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Policy Analysis
Policy Analysis: Valuation of Ecosystem Services in the Southern Appalachian Mountains H. Spencer Banzhaf, Dallas Burtraw, Susie Chung Criscimagna, Bernard Jackson Cosby, David A. Evans, Alan Krupnick, and Juha Siikamaki Environ. Sci. Technol., Just Accepted Manuscript • DOI: 10.1021/acs.est.5b03829 • Publication Date (Web): 12 Feb 2016 Downloaded from http://pubs.acs.org on February 24, 2016
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Policy Analysis: Valuation of Ecosystem Services in the Southern
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Appalachian Mountains
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H. Spencer Banzhaf,† Dallas Burtraw,*‡ Susie Chung Criscimagna,Ψ Bernard J. Cosby,ɸ David
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A. Evans,§ Alan J. Krupnick,‡ and Juha V. Siikamäki‡
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†
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Hayward CA (formerly Resources for the Future), ɸDepartment of Environmental Sciences,
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University of Virginia, §U.S. Environmental Protection Agency
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Abstract
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This study estimates the economic value of an increase in ecosystem services attributable to the
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reduced acidification expected from more stringent air pollution policy. By integrating a detailed
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biogeochemical model that projects future ecological recovery with economic methods that
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measure preferences for specific ecological improvements, we estimate the economic value of
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ecological benefits from new air pollution policies in the Southern Appalachian ecosystem. Our
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results indicate that these policies generate aggregate benefits of about $3.7 billion, or about $16
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per year per household in the region. The study provides currently missing information about the
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ecological benefits from air pollution policies that is needed to evaluate such policies
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comprehensively. More broadly, the study also illustrates how integrated biogeochemical and
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economic assessments of multidimensional ecosystems can evaluate the relative benefits of
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different policy options that vary by scale and across ecosystem attributes.
Economics Department, Georgia State University, ‡Resources for the Future, ΨEden Housing,
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TOC/Abstract Art Southern Appalachian region high-elevation areas especially affected by acidification
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Introduction
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Ecosystem services in the Southern Appalachian Mountain (SAM) region have been
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compromised by years of acid precipitation. We estimate the monetary value of restoring
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ecosystem services in this region by wedding a biogeochemical model to an economic model.
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The biogeochemical model, together with information drawn from the literature, is used to
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identify the likely effects of acidification on ecosystems. The economic model uses a stated
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preference (SP) survey1,2 to elicit individuals' willingness to pay (WTP) for these services.3,4,5,6
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Our approach makes three specific contributions. First, it facilitates the measurement of
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overall benefits of ecosystem improvements expected from new air pollution policies by closely
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tying effects of acidification identified by the natural sciences to attributes of the ecosystem
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valued by the general public.
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Second, we use choice experiment techniques that permit the valuation of the different
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ecological dimensions of the environmental improvements, which allows one to identify the
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benefits associated with each constituent ecosystem service. In this study, those services include
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the health of streams, forests, and bird populations. Some SP studies estimate values for
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individual animal species,7,8 others take a holistic approach and examine values for the totality of
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the ecosystem.9,10,11 Our approach bridges these two poles by valuing wholesale changes to the
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entire ecosystem and decomposing values for the different ecological attributes. This evaluation
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of the dimensions of an ecosystem separately provides information that can be used to evaluate
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tradeoffs among ecosystem services when designing conservation plans12,13,14 as well as to
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identify those services most likely to yield higher entry fees or other payments for ecosystem
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services.15
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Third, our approach could inform analyses of policy proposals for other natural areas.
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Because of their high costs, economic studies that assess the value of ecosystem services cannot
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be performed for each potential policy proposal and each target area. Hence, the ability to
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transfer benefits from a study of one policy context or area to another context or area, termed
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benefits transfer,16,17,18 is highly desirable. Such transfers are most reliable when they adjust for
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differences in ecosystem services provided across the two contexts or areas. Our approach allows
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for such adjustments.
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We apply the modeling framework to the SAM region, which encompasses parts of
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Virginia, West Virginia, Tennessee, North Carolina, and Georgia, comprising 37 million acres
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(Fig. 1). The majority of the region is unaffected by acid precipitation, but high-elevation areas
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are vulnerable for two reasons.19 First, these areas receive the greatest loadings of sulfate and
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nitrates, partly because of their proximity to emitting sources and partly from their immersion in
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acidic clouds. Second, their soils are thinner and have insufficient base cations to neutralize the
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acid. These high-elevation areas are marked in Fig. 1.
