BalticSTERN Benefits of mitigating eutrophication · economic value is described, as this gives indications on the way human well-being is affected by changes in ecosystem services,

Benefits of mitigating eutrophication

Background Paper

Havs- och vattenmyndighetens rapport 2013:4

PrefaceBalticSTERN (Systems Tools and Ecological-economic evaluation – a Research Network) is an international research network with partners in all countries around the Baltic Sea. The research focuses on costs and benefits of mitigating eutrophication and meeting environmental targets of the HELCOM Baltic Sea Action Plan. Case studies regarding fisheries manage-ment, oil spills and invasive species have also been made, as have long-term scenarios regarding the development of the Baltic Sea ecosystem.

The BalticSTERN Secretariat at the Stockholm Resilience Centre has the task to coordinate the network, communicate the results and to write a final report targeted at Governments, Parliaments and other decision makers. This report should also discuss the need for policy instruments and could be based also on results from other available and relevant research.

The final report “The Baltic Sea – Our Common Treasure. Economics of Saving the Sea” was published in March 2013. This Background Paper Benefits of mitigating Eutrophication is one of eight Background Papers, where methods and results from BalticSTERN research are described more in detail. In some of the papers the BalticSTERN case studies are discussed in a wider perspective based on other relevant research.

Contents

I. Introduction .................................................................... 4

2. Ecosystem services, values and economic valuation ....... 52.1 ecosystem services in the Baltic sea ........................................5

Intermediate marine ecosystem services .....................................................7Final marine ecosystem services ...................................................................7

2.2 Valuing ecosystem services – some foundations ......................8Spatially explicit ............................................................................................. 8Marginal changes ........................................................................................... 8Double counting ............................................................................................ 8Non-linearities and tipping points .............................................................. 9

2.3 total economic Value (teV) ....................................................9Use-values ......................................................................................................10Non-use values ..............................................................................................10Option and quasi-option values .................................................................10Total Economic Value and Total System Value ..........................................11

2.4 Valuation methods ...................................................................11Pricing approaches ....................................................................................... 12Revealed preference methods ..................................................................... 12Stated preference methods .......................................................................... 13Deliberative valuation methods .................................................................. 15

3. Method in BalticSTERN ................................................ 163.1 ecosystem services in focus ....................................................163.2. the studies ............................................................................18

BalticSurvey ................................................................................................... 18BalticSUN ...................................................................................................... 18

3.3. Linking ecological and economic models to policy targets .....193.4. estimating willingness to pay .................................................21

4. Results ........................................................................ 24Attitudes towards the marine environment ............................................. 24Actions for improvements ...........................................................................27Willingness to pay for reduced eutrophication ........................................27

5. Discussion ................................................................... 30

References: ..................................................................... 31

4 Benefits of mitigating eutrophication

I. IntroductionThe research performed in the BalticSTERN network has provided new in-formation on the benefits of improving the marine environment in the Baltic Sea. Two major activities have been performed in the BalticSTERN network to achieve this information:

• Baltic Survey, which includes about 9,000 interviews carried out in 2010 with representative samples of the nine Baltic Sea countries. It has identi-fied how people around the Baltic Sea and parts of the Skagerrak use the Sea and what attitudes they have towards the marine environment, and towards various measures for improving the environment.

• BalticSUN (Survey of Use and Non-use values), which includes about 10 500 interviews carried out in 2011 with representative samples of the nine Baltic Sea countries. It has allowed a monetary estimate of the benefits of reaching the HELCOM Baltic Sea Action Plan (HELCOM, 2007) nutri-ent reduction targets.

Full reports of the studies are available in SEPA (2010b) (BalticSurvey) and Ahtiainen et al. (2012) (BalticSUN). Some of the findings in BalticSurvey are also forthcoming in a journal article (Ahtiainen et al., 2013). This chapter synthesizes the findings of these studies. In Section 2, we present some under-lying theory on ecosystem services and economic valuation. This serves as a foundation for the studies performed in the BalticSTERN network. In Section 3, we present more concretely the method used for studying benefits in Baltic-Survey and BalticSUN. In Section 4, we present the results and in Section 5, we discuss some of the most important findings.

5Benefits of mitigating eutrophication

2. Ecosystem services, values and economic valuationThis section provides a background on important terminology and method o-logy that has been used in our research. First, we describe the link between benefits and ecosystem services of the Baltic Sea. Next, the concept of total economic value is described, as this gives indications on the way human well-being is affected by changes in ecosystem services, together with different (economic) methods to capture the total economic value.

2.1 ecosystem services in the Baltic seaThe Baltic Sea provides an array of ecosystem services. In reports by the Swedish EPA (Swedish EPA, 2008a) 24 marine ecosystem services provided by the Baltic Sea were identified. These include services such as primary pro-duction, biogeochemical cycling, food production, and waterways for trans-port and shipping, as well as maintenance of biodiversity and resilience (Figure 1). According to the report, only 10 of these identified services are functioning properly and seven of the 24 services are severely threatened. The threatened ones are: food web dynamics, biodiversity, habitats, food, genetic resources, aesthetic benefits and resilience (Swedish EPA, 2008a). The main pressures causing threats on these ecosystem services are eutrophi-cation, overfishing, physical disturbance (e.g. due to bottom trawling and dredging), hazardous substances, oil spills and invasive species (HELCOM, 2010) (see also BG Paper State of the Baltic Sea).


Food webs

Food

Habitat

O2 CO2

H2O CO2

Inedible goods

Recreation

Energy

Resilience

Inspiration

Biologic regulation

Chemicalresources

Geneticresources

Legacy ofthe sea

Ornamentalresources

Space andwaterways

Science andeducation

Nutrientbuffering

Regulation ofenvironmental toxins Primary production

Sedimentretention

Culturalheritage

Aestheticvalue

H2O

Biologicaldiversity

Figure 1: Ecosystem services provided by the Baltic Sea. (Illustration: J.Lokrantz/Azote)

There are many definitions and classification schemes of ecosystem services (e.g. Costanza et al., 1997; Daily, 1997; Boyd & Banzhaf, 2007). The most com-monly used definition and classification scheme is the one developed by the Millennium Ecosystem Assessment (MA) presented in 2005. The MA describes ecosystem services as the “goods and services people obtain from ecosystems” and divides ecosystem services into four categories: provisioning, cultural, supporting and regulating services. The Economics of Ecosystems and Biodiversity (TEEB) series of studies further develop the MA framework and makes a distinction between ecosystem functions, ecosystem services, benefits and values, and tries to explain the link between ecosystems and human wellbeing in a conceptual model (see e.g. Kumar, 2010).

In BalticSTERN, the economic valuation of ecosystem services is central, and the definition of ecosystem services is therefore based on the proposi-tions described by Fisher et al. (2009). They distinguish between ecosystem services and benefits, stating that “ecosystem services are the ecological phenomena, and the benefit is the realisation of the direct impact on human welfare”, as “ecosystem services are the aspects of ecosystem utilised (actively or passively) to produce human wellbeing”. Ecosystem services are seen as the link between ecosystems and things that human benefit from, not the benefit themselves. Ecosystem processes and functions thereby only become services if there are humans who (directly or indirectly) benefit from them. This is further important for economic valuation purposes as will be described ahead.

