D. Stuart Hale
University of Tennessee-Knoxville
Forestry, Wildlife, and Fisheries
Ecosystem services are “the benefits people
obtain from ecosystems” (MEA 2005).
Examples include:
Fiber
Recreation
Carbon Sequestration
Water Quality
Biodiversity
Human relationships with ecosystems
•
Plato (c.400 BC)
•
George Marsh
•
Progressive Era conservationists
First noted human impacts on the
environment
Man and Nature, in 1864, argued that natural
resources are finite
Pinchot and Leopold - Humans are part of ecosystems and must act
as proper stewards to ensure their health
•
Current Academy
Daily’s Nature’s Services (1997); Constanza et al. (1997); Salzman and
others-

Increasing awareness of humans’ dependence on nature and accounting
for the services provided

Ecosystem services markets are emerging
driven primarily by:
 consumer demand
• Voluntary markets
• Eco-labeling
 government regulation
• Mitigation markets (CWA and ESA)

New York City watershed protection in 1990s
 saved an estimated $4.5 billion

Millennium Ecosystem Assessment in 2005
 UN sanctioned approximately 1300 scientist worldwide to
analyze ecosystem health and human impacts and
consequences
Increasing demand for benefits of ecosystem
services due to:
•
•
•
•
Increasing degradation and
scarcity of ecosystem functions
Public policy and regulatory
shifts – ESA, CWA, CAA
Potential economic benefits to
landowners and communities
Dynamic land-use and
ownership patterns – TIMOs and
REITs (≈13% of private forestlands)
• Identify, map, and quantify areas as traditionally
•
•
•
•
managed for timber and recreation
Identify ecosystem services markets and capture
values as reflected through current prices
Identify, map, and quantify areas suitable for ecosystem
services management
Compare calculated values of ecosystem services
management scheme and to calculated traditional
management scheme
Anchor to actual landscape as a case study
•
•
•
•
Determine validity of ecosystem services management as
part of a comprehensive resource management strategy and
compare to traditional management
Provide a demonstrative example of an ecosystem services
management scheme
Estimate direct market present value of ecosystem services
Use open-source information as available
•Proposed Project Area is
approximately 3,976 acres
•Dumps Creek watershed in
southwest Virginia
•Mixed mesophytic forest ecoregion of predominately upland
hardwoods with some cove
hardwood forest types
•Current and past land uses
included timber, coal, and natural
gas extraction, human habitation,
and agriculture
Traditional management
scheme:
1. Fiber
2. Recreation leases
Ecosystem management
scheme:
1.
2.
3.
4.
5.
Fiber
Recreation leases
Watershed services
Carbon sequestration
Biodiversity

Identify traditional and ecosystem services
markets
Examples:
• Local fiber markets
• Local recreational hunt leasing
• Ecosystem Marketplace
• The Bay Bank
• The Nature Conservancy
• Mitigation banks/ ILF programs
• “Over the Counter” (OTC)
Find comparable prices from
reported transactions or estimates

