5

Forest-Scrub Ecosystems

3.5.1

Classification and Description

Indirect Value $NZ 2006 million

5.3

The forest-scrub ecosystem consists of regenerating scrub and mature forests. Much of this land is marginal in terms of its suitability for farming. This ecosystem includes Beech/Podocarp broadleaved forest and Matagouri, which occurs at one site at the northern central end of the study area (Golubiewski, 2012). In total, this ecosystem type comprises 15,735 ha. Although this represents just 3.2 percent of the total study area, it is the fourth largest area of any ecosystem type. 3.5.2

Value Estimation

The combined direct and indirect value of this ecosystem type is $42.2 million (see Table 3.5). This is slightly lower than that provided by the intermediate agriculture-

forest ($57.9 million) and river ($46.8 million) ecosystem types. The total use value is almost entirely indirect ($41.6 million), as opposed to direct ($0.7 million). By far the most valuable service provided by this ecosystem is nutrient cycling, valued at $22.6 million. Other major contributions include erosion control ($7.7 million), climate regulation ($4.9 million) and waste treatment ($4.3 million). Other services delivered by this ecosystem include genetic resources, recreation, soil formation, water supply, disturbance regulation, water regulation, biological control and cultural. Together, these services have a value of $2.8 million. Table 3.5

Direct and Indirect Value Provided by Forest-Scrub Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Climate Regulation Cultural Disturbance Regulation Erosion Control Genetic Resources Nutrient Cycling Recreation Soil Formation Waste Treatment Water Regulation Water Supply Total

Indirect Value $NZ 2006 million

0.1 4.9 0.1 0.1 7.7 0.8 22.6 0.7 0.6 4.3 0.1 0.2 0.9

3.6

Intermediate Agriculture-Scrub Ecosystems

3.6.1

Classification and Description

41.4

The intermediate agriculture-scrub ecosystem type refers to land which is marginal for pastoral farming, compared with land covered by the agriculture ecosystem type. It includes mixed exotic shrubland and tall tussock grassland. In total, this category comprises a total area of 2,671 ha within the rohe. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. Mixed exotic shrubland occurs primarily in low lying

areas in the west with a few occurrences in the northern hill country. Tall tussock grassland occurs along the eastern border of the study area in the hill country.

3.6.2

Value Estimation

This category has the lowest value of all the ecosystem types. Its total value is $2.1 million (see Table 3.6). This value is made up of, in descending order of value: erosion control, climate regulation, waste treatment, food production, recreation, raw materials, soil formation, biological control, and cultural services. Table 3.6

Direct and Indirect Value Provided by Intermediate AgricultureScrub Ecosystems within the rohe of Ngāti Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Climate Regulation Cultural Erosion Control Food Production Raw Material Recreation Soil Formation Waste Treatment

Indirect Value $NZ 2006 million

0.0 0.5 0.0 0.5 0.2 0.1 0.2 0.1 0.5

Total

0.5

3.7

Intermediate Agriculture-Forest Ecosystems

3.7.1

Classification and Description

1.6

The intermediate agriculture-forest ecosystem type represents the third largest area within the rohe. Its total area is 33,332 ha, which accounts for 6.7 percent of the study area, more than twice that of Forest-Scrub (3.2 percent), the next largest category. It comprises land that is covered by a mixture of forests and pasture. Fragmentation of forest ecosystems by the interspersed farmland leads to some loss of biodiversity and ecosystem services. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. Most of the ‘Intermediate Agriculture-Forest’ category is located in the hill country along the eastern edge of the study area. This includes broadleaved indigenous hardwoods, which represent 5 percent of the study area with a particular prevalence in the southeastern corner, and subalpine shrubland which is found along the eastern border of the study area near the summit of the ranges.

