Estimating coastal asset values using multi-criteria and valuation methods

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1 Estimating coastal asset values using multi-criteria and valuation methods Sean Pascoe, Amar Doshi, Mladen Kovac and Angelica Austin Australian Coastal Councils Conference, Brisbane, May 2017 CSIRO OCEANS AND ATMOSPHERE

2 Outline Role of economic values in coastal planning Many values! Combining techniques to estimate coastal values Multi-criteria approaches (AHP) Choice experiment Some key results Acknowledgement: The study was supported by the NSW Environment Trust Environmental Research Program, Project 2014/RD/0017, and CSIRO Oceans and Atmosphere 2 Estimating coastal asset values using multi-criteria and valuation methods

3 Role of economic values in coastal planning and management Coastal assets have values that are not accounted for in the market place Can t buy or sell a hectare of beach Coastal development increasingly impinging on the coastal environment Benefit cost analysis recommended in NSW to inform coastal management options being considered by councils Climate change adaptation works to protect coastal resources expensive How do we justify or prioritise this when budgets are limited and other competing uses for the funds? Marine reserve planning also require estimates of natural capital values Only few (and limited) studies on coastal values in Australia 3 Estimating coastal asset values using multi-criteria and valuation methods

4 Aim and challenge of this study Coastal environments have many components with different values traditional non-market value techniques are in practice limited to dealing with only a few components at a time The basic premise of this study Relative willingness to pay reflect relative preferences Preference elicitation techniques should be able to approximate relative WTP Multicriteria preference elicitation techniques can accommodate a larger number of alternatives than most non-market valuation techniques Non-market valuation techniques can be applied to derive values for key assets These can be scaled for other assets based on the relative preferences 4 Estimating coastal asset values using multi-criteria and valuation methods

5 So what we did Online survey of 1400 NSW coastal residents Key natural capital assets to be examined in this study Location Shoreline Backshore Intertidal Aquatic Key Asset Beaches Rocky shore Headlands Sand dunes Adjacent scrubland Freshwater Lakes/Rivers Estuaries Mangroves Saltmarsh Seagrass Reefs Sandy seabed Multicriteria analysis approach (Analytic Hierarchy Process (AHP)) used to derive relative importance of all assets Choice experiment used to estimate WTP for the shore based assets only 5 Estimating coastal asset values using multi-criteria and valuation methods

6 Some sample details 6 Estimating coastal asset values using multi-criteria and valuation methods

7 Beach visitation 7 Estimating coastal asset values using multi-criteria and valuation methods

8 AHP approach Geometric mean method Less influenced by extreme preferences ω = i n k = 1 n k k= 1 1/ n a ik, a ik, 1/ n 12. A=Shoreline (Beach, headland, rocky shore); B= Backshore (dunes, scrubland, lakes/rivers) All A (no B) Mostly A Much more A Increasing importance of A More A equal importance A = B More B Much more B Mostly B Increasing importance of B All B (no A) a = 9 ik, a = 1, a = 1/9, ik ik 8 Estimating coastal asset values using multi-criteria and valuation methods

9 Hierarchy Coastal assets Shoreline Backshore Intertidal Aquatic Sandy beach Sand dune Estuaries Seagrass Rocky shore Adjacent scrubland Mangroves Reefs Headland Freshwater lakes/rivers Saltmarsh Sandy seabed 9 Estimating coastal asset values using multi-criteria and valuation methods

10 Choice model D-efficient design developed using NGENE Four blocks of 6 choice sets (total 100 ha just trading off assets) Two blocks of 6 choice sets (varying size size and assets) Scenario: Coastal areas to be protected through Regional Conservation Plans Payment mechanism: Environmental levy included in quarterly rates (indefinite levy). 10 Estimating coastal asset values using multi-criteria and valuation methods

11 AHP Results 11 Estimating coastal asset values using multi-criteria and valuation methods

12 Relative to sandy beach Wide range of preferences for beachgoers Non-beachgoers were largely indifferent 12 Estimating coastal asset values using multi-criteria and valuation methods

