The Social Dimension of Biodiversity Policy The Social Dimension of Biodiversity Policy: Final Report (201 I) The Social Dimension of Biodiversity Policy FINAL REPORT by Fondazione Eni Enrico Mattei (FEEM) FEEM Together with GHK, Ecologic Institute and Institute for European Environmental Policy (IEEP) H K ►eco * x*23). Institute«,, Am European WW Environmental * Policy This report is prepared by Paulo A.L.D. Nunes, Helen Ding, Andrea Ghermand (FEEM); Matt Rayment, Adarsh Varma, Mavourneen Pieterse (GHK); Timo Kaphengst, Manuel Lago, McKenna Davis, Benjiamin Boteler, Sandra Naumann (Ecologic); Patrick ten Brink, Andrew J. McConville, Eden Cottee-Jones (IEEP); with administrative support of Frans Oosterbuis (IVM). Disclaimer: The views expressed in this report are purely those of the authors and may not necessarily reflect the views or policies of the European Commission. Acknowledgements: We would like to express our gratitude to DG environment in the European Commission for its fiancial support. The research team is also grateful for stimulating guidance and critical comments of Aude Neuville (Nature and Biodiversity Unit; B2), Alexandra Vakrou (Sustainable Development and Economic Analysis Unit; Gl) and Stephen White (Sustainable Development and Economic Analysis Unit; Gl) of DG Environment. Citation: Nunes, P.A.L.D., Ding, H., Boteler, B., ten Brink, P., Cottee-Jones, E., Davis, M., Ghermandi, A., Kaphengst, T., Lago, M., McConville, A. J., Naumann S., Pieterse, M., Rayment, M., and A. Varma (2011) "The Social Dimension of Biodiversity Policy: Final Report" for the European Commission, DG Environment under contract: ENV.G.l/FRA/2006/0073 - 2nd, pages vii-205, Venice/Brussels, February 2011 The Social Dimension of Biodiversity Policy: Final Report (201 I) EXECUTIVE SUMMARY There has long been a recognised link between biodiversity and human well-being. Biodiversity and its related ecosystems provide vital services such as the provision of clean water, nutrient circulation and protection from natural disasters. It also creates opportunities for employment, either directly (e.g. through fisheries) or indirectly (e.g. the support of the tourism industry). A growing understanding of the benefits provided by nature is generating increased political interest, and provides an opportunity to garner more support for biodiversity conservation by finding common goals with other policy agendas. This report sets out to investigate the social aspects of biodiversity conservation, in particular the links between biodiversity and employment, and the value of biodiversity for vulnerable rural people. The study maps the linkages between biodiversity, ecosystem services and employment and uses vulnerability-related indicators coupled with spatial mapping of biodiversity and ecosystem values for the EU to determine whether the poor and vulnerable rural communities are more strongly dependent on the provision of ecosystem services. A number of global case studies highlight a range of issues experienced by the rural poor in developing nations dependent on ecosystem services. Links between biodiversity and employment The relationships between biodiversity, ecosystem services and employment are significant and closely intertwined. Jobs are linked to biodiversity directly through management and conservation of protected areas, and through the direct provisioning services of ecosystems (supporting primary industries such as fisheries, forestry and agriculture) and indirectly through the provision of valuable ecosystem services such as nutrient cycling and water provision. The numbers of jobs provided directly and indirectly by biodiversity and ecosystem services is significant, both in the EU and in developing countries. A considerably larger proportion of jobs in developing countries (927 million, or 35% of jobs) are highly dependent on ecosystem services than in the EU. (14.6 million or 7%) (see Executive Summary Table 1). As it is the primary industries which are most highly dependent on biodiversity and related ecosystem services, changes in biodiversity and the consequent effects on ecosystem services (and hence employment) will be felt significantly more in developing economies than in the EU. As a consequence, it is expected that EU employment will be less exposed to the impacts of changes in biodiversity. Those economies whose populations are largely composed of fishermen, subsistence farmers, and rural societies that face ecological degradation will be most at risk, although some communities in the EU will be faced with similar challenges (e.g. remote mountainous communities). In the EU, a relatively large number of service sector jobs are linked to biodiversity and ecosystem services, although these linkages are relatively weaker and opportunities for substitution greater, making them less vulnerable to ecosystem degradation. i Executive Summary Table 1: Quantifying Employment in EU and Globally According to Ecosystem Service Linkages Type Sector EU Developing economies Employment (thousands) % of total Employment (thousands) % of total 1. Primary Industries highly dependent on ecosystem services Agriculture 11,223 4.9% 895,218 34.4% Forestry 2,988 1.3% Fishing 400 0.2% 31,811 1.2% Water Supply 373 0.2% 21,049 0.8% 2. Processing and Manufacturing industries dependent on ecosystem services for inputs and processes Energy Supply 1,233 0.5% Mining 859 0.4% 31,696 1.2% Food, drink, and tobacco 5,635 2.4% 733,844 28.2% Textiles, clothing and leather 3,020 1.3% Wood and paper 4,252 1.8% Pharmaceutical s 548 0.2% Other manufacturing industries 24,204 10.5% 3. Services activities dependent on cultural services Hotels and catering 10,598 4.6% 60,800 2.3% Media and creative industries 3,139 1.4% Education 15,368 6.7% 132,923 5.1% 4. Services activities dependent on provision of raw materials and fuel Construction 16,770 7.3% 140,171 5.4% Transport 26,154 11.3% 145,164 5.6% 5. Other activities Other 103,985 45.1% 412,268 15.8% Total 230,747 100.0% 2,604,943 100.0% [Source: adapted from Laborsta: http://laborsta.ilo.org; OECD and Eurostat The report also examines the qualitative aspects of the relationship between biodiversity and employment, which are found to differ between the EU and developing world. In the EU, employment related to biodiversity often provides new and skilled employment opportunities for a population increasingly disconnected from the land. In developing economies, however, much of the employment linked to biodiversity is in poor quality, low paid subsistence jobs in the primary industries. Nevertheless, more sustainable farming and forestry practices offer potential both to maintain biodiversity and to enhance employment by supporting safer, more lasting jobs linked to local livelihoods rather than centralised systems of production. Nature conservation and ecotourism also offer opportunities for skilled, knowledge-based and sometimes relatively well paid employment, often helping to diversify local economies and the employment opportunities they provide. The connection between biodiversity, ecosystem services and jobs There is a lack of knowledge about the point (thresholds) at which changes in biodiversity will impact ecosystem services to such a degree that economic activity and jobs can no longer be sustained. The vulnerability of ecosystem services to changes in biodiversity varies considerably depending on the spatial scale, the type of ecosystem service, and the aspect of biodiversity being considered. For certain ecosystems, such as coral reefs, mangroves, or tropical forests, small changes in biodiversity The Social Dimension of Biodiversity Policy: Final Report (201 I) can lead to dramatic and sometimes irreversible changes in ecosystem services. The degree of vulnerability of industries to biodiversity and ecosystem loss depends on the type of service relied upon and its substitutability (i.e. the degree to which a service can be replaced or reproduced technologically). A greater degree of substitutability can be expected from provisioning services while supporting services (e.g. nutrient cycling) are considerably more difficult to substitute by technologically generated alternatives. There is also evidence that the sectors most dependent on biodiversity and related ecosystem services are also those that are causing the most damage to the very services and inputs that they are reliant upon (e.g. agriculture places pressure on water quality and quantity; commercial fishing in marine ecosystems exploits fish stocks and changes habitat structures). In most cases, such damages are caused by unsustainable resource management and the conversion of natural systems, which may create immediate wealth and short-term employment, but often result in degraded ecosystems, declining provision of ecosystem services and decreases in employment in the long run. Trade-offs between biodiversity conservation and employment The conservation of biodiversity, however, does not necessarily always lead to societal benefits. Substantial benefits have been gained from many of the actions that have caused the homogenisation or loss of biodiversity, such as land conversion for food production. The protection of biodiversity also has associated costs such as the management and running of protected areas, the loss of productive agricultural and grazing land, and displacement of populations. In the absence of compensation, protected areas often have a net cost at the local level which may be especially high in developing countries and in the case of the rural poor. In addition, employment opportunities arising from the conservation of biodiversity often go to the most affluent in society, increasing social inequalities. In particular, this is true where there has been inadequate consideration of local communities' involvement. Nonetheless, it is equally important to acknowledge that the global benefits of protected areas are hugely significant, and in many cases, sufficient to justify their continued presence. In these cases, innovative (global) mechanisms which compensate communities for the costs incurred locally in return for global benefits should play an important role. It has been shown that conservation mechanisms can be a route out of poverty (e.g. community timber enterprises, nature-based tourism, fish spillover, protected area jobs, agroforestry and agrobiodiversity conservation; see Leisher, 2009). Furthermore, protected areas can provide a safety net which prevents the poor from falling further into poverty, indirectly acting as insurance from risks and shocks. Valuing biodiversity benefits for vulnerable groups It is apparent that developing nation economies are to a greater extent dependent on the provision of ecosystem services. However, large disparities exist in the degree of dependency on ecosystem services and in the levels of vulnerability to changes in biodiversity and the respective impacts on the provision of ecosystem services. There is also an imbalance between those most affected by, yet least able to respond to, the loss of ecosystem goods and services and the global distribution of derived benefits. Vulnerability assessments were conducted based on a partial quantification of the economic dependency of local economies on ecosystem services. The provisioning, cultural, regulating and supporting services provided by ecosystems were evaluated based on their direct or indirect contributions to employment, non-market values and the welfare enhancement of local communities provided by extracting natural resources. The report found the rural poor to be the most directly iii dependent on ecosystem services as well as the most vulnerable to natural hazards, rapid resource depletion and biodiversity degradation. Approximately 70% of the world's poor live in rural areas and rely on benefits derived from environmental resources for at least 25% of their incomes. The dependence of low versus high-income rural regions on the delivery of ecosystem services is explored in greater detail within the EU by using vulnerability-related indicators coupled with spatial mapping of biodiversity and ecosystem values for the EU. The analysis finds that communities living in remote regions are more vulnerable than populations in more accessible regions. This is largely due to their lack of access to, or the prices and affordability of, substitute products and services. Isolation additionally limits coping strategies to deal with a deterioration of environmental services. Furthermore, the location of rural households affects their potential to access markets or other sources of income from off-farm employment opportunities in neighboring urban areas. Although wealthy communities and households receive a higher total income from natural resources, poor households remain more dependent upon ecosystem health due to their often direct reliance on selling primary resources or labour (e.g. fishermen and foresters). Q. Q O in 't C o o 0 CD 01 es C CD O i_ CD Q. in cs in CD 3 E CD in >• in o o 35% -i 30% - 25% 20% 15% - 10% I Coastal recreation value over GDP I Wetland/freshwater value over GDP I Forest value over GDP CD T3 CD 5 -o CO CO Ol .5? co High-income Middle-income Executive Summary Figure 1. Contribution of forests, wetlands, freshwater and coastal ecosystem service values as a percentage of countries' GDP (Source: Own estimation) The economic structure of poor, agricultural regions was found to be more strongly dependent on biodiversity and the provision of ecosystem services than that of richer areas, even when these wealthy areas are also remote and predominantly reliant upon agriculture. Moving from high-income countries to low-income countries, the socio-economic indicators show unemployment increases from 5.3% to 7.3%, the rural percentage of the population rises from 22% to 37% and dependence of GDP from the agricultural sector rises from 1.5% to 5.9%. Ecosystem services account for 11.8% of the GDP in low-income countries in comparison with 3.6% for high-income countries. Specifically, the highest levels of agricultural added value, unemployment rates, and ecosystem service value over GDP were all found in low-income countries. Executive Summary Figure 1 demonstrates the high contribution of ecosystem services to the EU's GDP, particularly in low-income countries. Forests and wetlands were found to make the largest contributions. The Social Dimension of Biodiversity Policy: Final Report (201 I) This is consistent with the finding from TEEB over the contribution of forests and other ecosystems to the livelihoods of poor rural households, and therefore the significant potential for conservation efforts to contribute to poverty reduction. TEEB reported that ecosystem services and other non-marketed natural goods account for 47 to 89 per cent of the so-called 'GDP of the Poor' (i.e. the effective GDP or total sources of livelihoods of rural and forest-dwelling poor households) in some large developing countries. International case studies of the rural poor dependence on biodiversity The issues surrounding the dependence of the rural poor on ecosystem services and biodiversity were explored in three global case studies. These studies illustrate how the inadequate consideration of the dependency of the poor on ecosystem services can threaten both livelihoods of the most vulnerable in society and valuable ecosystems. The reliance of the rural poor on ecosystem services and thus their vulnerability to biodiversity loss is exacerbated by existing inequities in power structures, poor land tenure rights and a difficulty to mitigate impending risks. The case studies are summarized below. • Unclear land tenure rights and expansionist agricultural policies in Mexico resulted in an immense reduction (73%) of the country's dry forests. Although law revisions transferred ownership and management responsibilities to the rural communities, the lack of technical and organisational capacities in place has prevented the sustainable management of their forests. The poorest individuals in these communities remain the most heavily impacted by the loss of forest and soil fertility. • The case of the Mekong River in South-east Asia, demonstrates how unsustainable fishing practices and hydroelectric schemes continue to threaten what is considered to be one of the world's most productive inland fisheries. The importance of the fish to the neighbouring communities has prompted locals to create conservation schemes and rules limiting fish catches. However, these require recognition in national legislation to secure permanence in the long-term. • Mangrove destruction due to expanding aquaculture in Thailand has caused a collapse in the populations of commercially important fish species. Surrounding communities have a high dependency on the fish for nutrition and income due to their lack of education and access to other opportunities, highlighting the importance of protecting the remaining mangrove areas and fish populations. Recommendations Based on the policy needs shown above and the different policies on EU and international scale highlighted, the following priorities in EU policy actions can be derived for the consideration of social aspects in biodiversity and related policies. The actions should be understood as necessary steps in the short and medium term that would allow for better integration of biodiversity and its social dimension in future policy making. Rather then providing a roadmap for policy making, the list should support a broader thinking among decision-makers who seek to find the right elements for a strategy of integrated biodiversity policy. 