Identification and quantification of ecosystem services are crucial in order to make a socioeconomic assessment and valuation (Fisher et al., 2009; Turner et al., 2010a). For economic valuation purposes the classification of ecosystem services by MA (2005) is however somewhat general as it doesn’t distinguish between ecosystem functions and processes. To illustrate this issue Fisher et al. (2008) use the following example: “In the MA, nutrient


cycling is a supporting service, water flow regulation is a regulating service, and recreation is a cultural service. However, the first two can be seen as providing the same service, usable water, and the third (recreation) can be seen as a benefit, which is dependent on the usable water”. When trying to give economic values to ecosystem services, using the MA alone can therefore lead to some confusion (Fisher et al., 2008; Fisher & Turner, 2008). Consequently, for the purpose of valuation of ecosystems, services are preferably divided into final (or direct) and intermediate (or indirect) services with the purpose to differ between ecosystem functions and processes (e.g. Boyd & Banzhaf, 2007; Fisher et al., 2009; de Groot, 2006). This approach attempts to bridge between ecology and economy by providing a transparent method for economic valuation. In addition, it helps avoiding the issue of double counting.

Intermediate marine ecosystem servicesIntermediate services, such as well functioning habitats and the sea’s

capacity to mitigate eutrophication, enable final services in a supporting or regulating way and thereby influence human wellbeing indirectly. The appropriate stock level (i.e. configurations of ecosystem structures and processes) needed for delivering final services is however not always certain in a given set of circumstances or context. Acknowledging the role of both intermediate and final services in supporting human wellbeing is crucial. Overlooking the fundamental role of intermediate services within economic analysis such as cost-benefit analysis might lead to policy and management failures. Such a failure could lead to the risk of over-exploitation of ecosystem services and benefits with the risk of system change or collapse. Due to the high uncertainty of the appropriate level needed to maintain ecosystem resilience at a sustainable level, it can be argued that a precautionary approach should always be taken (Fisher et al., 2008; Fisher et al., 2009; Turner et al., 2010a).

Final marine ecosystem servicesFinal services are those that directly generate a benefit to humans, such as

fish-stocks for fishing, water quality for bathing and raw materials for energy. Changes in the supply of final services are therefore the appropriate basis for monetary valuation. To also put a monetary value of those intermediate services that serve as an input to final services would introduce double-coun-ting. Turner et al. (2010a) highlight that a final service is often, but not always, the same as a benefit. Final services are usually the easiest services to identify since they link directly to benefits to humans, while intermediate services capture the underlying services that affect the final services (e.g. climate regulation, eutrophication mitigation and resilience) and will therefore require a deeper understanding of the dynamics and interactions of the marine eco systems in order to be identified. The resilience of the ecosystem is a service that might be particularly challenging to address. However, not including resilience in the assessment can, in the worst case, cause irreversible consequences.

The relationships are better seen in a specific context and also linked to the


pressures on the services in question. Helin et al. (2010) show linkages between intermediate services, final services and ecosystem benefits with regard to some of the main pressures affecting the Baltic Sea; eutrophication, oil spills and invasive species (pressures on the Baltic Sea ecosystem are also described in BG Paper State of the Baltic Sea). Here, the final ecosystem services in focus are clean water provision and stock of species. These services in turn generate benefits in terms of recreation (e.g. bathing and recreational fishing) and food (both for consumption and non-consumption). These benefits both generate use values and non-use values that can be expressed in monetary terms using different valuation methods (see Section 2.4).

2.2 Valuing ecosystem services – some foundationsValuing ecosystem services in monetary terms is highly challenging and there are a number of aspects that are critical for an appropriate economic valua-tion (see e.g. Mäler et.al., 2009 and Mäler et.al., 2010 regarding valuing regu-lating services). Turner et al. (2010b) point out a few aspects as essential to take into consideration and address in the analyses when valuing ecosystem services. These are described below.

Spatially explicitEcosystem services are context dependent in terms of their provision and their associated benefits. It is therefore critical to first understand the under-lying biophysical structure and processes before valuation assessments can be performed. Models that are spatially explicit can be very helpful in this con-text. For example GIS (Geographical Information Systems) based techniques can be a very useful tool for this purpose as they can help in understanding the geographical context in which the ecosystem services need to be inter-preted (Turner et al., 2010b).

Marginal changesPolicy-relevant valuation of ecosystem services is about incremental change in the services, and such valuation performs better if the changes subject to the valuation are marginal. An understanding of the drivers and pressures on the studied ecosystem is therefore essential, as well as an understanding of how the system is changing or might change from its current state. While in-cremental changes have been valued in the BalticSTERN studies, many other valuation studies have focused on valuing the stock of ecosystem services. The main reason is the difficulties linked to the quantification of changes in flow of service provision (Turner et al., 2010b; Fisher et al., 2008). However, if the purpose of the valuation is to connect the estimated benefits to costs of taking action, a valuation of stocks may be problematic since by definition no change of the state of the environment is involved in the estimations.

Double countingThe issue of double counting is common when for instance competing eco-system services are valued separately and the values are then aggregated; or, where an intermediate service is first valued separately, but also subsequently through its contribution to a final service. The classification scheme described


above with a clear distinction between intermediate services, final services and benefits helps avoiding the risk of double counting (Turner et al., 2010b).

Non-linearities and tipping pointsMany ecosystem services respond to disturbances in a non-linear fashion. This can make it more complicated within cost-benefit assessments, as one cannot make the assumption that marginal values are constant. Therefore non-linarites need to be understood and reflected in the analysis, especially if risks of tipping points may exist. A tipping point refers to a point at which an ecosystem may change abruptly into an alternative steady state. The existence of tipping points poses especially complex policy and analysis challenges, and is also related to the uncertainty regarding the sustainability of the stock of intermediate ecosystem services.

2.3 total economic Value (teV)When the ecosystem services of concern have been identified, the impact these have on people’s wellbeing can be addressed. In assessing the impact of ecosystem services on human welfare, it is critical to focus on the benefits generated by the final services, as this is what affects human welfare directly. It is, therefore, the benefits rather than the services per se that are to be valued. These benefits can be described by identifying use and non-use values de-rived from final ecosystem services. Thereafter, stakeholders can be identified by connecting benefits with different actors (e.g. tourism, fishing, households, governments, public etc). One theoretical approach of capturing and describing the value of the benefits derived from the different ecosystem services is the Total Economic Value (TEV) framework. This is a common approach to valuing ecosystem services. The framework provides a systematic tool for considering the full range of impacts the marine environment has on human welfare. The concept of total economic value captures the value of those bene-fits humans derive from different ecosystem services. The TEV of an ecosystem service can be divided between use and non-use (or passive use) values, as well as option and quasi-option values (Figure 2) (Pearce et al., 2006).


