Table 3.2 : Numerical and structural assumption used to calculate the value of natural capital19 Variable
Unit
Value
Reference
Natural stocks Carbon price
Biodiversity value
US$/tonne of CO2
US$/ha
We analyze two scenarios, one with a low (US$2) carbon price and another with a price of US$15/tonne of CO2. This is to illustrate the potential impact of carbon prices on the value of natural capital in Borneo. References include Venter et al. (2011) and McKinsey (2010).
2 (and 15)
27
Forestland value (including primary and secondary forest, US$/ha swamp forest, and mangrove forest)
US$900 over the past ten years, projected to double up to 2030 in the BAU case; three times higher by 2030 in the GE case
Agricultural and plantation soil value
US$13.5 on average between 2011 and 2030; rising trend over time
US$/ha
Key limitations of the analysis
complex system being studied here, more systematic field research and data collection are required. HoB governments and international partners are hereby encouraged to
Models used in the assessment are simplifications of reality
coordinate and support these kinds of efforts.
and there is uncertainty surrounding certain outputs. InVEST, for instance, is suited to identifying areas of
The range of values found in the literature is as low as US$4.6 hectares per year (Pearce and Pearce 2001) to US$9,177 per hectare for pharmaceutically rich areas in Ecuador (Rauseer and Small 1998).
Another important limitation of the analysis relates to
relatively high and low ecosystem service provision,
the challenges of correctly representing and valuing an
assessing tradeoffs, and exploring how levels of services
ecosystem. An economic valuation of parts of the ecosystem
and biodiversity may increase or decrease under alternative
is presented here, along with an attempt to merge
future scenarios. InVEST is able to provide coarse
these parts within an integrated framework of analysis.
Estimated based on the weighted average potential profit from land use, including timber, palm oil or crop production. Palm oil and crop yield use local estimates, timber production uses global averages.
assessments of ecosystem services with relatively little data
However, the complexities of natural capital—as well as
that can include readily available global or regional datasets,
the complexity of its interactions with socio-economic
or look-up values from peer-reviewed and gray literature,
development processes—add uncertainty to the exercise.
but it offers low-precision estimates of ecosystem service
Specific issues arising include the risk of double counting
provision21. InVEST produces a range of map outputs that
economic values and the challenge of fully incorporating
can spatially reveal the most important sources of ecosystem
the multiple roles of ecosystem services. On the other hand,
service provision; however, not all of the maps produced
even when running simplistic scenarios, insights emerge
from InVEST could be presented in this report. Selected
that an alternative economy is feasible.
Estimated based on the projected differential in primary sector value added per ha (including agriculture, palm oil and forestry) caused by soil quality in the BAU vs. GE scenarios.
outputs from InVEST provided some of the biophysical variables used in the system dynamics model.
Ecosystem services
Precipitation and flood events
Road and river transport
Agriculture production
Calibrated using historical data on precipitation and flood events. The key drivers of precipitation and flood/drought events are: a long-term precipitation trend including seasonal variations, an approximately 5-year random event for a large flood, and deforestation, influencing the frequency of floods. Calibrated using precipitation and flood events historical data and communication with BHP Billiton on river use for productive operations. The main endogenous drivers affecting river use include: floods, also driving siltation, droughts, and water levels above and below levels of operations (driven by precipitation and siltation). Calibrated using historical data, agriculture production is affected negatively by precipitation and water levels above and below optimal thresholds: high rainfall may lead to floods, which wash away topsoil, while droughts reduce seasonal yields. Ecosystem goods
NTFP
Tourism
US$/ha/Year
US$/ha/Year
Finally, given that this report compares two simplified scenarios, the analysis may not include all the likely land
Concerning the geographical coverage of the analysis,
use changes in the area. Some of the omitted land uses
most of the work has been undertaken at the scale of four
could potentially have significant impacts on ecosystems
provinces in Kalimantan, with some of the elements being
and biodiversity. Both scenarios make use of current land
examined at smaller scales, e.g., catchment-level. Due
use plans and permits and make simplified assumptions
to limited data availability and time constraints, Sabah,
about land use management and enforcement. Neither
Sarawak and Brunei could not be included in the spatial
scenario accounts for variations in the external drivers
and economic assessments. However, due to the relative
of land use change, such as variables influencing climate
homogeneity of HoB ecosystems and economic activity,
change, economic drivers relating to international prices,
the data used can in large part be assumed to represent the
behavioural responses; neither have the importance of
situation in all three countries.
urban clusters been taken into account.
Regarding the economic valuation of natural capital,
32
Van Beukering et al. 2009. Other estimates of the value of NFTP in Southeast Asia range from 8 to 55 US$ per hectare (Caldecott 1988; Mai et al. 1999).
27
The value of tourism is calculated by using the references on biodiversity, so that the total value of tourism and NTFP production adds up to US$60/ha per year, in line with the literature.
alternative methods exist and, time and resources permitting, it would be interesting to see how these compare with the methods used, or how the various methods can complement each other. With the methods chosen, a representative selection of nature’s goods and services has been valued for which data are available. Other financially measurable goods and services exist but in the short time
Other relevant assumptions
frame of this assessment, not all have been assessed. These include for example the cost of haze pollution, an
82
Ecological agriculture cost
US$/ha
100
CO2 Carbon Storage (forest)
tonnes of CO2/ha
860
Palm Oil palm oil FFB yield
tonne/ha
Palm Oil Average CPO extraction rate Palm Oil Average KPO extraction rate
Baker et al. (2007), UNEP (2011). We assume a cost difference between organic and chemical fertilizers of US$680/ton or close to US$100/ha. Koh et al. (2011)
in-depth analysis of the ability of forest ecosystems to
McKinsey (2010) McKinsey (2010)
as the cultural values of forests. Therefore, more research
Per cent
22 (forested area) 20 (degraded area) 23 per cent
Per cent
5 per cent
McKinsey (2010)
Heart of Borneo: Investing in Nature for a Green Economy
reduce vulnerability to climate variability, the contribution of biodiversity to the quality of ecosystem services, as well should be done to expand the analysis presented here. This report is an initial step, but in order to analyze more fully the
Part III: Envisioning and Modeling the Green Economy
83