13 Median relative values Median relative values relative to sandy beach Using all data Using data only for those that visited the beach in the last 12 months Removing those that were indifferent between the different assets 13 Estimating coastal asset values using multi-criteria and valuation methods

14 Choice experiment preliminary results Random parameters model estimated in NLOGIT Coefficient Standard Error z sig Random parameters in utility functions Sandy beach (ha) *** Dunes and scrubland (ha) *** Headland and rocky shore (ha) *** Cost ($/household/quarter) *** Non-random parameters in utility functions ASC *** Male ** Age *** Sydney Income ** NSW National Park annual pass *** Environmental group member *** Distance from beach ** Distribution of random parameters (standard deviations) Sandy beach *** Dunes and scrubland *** Headland and rocky shore *** Cost *** Non-random parameters indicate likelihood that the respondent would choose none No significant difference between Sydney/non-Sydney Likelihood increases with age Likelihood decreases with other variables Indicates that the variable is highly statistically significant Not statistically significant 14 Estimating coastal asset values using multi-criteria and valuation methods

15 Derived economic values Asset values scaled up to annual figure, discounted indefinitely assuming 4% discount rate (lower bound suggested by Treasury) Relative values for other assets reasonably similar to those derived from AHP (direct comparison difficult as combined in the choice experiment) Coastal Asset Willingness to Pay Relative to beach $/ha/quarter NPV $/ha/ household From choice model From AHP Beach $0.90 $89.82 Dunes and scrubland $0.76 $ Headlands and rocky shores $0.60 $ Estimating coastal asset values using multi-criteria and valuation methods

16 Variability in values Mixed logit model recognises that there is variability in values of individuals 16 Estimating coastal asset values using multi-criteria and valuation methods

17 Expanding the values. Asset AHP MLM ($/ha/household) Sandy Beach $89.82 Headland $71.29 Rocky shoreline $42.60 Dunes $62.82 Adjacent Scrubland $51.04 Freshwater Lakes $69.80 Estuary $41.92 Saltmarsh $32.19 Mangroves $47.49 Seagrass $67.44 Reefs $49.90 Sandy Seabed $ Estimating coastal asset values using multi-criteria and valuation methods

18 An example of what this may mean Manly Beach (Manly Shire population) Sandy beach Adjacent park Households 18,050 Value/ha $1,621,251 $575,434 Area (ha) Total value $16,779,948 $1,611,215 For comparison Vacant lot near Manly Beach Asking price $4-4.4m Land size 690m 2 Value per ha = $57,971,014 So beaches are still relatively cheap real estate! 18 Estimating coastal asset values using multi-criteria and valuation methods

19 Further afield Estimated value $m/ha Manly Warringah Byron Coffs Households 18,050 58,300 11,197 27,614 Sandy Beach $1.62 $5.24 $1.01 $2.48 Headland $1.29 $4.16 $0.80 $1.97 Rocky shoreline $0.77 $2.48 $0.48 $1.18 Dunes $1.13 $3.66 $0.70 $1.73 Adjacent Scrubland $0.92 $2.98 $0.57 $1.41 Freshwater Lakes $1.26 $4.07 $0.78 $1.93 Estuary $0.76 $2.44 $0.47 $1.16 Saltmarsh $0.58 $1.88 $0.36 $0.89 Mangroves $0.86 $2.77 $0.53 $1.31 Seagrass $1.22 $3.93 $0.76 $1.86 Reefs $0.90 $2.91 $0.56 $1.38 Sandy Seabed $1.30 $4.19 $0.81 $ Estimating coastal asset values using multi-criteria and valuation methods

20 Some caveats and health warnings Project is still going for a couple of months Potential changes in some of these values Key question How far out do we go in terms of households? These capture asset values Recreational use values are likely to be substantially higher (as is contribution to local economies) 20 Estimating coastal asset values using multi-criteria and valuation methods

21 Thank you for further details Thanks also to Sydney Coastal Council Group Acknowledgement: The study was supported by the NSW Environment Trust Environmental Research Program, Project 2014/RD/0017, and CSIRO Oceans and Atmosphere and Eurobodalla Shire Council CSIRO OCEANS AND ATMOSPHERE