Figure 2: Total Economic Value (Source: Adapted from Turner et al., 2010a)

Use-valuesUse values (both direct and indirect) capture the direct link between ecosystem services and human welfare. Direct use values includes the results of market-based activities such as profits from fisheries, recreational sea angling opera-tors and the oil and gas industry etc. It also includes wider benefits that are more difficult to measure because they are not necessarily captured by market interactions, for example recreational activities generating non-consumptive values such as swimming and sailing, as well as the importance to local coastal communities of maintaining their marine heritage. Indirect use values in-cludes the benefits we derive from the environment’s provision of ecosystem services, such as waste decomposition, carbon sequestration or nutrient recycling (Pearce et al., 2006).

Non-use valuesNon-use values capture the benefits derived from knowing that an ecosystem service simply exists (existence value) and/or is available for descendants to be enjoyed in the future (bequest value), and/or the satisfaction from ensuring resources are available to contemporaries of the current generations (altruistic and bequest value) (Pearce et al., 2006).

Option and quasi-option valuesOption values capture the value individuals derive from knowing that an eco-system service will be available for future consumption for themselves. For example, even though an individual does not presently use a coastal zone for recreation s/he might value having the possibility to do so in the future. Quasi-option values are associated with the potential benefits of waiting for improved information before giving up the possibility to preserve an ecosys-tem service for future use. It might be of significant importance when it comes to avoiding irreversible changes that might turn out to be unwanted in the light of improved information (Pearce et al., 2006).


Total Economic Value and Total System ValueIt is important to be aware that Total Economic Value (TEV) is not equivalent to Total System Value (TSV) of ecosystem services. TEV captures the value of final ecosystem services in terms of human welfare. However, some authors argue that there are also, in addition to this value, ‘insurance’ values provided by a healthy ecosystem, which can be sustained only if an adequate configura-tion of structure and process is present (see also section 2.1 on intermediate services). TSV includes the notion that there is a role that ecosystem struc-ture/process plays in terms of the maintenance of a stock of intermediate ser-vices that can potentially deliver final services over time and space. This then is a value in itself. Therefore TSV will always be greater than TEV (Turner et al., 2010a; Pearce et al., 2006).In addition, some would argue that there are potential intrinsic values of na-ture, which are values residing in ecosystems regardless of human utilization and welfare benefits. Such kinds of values are not addressed by the TEV framework (Turner et al., 2010a; Pearce et al., 2006). It could, however (not undisputable), be argued that some people’s willingness to pay (see section 2.4 on stated preference methods) for the conservation of an asset, independently of any use they make of it, is influenced by their own judgements about such intrinsic values. This may show up especially in notions of ‘rights to existence’ but also as a form of altruism. Clearly, the practice of both economic and en-vironmental management would need to be changed radically in order to up-hold such deep ecology rules as the notion of intrinsic values are built upon (Turner et al., 2010a).

2.4 Valuation methodsThere exist a number of valuation methods to capture the different values in-cluded in TEV. However, the non-market nature of many ecosystem services introduces a challenge for valuation. This is in particular true in a case with considerable non-use values, because most valuation methods are only able to capture use values. However, a few methods exist that can capture also non-use values. It is therefore of importance to have an idea regarding which of these values that dominates when choosing between the different methods in order to avoid underestimation of the benefits (see e.g. Pearce et al., 2006; Turner et al., 2010a).

The objective of economic valuation is, as a basis, to measure the weight and direction of individuals’ preferences and thereby the total economic value of the benefits derived from an ecosystem service. Important to remember is that it is the value of incremental change in ecosystem services that is of interest (see marginal changes in Section 2.2). The methods to estimate a monetary value of benefits provided by ecosystem goods and services all have their different advantages and disadvantages. The economic methods can be separated between:

Pricing approaches: in which market prices, damage cost avoided or replacement costs are used to capture the values of the benefits provided by different ecosystem services.


Revealed preference methods: where the value is obtained by looking at costs of illness or loss of input, defensive expenditure or averting beha-viours or by conducting travel cost or hedonic price studies. Stated preferences methods: where individuals through various means are asked to state their willingness-to-pay (or willingness-to-accept compensa-tion) for an environmental improvement (degradation).

Which valuation method to prefer depends on the characteristics of the eco-system service in question, how it is linked to human wellbeing, as well as on which of the values described above that is likely to be dominating. Only stat-ed preferences methods are able to fully capture non-use values, which sug-gests that those methods have an important advantage if such values are like-ly to be significant. A short overview of existing methods is given below. The different methods’ main advantages and disadvantages are also highlighted in Table 1 below. For a more in-depth description of each of these methods see for example Pearce et al. (2006), Defra (2007) and Turner et.al. (2010a).

Pricing approachesPricing approaches, or cost based measures, are common techniques because they usually require fewer resources compared to the other two approaches. While pricing approaches typically only provide a partial estimate of actual benefits, they can still be useful in order to give rough monetary estimates of ecosystem services that otherwise may remain unvalued. Methods using mar-ket prices are often based on turnover, and methods using direct expenditures are often based on clean-up costs. Methods include avoided damage costs, replacement costs and provision costs of ecosystem services (Turner et al., 2010a).

Revealed preference methodsRevealed preference methods make use of linkages between ecosystem ser-vices and one or more market goods. This means that all these methods are based on data on peoples’ or firms’ actual market behaviour. The approaches in this category observe individuals’ behaviour in markets in which a given ecosystem service is indirectly bought (Turner et al., 2010a). The four most relevant valuation methods within this category are: Production Function Method (PFM), Travel Cost Method (TCM), Hedonic Price Method (proper-ty value method) (HPM) and Defensive Expenditure Methods (DE). These methods all have somewhat different basis. The PFM method assumes that the environmental quality is an input to the production of goods and services, and uses this link to connect changes in environmental quality with changes in profits and/or well-being. The TCM method enables obtaining economic values of recreational use (an element of direct use values) through studying the public’s costs in terms of time and money for travelling to a specific area. The HPM method generally uses price data from the housing market, assuming that property prices are a function of a number of characteristics including environmental quality, and may be applied to the valuation of goods such as landscape amenity, air quality, and noise. The DE methods are similar to TCM and HPM, but employ data on people’s averting behaviour instead. For a fur-ther description of the different methods see for example Pearce et al. (2006).


Stated preference methodsIt is, however, not always the case that there are linkages between ecosystem services that are to be valued economically, and some market goods, or the linkages, might be weak or not well examined. People’s Willingness To Pay (WTP) or Willingness To Accept compensation (WTA) can then be used, by creating hypothetical market situations. These stated preference methods include Contingent Valuation (CV) and Choice Experiments (CE). The two methods generally use questionnaires to estimate individual or household preferences (and more specifically their WTP or WTA) for changes in the provision of (non-market) goods. Choice Experiments (CE) offer the re-spondents choices between groups of attributes from which the analyst then can estimate a WTP or WTA. Stated preference methods are particularly use-ful when impacts on non-market goods associated with significant non-use values are to be assessed, as these values cannot be revealed using revealed preference methods (Pearce et al., 2006; Turner et al., 2010a).1

A problem with stated preference methods may be that the results suffer from hypothetical bias, that is the respondents say one thing but would not act upon their responses should the market situation be a real one. Much re-search has been devoted to this issue, see List & Gallet (2001), Murphy et al. (2005) and Swedish EPA (2010a) for reviews. This research has resulted in the development of procedures to reduce this problem, such as accounting for re-spondent uncertainty by, for example, asking respondents explicitly about how certain there are about their WTP/WTA, and providing so-called cheap talk scripts where the respondents are, for example, told explicitly to consider their household budgets and to respond as if the transaction would actually take place. It is only stated preference methods (CV and CE) that can capture all com-ponents of TEV including non-use values. Therefore these two methods play a very useful role in cost-benefit analysis when such values are considered to be high (Pearce et al., 2006; Turner et al., 2010a).

