Economic Valuation of the Royal Botanic Gardens, Kew

Economic valuation of the Royal Botanic Gardens, Kew

Economic valuation of the Royal Botanic Gardens, Kew

Oxford Economics Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities. Our best-of-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact.

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April 2016 All data shown in tables and charts is Oxford Economics’ own data, except where otherwise stated and cited in footnotes.

All information in this report is copyright © Oxford Economics Ltd. This report is confidential to clients of the Royal Botanic Gardens, Kew and may not be published or distributed without their prior written permission.

The modelling and results presented here are based on information provided by third parties, upon which Oxford Economics has relied in producing its report and forecasts in good faith. Any subsequent revision or update of those data will affect the assessments and projections shown.

To discuss the report further please contact: Ian Mulheirn: imulheirn@oxfordeconomics.com Oxford Economics Broadwall House, 21 Broadwall, London, SE1 9PL, UK Tel: +44 207 803 1400 1

Economic valuation of the Royal Botanic Gardens, Kew

TABLE OF CONTENTS Executive summary .............................................................................................. 4 1. Introduction..................................................................................................... 10 2. Methodology and scope ................................................................................. 11 2.1 Theoretical framework ............................................................................ 11 2.2 Total Economic Value ............................................................................. 12 2.3 Scope ...................................................................................................... 14 3. Value to Kew Gardens visitors from the UK ................................................... 15 3.1 Approach ................................................................................................. 15 3.2 Quantifying Kew Gardens visitors’ consumer surplus ............................ 19 3.3 Total visitor value at Kew Gardens ......................................................... 19 3.4 Visitors to special events at Kew Gardens ............................................. 19 4. Value to Wakehurst visitors............................................................................ 22 4.1 Approach ................................................................................................. 22 4.2 Total visitor value at Wakehurst .............................................................. 24 5. Value to UK students ..................................................................................... 25 5.1 School visits ............................................................................................ 25 5.2 School of Horticulture .............................................................................. 26 5.3 Specialist training .................................................................................... 27 5.4 University course visits by MSc students ................................................ 28 5.5 Teacher training ...................................................................................... 28 5.6 Total value of educational benefits ......................................................... 28 6. The non-use and option value of RBG Kew................................................... 30 6.1 Online survey .......................................................................................... 30 6.2 Awareness of RBG Kew ......................................................................... 31 6.3 Valuation of RBG Kew ............................................................................ 31 6.4 Components of non-use and option value .............................................. 34 6.5 Summary of survey results ..................................................................... 35 7. Value to UK science ....................................................................................... 37 7.1 Potential approaches to valuing RBG Kew’s scientific activity ............... 37 2

Economic valuation of the Royal Botanic Gardens, Kew

7.2 Our approach to valuing Kew Science .................................................... 40 8. International Value of RBG Kew .................................................................... 46 8.1 Value to international Kew Gardens visitors ........................................... 46 8.2 Value to international students ................................................................ 47 8.3 Value of science to the world .................................................................. 47 9. Conclusion...................................................................................................... 55 Appendix 1: Visitor values .................................................................................. 57 Appendix 2: Non-user survey ............................................................................. 62 Appendix 3: Kew Science .................................................................................. 70

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Economic valuation of the Royal Botanic Gardens, Kew

EXECUTIVE SUMMARY INTRODUCTION Founded in 1759 and declared a UNESCO World Heritage site in 2003, Kew Gardens is a world-famous visitor attraction. In 2014/15, more than 1.5 million visitors, including 85,000 school children, visited Kew Gardens and its sister gardens at Wakehurst, which together comprise the Royal Botanic Gardens (RBG), Kew.

1.5 million Visitors in 2014/15.

Kew Gardens and Wakehurst received a combined total of 1.5 million visitors in 2014/15.

But RBG Kew is far more than simply a visitor attraction. It is a global resource for plant and fungal knowledge. Its unique combination of extensive collections, databases, scientific expertise and global partnerships mean that Kew Gardens and its sister gardens at Wakehurst are an unparalleled educational resource for students and researchers.

HOW WE ASSESS THE VALUE OF RBG KEW This report provides an independent assessment of the value of Kew Gardens and Wakehurst, which together provide a wide range of benefits to society. For example, visitors may appreciate the beauty and serenity of the gardens, while RBG Kew’s extensive scientific contribution bolsters the UK’s science base and contributes to productivity growth. Equally, attendees at Kew Gardens’ special events come from far and wide to see world-class entertainment in a unique setting, and the gardens play a substantial educational role—ranging from school visits to horticulture diplomas and professional development for teachers.

85,000 School children on trips.

In 2014/15 some 85,000 school children visited Kew Gardens or Wakehurst, spending 4-5 hours on average at the gardens.

Beyond these immediate benefits, RBG Kew also benefits society in ways that are less tangible. Citizens place intrinsic value on the existence of Kew Gardens and Wakehurst as places of heritage and beauty, and on the role they play in conserving biodiversity for the benefit of future generations.

This study provides an assessment of the value of RBG Kew using cost-benefit analysis (CBA) within a welfare economics framework. It takes a Total Economic Value (TEV) approach, which aims to measure the economic benefits accruing not just to direct beneficiaries (such as visitors) but also to indirect users (such as beneficiaries of scientific output), and even non-users (such as those who value RBG Kew’s existence even if they have never visited). While assessing the costs of maintaining and operating RBG Kew is simple, quantifying the benefits is more difficult and we use a range of economic techniques, as appropriate to the diversity of activities it undertakes.

These include a calculation of its value as a visitor attraction—computed from what visitors actually pay to enter Kew Gardens and Wakehurst—but also an estimation of what they would have been prepared to pay, over and above that ticket price (known as a consumer surplus). RBG Kew’s value, however, is much broader than the benefits derived from it as a visitor attraction and so we also seek to assess the value it generates through the educational and scientific contribution that it makes, and which in turn, adds to the stock of scientific knowledge, stimulates innovation and boosts economic productivity.

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Economic valuation of the Royal Botanic Gardens, Kew

These benefits are diffuse and hard to capture, let alone price, but putting a value on them is essential in understanding the value that RBG Kew generates.

THE VALUE OF RBG KEW TO UK VISITORS

£43-50 m Total gross value to visitors.

The total gross value of Kew Gardens to visitors from the UK was between £43 million and £50 million in 2014/15.

£6.2 m Total gross value of events.

The total gross value of Kew Gardens’ special events to visitors from the UK was, conservatively estimated at £6.2 million 2014/15.

In 2014/15 a total of 1.1 million visits were made to Kew Gardens by members of the public who live in the UK (excluding students and teachers), alongside an additional 169,000 visits to Wakehurst. Data for Kew Gardens suggest that members, who typically paid £62 for annual membership and visited some 12 1 times, made around 57 percent of these visits. Visitors who were not members paid an entry fee of £15 to visit Kew Gardens. But entry fees represent only a small part of the true value that people place on their visit to Kew or Wakehurst.

Researchers use a variety of approaches to estimate the value visitors place on amenities such as Kew Gardens and Wakehurst. The approach adopted for this study is the travel cost method (TCM) which traces how demand would change if the cost of admission were to rise from its current level. Two versions were used to produce the most robust estimate possible. The two approaches suggest a total consumer surplus for Kew Gardens visitors from the UK in 2014/15 of between £34 million and £41 million. Adding the price visitors paid gives a total gross value of Kew Gardens to visitors of between £43 million and £50 million last year. In addition, Wakehurst generated a total visitor value of almost £3.0 million for 2014/15.

On top of its role as a visitor attraction in its own right, Kew Gardens hosts events throughout the year, including, for example, Christmas at Kew and Kew the Music. These events generated an additional benefit, conservatively valued at £6.2 million in 2014/15.

THE EDUCATIONAL VALUE OF RBG KEW TO UK STUDENTS

£25.8 m Total gross value of education.

The total gross value of RBG Kew’s educational programmes for UK students was £25.8 million in 2014/15.

In addition to its offering to visitors, RBG Kew generates significant educational benefits for the UK. These include the hands-on learning about plants and conservation that school visits provide to children from across the UK as well as a wide range of training opportunities, including for university students and trainee teachers.

Estimating returns to education is far from straightforward, but nonetheless we explore a range of studies that have attempted to quantify a causal relationship between educational learning and subsequent labour market outcomes. These insights have enabled us to calculate a total value of educational benefits generated by RBG Kew in 2014/15 of £25.8 million—the vast majority related to school visits but also taking into account the training opportunities offered.

THE ‘NON-USE’ VALUE OF RBG KEW Beyond visitor and educational benefits another category of valuation is represented by UK residents who do not visit the gardens themselves, but may yet still value the gardens and want them to be supported. This so-called ‘nonuse’ value is commonly estimated for environmental or cultural amenities,

1

Includes members’ guests and children.

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Economic valuation of the Royal Botanic Gardens, Kew

2

£44.3m Total gross ‘non-use’ and ‘option’ value.

The total gross ‘non-use’ and ‘option’ value of RBG Kew was £44.3 million in 2014/15 representing the value attributed to it by the public, even if they do not themselves visit the gardens.

which are seen as intrinsically valuable by citizens. It incorporates a number of components, including the value that people attach to the existence of RBG Kew despite the fact that they have no intention of visiting it, the value placed on preserving RBG Kew for the benefit of future generations, and the value that people attach to it simply because they know that other people enjoy it. In addition, people may value the option of visiting RBG Kew at some point in future.

In order to quantify these intrinsic values, we undertook a survey of UK residents to explore how much public funding people felt RBG Kew ought to receive in comparison to its current level of funding—around 90 pence per UK taxpayer each year, on average. More than half of the respondents (60 percent) stated they would choose to retain the current level of funding. A small portion of respondents (five percent) said they would decrease funding and just over one in three (34 percent) said they would be prepared to increase funding to the gardens. Based on the survey results we estimate a total non-use and option value of £44.3 million.

THE VALUE OF RBG KEW’S OUTREACH PROJECTS RBG Kew also operates a number of outreach programmes, the most wellknown of which is ‘Grow Wild’, which encourages the sowing and growing of wild flowers across the UK. Four percent of past Kew Gardens visitors and seven percent of non-visitors who took part in our survey reported having taken part in an RBG Kew outreach programme. Activities include engagement in small-scale funded community projects, the distribution of seed kits and four larger-scale community projects selected by public vote.

£56.2m Value of science.

Present discounted value to the UK of scientific activity undertaken at RBG Kew in 2014/15.

As well as increasing the number of wild flowers grown across the country, ‘Grow Wild’ aims to create wider benefits for society. This include bringing communities together in a joint endeavour, helping young people to connect with the natural world, promoting mental and physical wellbeing, and creating spaces for public interaction. A formal evaluation is currently underway, but initial findings suggest the programme has been successful in encouraging participation in growing activity amongst groups that would often not otherwise participate.

THE VALUE OF RBG KEW TO SCIENCE IN THE UK RBG Kew makes a substantial contribution to the scientific base in the UK, which, in turn, drives innovation, productivity and economic growth. RBG Kew is a global resource for plant and fungal knowledge and has one of the largest and most diverse collections of plant and fungal specimens (living and preserved) in the world. The extensive collections, databases, scientific expertise and global partnerships of its science departments, give RBG Kew a leading role in the science of plants. Its resources and materials are used by researchers and other stakeholders worldwide. Research undertaken by RBG Kew scientists focuses on documenting and understanding global plant and

2

The importance of assessing non-use values within a TEV is noted in Treasury and DWP’s 2011 supplement to the Green Book – Valuation Techniques for Social Cost Analysis.

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Economic valuation of the Royal Botanic Gardens, Kew

fungal diversity, with outputs of both intrinsic and instrumental value, including some with a direct commercial application.

Attributing a value to the diverse scientific research that RBG Kew undertakes and enables is challenging. Nonetheless, the scope of science undertaken at RBG Kew and the audience it serves, both within the UK and internationally, is clearly important. We therefore considered a range of potential approaches to measuring the value generated by RBG Kew’s scientific activities. This study follows an approach to valuing research and development (R&D) ‘externalities’ developed by Haskel et al. that explores how public science funding can drive productivity improvements in the private sector. On this basis we estimate that a £3 million per year increase in economic output was generated by RBG Kew’s scientific activities in 2014/15, giving a present discounted value of £56 3 million.

The UK Native Seed Hub is a good example of how RBG Kew generates scientific value. RBG Kew has been at the forefront of the response to the catastrophic loss of 97 percent of lowland grassland in England and Wales in the last 75 years, by working to secure the availability of high-quality UK nativeorigin seeds through the establishment of dedicated seed beds. These enable priority species to be to be grown in larger quantities and to be more readily and successfully distributed to users, helping to re-establish lost habitats.

RBG Kew also exhibits more immediate commercial value through its research partnerships with companies such as Walgreens Boots Alliance, Proctor and Gamble, and Taylors of Harrogate to bring products to market based on plant and fungal material. For example, RBG Kew scientists worked with Boots to assess the identity, quality and sustainability of botanical supplies provided for their Botanics range of cosmetics. In recognition of this research in ethical and sustainable sourcing practices—which included an evaluation of the entire supply chain and the creation of a model for the sustainable procurement of plant materials—Boots won the 2014 Guardian Sustainable Business Award in the Natural Capital category.

THE INTERNATIONAL VALUE OF RBG KEW

£7.9 m International visitor and student value.

The value of RBG Kew in 2014/15 to overseas visitors and students.

The central focus of this study is on the costs and benefits that RBG Kew provides to UK society as a whole. However, there is also an important global role for RBG Kew, particularly in science. Accordingly we also examined the international value of the RBG Kew with a focus on science, international visitors, and international education benefits.

RBG Kew is well-known and highly-regarded internationally and attracts visitors from all over the world. The top three countries in terms of international visitor origin in 2014/15 were the USA, Australia, and Germany. These visitors valued their visits to RBG Kew at some £7.2 million. On top of this we estimate an additional educational benefit to international students of £676,000 in 2014/15, giving a total additional gross value for international visitors of £7.9 million.

3

Jonathan Haskel, Alan Hughes and Elif Bascavusoglu-Moreau, "The economic significance of the UK science base" (UK-Innovation Research Centre, 2014).

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Economic valuation of the Royal Botanic Gardens, Kew

In addition, and perhaps even more significantly, this estimated international value of RBG Kew does not incorporate the international value of RBG Kew’s scientific research. This could be very substantial. RBG Kew undertakes scientific activity and collaborations across 110 countries and has one of the largest and most diverse collections of plant and fungal specimens globally. In this way, RBG Kew makes a marked contribution to the infrastructure upon which large swathes of plant biology research around the world rely. Much of RBG Kew’s conservation and other applied work primarily benefits other countries but each of these things, in turn, contributes to the UK’s cultural—or so-called ‘soft’—power and prestige. These things are, however, extremely difficult to value robustly.

The following are just two examples of how RBG Kew’s applied research directly generates benefits outside of the UK. In Madagascar, RBG Kew scientists are working to increase crop yields from wild yams so that they can become a cultivated and sustainable food staple for the local population. The project will work with 60 communities to grow and conserve those species of wild yams that have been identified by scientists as being economically and biologically viable for cultivation.

£182 m Total gross value to the UK. The total value of RBG Kew’s activities to the UK was £182 million in 2014/15.

3.4 UK benefit-cost ratio.

Dividing the UK benefits by operating costs of £54 million gives a benefit-cost ratio of 3.4. Adding in international value gives a benefit-cost ratio of 3.5.

In Ethiopia, coffee production is the mainstay of much of the economy. It is estimated that 15 million people depend directly or indirectly on coffee for their livelihood. Scientists from RBG Kew have been working to build a climate resilient coffee economy in the country by exploring the likely implications of climate change for coffee production.

A COST-BENEFIT ANALYSIS OF RBG KEW Overall, taking account of all the components of value that we are able to quantify as benefits, the total gross value to the UK of RBG Kew in 2014/15 is estimated to have been £182 million. When the international benefits that we have been able to quantify are added, the total reaches £190 million.

This estimated benefit was derived from costs (the operational expenditure needed to run RBG Kew) of £54 million. A benefit-cost ratio can therefore be calculated to reflect RBG Kew’s value to society in relation to the costs of operation. For the UK, dividing the £182 million in benefits by £54 million of operating costs gives a benefit cost ratio of 3.4. Adding quantifiable 4 international value gives a benefit-cost ratio of 3.5.

The quantified benefits outlined should be regarded as conservative. RBG Kew generates other significant benefits which it has not been possible to quantify within this study, most notably the international value of RBG Kew’s scientific research. It has also not been possible to estimate potential future economic value of species held in RBG Kew’s collections to the UK, or the value of RBG Kew’s community outreach activities, most notably ‘Grow Wild’.

4

The table does not separately identify values for RBG Kew’s revenues, as either costs or benefits. This is because the value these revenues represent is already captured within the figures presented. For example, ticket revenues are included in the estimates of the value to visitors and special event attendees.

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Economic valuation of the Royal Botanic Gardens, Kew

Finally, it is important to recognise that as RBG Kew’s activities continue to expand—for example, as visitor numbers and educational opportunities increase— so the value that it generates for the UK will also evolve and grow.

Fig. 1: Summary of costs and benefits of RBG Kew, in 2014/15 £ million Costs

54.3

Of which: Trading costs

5.7

Research and conservation

39.0

Visitor activities

9.5

Governance costs

0.1

Quantified UK benefits

182.1

Quantified total benefits

190.0

Of which: Value to UK Kew Gardens visitors (mid-point estimate)

46.6

Value to international Kew Gardens visitors (mid-point estimate)

7.2

Value to Wakehurst visitors

3.0

Value to attendees of special events

6.2

Non-use and option value for UK residents

44.3

Scientific value

56.2

Educational value for UK students

25.8

Education value for international students

0.7

Ratio of quantified UK benefits to costs

3.4

Ratio of quantified benefits to costs (including international benefits)

3.5

Source: Oxford Economics

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Economic valuation of the Royal Botanic Gardens, Kew

1. INTRODUCTION Founded in 1759 and declared a UNESCO World Heritage site in 2003, Kew Gardens is a world-famous visitor attraction and a special events venue, with its sister gardens at Wakehurst providing a complementary visitor attraction. In 2014/15, RBG Kew drew in 1.5 million visitors, including 85,000 school children on school visits. During the year, RBG Kew Gardens and Wakehurst had a combined 86,500 members. This study provides an assessment of the value of the Royal Botanic Gardens, Kew (RBG Kew), for both Kew Gardens and Wakehurst using cost-benefit analysis (CBA) within a welfare economics framework.

