Ten Magic Economic Spells to Cast on Your Mitigation, Conservation, Restoration, and Adaptation Projects (Part 1)

Last year, my colleague asked me for some economic perspectives when writing his blog post Old Macdonald Had A Farm…A-T-I-O-N??? I suggested he add some charts like the following:

Then he suggested I should write my own blog post to explain the charts, especially the magic BOOOOM part… So here it is. Ten magic economic spells to put your conserv-, mitig-, restor-, and adapt-ATION projects into ACTION!

1. Love Potion – I can’t think of a time when this wouldn’t be useful. Maybe a meticulous love potion is just what Harry Potter needed to win against Voldemort. It can also help you get the decision makers to fall in love with your “-ATION” projects.

Instructions – Brew your analysis with a mix of economic ingredients, and add to your reports for lots economic glamour and “$” values.

Uses – The best way to build resilient communities is to be proactive. Yet very often, a proactive project is seen as a conflict to economic development and a present cost to benefit future generations. To address these common misunderstandings, you’ll need the economic data to tell your story. Economic data are not all-encompassing, but they are definitely indispensable. These data, for example, can:

• Teach decision makers that proactive projects actually support sustainable economic development.
• Reveal the communities’ dependency on ecosystems in monetary terms.
• Quantify the urgent pressure of habitat loss, coastal hazards, and climate change on local economies.
• Arouse both individual and public interests with a project’s both long and short-term high return on investment.  

Caution – This synthesized potion, taking skilled experts some considerable time to brew, works like a sequence of spells. A clumsy potion would work only at the first glance and can even lead to inverse consequences. For newcomers to the wizard’s world, you’d better start with some simple spells.

2. Lumos – Wave your wand and create a beam of economic light to shine through the mysteries.

Instructions – Explore and list out the costs and economic benefits (direct/indirect, market/non-market…) of all the ecosystem services related to your project.

Uses – The list will give you insight into what’s involved and to whom it matters. For example:

• Restoring a fish habitat can directly generate jobs and income for fishermen.
• Conserving a wetland can indirectly generate sales on gas, hotels, restaurants, and bait and tackle from recreational activities.
• Using land for mitigation could yield greater monetary value for the landowner when it’s not practical for development.
• Choosing “non-adaptive” can cause huge opportunity costs for communities, e.g., losses from building damage and business interruption in case of future climate change.

Caution – To avoid bias, it’s important to get a comprehensive list. Don’t forget to include the costs of your decisions, and remember that conserv-, mitig-, restor-, and adapt-ation projects are not perfect and can sometimes lead to negative impacts. Also, be aware that some benefits are not easily monetized. The next spell will help you with that.

3. Transforming Spells – A variety of advanced spells that can turn the benefits of ecosystem services into “$” values.

Instructions – Keep a detailed picture of the causal-chain in mind, get sufficient benefit-relevant indicators (BRI) and background information, then cast the proper spell.

Uses – There are several Ecosystem Services Valuation methods that can be to used depending on what you want to estimate and what data you can get, such as:

• Hedonic pricing.
• Choice experiments.
• Travel cost.
• Benefit transfer. (see next spell)

Caution – In practice, it can be very costly to monetize all the values, so you might want to consider qualitative methods to analyze some of the values. You’ll also want to include the qualitative assessment into your report to paint a complete picture.

4. Doubling Charm – Well, it’s OK to copy what others have come up with. The economists call it “benefit transfer.”

Instructions – Adopt existing values from other studies and apply to your own study.

Uses – Benefit transfer is one of the most commonly used spells to value ecosystem services when you:

• Have done a thorough literature review.
• Decide to trade off certain accuracy for less cost and time.

Caution – Existing values and studies could only be transferred when the studied site’s types, quality, substitutes, and demography are comparable. In addition, be cautious as sometimes you’ll need to adjust the values to match your special situation before you can use them.

I’ll explain in the next blog the rest of the economic spells. Stay tuned!