1 Survey studies like these can be time consuming and costly. One option can be to use benefit transfers from earlier studies (see e.g. Pearce et al., 2006). There are, however, many difficulties to overcome with transferring values from existing studies.


Table 1: Pros and Cons with different valuation methods (Source: Adapted from Pearce et al., 2006; Turner et al., 2010a)

Valuation method Advantages Disadvantages

Market based/turnover(Pricing approach)

Practical Relatively easy data collection and analysis

Total turnover is not a welfare measure; however change in pro-fits is a better welfare measure

Cost of clean up(Pricing approach)

Easy to carry outInexpensive, no analysis required Frequently used

Not a pure welfare measure of lossCovers a very small portion of the total social costs of an environ-mental degradation

Production Function Method(Revealed preference)

Likely to have high acceptance for use in policy and legal discussions

Only estimate a fraction of total value.Requires a lot, both of economic and ecologic data. Often very costly Can be difficult to find data

Travel cost method(Revealed preference)

Practical and well establishedBased on actual observed behaviourRelatively easy if relevant data exists

Can only estimate use-values Applicable to specific sites only (usually recreational sites)Can be costlyCan require significant data collection to obtain distance travelled by recreational users

Hedonic price method (property value method)(Revealed preference)

Well established methodBased on actual observed behaviour and (usually) existing data

Can estimate non-use values but only captures values held by home ownersOnly applicable to attributes capitalised into housing and/or land pricing

Defensive expenditure method (DE)(Revealed preference)

Sound theoretical basisUses data on actual expenditure so data can be easy to obtain

Not widely usedOnly estimate use valuesAppropriate data may be difficult to obtain

Contingent valuation (CV)(Stated preference)

Can estimate use and non-use valuesWidely used and much researchedCan be applied to a range of ecosystem services

Controversial mainly due to problems at survey design and implementation stageCan suffer from biases (questionnaire technique)Can be very costlyRequires significant data collection

Choice experiments (CE)(Stated preference)

Can estimate use and non-use valuesCan be applied to a range of ecosystem services

Controversial (as CV)Can be costlyAnalysis can be complicatedRequires significant data collection

Non-monetary approaches (HEA/REA)(non-monetary method)

Fairly easy to undertakeCan capture non-use values but capture intermediate rather than final services

Cost is only an indicator of value, therefore not a pure welfare measure of loss as in WTP.Data availability may be limited

Benefits transfer Easy to carry outRelatively inexpensiveAccepted method

Depends on quality and applicability of existing studiesDepends on primary study method


Deliberative valuation methodsThe above described methods focus on individual preferences/value. However, it is possible that ecosystem services may also have ‘collective’ significance. It can be argued that citizens, in certain contexts, may hold ‘social/shared’ values for ecosystem services (see e.g. Fish et al., 2011; MacMillan et al., 2003; Sagoff, 1998, 2007; Spash, 2007, 2008). These ‘shared’ values cannot be captured by the methods explained above. An approach to elicit such values is via for example group discussions, debate and learning between stakeholders. As explained by Fish et al. (2011), techniques exist for deriving such shared values, either mon-etary or qualitatively (but most often qualitatively), and these are referred to as Deliberative Valuation Methods (DMV). If the objective is to achieve a monetary valuation, the value can be agreed upon by a group via consensus or majority. However, the outcome does not necessarily have to be an agreed-upon ‘shared’ value; that is, these techniques may also be used to elicit indi-vidual values that are informed through social learning and/or the dialogue process itself. Important to note is that the choice is not of using either mone-tary or non-monetary valuation methods but, rather a combination in order to take a holistic approach when analysing relationships between ecosystem services and human wellbeing (see Fish et al. 2011).Deliberative methods are perhaps most appropriate in contexts where so-called cultural ecosystem services are being assessed (e.g. landscapes/seascapes of symbolic and historical significance) but can be used for all types of ecosystem services (Fish et al., 2011). A monetary or qualitative expression of ‘shared’ values may also be used to complement conventional stated preference ap-proaches (see e.g. Álvarez-Farizo et al., 2007 for a combined case study linked to water quality). Some argue that the non-use benefit values that people associate with ecosystem services – bequest, existence and altruistic – are closely associated with these citizen-type behaviours and motivations. See Fish et al., 2011 for a further description of and use of deliberative methods for valuation of value ecosystem services. See also Background Paper Shared Values.


3. Method in BalticSTERNA few studies have been made previously on the benefits and thereby the wellbeing people obtain from the Baltic Sea and its ecosystem services. Stated preferences have been the main method used to value the benefit people re-ceive from different ecosystem services, followed by revealed preferences (Sandström, 1996), and these have mostly focused on impacts of eutrophica-tion such as changes in Secchi depth, recreational fishing and occurrences of summer algal blooms (e.g. Söderqvist & Scharin, 2000; Soutukorva, 2005; Vesterinen, et. al., 2010).

There still remain large gaps, however, regarding the value of the ecosystem services provided by the Baltic Sea. There are, for example, few valuation studies using the different pricing approaches (replacement costs, damage costs and market prices) to address the value of different ecosystem services (Swedish EPA, 2008b). So far, most studies have also been focusing on valuing provisioning and cultural ecosystem services, while few have addressed the value of regulating and supporting services. The supporting services “diver-sity” and “habitat” have been identified as needed for prioritization in future research. However, a large need still exists for future studies regarding the provisioning service “food” (e.g. fish) and many cultural services linked to recreational, aesthetic, cultural heritage and cultural existence values (e.g. legacy of the Sea) (Swedish EPA, 2008b).

Existing studies are in most cases related to specific scenarios and local regions, which makes it difficult to draw any large quantitative conclusions regarding benefits of an improved Baltic Sea environment and linking them to existing policy targets. Also, existing quantifications from large-scale studies are mainly based on benefit transfer from original studies with heavily out-dated benefit estimates. The need for a large-scale study has therefore been identified, valuing the benefits of decreased nutrient loads to the Baltic Sea (Swedish EPA, 2008b).

3.1 ecosystem services in focusAs eutrophication and overfishing are two of the most important threats to the Baltic Sea ecosystem (HELCOM, 2010), studies performed within the BalticSTERN research network have mainly focused on environmental problems linked to these pressures. Eutrophication and overfishing have large negative impacts on the identified threatened ecosystem services (Swedish EPA, 2008a).

Benefits that can be linked to fish are for example commercial catch of fish, aquaculture or recreational harvest of fish. The final ecosystem service linked to these benefits is the fish biomass. Without any fish biomass we are unable to receive the benefits of harvesting the fish. In order for the marine ecosys-tem to produce the fish biomass, several intermediate services are in turn needed. Examples of main intermediate services needed are; regulation of water quality and hazardous substances, maintenance of a well-functioning food web structure, habitats and primary production (Table 2).