1. Increase efforts to raise the awareness of stakeholders and the wider public about benefits arising from biodiversity and eco-system services. Changes in policies or cuts in subsidies can only be justified if their necessity is well understood by the stakeholders affected. More efforts are needed on the communication of the threats of biodiversity loss and ecosystem degradation, targeting both businesses and consumers, as well as communicating the solutions and benefits of overcoming these problems. 2. Support regional approaches for payments for ecosystem services (PES) and investigate potential for wider application. A clearer understanding of obstacles and v possibilities of PES approaches can only be gained if pilot projects in different regions and ecosystems are launched and evaluated. Examples from countries outside the EU can help design similar projects in the EU, funded by instruments such as LIFE+, and research and regional development funds. 3. Determine a time-horizon by which subsidies and policy incentives harmful for biodiversity and vulnerable groups will be phased out. The COP 10 of the CBD in Nagoya in October 2011 foresees the phasing out of harmful subsidies and incentives for biodiversity by 2020. Although voluntary, the EU should identify such perverse incentives and establish a phasing out model with a clear time frame, thus helping stakeholders affected to adapt to diminishing support over time. 4. Adopt the "Nagoya Protocol on access to genetic resources and the fair and equitable sharing of benefits arising from their utilization" and take effective and quick action for its implementation. The EU should pay particular attention to the rights of indigenous and local communities, and provide financial means to enable developing countries to implement the Protocol. 5. Integrate the ecosystem-based approach in development aid policies and ensure a strong involvement of local communities in land-use decisions. This would ensure a better consideration of local and traditional knowledge and greater local acceptance. 6. Establish a monitoring process that highlights the contribution and the negative effects of EU polices to the achievement of the Millennium Development Goals. Such an evaluation process may question policies that are currently not sufficiently debated regarding their impacts on natural resources and the rural poor in developing countries (e.g. trade, financial or agricultural policies). 7. Complement current EU policies for nature protection with measures focussing on the connectivity of landscapes. Policy-makers should consider how green infrastructure could be integrated in current policies, taking into account that it affects a wide range of policy fields such as regional policy, cohesion, nature protection, water, agriculture, forestry etc. The international case studies represent contrasting environmental challenges and demonstrate the need for locally adapted solutions. However, several recommendations and paths of action can be outlined which are relevant for other environmental degradation cases threatening the livelihoods of vulnerable poor rural populations. These encompass policy shifts, including: • Perverse incentives created by poorly developed management plans or governance regimes have to be eliminated and avoided in future policy design. • Short-term policy appraisals benefitting only limited groups should be shifted to long-term policies that generate net benefits, involving respective stakeholder-groups from the start of the policy formulation and design. • Access to crucial ecosystem services will be guaranteed for vulnerable groups by safeguarding tenure and property rights (e.g. by ABS and national law enforcement). Local knowledge and experiences in maintaining ecosystems and biodiversity should be more seriously taken into account instead of creating overly broad solutions that cannot be adapted to local and regional conditions. Poor people should be compensated and trained for alternative employment opportunities if they are affected by regulatory measures to preserve biodiversity. While local communities often develop sustainable management plans and locally accepted regulations, these customs need to be legally integrated into national legislation, expanded to encompass additional threatened regions and enforced in order to be effective. There should also be a greater sharing of knowledge and development of best practice examples where the long-term maintenance of ecosystems and biodiversity ensures stable livelihoods. Future The Social Dimension of Biodiversity Policy: Final Report (201 I) evaluation and assessment methods for biodiversity and ecosystem services should consider employment and poverty alleviation to a higher degree. The Social Dimension of Biodiversity Policy: Final Report (201 I) TABLE OF CONTENTS Executive Summary...............................................................................................................................i Section I: The Links between Biodiversity and Employment...........................................................1 1 Linkages between Employment and Biodiversity - The Conceptual Model.............................2 1.1 Employment and Biodiversity.....................................................................................................2 1.2 Implications for the Study...........................................................................................................3 2 Mapping the Links between Ecosystem Services and Employment.........................................6 2.1 Ecosystem Services and Economic Activity..............................................................................6 2.2 Links between Ecosystem Services and Different Sectors........................................................6 2.3 Quantifying Employment Linked to Ecosystem Services...........................................................8 3 Determining the Links between Biodiversity, Ecosystem Services and Employment..........12 3.1 Introduction...............................................................................................................................12 3.2 Links between Biodiversity and Ecosystem Services..............................................................13 3.3 Caveats to the Links between Biodiversity and Ecosystem Services......................................16 3.3.1 The Vulnerability of Ecosystem Services to Changes in Biodiversity......................................16 3.3.2 Substitutability..........................................................................................................................18 Substitution of provisioning services..................................................................................................19 3.4 Implications for Sectoral Economic Activity and Employment.................................................27 4 Analysis of Jobs Dependent on Biodiversity............................................................................31 4.1 Jobs in Biodiversity Conservation............................................................................................31 4.1.1 IntheEU..................................................................................................................................31 4.1.2 Outside the EU.........................................................................................................................32 4.2 Wider Links between Employment and Biodiversity................................................................33 4.3 Qualitative Aspects of Biodiversity/Employment Links............................................................35 4.3.1 The Quality of Jobs..................................................................................................................35 Agriculture..........................................................................................................................................36 Forestry..............................................................................................................................................37 Fisheries............................................................................................................................................38 Conservation and eco-tourism...........................................................................................................39 Conclusions on Qualitative Aspects of Employment.........................................................................41 5 Case Studies to Illustrate Biodiversity/Employment Links......................................................42 5.1 European Case Studies ..........................................................................................................42 5.1.1 Amvrakikos Case Study - Greece............................................................................................42 5.1.2 Danube Delta Case Study - Romania......................................................................................44 5.1.3 Donana Case Study - Spain....................................................................................................45 5.2 Global Case Studies................................................................................................................47 5.2.1 Cod Fishing - Eastern Canada................................................................................................47 5.2.2 The Maldives............................................................................................................................49 5.2.3 Lake Victoria's Fishing Industry...............................................................................................51 5.2.4 Miombo Woodlands - Africa.....................................................................................................53 6 Implications of Biodiversity Conservation for Employment....................................................57 6.1 Synergies and Trade-offs - Overall Evidence of Whether Biodiversity Conservation Supports Jobs or Constrains Job Opportunities...............................................................................................57 6.1.1 The Trade-offs Associated with Protected Areas....................................................................57 6.1.2 The Synergies Available with Protected Areas........................................................................59 6.1.3 Maximising the Synergies and Managing the Trade-offs.........................................................62 6.2 Employment Implications of Biodiversity Loss.........................................................................63 6.3 Opportunities for Job Creation through Biodiversity Conservation - Where are the Opportunities and How Many Jobs Can be Created?.......................................................................65 6.3.1 Overview..................................................................................................................................65 6.3.2 Conservation Sector.................................................................................................................66 6.3.3 Natural Resource Based Sectors.............................................................................................67 6.3.4 'Green New Deal' Programmes...............................................................................................69 Section II: Valuing Biodiversity Benefits for Rural Vulnerable Groups........................................72 7 Setting the Scene: Linkages Between Biodiversity, Ecosystem Services and Human Livelihoods.............................................................................................................................74 7.1 Introduction...............................................................................................................................74 7.2 Conceptual Model for Mapping the Linkages of Biodiversity Benefits and Human Livelihoods 75 7.3 A Hybrid Economic Model for Valuing the Magnitudes of Biodiversity Benefits on Human Livelihoods.........................................................................................................................................76 7.4 Spatial Mapping of Biodiversity Benefits and Rural Vulnerable Groups..................................79 8 The Economics of Biodiversity and The Rural Poor in Europe...............................................80 8.1 The Evidence of the Rural Poor and the Richness of Ecosystem and Biodiversity Resources 80 8.2 Identification of the Rural Poor in Europe................................................................................81 8.3 Biodiversity Spatial Profile in Europe.......................................................................................83 8.4 The Value of Ecosystems in Europe........................................................................................85 The Economic Value Provided by European Forest Ecosystem.......................................................86 The Economic Value Provided by European Freshwater Ecosystem...............................................88 The Economic Value Provided by European Coastal and Marine Ecosystems................................91 9 Dependency of Human Livelihoods on Benefits of Biodiversity and Ecosystem Services in EUROPE..................................................................................................................................94 The Social Dimension of Biodiversity Policy: Final Report (201 I) 9.1 Introduction...............................................................................................................................94 9.2 Analyzing the Dependency of Human Livelihoods on Benefits of Biodiversity and Ecosystem Services.............................................................................................................................................94 9.2.1 Income-related Vulnerability and the Link to Biodiversity.....................................................95 9.2.2 Vulnerable Rural Communities and their Dependency on Biodiversity................................99 9.2.3 Vulnerable Remote Communities and their Dependency on Biodiversity..........................101 10 Global Evidence on the Economic Significance of the Linkages between Biodiversity, Ecosystem Services and Human Livelihoods..................................................................104 10.1 Introduction to Global Case Studies on People's Vulnerability to Ecosystem Loss..............104 10.2 Forestry along Mexico's Pacific Coast...................................................................................108 10.3 Fisheries along the Mekong River, South-east Asia..............................................................110 10.4 Aquaculture in Thailand.........................................................................................................112 Section III: Outlook and Policy Implications..................................................................................114 11 Summary and Conclusions from Previous Sections............................................................115 11.1 Section 1: Links between Biodiversity and Employment.....................................................115 11.2 Section 2: Valuing Biodiversity Benefits for Rural Vulnerable Groups................................117 12 Policy Recommendations........................................................................................................121 