As its name suggests, CBA involves comparing the benefits of a given project or initiative with its costs. On the cost side, operating and maintaining RBG Kew involves society incurring what economists call an ‘opportunity cost’.

Funds used to sustain the operations of RBG Kew are resources that society— whether private visitors or public funding bodies—could put to alternative uses.

In return, the gardens provide a wide range of benefits to society. Visitors appreciate the beauty and serenity of the gardens; RBG Kew’s extensive scientific contribution bolsters the UK’s science base and hence contributes to productivity growth; attendees at Kew Gardens’ special events come from far and wide to see world-class entertainment in a unique setting; and the gardens play a substantial educational role ranging from school visits to horticulture diplomas and professional development for teachers.

Beyond these immediate benefits, RBG Kew also benefits society in ways that are less tangible, such as by helping to promote and secure biodiversity. RBG Kew’s gardens are home to over 1,300 threatened species; there are over 2,000 species and varieties of trees at Kew Gardens; and there are 40,000 samples of plant DNA in the RBG Kew DNA databank. Citizens place intrinsic value on the role that RBG Kew plays in conserving biodiversity for the benefit of future generations and, more broadly, on the existence of Kew Gardens and Wakehurst as places of heritage and beauty. This is known as the non-use value. Some people may also value the option of being able to visit RBG Kew in future. All of these benefits represent the full value society ascribes to the gardens and their work.

For the purposes of this report the costs and benefits are quantified with respect to 2014/15 – the most recent full year for which data are available.

Chapter three begins by estimating the value of Kew Gardens to its 1.1 million UK-resident visitors and to those attending special events. This exercise is repeated in Chapter four for Wakehurst. Chapter five turns to the educational contribution of RBG Kew for domestic students, estimating the labour market value that these activities generated. Chapter six discusses the non-use value estimated for the gardens. In Chapter seven we set out to quantify the scientific impact of RBG Kew in aggregate, in terms of the boost it gives to UK productivity in the long term. In Chapter eight we set out the international value of Kew Gardens. Finally, Chapter nine brings these strands of value together and sets them against the costs of operating and maintaining RBG Kew to derive a benefit cost ratio.

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Economic valuation of the Royal Botanic Gardens, Kew

2. METHODOLOGY AND SCOPE 2.1 THEORETICAL FRAMEWORK A welfare economics approach seeks to assess the true value of the subject of study. This is very different from taking market prices as a guide to value. For example, if visitors to RBG Kew placed value on their visit only just equal to the cost of entry, then what they give and receive would be equivalent and they would be indifferent between visiting or not visiting. In practice they visit because they feel they get value from the experience that exceeds the costs of the visit—they evidently see visiting as ‘worth it’. In welfare economics this value, which accrues to the consumer in excess of what they have to pay to get it, is known as their ‘consumer surplus’. A visitor may pay the £15 entry fee to visit Kew Gardens but enjoy it so much that they would have been prepared to visit even if the ticket price were £30. The consumer surplus for such a person would be £15. If a second visitor is only willing to pay £20 to visit, their consumer surplus would be £5.

In this way consumers capture benefits over and above the prices they pay. A similar dynamic can be seen on the producers side. The ‘producer surplus’ is therefore the difference between the revenue received by the producer (in this case Kew Gardens) and the minimum they would have been able to produce these services for. Roughly speaking then, producer surplus equates to the producer’s profits. Of course, where a producer only breaks even their surplus is zero, meanwhile it is entirely possible for producer surplus to be negative if the organisation is running at a loss.

Figure 2 below illustrates these concepts graphically. When the price of the thing being valued – for example, the entry fee for visitors to Kew Gardens – is P, the consumer surplus is identified by the area shaded in dark blue, which represents the sum of all these individual visitors’ consumer surplus. This is the area between what those visitors pay and the point at which they would become indifferent to visiting. The latter defines a demand curve that traces the number of visitors that would be expected at each different price of entry.

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Economic valuation of the Royal Botanic Gardens, Kew

Fig. 2: Consumer and producer surplus

Price (£s)

Consumer surplus

P Producer surplus

0

Q

Quantity

Similarly, the producer surplus, as the light blue area represents the difference between the revenue received by RBG Kew and the operational and maintenance costs associated with the gardens. As noted above, this figure could be negative if the revenues generated from visitors directly are insufficient to cover the gardens’ full costs.

Adding up the producer and consumer surpluses that flow from a good, programme, or initiative in this way gives the true benefit that those parties derive from it.

Quantifying these areas is complex in practice for a variety of reasons. How much visitors would have been willing to pay, and hence how much they really value RBG Kew, is not immediately apparent and inferring it is complex.

2.2 TOTAL ECONOMIC VALUE The above approach is often employed when estimating the value of something traded in a market. However, RBG Kew’s value is much broader than the benefits derived from it as a visitor attraction. When assessing the value of cultural or environmental assets, the standard welfare framework described above should be broadened.

For example, the labour market benefits that derive from the educational opportunities provided by RBG Kew often lie in the future and are hard to disentangle from other contributions to a person’s subsequent labour market success.

As well as being comprised of both consumer and producer surplus, the social welfare associated with the gardens includes any non-market effects which are not captured by those who either produce or directly consume them. These socalled ‘externalities’ can be substantial, particularly in the case of activities such as the scientific contribution of RBG Kew. 12

Economic valuation of the Royal Botanic Gardens, Kew

Non-market benefits, such as the value of the scientific work undertaken at RBG Kew, fall outside the producer and consumer framework, but ultimately add to the stock of scientific knowledge, stimulating innovation and boosting economic productivity. These benefits are diffuse and hard to capture let alone price, but putting a value on them is an essential part of understanding the benefits that RBG Kew generates.

In order to capture each of these diverse elements of the benefit that RBG Kew provides, this study adopts a Total Economic Value (TEV) approach to the cost-benefit analysis. This approach is outlined in the OECD publication Cost5 Benefit analysis and the environment: recent developments as well as in the Department for Environment, Food and Rural Affairs, Assessing environmental 6 impact: guidance. TEV aims to measure the sum of the producer surplus and consumer surplus associated with an environmental asset, including both values that arise for users of it as well as those that accrue to both indirect users (such as beneficiaries of the scientific output) and non-users (such as those who value its existence and its role in sustaining biodiversity).

Fig. 3: Total Economic Value framework for RBG Kew

Figure 3 sets out the TEV framework used in this study. Direct use values include the surpluses associated with visits by members of the public, special events attendees, and the benefits accruing to learners of all types. A major source of benefits then accrues indirectly to wider society through the scientific value added by RBG Kew. A second source of indirect value derives from the fact that members of the public who do not visit nevertheless have the option to do so at some point in the future. Finally, there are non-use values: people who do not use RBG Kew directly may nonetheless value it for the enjoyment it gives to other (altruism), the fact that it will be maintained for future generations and simply the fact that it exists.

5 6

OECD, “Cost-Benefit Analysis and the Environment: Recent Developments� (2006).

Department for Environment Food and Rural Affairs, "Assessing environmental impact: guidance" (2013).

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Economic valuation of the Royal Botanic Gardens, Kew

The TEV approach used to assess the value of each element of RBG Kew’s contribution is consistent with a standard welfare economics approach as well as with HM Treasury guidelines as set out in the Green Book (HM Treasury, 7 2011).

2.3 SCOPE Typically a CBA relates to the costs and benefits of an initiative as it affects the world as a whole. However, in many cases, costs and benefits are assessed with respect to a particular jurisdiction (such as the UK). In such cases only benefits to the people (consumer surplus) and entities (producer surplus) within that jurisdiction should be considered when assessing costs and benefits.

The people and entities that fall within the study form what is known as ‘the population of standing’. In the case of this report, the central focus is on the costs and benefits which the gardens provide to UK society as a whole.

Accordingly, we report a CBA of RBG Kew from a UK standpoint. However there is also an important global role for RBG Kew, particularly in science.

Accordingly, we include a separate chapter on the international value of the gardens with a focus on science, international visitors and international education benefits.

Finally, the costs and benefits quantified here all relate to 2014/15. The figures represent an annual ‘flow’ of costs and benefits, rather than a ‘stock’ of value.

There are two main reasons for taking this approach. Firstly, the value generated by RBG Kew for visitors, educational participants, non-users and through science occurs fairly continuously and so is best suited to measurement (and is most easily understood) as a flow during a defined time period. Secondly, we are interested in comparing costs and benefits, partly with a view to informing debate around the level of public funding that RBG Kew receives each year. Considering the value of benefits which accrue during a financial year facilitates comparison with the costs which accrue during that same period.

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HM Treasury, "The Green Book" (2011).

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Economic valuation of the Royal Botanic Gardens, Kew

3. VALUE TO KEW GARDENS VISITORS FROM THE UK In 2014/15 a total of 1.1 million visits were made to Kew Gardens by UK residents (excluding students and teachers). Around 57 percent of these visits were made by the gardens’ 77,800 members, who typically paid £62 for annual membership (or their guests or children). Visitors who were not members paid an entry fee of £15 to visit Kew Gardens. But as outlined above, the entry fees paid by visitors represent only a small part of the true value these people place on their visit to Kew Gardens. This chapter outlines the analytical method used to estimate this valuation and the results for UK visitors. Results for international visitors are discussed in Chapter 8.

3.1 APPROACH Researchers use a variety of approaches to estimate the value visitors place on amenities such as Kew Gardens. The goal of these methodologies is to reveal their willingness to pay (WTP). One approach is simply to ask people how much they would have been prepared to pay to visit Kew Gardens. However these ‘stated preference’ techniques suffer from various problems. For example, people may be concerned that they are being asked in order to test the water for future increases in the entry fee. Equally they may simply not find it easy to put a monetary value on the experience.

A well-established alternative approach to eliciting WTP is therefore a range of ‘revealed preference’ techniques. These, as the name suggests, use people’s observed actions to infer their WTP. The approach adopted for this study is the travel cost method (TCM). The TCM is based on the insight that travelling to visit an attraction such as Kew Gardens inevitably involves costs other than the formal entry fee. A visitor driving to the gardens would face costs in terms of fuel consumption, vehicle depreciation and the opportunity cost of their own time spent travelling. The net value from a visit to Kew Gardens which remains after travel costs have been taken into account is therefore likely to be substantially greater for someone who lives five miles away than for a similar person living 100 miles away. This is because the visitor who lives far away faces a substantially higher effective entry fee (the sum of all the costs of getting to and accessing Kew Gardens). These variations in travel costs can be taken as a proxy for different entry fees to Kew Gardens.

The degree to which visitors living further from Kew Gardens become more scarce allows us to infer how sensitive the typical visitor is to changes in the cost of going to Kew Gardens. That enables us to determine how quickly the total number of visitors in 2014/15 would fall away if the entry fee were to be raised, and hence identify the location of Kew Gardens’ demand curve and the consumer surplus accruing to visitors.

Two versions of the TCM are deployed in this study of Kew Gardens’ visitor value in order to produce the most robust estimate possible. One is an individual model and the other is a travel zone model. We outline each in turn.

15

Economic valuation of the Royal Botanic Gardens, Kew

3.1.1 Individual travel cost method (ITCM) The individual travel cost method (ITCM) focuses on the frequency of visits made by members of the public, seeking to determine what impact greater distance has on the frequency of visits for a given individual. People who live close to Kew Gardens face low travel costs—both in terms of the immediate costs of transport and the opportunity cost of time spent travelling—and hence are more likely to visit regularly than an equivalent person living further away.

The main dataset used in the analysis was the 2014/15 Kew Gardens visitor survey. This survey, undertaken throughout 2014/15, asked 1,048 respondents how many times they had visited Kew Gardens in the past 12 months, as well as their place of residence by the first part of their postcode, and a wide range of other questions about everything from their socioeconomic background and age to the length of their stay at Kew Gardens and the size of the group they 8 visited with. The chart below gives a sense of the distribution of the number of visits made by each respondent.

Fig. 4: Distribution of visit numbers by type of visitor, Kew Gardens, 2014/15 70% Non-member

60%

Member

50% 40% 30% 20% 10% 0% 1

2

3 or 4

5 or 6

7 to 10

Number of visits in past 12 months

"Around 12"

"Around 24"

Source: RBG Kew

Regression analysis allowed us to identify the impact of a marginal change in the total cost of travel on the number of visits respondents made over the past 12 months. Other data from the survey allowed the model to control for differences in visitor characteristics that may influence the number of visits they make, such as their age and income group. Determining the relationship between travel costs and the propensity of a person to visit multiple times facilitates estimation of the average consumer surplus for each visit.

8

The visitor survey data include some large groupings of visit numbers, for example one option is ‘around a dozen visits in the past year’. We used data on discrete numbers of visits in the past 12 months from a separate survey carried out by the Association of Leading Visitor Attractions to refine these.

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Economic valuation of the Royal Botanic Gardens, Kew

The visit patterns of members and non-members differ markedly, with the average member surveyed having visited around 12 times in the past year and the average non-member visiting twice. For this reason, separate models were run for member and non-member respondents, and the results combined to give a weighted average consumer surplus per visit for all visitors. More detail on the methodology is set out in Appendix 1.

3.1.2 Zonal travel cost method (ZTCM) The second approach is known as the Zonal Travel Cost Method (ZTCM). A zonal model divides the country into concentric zones around Kew Gardens and, by observing the place of residence of visitors, determines the visit rate per 100,000 of population in each zone. For example, if 200,000 visitors to Kew Gardens live between 30 and 50 miles of the gardens, and the total population in that area stands at five million, the visit rate for the zone would be 40 per 1,000 of population. The zone between 50 and 70 miles might be home to 50,000 Kew Gardens visitors in 2014/15 and have a population of three million, yielding a visit rate of 16.7 per 1,000 of population. In this example the zone that is further away exhibits a lower visit rate due to the higher costs associated with reaching the site, in line with what we would expect to see.

Drawing on the survey of 1,048 visitors to Kew Gardens in 2014/15 allows these zonal visit rates to be constructed from real data. Using the first half of visitors’ postcodes (e.g. TW9, SO21 etc.) enabled us to place them within one of 3,078 outward code areas across the UK. Drawing on 2011 census data we were then able to identify the population living in each outward code area.

Finally, using a Google mapping algorithm, we established the travel time (and distance) from each outward code to Kew Gardens itself. Having taken these steps we were then able to group each outward code area, its Kew Gardens visitors (grossed up to the full number of visitors for the year), and its population into one of 16 zones for which visit rates were determined. The results of this process for zones up to two hours’ travel time from Kew Gardens, representing 87 percent of day-trip visitors, are shown in the table below.

Ultimately, travel zones were developed based on total per person travel costs from each outward code, consisting of direct travel costs (divided by average group size) and value of time, in the same way as set out for the ITCM model above. Having developed the travel zones and visit rates it was possible to determine the underlying demand curve. The demand curve can then be used to estimate the consumer surplus of Kew Gardens visitors by looking at the impact on visitor numbers from different simulated increases in the entry fee.

More detail on the ZTCM model is outlined in Appendix 1.

17

Economic valuation of the Royal Botanic Gardens, Kew

Fig. 5: Visit rates to Kew Gardens by travel time Travel time to Kew Gardens (minutes)

Visits per 1,000 population

10 15 20 25 30 40 50 60 70 80 90 100 110 120

2178.31 612.14 347.39 120.64 143.58 79.87 45.92 31.05 16.49 18.49 10.75 8.82 5.16 4.92

Proportion of all Kew Gardens day-trip visitors, 2014/15 17% 12% 8% 5% 7% 13% 8% 6% 2% 3% 2% 1% 1% 1%

Figure 6, below, illustrates the estimated UK visitor demand curve based on a selection of simulated rises in the ticket price for visitors. It shows that the number of visitors is initially very sensitive to small increases in the price. For example, a ÂŁ10 increase in the per visit cost would be expected approximately to halve the number of visitors.

Fig. 6: Estimated visit demand curve for Kew gardens Additional entry cost 250 200 150 100 50 0

Source: Oxford Economics

Number of visitors

18

Economic valuation of the Royal Botanic Gardens, Kew

3.2 QUANTIFYING KEW GARDENS VISITORS’ CONSUMER SURPLUS The ITCM modelling suggests that members have an average consumer surplus per visit of around £28, while non-members value the visit at about £38 above the cost of getting to and entering Kew Gardens. Taking a weighted average of member and non-member visits shows that the average visitor in 2014/15 had an estimated consumer surplus of £32 per visit.

The ZTCM yields an average consumer surplus of £38 per visit. Given that there were around 1.1 million visitors from the UK (excluding students and teachers), the two approaches suggest a total consumer surplus for Kew Gardens visitors from the UK in 2014/15 of between £34 million and £41 million.

3.3 TOTAL VISITOR VALUE AT KEW GARDENS

£43-50 m Total gross value The total gross value of Kew Gardens to visitors was between £43 million and £50 million in 2014/15.

The above analysis has uncovered the consumer surplus captured by visitors by tracing how demand would change if the cost of admission were to rise from its current level. But in estimating the full cost-benefit ratio it is important not to ignore the element of visitor value that is claimed by Kew Gardens in the form of ticket sales. Adding total membership revenue to day entry fees and other 9 entry-related revenues, such as Gift Aid and parking , shows this to be £9.7 10,11 million for 2014/15, £8.9 million for of which is attributed to UK visitors.

