Chad McGuire

Assistant Professor of Environmental Policy University of Massachusetts Dept. of Public Policy

 Economic Activity
Goods Services

Sustainability Criterion
Ecosystem Health Provide for Today Maintain Capacity to Provide for Tomorrow

McGuire (2012) Environmental Decision-making in Context: A Toolbox. New York, NY: Taylor & Francis

 Total Valuation Technique

Seek to identify all values associated with a resource
decision. Make decisions based on a full accounting of these values

Total Value comprised of:

Direct Values: What nature provides Indirect Values: What nature helps to regulate Non-Use Values: What personal pleasures we derive
from nature (aesthetics, cultural values)

Inflows System Component

Outflows

McGuire (2012) Environmental Decision-making in Context: A Toolbox. New York, NY: Taylor & Francis

Feedback Loop

Burning Fossil Fuel

6 /year

Primary Production
120 /year

Plant respiration
60 /year

Decomposition of organic matter

60 /year

Atmosphere
750 (+3.2/year)

Net destruction of Vegetation

0.9 /year

Ocean release
90 /year

Ocean absorption
92 /year

River runoff
0.8 /year
*Quantities derived from William H. Schlesinger, Biogeochemistry: An Analysis of Global Change, 2nd ed. (San Diego, CA: Academic Press (1997),

Ocean
38,000

Soils
1,500

Deep Sea burial

0.1 /year

All reservoirs expressed in 1015gC All fluxes expressed in 1015gC/year

Where are the remaining 3 units of carbon?

Inflows System Component Interacting with Carbon 10 units of Carbon

Outflows

7 units of Carbon

McGuire (2012) Environmental Decision-making in Context: A Toolbox. New York, NY: Taylor & Francis

Feedback Loop

 3 units of carbon taken from ground and added to

atmosphere. So what?

Must be willing to both identify the cause and the

impacts of this action. accounting.

Total valuation requires us to internalize costs in the Failure to internalize the costs leads to externalization
of those costs.

Impacts can be substantial.

Example of Cost Accoun2ng

Provisioning

Enhanced
Crops Livestock Aquaculture Carbon sequestra5on

Degraded
Capture sheries Wild foods Wood fuel Gene5c resources Biochemicals Fresh Water Air quality regula5on Regional & local climate regula5on Erosion regula5on Water purica5on Pest regula5on Pollina5on Natural Hazard regula5on Spiritual & religious Aesthe5c values

Mixed
Timber Fiber Water regula5on Disease regula5on Recrea5on & ecotourism

Regulating

Cultural

Trade-os among ecosystem services

Mangrove Services: nursery and adult fishery habitat fuelwood & timber carbon sequestration traps sediment detoxifies pollutants protection from erosion & disaster

Mangrove ecosystem

Economic value of non-marketed services can be high

Forests in Italy Forests in Croa5a

Economic Value ($ per hectare) ($ per hectare) Economic Value

Source: Millennium Ecosystem Assessment

Photo: W. Reid

$4000

Public Net Present Value per hectare Private Net Present Value per hectare Value (per hectare) 1,000 Mangrove: $91 to $3,600 -5,400 Shrimp Farm: $2000 to $200

1987 1999

$2000

Coastal Protec5on (~$3,840) Net: $2,000 (Gross $17,900 less costs of $15,900)

Fishery nursery ($70) Timber and Non-5mber Mangrove Conversion 0

Source: Millennium Ecosystem Assessment; Sathirathai and Barbier 2001

Source: UNEP Less subsidies (-$1,700)

products ($90)

Pollu5on Costs (-$230) Restora5on (-$8,240)

Mangrove

Shrimp Farm

Many services are public goods

Spiritual & religious Aesthe5c Flood/Fire regula5on Disease regula5on Water purica5on Climate regula5on Freshwater Gene5c Resources Recrea5on & tourism Fiber Food
? ? ? ? ?

Economic Valua5on
?

Private Benet Capture

Dicult

Dicult or impossible

Easy
?

Easy

Economic Value ($)

Muller, N., Mendelson, R., & Nordhous, W. Environmental Accounting for Pollution in the United States Economy, American Economic Review, August 2011: 1649-75.

 Desire is to implement policy to internalize costs of

driving automobiles.

Focus on source of pollution, the auto itself. Create policy that reduces auto emissions.

 Use of certain automobiles banned based on emissions.

Generally older, cheaper automobiles.

Individual left to purchase newer vehicle, or find other

means of transportation. affected.

Government offers no aid (subsidy) to those who are Unfair and inequitable. Banning Legislation.

 Government caps the amount of miles allowed to be

driven by any particular vehicle.

Amount of miles based on pollution measure of

automobile.

Older automobiles generally can only travel 5k miles

per year under program.

More fair than banning legislation, but still not very

fair, not very equitable. Cap Program.

 Government places tax on emissions of all automobiles. Tax is based on the following factors:
Miles driven per year x Emissions of Auto.

Those with higher emission vehicles pay higher rate

per mile.

Those who travel more miles pay higher tax. Everyone is subject to tax. Equal, but strong impact! Taxing program.

 Look to the regions assets Account for those assets fully (total valuation) Apply intergenerational considerations
Sustainability Criterion

Know what tradeoffs you are making Make a decision and be willing to adapt to new
information

THANK YOU.