12.1 International Policies............................................................................................................122 Relevant International Policies for the Social Dimension of Biodiversty...................................123 12.2 European Polices.................................................................................................................125 Relevant European Policies for the Social Dimension of Biodiversty........................................126 12.2 Priority Actions for EU Policy Making...................................................................................128 Section IV: Bibliography and Annex...............................................................................................131 References - Section 1.......................................................................................................................132 References - Section II......................................................................................................................138 References - Section III.....................................................................................................................145 Annex A - Details on the Employment Data..................................................................................147 Global employment data..................................................................................................................147 Assumptions for data aggregation...................................................................................................147 EU employment data.......................................................................................................................150 Assumptions for populating the typology table................................................................................150 Annex B - Links between Biodiversity and Ecosystem Services................................................151 1. Provisioning services...............................................................................................................151 Provision of genetic resources.........................................................................................................151 Provision of food and fibre...............................................................................................................151 2 Regulating services...................................................................................................................152 Pollination and seed dispersal.........................................................................................................152 Invasion resistance..........................................................................................................................152 Climate regulation............................................................................................................................153 Pest control......................................................................................................................................153 Disease control and human health..................................................................................................154 Waste management and detoxification............................................................................................154 Water cycling, regulation and purification........................................................................................155 Regulation of natural hazards..........................................................................................................156 3 Supporting services...................................................................................................................157 Nutrient cycling................................................................................................................................157 Soil formation...................................................................................................................................157 Ecosystem Resilience......................................................................................................................158 5 Cultural services........................................................................................................................158 Annex C - Detailed Examples of Links between Employment, Ecosystem Services and Biodiversity in Some Sectors.............................................................................................160 1 Sectors with Strong Links with Biodiversity through Ecosystem Services................................160 1.1 Agriculture..............................................................................................................................160 1.2 Fisheries.................................................................................................................................161 1.3 Forestry..................................................................................................................................162 2 Sectors with medium links to biodiversity through ecosystem services...................................162 2.1 Pharmaceuticals.....................................................................................................................162 2.2 Fibre and forest products........................................................................................................163 Annex D - Figures Accompanying Global Case Studies..............................................................164 Annex E - Description of Economic Valuation Methodologies...................................................169 Annex F - Economic Valuation Details for Forest, Freshwater and Marine/Coastal Ecosystems in Europe...............................................................................................................................172 1. Economic valuation of European Forest Ecosystem...............................................................172 1.1 Introduction.............................................................................................................................172 1.2 Economic Valuation of European Forest Ecosystems...........................................................172 (1) Mapping the provision of ecosystem goods and services by European forests........................173 (2) Economic valuation of the ecosystem goods and services provided by European forests.......175 (3) Valuation results.........................................................................................................................179 2. Economic Valuation of European Freshwater Ecosystems.....................................................181 2.1 The dataset of freshwater ecosystems valuations.................................................................181 2.2 Specification of the meta-regression model...........................................................................182 2.3 Valuation results.....................................................................................................................186 3 The Recreational Value of the European Coastal and Marine Ecosystems.............................189 3.1 The dataset of coastal and marine ecosystems values.........................................................189 3.2 Specification of the meta-regression model...........................................................................190 3.3 Valuation results.....................................................................................................................192 The Social Dimension of Biodiversity Policy: Final Report (201 I) Annex G - The Econometric Specifications in the Valuation.......................................................195 Annex H - GIS maps..........................................................................................................................204 The Social Dimension of Biodiversity Policy: Final Report (201 I) SECTION I: THE LINKS BETWEEN BIODIVERSITY AND EMPLOYMENT Leader: GHK Contributors: Ecologic, FEEM, IEEP 1 1 LINKAGES BETWEEN EMPLOYMENT AND BIODIVERSITY ■ THE CONCEPTUAL MODEL 1.1 Employment and Biodiversity Employment dependent on biodiversity conservation includes: • Jobs directly concerned with the conservation and management of biodiversity. These include employment in land management, protection of sites and species, provision of advice, and scientific research and monitoring activities. These jobs are relatively small in number but their linkage to biodiversity is clear and direct. • Jobs dependent on ecosystem services, which in turn are dependent to a large degree on the biodiversity within ecosystems. These include jobs and livelihoods which depend on the provisioning, regulating and cultural services which biodiversity plays a role in delivering. A much larger number of jobs fall into this group, but the role of biodiversity in supporting these jobs is often more indirect, uncertain and difficult to quantify. These linkages are illustrated in Figure 1.1. STOCK OF BIODIVERSITY Provisioning services: agriculture, forestry, fisheries, hunting Regulating services: wide range of sectors and activities Zl o o o Cultural services: tourism, recreation, education, media Jobs in biodiversity conservation and management Jobs in sectors benefiting from ecosystem Figure 1.1: Links between Biodiversity and Employment Figure 1.2 provides an illustration of the number of jobs in the economy which are linked to biodiversity in different ways. A small number of jobs in the economy are very directly concerned with the management of biodiversity, in nature conservation and related activities. However, a larger number of jobs in sectors such as fisheries, hunting and organic agriculture are strongly dependent on biodiversity conservation. Jobs in activities such as intensive agriculture, commercial forestry and water supply may be less intimately connected with biodiversity but still rely on biodiversity to maintain 2 The Social Dimension of Biodiversity Policy: Final Report (201 I) the functioning of ecosystems and the services they provide. More indirectly, jobs in a variety of manufacturing industries use raw materials of natural origin. Finally, all other jobs in the economy depend on biodiversity to the extent that it is an important component of ecosystems and, by contributing to their functioning, helps to maintain the ecosystem services which maintain human life, provide a reasonable living and working environment, and safeguard people and property from natural hazards. Number of „ . Strength of linkage to ■ u Sectors ~. .. a Jobs biodiversity Figure 1.2: Illustration of numbers of jobs with different linkages to biodiversity It is important to note that the strength of these linkages is likely to vary between developed and developing countries. In the developing world, a large proportion of employment is dependent on biodiversity and the ecosystem services it provides. In developed regions such as the EU, the provisioning role of biodiversity and ecosystems is now responsible for only a small proportion of livelihoods. However, direct employment in nature conservation is significant and growing, as a result of policies promoting biodiversity conservation, and there is also growth in employment in nature tourism and recreation. 1.2 Implications for the Study The study has therefore examined employment directly concerned with biodiversity conservation, as well as employment in a variety of economic sectors which are indirectly dependent on biodiversity through their reliance on ecosystem services. These include sectors and activities dependent on: • Provisioning services - e.g. agriculture, forestry, fisheries, pharmaceuticals, hunting; • Cultural services - e.g. tourism, recreation, education, the media; • Regulating services - this potentially includes a broad spectrum of economic activity dependent on the contribution that biodiversity makes to the regulation of climate, air, water and soil. Some activities are more directly dependent on regulating services than others. For example agriculture depends on pollination and prevention of erosion and flooding, but a wide 3 variety of activities depend on a liveable climate, healthy workforce and protection from natural hazards. • Supporting services - such as nutrient cycling and soil formation - underpin all of the above services and to shape the stock of natural capital on which different sectors depend. In quantifying biodiversity related employment it is important to distinguish between jobs that are very strongly and directly linked to biodiversity (e.g. in fisheries which depend on maintenance of healthy marine ecosystems and conservation of fish stocks), others that have a weaker relationship (e.g. in commercial forestry plantations, which depend on protection against pests and diseases and may benefit from new crop varieties) and others where the relationship is still more indirect (e.g. all jobs depend to some extent on the role of biodiversity in climate regulation and protection against natural hazards). It is therefore possible to identify a series of definitions of biodiversity-linked employment, enabling us to estimate the number of jobs dependent on biodiversity according to narrow or wider definitions. It is important to note that the links between ecosystem services and employment are more easily identified and quantified than the linkages between biodiversity and employment. For example, it is clear that all employment in agriculture is directly dependent on ecosystem services, not just the role of provisioning services in delivering agricultural output, but also the provision of fresh water, genetic resources and other agricultural inputs, and the role of regulating services such as pollination, control of pests and diseases, and regulation of climate, water and soils. It is clear that all jobs in agriculture are dependent on ecosystem services, and it is therefore relatively straightforward to quantify employment in the sector that is dependent on ecosystem services. However, assessing the linkages between biodiversity and employment is more challenging, because it is often less clear to what extent the delivery of ecosystem services on which jobs depend is influenced by the biodiversity within ecosystems. For example, food production is possible based on established varieties of crops and livestock; synthetic fertilisers and pesticides may be used to replace or enhance natural processes; and pollination may possibly be achieved by a limited variety of species. The loss of biodiversity may, however, adversely affect the functioning of ecosystems and impact negatively on ecosystem service delivery, potentially in unexpected ways and with unpredictable impacts. The approach taken to assessing the linkages between biodiversity and employment has therefore been to: 1. Assess the extent to which jobs in different sectors are dependent on the delivery of ecosystem services (Section 2); and then 2. Assess the importance of biodiversity in the delivery of the ecosystem services on which different sectors depend (Section 3); 3. Assess the extent to which jobs in these sectors are dependent on biodiversity (Section 4); 4. Develop this understanding further through case studies (Section 5), and then; 5. Assess the implications for biodiversity conservation for employment (Section 6). A sectoral approach is used in the analysis, as employment estimates are available by sector, while an assessment of the significance of ecosystem services, and the role of biodiversity in their delivery, can also be made on a sector by sector basis. This comprehensive approach is complemented by a selection of case studies which provide a more detailed understanding of the main types of ecosystem services and job typologies, their dependence on biodiversity, and the consequences of biodiversity loss (Section 5). Section 6 then assesses the significance of biodiversity policy for employment, now and in the future. 