Hugo van Zyl
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Illustrating the methodology using
case studies
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Methodology re-cap and illustrative case studies
chosen
1.
2.
3.
4.
5.
6.
Estimate relative importance of natural assets for EGS
Estimate importance of EGS to beneficiaries/users
Establish links between EGSs and development objectives
Select EGS with ability to influence through management
Assess ability of ecosystems to yield a sustainable flow of
EGS and prioritise according to risk
Apply valuation techniques to selected EGS
Case studies
Site specific: Zandvlei based on previous study for CCT (Turpie et
al., 2001)
Area-wide / sectoral: Tourism
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1. Estimate relative importance of natural assets
for EGS
The primary natural assets that provides the bulk of
EGS at Zandvlei is the wetland area
However, the site also contains the following elements
that provide important EGS:
Municipal park with lawns, sport facilities, braai area
Non-aquatic natural vegetation areas
Coastal area where the vlei enters the sea at Muizenberg
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2. Estimate importance of EGS to beneficiaries/users
Use EGS matrix as guide to identify important EGS in the area (ideally involves
a field trip for ground truthing)
Focus for Zandvlei is regulating and cultural services as provisioning (e.g .
harvesting) not a prominent use
Water regulation
Natural hazard regulation (floods, etc.)
Regulating
Water purification and waste treatment, assimilation
Space for biota to live and reproduce (refugia)
Recreation and tourism
Provision of inspirational beauty
Aesthetic values and sense of place
Cultural (information) Educational uses (e.g. school excursions, scientific research)
Use in cultural and artistic practices and ceremonies
Use in religious practices and ceremonies
Use in productions (film & events), advertising and publications
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3. Establish links between EGSs and development
objectives (IDP, etc.)
According the City’s 5-year IDP, the following seven strategic focus areas
have been identified:
1.
Shared economic growth and development
2.
Sustainable urban infrastructure and services
3.
Energy efficiency for a sustainable future
4.
Public transport systems
5.
Integrated human settlements
6.
Safety and security
7.
Health, social and human capital development
8.
Good governance and regulatory reform
Focus areas are very broad and provide little clear guidance.
Con – hard to make targeted arguments, Pro – easier to argue for just about anything
Nevertheless, links are clearest to areas 2 and 7, less so for areas 1, 3 and 4
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4. Select EGS that City has ability to influence
through management
Revisit EGS and establish level of influence that City does
or could have over the value of the EGS
This is done to focus on EGS that are ‘controlable’ or at
least more easily influenced by City actions
Zandvlei is already a relatively intensively managed area
Lawned areas, park, sporting and braai areas are
particularly actively managed
Stands to reason that City has relatively high ability to
influence state and value of the area
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5. Assess ability of ecosystems to yield a sustainable flow
of EGS and prioritise according to risk
With continued adequate management, park, braai,
sporting area should yield sustainable flow of EGS
Assistance in management should be forthcoming
from boat club and residents with an interest in
keeping the area maintained
Water quality is probably area where City could
experience most difficulty with regard to management
– not as easy to control by comparison to other EGS
flows
Security risk is not currently particularly high relative
to other areas, but remains a risk
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6. Choose appropriate valuation techniques and apply
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Linking key EGS to valuation techniques
Ecosystem Services
Water regulation
Natural hazard regulation (floods, etc.)
Water purification and waste treatment, assimilation
Space for biota to live and reproduce (refugia)
Valuation techniques
Replacement cost,
preventative costs,
costs of disaster or
system failure
Recreation and tourism
Provision of inspirational beauty
Aesthetic values and sense of place
Travel cost, property
Educational uses (e.g. school excursions, scientific
price / hedonics,
research)
contigent valuation and
Use in cultural and artisitc practices and ceremonies
choice experiments
Use in religious practices and ceremonies
Use in productions (film & events), advertising and
publications
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Property value / hedonic approach
Property price = function of (property variables, neighbourhood
variables, accessibility variables, environmental quality variables)
Case study differed from the norm in using both estate agent
interviews, and the more conventional statistical technique
Focused on the estimation of the effects of the open space on
properties in close proximity to the space
Homogeneity of areas allowed for the use of less variables.