3.7.2

Value Estimation

The ‘Intermediate Agriculture-Forest’ ecosystem category has a combined direct and indirect value of $57.9 million (See Table 3.7), the fifth highest contribution of all the categories. By far the most valuable service provided by this ecosystem is nutrient cycling, at $26.6 million. Other significant contributions include climate regulation ($10.4 million), erosion control ($9 million), food production, and waste treatment ($2.7 million). Other services delivered by this ecosystem include genetic resources, raw materials, recreation, soil formation, water supply, disturbance regulation, water regulation, biological control and cultural. Together, these services are valued at $4.1 million. Table 3.7

Direct and Indirect Value Provided by Intermediate AgricultureForest Ecosystems within the rohe of Ngāti Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Biological Control Climate Regulation Cultural Disturbance Regulation Erosion Control Food Production Genetic Resources Nutrient Cycling Raw Material (timber/fire wood) Recreation Soil Formation Waste Treatment Water Regulation Water Supply

0.1 10.4 0.1 0.1 9.0 2.7 0.9 26.6 0.8 0.8 0.7 5.1 0.1 0.2

Total

4.5

3.8

Lake Ecosystems

3.8.1

Classification and Description

Indirect Value $NZ 2006 million

53.3

Lakes and ponds are scattered throughout the study area, with a higher density on the coast and a notable absence in the north-eastern and south-eastern ranges

(Golubiewski, 2012). Lakes are large natural bodies of standing fresh water, which provide a variety of habitats and ecological niches. The most notable lake inside the rohe of Ngāti Raukawa ki te Tonga is Lake Horowhenua, near Levin. This ecosystem type is the second smallest, covering an estimated 781 ha, or 0.2 percent of the study area. 3.8.2

Value Estimation

The combined direct and indirect use value of lakes inside the rohe of Ngāti Raukawa ki te Tonga is $14.6 million (Table 3.8). This value isn’t particularly similar to any of the other ecosystems, the closest being scrub which, at $5.1 million., is a little over a third of the value of lakes, despite having an area approximately eight times as large. This demonstrates the relatively high per hectare value of lakes, a common feature of the aquatic ecosystem types. Table 3.8

Direct and Indirect Value Provided by Lake Ecosystems within the rohe of Ngāti Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Food Production Recreation Waste Treatment Water Regulation Water Supply

0.0 0.4

Total

9.8

Indirect Value $NZ 2006 million

1.1 9.4 3.7 4.8

Lakes are important to the hydrological cycle, storing large quantities of water. Mosley (1993) has estimated that New Zealand lakes store 320 km3, or 55 percent of annual precipitation. By feeding river systems, lakes facilitate the provision of water for irrigation, hydroelectricity, and industrial and domestic purposes. Hence, the most highly valued ecosystem services are water regulation at $9.4 million,1 and water supply at $3.7 million. Waste treatment, another important lake-based ecosystem service ($1.1 million), consists mainly of animal wastes and fertiliser runoff from agriculture. The Ministry for the Environment (1997) notes that the waste assimilation capacity of lakes is often exceeded, causing 10 to 40 percent of smaller lakes to be eutrophic. Lakes are also a recreational attraction, tentatively valued at $0.4 million. It is difficult to determine a precise estimate of lake-based recreational value as this is often associated with other recreation activities. Lakes also provide refugia/habitat for a number of species. This is acknowledged as an important ecosystem service, but was not included in the calculations since no reliable data were available.

Some $7.5 million of this is direct value not measured by the SNAs. This value has been derived from Costanza et al.’s (1997) global analysis. As water is a much scarcer resource at the global level than in side the Ngāti Raukawa rohe, this figure may be an overestimate.

3.9

River Ecosystems

3.9.1

Classification and Description

Rivers refer to a natural flow of freshwater along a definite course usually into the sea. This ecosystem type also covers smaller rivers, streams and waterways. The Region’s rivers have an estimated surface area of 2,493 ha or 0.5 percent of the study area. Major rivers in the study area include the Manawatu, Ōtaki, Ohau, and Waikanae rivers. 3.9.2

