The Natural Capital Value of Forest Habitat Conservation

The Natural Capital Value of Forest Habitat Conservation
Brian DePratto (TD Economics) and Dan Kraus (Nature Conservancy Canada)
Conservation, including forest conservation, helps ensure that natural areas are protected and thus able to continue
providing their many benefits to nature and to people. Protected areas help to conserve important habitats and
species, maintain essential ecological processes, and provide benchmarks to monitor environmental change.
There has been increasing recognition of the importance of these areas to the quality of human life (Secretariat
of the Convention on Biological Diversity, 2008; Canadian National Conservation Plan, 2014). In addition to
conserving nature, protected areas provide important ecosystem goods and services, or natural capital services,
such as water filtration, flood control, pollination and carbon storage. Historically these environmental benefits
have been taken for granted, but the emerging field of natural capital valuation – placing a financial value on
ecosystem goods and services – shows that natural systems provide substantial value. The valuation of nature
provides an opportunity to link conservation and economics. The important role of ecosystem goods and services
in conservation has been recognized in Canada’s biodiversity goals and targets for 2020 (Canada, 2015). By
valuing the ecosystem goods and services that nature provides, we can improve our understanding of the impacts
of habitat loss and land conservation, which leads to more informed planning and decision-making. What is good
for the environment is also good for the economy.
This paper reviews the natural capital values of forest habitats, using the example of several properties conserved
by the Nature Conservancy of Canada (NCC) through the TD Forests program. Since the program launched in
2012, TD Forests has helped NCC protect more than 37,000 acres (15,000 hectares) in nine different types of
forest habitat across Canada. This report considers the value of these habitats from a natural capital perspective.
For more information on natural capital, see the TD Economics report Valuing the World Around Us: An Introduction
to Natural Capital.
The ecological services provided by forest habitats were valued based on data from representative properties in
three forest regions of Canada (NRC 2015) that were recently acquired by NCC as part of the TD Forests program:
Columbia Forest Region/ Columbia Mountains and Highlands Ecoregion (British Columbia)
The Canadian portion of the Columbia Forest Region only occurs in eastern BC and is characterized by a diversity of forest types. Lower elevations are dominated by mature forests of western hemlock and western red
cedar, mixed with Douglas-fir, western white pine, and western larch.
The subalpine zone is characterized
by Engelmann spruce, alpine fir and
stands of lodgepole pine, which can
develop after fire. Valley bottoms
often contain rivers and associated
wetlands.
Our study considers the Midgeley
property (162 ac / 66 ha) located at
the southern end of Kootenay Lake.
The property contains cedar-hemlock
forests in the upland areas and
wetlands in the valley. These valley wetlands have been recognized
as being of international importance
by the Ramsar Convention on Wetlands and as Important Bird Areas in
Canada. The property also supports
rare species and forms part of an
important linkage area for grizzly bear
populations.
ewsas
The Kenauk property, Que.
Montane Forest Region/ Northern Continental Divide Ecoregion (Alberta)
The Montane Forest Region occurs in the interior of BC and along the Rocky Mountains in both BC and Alberta. Elevation is a strong driver in forest comTable 1 -Selected natural capital services by habitat type
position, with Engelmann spruce and alpine fir at
Habitat type
Service
higher elevations. Middle and lower elevations
Forests
Carbon
storage
and sequestration, soil
are characterized by Douglas-fir, lodgepole pine,
formation,
waste
treatment, air quality,
ponderosa pine and trembling aspen, interspersed
storm water control, biodiversity,
with alpine meadows.
Our study considers the Lusicich property (263
ac / 106 ha), which is located in the Crowsnest
Pass, in southwest Alberta. The property is characterized by Douglas-fir and trembling aspen
forests with montane grasslands and pasture. In
addition to its significant habitat values, the Lusicich property provides important connectivity for
species, including grizzly bear, elk and grey wolf.
Great Lakes – St. Lawrence Forest Region/
Southern Laurentians Ecoregion (Quebec)
Grasslands
Wetlands
Lakes, rivers, riparian
zones
Croplands
Other land types
habitat/refuge, recreation, fibre.
Carbon storage and sequestration,
water regulation, erosion control, soil
formation, waste treatment, pollination,
habitat, food production.
Disturbance regulation, water supply
and treatment, food production,
habitat/refuge.
Water supply, waste treatment, food
production, erosion control, recreation.
Food production, habitat/refuge, scenic.
Scenic, recreation, existence value.
Sources: Sauer (2002); Olewiler (2004); TD Economics. Note: list is nonexhaustive.