(broader approach often requires aggregation across suburbs and
areas within suburbs increasing the risk of misinterpreting local
realities)
Limited as it does not allow for the capture of the full inf luence of
open spaces on property prices at a larger scale such as at suburb
level
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Application
Commenced by asking agents for their opinion of
premium/discount created by the vlei for each row of
houses as one moves away from it
Sourced detailed property sales data for last four years from
Cape Property Services. Data included house prices and
characteristics
Measured distance to open space using municipal maps
Ran regressions using house characteristics and proximity
to open space
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Zandvlei results: estate agent interviews
Table 1: Property price premiums associated with proximity to Zandvlei generated using estate agent
interviews
Lakeside
Muizenberg
Marina Da Gama
Total area
Number of houses
124
282
923
1329
affected
Total premium
R1.05 million
R3.32 million
R87.45million
R91.8 million
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Zandvlei results: statistical analysis
Proximity to open space was rejected as a candidate
independent variable for Muizenberg and Lakeside - not
entirely unexpected given small number of observations (14
and 16)
A step-wise regression was then performed on the Marina
Da Gama data (n = 80)
A dummy to indicate whether a house had water frontage
was use in favour of distance in meters from the water better results and conformed better to the views expressed
by estate agents.
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R= .82511486, R²= .68081453, Adjusted R²= .66401529
F(4,76)=40.527, p<.00000, Std. Error of estimate: 1474E2
Estimated Standard error T-ratio
Variable
coefficient of coefficient
(76 DF)
Water frontage dummy (1 = 131578.4
35577.3
3.698
on waterfront, 0 = not)
House size in m2
1453.7
261.4
5.562
Stand size in m2
199.2
108.34
1.839
Number of garages
58104.3
31292.3
1.857
P-level
.000408
.000000
.069879
.067212
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Discussion of property value results
The results of the statistical analysis compare well with those of the estate
agent interviews for Marina Da Gama (R77 million using statistical analysis vs.
R87 million using estate agent interviews).
Despite insufficient data for statistical analysis in Muizenberg and Lakeside,
there is no reason to doubt the views of estate agents that a relationship does
indeed exist.
Main strength of hedonics is that it derives values from actual market
transactions and known trends. However, data can prove inadequate:
Lack of properly kept sales records
Inadequate number of candidate houses
Scarce sales data for areas where the property market is not well-developed or
stagnant
Estate agent interviews provide a relatively quick and inexpensive way of
estimating property price effects without having to comply with the often
stringent data requirements of statistical analysis.
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Replacement cost technique
Wetlands are widely recognised as particularly important
providers of EGS per area – tend to punch above their size
Several of these services may save cities significant amounts in terms of
the infrastructural costs that they would have had to incur had the
natural systems not been present.
In the 2001 Open Space Values study three replacement costs
techniques were used for determining the equivalent functional
value for selected wetlands were used:
Estimation of the cost of constructing an artificial wetland,
Estimation of the cost of providing the same level of water quality
enhancement using a treatment plant;
Estimation of the cost of providing for the identified flood storage
capacity only, i.e. the construction of a detention pond providing flood
storage;
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Replacement cost results
Descriptive value based on ecological,
functional and social assessment
Estimated monetary value per indicated
alternative. Values in million R (2000
value)
Ecological
value
Functional
value
Social
value
Constructe
d wetland
Treatment
Plant
Flood
storage
Rondevlei
High
High
High
18
36
13
Zandvlei
High
High
High
-
180
24
Moderate/
High
High
High
102.4
165
38
Metro Area and
Name
Zeekoevlei
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Travel cost technique
Focuses on recreational use value
Observed behaviour is used to derive a demand curve
and to estimate a value (including consumer surplus)
for an unpriced environmental good by treating travel
costs as a surrogate for value.
Less prone to bias than stated preference methods
because it estimates the value of an amenity on the
basis of the actual behaviour of users.
More commonly used to estimate the value of a site
where there is no on-site expenditure due to absence
of an entry fee, as is the case for Zandvlei.