Value Estimation

River ecosystems within the rohe of Ngāti Raukawa ki te Tonga provide an estimated $46.8 million of services (Table 3.9) that, similar to the Lakes category, are very high on a per hectare basis compared with the non-aquatic ecosystem types. Water regulation is the most valuable ecosystem service delivered, at $30 million. This includes the provision of water for irrigation of pasture and crops, hydroelectricity generation, industrial use and household water supply. Mosley (1993) estimates that retention (storage) of water by New Zealand rivers amounts to 415 km3. This exceeds that of lakes at 320 km3. Water supply, partially a function of the retention capacity of rivers, is the second most valuable ecosystem service provided by rivers, at $11.7 million. The region’s rivers also provide waste treatment services, valued at $3.7 million. These services include processing agricultural runoff, industrial discharges, urban storm water and sewage. This often causes localised pollution in the lower reaches of catchments, due to exceedence of the river’s assimilative capacity. Recreation and tourism activities are tentatively valued at $1.3 million, although this is difficult to measure with any precision, due to data constraints. Food production has a relatively insignificant value of $0.1 million. Rivers, like lakes, provide essential refugia/habitat for a number of species; however, this is not included in the calculation due to the lack of reliable data. Table 3.9

Direct and Indirect Value Provided by River Ecosystems within the rohe of Ngāti Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Food Production Recreation Waste Treatment Water Regulation Water Supply

Indirect Value $NZ 2006 million

0.1 1.3 3.7 30.0 11.7

Total

31.4

15.3

3.10

Swamp/Floodplain Ecosystems

3.10.1 Classification and Description Swamps/floodplains consist of wetland areas that are inundated by fresh water at times during the year. This ecosystem type is characterised by plant communities dominated by herbaceous species, as well as gravel and rock areas surrounding rivers and lakes. Human land-management practices within the rohe of Ngāti Raukawa ki te Tonga have damaged many swamps, or reduced their size. In total, this ecosystem type represents an estimated 3,188 ha, or 0.6 percent of the study area. The spatial presence of this ecosystem can be derived by summarising from Golubiewski (2012), as follows. Swamps are located throughout the region. The herbaceous freshwater vegetation sub-category is mostly found in central lowlands, particularly on the coastal plain. Flaxland exists at 17 sites in the western and central lowlands. River and lakeshore gravel/rock surrounds major rivers throughout the study area. 3.10.2 Value Estimation The value of swamps/floodplains ecosystem services within the rohe of Ngāti Raukawa ki te Tonga totals $138.3 million (Table 3.10), representing 16.9 percent of the total value delivered by the region’s ecosystem services. This is the third greatest contribution of any of the ecosystem categories, and is similar to the value of the forest category ($146.3 million) which ranks second. This is remarkable, considering its proportion of the total area (0.6 percent). At $53.6 million, water supply is the most valuable ecosystem service derived from swamps/floodplains in the study area. This refers to the storage and retention of water, and is based on Costanza et al.’s (1997) global value. Given the abundance of water supplies in the study area relative to that of most parts of the world, this may be an overestimate. Disturbance regulation is the next most significant ecosystem service delivered by swamps/floodplains, estimated at $51.1 million. This includes storm protection, flood control, drought recovery and other aspects of habitat response to environmental variability. In this study, United States estimates of monetary value required to prevent damages or replace wetland function by artificial constructions have been employed. It is debatable how readily such values may be transferred for use in the area encompassed by the rohe of Ngāti Raukawa ki te Tonga, but lack of data prevents a more accurate estimation. Cultural services (aesthetic, educational, scientific values), coupled with waste treatment (processing of agricultural runoff, fertilisers and other wastes), are also significant, accounting for $12.4 million and $11.7 million respectively. Other services include recreation, refugia, gas regulation, food production, raw materials, and water regulation. These have a combined value of $9.5 million. International valuation studies have consistently found wetlands to have a high non-market value on a $/ha basis. It is likely that this is also the case with the wetlands found inside the rohe of Ngāti Raukawa ki te Tonga, characterised here as swamps/floodplains. Nevertheless, further research is required to accurately allocate this value of individual services delivered by wetlands.