Table 2: Examples of intermediate, final services and benefits linked to fisheries (Source: Adapted from Fisher et al., 2008)

Intermediate Services ➜ Final Services ➜ Benefits

Regulation of water quality Fish biomass Fish landings

Regulation of hazardous substances

Maintenance of food web structure and function

Maintenance of habitats

Primary production

Benefits from recreational activities can, for example, be the enjoyment experienced by people from swimming. Depending on the kind of recrea-tional activity, the main final services might be different. Taking ‘swimming’ as an example, one important final service needed to generate this benefit is high/good water quality. Important intermediate services needed to generate a sufficiently good water quality are for example; eutrophication control, re-tention storage of sediments, nutrients and contaminants, as well as regula-tion of hazardous substances (Table 3). Beneficiaries are for example the tour-ism sector and the general public.

Table 3: Examples of intermediate and final services linked to recreational swimming (Source: Adapted from Fisher et al., 2008)

Intermediate Services ➜ Final Services ➜ Benefits

Eutrophication control Water quality Recreational swimming

Retention storage of sediments, nutrients and contaminants

Regulation of hazardous substances

Primary production

In addition, recreational activities are to a varying degree dependent on the state of different ecosystem services. Swimming is for example most likely more dependent on the capacity to mitigate eutrophication, compared to walking along the beach. Figure 3 illustrates to which degree some recreational activities may depend on the intermediate service of eutrophication miti-gation (Enveco et al., 2012).

HighSwimmingDivingFishingBeing at the beachBoating Going on a cruise Low

Figure3: Degree of recreational activities’ dependency on eutrophication mitigation in the Baltic Sea (Source: Enveco et al., 2012.).


3.2. the studiesWithin the BalticSTERN research network, two major activities have been performed to identify and to capture benefits that people obtain from the Baltic Sea; BalticSurvey and BalticSUN.

BalticSurveyBalticSurvey was a study performed in 2010 in all the nine countries sur-rounding the Baltic Sea with the purpose to identify how people around the Baltic Sea and parts of the Skagerrak use the Sea, what attitudes they have towards the marine environment and towards various responsibilities, as well as ways to finance measures for improving the environment. The study fur-ther aimed at providing information that could be useful for the design of forthcoming research on the value of benefits at risk because of marine environmental problems (See Swedish EPA, 2010b).

In all countries2, random sampling of the adult national population was applied and about 1000 interviews were performed in each country. Tele-phone interviews were used as the method for data collection in all countries except in Estonia, Latvia and Lithuania, in which face-to-face interviews were conducted. The questionnaire used in all interviews explained what the survey was about and consisted of questions about the respondents’ general use of the Sea and their attitudes related to the marine environment. Ques-tions were asked about for example potential problems in the Sea, actors that can take actions for improvements and payment modes for funding actions. In most countries, there was an overrepresentation of females and relatively old respondents. In order to achieve an improved representativeness, weigh-ting was applied in the analysis with respect to gender and age (see Appendix D in Swedish EPA, 2010b). In general, the findings from this survey about the general public’s use of the Sea and attitudes about marine environmental issues serve as a point of departure for further studies on their preferences for improvements in the marine environment.

BalticSUNTo fill the research gap of a large-scale study that values the benefits of decreased nutrient loads to the Baltic Sea, and that also give indications of marginal benefits of reduction (see Swedish EPA, 2008b), the research net-work performed a valuation study called BalticSUN(SurveyofUseandNon-use values) in all nine littoral countries. The study is developed and based on information received from BalticSurvey. A CV study was carried out in all countries simultaneously in order to capture benefits linked to reduced eutrophication in the Sea. The overall aim with the study was to produce results that can be compared with the costs of specific scenarios of reducing eutrophication. Collecting new data from all countries made it possible to

2 For Russia, due to its large population and wide geographical extent, a separate sample was made for the population living in the two Russian regions situated closest to the Baltic Sea, i.e. the coastal regions of St. Petersburg and Kaliningrad. 500 interviews were also made among the population in a number of cities situated in other parts of Russia (Swedish EPA, 2010).


avoid the dependency on benefit transfer from previous studies when valuing the benefits. This approach to estimate the benefits makes it the first primary CV study made to cover all nine countries. It is also likely to be one of the largest international CV studies on the marine environment conducted so far.

In the study, people in the nine littoral countries were asked what they would be willing to pay for reduced eutrophication in the Sea. In addition, people were also asked questions about their attitudes towards the Baltic Sea and recreation in the area. Since it was indicated in BalticSurvey that non-use values linked to eutrophication might be high, it was important to choose a method for the valuation study that not only captured use-values. The use of a stated preference approach allowed for capturing both use values and non-use values of the ecosystem services affected by eutrophication (see section 2.4 on methods for capturing TEV).

CV studies are most suited to valuation situations where coherent hypo-thetical scenarios of environmental change are valued. CE, in turn, excels in assessing the values of individual attributes (Haab & McConnell, 2002). In the survey, eutrophication in the Baltic Sea was described using five effects, which had five quality levels. While choice experiments might seem suitable for this kind of setting, we chose the CV method over CE based on a number of reasons. The valuation was conducted for a scenario-based cost-benefit analysis, where the changes in eutrophication were determined with marine biogeochemical modeling. Proper statistical analysis of in CE studies requires the levels of the valued attributes to vary in choice situations presented to respondents. As all the eutrophication effects are heavily correlated with each other and the valuation scenarios needed to be credible, the choice experi-ment would not have provided additional information. Furthermore, as wide geographical coverage and large samples of valuation data were needed in all nine littoral countries, it was paramount for the survey to be easily and similarly understood despite cultural differences. To maintain a simple exposition, the change in eutrophication was shown in maps of the Baltic Sea with a simple coloring scheme and identically translated explanations in the surveys. In addition to the careful definition of the valuation problem and question, the survey elicited information on attitudes, recreation behavior and personal information. A CE format would have added to the burden of response, risking reduced response rates.

3.3. Linking ecological and economic models to policy targetsThe study elicited willingness to pay for two eutrophication scenarios related to reaching the Baltic Sea Action Plan’s (BSAP; HELCOM, 2007) nutrient reduction targets. A business as usual (BAU) eutrophication scenario (non-action scenario) was developed and described, predicting the expected development of nutrient loads and concentrations in the Sea if no additional abatement actions are taken for the state of the Baltic Sea until 2050. The BAU scenario was then compared with two different policy scenarios, one scenario where the BSAP-targets regarding nutrient loads were fulfilled, and one scenario where the nutrient load targets were met to 50 per cent. There-after, the respondents of the survey were asked how much they would be


willing to pay each year for obtaining a future in which the better scenario had generated a healthier Baltic Sea compared to the BAU future. The two policy scenarios can be said to represent a global storyline corresponding to the optimistic “A world in balance” (see BG Paper Scenarios). Coloured maps were used to illustrate the state of the Baltic Sea under the different scenarios. Figure 4 shows the BAU scenario compared with the scenario corresponding to full implementation of BSAP. All scenarios were carefully developed based on experience from previous valuation studies and feedback from a thorough pre-testing phase. The use of two scenarios with varying nutrient reductions allow for interpolations of WTP estimations for different levels of abatement.

