Types of Water Valuation

Hello all!

In my previous post, I spoke about the differing physical characteristics of countries within the African continent, taking examples from the wetter parts of Central and Western Africa. In this post, I will speak more about the different types of water valuation, in a bid to clarify further what "ecosystem valuation" means.

Monetary Approaches

Monetary approaches are directly influential on policy-making decisions, as they provide humans with accessible and comprehensible values of water through an economic unit. They are supported by the quantification service production, delivery and consumption, which necessitates the biophysical measurement of ecosystem services. These approaches have been classified as a "neoclassical paradigm" to address environmental issues due to their applicability in the modern context when development is causing the demise of many ecosystems (Pandeya et al. 2016: 254). They have been divided into use and non-use categories, and the values derived from both categories and their sub-units are subsequently summed up to form the Total Economic Value (TEV) of an ecosystem service - in this case, water. I have drawn up an example in Table 2 to hopefully explain this in better detail.

Table 2: Example of the Total Economic Value framework (by me).

	Benefit flow to humans per 1000 people	Monetary valuation per 1000 people
Tangible human benefits (provisioning and regulating)
Water for domestic consumption	100 gallons of water	Eg. $100
Water for crop plantation	3 ha of crops	Eg. $500
Water as a regulator of pollution	Reduced toxic exposure by humans and improved health.	Eg. $2000
Intangible human benefits (non-use)
Water for eco-tourism and education	People may study rare bird species in wetlands, gain cultural appreciation of species and be more aware of biodiversity.	Eg. $100
Water for increased forest coverage and greater carbon sequestration	Larger carbon store and reduction of global warming.	Eg. $5000
		= Sum of $7700

In this rough worked example, we can arguably already see some limitations immediately. How do we assign a value to all of these benefit flows for water? How do we value the education from cultural appreciation, and how do we value regulating services performed by water which may not be immediately obvious? Of course, a range of monetary valuation techniques have already been introduced and increasingly refined to estimate the value of all these ecosystem services. They can be valued in the form of market transactions - for example when drinking water is transacted between populations and water vendors, or when transactions with indirect associations are made when crops are transacted in the market. By correlating sustainable water resource management with economic well-being of people, it allows development boards to make informed decisions in the pursuit of development. They may even improve socioeconomic conditions, especially if biodiversity conservation is simultaneously pursued with ecosystem management (Adams, 2014).

Nonetheless, it continues to be challenging to assign monetary values to many uses, such as education, cultural heritage and the beauty of the landscape. As a result, non-monetary valuation approaches have also been set up in complement, to offer an alternative to the near impossibility of a wholesome monetary approach.

Non-monetary Approaches

These focus largely on stakeholder participation and group perceptions of ecosystem services. These stakeholders are tasked with assessing the cultural values of natural resources and services, their role in our improvement of social well-being, and their valuation in our lives. However, these non-monetary frameworks are often arbitrary as understanding spiritual values of ecosystem services are difficult, and the field is still relatively young at this stage when exact measurements are little found and made. nonetheless, for the valuation of ecosystems to be wholly useful in policy-making, it is integral to develop non-monetary methods for water uses that cannot be immediately quantified.

Some solutions that have been suggested include inclusive and participatory valuation of local needs, especially in data scarce environments such as remote mountainous areas. They combine citizen science with known and experienced human impacts on the water cycle in these regions where conventional data is not easily collected, with scientific processes of the hydrological cycle (Buytaert et al. 2014). These represent measures to make valuation processes more policy-oriented as they cater to local needs to increase the validity of the ecosystem services approach in a specific area.

However, as the field on ecosystem services is relatively new, most of these approaches have been suggested and acted on independently. For future improvements to the overall valuation of water and its associated benefits to human well-being, it is vital that both approaches are taken to provide an overall ecological underpinning of the decisions made on water resources. In my next few posts, I will use case studies to argue how valuation of economic services may help in water resource management, mostly through the monetary approach due to its current applicability in the field.

See you next week!