Cost and Benefits Analyses

Cost-benefit analysis (CBA) is an economic decision-support tool that evaluates the changes in costs and benefits that occur when a Management Option (MO) is applied, typically measuring these changes in monetary terms. CBA is a decision-making tool that can inform policy-making (Hussain and Gundimeda, 2011). It can be used to compare different management options.


ODEMM has developed key resources to facilitate CBA:


1. A Typology of Ecosystem Services (to assess benefits)


2. A method for linking management options to change in the supply of individual ecosystem services


3. A Typology of Costs


 


1. A Typology of Ecosystem Services


The concept of Ecosystem Services (ESs) provides a mechanism for people to understand how our existence is linked with the natural environment (MA, 2005).  The need for a typology of ESs arises so as to ensure that all these benefits are made explicit and to avoid under-representation of the benefits arising from measures aimed at conserving nature. The core principle is to make the benefits visible and to encourage well-informed decision-making.


The ODEMM tyoplogy of Marine Ecosystem Services has been modified from The Economics of Ecosystems and Biodiversity (TEEB) study (TEEB 2010) and the framework used in the Millennium Ecosystem Assessment (MA, 2005). There are four main categories of services:


(1) provisioning services such as sea fish for human consumption;


(2) regulating services such as gas and climate regulation;


(3) supporting/habitat services (e.g. sea grass beds providing a nursery habitat for juvenile fish); and


(4) cultural/amenity services such as leisure and recreation.


The ODEMM typology allows decision-makers to categorise those ESs which are likely to be priorities in their particular decision-making context. ODEMM has produced a set of downloadable cards with one card per defined service (Figure 1). The puropose of these cards is to help individuals and groups become familiar with the ODEMM marine ecosystem service typology. It is our hope that these cards will make marine ecosystem services more accessible, contributing to a greater understanding of marine ecosystem services, and that they will facilitate future marine ecosystem service assessments.


 


     


Figure 1 Examples from the ODEMM Marine Ecosystem Service Cards


 


Using the Ecosystem Services typology


The ODEMM typology (Bohnke-Henrichs et al, 2013 - see Further Information below) is available to be applied to any marine ecosystem assessment. The typology is illustrated for ease of use and users can download the full set of ESs' cards here to print Ecosystem Service Cards v1.0.pdf. In addition, it is possible to use the ODEMM linkage tables (see details under Linkage Framework Resource tab) to link up ESs to the ecological components that contribute to changes in their supply, enabling an overall assessment of how change in the ecosystem might then be manifested in change in supply of ecosystem services (see 2 below).


Skills needed


One of the main objectives of generating the Ecosystem Services typology and the accompanying illustrated cards was to promote a wider understanding and use of Ecosystem Services in Ecosystem Assessments. Users may thus take this typology with relatively little underlying familiarity with such an approach and use the cards to help understand the application. Linking this to changes in the underlying ecosystem will then require further understanding (see details under 2 below).


Further information


The typology of ecosystem services developed by ODEMM (Bohnke-Henrichs et al., 2013) has been published in the Journal of Environmental Management:


http://dx.doi.org/10.1016/j.jenvman.2013.08.027


A more detailed description can also be found under Chapter 7 of ODEMM's final deliverable (Robinson et al. (2014) - ODEMM Report.pdf) and the illustrated cards downloaded using the link given above.


Developers: Anne Bohnke-Henrichs, Corinne Baulcomb, Rebecca Koss, Salman Hussain and Rudolf de Groot


Tool contacts: Anne Bohnke-Henrichs (anne.boehnke-henrichs@wur.nl) or Corinne Baulcomb (Corinne.Baulcomb@sruc.ac.uk)


 


2. Linking Management Options to Change in the Supply of Individual Ecosystem Services


The ODEMM Linkage Framework identifies which ecosystem services have the potential to be affected by a management option scenario. Knowing the qualitative links between these different aspects of the ecosystem provides the structure within which management options can be explored.


The ecological consequences of marine management are explored using the Ecological Risk Assessment. In theory, the adoption of new management should lead to a reduction in risk, and reductions in risk should be reflected in changes in the identified ecological components. Constructing this full set of linkages allows for changes in ecosystem service supply and changes in risk to the ecosystem to be assessed simultaneously (Figure 2).



