One of the main problems in using environmental cost -benefit analysis is deciding on the relevant population: whose benefits should we count? This is important since aggregate benefits depend on both per-person benefit and the number of beneficiaries. Yet this latter term is often hard to evaluate. Distance-decay functions are one way of addressing this problem. In this paper, we present estimates of distancedecay functions for a particular environmental improvement, namely a reduction in low flow problems on the River Mimram in Southern England. We do this both for users and non-users, in the context of a contingent valuation study of the benefits of improving low flow conditions. We test whether distance-decay effects for mean Willingness to Pay are stronger for a single environmental good (the River Mimram, in this case) than for a more inclusive set (here, all rivers in Thames region which suffer from low flow problems). Finally, we explore the impact on part -whole bias, in terms of the relationship between WTP for an individual site and WTP for a more inclusive group of sites, of allowing for distance-decay effects. q
The Oil and Gas industry has long recognised the importance in assessing interactions of its activities with the natural environment and the need to integrate biodiversity issues into environmental management practices. This is key to ensuring business continuity, access to new resources and the sustainable shared use of nature. The joint work of the oil and gas trade associations, IPIECA and OGP, addresses biodiversity risk management and the increasingly-adopted concept of ecosystem services. This concept considers humans as an integral part of an ecosystem economy that both depends on, and potentially affects, natural capital through a supply and demand process. To achieve sustainable, shared use of natural resources, we must ensure that combined demand does not exceed nature's ability to supply. Governments, organisations and the financial sector are embracing the concept, which enables more rigorous determination of environmental and business risk, but also highlights new revenue generation and cost saving opportunities. Oil and gas activities both depend upon and impact biodiversity and the services ecosystems provide (such as by using water and relying on natural waste assimilation). Therefore, there is a clear business case for companies to identify and manage dependencies and impacts effectively, as well as to consider the maintenance or enhancement of ecosystems providing valuable services. This paper overviews the recent IPIECA-OGP publication, Ecosystem Services Guidance, drawing on a hypothetical arctic case study. This guide was produced to help member companies apply the concept of ecosystem services as part of existing environmental assessment and management practices. The guide explains the relationships among biodiversity, ecosystem services and oil and gas activities; provides a set of checklists for identifying important ecosystem service dependencies and potential impacts through the asset life-cycle stages and key habitat types, onshore and offshore; and finally highlights some associated risks and opportunities, providing guidance on management measures.
Summary:
Biodiversity and ecosystem services loss is a major global issue of increasing significance to the public, politicians and businesses. A key contributory solution, as advocated by the UN Convention of Biological Diversity and Millenium Ecosystem Assessment is to change the way people and businesses behave towards the environment through introducing economic incentives for biodiversity and ecosystem services (EIBs). These EIBs begin to reflect the true value of the environment, and are now being adopted worldwide with significant implications for businesses.
This is the second article in a series of four with the overall objective of exploring the literature relevant to the extent to which the development of economic incentives for biodiversity is likely to be an opportunity or risk for extractive and water companies over the next five to10 years.
The first article began the investigation by outlining the links between business and biodiversity. This second article explains what economic incentives for biodiversity are and provides examples from the literature that helps demonstrate how important they are becoming. Subsequent articles will indicate some of the associated implications of climate change, and highlight what strategies companies can adopt to best deal with environmental and biodiversity issues and the development of EIBs.
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