Figure 4: The Baltic Sea in 2050 without the BSAP (BAU scenario) (left) and the Baltic Sea in 2050 with BSAP (right) (Source. Ahtiainen et al., 2012)

The levels of eutrophication were described for different subbasins of the Baltic Sea, using a five-step water quality scale based on HELCOM’s Ecologi-cal Quality Ratio (EQR), which represents relationships between actual status and a reference condition in the Baltic Sea (see HELCOM, 2009). Five eco-system characteristics were used to describe the different status of water quality: levels of water clarity, extent of blue-green algal blooms, extent of underwater meadows, fish species composition and oxygen conditions in deep-sea regions. The five-step scale using these characteristics is illustrated in Table 4. Blue and green colours indicate acceptable levels of eutrophica-tion, where blue is the best situation. Yellow, orange and red indicate unaccep-table levels where red signifies the worst situation.


Table 4: Five steps water quality scale to explain eutrophication (Source: Ahtiainen et al., 2012)

Description of the effects of eutrophication

Water quality Water clarity Blue-green algal blooms

Underwater meadows

Fish species Deep sea bottoms

Best possible water quality

Clear Seldom Excellent condition Good for fish spawning and feeding

Cod, herring and perch common

No oxygen deficiency Bottom animals common

Mainly clear Sometimes Patchy vegetationGood for fish spawning and feeding

Cod, herring and perch common

Oxygen deficiency in large areas Bottom animals common

Slightly turbid In most summers

Cover a small area Less good for fish spawning

Fewer cod, but herring and perch commonMore roach, carp and bream

Oxygen short-ages often in large areasSome bottom animals rare

Turbid Every summer Cover a small areaBad for fish spawning

Fewer cod, herring and perch More roach, carp and bream

Oxygen short-ages often in large areasSome bottom animal groups have disap-peared

Worst possible water quality

Very turbid On large areas every summer

Almost goneNot suitable for fish spawning

Almost no cod, fewer herring and perchLots of roach, carp and bream

Oxygen short-ages always in large areasNo bottom an-imals in many areas

Three models were used to predict the future state of the Baltic Sea with regard to eutrophication under various nutrient reduction scenarios: a basin-level long-term dynamic model, and two more specific three-dimensional models (3D-models), the EIA-SYKE 3D model, and the Ecological Regional Ocean Model (ERGOM). The dynamic marine model was used for projecting the state of the Baltic Sea over the 40 years time horizon 2010-2050. This model describes the exchange of water and nutrients across the seven basins of the Baltic Sea, and projects the development of nutrient concentrations as a consequence of the current state and exogenously given load projections. The two more specific models are biogeochemical models used to translate the predicted nutrient concentrations from the basin-level marine model into phytoplankton biomass and other attributes of water quality at a spatially detailed level (see also BG Paper Costs of mitigating eutrophication).

3.4. estimating willingness to payThe “willingnesstopay question” in the CV-study was two-staged. First the respondent was asked whether s/he would, in principle, be willing to pay for reduced eutrophication in the Baltic Sea, and if the answer was yes or don’t know, the maps illustrating the eutrophication scenarios and the willingness-to-pay question were presented together with a payment card. This question


was formulated as follows: “What is the most you would be willing to pay every year to reduce eutrophication in the Baltic Sea as shown in the maps? Please consider your disposable income carefully before answering the question.”

Based on findings from BalticSurvey, the payment vehicle chosen was a special Baltic Sea tax, collected from each individual and firm in all Baltic Sea countries, and earmarked for reducing eutrophication. The respondent also received information regarding eutrophication reduction measures and that they would have to pay each year for the rest of their lives (Ahtiainen et al., 2012).

In total 10564 interviews were conducted through face-to-face interviews or Internet panels3. The smallest specific sample was 505 (Estonia) and the largest 2029 (Poland). As shown in Table 5 the response rate was lower in countries where an online survey was used compared to countries where face-to-face interviews were conducted. In all countries except Russia, the sample was drawn from the entire population. In Russia, two samples were constructed separately: one for the Baltic coastal regions and another for the rest of the country4. For aggregation of WTP estimates, the samples from each country were adjusted to the relevant national population primarily due to over-representativeness of larger households, higher income and higher education compared to the national population (Ahtiainen et al., 2012).

Table 5: Survey mode and response rate in each Baltic Sea country (Source: Ahtiainen et al., 2012)

Country Survey mode Number of responses

Response rate (%)

Age of sampled individuals

(years)

Denmark Internet panel 1061 38.2 18–74

Estonia Internet panel 506 42.1 1–74

Finland Internet panel 1645 39.4 18–74

Germany Internet panel 1463 32.5 18–70

Latvia Face-to-face interviews 701 45.0 18–74

Lithuania Face-to-face interviews 617 60.5 15–74

Poland Face-to-face interviews, internet panel

2029 n/a 36* 20–60

Russia Face-to-face interviews 1508** 69.3 18–85

Sweden Internet panel 1003 34 18+

*n/a for face-to-face interviews, 36 for internet panel** (of which coastal: 1008; and non-coastal: 500)

Two econometric approaches were used to estimate mean and median willing ness to pay for each country; an interval regression model and a spike model. The purpose of using two approaches was to compare results and verify the robustness. Information was also collected in order to understand how certain people are about their stated WTP, and hence whether the degree of

3 Previous empirical studies have provided evidence that internet surveys responses are of similar quality to face-to-face interviews, and thus may be a reliable alternative (Ahtiainen et al., 2012).4 The coastal part included: Leningrad, Saint Petersburg and Kaliningrad Region. The other parts were represented by Khabarovsk, Novosibirsk, Samara, Sverdlovsk, Rostov and Voronezh Region (Ahtiainen et al., 2012).


certainty affects WTP. It was further chosen to include protest respondents when estimating the WTP, setting their WTP to zero. In general, protest re-sponses are defined as the responses of persons who do not state their true value for the good in question due to objecting to some component of the survey. These objections may be directed towards the payment vehicle, dis-trust regarding the money being used to the purpose stated in the survey (c.f. Meyerhoff & Liebe 2010, Jorgensen & Syme 2000) or more general opposition to the survey set-up.

In this study, protest responses were identified based on answers to debrief-ing questions about the most important reason for not being willing to pay or being uncertain about the willingness to pay. The share of protest responses was much higher among uncertain respondents (54%) than among respon-dents not willing to pay (25%). The following responses were deemed as protests: those who did not believe in the program to reduce eutrophication or that the money would be used for the stated purpose; those who said they did not receive enough information; and those who said they would be prepared to pay for reducing eutrophication, but opposed the extra tax, thought that polluters should pay more or that the payment should be dependent on income. For these respondents, there are reasons to believe that their actual WTP is greater than zero, despite that they have stated a zero WTP.