Table 3.10

Direct and Indirect Value Provided by Swamp/Floodplain Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Direct Value $NZ 2006 million

Cultural Disturbance Regulation Food Production Gas Regulation Raw Materials Recreation Refugia Waste Treatment Water Regulation Water Supply

12.4

Total

16.9

3.11

Indirect Value $NZ 2006 million

51.1 0.5 1.9 0.3 3.5 3.1 11.7 0.2 53.6 121.3

Estuarine Ecosystems

3.11.1 Classification and Description This ecosystem type consists of semi-enclosed wetlands occurring at river mouths, where the river meets the sea. Hence, they are inundated by salt water, but also diluted by fresh water. Estuaries are strongly affected by tidal action, where seawater mixes with fresh water from land drainage (Knox, 1980). Estuaries are rich in nutrients, with high productivity. Estuarine ecosystems cover 46 ha (Golubiewski, 2012), the smallest area of any ecosystem type in the area. By far the most significant estuary within the rohe is the Manawatu Estuary, at Foxton. This estuary is an internationally recognized bird sanctuary, where a diverse range of migratory and native species can be seen. 3.11.2 Value Estimation The value of estuarine ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga is estimated to be $2.4 million (Table 3.11). Many important biological functions are mediated by the circulation of water in estuaries, including the transportation of nutrients and plankton, the distribution of fish larvae and invertebrates, and the flushing of waste products. Estuaries are also an important habitat for marine and bird wildlife. These functions are captured under the nutrient cycling ($2.14 million), disturbance regulation ($0.06 million), waste treatment ($0.04 million), habitat/refugia ($0.01 million), and biological control ($0.01 million) services. Value is also derived from cultural, recreation, raw materials and food production services. These values collectively amount to $0.11 million.

Table 3.11

Direct and Indirect Value Provided by Estuarine Ecosystems within the rohe of Ngﾄ》i Raukawa ki te Tonga, 2006

Ecosystem Services

Biological Control Cultural Disturbance Regulation Food Production/fishing Habitat/Refugia Nutrient Cycling Raw Materials Recreation/non-consumptive Waste Treatment/nitrogen Waste Treatment/phospherus

Direct Value $NZ 2006 million

0.01 0.00 0.06 0.05 0.01 2.14 0.00 0.04 0.04 0.01

Total 3.12

Indirect Value $NZ 2006 million

0.1

2.3

Summary of Direct and Indirect Value

This section provides a summary of the overall direct and indirect value derived from the biodiversity within the rohe of Ngﾄ》i Raukawa ki te Tonga. The data are summarised according to (a) ecosystem type, and (b) ecosystem service. 3.12.1 Value, By Ecosystem Type The total direct and indirect value of services provided by land-based ecosystems in the greater Ngﾄ》i Raukawa area for 2006 was estimated to be $0.97 billion (Table 3.12). Direct use value derived from land-based biodiversity in the rohe amounts to $318.3 million. Of this figure, an estimated $246.8 million is measured by the System of National Accounts (SNAs), mostly due to food production and raw materials from agriculture, horticulture and forestry, but also an estimated 20 percent of water regulation services. Direct use value not measured by the SNAs includes an estimated 80 percent of water regulation services, along with recreation and cultural services. Indirect use value delivered by land-based biodiversity was estimated to be $647.8 million. It is important to note that none of this value is included in the SNA窶冱. As with direct use value, agriculture ($287 million) and forestry (115.2 million) made large contributions to the total indirect use value (largely due to their high areas), ranking first and third respectively. Swamps/floodplains ranked second (largely due to their high per hectare value), accounting for $122.2 million. These three categories together contribute $524.4 million, or 81 percent of the total indirect value.

Table 3.12

Direct and Indirect Value Derived from Land-Based Biodiversity within the rohe of Ngāti Raukawa ki te Tonga, by Ecosystem Type, 2006

Ecosystem Type

Direct Value $NZ2006million

Indirect Value $NZ2006million

Total $NZ2006million

Agriculture Forest Swamps Horticulture Intermediate Agriculture-Forest Rivers Forest-Scrub Lakes Scrub Estuaries Intermediate Agriculture-Scrub