Landscape features with potential to offer
marketable ecosystem services:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Areas suitable for fiber harvests
Culturally significant sites
Retention areas of recent timber harvest
Areas unlikely for timber harvest
Perennial streams
Critical habitat
Non-forest areas
Wetlands
High Conservation Value Forests
Critical viewsheds
Areas with public safety concerns
Traditional Management Scheme
Service
Fiber
Area (ac)
2,873
(80% BA
harvest)
410
(50% BA
harvest)
3,283
Recreation
3,883
NA*
Non-timber
693
693
TOTALS: 3,976
*The area of recreation is considered co-use,
in that it provides multiple services, and
therefore will only be counted once in total
area.
Traditional Management Scheme Service Prices
Service
Units
Price per unit
Sources
Assumptions
Fiber
MBF
•$100 – pessimistic
•$125 – most likely
•$150 – optimistic
•Local prices
•Timber MartSouth
2nd Quarter
2010
•3000 BF/ac
•Harvest 80% for
suitable areas
•Harvest 50% for
SMZ buffers
•Annual harvest rate
of total area/15-year
ownership period
Recreation
acre
•$2.00 – pessimistic
•$2.07 – most likely
•$3.00 – optimistic
•Local prices
•VA DOF
•All areas suitable
are leased annually
based on current
conditions
Ecosystem Services Management Scheme
Service
Area (ac)
Linear feet
Fiber
2,264
NA
(80% BA
harvest)
Recreation
3,883*
NA
Carbon
685
NA
Watershed
397
94,212
Services
(No harvest
SMZ Buffers)
Biodiversity
630
NA
(Non-timber)
TOTALS:
3,976
*The area of recreation is considered co-use, in
that it provides multiple services, and therefore
will only be counted once in total area.
Ecosystem Management Scheme Service Prices
Service
Unit
Price per unit
Sources
Assumptions
Fiber
MBF
•$100 – pessimistic
•$125 – most likely
•$150 – optimistic
•Local prices
•Timber MartSouth
2nd Quarter 2010
•3000 BF/ac
•Harvest 80% for suitable
areas
•Harvest 50% for SMZ
buffers
•Annual harvest rate of
total area/15-year
ownership period
Recreation
acre
•$2.00 – pessimistic
•$2.07 – most likely
•$3.00 – optimistic
•Local prices
•VA DOF
All areas suitable are
leased annually based on
current conditions
Carbon
ton
•$0.10 – pessimistic
•$1.00 – most likely
•$4.00 - optimistic
•Ecosystem
Marketplace
•Appalachian
Carbon
Partnership
•127 tons/ac
•Annual enrollment rate
of total area/15-year
ownership period
•Additional area from
fiber retention in Year 2
Ecosystem Management Scheme Prices (continued)
Service
Unit
Price per unit
Sources
Assumptions
Watershed
linear
feet
•$20 – pessimistic
•$25 – most likely
•$30 – optimistic
•Approximate ILF
average –
construction cost
•Approximately 10%
of ILF prices
•1% of total LFt sold
annually for 15-year
ownership period
•Act as mitigation
bank
•Demand provided
through mitigation
markets (CWA)
Biodiversity
acre
•$0.00 for all pricing
scenarios
•Transactions are
taking place but
prices are highly
variable and project
specific
•No local
transactions
•Act as conservation
bank
•Demand provided
by conservation
markets (ESA)
Valuate marketable services as available and
projected :
5
y=
Σ (a )(v )
i =1
i
i
Whereas,
y = economic benefits to landowner
i = landscape feature
a = units of marketable ecosystem services
v = value per unit of marketable ecosystem
services
Comparison of Management Schemes by Pricing Scenario
1600000.00
1400000.00
Dollars (US)
1200000.00
1000000.00
Ecosystem
Services
Management
800000.00
Traditional
Management
600000.00
400000.00
200000.00
0.00
Pessimistic
Most Likely
Optimistic
Traditional Management Scheme
Service
Pessimistic
Fiber
498,410.42
Recreation
40,304.21
TOTALS:
$538,714.63
Most likely
623,013.02
83,429.72
$706,442.74
Optimistic
747,615.63
120,912.64
$868,528.27
Pessimistic
Most Likely
Optimistic
Fiber
375,992.73
469,990.92
563,989.10
Recreation
Carbon
40,304.21
9,634.00
83,429.72
96,339.97
120,912.64
385,359.89
Watershed
195,577.67
244,472.09
293,366.50
Biodiversity
0.00
0.00
0.00
$621,508.61
$894,232.69
$1,363,628.13
Ecosystem Services Management Scheme