4 The Social Dimension of Biodiversity Policy: Final Report (201 I) It is important to recognise that this approach depends on sufficient data and evidence being available at each stage of the analysis. In practice, evidence on the links between biodiversity, ecosystem services and economic activities is far from complete and often fragmented, making fully quantified and unqualified estimates of the relationship between biodiversity and employment impossible. The analysis therefore presents the available evidence at each of the five stages identified above, while recognising also the uncertainties and data gaps involved. It should be noted that these uncertainties and gaps in evidence mean that the links between ecosystem services and employment (stage 1) are understood with greater confidence than the links between biodiversity and employment (stage 5). Importantly, the use of the term 'biodiversity' in this study encompasses all its dimensions and is based on that used by the Millennium Ecosystem Assessment.1 It therefore considers not just the typical species richness, but also the functional, ecological and genetic diversity and species abundance that encompasses 'biodiversity' as a whole. It is also important to recognise that the loss of biodiversity can result in increases in some ecosystem services (for example increased food production resulting from deforestation), and that this may create employment, while also potentially causing job losses as a result of the decline in other ecosystem services. Defined as: "the variability among living organisms from all sources, including terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part. Biodiversity includes diversity within species, between species and between ecosystems. Biodiversity may be described in terms such as richness, rarity, uniqueness, biomass and productivity" 5 2 MAPPING THE LINKS BETWEEN ECOSYSTEM SERVICES AND EMPLOYMENT 2.1 Ecosystem Services and Economic Activity Ecosystem services support economic activities and therefore employment in different sectors in different ways. They support economic activity by directly influencing: • Outputs - the output of natural resource based activities such as agriculture, forestry and fisheries is directly dependent on provisioning services; • Inputs - many manufacturing activities use raw materials provided by ecosystems, including food, fibre, fuel, fresh water and genetic resources. Natural resource based activities also depend on a variety of these inputs; • Processes - the primary sector depends on natural processes such as pollination and regulation of water, air, climate, pests and diseases, all of which influence the production process; • Capital - ecosystem services maintain natural capital on which many economic activities depend. This includes productive assets such as soil and water, which are essential as the basis for primary production, as well as cultural assets such as landscape and wildlife which support tourism, recreation and cultural industries; • Working Environment - all jobs depend on the role of ecosystem services in maintaining human health, preventing natural hazards and providing a liveable environment. 2.2 Links between Ecosystem Services and Different Sectors Figure 2.1 provides an illustration of the importance of ecosystem services to different economic sectors. Primary sector activities such as agriculture, forestry, fisheries and hunting depend on a wide range of provisioning, regulating and supporting services which together shape the natural capital on which these sectors depend and determine sector inputs, processes and outputs. A variety of manufacturing activities depend on ecosystem services for the delivery of raw material inputs. Service sectors such as tourism, education and the media rely on the cultural services delivered by ecosystems. All sectors are dependent on ecosystem services indirectly in maintaining the health of the workforce, the living and working environment, and for providing protection from natural hazards. 6 The Social Dimension of Biodiversity Policy: Final Report (201 I) Agriculture Forestry Fisheries Hunting Water Supply Energy Supply Mining_ Food, drink and tobacco Textiles, clothing, leather Wood and paper Pharmaceuticals Other manufacturing industries Construction Hotels and catering Transport Media Education Other services Climate regulation Natural hazard regulation Water regulation Waste treatment & water purification Erosion regulation Pollination Biological control _ PC PC c c PC PC PC PC c c CP CP E c c c CP CP E C E E PC PC E C P P E C P P C C CP E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E E CP E E E E E E E E E E E E Cultural Supporting CP CP c c CP CP CP c c Figure 2.1: Dependence of Selected Sectors on Ecosystem Services Strong link O Service delivers sector outputs I Service provides sector inputs C Service affects capital base Weak link P Service influences production process E Service influences sector environment and workforce 7 Building on this analysis, we propose the following typology of sectors according to their linkages with ecosystem services (Table 2.1). Table 2.1: Typology of Sectors according to Linkage with Ecosystem Services Type Description Sectors 1 Primary sectors dependent on provisioning services for outputs as well as inputs, and regulating and supporting services to determine productive capacity and production process Agriculture Forestry Fisheries Hunting Water Supply 2 Processing and manufacturing activities dependent on ecosystem services primarily for provision of inputs and (in some cases) production processes Energy supply Mining Food, drink and tobacco Textiles, clothing and leather Wood and paper Pharmaceuticals Other manufacturing industries 3 Service activities particularly dependent on cultural services provided by ecosystems, as well as inputs of food and other materials Hotels and catering Media/creative industries Education 4 Service activities dependent on provision of raw materials and fuel from ecosystems Construction Transport 5 Other activities dependent on ecosystem services for maintaining human health, living and working environment, and protection of people and property from natural hazards All other industries 2.3 Quantifying Employment Linked to Ecosystem Services Using the above typology, the number of jobs linked to ecosystem services in different ways in the EU and in developing economies can be quantified. Table 2.2 summarises the number of jobs according to the typology above for the EU, and in developing countries. The varying categorisations used across the different regions have meant that both obtaining the necessary detail, as well as aggregating the data accordingly has been problematic. It was, for instance, particularly difficult to obtain data for developing countries with the same detailed categorisations used for the EU - accordingly there are some gaps in the these figures and aggregations have had to be made instead. Certain assumptions have had to be made to populate Table 2.2. A brief description of the methodology and the assumptions used are given in Box 2.1. For a more detail on the methodology and the original data, please see ' Referecne - section III' for details on the assumptions used, the method of aggregation and other issues surrounding the data used. 8 The Social Dimension of Biodiversity Policy: Final Report (201 I) Table 2.2: Quantifying Employment in EU and in Developing Economies According to Ecosystem Service Linkages Type Sector EU Developinc economies Employment (thousands) % of total Employment (thousands) % of total 1. Primary Industries highly dependent on ecosystem services Agriculture 11,223 4.9% 895,218 34.4% Forestry 2,988 1.3% Fishing 400 0.2% 31,811 1.2% Water Supply 373 0.2% 21,049 0.8% 2. Processing and Manufacturing industries dependent on ecosystem services for inputs and processes Energy Supply 1,233 0.5% Mining 859 0.4% 31,696 1.2% Food, drink, and tobacco 5,635 2.4% 733,844 28.2% Textiles, clothing and leather 3,020 1.3% Wood and paper 4,252 1.8% Pharmaceuticals 548 0.2% Other manufacturing industries 24,204 10.5% 3. Services activities dependent on cultural services Hotels and catering 10,598 4.6% 60,800 2.3% Media and creative industries 3,139 1.4% Education 15,368 6.7% 132,923 5.1% 4. Services activities dependent on provision of raw materials and fuel Construction 16,770 7.3% 140,171 5.4% Transport 26,154 11.3% 145,164 5.6% 5. Other activities Other 103,985 45.1% 412,268 15.8% Total 230,747 100.0% 2,604,943 100.0% The figures estimate that a total of 55% of jobs in the EU and 84% of jobs in developing economies have a significant direct link to ecosystem services, falling within Types 1 to 4 of our typology. The remaining 45% of jobs in the EU and 16% in developing economies are indirectly dependent on ecosystem services for sustaining human life and health and a liveable, workable environment. The data show that there is a definite difference in the dependence of employment in the EU and developing economies on ecosystem services (Figure 2.1). Overall, employment in the EU is less dependent on ecosystem services than is employment in developing economies. This is especially evident in the case of primary industries such as agriculture, forestry and fisheries, and to a slightly lesser extent in the case of manufacturing industries. Primary industries, which are highly dependent on ecosystem services, constitute more than a third of employment in developing economies, whereas only about 6% of workers in the EU are employed in these sectors. Manufacturing industries, which are reliant on ecosystem services for inputs and processes, constitute almost a further third in developing economies. In the EU this proportion is considerably less (only 17%). Overall, some 950 million jobs in the primary industries and a further 787 million jobs in manufacturing in developing economies are estimated to be reliant on ecosystem services for inputs and processes. These figures also reflect the much smaller share of primary industries in national income in the EU compared to developing countries. 9 Employment in Developing Economies Employment in the EU - 29.8% 7.4% 11.0% 15.8% - 6.5% 17.2% 12.6% 18.6% 45.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ■ Type 1 - Highly dependent primary industries ■ Type 2 - Manufacturing industries dependent on inputs and processes ■ Type 3 - Service activities depedenton cultural services ■ Type 4 - Service activities dependenton raw materials and fuel ■ 5- Other Figure 2.1: The extent to which employment in the EU and developing economies is linked to ecosystem services However, the EU has a larger proportion of service sectors that depend on cultural services from ecosystem services than developing economies, such as hotels and catering, media and creative industries, and also education. Additionally, the EU has a larger proportion of service activities dependent on the provision of raw materials and fuel from ecosystems such as construction and transport than developing countries. In the EU, these two sectors provide a total of 31% of employment (72 million jobs) compared to 18% (480 million jobs) in developing countries. A variety of other activities dependent on ecosystem services and used to maintain human health, provide a living and working environment, and provide protection from natural hazards are indirectly linked to ecosystem services and make up the largest portion of employment activities in the EU and the remainder of employment in developing countries. These activities account for 45% of employment (104 million jobs) in the EU and 15.8% of employment (413 million jobs) in developing countries. The analysis suggests that changes to ecosystem services will have varying impacts on employment in developing countries compared to the EU. However, there is a limit to which we can draw concrete conclusions from the analysis. Overall, we might expect the greater dependence of developing economies on ecosystem services to mean that employment and livelihoods are more sensitive to changes in ecosystem services in future. However, the loss of ecosystem services being observed across the world may lead to a loss of employment, a shift in employment between sectors, and/or more subtle changes as some jobs are able to adapt to the changes that take place. Overall, the effects on employment due to variations in ecosystem services are likely to vary across industries, sectors, and regions. Box 2.1. Brief description of the methodology and assumptions used to derive employment data 10 The Social Dimension of Biodiversity Policy: Final Report (201 I) Employment figures for developing economies were derived from Laborsta (http://laborsta.ilo.org). Reported statistics are presented by the different countries' statistical offices using different levels of detail, which created some inconsistencies. In order to ensure a minimum level of consistency for aggregation, some assumptions had to be made (e.g. averages from 1999-2008 were calculated and used for aggregation to achieve consistency between data for different years). For a full list see Annex A. World Bank regions were used to aggregate data for employment in developing economies. However, employment data from Laborsta was limited to a subsection of those included in the World Bank regions; data was only available for 77 countries out of a possible 144 developing economies according to the World Bank's categorisation. In the case of some regions (for instance South Asia and Sub-Saharan Africa), the proportion of employment covered by Laborsta figures was low (as little as 10% in South Asia). In other cases however, Laborsta figures covered as much as 73% of the region's employment (in the case of Europe and Central Asia). As a whole, the Laborsta figures cover only 32% of all possible jobs in developing economies. Consequently, a significant assumption has been made in order extrapolate the data to obtain employment figures for the entire World Bank regions, namely that the share of jobs for which Laborsta data was available were representative of the entire region. By multiplying the World Bank total employment per region by the percentages found for each sector according to the available Laborsta data for each region, it was therefore possible to obtain an indication of the total employment per sector, per region. EU employment figures were derived from OECD Input-Output tables and Eurostat for the year 2008 (see Annex A). For a more detail on the methodology and the original data, see ' References - Section III ' for details on the reference sources, assumptions used, the method of aggregation and other issues surrounding the data used. 11 3 DETERMINING THE LINKS BETWEEN BIODIVERSITY, ECOSYSTEM SERVICES AND EMPLOYMENT 3.1 Introduction In this section we examine the links between biodiversity, ecosystem services and employment. The review first considers the degree to which different ecosystem services are dependent on biodiversity (Section 3.2), and discusses some of the caveats to be considered in the analysis (Section 3.3), before examining the implications for economic activity and employment in different sectors (Section 3.4). Biodiversity, including the number, abundance, and composition of genotypes, populations, species, functional types, communities, and landscape units, strongly influences the provision of ecosystem services and therefore human well-being, livelihoods and employment. For example, as one of the most species-rich communities on Earth, coral reefs are responsible for maintaining a vast storehouse of genetic and biological diversity. Substantial ecosystem services are provided by coral reefs—such as habitat construction, nurseries, and spawning grounds for fish; nutrient cycling and carbon and nitrogen fixing in nutrient-poor environments; and wave buffering and sediment stabilization (MEA, 2005o) - and many human livelihoods depend on these (Box 3.1). Box 3.1. The economic and ecological value of coral reefs Coral reefs are responsible for providing several ecosystem services: they are a major source of fisheries products for coastal residents, tourists, and export markets; they support high diversity that in turn supports a thriving and valuable dive tourism industry; they contribute to the formation of beaches; they buffer land from waves and storms and prevent beach erosion; they provide pharmaceutical compounds and opportunities for bio-prospecting; they provide curios and ornamentals for the aquarium trade; and they provide coastal communities with materials for construction. Given this, it is unsurprising that 58% of the world's major reefs occur within 50 kilometres of major urban centres of 100,000 people or more, and that 31% of the world's population live within 50 kilometres of a coral reef system. Coral reefs are particularly valuable to some regions. Reef fisheries in Asia for instance, are estimated to produce net benefit streams of over $2 billion annually. Coral