The total gross value of Kew Gardens to visitors was therefore between £43 million and £50 million last year.

3.4 VISITORS TO SPECIAL EVENTS AT KEW GARDENS Apart from its role as a visitor attraction in its own right, Kew Gardens hosts a diverse range of events throughout the year. Among others, these include Christmas at Kew, a Christmas festival and light show along a one-mile path through the gardens; Kew the Music, a week of live outdoor music concerts from world-famous acts; and open air film showings through the summer months, called ‘Kew the Movies’, which runs at both Kew Gardens and Wakehurst.

These events attract different kinds of visitors to those visiting the gardens during the day. But they are also amenable to the same travel cost analysis outlined above in order to evaluate the consumer surplus they provide to attendees. In this chapter we use the zonal travel cost method (ZTCM) to value the two largest of these events: Christmas at Kew, which in 2014 attracted over 122,000 visitors, and Kew the Music, which attracted over 30,000 people to open-air concerts featuring performers including Jules Holland and Elvis Costello. This methodology could not be applied to Kew the Movies due to a lack of data, however, given that RBG Kew’s revenues from Kew the Movies

9

Gift Aid, parking and sundries Using estimated splits of UK and international visitors calculated from exit polls, and assuming membership revenues accrue exclusively as a result of UK visitation.

11 Note that we only take the value of entry-related income. Spending in the gift shop or catering outlets is not included in the £9.7m as it is not necessarily an indication of how much a visitor values a visit to Kew. 10

19

Economic valuation of the Royal Botanic Gardens, Kew

were only about £43,000, the omission of Kew the Movies does not have a significant effect on the estimate of the total value of special events.

3.4.1 Quantifying the consumer surplus of special events The available data on attendees at the 2014 Kew the Music concerts stems from an online survey of those who bought tickets. In total 1,247 people provided information, of which 1,074 records contained usable postcodes. It is unclear how representative these data are, and a lack of other details about the respondents—such as their age or whether they were making a dedicated trip to Kew Gardens or visiting as part of a bigger visit to London—makes the results somewhat more uncertain than those reported for Kew Gardens’ visitors. The method employed to tackle the question about whether people were making a dedicated trip or not is outlined in the box below.

SINGLE PURPOSE TRIPS? A central principle of the travel cost method of valuation is that people incur the full cost of their trip solely in order to visit the subject of evaluation, in this case a Kew the Music concert. In practice many people may combine their trip with other visits, and perhaps a weekend break in London. To avoid over-valuing the events it is therefore important to try to identify only travel costs incurred in respect of the Kew event.

To do so we use information from the main Kew Gardens visitor survey, which formed the basis of the analysis in Chapter 3. In that analysis it was assumed that people who stay overnight, away from home, to visit Kew Gardens face related travel costs equivalent to daytrip visitors. This is because it would be unrealistic to assume that someone visiting Kew Gardens from Edinburgh, for example, and staying at least one night in London, had made their trip solely to visit the gardens.

Since the Kew the Music data contain no information on attendees staying overnight, this adjustment is not immediately possible when valuing special events. In order to make the adjustment we therefore used the Kew Gardens visitor data to predict the probability of being a day-tripper, given the distance of their place of residence. For example, 76 percent of visitors living in the centre of Southampton are day trippers to Kew Gardens, while only 14 percent of visitors from Stafford are. Applying these probabilities to Kew the Music attendee data allowed us to avoid the risk of exaggerating the costs people are willing to incur, and hence their valuation of the event.

These respondents were allocated to one of nine zones of the country, defined by their travel and time costs to reach Kew Gardens. An attendee rate per thousand of population was calculated for each zone, allowing us to estimate the relationship between costs of accessing the events and demand.

Data for Christmas at Kew was taken from an earlier analysis of the distances travelled by visitors to the event, based on postcode data provided at the time of ticket purchase. Seven travel zones were defined, from which the relationship between costs and visit rates was established.

Constructing the implied demand curve for each event allowed us to estimate the consumer surplus associated with them. As with the visitors, attendees are 20

Economic valuation of the Royal Botanic Gardens, Kew

sensitive to small changes in the cost of attending these events. For example the Christmas at Kew model suggests that if costs per person were £10 higher attendance would approximately halve.

The results of the modelling suggest that the consumer surplus associated with Kew the Music 2014 was £0.7 million, approximately £24 per attendee. The equivalent figure for Christmas at Kew 2014 was some £2.8 million, representing an average of almost £23 per visitor. Once again, this surplus is assumed to accrue to the UK, as the underlying data do not allow us to distinguish between UK and international event attendees.

3.4.2 Total special event value at RBG Kew

£6.2 m Total gross value The total gross value of special events was £6.2 million in 2014/15.

Revenue in respect of Christmas at Kew and Kew the Music in 2014/15 totalled £2.7 million. This represents the part of the value attendees place on their visit that is claimed by RBG Kew in order to put on the events. Adding this to the consumer surplus generated by the events yields a total gross benefit from these two special events of around £6.2 million last year.

The value generated by other special events run by RBG Kew, including Kew the Movies and Write on Kew, have not been considered in this analysis. This is in part because their contribution is much smaller than the two flagship events analysed here. Consequently we can say that £6.2 million represents a conservative assessment of the special events value generated by RBG Kew.

21

Economic valuation of the Royal Botanic Gardens, Kew

4. VALUE TO WAKEHURST VISITORS In 2014/15 a further 169,000 visitors enjoyed the botanic gardens at Wakehurst in Sussex (excluding students and teachers). As well as the gardens, Wakehurst is home to various tree collections and the Millennium Seed Bank, which aims to conserve 25 percent of the world’s flora by 2020. As with Kew Gardens, visitors to Wakehurst can be members paying an annual subscription or non-members, for whom tickets are priced at £12.50. This chapter reports the results of further travel cost method (TCM) modelling work to establish the 12 true value derived by all visitors to Wakehurst.

4.1 APPROACH To estimate the consumer surplus associated with visits to Wakehurst, we adopted similar methodologies to those used for Kew Gardens and set out in Chapter 2. However, recent changes in the fees charged to visitors for parking at Wakehurst meant that the individual travel cost method (ITCM) was more problematic given the available data, hence we relied on the results of the zonal model here.

To undertake the modelling we used visitor survey data collected annually by the Association of Leading Visitor Attractions (ALVA). Collected over a three year period from 2012/13 to 2014/15, the pooled sample includes 499 visitor survey responses. However, in 2014/15 significant new parking charges were introduced, with visitors arriving by car (the overwhelming majority) charged up to ÂŁ10 to park depending on the length of their visit. This meant that the pattern of demand was likely to have changed between the 2013/14 and 2014/15 seasons.

This posed a problem for the ITCM, since it relies on data about how many times a person has visited in the past 12 months. Clearly, for people interviewed in 2014/15, some of their previous visits will have been made in the period before parking charges were introduced. Meanwhile, running the model on 2012/13 and 2013/14 data alone would give a misleading picture of demand for visits to Wakehurst in 2014/15. Consequently, the ITCM analysis was deemed unreliable in the case of Wakehurst.

The above data complications posed less of a problem for the zonal travel cost method (ZTCM), since this approach relies on snapshots of distance travelled on that day by each visitor interviewed. Nevertheless, it is still important to use data from after the introduction of the new charges in order to understand the pattern of demand for visits under the new charging regime. We were therefore restricted to using a sub-sample of 157 observations from 2014/15 visitors.

Once again, driving distances and times were established for each survey respondent using a Google mapping algorithm. From these, total travel costs were derived on the same assumptions as set out in Chapter 3. The travel cost variable was used to allocate individual respondents into one of seven concentric travel cost zones for the zonal model, in the same way as for Kew 12

Data on Wakehurst visitation does not allow us to separate out international visitors.

22

Economic valuation of the Royal Botanic Gardens, Kew

Gardens. Visit rates per 1,000 of population were then established from census data.

Figure 7, below, illustrates the estimated UK visitor demand curve derived from the zonal model and based on a selection of simulated rises in the ticket price for visitors. As for Kew Gardens, it shows that the number of visitors is initially quite sensitive to small increases in the price. A ÂŁ10 increase in the per visit cost (for both members and non-members) would be expected to reduce the number of annual visits by around 120,000.

Fig. 7: Estimated visit demand curve for Wakehurst, 2014/15 Additional entry cost 50 45 40 35 30 25 20 15 10 5 0

Source: Oxford Economics

Number of visitors

Since only 2014/15 respondents faced the parking charges, the sample upon which the zonal model is based is relatively small, which could raise concerns about the reliability of the results. However, it is possible to use the pre-charges data from 2012/14 to assess the accuracy of the implied demand curve. In 2012/13 and 2013/14 the number of visitors to Wakehurst averaged around 340,000. The survey responses from 2014/15 visitors allow us to estimate the implied extra cost per person for their visits based on their mode of transport, the length of time they spent on site, and the size of the travelling group. These data suggest that the average additional cost per visitor after parking charges were introduced was ÂŁ2.97 in 2014/15.

If the zonal model based on 2014/15 data is performing well, its derived demand curve should trace that of from the pre-charging period 2012-14 with a simulated ÂŁ2.97 rise in the entry cost per person. Figure 7 shows the results of this analysis, with the two demand curves sitting very close to one another, despite being based on different survey samples. This confirms that the 2014/15 zonal model is sufficiently robust to deliver reliable conclusions.

23

Economic valuation of the Royal Botanic Gardens, Kew

Fig. 8: Visit demand curve for Wakehurst before and after parking charges Additional entry cost 50 45 40 35 30 25 20 15 10 5 0

Number of visitors Source: Oxford Economics

2012-14

2014-15

As with the Kew Gardens assessment, in determining the consumer surplus we truncated the demand curve—in this case at total additional cost of £45, since less than one percent of the visitor sample faced costs higher than this.

4.2 TOTAL VISITOR VALUE AT WAKEHURST

£3.0 m Total gross value The total gross value of Wakehurst to visitors was £3.0 million in 2014/15.

The ZTCM model therefore suggests that the average consumer surplus per visit for all types of visitor was around £15, indicating an aggregate consumer surplus for its 169,000 visitors in 2014/15 of £2.5 million. The underlying data do not allow us to distinguish between UK and international visitors and thus all of this value is assumed to accrue to the UK. As explained in Chapter 3, it is important to recognise the revenues raised by admissions and parking charges at Wakehurst as part of its value. These revenues are collected by Wakehurst in order to cover the operating and capital costs of the site, but they nevertheless represent a portion of the value visitors place on Wakehurst. Adding almost £460,000 of annual visitor revenues to the consumer surplus above puts the total visitor value of Wakehurst at almost £3.0 million for 2014/15.

24

Economic valuation of the Royal Botanic Gardens, Kew

5. VALUE TO UK STUDENTS In addition to its offering to visitors, RBG Kew generates significant educational benefits for the UK. For the purposes of this report, we have divided the educational offerings of RBG Kew into five categories: 



  

School visits - RBG Kew works with schools across the UK to bring school children to the gardens for a day of hands-on learning about plants and conservation.

School of Horticulture courses - RBG Kew’s School of Horticulture offers a three-year diploma with broad-based training in amenity and botanical horticulture.

Specialist training – Specialist courses aimed at researchers and PhD students.

University course visits – Short visits for MSc students.

Teacher training courses – Series of courses for trainee teachers.

This chapter draws on evidence from the academic literature on the returns to education in order to estimate the value of RBG Kew’s educational contribution to UK students. The value to international students will be discussed in Chapter seven. Estimating returns to education is far from straightforward. All of the studies cited here attempt to identify a causal relationship between education and subsequent labour market outcomes, rather than simply the correlation between them. We explore each element of RBG Kew’s educational contribution in turn.

5.1 SCHOOL VISITS In the 2014/15 financial year, 76,100 school students visited Kew Gardens and 9,100 visited Wakehurst to participate in structured educational visits with RBG Kew teachers. On average, each student spent four to five hours at Kew Gardens or Wakehurst during their visit. For simplicity we assume each visit is equivalent to a whole day’s instruction.

On the day of the school visit, Kew Gardens or Wakehurst may be considered a substitute for students’ normal place of learning. A day spent at the gardens can therefore be assumed to have a similar value to a day of classroom learning.

To estimate a valuation for education we turn to academic literature on the returns to an additional year of schooling. Much of the literature on returns to schooling is based on identifying relationships between individuals’ earnings and their years of schooling. However, such estimates can be biased as more able individuals are likely to spend more time in education. A more satisfactory approach is to control for such bias through the use of ‘natural experiments’ to take advantage of policy changes or characteristics of students that are unlikely to vary by ability. Such natural experiments include studies using the month of birth of students, changes in compulsory schooling laws, or data on samples of identical twins.

Examining the wide spectrum of these studies, many researchers come to the conclusion that an additional year of education adds approximately ten percent 25

Economic valuation of the Royal Botanic Gardens, Kew

13

to an individual’s lifetime earnings. Harmon and Walker review international evidence on returns to education and note that the UK seems to be at the higher end of the scale of returns to schooling, with calculated returns of 11 to 14 15 percent using methods that control for unobserved differences in ability.

15 Oreopoulos estimated a ten to 14 percent return on education for the UK. International evidence seems to converge on a similar rate of return. Leigh and Ryan find ten percent to be the best estimate for Australia, and note that this is similar to other studies for the US, the UK, Canada, the Netherlands, and 16 Norway. In the US, Angrist and Krueger estimated a rate of return of nine percent using a natural experiment that categorises students by month of 17 birth.

£24.7 m Total value of school visits The total educational value of school visits to RBG Kew for pupils was £24.7 million in 2014/15.

In light of the evidence above, we assume that an additional year’s schooling adds ten percent to lifetime earnings. Based on average UK incomes for someone qualified at GCSE-level, and assuming an individual works between the ages of 21 and 65 and a discount rate of 3.5 percent (three percent after 30 18 years), lifetime earnings are estimated to be £552,000. A ten percent uplift is therefore worth £55,000. Assuming that a day at Kew Gardens or Wakehurst is one out of 190 days of an academic year, this implies that the educational value of a visit is £290 per pupil. Multiplying this across 85,200 school visits suggests the total value of school trips in 2014/15 was £24.7 million.

5.2 SCHOOL OF HORTICULTURE RBG Kew’s School of Horticulture offers a three-year full-time diploma course.

In 2014/15 it enrolled 13 students, of which nine were from the UK. The RBG Kew diploma course is viewed as a higher education qualification and many universities accept an Honours grade in lieu of a bachelors degree (QCF level 6). Thus we can estimate returns to the course using evidence from academic literature on the value of a university degree. Chevalier et al. assess the marginal return to a degree (as opposed to leaving education after A-levels) and estimate that the uplift in lifetime earnings is 22 percent and 30 percent for

13

Arnaud Chevalier et al., "Does Education Raise Productivity, or Just Reflect It?", The Economic Journal, 114 (2004): F499-517.

14 Colm Harmon and Ian Walker, "The Returns to Education: A Review of Evidence, Issues and Deficiencies in the Literature", 2001.

15 Philip Oreopoulos, "Do Dropouts Drop out too Soon? International Evidence from Changes in School-Leaving Laws", NBER Working Paper 10155, 2003.

16 Andrew Leigh and Chris Ryan, "Estimating Returns to Education: Three Natural Experiments Techniques Compared", The Australian National University Centre for Economic Policy Research, 2005: Discussion Paper 493.

17 Joshua D Angrist and Alan B Krueger, "Does Compuslory School Attendance Affect Schooling and Earnings?", Quarterly Journal of Economics, 106, Issue 4 (1991): 979-1014.

18 Lifetime earnings estimated using data on pay by age and qualification from the ONS publication “Full Report Graduates in the UK Labour Market 2013” in conjunction with Oxford Economics’ forecasts of real wage growth.

26

Economic valuation of the Royal Botanic Gardens, Kew

men and women, respectively.

20 rate of return of 27 percent.

19

A separate study for BIS calculates a similar

For simplicity we use 26 percent, which is the simple average of the Chevalier et al. estimate for men and women. Assuming average lifetime earnings of 21 £640,000 for someone qualified at A-level or an equivalent qualification, a career that lasts from the ages of 21 to 65, and a discount rate of 3.5 percent (three percent after 30 years), this suggests that the value of an RBG Kew diploma is £166,000 per student over three years, or £55,000 per year. We assume that the number of UK students enrolling in a diploma has remained relatively constant at nine per year over the last few years, suggesting that the total value generated by RBG Kew’s diploma course each year is £0.5 million.

In addition to its diploma course, RBG Kew’s School of Horticulture also hosts apprentices. These individuals spend four days each week undertaking workplace training at Kew Gardens, and attend a local college to study for their RHS Level 2 qualification on remaining weekdays. In 2014/15 there were six apprentices with two Temperate House apprentices (as part of a three-year apprenticeship) and a further four apprentices (as part of a two-year apprenticeship).

Research for BIS estimates that the lifetime earnings return to a Level 2 22 apprenticeship is 12 percent. Following a similar approach to that for diploma students (except we use the average lifetime earnings for someone qualified at GCSE-level of £552,000), and scaling to reflect that apprenticeship students are only at Kew Gardens for four-fifths of the week and also to reflect the length of the apprenticeship, we estimate a return per apprentice of £24,000.

Multiplying across six apprentices suggests a total value of £141,000.

5.3 SPECIALIST TRAINING RBG Kew offers a range of other courses, including:     

a two-week tropical plant identification course for researchers and PhD students; a two-week natural environment plant taxonomy and field study skills course for PhD students, researchers and lecturers; a one-week botanical nomenclature course for researchers and PhD students; an international diploma in botanic garden education for professionals working in educational activities in botanic gardens worldwide; and a two-week course on seed conservation techniques for partner organisations working with the Millennium Seed Bank.

19

Arnaud Chevalier et al., "Does Education Raise Productivity, or Just Reflect It?", The Economic Journal, 114 (2004): F499-517.

