Practical Methods for Ecosystems Accounting Valuation: Commentary Giles Atkinson London School of Economics Natural Capital Committee Part 1 Overview of the Papers The papers      Towards a valuation strategy for natural capital accounting (M. Pittini/ R Harris/ C Smith, Defra; J Khan/ ONS, J Harlow/ NCC Sect.) An overview of valuation techniques for ecosystem accounting (B. Day, UEA) Accounting for the value of wetland services (A. Provins, eftec ltd.) Valuing regulating services in coastal habitats (‘blue carbon’) (T Luisetti/ RK Turner, UEA; E Jackson, U. Reading) Accounting for the value of pollination services (N Hanley/ C Ellis, U. Stirling; T. Breeze, U. Reading) Pittini et al.: “Towards a valuation strategy”   Context: Roadmap to 2020 Institutional context of SNA and SEEA – Production & asset boundaries – Valuation ‘ground-rules’  Sketch of valuation approaches and accounting implications – Top-down/ bottom-up accounts – State of valuation Day: “An overview of valuation techniques”   Valuing consumption of (non-market) goods and services Institutional basis for valuation: SNA and (inclusion/ exclusion of) surplus – … and parallels with valuation techniques relevant to ecosystems – 5 revealed & stated preference   Broad consistency with accounting principles … But some important caveats esp. in moving from principles to practical Provins: “Accounting for the value of wetland services”  Wetlands as natural asset: multiple ecosystem services – … with consumption and production values,  ‘State of the practice’: Evidence base exists … – Benefits transfer as short-cut (interim?) answer – Meta-analysis: different supply/ demand characteristics across wetland areas?  Challenges for accounting: changes in quality; scaling-up; costs & values Luisetti et al.: “Valuing coastal blue carbon”  Regulating service of coastal ecosystems in storing carbon – But itself provides multiple values   Valuing carbon: Social costs vs. own damage Distinction made between valuing stock itself now & changes – Balance sheet using this procedure?  Accounting for (future) changes in stock under different scenarios Hanley et al.: “Accounting for the value of pollination services”   Regulating service: pollination services (largely?) captured in (agricultural) production Insect pollinators as ‘asset’ providing this service – Mix of managed/ wild pollinators  Valuing pollination services – Scope for moving beyond simplicity? Knowledge of ecological production – Scale of benefits for (non-agricultural) pollination? Part 2 Common Themes, Challenges & Questions Consistency of valuation & national accounting  Consistency with national accounting principles on two fronts – Finding values which are marginal prices – Conformity with SNA/ SEEA boundaries   Theory insights (largely) reassuring (BD) Corresponding need for practice and empirical record to be similarly scrutinised Is there a valuation technique hierarchy  Will distinct criteria lead to different hierarchies? – … and consistency considerations – Provenance of values in empirical record?  And clarify role for cost approaches (AP) – Replacement cost as part of valuation hierarchy (BD, NH) What’s in the accounts already … and what is not?  Valuation & accounts: reorganising and extending – … and quite a lot of the former (NH, BD) – Important to reflect on what is really in the accounts  Answer depends on focus? – Income/ product – Wealth & changes in wealth Valuing (Changes in) Natural Assets  Crucial element of natural capital accounting – But papers illustrate variety of complexities (NH, RKT, AP)  Can ad hoc procedures be used (AP)? – But: takes us far from SEEA  Importance of thresholds (e.g. BD, NH) – But need for basic research? – … and uncertainties surely will remain?  Empirical insights are reachable in interim Complexity and Accuracy  How much inaccuracy can be lived with? – What criteria to use here? – Spatial detail vs. transfer approaches  False sense of security with some valuations – … or can be ‘happy’ so long as we understand major fault lines? (RKT)  Is (required) accuracy solely a technical issue? – Esp. where accounts provide controversial headline messages A Way Ahead …  Papers illustrate there is significant/ realistic progress to be made – … as well as likely areas of further debate  Keep talking: anxieties about “inconsistency” remarkably persistent – … but surely soluble – Shape/ help evolve how SEEA guidelines on ecosystem valuation applied (MP)