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We demonstrate how information from the biogeochemical model and the WTP estimates
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generated from our SP survey can be used to estimate the economic benefits from implementing
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a set of related recent U.S. regulations: the Cross-State Air Pollution Rule, the Mercury and Air
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Toxics Standard, the Industrial Boiler rule, and the greenhouse gas regulations for electricity
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generators. Our study also is related to previous studies of ecosystem services in the southern
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Appalachians, including Ahn et al.,20 Kramer et al.,10 and Zinkhan et al,14 as well as to studies of
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acid pollution in streams.21 However, none of those studies link values to a biogeochemical
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model, nor do they permit consideration of the tradeoffs between ecosystem services.
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Methods
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Biochemical modeling
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Current and past acid deposition has harmed both aquatic and terrestrial environments,
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though aquatic damages are better documented.22 As such, we use a biogeochemical model of the
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effect of acid deposition on aquatic chemistry to inform the construction of the survey
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instrument, and supplement it with information on possible terrestrial effects as described below.
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Specifically, we use the Model for Acidification of Groundwater In Catchments (MAGIC) to
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forecast the acidity of streams under different deposition scenarios. We use MAGIC because it
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has been used in numerous peer-reviewed studies, including some in our study area, and in
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evaluations of environmental regulations. MAGIC has been used to reconstruct the history of
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acidification, to examine current patterns of recovery, and to simulate future trends in stream
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water acidity and concentrations of ions in numerous sites around the world.Error! Bookmark not
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defined.23
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Specifically, we use MAGIC to forecast acid-neutralizing capacity (ANC) of streams in
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the region under the various scenarios. ANC is a commonly used chemical indicator of the
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ecological effect of acidification on aquatic systems, measuring the concentration of base cations
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in surface water.24,25 Low ANC levels are associated with higher aluminum concentrations and
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reduced fish communities and fish species diversity.26,27
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MAGIC assumes that concentrations of major ions are governed by simultaneous
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reactions involving SO42- adsorption, cation exchange, dissolution-precipitation-speciation of Al,
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and dissolution-speciation of inorganic C. The model includes mass balance equations in which
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the flux of major ions to and from the soil is assumed to be controlled by atmospheric inputs,
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chemical weathering, net uptake and loss in biomass, and loss to runoff. At the heart of MAGIC
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is the size of the pool of exchangeable base cations in the soil. As the fluxes to and from this
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pool change over time because of changes in atmospheric deposition, the chemical equilibria
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between soil and soil solution shift, changing surface water chemistry. The model is calibrated to
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observed data from a water quality system to replicate observed atmospheric and hydrologic
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inputs, and then run using assumed atmospheric and hydrologic inputs to forecast trends.
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Additional information on the MAGIC model can be found in the Supporting Information
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(Appendix S1).
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For this study, MAGIC was applied to a sample of 169 representative sites across seven
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states, including high-elevation wild trout streams in our SAM study region. Such streams
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account for about 40% of the total stream length in the region.Error! Bookmark not defined. We use the
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threshold of an ANC value below 50µeq/L to describe a stream as being affected by
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acidification, as these streams have a marked decline in the abundance of fish species, including
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trout.28
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Using MAGIC, we forecast future conditions under 32 hypothetical future deposition
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scenarios. Specifically, we analyze eight scenarios of future SO4 deposition resulting from
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potential changes in anthropogenic emissions combined with four scenarios of future nitrogen
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deposition. The eight SO4 scenarios range from, at one extreme, a scenario based on deposition
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remaining at 1980 levels to, at another extreme, essentially the elimination of all future
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anthropogenic sulfur (SO42-) deposition, with six deposition scenarios between. Two scenarios
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hold SO42- deposition at either 1990 or 2000 levels constant over the forecast horizon, while the
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four others assume deposition reductions by 20% increments from 2000 levels by 2020. The
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deposition levels were modeled out to 2100. Of the four scenarios for nitrogen deposition, one
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assumes NO3 deposition remaining at 2000 levels, another assumes a 25% reduction in these
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levels by 2020, and a third assumes a 50% reduction. All three assume NH4 deposition is at
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110% of 2000 levels. The fourth scenario assumes that both NO3 and NH4 deposition decline by
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50% from 2000 levels by 2020. One of the 32 scenarios approximates levels already achieved by
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Title IV Acid Rain Program while another approximates the more stringent Clean Air Interstate
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Rule (CAIR) (which is similar to its replacement, the Cross-State Air Pollution Rule). We find
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stream quality to be sensitive to the SO4 deposition levels but relatively insensitive to these
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nitrogen deposition levels.
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From these 32 sulfur and nitrogen deposition scenarios, we estimate a response function
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of aquatic ecosystem impacts, which was incorporated into the design of our survey and into the
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changes in ecosystem services that we evaluate. For example, MAGIC predicts that, under
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CAIR, 21.3% of streams in the region are acidic (