Based on a closer examination of the socio-economic characteristics of protest respondents, protesters were typically male and had higher income. In some countries, protest responses were also more likely among younger respondents and those who had a lower education level.

Protest respondents were not excluded from the analysis, that is they were considered being not willing to pay. The decision not to exclude these protest answers produces a conservative estimate of the WTP. See Ahtiainen et al., 2012 for a description of the models and the treatment of uncertainty.


4. ResultsBalticSurvey has provided completely new and comparable insights to how people in the Baltic Sea countries use the Sea and what attitudes they have towards marine environmental issues. The survey shows that while people’s professional experience of the Sea is limited, most of the respondents have been to the Sea to spend leisure time there. The proportion of respondents saying that they have or have had an occupation that is dependent on the Sea was less than or equal to about 10 per cent in all countries.

In all countries except coastal Russia, more than 80 per cent have been to the Sea at least once. In coastal Russia, this number is about 50 per cent. The highest percentage (98 %) is found in Sweden. The survey also included data indicating how often people visit the Baltic Sea. Visits to the Sea are most frequent in Sweden, Denmark and Finland and least frequent in Lithuania, Germany, Latvia and Poland. The number of visit days was considerably lower for all countries for the period between October 2009 and March 2010, which is not surprising as people normally spend more time by the Sea during the summer months. The frequency of visits was measured as the number of days in which the respondents have spent at least some leisure time at Sea. Two 6-month periods were included: April – September 2009 and October 2009 – March 2010 respectively.

The study further highlighted people’s preferences for how to use the Baltic Sea. The most common activities people enjoy when spending time at the Baltic Sea are swimming (in the Sea), being at the beach or seashore for walking, sunbathing or similar, going on cruises or boat excursions and recreational fishing. The results from BalticSUNconfirm the findings of BalticSurvey regarding recreational activities. In Finland, Latvia and Lithuania, about 30 per cent further stated in BalticSUN that the recreational experience they have at the Baltic Sea could not be found elsewhere. In Denmark, Germany, Poland and Russia, around 90 per cent however felt that they could have a similar recreational experience at some other water area, and in Estonia all respondents could think of a substitute for the Baltic Sea. For Denmark and Germany, this could be explained by the fact that they have coastlines on the North Sea as well.

Attitudes towards the marine environmentBalticSurvey showed that many people in the region are worried about the Baltic Sea environment and BalticSUN further confirms these findings. People in Finland are the most worried (77 per cent). Many are worried also in coastal Russia (71 per cent), Estonia (69 per cent) and Sweden (63 per cent). People in Poland and Germany are the least worried, but nevertheless more than one third of the people in these countries are worried (37 and 39 per cent respectively) (Figure 5). Swedish respondents agreed most strongly that the environmental problems in the Baltic Sea are among the most impor-tant environmental problems that the country faces. In Germany, Russia and Denmark people are more indifferent (Swedish EPA, 2010b).


Figure 5: Percentage of the population that agree or disagree to the statement “I am worried about the Baltic Sea environment”. (Source: Swedish EPA, 2010b). DK = Denmark, EE = Estonia, FI = Finland, DE = Germany, LV = Latvia, LT = Lithuania, PL = Poland, RU = Russia, SE = Sweden

According to BalticSurvey, there is also a tendency in most countries to agree that there is deterioration rather than improvement of the Baltic Sea environ-ment. This tendency is particularly strong for coastal Russia. However, German and Polish respondents are on average more prone to agree that an improve-ment has taken place. There is a slight tendency among the respondents in all countries, except Poland and coastal Russia, to view the status of one’s own country’s part of the Sea as being better than the status of the Baltic Sea as a whole. Interestingly, not many feel that the Baltic Sea water quality at present restricts their recreational opportunities.

Respondents in BalticSurvey were asked to state the extent to which they view a number of different issues as being a problem in the Baltic Sea. Some of the issues, such as “marine litter”, were stated as being a rather large problem by a majority of the respondents. The same is true in at least seven countries for “damage to flora and fauna in the sea”, “heavy metals and other hazardous substances”, “small everyday oil leakages”, “possibility of major oil spill” and “algal blooms” (Figure 6). People were also asked to answer whether there are any other major problems in the Sea. Common responses to this question included emissions and other disturbances caused by boating and sea transports (Swedish EPA, 2010b).


Figure 6: Environmental issues regarded as largest in the Baltic Sea (Layout: M.Nekoro, Copyright: Azote.se)

In addition to the findings in BalticSurvey regarding people’s attitudes, BalticSUN, which focused on eutrophication, showed that half of the respondents had at some point experienced the effects of eutrophication, and that people are in general most familiar with blue-green algal blooms and water turbidity. A large variation between countries can be seen when it comes to people’s familiarity with the effects. Swedes and Finns are for example also familiar with less ‘visible’ effects, such as changes in fish species composition and lack of oxygen (Table 6).

Table 6: Familiarity with effects from eutrophication (in %) (N=10540)

Country DK EE FI DE LV LT PL RU SE

Water turbidity 45.6 55.1 94.5 41.5 49.1 49.4 41.2 45.8 82.6

Blue-green algal blooms

60.9 74.7 97.6 57.9 59.2 57.1 50.1 45.6 94.5

Loss of underwater meadows

44.4 53.3 56.4 57.9 36.1 47.8 24.9 35.4 65.9

Changes in fish species composition

41.6 48.1 88.6 22.4 45.5 51.2 31.08 33.7 73.4

Lack of oxygen 66.6 51.1 91.7 33.0 45.1 49.8 37.7 31.0 90.9

Percentages in the table reflect the share of yes responses.DK = Denmark, EE = Estonia, FI = Finland, DE = Germany, LV = Latvia, LT = Lithuania, PL = Poland, RU = Russia, SE = Sweden


Actions for improvementsIn most countries, people do not feel that they are affecting the Baltic Sea environment themselves, as shown in BalticSurvey. Poland and Sweden were however exceptions in the survey, despite the fact that these countries are very different in terms of where the major part of the population lives; in Poland relatively far from the Sea and in Sweden relatively close to the Sea. In Sweden and Poland, a majority also think that they themselves can play a role in improving the Baltic Sea environment. This is different compared to Germany, Latvia and Lithuania where a majority of the respondents do not think they can play a role in improving the environment. Further, Poles and, in particular, Swedes are those who most clearly tend to regard themselves as currently contributing financially for funding actions to mitigate eutrophi-cation through taxes or other types of payments.

Regarding actions to improve the Baltic Sea environment, BalticSurvey indicates a widespread support for actions to be taken by wastewater treat-ment plants, farmers, professional fishermen, industry, sea transports and ports in most countries. This implies that there is a widespread support for the polluters to take actions in the Baltic Sea region. When it comes to funding of actions, a majority of the respondents in all the countries considered increased pollution emissions charges to be an acceptable way of funding actions to improve the Baltic Sea environment. Increases in taxes or water bills are not popular however, though people are in general less negative towards making payments that are paid by all and are earmarked for funding actions.