20 London Economics, "The Returns to Higher Education Qualifications" (Research Paper 45, Department for Business Innovation and Skills (BIS), 2011).

21 Lifetime earnings estimated using data on pay by age and qualification from the ONS publication “Full Report Graduates in the UK Labour Market 2013” in conjunction with Oxford Economics’ forecasts of real wage growth.

22 Ibid

27

Economic valuation of the Royal Botanic Gardens, Kew

£25.8 m Total value The total educational value of RBG Kew was £25.8 million in 2014/15.

While some of these courses only cater to international participants, the first three listed above host UK participants. Precise numbers of UK and international participants per course were not available, so we use the proportion of UK students for higher degrees. Research collected by the Higher Education Statistics Agency (HESA) from 2012/13 shows that 51 percent of students were domestic students.

It is further assumed that these courses are equivalent to PhD level. Returns to a PhD are estimated to be 15 percent compared to those with undergraduate 23 degrees. Applying this to lifetime earnings of £959,000 for someone qualified 24 at degree level and scaling for the time spent at RBG Kew suggests a value of £31,000 across all participants in 2014/15.

5.4 UNIVERSITY COURSE VISITS BY MSC STUDENTS RBG Kew hosts university students from a number of UK universities on multiday field trips. In 2014/15, 157 days of education were provided to UK MSc students. BIS estimates that the returns to an MSc are nine percent of lifetime 25 earnings against a baseline of people with an undergraduate degree only.

Following a similar process as above, and scaling to the time spent at Kew, we estimate the value of MSc field trips to RBG Kew to be £90,000 in total for domestic students in 2014/15.

5.5 TEACHER TRAINING Along similar lines to the previous category, RBG Kew hosts field trips by trainee teachers studying for Post Graduate Certificate of Education (PGCE) qualifications. RBG Kew provided an estimated five days of education to 446 UK trainee teachers in 2014/15. Assuming PGCE courses generate similar value to an MSc course (and using the lifetime wage for someone qualified at degree level), this is estimated to generate £257,000 of benefits to the UK. 5.6 TOTAL VALUE OF EDUCATIONAL BENEFITS Adding the various education benefits outlined above suggests the total value of educational benefits for UK students generated by RBG Kew in 2014/15 was £25.8 million. The table below summarises each educational area and the value attributed to each of RBG Kew’s educational programmes.

23

London Economics, "The Returns to Higher Education Qualifications" (Research Paper 45, Department for Business Innovation and Skills (BIS), 2011).

24 Lifetime earnings estimated using data on pay by age and qualification from the ONS publication “Full Report Graduates in the UK Labour Market 2013” in conjunction with Oxford Economics’ forecasts of real wage growth.

25 Ibid

28

Economic valuation of the Royal Botanic Gardens, Kew

Fig. 9: Value of RBG Kew educational programmes for UK students, 2014/15 Value of RBG Kew educational programmes School visits School of Horticulture

ÂŁ 24,745,989 639,785

Of which: RBG Kew Diploma

498,512

Apprenticeships

141,273

Specialist training

31,243

Of which: Tropical plant identification course

11,688

Applied plant taxonomy and field study skills course

15,938

Botanical nomenclature course

3,617

University course visits

90,310

Of which: Msc Ethnobotany, University of Kent course

17,962

Msc Biodiversity Conservation, University of Exeter course

16,964

Msc Plant Diversity, University of Reading course

2,328

Msc Conservation Science, Imperial College course

53,055

Teacher training

256,668

Of which: RBG Kew - Institute of Education PGCE science course

153,655

RBG Kew - University of Roehampton, PGCE Primary course

42,586

RBG Kew - Institute of Education, PGCE Geography course

39,133

RBG Kew - Imperial College, INSPIRE course

10,934

RBG Kew - University of Roehampton, PGCE Secondary Biology course

10,359

Total

25,763,994

Source: Oxford Economics

29

Economic valuation of the Royal Botanic Gardens, Kew

6. THE NON-USE AND OPTION VALUE OF RBG KEW In addition to the day visitors to RBG Kew and the special events visitors, another category of valuation is represented by UK residents who do not visit the gardens but may yet still value the gardens and want them to be supported.

This so-called ‘non-use’ value is commonly estimated for environmental or 26 cultural amenities, which are often seen as intrinsically valuable by citizens.

For example, people may value the fact that the ballet exists and support its continued funding, even though they may never want to attend the ballet.

Non-use values can consist of three different components:   

Existence value – The value people attach to the existence of RBG Kew despite the fact that they have no intention of visiting it.

Bequest value – The value that people place on preserving RBG Kew for the benefit of future generations.

Altruism value – The value people attach to RBG Kew simply because they know that other people enjoy it.

People may also value the possibility of having the option of visiting RBG Kew at some point in future. The framework presented in Chapter two shows that this ‘option value’ represents an indirect use benefit of RBG Kew, rather than a non-use value. However, in practice it is often difficult for people to distinguish between these concepts and so we quantify option value alongside non-use values.

6.1 ONLINE SURVEY An online survey of the UK general population was conducted to measure non27 use and option values of RBG Kew by Lightspeed GMI. Survey quotas were imposed on age and region of residence to ensure a representative sample of 28 the UK population. A total of 1,199 UK residents were surveyed.

This is an established technique for determining an intangible, but nonetheless real, type of value. The HMT Treasury Green Book, for example, acknowledges that it may be useful to ask people about their ‘willingness to pay’ for a benefit through a specially constructed survey when it is not possible to estimate 29 values from market data or consumers’ behaviour.

26

The importance of assessing non-use values within a TEV is noted in Treasury and DWP’s 2011 supplement to the Green Book – Valuation Techniques for Social Cost Analysis.

27 The survey included UK residents aged 16 and older and was undertaken between 27 October and 4 November 2015.

28 Survey quotas set for 16-24 year olds were relaxed in order to complete the study. Only 141 records out of 172 targeted were met for this age group.

29 HM Treasury, "The Green Book" (2011).

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Economic valuation of the Royal Botanic Gardens, Kew

6.2 AWARENESS OF RBG KEW An initial area of enquiry was to determine how many respondents were aware of the gardens and whether they had visited in the past. Of the 1,199 respondents, 35 percent were aware of the gardens and had visited in the past, 53 percent were aware of them and had never visited in the past, and only 12 percent were not aware of the gardens.

Fig. 10: Awareness of RBG Kew, 2015

I am aware of Royal Botanic Gardens, Kew and I have visited in the past

12% 35%

I am aware of Royal Botanic Gardens, Kew and I have never visited in the past

53%

Source: Oxford Economics

I was not aware of Royal Botanic Gardens, Kew

Only respondents who have never visited RBG are included in the main estimate of non-use and option value, although it is informative to compare the responses given by users and non-users, and this is included in the analysis below.

6.3 VALUATION OF RBG KEW The estimation of non-use and option value is based on survey questions relating to respondents’ willingness to pay to support the operation of RBG Kew. When asking these kinds of questions it is important to set them within a realistic context so that respondents give proper consideration to their response and take into account their ability to pay. For the RBG Kew survey, respondents were told that the average UK taxpayer contributes 90 pence to RBG Kew in the form of tax-funded public grants and asked whether they would ideally want to increase, decrease or keep that contribution the same. If respondents chose to increase or decrease their contributions, they were asked what would be the maximum they would be willing to pay.

More than half of respondents (60 percent) stated they would choose to retain the current level of funding. A small portion of respondents (5 percent) said

31

Economic valuation of the Royal Botanic Gardens, Kew

they would decrease funding and just over one in three (34 percent) said they 30 would be prepared to increase funding to the gardens.

Fig. 11: Awareness of RBG Kew and desired level of funding 100% 90% 80%

48% 65%

70%

73%

60% 50%

5%

40% 8%

30% 20%

47%

14% 27%

10%

13%

0% Past Visitor Increase funding

Aware of RBG Kew Reduce funding

Unaware of RBG Kew

Keep funding at present level

Source: Oxford Economics

Past visitors to RBG Kew were most likely to suggest increasing funding. This group was evenly split between increasing funding and keeping funding at the current level. Almost two-thirds of respondents who were aware of the gardens but had never visited and almost three-quarters of respondents who were unaware of the gardens stated they would retain the present funding level.

To calculate a non-use and option value for RBG Kew, past visitors to the 31 gardens need to be excluded from the valuation. The resulting non-use and option value for this group is compared to the valuation using all survey respondents and that of previous visitors to the gardens in the chart below.

30

A small number of respondents (34) initially said they would decrease funding to RBG Kew and then when asked for the maximum amount they were willing to pay, indicated that they would be willing to increase funding to RBG Kew. The number of people choosing to increase funding was increased accordingly. A similar adjustment was made for people whose willingness to pay response suggested they wanted to decrease funding or keep it the same, even if their earlier response suggested they thought funding should increase.

31 Pure non-use values from those who have never used a resource are a better guide to non-use valuations because those who have previously used the facility could conflate use and non-use values. See, for example, John Rolfe and Jill Windle, "Do values for protecting iconic assets vary across populations? A Great Barrier Reef case study", Environmental Economics Research Hub Research Reports, 65 (2010): 1-20.

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Economic valuation of the Royal Botanic Gardens, Kew

Fig. 12: Average valuation of RBG Kew per respondent £ 1.2 1.04 1.0

0.97 0.85

0.8 0.6 0.4 0.2 0.0 All respondents

Never visited RBG Kew

Previous visitors

Note: Standard deviations for all respondents (0.21), those who never visited RBG Kew (0.22) and previous visitors (0.39).

Source: Oxford Economics

Raw survey results contained some very large outliers for responses to the maximum willingness to pay. Including these would distort the findings which, in line with standard practice for this type of study, are based on the mean value.

We therefore followed the ‘Tukey Method’, which defines the upper boundary as 1.5 times the inter-quartile range. Any valuation above the upper boundary of 2.15 (for all respondents) and 1.15 (for non-users) has therefore been discarded. For this type of valuation there is a natural lower bound of zero and the Tukey Method was not applied here to preserve the choices of people voting to decrease funding to the gardens.

The average value amongst previous visitors to the gardens was £1.04 per respondent, while non-users reported an average valuation of 85 pence per 32 respondent. In addition, since more than half of all respondents stated they would retain the same level of funding, the median valuation is 90 pence across all groups.

As noted above, the central estimate of non-use and option value will be based on the result from non-users. Multiplying 85 pence by the estimated total number of UK residents aged 16 and older yields a total non-use and option 33 value of £44.3 million.

32

A test of the difference in average value between previous visitors and those who have never visited confirmed that the difference is statistically significant.

33 While the estimation of average value per person excludes results for previous visitors, the total value is grossed up to the total population because those who have visited previously may still perceive a non-use and option value. Grossing to the total population is an approach followed in other studies of this type. See, for example, http://www.ecosystemvaluation.org/contingent_valuation.htm, http://www.fao.org/docrep/007/ae212e/ae212e08.htm

33

Economic valuation of the Royal Botanic Gardens, Kew

Fig. 13: Average non-use and option value by reason given for valuation with respondent numbers, amongst non-users Left scale shows non-use values, right scale shows number of respondents £ 1.00

Average non-use value

Number of Respondents

Number 500

0.80

400

0.60

300

0.40

200

0.20

100

0.00

0

I value RBG I think existing I have never I am happy I do not value Kew highly funding is or I am with the RBG Kew insufficient unlikely to use current RBG Kew allocation of my taxes Source: Oxford Economics

After reporting their valuation of the gardens, respondents were asked to justify their response. The figure above shows the average non-use and option value 34 of respondents according to the reasons given for their valuation. Very few non-users (47) said they did not value RBG Kew, while most non-users stated they valued RBG Kew highly and/or were happy with the current allocation of their taxes, and had average valuations at or just above the current funding level. Some non-users (220) also felt existing funding was insufficient and gave a slightly higher average value of 91 pence. Lastly, those who stated they had never or were unlikely to ever visit the gardens (180) had a lower valuation than the current funding level at 79 pence.

6.4 COMPONENTS OF NON-USE AND OPTION VALUE Non-use values have three components: the value of an amenity’s existence (‘existence value’), the value of it as a gift to future generations (‘bequest value’), and the ‘altruism value’ of the attraction simply because it gives pleasure to others. In addition, respondents may perceive the ‘option value’ of having the opportunity to visit RBG Kew in future.

It is difficult for respondents to make a meaningful separation of the various sources of value when answering questions of this type. Nonetheless, to get a sense of the relative importance of the different factors respondents were asked to rate their agreement or disagreement on a scale of 1 to 10 with statements on non-use and option value. Summary results are displayed below.

34

Respondents were able to choose more than one reason.

34

Economic valuation of the Royal Botanic Gardens, Kew

Fig. 14: Non-use and option value for survey respondents

35

Score 9 8 7 6 5 4 3 2 1 0 Past users

Aware of Kew

Non-use score

Unaware of Kew Option score

Source: Oxford Economics

£44.3 m Total value The total non-use and option value of RBG Kew was £44.3 million in 2014/15.

While respondents who were unaware of RBG Kew and past users gave similar ratings for the two components, other respondents attributed slightly more value to non-use than to the option of visiting in future.

6.5 SUMMARY OF SURVEY RESULTS The survey conducted with 1,199 individuals spread throughout the UK showed that of the total respondents, approximately two-thirds were non-users with a per-respondent valuation of 85 pence for RBG Kew funding. The 85 pence, once scaled up for the UK population aged 16 and over, gives a total non-use and option value of £44.3 million.

35

Non-use score is the average of the scores for existence value and bequest value. Respondents are assumed to have incorporated altruism value within their responses for existence value.

35

Economic valuation of the Royal Botanic Gardens, Kew

GROW WILD PROGRAMME Some four percent of past Kew visitors and seven percent of non-visitors who participated in the survey reported that they had taken part in an RBG Kew outreach programme. Currently, the most prominent of these is ‘Grow Wild’, which encourages the sowing and growing of wild flowers across the UK through a range of initiatives, including: 

  

Community projects: Grow Wild is awarding grants of up to £4,000 to community groups that bring people together to transform a communal space by growing UK native plants. A total of 300 such projects will be launched around the UK over the course of Grow Wild; The distribution of free seed kits to youth and community groups to enable the growing of wild flows. Around 120,000 such kits will be distributed during 2015; The distribution of 200,000 free seed packets each year to members of the public.

Each pack contains enough seeds to cover around two square metres of ground; and Four flagship projects (one in each UK country) will be developed between 2014 and 2017. The public has voted for four locations which will receive funding of £120,000 to create a space which both leaves a lasting footprint of Grow Wild and encourages participation. The winning locations in England and Scotland are a joint bid between Liverpool and Manchester and Barrhead Water Works near Glasgow. Sites in Wales and Northern Ireland were to be announced shortly after this report was written.

As well as increasing the number of wild flowers grown across the country, Grow Wild creates benefits by bringing communities together in a joint endeavour; helping young people to connect with the natural world; and promoting mental and physical wellbeing through healthy outdoor activity and the creation of spaces for interaction with others. A formal evaluation is currently underway, but initial findings suggest the programme has been successful in encouraging participation in growing activity amongst groups that would often not otherwise participate. Moreover, three-quarters of those who received seed packets in 2015 reported a greater sense of belonging to their neighbourhood.

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Economic valuation of the Royal Botanic Gardens, Kew

7. VALUE TO UK SCIENCE RBG Kew is a global resource for plant and fungal knowledge. It has one of the largest and most diverse collections of plant and fungal specimens (living and preserved) in the world. The combination of extensive collections, databases, scientific expertise and global partnerships give Kew Gardens and its sister gardens at Wakehurst a leading role in the science of plants.

RBG Kew’s resources and materials are used by researchers and other stakeholders worldwide. Research undertaken by RBG Kew scientists focuses on documenting and understanding global plant and fungal diversity. The majority of the research is fundamental, with the objective of increasing understanding of plants and fungi, although the outputs can often be of economic importance and some have a direct commercial application.

RBG Kew’s Science Directorate is divided into six research departments (brief descriptions of these are in Appendix 3):      

Collections Identification and Naming Comparative Plant and Fungal Biology Conservation Science Natural Capital and Plant Health Biodiversity Informatics and Spatial Analysis

Attributing a value to the diverse scientific research that RBG Kew undertakes and enables is challenging. Nonetheless, the scope of science undertaken at RBG Kew and the audience it serves, both within the UK and internationally, is arguably the most important reason for the continuing existence of RBG Kew. This chapter considers potential approaches to measuring the value generated

by RBG Kew’s scientific activities, develops estimates based on our preferred approach, and then presents a set of case studies which highlight just a few of the ways in which RBG Kew scientists generate value for the UK. The international value generated by RBG Kew’s scientific activity is discussed in Chapter 8.

7.1 POTENTIAL APPROACHES TO VALUING RBG KEW’S SCIENTIFIC ACTIVITY 7.1.1 Output–based approaches To assess the value of research activity we would ideally like to identify outputbased metrics which measure real-world changes which have occurred as a result of the research. For example, it might be possible to estimate the extent to which research has increased the yield of a particular crop, and then the monetary value associated with that increase.

While some of RBG Kew’s research projects can be valued in this way, this approach is not suitable for valuing the entirety of the activity underway. Firstly, there is a lack of information on the full chain of users of Kew collections, their subsequent research, and the impact of that research. Furthermore, impacts could occur some way into the future and over different geographies.

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Economic valuation of the Royal Botanic Gardens, Kew

7.1.2 Probability-based output approaches In the context of scientific collections, some authors have attempted to address such challenges by estimating the probable economic value of a species or information stored. For example, Pearce and Puroshothaman do this for medicinal plants, finding that a loss of 60,000 species means the loss of 30 36 future plant-based drugs at a cost of about US$ 25 billion for the OECD. Economic value for plants could also include applications in cosmetics, crops, textiles, and horticulture.