6000
5000
4000
V isitor days
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Recreational use patterns at Zandvlei
3000
2000
1000
0
Sailing
Fishing
Picnicking
Walking
(w ith/out
dog)
Canoeing
BirdBirdKite flying
w atching w atching
in reserve around vlei
Cycling
Sw imming
Existence,
conservation
100
60
40
40
40
20
20
20
0
0
0
Very
valuable
60
Quite
valuable
60
Not
valuable
80
Very
valuable
80
Quite
valuable
80
Bequest value
Very
valuable
100
Quite
valuable
Open space, view s,
aesthetics
Not
valuable
100
Not
valuable
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Relative importance of value categories
at Zandvlei
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Relative value of different parts of the
Zandvlei area
50
40
30
20
10
0
Nature
res erve
Park areas
Water
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Populations, number of visitors and average travel costs
from the six zones used in the Travel Cost analysis
Zone Distance by road
(km)
1
2
3
4
5
6
Totals
Zonal population
<1
1-6
6-11
11-16
16-21
>21
18 611
90 070
178 952
99 326
419 407
1 769 397
2 575 763
Sample’s Estimated total number Average Travel
Visitors per
of visits originating
Cost
zone
from each zone per (Rands per visit)
year
54
42 857
0.7
23
18 254
6.1
22
17 460
11.6
9
7 143
18.7
16
12 698
24.0
2
1 587
34.8
126
100 000
Using this survey data a value of R700,000/year was estimated
for Zandvlei in 2001
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Contingent valuation method
Visitors were asked if they would pay a fee (entry or
annual) to make use of Zandvlei, on the understanding
that they would be able to influence how this money was
spent.
Most (85%) respondents were willing to pay an entrance
fee. Of those that were not willing, some voiced concern
that this might be a council proposal (i.e. not so
hypothetical!).
The overall average willingness to pay was R6.40 per entry
Using a rough estimate of a total of 100 000 visits, this
suggests an overall willingness to pay, or recreational use
value, of about R640 000 per year.
60
Average%allocation
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Allocation of entrance fee to different
management functions
50
40
30
20
10
0
Conserve
nature
areas
Water
quality
Litter
Crime
prevention
Safety
60
High risk
medium risk
low risk
Water quality
60
50
Good
Ok
bad
50
% of responses
% of responses
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Crime and water quality perceptions at Zandvlei
and Zeekoevlei
40
30
20
10
40
30
20
10
0
Zandvlei
reserve area
Zandvlei
park
Zeekoevlei
Park
0
Zandvlei
Zeekoevlei
14
If 100% safe
% change (days /year)
14
% change (days /year)
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Change in visitation rate with improved
safety and water quality
12
10
8
6
4
2
0
If w ater quality excellent
12
10
8
6
4
2
0
Nature area
Park
Watersports
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Overall results discussion
Significant benefits for wide variety of users
Property value, travel cost and contingent valuation techniques had
areas of overlap
Links between management, water quality and security were relatively
apparent
Valuation
technique
Present value in
2000
Annual value
Property value
technique
R84 million
+/- R6 million
Travel cost
R10 million
R700,000
Contingent
valuation
R9 million
R640,000
Replacement cost
R24 million – R180 R2 million – R15
million
million
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Area-wide case study: Natural areas and
tourism
From a wider policy perspective, it is relatively clear that the tourism sector
is a cornerstone of economic development in the City and that natural
areas play a key role.
Growth of eco-tourism shows that nature based activities are an
increasingly prominent part of global tourism and that accessible and
attractive natural areas are increasing in scarcity
Focus of valuation would thus be on contribution of natural areas to the
entire tourism sector.
Key information required:
What is the relative importance of natural areas within the Cape Town
tourist package?
What proportion of tourist spending can be attributed to natural areas?
How can City management affect this number – i.e. what are the
management scenarios from total neglect will result in a loss of X to
ideal management will result in a gain of Y ?
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Likely approaches and challenges
•
•
•
•
Determining a defensible estimate of the relative role natural areas play within
tourism requires a survey and can probably draw on existing tourist attitudinal
surveys, visitor number counts at key sites
Unfortunately difficult to trace impact of past management improvements on
greater tourism – this kind of information would allow one to argue that
money committed to management in the past has resulted in benefits
allowing for more confidence with respect to further investment
Need to be aware of major role of relatively few sites in attracting tourists (i.e.
TMNP, Kirstenbosch will be dominant in value of natural areas in the City)
Predictions with regard to the impact of management scenarios will rely on:
professional judgement
evidence from elsewhere to a large degree
(a carefully worded survey may help, but the question is relatively complex
and not clear people will be in a position to provide properly thought
through responses)
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Thank you for your attention