Climate Change in Cities – Nature’s Solutions: An
Economic Case for Municipal Green Infrastructure
Gregg Oelofse
Environmental Resource Management Department
City of Cape Town
Background –
The role of nature must be considered in a broad context at city
level, including:
An urban development context where population growth means:
Service provision
Economic growth
Poverty alleviation
Social development
Must and will remain urban priorities
Where massive disparities in wealth and living standards remain
and need to be addressed
Conservation and Protection of Nature in this
context faces challenges due to:
A history of protectionist activism
Primary focus has been the protection of species and
landscapes
Centred on nature conservation value system
As a result:
Remains trapped in a people vs. environment dialogue
Nature remains somewhat on the periphery of
priorities
Looking to the future in a changed climate
• In a changing climate the importance of healthy functioning ecosystems shifts
dramatically from a conservation argument to a critical green municipal
infrastructure perspective
• Healthy ecosystems have been globally recognised as critical in any resilience
and adaptation planning:
• Most effective in buffering climate shocks and extreme weather events
• Central to retaining critical resources such as water and food production
• Least to no risk of maladaptation
An Economic Case for Nature’s Solutions:
What is Municipal Green Infrastructure?
Provisioning services that relate to the products derived from ecosystems,
including food production, water and other resources;
Regulating services that involve the benefits derived from the regulation of
ecosystem processes, such as air quality, climate regulation, water regulation,
erosion regulation, pollution regulation and natural hazard regulation;
Supporting services are those necessary for the production of all other
ecosystem services, such as soil formation, photosynthesis, primary production,
nutrient cycling and water cycling.
A Resource Economics Assessment by the City of
Cape Town in 2009 showed that:
We significantly underestimate and under value these “free” ecosystem services
Ecosystem services were calculated to determine:
A total of R2 - R6 billion annual benefit (considered a conservative estimate)
Net present value of natural assets is estimated at R43 – R82 billion
Combined annual value of recreational natural spaces alone is R407 to R494 million
Cost to the City currently of retaining these services is:
R371 million or 2,5% of Operating Budget
R110 million or 2,1% of Capital Budget
In the 2008/2009 financial year it was calculated that expenditure by the municipality on the
environment (ecosystem services) leveraged between 1.2 and 2 times that of any other expenditure
Using the Unit Reference Value (URV), a common metric to evaluate water augmentation schemes,
the cost to produce R1 of benefit from the natural capital stock is only 16c compared to between R2
and R5 in the water sector
Highly valuable ecosystem services –
What is the added economic value regarding
climate change?
Loss of ecosystem service (value)
Loss of adaptive and buffering capacity
Infrastructure and property risk
Replacement costs
Effectiveness and risk of replacement cost
On-going management costs of replaced services
Loss of associated “free” financial values
High risk of maladaptation
Example: Coastal Ecosystems - sea level rise and storm surge
1 km
10m
Neptune’s Isle
In these examples we have devalued /
‘lost money’…
The ecosystem service
Tourism value
Recreational value
Heritage value
Resource management (sand, vegetation)
Loss of adaptive and buffering capacity
Increasingly vulnerable to sea level rise and storm surges
Significantly reduced recovery rate/value
Resulting in infrastructure and property at risk
In all cases, adjacent property and infrastructure (houses, storm-water, roads, electricity substations, sewerage systems and amenities) will need protection measures
Added cost burden of replacing “free” ecosystem
services:
Ecosystem replacement costs
Sea defences and sea walls excessively expensive
Ultimately the general ratepayer will have to cover the cost
Effectiveness and risk of replacement measure (maladaptation)
A UK study found that sea-walls had only a 34% chance of improving the situation with regards to sealevel rise, but a simultaneous 18% of unwittingly exacerbating the problem
Another study showed that one acre of hard surface produced 18 times the rainfall run-off of one acre of
meadow
On-going management costs of replaced service
All hard infrastructure (in this case sea walls) require annual maintenance
All hard infrastructure has a lifespan and ultimately has to be replaced
Loss of associated indirect values
In the case of vegetated areas, carbon sequestration value lost
Species conservation and global biodiversity targets threatened
What if we plan and grow our urban cities where
ecosystem services are protected and managed as
core municipal infrastructure?
In Summary
Retention of Municipal Green
Infrastructure
Economic value to economy retained
No initial capital investment required
Low maintenance costs
Most effective adaptive strategy
Reduction of future risk
Reduced maladaptation risk/exacerbation of
problem
Retention of a range of indirect benefits
Retention of future opportunity/choices
Dramatically reduced cost to general ratepayer
ECONOMIC VALUE CHAIN RETAINED,
REDUCED RISK, MUTIPLE INDIRECT
BENEFITS
Loss of Municipal Green
Infrastructure
vs.
Loss of income to the economy
Significant capital and operating costs of
“replacement” service
High risk of maladaptation or exacerbation of
problem
On-going high costs of maintenance and
repair
Full replacement cost in the future
Loss of indirect and associated benefits
Loss of future opportunity/choices
LOSS OF ECONOMIC VALUE CHAIN, HIGH
REPLACEMENT COST, ONGOING
MAINTENANCE COST, EVENTUAL
REPLACEMENT COST, LOSS OF MULTIPLE
BENEFITS
What we need:
Methodology to define “core municipal green infrastructure”
Map and identify
Develop policy and regulations to protect and manage municipal green infrastructure
Support and underpin other priority initiatives such as Biodiversity Network
Ecosystem based adaptation makes economic sense
Thank You