In consultation with RBG Kew scientists it has been possible to identify some examples which illustrate how the collections of plants and fungi at RBG Kew have been used to identify species which potentially have economically valuable applications within agrochemicals, pharmaceuticals, or cosmetics, or which may be sources of high-value compounds. The examples are as follows: 







Herbarium species: approximately 15,000 plant specimens stored in the Herbarium (which holds a total of seven million specimens) were screened chemically and tested in a range of biological tests. Of these, about 650 had economic potential, implying a “hit rate” of four percent.

Species in the Gardens: there are approximately 150,000 plants growing at the Kew Gardens and Wakehurst sites. RBG Kew scientists studied the use and/or chemistry of about 13,000 of these and 250 had economic value, giving a hit rate of two percent.

Species in the Fungarium: about 1.25 million specimens of fungi are stored in RBG Kew’s Fungarium. About 2,000 specimens were studied, and 50 had economic value. This gives a hit rate of three percent.

Native UK species: there are about 1,600 species of plants in the UK that are classified as “native”. Samples from 350 of these species were collected and screened and about 200 had economically valuable uses and/or contained compounds of commercial interest. The high proportion (57 percent) of hits reflects that species were selected because of their traditional uses, although in many cases there was little scientific data to support these uses. The Millennium Seed Bank (MSB) holds the majority of these UK species.

In some circumstances it might be possible to use the types of ‘hit rate’ outlined above in conjunction with estimated values of commercially valuable plants from scientific literature to estimate the potential value of a collection. The annual flow of value could be estimated by applying assumptions about the time period over which plants are studied and benefits accrue. However, RBG Kew scientists typically study species they believe are most likely to have value. The evidence above cannot therefore be assumed to represent randomly drawn samples that could be used to draw inferences about the value of entire collections.

Nevertheless, RBG Kew’s scientists suggest a reasonably high proportion of plants will have characteristics and/or contain compounds that could have 36

David Pearce and Susan Puroshothaman, "Protecting Biological Diversity: The Economic Value of Pharmaceutical Plants" (CSERGE DISCUSSION PAPER GEC 92-27, University College London and University of East Anglia, Centre for Social and Economic Research on the Global Environment, 1992).

38

Economic valuation of the Royal Botanic Gardens, Kew

potential economic uses because they are related to those studied. They suggest it is likely that between two and four percent of the Herbarium specimens could be of economic importance. However, it is unclear what financial value could be attributed to the 140,000 to 280,000 potential hits that this implies.

7.1.3 Input-based approaches Given the difficulties with output-based approaches outlined above, some valuation studies have turned to input costs (the cost of building a collection) or replacement costs (the cost of replacing an entire collection, or its ‘insurance value’). This is a second-best approach since input costs do not reflect the full 37 value of collections or research to science, education and society. Moreover, the replacement cost measures available for RBG Kew are not suitable for inclusion in our total economic value framework because they represent an accumulated stock of value, rather than an annual flow of benefits.

Consultations with RBG Kew scientists identified that the following input costs estimates have been made for RBG Kew collections: 

 

the cost of establishing the collections in the RBG Kew Herbarium is estimated to have been £868 million. The collection is particularly important as it includes many specimens from populations and species which are extinct or in decline and thus cannot be replaced; the cost of establishing the collections in the Fungarium is estimated to have been £155 million; and RBG Kew estimate that the total replacement cost of the Millennium Seed Bank is £150.5 million.

Valuing crop wild relative species A study by PwC assessed the value of ‘crop wild relative’ species held by the Millennium Seed 38 Bank Partnership, which RBG Kew leads. This study highlighted that new crop varieties will be needed in future to enable agricultural productivity to keep rising in line with the needs of a growing global population. However, crop wild relatives (CWRs), which are used to develop higher-yielding species of food crops, are at risk from land development and climate change. If these species are lost, it may become difficult to sustain upward trends in crop yields. The Millennium Seed Bank Partnership is therefore undertaking work to collect, store, research and distribute crop wild relative material. PwC estimated that the potential value of CWRs to the production of 29 crops could be $120 billion.

This figure represents value that could ultimately be realised from CWRs, and so is not comparable to the replacement cost estimates for RBG Kew collections identified above. It also relates to the entire ‘value chain’ for CWRs, which includes the research undertaken by others to 37

Robert Bradley et al., "Assessing the value of natural history collections and addressing issues regarding longterm growth and care", BioScience, 64 (2014): 1150-8.

38 PwC, "Crop wild relatives, a valuable source for crop development" <http://www.pwc.co.uk/services/sustainability-climate-change/insights/understanding-the-value-of-seeds.html> [accessed 7 August 2015]

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Economic valuation of the Royal Botanic Gardens, Kew

develop new crop varieties, and the work of seed producers and farmers, as well as activity related to the banking of seeds. Moreover, the Millennium Seed Bank Partnership includes partners across 80 countries, and so the seed banking element of the value estimated cannot be attributed solely to RBG Kew. Nonetheless, this study does provide an indication of the potential global value of efforts to preserve biodiversity and the importance of insuring against its loss.

7.1.4 Citations Kovacic proposes that collections could be valued using the number and quality 39 of scientific publications produced using specimens from those collections.

Consultation with RBG Kew researchers identified that it would be challenging to apply this approach to the valuation of RBG Kew’s research because as well as publishing in mainstream scientific journals, their scientists also contribute to monographs and floras which are currently not part of the literature that is 40 usually used to monitor citations and impact. While RBG Kew scientists have stressed the importance of these outputs, it is unclear how they might be valued.

It is also difficult to measure the outputs of researchers that have either visited the RBG Kew collections or used its online resources. Firstly, there is no standard way of citing use of RBG Kew’s collections in scientific papers, which makes it difficult to search for and count the number of papers which have been informed by access to RBG Kew. Secondly, some researchers do not cite access to RBG Kew resources at all in their research outputs.

7.1.5 Travel cost approaches Mwebaze and Bennett valued access to a central online biological collection in Australia by surveying users on their willingness to pay for access to the 41 collection. Along similar lines, the travel cost method applied to leisure visitors in Chapter three could, theoretically, also be deployed in a survey of researchers who have accessed RBG Kew resources, either online or in person. Such a survey was not possible for RBG Kew collections within the timescales for this study, though we understand this is something that could be explored in future.

7.2 OUR APPROACH TO VALUING KEW SCIENCE Although a range of valuation approaches are identified and applied in academic literature, none clearly lend themselves to the valuation of RBG Kew’s science activity. This is partly because of the challenges identified above and partly because of the sheer diversity of scientific work undertaken at Kew. Nonetheless, it is important to recognise and value the benefits to society that research can generate, which often exceed those received by the individuals

39

Marcelo Kovacic, “Is the scientific value of a biological collection measurable?”, Croation Natural History Museum, 2009 40 DEFRA, "Science Review of the Royal Botanic Gardens, Kew" (Review, DEFRA, 2012).

41 Paul Mwebaze and Jeff Bennett, "Valuing access to biological collections with contingent valuation and and cost-benefit analysis", Journal of Environmental Economics and Policy, 2014.

40

Economic valuation of the Royal Botanic Gardens, Kew

carrying out the research. Economists call these wider benefits to society ‘externalities’, and their existence means that there is a case for public investment to fund research and development (R&D) activity that would otherwise not take place.

Various researchers have attempted to place a value on R&D activity. Most notably in the UK, Haskel et al. investigate how public science funding can 42 drive productivity improvements in the private sector. The authors constructed a model of the effect of private and public sector R&D on the long-run productivity of the UK economy, finding that public sector R&D has a 20 percent rate of return to the UK economy.

This finding can be applied to RBG Kew’s science budget to estimate the value it generates. While this is essentially an input-based approach, incorporating the multiplier allows us to adjust for the fact that the value generated by scientific research is, on average, substantially greater than the cost of undertaking that research.

RBG Kew’s total expenditure on science in 2014/15 was £14.9 million. Applying the rate of return identified by Haskel et al. suggests an increase of £3 million 43 per year in UK economic output for the lifetime of the research.

£56.2 m Total value The total value of RBG Kew science to the UK was £56.2 million in 2014/15.

The length of this lifetime depends on the assumed depreciation rate and the characteristics of the research in question. Studies suggest that private R&D investments depreciate at a rate of 20 percent per year, but that public R&D 44 investments do not depreciate or depreciate at slower rates. Haskel et al. assume a discount rate of five percent per year and that the increase in knowledge is infinitely-lived. In order to maintain consistency with HM Treasury discount rates and government modelling assumptions on depreciation, however, we applied a 3.5 percent discount rate and a two percent yearly depreciation rate.

Following that approach, the £3 million per year increase generated by RBG Kew’s scientific activities in 2014/15 has a present discounted value of £56.2 million.

While this approach to valuing RBG Kew’s scientific research is robust and in line with current government practice, it is relatively ‘broad-brush’. To give a richer sense of the types of research undertaken by RBG Kew science and the ways in which they create value for the UK, we have consulted with RBG Kew’s scientists to develop a number of case studies. These are presented below.

Further case studies which highlight the international value generated by science at RBG Kew are presented in the next chapter.

42

Jonathan Haskel, Alan Hughes and Elif Bascavusoglu-Moreau, "The economic significance of the UK science base" (UK-Innovation Research Centre, 2014).

43 Assumptions include a six year lag between the investment and associated benefits.

44 Frontier Economics, "Rates of return to investment in science and innovation: A report prepared for the Department of Business, Innovation and Skills (BIS)" (Research Report, 2014).

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Economic valuation of the Royal Botanic Gardens, Kew

UK NATIVE SEED HUB Since the mid-twentieth century, species-rich habitats have been destroyed or degraded at an alarming rate. In some cases the losses have been catastrophic: over 97 percent of lowland grassland in England and Wales has been lost in the last 75 years, with profound consequences for biodiversity and the ability of ecosystems to sustain services essential for human well-being and prosperity. Surviving patches of habitat are unsustainably small and fragmented, vulnerable to further degradation in the face of a changing climate and evergrowing demands on the natural environment. In his ground-breaking 2010 report, Making Space for Nature, Sir John Lawton and colleagues set out an ambitious new strategy for conservation â&#x20AC;&#x201D; to rebuild nature on a landscape scale, creating coherent and resilient ecological networks to expand and link existing habitats with buffer zones, wildlife corridors 45 and areas of active restoration and habitat creation.

The approach outlined in the Lawton report has been widely integrated into government policy, but delivery of this strategy depends on the availability of a diverse range of high-quality, UK native-origin seed. Research by RBG Kew revealed that a number of desirable species are missing from the commercial market, with others sourced from a narrow geographical range.

Furthermore, seed quality is variable and largely untested, with mixed awareness of best practice standards in seed harvesting, processing and storage. The Native Seed Hub has therefore established seed beds which allow RBG Kew to bulk up large quantities of priority species, and which can also produce plug plants (that can be easily moved and potted) for users. Most often these are species which are difficult to harvest, store, or germinate/propagate and so are not easily available to practitioners.

The Native Seed Hub also provides training, technical advice and tailored research which focuses on regulation/standards of practice, awareness, and demand building. Since the Seed Hub was launched in 2011 it has provided, or is planning to provide, seeds and plug plants to 26 partner organisations. The Native Seed Hub has also developed a quality standard for suppliers of UK native wildflower seeds: â&#x20AC;&#x2DC;Quality UK Nativeâ&#x20AC;&#x2122;. This quality mark has been applied to the supplies of Grow Wild seeds, and is being adopted by commercial suppliers of similar seeds into the UK market.

45

Sir John Lawton, "Making Space for Nature: A review of England's Wildlife Sites and Ecological Network" (A review, UK Government, Department for Environment, Food and Rural Affairs, 2010).

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Economic valuation of the Royal Botanic Gardens, Kew

RBG KEW COMMERCIAL PARTNERSHIPS As well as providing important collections and contributing to the wider science base, RBG Kew conducts applied research with commercial partners such as Walgreens Boots Alliance, Proctor and Gamble, and Taylors of Harrogate to bring products to market based on plant and fungal material.

For example, in 2003 Boots asked RBG Kew scientists to assess the botanical supplies provided by their suppliers for the Boots Botanics range of cosmetics. RBG Kew scientists assessed the identity, quality and sustainability of the plant material across 180 products. As part of that work, RBG Kew scientists worked with Boots to evaluate the entire supply chain, creating a model for the sustainable procurement of plant materials. The identification, quality and sustainable supply of the plants used in the range is now evaluated by RBG Kew scientists. In recognition of this research in ethical and sustainable sourcing practices, Boots won the 2014 Guardian Sustainable Business Award in the Natural Capital category.

RBG Kew also won an Engineering and Physical Sciences Research Council grant of £975,000 to partner with Proctor and Gamble to develop skin care products. As part of their work on anti-pollution skincare, RBG Kew scientists identified plants that contained active ingredients. Dr Frauke Neuser, principal scientist for Olay Skin Care stated: “the expertise of the botanists at the Royal Botanical Gardens was crucial for the development of both of these 46 extracts.” These are now used in the Olay and SKII ranges. A range of Olay products will be co-branded with RBG Kew to be sold in China and the US. Aside from skin care products, RBG Kew is also working with Taylors of Harrogate on their range of herbal, fruit and green teas. RBG Kew scientists are certifying the authenticity and quality of the botanical ingredients in these tea infusions, creating a brand that currently occupies nearly two percent of the UK herbal tea market, which is worth £68.9 million annually.

46

Simon Pitman, "P&G focuses on natural skin care ingredients to fight pollution", in www.cosmeticsdesigneuropa.com <http://www.cosmeticsdesign-europe.com/Formulation-Science/P-G-focuses-on-natural-skin-careingredients-to-fight-pollution> [accessed 05 November 2015]

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Economic valuation of the Royal Botanic Gardens, Kew

UK POLLINATION RESEARCH RBG Kew, in collaboration with the Natural Resources Institute, conducts work on pollination to improve crop quality and yields. It also looks at how naturally occurring plant chemicals can reduce the occurrence of disease in species which pollinate them. These areas of research dovetail with a general interest in the UK around food production that does not harm the environment and the decline of local pollinator populations, such as honeybees.

Better pollination to improve commercial crop yields Commercial crop farmers typically buy tens of thousands of commercial bee boxes to pollinate their crops, as better pollination, even for plants that are self-pollinating, improves crop quality and yields. Recent research shows that fava beans, which are self-pollinating, had a 36 47 percent yield improvement when pollinated.

Further research by Phil Stevenson, Senior Research Leader in chemical ecology at RBG Kew, showed that bees exposed to caffeine had a better memory of plants and became more 48 effective and regular pollinators. Thus, commercial bees fed caffeinated nectars can be used to improve crop quality and yields. It may also mean that commercial farmers would need to purchase fewer commercial bees, reducing the costs of farming. The work on caffeineinfluenced pollination for crops has been trialled on a small scale in the UK and RBG Kew researchers are currently applying for funding to conduct a large-scale study on pollination on UK strawberry and raspberry production.

Strawberries and raspberries together made up 88 percent of soft fruit and 54 percent of total 49 fruit marketed in 2014 (by value). With the soft fruit crop industry’s total home production 50 revenues at £307m in the UK in 2013 (£218m for strawberries and £90m for raspberries ), a yield improvement of just five percent could yield an extra £15 million in revenue per annum for UK farms.

47

Geetha K. Nayak et al., "Interactive effect of floral abundance and semi-natural habitats on pollinators in field beans (Vicia faba)", Agriculture, Ecosystems and Environment, 199 (2015): 58-66.

48 G.A. Wright et al, "Caffeine in Floral Nectar Enhances a Pollinator's Memory of Reward", Science, 339 (2013): 1202-4.

49 ONS, "Basic Horticultural Statistics", in www.ons.gov.uk 50 Ibid.

44

Economic valuation of the Royal Botanic Gardens, Kew

RELEASING A BIOLOGICAL CONTROL AGENT FOR JAPANESE KNOTWEED IN THE UK Japanese Knotweed, an invasive weed, costs hundreds of millions of pounds a year to control in the UK, and it continues to spread. The weed crowds out native flora and affects other wildlife due to its rapid invasion and domination of habitats. It causes problems in respect of flood management by increasing the risk of riverbank erosion. The weed also causes damage to property, even growing through tarmac and the floors of houses. To control its spread, the weed and soil contaminated with it is considered controlled waste and must be disposed of by 51 property developers at considerable cost. It is also expensive to control because it has no natural enemies in Britain. In 2010, it was estimated the weed costs £166 million in damages 52 annually. In 2003, Defra estimated it would cost £1.56 billion to eradicate the weed across 53 the UK. The Centre for Agriculture and Bioscience International (CABI), a not-for-profit organisation based in the UK that specialises in agricultural and environmental research, developed a 54 biological control for Japanese Knotweed costed at £500,000. To gain a license to release the control agent (a beetle), they needed to test it against UK native species to make sure that it would only affect Japanese Knotweed and not have adverse effects on other native plant species.

55

RBG Kew’s Millennium Seed Bank (MSB) supplied 48 seed collections of UK native plants.

The seeds supplied included highly threatened species. This, allowed CABI to release the control agent at least a year earlier than would have been possible without RBG Kew’s involvement due to the ready availability of UK native species provided by RBG Kew. Gorst estimates the seeds provided by the MSB have a present value of £100 million by 2050 or 56 £2.5 million per annum. This is based on the time saved by researchers in testing the control agent against other UK native species, and of the damage costs of Japanese Knotweed that were averted in a year.

51

DEFRA, "Review of non-native species policy" (Report of working group, UK Government, Department for Environment, Food and Rural Affairs, 2003).

52 F Williams et al, "The Economic Cost of Invasive Non-Native Species on Great Britain" (Published report, CABI, 2010).

53 DEFRA, "Review of non-native species policy" (Report of working group, UK Government, Department for Environment, Food and Rural Affairs, 2003).

54 DEFRA, "Review of non-native species policy" (Report of working group, UK Government, Department for Environment, Food and Rural Affairs, 2003).