reefs play an especially significant role in tourism - much of the estimated economic value of coral reefs (annual net benefits are estimated at almost $30 billion) is generated from nature-based and dive tourism. In the United States alone, coral reefs and their associated nursery habitats support millions of jobs and billions of dollars in tourism each year. The natural reefs around Florida, for instance, support over 61,000 jobs in the region.2 However, despite their ecological and economic importance, coral reefs are also one of the most vulnerable and threatened ecosystems. The most intensive degradation is taking place in developing countries, where most tropical reefs occur. The latest estimates suggest that 20% of reefs have been destroyed and at least an additional 20% are badly degraded or under imminent risk of collapse. The impacts of this degradation on human well-being will be considerable given the large numbers of people who depend on coral reefs and the services they provide. For instance, in Jamaica and Barbados destruction of coral reefs caused dramatic declines in the number of visitors; loss of revenue streams consequently led to social unrest, resulting in further decline of tourist numbers. Source: MEA, 2005q However, few studies link changes in biodiversity with changes in ecosystem functioning to changes in human well-being. Nonetheless, the link between biodiversity and the services which ecosystem deliver is 2 http://www.allislandscorals.orq/index.php?option=com content&task=view&id=76<emid=9 12 The Social Dimension of Biodiversity Policy: Final Report (201 I) clear. The importance of biodiversity to ecosystems is a consequence of the fact that it is at the different levels in the ecological hierarchy (see Figure 3.1) at which key processes such as carbon, water and nutrient cycling and productivity, and therefore the services ecosystems provide, are determined (EASAC, 2009). Overall biodiversity underpins the provision of ecosystem services to the point that local or functional extinction, or the reduction of populations to the point that they no longer contribute to ecosystem functioning, can have dramatic impacts on ecosystem services. Indeed, these impacts can be disproportionately large and irreversible (MEA, 2005o). Figure 3.1: The Ecological Hierarchy - The importance of biodiversity in underpinning ecosystems and their services (EASAC, 2009) ECOSYSTEM Impacts Processes Variables Pollution Nutrient cycling Productivity Climate change Energy How Biomass disturbance Water cycling Complexity Communities B Biodiversity, functional I 0 diversity Predation T I ♦ Parasitism C T Competition Mutualism E Populations N w Dynamics, invasions V I f Competition R O I Predation N M Individuals E Behaviour, life history N T The diagram represents the components of the ecosystem, which comprises the abiotic factors of the environment and the biological communities that live there. Communities are made up of populations of organisms whose individuals interact with each other and with those in other populations by competing for resources and preying on or parasitising others. It Is the individuals that respond to the abiotic factors of the habitat Processes in ecosystems, which underlie ecosystem services, are the result of the Interaction of the organisms and the abiotic environment Tfie ecosystem is one stage in a hierarchy of systems recognised by the science of ecology, from the population (the individuals of a single species in a defined area), through the community (the set of populations in that area), to the ecosystem, which brings in the abiotic elements. Although ecologists recognise landscape units such as forests and lakes as ecosystems, they also accept that ecosystems are not self-contained: they have porous boundaries and both organisms and materials move between systems, often with important ecological consequences. Above the ecosystem in this hierarchy, ecologists recognise biomes and the biosphere," both of these are at much larger scale, continental or global. 3.2 Links between Biodiversity and Ecosystem Services Table 3.1 illustrates the significant links between biodiversity and the main ecosystem services. A fuller discussion is provided in Annex A - Details on the Employment Data.Angelsen, A. with Brockhaus, M., Kanninen, M., Sills, E., Sunderlin, W. D. and Wertz-Kanounnikoff, S. (eds) 2009 Realising REDD+: National strategy and policy options. CIFOR, Bogor, Indonesia. Ebert, S., Hulea, O. and Strobel, D. (2009) Floodplain restoration along the lower Danube: A climate change adaptation case study. Climate and Development, Lessons for climate change adaptation from better management of rivers, pp. 212-219. European Environment Agency. 2009. Territorial Cohesion: Analysis of Environmental Aspects of the EU Cohesion Policy in Selected Countries. Copenhagen. 13 Emerton, L, lyango, L, Luwum, P. & Malinga, A. (1999) The economic value of Nakivubo wetland urban wetland, Uganda. Uganda National Wetlands Programme, Kampala and IUCN- the World Conservation Union, East African Regional Office, Nairobi. Hart, K., Lee, H. and Rayment, M. (2010) Achieving a Transition Away from CAP Direct Payments. Paper 1 for the Land Use Policy Group, http://www.ieep.eu/publications/pdfs//LUPG%20Paper%201 .pdf Hardin, G. (1968), The Tragedy of the Commons, Science, 162(1968):1243-1248. Harvey C. A., Zerbock O., Papageorgiou S. and Parra A. 2010 What is needed to make REDD+ work on the ground? Lessons learned from pilot forest carbon initiatives. Conservation International, Arlington, Virginia, USA. 121 pp. Kettunen, M, Terry, A., Tucker, G. and Jones A. (2007) Guidance on the maintenance of landscape features of major importance for wild flora and fauna - Guidance on the implementation of Article 3 of the Birds Directive (79/409/EEC) and Article 10 of the Habitats Directive (92/43/EEC) Institute for European Environmental Policy (IEEP), Brussels, 114 pp. and Annexes. Kettunen, M., Adelle, C, Baldock, D., Cooper, T., Farmer, M. Hart, K., Torkler, P. (2009) Biodiversity and the EU Budget - an IEEP briefing paper. Institute for European Environmental Policy, London / Brussels. 31 pp. McConville, A.J. and Gantioler, S. (2010) Financing Natura 2000. Stakeholder Conference, 15-16th July, 2010. Deliverable to DG ENV, under the project: Costs and Socio-Economic Benefits associated with the Natura 2000 Network. Final report to the European Commission, DG Environment on Contract ENV.B.2/SER/2008/0038. http://www.ecologic- events.de/natura2000/documents/Natura2000Financingconference2010-Proceedings_Final.pdf Peskett, L., Huberman, D., Bowen-Jones, E., Edwards, G., and Brown, J. 2008 Making REDD work for the poor. Prepared on behalf of the Poverty Environment Partnership (PEP) Rosseau, D.P.L., van der Steen, P., van Bruggen, H. & Lens, P.N.L. (2009) Constructed treatment wetlands contributing to the paradign shift in sustainable urban water management. Paper presented at the conference "Sustainable Development: a challenge for European Research", 26- 28 May 2009, Brussels, Belgium. Salz, P and Macfadyen, G (2010) Regional Dependency on Fisheries. 379.204, European Parliament (ed), Brussels. Sissenwine, M. (2010) An overview of the state of stocks. Presentation made at the "State of European Fish Stocks in 2010" European Commission. Brussels. 14 September 2010. TEEB (2010) The Economics of Ecosystems and Biodiversity in National and International Policy Making. Earthscan, London. Torkler, P., Arroyo, A., Kettunen,. M. 2008. Linking Management and Financing of Natura 2000. Final report. 51 pp. Tokarski, S. (2010) Presentation made at the Seminar on Financial Policy in the Common Fisheries Policy. April 13th 2010. http://ec.europa.eu/fisheries/news_and_events/events/seminar_130410/3_tokarski_en.pdf Turpie, J.K., Marais, C. & Blignaut, J.N. (2008) The working for water programme: Evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa. Ecological Economics, 65:788-798. World Bank (2010): Rising Global Interest in Farmland. Can It Yield Sustainable and Equitable Benefits? September 7, 2010. 14 The Social Dimension of Biodiversity Policy: Final Report (201 I) ANNEX A - DETAILS ON THE EMPLOYMENT DATA The following details the main issues arising from the EU and global employment data, as well as any assumptions that had to be made in order to aggregate the global data, and in the population of Table 2. Global employment data Global employment figures per main industry sectors were taken for each country from Laborsta (an International Labour Office database on labour statistics operated by the International Labour Organisation Department of Statistics - http://laborsta.ilo.org). Laborsta presents information on total employment by economic activity for all the world's economies. The data illustrates absolute figures on 15 the distribution of the employed by economic activity, according to either the industry classifications ISIC-68 (http://laborsta.ilo.org/applv8/data/isic2e.html) or ISIC Rev.3 (http://laborsta.ilo.org/applv8/data/isic3e.html), or to both versions side by side, in cases where the latest revision of this international classification has been adopted during the 10-year time series covered in the Yearbook. Hence the figures used are the average over the 10-year time series period. Data sources employed by laborsta to compile employment statistics include either the population census and the Labour force survey. Assumptions for data aggregation There were some inconsistencies in the Laborsta data; reported stats are presented by the different countries statistical offices of each country using different levels of detail. Reporting requirements and level of detail shown on figures for each of the industry sectors under the international standard industry classifications (ISIC) differ between countries. Therefore, the following assumptions were necessary to ensure a minimum level of consistency for aggregation: i) ISIC-Rev 3 classification was employed, ii) only stats sourced from the Labour force survey were used and iii) averages from 1999-2008 were calculated and used for aggregation to achieve consistency between data for different years. Employment figures are aggregated by World Bank region. The World Bank divides emerging economies into six different regions (South Asia, Europe & Central Asia, Middle East & North Africa, East Asia & Pacific, Sub-Saharan Africa and Latin America & Caribbean). Data for these regions are comprised of data for the following countries: • South Asia (SA) - Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka • Europe and Central Asia (E&CA) - Armenia, Azerbaijan, Bulgaria, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, The former Yugoslav Rep. of Macedonia, Republic of Moldova, Montenegro, Poland, Romania, Russian Federation, Serbia, Tajikistan, Turkey, Ukraine • Middle East and North Africa (MENA) - Algeria, Egypt, Islamic Rep. Of Iran, Iraq, Morocco, Arab Rep. Syrian Arab Republic, West Bank and Gaza Strip, Rep. Of Yemen • East Asia and Pacific (EA&P) - Cambodia, China, Indonesia, Malaysia, Mongolia, Papua New Guinea, Philippines, Samoa, Thailand, Tonga, Viet Nam • Sub-Saharan Africa (SSA) - Botswana, Ethiopia, Lesotho, Madagascar, Mali, Mauritius, Namibia, Senegal, Sierra Leone, South Africa, United Republic of Tanzania, Uganda • Latin America and Caribbean (LA&C) - Argentina, Belize, Bolivia, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Lucia, Uruguay A full breakdown of employment figures for the above regions is given below (employment figures are in thousands). Please note that further aggregation by industry sector is impossible as some countries have reported employment stats only in broad categories of the ISIC-Rev 3 classification (for example the A-C category covers jobs in Agriculture, fishing and manufacturing). There are some grounds to believe that some stats have been double counted between categories. As the totals in some cases are above a 100%. Industry classification Employment by Region (thousands) LA&C SSA SA MENA E&CA EA&P Agriculture, Hunting and Forestry 30623.8 30261.3 29081.5 15169.9 29892.0 93971.3 Fishing 709.1 565.7 1091.3 297.3 251.8 4715.2 Mining and Quarrying 852.0 821.8 77.7 438.4 2128.6 6490.5 Manufacturing 27123.2 5435.6 6638.2 9063.8 24252.1 59705.5 Electricity, Gas and Water Supply 831.9 232.3 118.3 728.0 2952.9 3665.2 Construction 12132.5 2125.4 1912.2 7356.2 9512.4 19811.0 16 The Social Dimension of Biodiversity Policy: Final Report (201 I) Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal and Household Goods 35411.0 6666.9 7936.1 9715.2 19976.4 40874.3 Hotels and Restaurants 7003.3 1546.1 887.9 1007.2 3013.7 8096.9 Transport, Storage and Communications 9789.2 1569.1 4058.7 5077.8 11602.0 16922.8 Financial Intermediation 2029.6 112.3 386.9 585.9 2181.7 5379.2 Real Estate, Renting and Business Activities 8894.1 256.7 249.7 1149.1 6751.8 8817.8 Public Administration and Defence; Compulsory Social Security 8103.3 1034.4 1525.6 6662.3 9981.8 19018.1 Education 9153.2 1007.3 1698.1 5104.7 12309.4 21615.2 Health and Social Work 9008.8 358.6 580.9 1604.0 9229.6 7272.9 Other Community.Social and Personal Service Activities 6489.5 1342.1 2645.7 1409.2 5101.1 5774.0 Households with Employed Persons 10236.8 2376.0 366.6 110.6 335.8 5165.8 Extra-Territorial Organizations and Bodies 39.0 80.7 8.2 19.9 22.1 15.2 Not classifiable by economic activity 885.9 547.2 315.6 312.8 21.2 3787.8 World Bank regions were used to aggregate data for employment in developing economies. However, employment data from Laborsta was limited to a subsection of those included in the World Bank regions; data was only available for 77 countries out of a possible 144 developing economies according to the World Bank's categorisation. In the case of some regions (for instance South Asia and Sub-Saharan Africa), the proportion of employment covered by Laborsta figures was low (as little as 10% in South Asia). In other cases however, Laborsta figures covered as much as 73% of the region's employment (in the case of Europe and Central Asia). As a whole, the Laborsta figures cover only 32% of all possible jobs in developing economies. Consequently, a significant assumption has been made in order extrapolate the data to obtain employment figures for the entire World Bank regions, namely that the share of jobs for which Laborsta data was available were representative of the entire region. By multiplying the World Bank total employment per region by the percentages found for each sector according to the available Laborsta data for each region, it was therefore possible to obtain an indication of the total employment per sector, per region. 17 Employment by Region (thousands) All regions LA&C SSA SA MENA E&CA EST. % EST. % EST. % EST. % EST. % EST. Industry classification Laborsta % Total** Laborsta Total** Laborsta Total** Laborsta Total** Laborsta Total** Laborsta Total** Agriculture, Hunting and Forestry 229000 27% 708754 30624 17% 45293 30261 54% 177616 29082 49% 299433 15170 23% 25641 29892 20% 41203 Fishing 7630 1% 23616 709 0% 1049 566 1% 3320 1091 2% 11236 297 0% 503 252 0% 347 Mining and Quarrying 10809 1% 33454 852 0% 1260 822 1% 4823 78 0% 800 438 1% 741 2129 1% 2934 Manufacturing 132218 16% 409216 27123 15% 40116 5436 10% 31904 6638 11% 68349 9064 14% 15320 24252 16% 33429 Electricity, Gas and Water Supply 8529 1% 26396 832 0% 1230 232 0% 1363 118 0% 1218 728 1% 1230 2953 2% 4070 Construction 52850 6% 163570 12133 7% 17944 2125 4% 12475 1912 3% 19689 7356 11% 12434 9512 6% 13112 Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal and 120580 14% 373195 35411 20% 52373 6667 12% 39131 7936 13% 81713 9715 15% 16421 19976 13% 27535 Household Goods Hotels and Restaurants 21555 3% 66713 7003 4% 10358 1546 3% 9075 888 1% 9142 1007 2% 1702 3014 2% 4154 Transport, Storage and Communications 49020 6% 151716 9789 5% 14478 1569 3% 9210 4059 7% 41790 5078 8% 8583 11602 8% 15992 Financial Intermediation 10676 1% 33041 2030 1% 3002 112 0% 659 387 1% 3984 586 1% 990 2182 1% 3007 Real Estate, Renting and Business Activities 26119 3% 80839 8894 5% 13155 257 0% 1507 250 0% 2571 1149 2% 1942 6752 5% 9307 Public Administration and Defence; 46326 6% 143377 8103 5% 11985 1034 2% 6071 1526 3% 15708 6662 10% 11261 9982 7% 13759 Compulsory Social Security Education 50888 6% 157498 9153 5% 13538 1007 2% 5912 1698 3% 17484 5105 8% 8628 12309 8% 16967 Health and Social Work 28055 3% 86830 9009 5% 13324 359 1% 2105 581 1% 5981 1604 2% 2711 9230 6% 12722 Other Community,Social and Personal Service 22762 3% 70447 6490 4% 9598 1342 2% 7877 2646 4% 27241 1409 2% 2382 5101 3% 7031 Activities Households w ith Employed Persons 18592 2% 57541 10237 6% 15140 2376 4% 13946 367 1% 3775 111 0% 187 336 0% 463 Extra-Territorial Organizations and Bodies 185 0% 573 39 0% 58 81 0% 474 8 0% 84 20 0% 34 22 0% 30 Not classifiable by economic activity 5871 1% 18169 886 0% 1310 547 1% 3212 316 1% 3250 313 0% 529 21 0% 29 TOTAL 841662 100% 2604943* 179316 100% 265211* 56340 100% 330679* 59579 100% 613447* 65812 100% 111238* 149516 100% 206091* |% represented 32% 68% 17% 10% 59% 73% "Total employment numbers per World Bank region have been sourced from: http://data.worldbank.org/about/country-classifications/country-and-lending-groups (Data downloaded 18-06-2010) ** Total employment figures per sector per region have been estimated by multiplying the percentages obtained for some countries by region in the Laborsta stat by the total figures obtained in the World Bank statistics. 