Willingness to pay for reduced eutrophicationBalticSUN captured people’s willingess-to-pay for reducing eutrophication in the Baltic Sea. A monetary estimate was obtained of the value individuals attach to fully obtaining the nutrient load targets set up in the Baltic Sea Action Plan (BSAP), and also of achieving half the BSAP-targets. The study shows that, overall, more than half of the respondents are willing to pay something for reducing eutrophication in the Baltic Sea. The shares of respondents, who are willing to pay separately for the two different eutrophi-cation reduction scenarios (full BSAP and half BSAP) in comparison to the Business As Usual (BAU) scenario, were highest in Sweden and lowest in Russia as shown in Table 7.


Table 7: Shares of respondents willing to pay per country (Source: Ahtiainen et al., 2012)

CountryShare WTP for

½ BSAP (%)Share WTP for

BSAP (%)

Share WTP for either or both programs (%)

N

Denmark 54.0 53.7 54.9 1061

Estonia 53.9 56.4 58.0 505

Finland 62.1 63.0 63.4 1645

Germany 54.7 56.2 56.5 1495

Latvia 49.1 49.8 50.1 701

Lithuania 54.1 55.1 55.1 617

Poland 54.3 55.0 55.6 2029

Russia 31.1 32.2 32.4 1508

Sweden 74.1 74.6 75.4 1003

Overall average 53.7 54.6 55.2 10564

Population figures corresponding to the sampled part of the population for each country together with the WTP estimates are shown in Table 8. The aggregate willingness to pay for fulfilling the ‘half BSAP” and ‘full BSAP’ scenarios amounts to 3000 million and 3800 million Euros, respectively. Notably, the differences between the WTP in various countries are large, with mean WTP per person and year being highest in Sweden (about 111 Euros for the ‘full BSAP’ scenario) and lowest in Latvia (about 4 Euros). If looking at national WTP per year, it is highest in Germany followed by Sweden.

Naturally, the WTP estimates involve a certain level of uncertainty, which is here mainly linked to sampling and models. To reduce uncertainty, the samples were drawn to represent the entire country with best possible accura-cy for all countries. Also, the use of two modelling methods to assess the WTP (an interval regression model and a spike model) gave similar results, providing confidence in using the results for the aggregation (see also section 3.4 on method). For Russia, the aggregate WTP presented below includes only the Central, Southern, Northwestern and Volga Federal Districts, in order to obtain a conservative estimate. Hence a slight difference compared to Ahtiainen et al. (2012).


Table 8: Aggregate benefit estimates for the ½ BSAP and BSAP scenarios (in 2011 euros) (Source: Ahtiainen et al., 2012)

CountryAdult population (in millions)

Annual mean WTP per person for half BSAP (€)

Annual mean WTP per person for full BSAP (€)

National WTP per year for half BSAP (M€)

National WTP per year for full BSAP (M€)

Denmark 3.958 49 52 195 205

Estonia 0.989 13 18 13 17

Finland 3.617 42 56 152 201

Germany 68.321 20 27 1367 1870

Latvia 1.690 4 4 6 7

Lithuania 2.516 5 6 12 16

Poland 24.624 7 9 170 211

Russia 81.476* 5 6 407 473

Sweden 7.564 90 110 680 838

Total 194.746 - - 3002 3838

* Includes only the Central, Southern, Northwestern and Volga Federal Districts in Russia, in order to obtain a conservative estimate. Hence a slight difference compared to Ahtiainen et al. (2012)

The study further showed that if people have experienced the effects of eutrophication, they are also more likely to be willing to pay something to mitigate its effects. Also, if they believe that the environmental problems in the Baltic Sea are amongst the three most important problems in their country, the probability of being willing to pay increases. Concerning the size of WTP; high income, certainty about the WTP response, frequent use and plans to visit the Baltic Sea in the future increased the respondents WTP. Lack of substitutes to the Baltic Sea to receive the same experience elsewhere did, however, not increase the level of WTP.

In the study, there are several indications that non-use values are of particular importance. In general, respondents considered both coastal as well as open-sea areas when stating their WTP, and a large share also considered the whole Baltic Sea rather than specific areas. The distance between where the respondent lives and the Baltic Sea did not affect the probability of being willing to pay, implying that the Baltic Sea environment is important throug-hout the countries. That is – respondents who live further away from the Sea also value an improved environment (somewhat surprisingly, in Germany, those living further away from the Sea were more likely to be willing to pay something compared to those living closer to it). This is an important finding, and a possible explanation for this result could be a large share of non-use values. In addition, all types of eutrophication effects are perceived as im-portant and not only the most ‘visible’ effects such as algal blooms and water turbidity. These results combined indicate that both use and non-use values determine the WTP, but in particular that the share of non-use values in the WTP estimates is likely to be substantial.


5. DiscussionCompared to previous attempts to estimate the benefits of reducing eutrophi-cation in the Baltic Sea, the aggregate WTP estimates is somewhat lower (see e.g. Swedish EPA, 2008b). This is most likely due to the fact that present esti-mates are based on primary data for all countries instead of benefit transfer from previous valuation studies. Also, unlike previous studies, the improve-ment in the state of the Baltic Sea is not attained everywhere in the Sea and the time frame required to deliver the environmental change is longer.

The samples collected in each country exhibited similar properties in terms of representativeness. Generally, respondents were characterized by larger households, higher income and higher education levels compared to the relevant national population. With representative data the sample mean WTP can be multiplied with the population to estimate the aggregate national benefits (Bateman et al. 2006). To assess the representativeness of the sample, we examined the change in the probability of being willing to pay by repla-cing the variable sample means with the corresponding population statistics (see e.g. Harrison & Lesley 1996). We used the population statistics for age, percent female, household size, and the proportion of people with higher level education, high income and low income for this correction.

The corrected figures for being willing to pay were generally slightly higher than the raw sample averages. For Estonia and Russia, the estimate was lower than the sample average, while for other countries the estimates are slightly higher. The mean difference between sample average and the correction is 1.8 percentage points, where the largest differences are for Poland, which was predicted to have a 5.3 percentage points higher share of people being willing to pay, and Estonia, which has a 2.8 percentage points smaller share after the correction. With the exception of Poland, the original sample shares (Table 7) of those willing to pay were within the 95 per cent confidence interval of the corrected figures.

Possible reasons for why the corrections giving higher shares are the underrepresentation of young people, who were more likely willing to pay, and also, to a lesser extent, the slight underrepresentation of women, who were also more often willing to pay. These two variables seem to override the effects from the overrepresentation of respondents with higher income and education and larger households.

The presented benefit estimates are likely to be an underestimation for several reasons. The treatment of protest and unsure respondents was con-servative. We did not exclude protest zero responses from the analysis, thus assuming that they were not willing to pay. We also assumed zero WTP for respondents completely unsure about their willingness to pay.

In addition, the measures taken to reduce eutrophication in the Baltic Sea improve also the state of inland waters, which is not captured in the contin-gent valuation study and people’s willingness to pay. Furthermore, the nu-trient abatement measures were assumed to produce similar changes in coastal and open sea areas, while in reality it is possible that the condition of coastal waters may improve more rapidly than open sea areas.


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Documents

BalticSTERN Benefits of mitigating eutrophication · economic value is described, as this gives indications on the way human well-being is affected by changes in ecosystem services,