55 Ashley Gorst, "The Value of a Large Seed Bank: A Case Study of Kew's Millennium Seed Bank" (MsC Thesis, London School of Economics, 2012).

56 Ashley Gorst, "The Value of a Large Seed Bank: A Case Study of Kew's Millennium Seed Bank" (MsC Thesis, London School of Economics, 2012).

45

Economic valuation of the Royal Botanic Gardens, Kew

8. INTERNATIONAL VALUE OF RBG KEW The preceding chapters present quantitative estimates of the value of RBG Kew to the UK. However, the benefits that RBG Kew generates extend far beyond the UK’s borders and in this chapter we consider the international value of Kew in terms of visitors, students, and international science.

8.1 VALUE TO INTERNATIONAL KEW GARDENS VISITORS Chapter 3 considered the value to UK visitors of Kew Gardens. The same modelling can be applied to international visitors to Kew Gardens. RBG Kew is well-known and highly-regarded across the world. But the people of some countries, such as Australia, have an even stronger cultural affinity with it. This is partly through the cultural connections between the two countries, established by Sir Joseph Banks, who was instrumental in making RBG Kew the leading botanic gardens in the world. Such cultural connections mean that there tend to be systematic differences in visit rates from different countries that are unrelated to travel costs. This makes using the travel cost method to establish international visitors’ willingness to pay problematic. We therefore make the relatively conservative assumption that, on average, international visitors have the same consumer surplus as visitors from the UK. In 2014/15, approximately 184,000 international visitors came to Kew Gardens.

They made up about 15 percent of total Kew Gardens visitors. The top three countries in terms of international visitor origin in that year were the USA, Australia, and Germany.

Fig. 15: Countries of origin for international visitors, 2014/15

USA Australia Germany Holland Canada France New Zealand Sweden Japan Republic of Ireland Other 0

10

20

Source: BDRC Continental, Oxford Economics

£7.2 m Total gross value The total gross value of Kew Gardens to international visitors was £7.2 million in 2014/15.

30

40 50 60 Number of visitors (000s)

The analysis in Chapter 3 identified an average surplus of £35 per visitor (based on the mid-point of the values from the ITCM and ZTCM approaches).

Applying this figure to international visitors to Kew Gardens suggests they had a total consumer surplus of £6.4 million in 2014/15. Adding in revenues from entry-related fees of £805,000 brings the total gross value of Kew Gardens to international visitors to £7.2 million.

46

Economic valuation of the Royal Botanic Gardens, Kew

The estimate above is likely to be conservative since it does not take into account the full costs an overseas visitor would incur in devoting a day of their trip to visit Kew, which suggests they place great value on their visit. It would be reasonable to assume, for example, that if a visitor on a seven-day trip to the UK spends one of their days at Kew, one seventh of the associated costs of their whole trip to the UK could be attributable to Kew. However, in practice, travel cost modelling is of little use in determining the willingness to pay of overseas visitors, since widely varying country-specific propensities to visit mean that strong cultural ties - such as between Australia and the UK - are much stronger predictors of visit rates across countries than differences in the cost of the visit. Nor does it take account of the contribution of RBG Kew in attracting overseas visitors to the UK. 8.2 VALUE TO INTERNATIONAL STUDENTS Chapter six estimated the educational benefits to UK students. Many of those programmes also educate international students, and some programmes are exclusively for international students. Information was not available to the study on the country of origin of international students, and so it is not possible to estimate the returns to education for each of these students. We therefore use the UK return to education as a proxy in the absence of better information. The estimated values of different types of course are set out below. Overall, the value of educational benefits to international students is estimated to have been £676,000 in 2014/15. 

£676,000



Value to international students The value of RBG Kew to international students was £676,000 in 2014/15.

 

School of Horticulture - Four international students were enrolled in RBG Kew’s Horticulture Diploma course in the last financial year, representing a return of £222,000 that year.

Specialist Training - The international students enrolled in RBG Kew’s International Diploma in Botanic Garden Education, its Tropical Plant Identification Course, its Seed Conservation Techniques course, its natural environment research council applied plan taxonomy and field study skills course, and its Botanical nomenclature course generated an economic return of £86,000 for international students.

University course visits - University course visits that international students participated in generated a return of £237,000.

Technician and teacher training - While these courses are mostly for UK students, some international students attended these training sessions, notably the Technician Training at Kew and Wakehurst and a course at University of Derby, generating a return of £131,000.

8.3 VALUE OF SCIENCE TO THE WORLD The previous chapter summarised the estimated value to the UK of RBG Kew’s science contributions, using an expenditure multiplier for publicly funded R&D in the UK. However, RBG’s scientific research is also likely to generate substantial value outside of the UK. This is firstly because RBG Kew supports and provides important aspects of the infrastructure used in large swathes of plant biology research around the world. In particular, RBG Kew has one of the largest and most diverse collections of plant and fungal specimens globally. These collections are complemented by databases, scientific expertise and global partnerships which 47

Economic valuation of the Royal Botanic Gardens, Kew

give RBG Kew a leading role in facilitating access to fundamental plant and 57 fungal information. By way of example, the RBG Kew Herbarium (which is not open to the public) attracted 460 researchers from 50 countries between April 2014 and March 2015. The online catalogue for the Herbarium receives around 95,000 views per month. More broadly, the kew.org website received 6.6 million hits between April 2014 and March 2015, 74 percent of which came 58 from overseas.

Secondly, much of RBG Kew’s applied research directly generates benefits outside of the UK, for example by increasing crop yields in developing countries, or through conservation initiatives. RBG Kew undertakes scientific activity and collaborations across 110 countries, working with key organisations, individuals and communities.

An indication of the global reach of RBG Kew’s scientific work is provided by the list of strategic outputs identified in its science strategy: 



 





Plants of the World Online Portal (POWOP) – Kew Science will publish information on all the world’s known seed-bearing plants in an online portal by 2020.

State of the World’s Plants – a report due to be published in December 2015 on the status of the plant kingdom. RBG Kew will also hold an international symposium.

Tropical Important Plant Areas (TIPAs) – RBG Kew will map and publish these plant areas in seven tropical countries by 2020.

The Plant and Fungal Trees of Life – RBG Kew will produce evolutionary trees for all genera (the highest classification of plant families) by 2020.

Banking the World’s Seeds – the Collections, Identification and Naming and Conservation Science departments are jointly working to bank the seeds of 25 percent of the world’s plant species by 2020.

Useful Plants and Fungi Portal – RBG Kew will produce data on 80 percent of priority useful plants for the world by 2020 and make the information available on an easily accessible online portal.

Placing a monetary value on RBG Kew’s international scientific value is even more challenging than estimating a value of science to the UK. The benefits of Kew’s scientific research accrue in many different countries in many different ways, and with varying degrees of visibility.

It is, nonetheless, also important to recognise that RBG Kew’s international scientific research contributes to the UK’s cultural power and prestige (or socalled ‘soft power’). These things are, however, extremely difficult to value robustly.

The remainder of the chapter is therefore dedicated to a range of case studies to exemplify the types of international scientific research conducted by RBG Kew scientists, and the ways in which it creates value across the globe.

57 58

RBG Kew Science Strategy 2015-2020 The estimate of the proportion of hits from overseas is based on the language settings on users’ computers.

48

Economic valuation of the Royal Botanic Gardens, Kew

MEDICINAL PLANT NAME SERVICES PROJECT (MPNS) Each species of plant has, on average, two to three names in the scientific literature. Plants with medicinal value can have between 5 and 40 scientific Latin names, but some can have more than 500. They are also known by pharmaceutical, drug, common and trade names.

Medicinal plants are used globally and are known by different names in different communities, health traditions, generations and languages. Sometimes as many as 500 scientific synonyms are used for the same medicinal plant. Moreover, 10,000 changes to scientific plant names are published every year.

This synonymy leads to confusion on information pertaining to a particular species, or ambiguity over which plant is being discussed. Until recently, the herbal and pharmaceutical industries, and those engaged in medicinal plant research and health regulation have not been able to turn to an authoritative or complete reference source, leading to frequent and costly failures to communicate safely about medicinal plants and their deleterious side effects (e.g. allergies, adverse reactions).

Support from the Wellcome Trust has enabled MPNS to build upon RBG Kew’s existing 59 60 resources (which include The Plant List and the World Checklist. ) to create an authoritative database of medicinal plants and their names. Up-to-date taxonomy is linked to scientific, pharmaceutical, drug and common names as they are used in literature and legislation. The MPNS currently covers approximately 13,500 species, corresponding to 20,600 scientific names. It links these to 42,000 non-scientific names from the same literature, and to over 194,000 scientific names (synonyms) in Kew’s taxonomic databases.

The MPNS established a reference resource and associated services for health regulators and industry, including the World Health Organisation, European Medicines Agency, UK Medicines and Healthcare products Regulatory Agency (MHRA), US Food and Drugs Administration (FDA), American Herbal Products Association, United States Pharmacopoeia, and British Pharmacopoeia. The main economic value of the MPNS is the time and cost it saves other organisations from duplicating effort to record and maintain databases of plant names. A survey by RBG Kew of 20 organisations in this field found that an average of six percent of budgets was spent searching and validating plant names for entry into databases, and a further three percent on maintaining databases. Now that MPNS supplies the information automatically, these organisations can re-allocate budgets to other areas.

MPNS services have been developing over the last four years, and revenues have grown to £60,000 to £70,000 in the 2015/16 financial year. In initial client engagements, RBG Kew scientists take their clients’ datasets, validating and correcting the plant names. In addition, the MPNS is developing annual subscription licenses, to update subsets of databases and report on change over time. Kew anticipates these will be sold for approximately £10,000. Seed funding to develop the service was provided by the Wellcome Trust, and Kew are planning to not only expand the number of clients it serves with the MPNS (and specifically to address food supplements, poisonous plants and allergens) but also expand the service into other domains such as agriculture or forestry.

59 60

www.theplantlist.org www.kew.org/wcsp

49

Economic valuation of the Royal Botanic Gardens, Kew

VALUE OF RBG KEW COLLECTIONS FOR NAMING AND DESCRIBING NEW SPECIES An average of over 2,100 new species have been described globally in each of the past ten years. Around 20 percent cite specimens from RBG Kew’s Herbarium. In fact, RBG Kew was the most cited herbarium in six of the past ten years. New species are most likely to be of conservation significance.

The estimated cost of RBG Kew’s contribution to naming new species is £915,000 per annum.

This estimate is based on an average of 400 new species, each requiring around two weeks’ work.

Further botanical activity is undertaken for species descriptions of existing species. In taxonomic work, new species are likely only to account for up to five percent of the species described, so the economic value of RBG Kew in supporting the description of new species is only a small fraction of its value to all plant species description worldwide.

Not only do RBG Kew scientists in the Herbarium identify plant material for their own research projects (floras, monographs, inventories etc.), but they also identify material for collaborating institutions when they send material for identification. Over the last five years, RBG Kew scientists have identified over 25,000 specimens for collaborating institutions in over 60 countries. Usually the specimens are sent to RBG Kew for naming because the sending institution lacks the expertise or collections to name the material themselves. The input cost of identifying specimens for other institutions comes to approximately £660,000 over the last five years, not including material named at RBG Kew for taxonomic projects, curation, and research.

50

Economic valuation of the Royal Botanic Gardens, Kew

CONSERVING MADAGASCAR’S YAMS FOR LIVELIHOODS AND FOOD SECURITY RBG Kew scientists are embarking on a three-year study of Madagascar’s yams to help low-income Madagascan families maintain a sustainable food supply in the face of climate change.

Madagascar’s population relies on wild yams for food to supplement small, seasonal and unreliable staple crops. The World Bank ranks Madagascar at 207 out of 213 by Gross National Income (GNI) per capita. Famines occur regularly and food production is predicted to decrease with climate change. Yams, however, are resilient against environmental change and therefore constitute a sustainable supply of food for Madagascan families.

Yams are a staple food and not a high value cash crop. However, in the cash-poor, rural subsistence economies of Madagascar any food that can be grown or harvested from the wild will save households from needing to purchase food, freeing money to be spent on other essentials, including medicine and schooling. Any surplus yams that can be sold in local markets provide a disproportionately valuable supplementary income, particularly for women. Yams are also relatively nutritious amongst tuberous crops: in West Africa yams are the third most important protein source 61 after rice and maize. Improved diets from sources like yams can help to increase household productivity, children’s performance at school and resistance to diseases.

Winged yam Dioscorea alata (D. alata), originally from Asia, is grown on a small scale in gardens.

RBG Kew research has shown that when cultivated in small scale agricultural systems it improves 62 63 livelihoods and reduces pressure on wild species.

This project utilises both D.alata and major wild edible species to scale up yam cultivation and sustainable harvesting. RBG Kew scientists are leading the project and providing institutional management and administration, as well as technical steer and training in areas such as yam taxonomy and ecology, GIS modelling, population and socio-economic surveys. The project will establish a national system to conserve wild and cultivated yams and related biocultural knowledge, and provide stakeholders with access to genetic material through seed banks and living collections.

The direct beneficiaries of the project will be 60 communities (c.3000 households) engaged in sustainable utilisation, cultivation and conservation of the priority species. The yams they produce will improve diets and increase household income (or decrease spending on alternative foods). Part of the legacy of the project will also be the safe-guarding of Madagascar's yam diversity in ex-situ collections (such as the Millennium Seed Bank) and their direct and growing application to improving food security. The seeds and living plants will also be available for research and restoration projects.

Yams are regarded as the key to unlocking interest in other innovative agricultural practices in Madagascar, such as agroforestry, and higher value crops such as vanilla, peppers, lychees and essential oils for these subsistence farmers. Diversification of production will improve welfare, livelihoods, food security and resilience to climate change and lead to restoration of forests, biodiversity and ecosystems.

61

Robert Asiedu and Alieu Sartie, "Crops that feed the World: Yams for income and food security", Food Security, 2 (2010): 305-15.

62 T Randriamboavonjy et al., "Utilisation et conservation durable des ignames du corridor forestier AmbositraVondrozo, Madagascar", in African Plant Diversity, Systematics and Sustainable Development – Proceedings of the XIXth AETFAT Congress, ed. N Beau , S Dessein and E Robbrecht (Antananarivo: National Botanic Garden of Belgium, 2010), 50:341–348.

63 M.T.M. Rajaonah, "Études Biologique, Anatomique, Ecologique et Ethnobotanique des espèces de Dioscorea (Dioscoreaceae) dans la region du Menabe" (Unpublished DEA thesis, Faculté des Sciences, Université d’Antananarivo, Madagascar, Département de Biologie et Ecologie Végétales, 2004).

51

Economic valuation of the Royal Botanic Gardens, Kew

COFFEE IN ETHIOPIA Ethiopia is the world’s third largest exporter of Arabica coffee, after Brazil and Colombia.

64 Ethiopia exported an estimated US$800m of coffee from its 2014 harvest and it is estimated 65 that a further US$540m was sold for domestic consumption. Coffee farming provides a livelihood for an estimated 15 million Ethiopians (around 15 percent of the population), and 66 approximately 95 percent of production comes from four million small-hold farms. Ethiopia produces high-quality coffee, but yields are low compared to those in other countries.

Building a climate resilient coffee economy for Ethiopia This project, which concluded in October 2015, provides a climate resilient coffee economy strategy for Ethiopia based on an assessment of the influence of climate change on coffee producing areas and wild coffee forests.

Recorded climate data from the 1960s onwards shows an average increase in the mean annual temperature for Ethiopia of 0.28 °C per decade, a shorter wet season, and an increase in the number of hot days. The impacts of climactic changes in Ethiopia through to 2100 were modelled for the study, showing that a combination of moving coffee farms to more suitable regions and adaptation measures as the climate shifts can allow farmers to stay in production for several decades more.

Before RBG Kew conducted the study, there were few resources for understanding and managing the risks associated with climate change and land-use change in Ethiopia. The study has provided the information needed to sustain the Ethiopian coffee industry in the context of a changing climate and land use, helping to support the livelihoods of the 15 million or so Ethiopians who rely on coffee production.

The project also shows that the productivity of the Ethiopian coffee industry could be significantly increased over the next 20 years. Given the size of the industry, even relatively modest progress towards this objective could lead to substantial increases in revenue. For example, increasing productivity by 10 percent could increase export earnings by US$80m per year at today’s prices.

Biodiversity conservation and climate resilience at Yayu Biosphere reserve Ethiopian coffee has enormous potential in the world market, due to the diversity of taste profiles, and competitive production costs. Coffee connoisseurs and baristas often rate Ethiopia as the world’s best coffee. Its full potential, however, can only be realised by making critical investments within the sector. Foremost amongst these are improving quality and traceability, and by ensuring climatic, community, and market resilience. Through this threeyear project, which will end in 2018, RBG Kew scientists aim to show that by employing costeffective interventions it is possible to realise this production potential alongside associated environmental benefits.

Yayu Reserve, an area of 167,000 hectares in Ethiopia is home to around 450 higher plant, 50 mammal, 200 bird, and 20 amphibian species, plus important wild crop genetic resources

64

Based on data from http://www.ico.org/new_historical.asp?section=Statistics and assuming a price of US$4.30 per kg 65 Assuming around 50 percent of output is consumed domestically and a price of US$3 per kg.

66 Abu Tefera, "Ethiopia: Coffee Annual Report", GAIN Report Number: ET1514, 2015: 2.

52

Economic valuation of the Royal Botanic Gardens, Kew

(including Coffea arabica). Coffee cultivation occurs within forests of the buffer zone and transition areas. At Yayu, coffee generates up to 70 percent of the cash income for over 90 percent of the population. The problem is that most farmers in the area are struggling to make sufficient income from coffee. This causes a conversion away from forest production, to nonforest crops such as khat (Catha edulis) and maize (Zea mays), leading to forest loss, biodiversity loss, a reduction in ecosystem services, and a narrowing of income diversity for farmers. The most important factor restricting coffee income for farmers is coffee quality, rather than productivity or quantity, which determines the price set for the coffee.