145.8 31.1 16.1 90.4 4.6 31.4 0.9 9.8 4.0 0.1 1.1

287.0 115.2 122.2 1.1 53.3 15.3 41.3 4.8 3.2 2.3 1.1

432.7 146.3 138.3 91.5 57.9 46.8 42.2 14.6 7.2 2.4 2.2

Total

335.2

646.9

982.1

Overall, the study area’s most valuable ecosystem in use terms was agriculture at $432.7 million. This is not surprising, given the spatial extent of the agriculture ecosystem type inside the rohe of Ngāti Raukawa ki te Tonga. Forest was the next most valuable ecosystem at $146.3 million, followed by swamps/floodplains at $138.3 million. Next came horticulture ($91.5 million), intermediate agriculture-forest ($57.9 million), rivers ($46.8 million) and forest-scrub ($42.2 million). The remaining ecosystem types (lakes, scrub, estuarine and intermediate agriculture-scrub) delivered an estimated $26.4 million of services. Terrestrial ecosystem types (agriculture, horticulture, forest, scrub, intermediate agriculture-scrub, intermediate agriculture forest, forest-scrub) delivered services amounting to a total of $765.5 million compared with $202 million by aquatic ecosystem types (swamps/floodplains, rivers, lakes, estuaries). Both terrestrial and aquatic ecosystems thus make large contributions, though for terrestrial ecosystems the value is much higher, as might be expected given the extent to which terrestrial ecosystems’ land cover dominate the study area. However, aquatic ecosystems comprise just 1.3 percent of the study area, compared to 98.7 percent for terrestrial ecosystems. Hence, on a per hectare basis, aquatic ecosystems are much more valuable, contributing $31,041/ha, compared with just $1,606/ha for terrestrial ecosystems. The huge variation in the per hectare values are clearly illustrated in Table 3.13. Estuaries, at $51,682/ha, are the most valuable on a per hectare basis, followed closely by swamps/floodplains ($43,368). There is then a large gap before lakes and rivers (both $18,750/ha), another large gap before Horticulture ($7,018/ha), and yet another before forest-scrub ecosystems ($2685/ha). It is interesting to note that of all

the ecosystem types, agriculture ($1,294/ha), which makes by far the highest contribution to the total value for ecosystem services in the study area, is relatively invaluable on a per hectare basis. Maps of the study area have also been superimposed with colour coding for direct, indirect, and total (direct + indirect) per hectare values which align with this study’s ecosystem types. These can be found in appendices A–C. The ‘cooler’ the colour (e.g. blue) the lower the per hectare value, while the ‘hotter’ (e.g. red) the higher the per hectare value. These pictures nicely illustrate the spatial presence of the service values derived from ecosystems in the area. In particular, for the total value map (Appendix C) the virtual monochrome illustrates the prominence of low valued land (mainly due to agriculture), except for mild values in the north and south-eastern corners, and relatively minor scatterings of higher values The general trend is for high land cover to be coupled with low per hectare values, with the more highly valued appearing as mere speckles. There is, however, a distinct difference in the presence of high and low values between direct (Appendix A) and indirect (Appendix B) values. With direct values, the majority (mainly due to agriculture) is medium valued, becoming lower toward the eastern border in the hill country. The opposite is the case for indirect values. Table 3.13

Use Values Per Hectare Derived from Land-Based Biodiversity within the rohe of Ngāti Raukawa ki te Tonga, by Ecosystem Type, 2006

Ecosystem Type

Estuaries Swamps/Floodplains Lakes Rivers Horticulture Forest-Scrub Forest Intermediate AgricultureForest Agriculture Scrub Intermediate Agriculture-Scrub

Direct Value $NZ2006/ha

Indirect Value $NZ2006/ha

Direct+Indirect Value $NZ2006/ha

2,115 5,310 12,595 12,595 6,934 58 432

49,567 38,059 6,155 6,155 84 2,627 1,600

51,682 43,368 18,750 18,750 7,018 2,685 2,032

138 436 250 190

1,600 858 689 633

1,738 1,294 939 823

687

1,337

2,024

Total

3.12.2 Value, By Ecosystem Services Food production is the most valuable ecosystem service in the study area, contributing $224.4 million, or 22.85 percent of the total use value (See Table 3.14). Most of this value is provided by commercial agriculture and horticulture, and is therefore recorded in national accounts. This is also the case with value for raw material production (ranked eighth), contributing $42.1 million, coming mainly from commercial forestry.