18 The Social Dimension of Biodiversity Policy: Final Report (201 I) EU employment data EU employment figures were derived from OECD Input-Output tables and Eurostat for the year 2008. These figures had to be made consistent with the E3ME classification, which was more detailed, to obtain a total headcount employment. For more information, see Annex C of GHK 2007. Assumptions for populating the typology table Some assumptions had to be made in order to fit the figures into the typology laid down in Table3, as follows: Type (from Typology) Sector (from Typlogy) Combined sector categories on which the employment figure is based (in some cases these are identical) 1. Primary Industries highly dependent on ecosystem services Agriculture, forestry, fisheries Agriculture, forestry, fisheries Water Supply Water supply 2. Processing and Manufacturing industries dependent on ecosystem services for inputs and processes Energy Supply Electricity Supply ; Gas Supply Mining Coal ; Oil and Gas ; Other Mining Food, drink, and tobacco Food, Drink and Tobacco Textiles, clothing and leather Textiles, Clothing and Leather Wood and paper Wood and Paper; Printing and Publishing Pharmaceuticals Pharmaceuticals Other manufacturing industries Manufactured fuels, Chemicals nes; Rubber and Plastics ; Non-metallic Mineral Products ; Basic Metals ; Metal Goods ; Mechanical Engineering ' Electronics ; Electrical Engineering and Instruments ; Motor Vehicles ; Other Transport Equipment ; Manufacturing nes. 3. Services activities dependent on cultural services Hotels and catering Hotels and Catering Media and creative industries (Communications) Communications Education Education 4. Services activities dependent on provision of raw materials and fuel Construction Construction Transport Distribution ; Land Transport ; Water Transport ; Air Transport 5. Other activities Retailing ; Banking and Finance ; Insurance ; Computing Services ; Professional Services ; Other Business Services ; Public Administration and Defence ; Health and Social Work ; Miscellaneous Services 19 Annex B - Links between Biodiversity and Ecosystem Services', which provides the basis for the general overview presented below. Based on available evidence, a judgement has been made on the strength of the linkage, the extent to which the service is likely to change in importance in the future, as well as the extent to each service may be subject to thresholds or tipping points (where a small change in nature has disproportionate effects). In many cases, the likely increased importance of the service being delivered is due to the resilience that biodiversity provides, rather than the actual diversity per se (noted in the table below as 'R' and 'D' respectively). This is largely a consequence of the increased likelihood of systems being subject to shocks, both in terms of absolute numbers and their degree (e.g. climate change, general environmental pollution, disease, natural hazards). For instance, the strength of the linkage between food provision and biodiversity is quite weak (with lower biodiversity actually being associated with increased productivity in some cases). The sensitivity of the system to decreases in biodiversity therefore appears to be low, until the system is subject to a disturbance, when the resilience that biodiversity confers (rather than actual productivity) is needed. A case in point would be the potato famine in Ireland, where the low genetic diversity of the potatoes cultivated is thought to have made the entire crop susceptible to potato blight fungus, a problem resolved by using resistant varieties from original gene pools in South America. Table 3.1: The extent to which ecosystem services depend on biodiversity Ecosystem Service Link to biodiversity Provisioning services Provision of Genetic resource provision, for example provision of genes genetic and genetic material for animal and plant breeding and for resources biotechnology, is directly related to the current level of biodiversity. Provision of food Only 30 crops provide an estimated 90% of the world and fibre population's calorific requirements. Fewer than 14 species account for 90% of global livestock production. Trees planted in Europe tend to be grown at high densities in large-scale monocultures with limited scope for biodiversity. However, new crop and livestock varieties could be important for future production and to improve the resilience of existing production to disease and disruption. Regulating services Pollination and 80% of angiosperms are pollinated by animals. However, seed dispersal most plants attract and can be pollinated by a range of pollinators. Nonetheless, the diversity and abundance of pollinators influences the quality of the pollination services, and therefore the quantity and quality of plant productivity. The diversity of plants also influences the health and survival of pollinators. Given the reliance on the domesticated honeybee and its current precipitous decline highlights the importance of pollinator diversity to improve the resilience of crop production. Invasion Although areas of high species richness (such as biodiversity resistance hot spots) are more susceptible to invasion than species- poor areas, within a given habitat the preservation of the natural species pool can increase resistance to invasions. Key native species are very competitive and can act as biological controls to the establishment of aliens. Species-rich communities are more likely to contain highly competitive species and fewer vacant niches, and are Strength Likely of linkage trend in importance A (R) A(R) A(R) Risk of abrupt changes in service delivery Low to Medium (but High in the case of onetime use benefits) Low to Medium (mostly localised effects) Medium to High Medium to High 20 The Social Dimension of Biodiversity Policy: Final Report (201 I) therefore more resistant to invasions. Climate The functional characteristics of dominant species, and Regulation hence the type and distribution of habitats across landscapes, are a key element in determining climate regulation. These characteristics affect climate by influencing albedo, evapotranspiration, temperature, fire regimes, and the capacity of ecosystems to sequester carbon. Overall, the current evidence suggests that biodiversity has a moderate impact in climate regulation Pest Control Evidence indicates that the spread of pathogens is less rapid in more biodiverse ecosystems, in that high species richness can slow down the spread of pests and pathogens. Genetic diversity also reduces density of hosts for specialist pests, and thus their ability to spread. The maintenance of natural pest control services is therefore strongly dependent on biodiversity. Disease control Human health, particularly risk of exposure to many and human infectious diseases, may depend on the maintenance of health biodiversity in natural ecosystems. Over 60% of human pathogens are naturally transmitted from animals to humans. However, greater diversity of wildlife species might be expected to sustain a greater diversity of pathogens that can infect humans. Nonetheless, intact ecosystems play an important role in regulating the transmission of many infectious diseases due, for instance, to the dilution effect. Overall evidence indicates that human health is supported as an ecosystem service by biodiversity in some cases, but the generality of this service is poorly known. Water Fresh water services are the result of interactions among the purification and ecological components within ecosystems and those in the waste treatment catchment; biodiversity influences that ecological character and therefore the services provided. Soil micro-organisms are especially important in purification. The capacity for an environment to assimilate wastes is highly dependent upon local conditions. Wetlands play a key role in treating and detoxifying a variety of waste products. In turn, these abilities are determined by the ecological characteristics of wetlands. The role of species diversity is unclear given that many of the processes can be performed by a wide variety of species ; there seems to be high functional redundancy in the effects of species on the provision and regulation of freshwater water. Water cycling Fresh water services are the result of interactions among the and regulation ecological components within ecosystems and those in the catchment; biodiversity influences that ecological character and therefore the services provided. Natural processes play key roles: vegetation is a major determinant of water flows and quality, whilst soil state and vegetation both act as key regulators of the water flow and storage and microorganisms play an important role in the quality of groundwater. However, the relationship of water regulation to biodiversity is poorly understood. Nonetheless, changes in species composition can have significant impacts, and native flora may be more efficient at retaining water. Regulation of The extent to which ecosystems mitigate the effects of natural hazards natural hazards is still unclear. However, ecosystem integrity is important in providing protection from hazards, but less so to localised, geological hazards. Overall, biodiversity seems to play a relatively small part, although vegetation itself is very important. Supporting services A(R) Medium to High A (R) Medium to High A (D) Low to Medium A (D) Medium to High Medium to High A (R) Medium (dependent on extent of the relationship) 21 Nutrient cycling Soil formation Nutrient cycling requires a large number of different organisms from diverse functional groups; specific forms of biodiversity are critical to the performance of the buffering mechanisms that ensure the efficient use and cycling of nutrients in ecosystems. Soil formation is fundamental to soil fertility, especially where processes leading to soil destruction or degradation (erosion, pollution) are active. Biodiversity of soil organisms plays a major part in creating soil and maintaining soil function. Ecosystem There is established but incomplete evidence that reductions resilience in biodiversity reduce the resilience of ecosystems. A reduction in biodiversity reduces overall fitness and adaptive potential, and it limits the prospects for recovery of species whose populations are reduced to low levels. The impacts of reductions in biodiversity on ecosystems can be both spatially and temporally displaced. Cultural services Biodiversity has considerable intrinsic, aesthetic and spiritual values. Cultural services based on biodiversity are most strongly associated with less intensively managed areas, where semi-natural biotopes dominate. Maintenance of diverse ecosystems for cultural reasons can allow provision of a wide range of other services without economic intervention. Biodiversity provides a resource for tourism, recreation, education and the creative industries, both in itself and through its effect on landscape. Compiled by GHK from various sources: see Annex A-B for further details ▼(D) (except for agricultural systems in poorer countries) A (R) Low to Medium Low to Medium Medium to High Medium to High (localised effects) 3.3 Caveats to the Links between Biodiversity and Ecosystem Services 3.3.1 The Vulnerability of Ecosystem Services to Changes in Biodiversity It is crucial to note that there are essentially two main links between biodiversity and ecosystem services - the influence of biodiversity on the amount of the service being delivered, as well as its influence on the stability of that provision over time. In the case of the former, the relationship is far from straightforward, in that more biodiversity does not necessarily mean more of an ecosystem service is provided. The extent to which changes in biodiversity affect the amount of services being delivered varies considerably depending on the spatial scale, the type of ecosystem service, and the aspect of biodiversity being considered (e.g. species richness, species abundance, functional diversity, trophic interactions, and compositional characteristics). As has been noted above, small changes in biodiversity can lead to dramatic and sometimes irreversible changes in ecosystem services. For instance, some systems—including coral reefs, glaciers, mangroves, boreal and tropical forests, polar and alpine systems, prairie wetlands, and temperate native grasslands—are particularly vulnerable to climate change because of limited adaptive capacity and may undergo significant and irreversible damage (MEA, 2005h). The loss of particular species could have a substantial impact on ecosystem functioning. Such "keystone species" or "ecosystem engineers" may not necessarily be identified in advance, which makes preventive mitigation policy difficult (MEA, 2005h). 22 The Social Dimension of Biodiversity Policy: Final Report (201 I) Box 3.2. Examples illustrating the links between biodiversity, marine ecosystem services and livelihoods There have been several cases in the past where changes to biodiversity have led to the degradation (or collapse) of ecosystems, with subsequent impacts on livelihoods. This is particularly obvious in the case of marine environments. Some examples are given below: In the late 1980s, the invasion of the Black Sea by a comb jellyfish and the subsequent collapse of the fishing industry led to 150,000 jobs being lost. Additionally, the degraded state of the environment led to a reported loss of $300 million in revenues from the tourist industry (Lubchenco, 1997). The Canadian cod fishery in Newfoundland, Canada, provided between 80 and 100% of income in some communities, and 20% of the population was employed in the fishery. Its collapse led to more than 40,000 people losing their jobs, including 10,000 fishermen (Vilhjalmsson, H. et al., 2010; WWF, undated) The number of fishermen across the EU has been steadily declining as a result of the deterioration of major commercial fish stocks in the last decade. In the harvesting sector, 22% of jobs have been lost (66,000 jobs), whilst the processing sector has experienced a 14% decline in employment. The absence of suitable alternative employment means small coastal communities are particularly vulnerable (IEEP, 2006). The degradation of the former Lake Karla in Greece and the consequent impact on commercial fisheries has meant that 1,300 fishermen have lost their jobs. The impact was especially severe given the lack of alternatives (IEEP, 2006). The bleaching of Palau's coral reefs in 1998 led to a 5-10% decline in the number of tourists visiting the area. The total losses to the Palau tourism industry in the 2 years following the bleaching are estimated to be as high as $750,000 (Pratchett, et al., 2008). Recent coral bleaching in the Philippines, is thought to result in economic losses ranging from $6 million up to $27 million, depending on the coral reef's recovery. Over the next 20 years following the 1998 bleaching event in the Indian Ocean, the total economic damages could reach $8 billion, including $1.4 billion in lost food production and from fisheries, $3.5 billion in lost tourism revenue and $2.2 billion in lost coastal protection (Pratchett, et al., 2008). Nonetheless, in other instances ecosystem services can be relatively stable regardless of changes in biodiversity. For example, the functionality of microbial communities is rarely impaired by ecosystem degradations in spite of decreases in microbial diversity reported in some cases. The most sensitive function may be nitrification, since it is operated by a relatively small, diverse group of microbes. The risk to this function seems to be very limited, although it is speculated that threshold effects might be observed in some conditions (MEA, 2005g). The existence of different levels of buffers at nested scales also has the potential to reduce the vulnerability of nutrient cycling services, since different options exist to support the services. However, although vulnerability may appear to be relatively low as a result, disturbances that have multiple effects that accumulate over time and space can nonetheless cause the system to collapse (MEA, 2005g). The same applies to some provisioning services. For instance, increases in the productivity of some fishery systems have been observed despite dramatic declines in diversity; catches from Lake Victoria increased from 30,000 million tonnes to an average of 500,000 million tonnes since the 1970s, despite the loss of roughly half the native species. The introduced Nile Perch now makes up around 90% of the landing's volume and value (Balmford & Rodriguez, 2008). 