The project will target an increase from commodity price (US$ 1.80 lb) to a ‘speciality’ price (US$ 2.30 lb) and a rise in non-processed coffee from circa US$ 0.50 lb to either commodity or specialty price. The five Yayu coffee cooperatives’ 950 members with circa 5,200 household members are projected to increase their income by 30 percent and be able to maintain this increase. The project will also directly provide 250 community members with seasonal work in harvest and processing activities. In addition, the five Yayu coffee cooperatives will have the equipment and training required to produce high quality coffee for at least the next decade, providing an opportunity to repay micro-loans and re-invest/maintain farm equipment in the longer term. Lastly, the project is expected to stabilize or significantly reduce forest/biodiversity loss.

Lessons learned at Yayu would be transferrable across Ethiopia’s coffee growing landscape and to other crops and will be valuable for scaling-up intervention practices for vulnerable coffee production areas across Ethiopia as part of Ethiopia’s Climate Resilient Green Economy (CRGE).

53

Economic valuation of the Royal Botanic Gardens, Kew

HARNESSING AGRICULTURAL ECOSYSTEM BIODIVERSITY FOR BEAN PRODUCTION AND FOOD SECURITY Beans are Tanzania and Malawi’s primary legumes. They are produced on 1.5 million hectares and consumed by more than 20 million people. Yet current bean yields are chronically low, between 500 to 700 kg per hectare, while potential yields could be higher. RBG Kew is conducting a three-year research project in the two countries to survey plant and invertebrate animal (animals without a spinal cord such as insects or worms) biodiversity in order to identify plant species that (1) attract, nourish and provide habitat for natural enemies of pests; (2) promote the activity of insects who pollinate crops and (3) provide environmentally friendly ‘botanical insecticides’ as additional control for pests.

Beans provide about 25 percent of the income for most farmers in Tanzania and Malawi and are a key component of poverty alleviation in those countries. Tanzania is the world’s seventh largest bean producer, where millions of farmers – primarily women – grow beans commercially and for home consumption. Beans are equally important to Malawi and currently 1.5 million hectares of beans are sown across both countries, providing a critical protein source to millions of households. In both countries, about 90 percent of beans are produced on small farms with average annual household crop yields of about 250 kg. Half of this yield is sold and it is worth between US$ 150 and US$ 250 per household. The study aims to increase yields by approximately 20 percent, a gain equivalent to up to US$ 50 per household per annum. The total increase in bean production in the study region is expected to be worth up to US$ 200,000 per annum. In total, the study will train 400 farmers and reach a further 3,600 households directly and to 100,000 households or more via a partner organisation.

The farming techniques developed in this study are not just useful for Tanzania and Malawi, but can also be applied in Europe for organic farming, and other large emerging markets like China and India, who are keen to employ such farming techniques for large-scale farms.

54

Economic valuation of the Royal Botanic Gardens, Kew

9. CONCLUSION The preceding sections have presented estimates of the value generated by RBG Kew for visitors; the perceived value attributed to Kew by non-users and those who may wish to visit in future; through scientific research; and through education. We estimate the total quantifiable economic value of RBG Kew to the UK in 2014/15 to have been £182 million. This figure increases to £190 million when the quantifiable aspects of RBG Kew’s international benefits are incorporated.

The UK estimate should be regarded as conservative since it does not incorporate important aspects of the value generated by RBG Kew which cannot easily be valued. These include the ‘insurance’ value and potential future economic value of species held in RBG Kew’s scientific collections. It has also not been possible to identify evidence to enable the valuation of increased planting and horticultural activity that is encouraged amongst the wider UK population by RBG Kew’s activities, most notably through the ‘Grow Wild’ programme.

In addition, and perhaps even more significantly, the estimated international value of RBG Kew does not incorporate the international value of RBG Kew’s scientific research. This could be very substantial, both because of the large contribution Kew makes to the infrastructure upon which large swathes of plant biology research around the world rely, and because much of RBG Kew’s conservation and other applied work primarily benefits other countries. Each of these things, in turn, contributes to the UK’s cultural – or so-called ‘soft’ – power and prestige. These things are, however, extremely difficult to value robustly.

Nonetheless, it is important to place the quantitative estimates of the value generated

by RBG Kew in context by setting it against the costs of operation, which totalled £54 million in 2014/15. Dividing the value of quantified UK benefits by these costs gives a benefit cost ratio of 3.4. This means that for each £1 spent operating RBG Kew in 2014/15, £3.40 of benefits were generated for the UK. If we include the elements of international value we have been able to quantify, the benefit cost ratio rises to 3.5.

It is important to recognise that RBG Kew’s activities, and therefore the value they generate, continue to evolve. For example, RBG Kew is actively seeking to increase the number of visitors to its gardens at Kew and Wakehurst, in part by investing in new and expanded educational offerings for UK and overseas students, and by introducing new special events into its gardens.

In light of this, RBG Kew may wish to consider how it could track the economic value it generates on an ongoing basis. It is likely to be impractical to re-estimate the entirety of this study on an annual basis - estimating the consumer surplus of visitors, or undertaking a non-use survey are substantial undertakings, for example.

Nonetheless, the consumer surplus values estimated in this study could be re-scaled to reflect annual visitor numbers. Similarly, education benefits could be updated by re-scaling values per pupil/student according to the annual number of participants.

The multiplier approach to estimating the value of RBG Kew’s scientific research could also be applied to science spending in future years. RBG Kew may also wish to consider how to develop a richer understanding of how their resources are used by the wider scientific community to generate value, both in the UK and overseas.

The planned survey of users of RBG Kew’s online resources could be a helpful 55

Economic valuation of the Royal Botanic Gardens, Kew

development in this regard.

Fig. 16: Summary of costs and benefits of RBG Kew, 2014/15

ÂŁ million Costs

54.3

Of which: Trading costs

5.7

Research and conservation

39.0

Visitor activities

9.5

Governance costs

0.1

Quantified UK benefits

182.1

Quantified total benefits

190.0

Of which: Value to UK Kew Gardens visitors (mid-point estimate)

46.6

Value to international Kew Gardens visitors (mid-point estimate)

7.2

Value to Wakehurst visitors

3.0

Value to attendees of special events

6.2

Non-use and option value for UK residents

44.3

Scientific value

56.2

Educational value for UK students

25.8

Education value for international students

0.7

Ratio of quantified UK benefits to costs

3.4

Ratio of quantified benefits to costs (including international benefits)

3.5

Source: Oxford Economics

56

Economic valuation of the Royal Botanic Gardens, Kew

APPENDIX 1: VISITOR VALUES INDIVIDUAL TRAVEL COST METHOD (ITCM) Under the ITCM, the number of visits made by a person over a given time period is thought of as a function of the costs they face in accessing the site and a range of other personal characteristics, such as their age and income group. Details on these are captured in the visitor survey, which in the case of Kew involved survey work by BDRC Continental to gather responses from 1,048 respondents over the course of 2014-15. The analysis then proceeded to develop a variable for the costs associated with each visit, before modelling the relationship between cost and the number of visits made. This, in turn, allowed us to establish the implied average consumer surplus per visit. Here we describe the steps in the analysis in greater technical detail.

Developing the visit cost variable Constructing an accurate travel cost variable is a key challenge for the analysis. To capture the full cost of a visit it is necessary to calculate the true direct travel costs – taking account of fuel consumption, but also vehicle depreciation, insurance and taxation – as well as the opportunity cost of the time spent travelling. This was done for each respondent in the sample.

We used a Google mapping algorithm to identify travel times and distances from the centre of each of 3,078 outward codes (the first part of a postcode) to Kew Gardens. The appropriate travel time and distance was then allocated to each survey observation. To estimate the direct travel costs we then used the HMRC mileage rate of 45 pence per mile, which takes account of all vehicle costs from fuel and servicing to insurance and depreciation. Where the survey respondent was part of a group of people visiting Kew Gardens, these transport costs were divided by the number of people in the group to obtain a cost per person.

Estimation of the opportunity cost of travel time is somewhat more contentious. According to economic theory, individuals’ values of time should be related to their wage rate. People are assumed to trade off leisure and income until the value to them of an extra hour of leisure is equal to the income they would receive from working that hour. In practice, labour market choices are rarely so flexible and empirical studies tend to demonstrate that people value an hour of leisure time less than their hourly income. Consequently we draw upon the Department for Transport’s estimate of the average value of leisure time as £6.99 per hour in 2015.

An important issue to think about when using the travel costs method is the degree to which it is reasonable to assume that travel costs are being incurred solely to visit Kew Gardens. For day-trip visitors it seems reasonable to assume that a visit to Kew Gardens was the dominant if not the sole reason for their trip. But for people who stayed away from home – perhaps British residents visiting Kew Gardens despite their place of residence being a long distance away, and certainly international tourists – it does not seem reasonable to attribute their entire trip costs to their desire to visit the gardens. Identifying what portion of those costs should be attributed to Kew Gardens is problematic without extensive and detailed survey data.

However, at a minimum it is reasonable to assume that these visitors’ on-the-day travel costs – perhaps from a hotel in central London – reflect the value they place on the visit. We therefore implicitly assume that the 36 percent of visitors who are not on a daytrip have the same average consumer surplus as those who are. This is likely to be a conservative estimate.

Finally it is worth noting that the mapping algorithm works on driving time. In practice, a large 57

Economic valuation of the Royal Botanic Gardens, Kew

number of visitors to Kew Gardens either walk or take public transport. Informal analysis of travel times from various parts of London shows that drive times tend to be similar or slightly shorter than public transport travel times for trips to Kew Gardens. This suggests that the use of drive times will make little difference to the estimation. To the extent that it underestimates travel times for public transport users hailing from west London, the effect will be to bias downwards the estimate of consumer surplus. The use of drive times can therefore be seen as a conservative approach to the estimation of consumer surplus.

Modelling and results Having developed the travel cost variable, the purpose of the regression analysis is to use these data to determine how sensitive the annual number of visits a person makes is to the full costs associated with each visit (including costs of travel, time and entry).

Features of the data determine the appropriate modelling approach to be adopted. First, the number of visits made by any one person is ‘count data’: a person visits once, twice or three times, but never 2.5 times. A standard ordinary least squares (OLS) regression would not be appropriate for this type of data both because of its count nature and because the data is not normally distributed around the mean. Consequently a form of Poisson regression was adopted, the detail of which is explored further below.

Second, since the survey was undertaken on visitors to RBG Kew, there are obviously no respondents in the sample who have zero visits. In other words the sample is ‘truncated’ at zero and every observation is associated with one or more visits.

A count data model with a semi-log functional form was therefore used in the estimation, taking the form of the equation below for members, where represents the number of visits made by individual i, is the total travel cost faced by the individual, and is a vector of personal characteristics such as age and income group. For non-members the equation was estimated without the squared term since this appeared to better fit the data.

The model was split between members and non-members since each group exhibits very different visit rates, and the marginal cost of a visit is not the same between the two, given the charging structure.

Figure 17 and Figure 18 below, show results for the various types of Poisson model that were tested. The estimated parameters are similar across models showing that the results are robust to specification.

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Economic valuation of the Royal Botanic Gardens, Kew

Fig. 17: Members

Poison

Negative Binomial

Truncated Poisson

Truncated Negative Binomial 1

Truncated Negative Binomial 2

-0.0276***

-0.0262***

-0.0279***

-0.0270***

-0.0268***

Travel Cost Square

0.0001***

0.0001***

0.0001***

0.0001***

0.0001***

Age

0.0040***

0.0056***

0.0040***

0.0058***

0.0059***

-0.0300*

-0.0232

-0.0308*

-0.0249

3.1399***

2.9694***

3.1484***

2.9795***

2.8814***

-1.56***

-1.56***

Travel Cost

Income Group Constant Statistics lnalpha

-1.61***

R-Square

0.55

0.5

0.55

0.5

0.5

-1890.706

-1678.408

-1888.532

-1673.579

-1673.893

AIC

3791.412

3368.815

3787.064

3359.157

3357.786

BIC

3812.767

3394.441

3808.419

3384.783

3379.141

Log likelihood

legend: * p<.1; ** p<.05; *** p<.01

Fig. 18: Non-Members

Poison

Negative Binomial

Truncated Poisson

Truncated Negative Binomial 1

Truncated Negative Binomial 2

Truncated Negative Binomial 3

-0.0275***

-0.0275***

-0.0562***

-0.0583***

-0.0584***

-0.0260***

0.0001***

0.0001***

0.0002***

0.0002***

0.0002***

Age

0.0058*

0.0058*

0.0114**

0.0125**

0.0125**

Income Group

-0.0005

-0.0005

-0.0007

0.0051

1.3344***

1.3344***

1.7448***

1.6542***

1.6733***

0.6624

Travel Cost Travel Cost Square

Constant

0.0141*** -0.0031

Statistics lnalpha

-1.77***

-1.77***

-1.57***

R-Square

0.0013

-24.25*** 0.0013

0.0013

0.0013

0.0013

0.51

Log likelihood

-336.8

-336.8

-251.5

-250.9

-250.9

-254.8

AIC

683.5

683.5

513.1

513.7

511.7

519.5

BIC

701.0

701.0

530.6

534.7

529.2

537.0

legend: * p<.1; **legend: p<.05; *** * p<.1; p<.01 ** p<.05; *** p<.01

Choice of model type The conventional Poisson model assumes that the variance of the data is fixed at one, whereas the negative binomial model – part of the Poisson family - does not require such an assumption. A variety of tests were run on different model types, to test this assumption and determine whether the data are ‘over dispersed’. The test statistics for this is given by ‘lnalpha’, shown in the results tables above. This statistic is significant in all cases for the 59

Economic valuation of the Royal Botanic Gardens, Kew

negative binomial specifications, implying that the negative binomial model is appropriate.

For members, ‘truncated binomial distribution model 2’ is the preferred model. It exhibits the lowest Akaike Information Criterion (AIC) and Bayesian Information Criterion coefficients, indicating that the model fits the data well with a limited number of explanatory variables. This model also exhibits a good R-squared statistic for a cross-sectional model.

For non-members, despite not having the lowest AIC and BIC statistics, the ‘truncated binomial distribution model 3’ is our chosen model. This specification excludes the squared term on travel costs despite its showing a significant coefficient in other models. This term was dropped from the chosen model because models that include a squared term substantially lower the low R-squared statistic indicating that they fit the data poorly. In practice the Rsquared falls when the term is included mainly because most of non-members tend to visit only once, while the squared term forces the model wrongly to predict that most people will visit four or five times in the course of the year.

Deriving the consumer surplus Given the results of the modelling exercise, the final step is to translate these into estimates of the consumer surplus. One property of a linear model of the above type is that it can easily be used to determine the average consumer surplus per visit as

67

. When a squared term

is added to the model, as in the members’ model above, the consumer surplus can be estimated using the ratio

. This figure is then multiplied up by the total number of

annual visits to Kew Gardens to give the aggregate consumer surplus.

ZONAL TRAVEL COST METHOD Visit rates by geographic zone were established by building on the approach described above to generate travel costs per respondent. The outward code areas were grouped into 11 (in the case of Kew) travel cost bands of £0-3, £3-5, £5-£10, £10-15 and so on.

The next step in the Zonal Travel Cost Method is to identify the demand curve implied by the rate at which the visits drop away with increasing visit-related costs. The relationship between the total cost of a visit and the visit rate per thousand of population is non-linear, with rates dropping very rapidly over the first few miles from Kew Gardens and then falling more slowly at greater distances as seen in Figure 5 above. Taking the log of visit rate and travel costs produces a linear relationship. Consequently the log of the visit rate can be regressed upon the log of visit costs using OLS, as per the equation below.

The results of this regression determine the relationship between costs and visit rates in the abstract, allowing us to simulate the likely number of visitors were the entry fee to Kew Gardens to be raised by any given amount. A plot of this simple model is shown below. A linear relationship fitted the data well, exhibiting an R-squared of 0.98. For the Wakehurst

67

John B Loomis and Michael D Creel, "Theoretical and Empirical Advantages of Truncated Count Data Estimators for Analysis of Deer Hunting in California", American Journal of Agricultural Economics, 72 (1990): 434-41.

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Economic valuation of the Royal Botanic Gardens, Kew

ZTCM, a significantly smaller sample size of 157 respondents in 2014 restricted the number of travel cost zones we were able to construct. The R-squared on the regression was 0.71, while those for the Kew the Music and Christmas at Kew models were 0.88 and 0.85 respectively.

All coefficients we statistically significant at the one percent level.

Fig. 19: Regressing log of visit rate on log of generalised cost of visit 9.0 8.0 7.0 6.0 5.0 4.0

3.0

y = -1.2645x + 7.603 R² = 0.9778

2.0 1.0 -

1.0

2.0

3.0

4.0

5.0

6.0

Using these coefficients we were then able to simulate visitor numbers at a variety of new entry fees to trace the full demand curve as seen in Figure 6, giving the consumer surplus as the area under the demand curve.

The Kew visitor survey numbers suggest that a small number of people may be prepared to incur very large costs in order to visit the gardens. For example, the data indicate that around one percent of day trip visitors incur costs in excess of ÂŁ200 to travel to Kew Gardens in terms of travel time and direct costs. Since the results are somewhat sensitive to the tail of the distribution, and since travelling more than four hours each way on a day trip begins to be implausible, in calculating the consumer surplus we truncate the demand curve at ÂŁ200. This gives a conservative estimate of the consumer surplus.

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Economic valuation of the Royal Botanic Gardens, Kew

APPENDIX 2: NON-USER SURVEY NON-USER SURVEY QUESTIONNAIRE Royal Botanic Gardens, Kew is undertaking work with Oxford Economics to assess the importance of the Gardens to UK society and the economy. To do this it is important for us to understand how members of the public view the Royal Botanic Gardens, Kew. We appreciate you taking the time to complete this survey. It will only take a few minutes and all responses will be treated as confidential.