Figure 2 Visualising the connection between the ODEMM Ecological Risk Assessment and the analysis of ecosystem services


Steps



  1. The relative contribution made by each identified ecological component to the supply of each identified ecosystem service must first be assessed. The outcomes of this analysis are unique for each regional sea and scale of assessment. The analysis of the relative contributions of ecological components to ecosystem services is conducted using expert judgment, scoring the contributions on a categorical scale from none, low, moderate or high.

  2. This then allows a formal link to be assigned between changes in ecosystem services supply to changes in marine management. This is achieved by multiplying the reductions in the ecological risk associated with each ecological component (the output of the Ecological Risk Assessment) by the relative contribution linking each ecological component to each ecosystem service (the categorical score).

As the results are based on the best available information, when better information becomes available scores should be reviewed and updated where necessary (as part of an adaptive management process). Thus, the outcomes are indicative and should be viewed as a mechanism for sign-posting research and management options.


Output


The ODEMM framework captures ecosystem complexity and translates this into a simple metric (i.e. a single figure in each cell of a matrix) that allows comparison of potential change in supply of ecosystem services across management options. This information can then be compared against outcomes of management options in terms of the other pillars of sustainable development (e.g. changes in ecosystem state, societal and monetary costs arising, governance complexity etc).


Using the Ecosystem Services supply change methodology


The ODEMM framework captures ecosystem complexity and translates this into a simple metric (i.e. a single figure in each cell of a matrix) that allows comparison of potential change in supply of ecosystem services across management options. This information can then be compared against outcomes of management options in terms of the other pillars of sustainable development (e.g. changes in ecosystem state, societal and monetary costs arising, governance complexity etc).


Further information


A more detailed description of this approach can be found under Chapter 7 of ODEMM's final deliverable (Robinson et al. (2014) - ODEMM Report.pdf) .


Developers: Anne Bohnke-Henrichs, Corinne Baulcomb, Leonie Robinson, Fiona Culhane and Salman Hussain


Tool contacts: Anne Bohnke-Henrichs (anne.boehnke-henrichs@wur.nl), Corinne Baulcomb (Corinne.Baulcomb@sruc.ac.uk) or Leonie Robinson (leonie.robinson@liv.ac.uk)


 


3. The Assessment of Costs


 


ODEMM has developed a typology of costs, adapted from existing typologies, associated with the implementation of management options. This highlights the range of cost categories that should be considered when pursuing a full cost assessment of marine policy.


In general it is possible to split the assessment of costs across two domains:



  1. the affected agents incurring the costs; and

  2. when the costs are incurred – before, during or after the application of the management option.

Figure 3 sets out a cost framework for the before and during application governmental costs. These cost categories are incurred not only by the regulator (as shown in Figure 3) but also the affected industries (as well as other stakeholders such as the Third Sector and civil society). ODEMM carried out a review of costs for Marine Protected Area (MPA) designation and found that only a sub-set of these cost categories have been estimated, and even then the range of value estimates is large, and dependent on a wide number of key variables.


 



Figure 3 Typology of governmental costs incurred before and during implementation of the Management Option


Costs to the regulator are typically borne at Member State level, but the designation of one particular Member State’s share of this regulatory burden can be unclear in regional management. Any before application cost assessment is likely to be applied under conditions where the management option is not fully specified. For instance, knowing that the management option is the designation of MPAs in the NE Atlantic is insufficient to facilitate an accurate cost assessment. It is also necessary to know where exactly the MPAs would be located, and what restrictions on activities and pressures would be applied. It is rarely the case that such a complete specification is available, but in its absence, cost estimate ranges are so large as to be near useless in terms of informing policy.


 


Further information


A more detailed description of this approach can be found under Chapter 7 of ODEMM's final deliverable (Robinson et al. (2014) - ODEMM Report.pdf) .


Developers: Corinne Baulcomb, Abdulai Fofana and Salman Hussain


Tool contacts: Corinne Baulcomb (Corinne.Baulcomb@sruc.ac.uk