The Great Lakes – St. Lawrence Forest Region occurs on the southern Canadian Shield and extends from
southeastern Manitoba through central and southern Ontario and Quebec into western New Brunswick. In the
southern Laurentian area, the mixed forests are characterized by sugar maple, yellow birch, eastern hemlock
and eastern white pine. Dry sites are dominated by red and eastern white pine, and red oak. Wetter areas support red maple, black ash, white spruce, black spruce, tamarack, and eastern white cedar.
Our study considers the Kenauk property (10,051 ac / 4,068 ha) located in Quebec just north of the Ottawa
River. The property lies at the southern limits of the Canadian Shield, in a landscape dominated by deciduous
forests that are characterized by maple-dominated forests with stands of birch and aspen, and mixed forest.
It includes lakes, wetlands and open rock barrens. More than 30 rare species have been documented on the
property, along with wide-ranging mammals such as black bear, moose and eastern wolf.
A Brief Overview of Natural Capital Services
While the idea of natural capital has a long history in economics, it has arguably only entered the
mainstream in recent years, with the rise of carbon pricing in many jurisdictions, including Alberta,
British Columbia and Quebec and, as recently announced, in Ontario. Natural capital is, in effect, the
natural resources and ecosystems that provide direct and/or indirect benefits to the economy, society, and the world more generally. These benefits are referred to as natural capital services. Much as
financial capital yields a series of payments, natural capital produces a continuous stream of services.
For instance, a wetland provides a potential breeding ground for fish, opportunities for wildlife viewing
and other recreational activities, and filters the water passing through it, thereby reducing the strain
on filtration plants in downstream communities. Unlike financial capital, however, these benefits are
diffuse, and do not necessarily accrue to a particular individual or group, but rather to society more
broadly.
Natural capital services vary by habitat type – Table 1 provides an overview of the most common
services provided. It is important to remember that this list is not exhaustive or exclusive – most lands
provide intrinsic value to nearby communities (and sometimes even those not so near) and not only
because of the environmental benefits they provide. They can also have cultural significance and an
impact on health and well-being. While it is difficult to assign a value to these services, they are nonetheless important and have economic value.
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Table 2. Annual Natural Capital Service Values of Representative Properties
Service Type
Non-Carbon
Atmospheric Pollutants
Stored Carbon1
Annual Carbon Storage
Flood Control
Water Treatment:
Phosphorous
Water Treatment:
Nitrogen
Total
Midgely, B.C.
Lusicich, Alta.
Kenauk, Que.
Total
$ 63,754
$ 88,581
$ 1,271,019
$ 1,423,354
$ 3,046,812
$ 45,665
$ 1,685
$ 4,585,562
$ 11,683
-
$ 76,075,620
$ 1,390,934
$ 51,384
$ 83,707,994
$ 1,448,282
$ 53,069
$ 2,027
-
$ 61,790
$ 63,817
$ 2,458
-
$ 74,959
$ 77,417
$ 3,162,401
$ 4,685,827
$ 78,925,706
$ 86,773,934
Note: Value per Hectare
$ 46,476
$ 42,136
$ 19,405
$ 20,420
Details of service values, sources and methodology are provided in the technical appendix.
Note that properties are used as a representative sample of their habitat context.
1
: This represents the accumulated value of the carbon estimated to be stored within each property.
The continued existence of ecosystems within the property prevents this carbon from entering the
atmosphere.
Natural Capital Valuation – Case Study of Selected Forest Habitats
With only a limited number of environmental attributes quantified at a regional level, we restrict our analysis to
atmospheric and water pollution benefits, and exclude social and other benefits. Despite the relatively limited
evaluation scope, the total natural capital value provided within the three habitats considered is estimated to
be more than $86 million per year, or around $20,000 per hectare (Table 2; per-hectare values are provided to
help distinguish the intensity of ecosystem services by land type and geographic location). Given the diverse
habitat features and location of the areas, individual values vary:
Columbia Forest Region/ Columbia Mountains and Highlands Ecoregion (British Columbia)
At more than $46,000 per hectare, the forest habitat represented by the Midgeley property has the highest
natural capital service value per hectare of those considered. The bulk of the annual service value stems from
the large amount of carbon stored in the trees, bushes, grasses and other vegetation, as well as the additional
carbon sequestered each year. The removal of atmospheric pollutants, such as NO2 and SO2, are the next
largest contribution, while water-oriented services provide only minor annual benefits.