Erosion control (ranked second) has a similar value to Food production, contributing $220.9 million, or 22.49% of the total use value for the study area. This is not surprising, given that much of the land within the rohe of Ngāti Raukawa ki te Tonga is highly erosion prone, particularly on the region’s steeper gradients. Pasture, forest and scrub ecosystems play a critical role in reducing the amount of soil loss, sedimentation and other adverse effects. The next most valuable service, nutrient cycling (ranked third), contribute approximately half that of erosion control services. The value of nutrient cycling amounts to $108.9 million, or 11.08 percent of the total use value of services provided by ecosystems within the rohe. Ecosystems play a vital role in the acquisition, storage and internal cycling of nutrients: they facilitate the biogeochemical cycling of nutrients such as potassium, carbon, nitrogen and phosphorous through the biosphere; and also act as reservoirs from which plants and micro-organisms can harvest nutrients. Almost all the nutrient cycling value estimated here is accounted for by those ecosystems with a forest component, i.e. the forest, forest-scrub, and intermediate agriculture-forest categories. Table 3.14

Direct and Indirect Value Derived from Land-Based Biodiversity within the rohe of Ngāti Raukawa ki te Tonga, by Ecosystem Service, 2006

Ecosystem Services

Direct and Indirect Value $NZ2006million Percentage

Erosion Control Food Production Nutrient Cycling Waste Treatment Water Supply Disturbance Regulation Water regulation Raw Materials Climate Regulation Pollination Biological Control Cultural Recreation Gas Regulation Soil Formation Genetic Resources Refugia

220.8 210.1 108.9 103.3 69.8 51.7 42.5 42.1 39.8 18.9 18.4 13.1 10.6 7.0 3.9 3.8 3.1

22.82 21.72 11.25 10.68 7.22 5.34 4.39 4.35 4.11 1.95 1.89 1.35 1.09 0.73 0.41 0.39 0.32

Total

982.1

1.00

Waste treatment (ranked fourth) is also a highly important ecosystem service, providing $103.3 million, or 10.52 percent of the total value of ecosystem services in the study area. Natural ecosystems provide waste treatment by recovering mobile nutrients, as well as breaking down and removing xenic nutrients and compounds such as those found in fertilisers, industrial chemicals and wastes, animal excrement, dairy shed effluent, and so on. Several ecosystem types make significant contributions to the value of waste treatment services, including both terrestrial and aquatic ecosystems. Water supply (ranked fifth) and Water regulation (ranked seventh) are also very significant, together accounting for $112.3, or 11.43 percent of the total use value of biodiversity. This value comes almost entirely from the aquatic ecosystems within the study area, illustrating the high per hectare value of aquatic ecosystems, which comprise a relatively tiny proportion of the total study area. Disturbance regulation (ranked sixth) also highlights this phenomenon, with $51.1 of its $51.7 million provided by the swamps/floodplains ecosystem type. Climate regulation (ranked ninth) is also highly valuable, contributing $39.8 million, due primarily to carbon sequestered by trees and scrub. The remaining ecosystem services estimated in this analysis together contribute 8 percent of the study area’s total direct and indirect value of biodiversity. 4