Service
TOTALS:
All prices include a 5% discount rate
Traditional Management Scheme
Ecosystem Services Management Scheme
Total Values ($)
Total Values ($)
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Total
(a l l pri ces wi th a 5% di s count ra te)
Pessimistic
49,429.52
47,075.74
44,834.04
42,699.08
40,665.79
38,729.33
36,885.07
35,128.64
33,455.85
31,862.71
30,345.44
28,900.42
27,524.21
26,213.53
24,965.27
538,714.63
Most likely
64,819.34
61,732.71
58,793.05
55,993.39
53,327.03
50,787.65
48,369.19
46,065.90
43,872.28
41,783.13
39,793.45
37,898.53
36,093.84
34,375.08
32,738.17
706,442.74
Optimistic
79,691.43
75,896.60
72,282.47
68,840.45
65,562.34
62,440.32
59,466.97
56,635.21
53,938.30
51,369.81
48,923.62
46,593.93
44,375.17
42,262.07
40,249.59
868,528.27
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Total
(a l l pri ces wi th a 5% di s count ra te)
Pessimistic
56,694.63
54,342.62
51,754.88
49,290.36
46,943.20
44,707.81
42,578.86
40,551.30
38,620.28
36,781.22
35,029.74
33,361.65
31,773.00
30,260.00
28,819.05
621,508.61
Most likely
78,733.79
78,461.84
74,725.57
71,167.21
67,778.29
64,550.75
61,476.91
58,549.44
55,761.37
53,106.06
50,577.20
48,168.77
45,875.02
43,690.49
41,609.99
894,232.69
Optimistic
111,854.54
120,437.27
114,702.16
109,240.16
104,038.24
99,084.04
94,365.75
89,872.15
85,592.52
81,516.69
77,634.94
73,938.04
70,417.18
67,063.98
63,870.46
1,363,628.13
Traditional Management Scheme
- Combined Pessimistic Prices
Ecosystem Management Scheme
- Combined Pessimistic Prices
700,000
600,000
600,000
500,000
500,000
Biodiversity
Recreation
Fiber
300,000
200,000
Dollars (US)
Dollars (US)
400,000
Watershed
Services
Carbon
400,000
300,000
Recreation
Fiber
200,000
100,000
100,000
0
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
Traditional Management Scheme
- Combined Most Likely Prices
Ecosystem Management Scheme
- Combined Most Likely Values
1,000,000
800,000
900,000
700,000
800,000
600,000
Recreation
500,000
Fiber
400,000
300,000
Dollars (US)
Dollars (US)
700,000
Biodiversity
600,000
500,000
Watershed
Services
400,000
Carbon
300,000
Recreation
200,000
200,000
Fiber
100,000
100,000
0
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
Traditional Management Scheme
- Combined Optimistic Prices
Ecosystem Management Scheme
- Combined Optimistic Prices
1,000,000
1,600,000
900,000
1,400,000
800,000
1,200,000
700,000
Biodiversity
600,000
Fiber
500,000
400,000
1,000,000
Dollars (US)
Dollars (US)
Recreation
Watershed
Services
Carbon
800,000
Recreation
600,000
Fiber
300,000
400,000
200,000
200,000
100,000
0
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Problems
• Market approach may not be best for
insuring long-term ecosystem health
• Highly variable costs and pricing
• Negative impacts from perpetual deed
restrictions
 Future selling price
 Restricting future management options
 Positives
• Additional revenues and making acres productive
•
•
•
•
that may not have been otherwise
Additional management actions could be
incorporated into current practices
Provide opportunity for management of other
desirable species without market values
Could provide for significant gains if applied to a
larger portfolio
Promote awareness and education of human impacts
and dependence on ecosystem health
•
•
•
•
•
Ecosystem markets are emerging but immature
Ecosystem services management and marketing
may offer additional revenues to landowners now
and in the future
Greater recognition of ecosystem service values
could influence management policies
Humans and ecosystem health are dependent
upon the services originating on private lands
Improved ecosystem management could result in
improved human and ecosystem health
•
•
•
The University of Tennessee-Knoxville
• Department of Forestry, Wildlife, and Fisheries
• Dr. Don Hodges, Dr. Dave Ostermeier, Dr. Chris Clark
Craig Kaderavek, The Forestland Group
Bobby Campbell, The Forest Management Company