SECTION 1: ABOUT YOU We are collecting the information in this section to see how respondents to this survey compare to the general profile of the population.

1) What is your postcode?

Please enter the first half of your postcode

2) What is your gender?

Male Female 3) Which of the following best describes your employment status?

Only one option may be selected Full time employment Part time employment Self-employed Looking after family Student Unemployed Retired Long-term illness Other (please specify) Other _________________________

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Economic valuation of the Royal Botanic Gardens, Kew

4) What is the highest educational level you have reached?

Only one option may be selected GCSE/O level/CSE Vocational qualification A-level or equivalent Bachelor degree or equivalent Masters/PhD or equivalent Other professional qualifications No formal qualifications Still studying

5) What is your age?

16-24 25-34 35-44 45-54 55-64 65+

6) What region do you live in?

Inner and Greater London South East/East Anglia South West Wales East and West Midlands North West Yorkshire and Humberside North Scotland

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Economic valuation of the Royal Botanic Gardens, Kew

7) Which of the following brackets does your annual household income (before tax) fall into?

Note: this relates to the income for your household as a whole and not just yourself, only one option may be selected.

Less than £12,800 £12,801 - £24,000 £24,001 - £36,000 £36,001 - £56,000 £56,001 - £75,000 Over £75,000

SECTION 2: ROYAL BOTANIC GARDENS, KEW 1) What comes to mind when you think about Royal Botanic Gardens, Kew?

2) Which of the following best applies to you prior to taking this survey?

I am aware of Royal Botanic Gardens, Kew and I have visited in the past I am aware of Royal Botanic Gardens, Kew and I have never visited in the past I was not aware of Royal Botanic Gardens, Kew

IF Q2 is 1: Which one of these apply?

I have visited within the last 12 months I have used RBG Kew’s website before I have participated in Kew’s outreach activities, such as the Grow Wild programme None of these

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Economic valuation of the Royal Botanic Gardens, Kew

IF Q2 is 2: Which one applies to you?

Select all that apply Have you ever used Kew’s website Have you ever participated in Kew’s outreach activities, such as the Grow Wild programme None of these

The Royal Botanic Gardens, Kew has many unique assets and runs high profile science, horticulture and visitor-related activities, including:  a major centre of botanical and related scientific collections;  one of the largest collections of living plants anywhere in the world;  beautiful gardens which allow the public to enjoy and have close contact with a rich diversity of plant life, gathered from across the world;  the Millennium Seed Bank, the largest dedicated plant conservation project in the world;  unique and historic glass houses (e.g. Palm House, Temperate House), buildings (e.g.

Great Pagoda) and a royal palace (Kew Palace);  a botanical art collection comprising 200,000 works of art and a library containing over 500,000 items;  a centre for scientific and horticultural education;  events such as Kew the Music, Kew the Movies and Christmas at Kew; and  a separate Wakehurst country estate in West Sussex, consisting of ornamental gardens, temperate woodlands, a nature reserve, and an Elizabethan mansion.

3) Why do you think the Royal Botanic Gardens (RBG), Kew may or may not have value to you? Please rate your agreement with the following statements on a scale of 1-10 where 1 = “Strongly disagree” and 10 = “Strongly agree” RBG Kew has no value to me at all I value RBG Kew just because it exists, regardless of whether or not I have visited – or will ever visit I value RBG Kew as a gift to future generations I value RBG Kew because I may want to visit (or visit again) in the future Other (please specify and rate on the scale 110)

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Economic valuation of the Royal Botanic Gardens, Kew

Note: the following questions are designed to capture the value that you place on the Royal Botanic Gardens, Kew. They are not an indication that existing levels of taxes or services will change.

It is important that you try to answer these questions to enable us to place a value on RBG Kew and the services they provide.

4) All UK taxpayers pay towards the upkeep and development of Royal Botanic Gardens, Kew through taxes. On average, each UK income tax payer currently pays roughly £0.90 (90 pence) a year towards RBG Kew through taxes.

In general terms, would you be in favour of: Increasing the amount of funding to RBG Kew

Only one option may be selected

Reducing the amount of funding to RBG Kew Keeping funding of RBG Kew at the present level

IF Q4 is “increasing the amount of funding to RBG Kew” see Q5 5) You’ve indicated you believe funding to RBG Kew should be increased. If you have to choose between two possible ways of increasing this funding would you prefer to: a) Reduce the funding of other government funded services (e.g. grants to other cultural attractions, or spending on the NHS, schools or transport)? b) Increase taxes c) Reduce funding of other government services and increase taxes

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Economic valuation of the Royal Botanic Gardens, Kew

IF Q5 is A or B ask Q6: 6) As indicated on average, each UK income tax payer currently pays roughly £0.90 (90 pence) a year towards RBG Kew through taxes.

If you were free to choose how much you would pay in tax to maintain RBG Kew, what would be the maximum you would be willing to pay, through taxes, each year, to maintain RBG Kew?

Maximum amount you would be willing to pay per year in taxes to maintain RBG Kew (in pounds and pence)

7) What is the basis for your answer to the previous question?

Please tick all that apply I value RBG Kew highly I think existing funding is insufficient I have never or I am unlikely to use RBG Kew I am happy with the current allocation of my taxes I do not value RBG Kew I do not believe you can use surveys to address this sort of question Other (please specify) Other ____________________

WILLINGNESS TO PAY AND ‘ANCHORING’ As noted in the main text, respondents were told that the average UK taxpayer contributes 90 pence to RBG Kew in the form of tax-funded public grants and asked whether they would ideally want to increase, decrease or keep the contribution the same. Contextualising the question by reporting the current average contribution gives rise to the risk of ‘anchoring bias’ whereby respondents focus on the information in the question when deciding upon their response. However, this risk must be weighed against the opposite risk that without any such information respondents might find it extremely difficult to give meaningful responses. The latter problem may be particularly acute in the case of environmental goods, which are not regularly purchased, consumed, and therefore valued, by respondents. As noted by Hansen, giving some sort of value can help the respondent since it 68 enables them to judge whether a good is worth the amount they currently pay for it.

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Trine B. Hansen, "The Willingness-to-Pay for the Royal Theatre in Copenhagen as a Public Good", Journal of Cultural Economics, 21 (1997): 1-28.

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Economic valuation of the Royal Botanic Gardens, Kew

Arrow et al. recommend taking a conservative approach, and note that providing information on 69 actual expenditure is likely to yield more conservative responses. This finding is supported by Hansen, who found that respondents gave considerably higher valuations of the Royal Theatre in Copenhagen when they were not given information about actual expenditure on the theatre.

A further consideration is that decisions on public funding of RBG Kew are likely to take the form of whether to increase or decrease current funding levels, rather than start from a zero base of what the ‘ideal’ funding level should be. It could therefore be argued that asking people how funding should be adjusted from its current level provides responses that are more closely aligned with government decision-making.

In light of the considerations and uncertainties above, we took a conservative approach and chose to provide information on the current level of taxpayer funding to RBG Kew. The results suggest this did influence the final results as 60 percent of respondents indicated that they would keep funding at the current level. In particular, 73 percent of respondents who were unaware of RBG Kew gave this response. This fell to 65 percent for those who had not visited but were aware of Kew, and 48 per cent of past visitors. One possibility is that while more than half of previous visitors, who might be assumed to have the best understanding of RBG Kew, indicated they would change the level of funding, those with less understanding based their response on the information in the question.

While this resulted in many non-users providing a valuation of 90 pence, they did have the opportunity to judge whether 90 pence seemed like a reasonable amount. It is unclear how they might have identified a valuation had this information not been available.

FACTORS INFLUENCING VALUATIONS Looking at average valuations by region allows us to check whether there was any tendency for respondents living nearer to RBG Kew to give a higher valuation. Regional results ranged between 84 pence and 86 pence per person, and the South was at the lower end of this very narrow range.

Fig. 20: Average value for non-users by region £ 0.87 0.86 0.86

0.85

0.85 0.84 0.84 0.83 0.82 North

Midlands

South

Source: Oxford Economics

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Kenneth Arrow et al., "Report of the NOAA Panel on Contingent Valuation", Federal Register, 58(10) (1993): 4601-14.

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Economic valuation of the Royal Botanic Gardens, Kew

An Analysis of Variance (ANOVA) test was run to determine if there were statistically significant differences in the average non-use values for RBG Kew by region of residence. The sample met the criteria needed to satisfy the assumptions to calculate the statistic, which include independence across groups; independence of observations (random selection); and an approximately normal and homoskedastic distribution. The results showed that there were no significant differences in average non-use values by region of residence. The test statistic showed variation between regions of 0.05 and variation within regions of 28.07, yielding an F Statistic of 0.50 and a p-value of 0.6049.

Therefore, we failed to reject the null hypothesis of equality of mean non-use values across regions.

Looking at average valuations by income band reveals also no clear trend. Apart from the third income band, all groups had an average valuation of between 85 pence and 87 pence. This is, once again, a very narrow range and does not suggest those with higher incomes had a systematic tendency to suggest higher values.

Fig. 21: Average value for non-users by income level £ 0.88 0.87 0.87 0.86

0.86 0.86 0.85

0.85

0.85

0.84 0.83

0.83

0.82 0.81 0.80 < than £12,800

£12,801 £24,000

£24,001 £36,000

£36,001 £56,000

£56,001 - Over £75,000 £75,000

Source: Oxford Economics

Another Analysis of Variance (ANOVA) test was run to determine if there were statistically significant differences in average non-use values for RBG Kew by income band. The sample generally met the criteria needed to satisfy the assumptions for calculation of the statistic, which include independence across groups; independence of observations (random selection); and an approximately normal distribution. However, the Bartlett test for equal variances and the Levene test for homogeneity of variances both suggested that the distributions may be heteroskedastic (different variances by income bands) and so the standard ANOVA test was run alongside a similar test that is robust to heteroskedastic distributions. The results of both tests showed that there were no significant differences in average non-use values according to reported income bands. The standard ANOVA test statistic showed variation between income bands of 0.18 and variation within income bands of 27.94, yielding an F Statistic of 0.78 and a p-value of 0.5637. Therefore, we failed to reject the null hypothesis of equality of mean non-use values across income bands.

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Economic valuation of the Royal Botanic Gardens, Kew

APPENDIX 3: KEW SCIENCE RBG KEW SCIENCE DEPARTMENTS Collections Department RGB Kew’s collections are at the centre of their science research. The collections offer an opportunity to study vascular plant and fungal diversity on a global scale. To develop the collections, the department is focused on a number of areas, including ensuring representation of the global breadth of plant and fungal diversity, as well as enhancing what are deemed priority taxa — those relevant in the framework of the Science Strategy.

In addition, RBG Kew is further developing its best-practice in collection management through increasing the usability and availability of the collections. This is being achieved through large-scale digitisation and dissemination of detailed data, as well as integration of information from individual collections, both within RBG Kew, and from external resources. The main collections are described below.

Millennium Seed Bank RBG Kew’s MSB at Wakehurst is the largest ex situ plant conservation programme in the world. RBG Kew aims to collect 25 percent of the world’s wild plant species by 2020 (75,000 species). Whereas most seed banks hold seeds for agricultural purposes, the MSB focuses on wild plant species.

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At present, the MSB stores 13 percent of wild plant species. Seeds targeted for preservation in the MSB are species at risk of extinction (the number of which is estimated to range from 60,000 to 71 100,000) and also species deemed to be of most use in the future. The seeds that are stored in the seed bank serve as an insurance against the risk of those species going extinct in the wild.

However, as well as providing a passive insurance policy against irreversible changes to the ecosystem, the MSB supports current research. A recent survey of individuals sent seed samples from the seed bank between 2000 and 2014 found that over a third of users were from the UK. The vast majority of people who requested samples used them for research.

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Royal Botanical Gardens, Kew, "Millennium Seed Bank", in Royal Botanical Gardens, Kew <http://www.kew.org/science-conservation/collections/millennium-seed-bank> [accessed 30 October 2015] 71 Royal Botanical Gardens, Kew, "About the Millennium Seed Bank", in www.kew.org <http://www.kew.org/science-conservation/collections/millennium-seed-bank/about-millennium-seed-bank> [accessed 30 October 2015]

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Economic valuation of the Royal Botanic Gardens, Kew

Uses of MSB seed samples Share of respondents Applied research - Forestry

1%

Not used

2%

Species re-introduction

4%

Habitat restoration

4%

Applied research - Invasive species

5%

Other use, please specify below

8%

Added to own ex-situ seed collection

10%

Applied research - Agriculture

11%

Botanic Garden display Basic/pure research

13% 67% 0% 10% 20% 30% 40% 50% 60% 70% 80%

Source: RBG Kew

Herbarium The Herbarium at RBG Kew stores over seven million specimens, some 98 percent of all of the plant genera in the world. This collection holds the largest number of historical plant specimens from all regions of the world and dates back over 200 years (specimens are either pressed and dried or preserved in spirit for conservation).

Although not open to the public, the RBG Kew Herbarium attracted 460 researchers from 50 countries between April 2014 and March 2015. To make the Herbarium more accessible to botanists and others, RBG Kew are building an online catalogue, and this currently receives an average of 95,600 views per month.

Fungarium The RBG Kew Fungarium contains the largest collection of dried fungi in the world. Partnered with 72 Centre for Agriculture and Bioscience International (CABI) collection, the Fungarium contains approximately 1.25 million specimens of over 45,000 types, including specimens from over 240 countries across all continents. Amongst the important historical collection are specimens collected by Charles Darwin on the H.M.S. Beagle. The Fungarium collection, available as an online catalogue on the RBG Kew website, receives 33,900 views per annum.

DNA Bank In 2010 RBG Kewâ&#x20AC;&#x2122;s DNA Bank contained approximately 40,000 plant genomic DNA samples. The Plant DNA C-values database provides a further 1,400 plant species. The samples collected and stored within RBG Kewâ&#x20AC;&#x2122;s DNA Bank are stored at -80 degrees Celsius and can be ordered online for the commercial and scientific use of collaborators to facilitate taxonomic and evolutionary studies

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The transfer to RBG Kew of the CABI fungus collection was undertaken with financial support from DEFRA.

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Economic valuation of the Royal Botanic Gardens, Kew

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globally. The RBG Kew online DNA bank has a user base of 3,290, and this is likely to increase as the collection is expanded through the incorporation of DNA extracts from all plant species at RBG Kew. Other databases RBG Kew is also home to 20 other databases (some in partnership with other organisations), including the Medicinal Plant Names Service (MPNS), the International Plant Names Index (IPNI), Flora Zambesciaca online (eFloras), Neotropical Plant Image Database, and the World Checklist of Rubiasceae (plants from the coffee family). These collections supply scientists and researchers globally. Collectively, RBG Kew’s databases generated over 4,035,600 online sessions.

Identification and Naming Department Taxonomy forms a fundamental part of the research performed at RBG Kew and the Identification and Naming department is responsible for ensuring that taxonomy at RBG Kew is accurate. To achieve this, the department carries out fundamental taxonomic research, as well as developing innovative projects that address RBG Kew’s research questions and improves the value of the collections.

The current priority of the department is to enhance species discovery, and accelerate the rate at which new species discoveries are disseminated to the international scientific community. To help facilitate this, the department also focuses on driving e-taxonomy forward using new technologies for the discovery, description and identification of biodiversity.

The Identification and Naming Department helps increase the value of the collections through accurate naming and curation of species, as well as improving links between basic taxonomic knowledge and its applications, specifically in the areas of conservation and plant health.

Comparative Plant and Fungal Biology Department RBG Kew’s Comparative Plant and Fungal Biology Department uses RBG Kew’s substantive collection of both living and preserved specimens to research, and create predictive frameworks to explain how plant or fungal life interact with the environment. The research includes plant and fungal evolution, comparative seed biology, specialist systematics of selected vascular plants, and specialist systematics of selected groups of fungi. This extensive research provides a resource to various stakeholders including scientific institutions, governments, and food, timber and pharmaceutical industries, as well as aiding RBG Kew is achieving their strategic goals.

Conservation Science Department The Conservation Science Department conducts rigorous, evidence-based research and conservation activities. With various partners, the department provide evidence to enable the monitoring, conservation and evaluation of the world’s plants, fungi and protected areas. The four interlinked conservation research foci that the department focus on include islands (prioritising UK, UK Overseas Territories and Madagascar), seed conservation, conservation genetics, and conservation assessment and analysis. The research done by the department is crucial to many of RBG Kew’s strategic outputs, including Plants of the World Online Portal, State of the World’s Plants, and Tropical Important Plant Areas.

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Whilst complying with the Convention on Biological Diversity.

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Economic valuation of the Royal Botanic Gardens, Kew

Natural Capital and Plant Health Department RBG Kew’s Natural Capital and Plant Health Department seeks to address various overarching issues including the effects of climate change, ecosystem service provision, and resilience and resource security. To do so, the department uses collection-based science to identify and evaluate the roles of plants and fungi in the provision of services to mankind. The Natural Capital and Plant Health department primarily focuses on: Agro-biodiversity research, natural product chemistry approaches, research into the beneficial impacts on human livelihoods, and plant disease research. Research from this department feeds into RBG Kew’s outputs including the Useful Plants and Fungal Portal, and Science in the Gardens.

Biodiversity Informatics and Spatial Analysis Department The data included in RBG Kew’s Biodiversity Informatics and Spatial Analysis work represent a huge, often untapped resource, and provide evidence of changes in plant distribution and diversity over time and space. Over the next five years, the Biodiversity Informatics and Spatial Analysis Department at RBG Kew aims to tap into a vast amount of data held in their collections, and nomenclatural and taxonomic databases. Prioritising key departments (including the Plants of the World Online Portal), and key research such as the development of a plant and fungal names backbone, the aim is to link databases and improve access to the information held in RBG Kew’s collections and nomenclatural and taxonomic databases.

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Economic valuation of the Royal Botanic Gardens, Kew

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