Summary

4.1

Value of Ecosystem Services and Biodiversity

The total use value (direct plus indirect) of biodiversity inside the rohe of Ngāti Raukawa ki te Tonga is estimated to be $967.8 million. Indirect value is higher, at $647.8 million, compared with direct value, at $318.3 million. Most of the value of ecosystem services is not included in the SNAs. Of the estimated $967.8 million, only an estimated $246.8 million is accounted for in the SNAs. Therefore, the remainder, an estimated $720.8 million is ‘hidden’ value. The proportionate distribution of the study area across ecosystem types is highly imbalanced. For instance, agricultural ecosystems cover the majority of the study area (67.6 percent). Furthermore, together with forest (14.6 percent) and intermediate agriculture-forest (6.7 percent), the three most prevalent ecosystem types comprise 88.9 percent of the total study area. The remaining ecosystem types range in proportionate area from 0.01 to 3.18 percent. Not surprisingly, given its spatial extent, agriculture, valued at $432.7 million, makes the highest contribution to both the direct ($145.8 million) and indirect ($287 million) values. Forest ($146.3 million) and swamps/floodplains ($138.3 million) are also highly valued, while horticulture delivers a high proportion of the total direct value (24 percent). Swamps/floodplains ranking is largely attributable to its extremely high per hectare value ($43,368/ha), relative to most ecosystem types. The variation in per hectare values is extremely large, ranging from just $823/ha for intermediate agriculture-scrub to $51,682/ha for estuaries. Erosion control and food production and are by far the highest valued ecosystem services, at $220.8 million and $210.1 million respectively. Food production is

provided mainly by agriculture and horticulture, while erosion control is provided by all the terrestrial ecosystems. Nutrient cycling ($108.9 million) and waste treatment ($103.3 million) are also highly valuable, the former being provided by ecosystems with a forest component and the latter by several ecosystems, both terrestrial and aquatic. Total economic value also includes passive values, which were not estimated due to difficulties in acquiring appropriate data in the time available for completion of this report. Patterson & Cole (1997) estimated the passive value of biodiversity for the whole of New Zealand to be approximately 10 percent of the total economic value in 1994. This gives us some indication of the likely discrepancy between our estimates, which doesn’t include passive values, and the total economic value (and total ‘hidden’ value) of the study area. A value comparison with a Gross Regional Product would also be useful, giving an indication of the magnitude of the biodiversity estimated herein. Unfortunately, Gross Regional Products for tribal areas do not exist in the system of national accounts, and thus cannot be readily obtained. However, a rough indication of how such values may compare can be gained from Patterson & Cole (1997), in which the total use value of biodiversity in New Zealand was estimated as $6,268 per person, compared with GDP of $13,394 per person in 1994. 4.2

Methodological and Theoretical Issues

The justification for this approach is that at the very least, it makes visible and tangible the value that hitherto has remained ‘hidden’ to policy and decision-makers. Nevertheless, many data, methodological and theoretical issues have arisen in this report. Further research is required to address the following issues, which are beyond the immediate scope of this report. There is a severe lack of data specific to the area encompassed by the rohe of Ngāti Raukawa ki te Tonga for either use values or passive values. Total Economic Value includes passive values as well as the direct and indirect values estimated in this report. These would need to be calculated to give a clearer indication of the value of biodiversity for the study area. In order for useful comparison to be made, a Gross Regional Product should be estimated for the study area, though a precise estimate would be difficult to obtain due to the tribal boundary not coinciding with the boundaries of territorial authorities. Various problems exist with translating global figures to the study area, as has been undertaken for much of the indirect value analysis in this report. The ecosystem types used do not align particularly well with the sub-categories used to define their areas. A subsequent report would do better to categorise ecosystem types differently. There is much debate about the precise area encompassed by the rohe of Ngāti Raukawa ki te Tonga and, it should therefore be emphasised that the study area used here is only a rough approximation of the land-based area encompassed by the rohe. Furthermore, a more comprehensive account of the value of services provided by ecosystems within the Ngāti Raukawa rohe would include marine ecosystems. Although most ecosystem services can be substituted for or replaced at the margins, they are ultimately non-substitutable. In other words, a minimum service level is required for human survival. The neoclassical approach used in this report does not account for the non-substitutable nature of these services. Other

approaches, such as those outlined by Ulanowicz (1991) and Patterson (1998), may provide additional insight. The neoclassical valuation method used in this report is by definition anthropocentric, which can easily lead to intrinsic value and contributory value being overlooked or underestimated.

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Appendix A: Map of Direct Values per Hectare from Ecosystem Services in Study Area

Appendix B: Map of Indirect Values per Hectare from Ecosystem Services in Study Area

Appendix C: Map of Total Values per Hectare from Ecosystem Services in Study Area