23 It is worth noting that while some ecosystems and the services derived from them are quite stable regardless of changes in their biodiversity, changes to those services through human manipulation can have a significant impact on the ecosystems and the biodiversity which underpins them. This can be seen in the case of climate change (see above) and nutrient cycling. For example, the human manipulation of nutrient cycling services has greatly affected all ecosystems. Dysfunctions in nutrient cycling, leading, for example, to eutrophication, have severe negative effects on biodiversity (MEA, 2005g). As the discussion above shows, the sensitivity to the which changes in biodiversity affect the provision of a specific ecosystem service varies. However, the extent to which changes in biodiversity influences the stability of that provision over time is much more straightforward; more biodiversity means that a system is more resilient, and therefore its delivery is more stable over time. This resilience is becoming increasingly important, partly because the effects of anthropogenic and environmental changes are becoming more prevalent. Crucially, this is arguably one of the most important and directly attributably benefits which biodiversity confers. It is therefore unfortunate that biodiversity is being lost at unprecedented rates, at a time when the ability of biodiversity to help ecosystem services resist and recover from disturbances is becoming more significant. 3.3.2 Substitutability Part of the debate around the substitutability of ecosystems and their services is the idea that ecosystems represent a form of capital (defined as a stock yielding a flow of services), and that this stock of 'natural capital' must be independently maintained in order to assure ecological sustainability (known as 'strong sustainability). The alternative view is that human-made capital can substitute for natural capital, so that, in other words, only the total of all capital stocks need to be maintained (known as 'weak sustainability'). This debate plays a central role in the field of ecological economics. Ecological economists hold the view that the stock of natural resources and ecological functions are irreplaceable, while neoclassical economists tend to maintain that man-made capital can, in principle, replace all types of natural capital. The latter view is based largely on the benefits of technological advances, in that every technology can be improved upon or replaced by innovation, and that there is a substitute for any and all scarce materials. However, ecological economists point out that substitution is, for instance, limited by the laws of thermodynamics in the production process. The laws of thermodynamics, for instance, place limits on the ability of technical change to offset the depletion or degradation of natural capital. Although human capital may be a substitute in individual processes in the short run, natural capital and human-made capital ultimately are complements because both manufactured and human capital require materials and energy for their own production and maintenance. As such, weak sustainability is based on the erroneous premise that 'self-generating technological change' can maintain a constant output with ever-decreasing amounts of energy and materials as long as ever-increasing amounts of human capital are available. Additionally, there are irreducible thermodynamic minimum amounts of energy and materials required to produce a unit of output that technical innovations cannot change. For instance, in sectors concerned with processing and/or constructing materials, technical change is subject to diminishing returns as it approaches these thermodynamic minimums. Essentially, no amount of substitution of capital for resources can ever reduce the mass of material resource inputs below the mass of the outputs, given the law of conservation of matter-energy (Perrings, 1999). Nonetheless, there are degrees to which ecosystem services are substitutable, whether by natural alternatives, or man-made ones. Ecosystem services vary in the extent and in the ease with which they can be substituted. Provisioning services are most easily substituted, mostly because they are associated with market prices and good (and sometimes better) technological substitutes are well established. On the other hand, supporting services as a whole are considerably less substitutable. 24 The Social Dimension of Biodiversity Policy: Final Report (201 I) The substitutability of regulating and cultural services varies depending on the service and context. As such, it is possible to place ecosystem services on a continuum of substitutability (Figure 3.2). Figure 3.2: The varying substitutability of different types of ecosystem services3 Supporting Cultural Regulating Provisioning Services Services Services Services 0 100 (zero) Substitutability (perfcct) Substitution of provisioning services Although biodiversity is of high importance to certain sectors (e.g. agriculture, fisheries, forestry), there are some caveats to consider. Increasingly, the inputs that the sectors used to rely on heavily have become substitutable, decreasing to some extent the dependence of the various activities on biodiversity as a continued resource. For example, there is a decreased reliance on wild services in favour of those delivered through cultivation - nearly one third of the fish and timber supplied to markets comes from farming (MEA, 2005p). Aquaculture in particular contributed approximately 27% of fish harvested and 40% (by weight) of all fish consumed as food in 2002. However, the variety of supply from aquaculture is well below that of capture fisheries: only five different Asian carp species account for about 35% of world aquaculture production, and inland waters currently provide about 60% of global aquaculture outputs (MEA, 2005c). In forestry, plantations are providing an increasing proportion of timber products. In 2000, plantations were 5% of the global forest cover, but they provided some 35% of harvested roundwood, an amount anticipated to increase to 44% by 2020 (MEA, 2005d). This trend towards cultivated rather than wild inputs has been accompanied by a substantial reduction in the genetic diversity of domesticated plants and animals in agricultural systems (MEA, 2005o). The losses of crop genetic diversity due to modern agricultural methods have been well documented. In China, for example, only 10% of the 10,000 wheat varieties present in 1949 were available in the 1970s, while in Mexico only 20% of maize varieties planted in the 1930s remain and in the United States only 15-20% of apple, cabbage, maize, pea, and tomato varieties grown in the nineteenth century are available today (MEA, 2005e). In Europe, 50% of livestock breeds that existed 100 years ago have disappeared (MEA, 2005c). The loss of varieties has for the moment not had a major influence on agricultural output at a global scale. However, there are dangers of a loss of genetic diversity to agriculture and also a danger of basing agriculture on only a minority of crop varieties. In Ireland in 1845, for instance, a mildew epidemic destroyed the entire potato crop for two consecutive years. Because potatoes were the basis of the local diet and there was only one variety on the island, over one million Irish died and another one million emigrated to North America to escape starvation (GHK, 2007). Some of these on-farm losses of genetic diversity have been partially offset by genetic tools, such as the maintenance of genetic diversity in seed banks, and yields have continued to increase in many sectors (MEA, 2005o). Plant breeding for example has been complemented by deliberate programs of genetic enhancement or "base broadening" in order to incorporate genetic variation into plant breeders' stocks, which has enabled, inter alia, the maturity period for annual and perennial crops to be shortened and drought resistance and nutrient use efficiency to be increased (MEA, 2005c). With regard to timber, gains in production will also come from insect and disease-resistant trees, 3 Taken from "COPI Task 3: Potential for Substitution". Available from: http://ec.europa.eu/environment/enveco/biodiversitv/pdf/ieep alterra report.pdf 25 genetically improved trees with higher yields and improved fibre characteristics. There is therefore a reduced harvest from natural forests in most regions (MEA, 2005d). Other examples include: • The substitution of a variety of other materials for wood, such as steel, vinyl, and plastics, has contributed to relatively slow growth in global timber consumption in recent years (MEA, 2005c; MEA, 2005d). • In the paper industry, plastics and other materials have replaced some paper bags, packing papers, and paperboard (MEA, 2005d) • Competition from non-cellulosic fibres has increased significantly in recent years; total world fibre production has grown by 63% in the last two decades, while the proportion of natural (cellulosic) fibres has declined from almost two thirds to under one half (MEA, 2005d) This has meant that in some sectors, constraints or losses in biodiversity as inputs will be unlikely to affect the outputs. This is due both to production from natural forests being replaced by production from plantation forests, as well as the impact of competing materials. The future availability of wood supplies in the United States for instance, is likely to be related more to growth and productivity of managed and planted forests than to the area of natural forests or gross forest stock (MEA, 2005d) It is important to note two related characteristics of substitution. Firstly, substitution is quite often costly. Secondly, and consequently, richer groups of people are often less affected by the loss of biodiversity and the related ecosystem services because of their ability to purchase substitutes or to offset local losses by shifting production and harvest to other regions. Examples which demonstrate the socio-economic limits to substitutability are given in Box 3.3. Box 3.3. Socio-economic limits to the substitutability of provisioning services The two examples below illustrate that in some cases, although substitutes are available, these are often associated with prohibitive costs that mean they are not accessible by all. Additionally, the impacts on livelihoods can be significant. Technological substitution - the case of genetic modification In the past, natural breeding was used for increasing yields by drawing upon the natural pool of genetic resources. Biodiversity also improves an ecosystem's natural resistance and resilience to pests and disease, and to the establishment of invasive species (see Table 3.1). More recently, genetic modification (GM) has become a technological tool to increase yields and protect crops against pests and disease. However, it is has been argued that the characteristics of GM, namely high costs and patenting practices, introduce an anti-poor bias. The patents that biotechnology companies place on their seeds mean that farmers using that seed are prohibited from saving, reselling or exchanging that seed. However many farmers, especially poorer ones, depend on saved seed and its re-use from one year to the next. Perhaps more importantly, GM seeds are significantly more expensive than traditional seeds. Combined with the cost of other inputs (e.g. the associated herbicides with herbicide-tolerant seeds), and "technology use payments", this makes the technology often prohibitively expensive. In India for example, farmers could buy a kilogram of local seed for as little as Rs7 or Rs9 in 1991. By 2003, a 450g bag of hybrid seed cost Rs350 (US$7). By 2004, a 450g bag of Bt cotton seed (which was modified to protect a cotton crap against bollworm infections), was selling at between Rs1,650 and Rs1,800 ($33 to $36). In addition, the costs of pesticides for farmers increased from Rs921 million to Rs13,264 billion in the same period (a 13 fold increase). Bt cotton seeds also require double the amount of water to traditional seeds (ISIS, 2010). 26 The Social Dimension of Biodiversity Policy: Final Report (201 I) However, state support and marketing campaigns highlighting improved yields meant farmers in some Indian regions adopted GM seeds despite the higher costs. In some cases, farmers are said to have become heavily indebted through the need to borrow money to buy the seeds. Unfortunately, rains failed for two years, leading to extensive crop failure. Some believe that this, combined with the indebtedness caused by the widespread adoption of GM crops, contributed to a wave of farmer suicides (ISIS,2010). One journalist reported an estimated 125,000 farmers had committed suicide as a direct result of the debt incurred by choosing to purchase and grow GM crops (Malone, 2008). Nonetheless, the International Food Policy Research Institute found that suicides among Indian farmers have not increased as a result of the introduction of GM crops. Although it was found that there were some catastrophic failures of Bt cotton varieties for some farmers after their initial introduction, conventional varieties were found to have been equally affected because of the drought. Since then, they report that the adoption of GM varieties have led to increases in yield and a 40% decrease in pesticide use (IFPRI, 2008). Geographical substitution - the mobility of fishing fleets Many factors, including technological advances have led to the over-exploitation and depletion of numerous fish stocks. It is estimated that 52% of all fish stocks are fully-exploited and a further 17% over-exploited. The depletion of fish stocks in some areas has led to fishing fleets moving further afield and replacing an over-fished stock with another situated somewhere else. This allows the same service to be obtained from the same type of ecosystem, but only in a different location (geographic substitution). Critically however, this is far easier for larger, international fishing fleets but small-scale traditional fleets exploiting local resources are limited in their ability to substitute the fish stocks in their area for another. For example, as fish stocks have been depleted in the north Atlantic, European and other commercial capture fisheries shifted their fishing to West African seas, but this has adversely affected coastal West Africans who rely on fish as a cheap source of protein (MEA, 2005o). In the case of Senegal, fisheries are characterised by artisanal and traditional fishing, a low-technology approach, low initial investment and a large workforce. The fish stocks in the area support 47,000 artisanal fishermen, constituting more than 7% of the active population and landing more than 70% of the total volume of fish caught. With the progressive overfishing of European waters, European fishing fleets have moved to places like Senegal in search of new fishing grounds. Fishing stocks in the area have become increasingly affected, with knock on impacts on the marine environment and the local fishing communities which dependent on it. As a consequence, artisanal fishermen are having to travel further out to sea. Those unable to afford the additional equipment and fuel required to do so are instead fishing to supply European or Asian boats (who use local fishermen to obtain access to coastal resources). Despite the apparent relative abundance of substitutes for provisioning services, the dependence on biodiversity and the relevant genetic resources as an input is still critical. Aquaculture, for example, is still extremely dependent on marine fisheries for its inputs (cultured fish are fed on fish meal and fish oil that comes largely from fishing) and, looked at from a global perspective, it may not be reducing the actual dependency on wild marine fisheries (TEEB, 2008). Furthermore, it is likely that the need for biodiversity as an input in some sectors might increase. For instance, as traditionally used inputs are depleted, non-natural substitutes might not be suitable or readily available. Consequently, other natural inputs might need to be found as replacements from the stock of available biodiversity; about half of the wild marine fish stocks for which information is available are fully exploited and offer no scope for increased catches. However, 25% are underexploited or moderately exploited (MEA, 2005c) and therefore provide scope for diversification. Nonetheless, at the global level, fishery substitution potential will decrease with time (TEEB, 2009a). 