Montane Forest Region/ Northern Continental Divide Ecoregion (Alberta)
The habitat of which Lusicich Forest is part provides the second-highest annual service value per hectare, despite not containing any lands that would provide water benefits. An estimated 31,000 tonnes of carbon stored
within the property itself provide the majority of the annual service value, in conjunction with the removal of
atmospheric pollutants.
Great Lakes – St. Lawrence Forest Region/ Southern Laurentians Ecoregion (Quebec)
Although the property studied provides the lowest natural capital service value per hectare, the sheer size of
the property gives it the largest total natural capital value of the properties considered – over $75 million. The
size of the property translates into significant carbon sequestration: more than half-a-million tonnes of carbon
are estimated to be stored within the property itself, with nearly 10,000 more tonnes captured each year. The
Kenauk property helps illustrate the scale of natural capital services that can occur when protection of land occurs at scale.
There are also significant wetlands within the property, which help mitigate storm water for surrounding communities, as well as acting as a purifier, removing 5,000 kg of phosphorous and 21,000 kg of nitrogen from the
water system each year, thereby reducing the burden for water users farther down the system.
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Beyond Pollution: Other Natural Capital Services
Not only do forests help purify our air and water, they provide a wide range of other benefits as well. Although it
is difficult to assign dollar values to many of these other services, the importance of these other benefits should
not be underestimated. To begin with, all three habitats that these properties represent provide significant
biodiversity benefits, providing homes to a variety of rare and endangered species as outlined in this paper’s
introduction. Each year, Canadians spend millions of dollars on equipment, travel, lodging and other expenses
to observe wildlife – activities that clearly would not take place were there nothing to observe (Scott and Callahan, 2000).
Beyond opportunities for wildlife observation, natural areas also provide space for other nature-related activities, such as hiking, picnicking, or just relaxing. The opportunity to engage in these activities is clearly important to Canadians, as three in four of us reported participating in nature-based recreation in 2012 (Federal,
Provincial, and Territorial Governments, 2014). Canadians spent more than $14 billion on these activities –
hardly pocket change. Moreover, these expenditures often take place in more remote parts of Canada, helping
distribute income geographically, including to Aboriginal communities.
Other benefits of protected lands that are difficult to value but are no less important, include the cultural value,
particularly for Aboriginal Peoples, as well as the intrinsic value of biodiversity in and of itself and the resilience
that results from non-monocultural landscapes; the value that we derive from the mere existence of wild spaces, and many others. All of these values contribute to the “worth” of protected lands, regardless of whether a
dollar value can be explicitly assigned or not.
Conclusion
Canada’s protected areas represent a vast natural capital resource. Protected areas help ensure that these
resources will continue to benefit Canadians for years to come. The TD Forests program with NCC has helped
protect lands and natural ecosystems that provide countless benefits for the communities around them, while
at the same time conserving important habitats and wildlife.
The value of Canadian natural capital should not be underestimated. Although this analysis focused on a small
set of properties, scaling these results up to the national level implies an incredible amount of value accruing to
Canadians year after year. By protecting these important lands, we can help ensure that these benefits continue to be maintained for generations to come.
Technical Notes
Land sizes and ground coverage types are the outcome of independent assessment of the properties (so-called
“timber cruises”). Non-carbon atmospheric pollutants and water pollutant removal coefficients are adapted from
Wilson (2010) and Wilson (2012). Carbon storage rates are based on Kulshreshtha et. al (2000).
Values for non-carbon atmospheric pollutants are those reported in Nowak et. al (2008). We use abatement costs
for these pollutants as consensus social costs have not yet emerged in the literature. A social cost of carbon is
used, based on the Interagency Working Group on Social Cost of Carbon, United States Government (2013). 95th
percentile values at a 3% discount rate are used. The 95th percentile is used to reflect a number of criticisms of
models of the social cost of carbon which suggest that the values arising from each model may be too low (see
for instance Revesz et. al (2014)).
The value of phosphorus removal is based on the lowest reported cost in Jiang et. al (2005), while the value of
removed nitrogen is based on the lowest reported value in Wilson (2012).
In all cases, values are adjusted to 2014 Canadian dollars by first using a currency-specific price index, then
converting to Canadian dollars using the average observed exchange rate over that year.
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References
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Interagency Working Group on Social Cost of Carbon, 2011 “Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis (Revised November 2013)”
Jiang, F., et. al. 2005. “Estimation of Costs of Phosphorous Removal in Wastewater Treatment Facilities: Adaptation
of Existing Facilities” Water Policy Working Paper #2005-011
Kulshreshtha, S., et. al. 2000. “Carbon Sequestration in Protected Areas of Canada: An Economic Valuation”
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Location Map
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