27 The emergence of new and changing needs might also increase the dependence on biodiversity as an input in some sectors. Alarming levels of antibiotic resistance in many human pathogens for instance, are likely to provoke an increase in pharmaceutical bio-prospecting (MEA, 2005e). Moreover, hundreds of medicinal plant species, whose naturally occurring chemicals make up the basis of over 50% of all prescription drugs, are threatened with extinction (TEEB, 2008). Consequently, other options may have to be found, for which biodiversity might prove significant. The importance of biodiversity stocks might also become more important as the need grows to improve a sector's resilience in the face of environmental shocks. Substitution of regulating and supporting services The substitution of regulating and supporting services is considerably more difficult. The degree to which ecological services can be replaced by technologically generated alternatives is very uncertain. In some cases, substitution of services can happen by natural means: the services lost from the original ecosystem may be (partly) substituted for by exploiting another, similar ecosystem in some other location (TEEB, 2009a). For instance, the case of mining along the Kafue River in Zambia, Zambians have traded off the quality of upstream wetlands while retaining the properties of drinking water and food (provisioning services) provided by the lower portions of the watershed (MEA, 2005k). In other cases, substitution of ecosystem services can be by artificial means: their loss may be substituted by technical solutions (artificial substitutes) (TEEB, 2009a). Replaceability depends upon what services people want to replace, what technologies are available, and what other ecosystem services are (intentionally or accidentally) traded off by the technological replacement. There are limits to substitution potential, with very important implications for society (TEEB, 2009a). For some services and groups of society, there are: no alternatives; only degraded alternatives; or much more costly - even unaffordable - alternatives. As noted already in the discussion of the substitutability of biodiversity, the substitution of ecosystem services, where possible, is often costly. The effects are therefore often regressive, leaving vulnerable populations without access to the substitutes even where these are available. This point is illustrated in Box 3.4, which considers the case of substituting fresh water. Finding substitute sources of services - water, fuel wood, food provision - or creating substitutes - e.g. water purification - can lead to higher social costs, to higher economic costs beyond the reach of some social groups and to potential loss of quality. Substitution is also potentially limited by timescale and geography, as well as wealth (TEEB, 2009a). Table 3.2 gives some examples of the financial costs associated with the implementation of evaluated artificial substitutes for the following ecosystem services: (i) water regulation, (ii) water purification and (iii) carbon storage. These relate to specific cases and are therefore not necessarily representative. 28 The Social Dimension of Biodiversity Policy: Final Report (201 I) Table 3.2: Financial costs associated with the implementation of artificial substitutes in the case of some regulating ecosystem services4 Artificial Substitute Associated costs Water Regulation Runoff Diversion Negligible Agricultural practices Low, but very much correlated to the region and the respective production system Embankments €4 million per km Flood reservoirs €2490 - €3670 per m3 Groundwater infiltration €0.75-€7.50 perm3 Water purification Agricultural practices €1 - €23 per kgN (depending on the production system and the intended reduction level) Sewage treatment plant €15.8 million at 49 million litres per day For nitrogen removal, marginal costs of €6 - €25 per kgN and for phosphorous removal costs of €20 - €35 per kgP are reported in Germany Water purification plant €365 million (construction costs) and €17.2 million (O&M) per year: €0.29 per m3 Carbon storage Carbon capture and storage €0.5 -€1.1 billion per plant; €35 - €50 per tonne of carbon abated Box 3.4. The potential for fresh water to be substituted The pollution of natural freshwater resources may require substitutes for drinking water. The potential substitutes are illustrated in Figure 3.3 below. As the Figure shows, the cost of these substitutes varies. While some options can be implemented at little or no extra cost, other substitutes can be associated with significant costs. For instance, bottled water (the most expensive substitute for drinking water) can cost as much as 10,000 times that of tap water, amounting to €1.88 per litre. Such high prices often lead to social problems in developing countries, where the poor cannot afford the cost of the substitute. Besides the social impact, bottled water also has a much higher environmental impact than other natural options, given the carbon intensity of its production and transport. Additionally, huge amounts of packaging waste are associated with the consumption of bottled water. A similar situation exists in the case of desalination, which is also accompanied by high financial costs and energy-consuming production. 4 Taken from: "COPI Task 3: Potential for substitution" Available from: http://ec.europa.eu/environment/enveco/biodiversitv/pdf/ieep alterra report.pdf 29 Figure 3.3: Substitution potential for ecosystem services - The case of freshwater (TEEB 2009a) Bottled SocinIcost: lew can Water ufford Social impact Cost Water lit local well SijuiuJ «ist ní divsimrníty TVater z = 0.6518). The homoskedasticity of the distribution of residuals is investigated by visual investigation of plot of residuals versus fitted values (Fig. 3) and by means of both White's test and Breusch-Pagan test. Both tests do not reject the hypothesis of homoskedastic distribution of residuals (p-level = 0.7097; Prob > F = 0.9117). Fig. 3. Plot of residuals versus fitted predicted values The presence of multicollinearity between predictor variables was investigated by means of the variance inflation factor (VIF). Table 5 illustrates the values of VIF and tolerance (1 A/IF) for the regression variables. All values of VIF are lower than 10 and tolerance is higher than 0.1, which suggests that none of the variables can be expressed as a linear combination of other variables. 205 Table 5. Variance inflation factor (VIF) and tolerance Stated preference Revealed preference Mixed Marginal Size (In) Latitude 35°N-45°N Latitude 45 °N-55°N Latitude higher than 55 °N Cultural services: recreation Cultural services: passive Provisioning Regulating Real GDP per capita (In) Population density (In) Total freshwater ecosystem area Total known bird species Maximum monthly temperature 2.06 2.10 1.16 1.37 1.28 3.88 4.43 2.30 1.97 1.71 2.02 1.58 4.31 2.00 6.97 5.06 2.85 0.486 0.475 0.864 0.730 0.782 0.258 0.225 0.434 0.508 0.584 0.496 0.632 0.232 0.500 0.144 0.198 0.351 Mean VIF 2.77 For what concerns model specification, both the link test for model specification (p-value of _hatsq = 0.669) and the regression specification error test for omitted variables (Prob > F = 0.167) do not suggest specification errors. Finally, we tested for dependencies between observations from the same study by running the regression clustering for studies. Overall, the results are consistent with what shown in Table 3, but for the standard error of some of the variables, which is modestly enlarged making the coefficients not statistically significant. Such variables are 'Latitude 35°N-45°N' (p-level = 0.104), 'mixed' (p-level = 0.179), 'Real GDP per capita' (p-level = 0.110), and 'Total known bird species' (p-level = 0.160). 3. Meta-analysis of the value of recreation in coastal ecosystems The meta-regression model used in the analysis of recreation values of coastal ecosystems is specified as follows: where \r\(yj) is the natural logarithm of the endogenous variable (US$/person/year); the subscript /' is an index for the value observations; a is a constant term; bv, bs and bc are vectors containing the coefficients of the explanatory variables Xv (valuation study characteristics), Xs (site characteristics), and Xc (context characteristics); and u is an error term that is assumed to be well-behaved. In the meta-regression the value observations are assumed to be independent. In the semi-logarithmic model the coefficients measure the constant proportional or relative change in the dependent variable for a given absolute change in the value of the explanatory variable. For the explanatory variables expressed as logarithms, the coefficients represent elasticities, that is, the percentage change in the dependent variable given a one-percentage change in the explanatory variable. To allow for a comparison between values that have been calculated in different years and expressed in different currencies and metrics, values are standardised to the common metric of 2003 US$ per person per year. Values referring to different years were deflated using appropriate factors from the Millennium Development Indicators (World Bank 2006), while differences in purchase power among the countries ln( j, ) = a + bv X Vi + bs X Si + bc X (1) 206 The Social Dimension of Biodiversity Policy: Final Report (201 I) were accounted for by the Purchase Power Parity index provided by the Penn World Table (Heston et al. 2006). Table 6 illustrates the final set of explanatory variables used in the meta-regression. Table 6. Explanatory variables of the meta-regression model Group Variable Units and measurement Mean (SD) Study (Xvi) Stated preference method Binary (range: 0 or 1) 0.59 (0.49) Revealed preference method Omitted category 0.41 (0.49) Marginal variation Binary (range: 0 or 1) 0.57 (0.50) Total value Omitted category 0.43 (0.50) Household value Binary (range: 0 or 1) 0.14(0.34) Individual value Omitted category 0.86 (0.34) Site (XSi) Beach Binary (range: 0 or 1) 0.47 (0.50) Coral reef Binary (range: 0 or 1) 0.08 (0.27) Other coastal ecosystem Omitted category 0.45 (0.50) Recreational fishing a Binary (range: 0 or 1) 0.52 (0.50) Non-consumptive recreation3 Binary (range: 0 or 1) 0.65 (0.48) Context (Xa) Real GDP per capitab Natural log of 2003 l$ (PPP) 10.36 (0.53) Population density 0 Natural log of inhabitants per km2 3.66 (1.11) Total known bird species0 Natural log of number of species 6.59 (0.32) Threatened bird species 0 Natural log of number of species 3.75 (0.83) Minimum monthly temperature 0 Degrees Celsius 13.40 (8.60) Maximum monthly temperature 0 Degrees Celsius 23.03 (5.83) a The variables identifying ecosystem services are not mutually exclusive, since individual observations may pertain to two or more services;b At country level, but for the USA and EU countries where it is evaluated at state and NUTS2 level respectively;0 At country level. The results obtained from the meta-regression with ordinary least squares (OLS) are presented in Table 7. In the model, the coefficients measure the constant proportional or relative change in the dependent variable for a given absolute change in the value of the explanatory variable. It is reminded that for the explanatory variables expressed as logarithms, the coefficients represent elasticities, i.e., the percentage change in the dependent variable given a one-percentage change in the explanatory variable. Table 7. Results of the meta-regression Type Variable Coefficient St.error I Constant -3.724 0.175 Study (XVl) Stated preference method -0.550 0.189 Marginal variation -0.992 *** 0.192 Household value 0.903 *** 0.195 Site (XSi) Beach -0.007 0.175 Coral reef 0.587 0.432 Recreational fishing 0.884 *** 0.228 Non-consumptive recreation -0.530 ** 0.221 Context (Xa) Real GDP per capita 0.538 ** 0.211 Population density -0.225 * 0.134 Total known bird species 0.779 * 0.398 Threatened bird species -0.921 *** 0.223 Minimum monthly temperature 0.060 *** 0.023 Maximum monthly temperature 0.079 ** 0.031 OLS results obtained with STATA® statistical software. R2 = 0.49; Adj. R2 = 0.47. Significance is indicated with ***, ** and * for 1, 5 and 10% statistical significance levels respectively. Robust standard errors calculated with Huber-White estimators. A series of diagnostic tests are performed in order to investigate the normality and homoskedasticity of residuals. Normality is investigated by means of the Kernel density plot of the residuals, the standardized normal probability plot and quantiles of residuals plotted against the quantiles of a normal distribution (see 207 Fig. 4), and with the Shapiro-Wilk W test for normality. The homoskedasticity of the distribution of residuals is investigated by plotting residuals versus fitted values (see Fig. 5) and by means of both White's test and Breusch-Pagan test. 0.50 Empirical P[i] = Inverse Normal Fig. 4. Tests of normality of residuals: Kernel density plot of residuals {above); standardized normal probability plot (below left) and quantiles of residuals plotted against quantiles of normal distribution (below right) Fig. 5. Test of heteroskedasticity of residuals: plot of residuals versus fitted predicted values 208 The Social Dimension of Biodiversity Policy: Final Report (201 I) Fig. 3 illustrates a deviation of the distribution of the residuals from the normal distribution. This is confirmed by the Shapiro-Wilk test, which rejects the hypothesis of normal distribution (Prob > z = 0.0001). Visual investigation of Fig. 4 does not reveal evidence of heteroskedasticity in the distribution of residuals. The hypothesis of homoskedasticity is not rejected by the Breusch-Pagan test (Prob. > chi2 = 0.1782), but is rejected by White's test (p = 0.0000). Deviation from normality and heteroskedasticity in the distribution of residuals does not introduce bias into the coefficient estimates but compromises the reliability of the p-values in the regression. In order to mitigate the effect of non-normality and heteroskedasticity, we estimated in Table 2 standard errors obtained with the Huber-White estimators, which are more robust to the failure to meet assumptions concerning normality and homoskedasticity of the residuals. The presence of multicollinearity between predictor variables was investigated by means of the variance inflation factor (VIF). Table 8 illustrates the values of VIF and tolerance (1/VIF) for the regression variables. All values of VIF are lower than 10 and tolerance is higher than 0.1, which suggests that none of the variables can be expressed as a linear combination of other variables. Table 8. Variance inflation factor (VIF) and tolerance Variable VIF 1/VIF I Stated preference method 2.43 0.411 Marginal variation 2.47 0.404 Household value 1.33 0.752 Beach 2.06 0.486 Coral reef 2.22 0.450 Recreational fishing 2.97 0.337 Non-consumptive recreation 2.57 0.390 Real GDP per capita 2.58 0.388 Population density 2.39 0.419 Total known bird species 4.04 0.247 Threatened bird species 5.86 0.171 Minimum monthly temperature 7.69 0.130 Maximum monthly temperature 7.85 0.127 Mean VIF 3.57 With respect to model specification, both the link test for model specification (p-value of _hatsq = 0.781) and the regression specification error test for omitted variables (Prob > F = 0.183) do not suggest specification errors. 209 ANNEX H - GIS MAPS Fig. A. The total economic value of forest ecosystem in Europe Fig. B. Aggregated values of freshwater ecosystem services in European countries 210 The Social Dimension of Biodiversity Policy: Final Report (201 I) Fig. C. Aggregated values of coastal recreation in European countries 211