Valuation of Ecosystem Services in Carpathian Protected Areas with focus on Slovakia - Guidelines for rapid assessment -

Valuation of Ecosystem Services in Carpathian Protected Areas with focus on Slovakia - Guidelines for rapid assessment - May 2014 Prepared by Radoslav Považan (Pronatur) & Ján Kadlečík (SNC SR) Draft commented and reviewed by Michael Getzner (Vienna University of Technology) 1

Contents Acknowledgments... 3 Purpose of the Guidelines... 3 Introduction... 4 1 Valuing the ecosystem services of protected areas... 8 2 Valuation techniques... 12 3 Methodology... 14 3.1 Overview of the applied methodologies... 14 3.2 Relevant ecosystem services/values... 17 3.3 Applied valuation techniques/calculation... 19 3.4 Total Economic Value... 27 4 Recommendations... 28 4.1 Legal arrangement options for the ecosystem services evaluation in Slovakia... 28 4.2 An approach to assessing the values... 29 4.3 National challenges... 29 5 Use of valuation results for designing Payments for Ecosystem Services (PES)... 32 References... 34 2

Acknowledgments Special thanks to Hildegard Meyer (WWF Danube-Carpathian Programme) for her kind allowance of using guidelines developed by WWF-DCP (BUCUR, Costel; STROBEL, David: Valuation of Ecosystem Services in Carpathian Protected Areas - Guidelines for rapid assessment / Costel Bucur, David Strobel - Braşov: Green Steps, 2012. ISBN 978-606-93042-2-8). The guidelines were taken as a base and adapted to Slovak conditions. Purpose of the Guidelines These guidelines are intended as a supporting document to be used by staff working for the protected areas administrations of the State Nature Conservancy of the Slovak Republic and other institutions from the field of nature conservation, for planning and carrying out a rough assessment of the values of ecosystem services related to protected areas. There are many interpretations, approaches and statements on the topic of valuation of ecosystem services. These guidelines are not aiming to analyze the existing theories and methodologies, but try to present a simple methodology for a rapid assessment and rough valuation, and for clarifying some basic principles and approaches in terms of a value of ecosystem services valued in money terms by protected areas. The results of the rough valuation done by protected area managers using the methodology should help protected area practitioners to convince others and themselves about the tremendous value of protected areas, including their market and non-market value and should help when negotiating with decision makers against investments harmful to the ecology of the park, or for policies in favor of the sustainable use of these resources. The main purpose for carrying out a rough valuation of ecosystem services is to provide reasonably accurate information on the economic value of the protected area and use it to convince and demonstrate stakeholders and decision makers about their importance, especially why it is worth to establish and manage protected areas. This exercise should be a useful tool to convince people that protected areas are offering more than space for researchers or for the people enjoying nature. They are offering real services which everyone is benefiting from and we can asses them. As such, a rough estimation of the values of protected areas only results in a first approximation of these values; in order to derive specific and more founded values, more comprehensive and detailed scientific economic studies have to be commissioned. Thus, the current guidelines should enable protected area managers to commission such studies, and to communicate effectively with scientists and economists dealing with values of protected areas. 3

Introduction Protected areas management is currently understood as a new science, which integrates the knowledge of other sciences with the aim of optimal management of these areas (GETZNER & JUNGMEIER 2009). Assessment of the ecosystem services in protected areas belongs to modern approaches of the protected areas management. Its aim is to ascertain the ecological, social and economic values of the area and to conserve, improve and extend the ecosystem services of the area. This assessment can be used for the development of schemes of ecosystem services payments (PES), in the process of environmental impact assessment (EIA), or for the calculation of ecological loss. The introduction of new economic tools into nature conservation policies as well as the gradual introduction of ecosystem services payments is currently a challenge for nature conservation in Slovakia and the whole Central-European region. A newly prepared draft act on nature conservation includes the application of these tools. Realising the value of ecosystem services and using the ecosystem services payments is one of the most important aims of the updated National Biodiversity Strategy 2012 2020. The need for valuing ecosystems has gained significant importance in recent years: decision-makers are often lacking data or approximations on the values and benefits created and maintained by functional ecosystems. In consequence, decisions are made too often in favour of development projects negatively affecting ecosystems, which may yield high short-term revenues, but definitely miss the goal of ensuring benefits in the long term. This gap in environmental-economic studies was addressed, starting especially from the mid 1990s, by conservation organizations and economic experts, who contributed substantially to more comprehensive and more balanced views on the opportunities and risks linked to the impact of projects on the environment and natural resources and thus on their implications for human well-being in the longer prospect. The overarching EU Biodiversity Strategy, adopted by the EU Heads of State (European Council), aims to halt the loss of biodiversity and the degradation of ecosystem services in the EU by 2020, and to restore them as far as possible as a major contribution by the EU to combat global biodiversity loss. The mapping and assessment of ecosystems and ecosystem services is one of the keystones of EU Biodiversity Strategy. The initial methodological work on biophysical mapping and assessment is expected to be delivered by 2014. The work carried out by the European Union and its Member States will also contribute to the assessment of the economic value of ecosystem services, and promote the integration of these values into the accounting and reporting systems at an EU and a national level by 2020 (MANDATE EU, 2012). Besides the manifold direct and indirect use values of protected areas in terms of provisioning, supporting and regulating services, the intrinsic value of preserving nature in terms of cultural services (e.g., existence and bequest values) is still a major motivating factor for setting up protected areas (PA). There are many other benefits of protected areas besides protecting biodiversity. For instance, Natura 2000 sites count between 1.2 and 2.2 billion visitor days every year, generating additional revenue and regional income of EUR 50 to 85 billion (EEA REPORT No 5/2012). Protected areas can also provide health benefits, education opportunities, clean water and air, and tourism. Protected areas thus generate considerable economic value. Consequently, there are many reasons for public investment in PAs (GEF/UNDP 2011). A recent study by the European Commission estimated that the 4

benefits of the Natura 2000 network would at least be 3 to 7 times the cost of setting it up (EEA REPORT No 5/2012; GANTIOLER et al. 2014). Currently, there are many economic valuation approaches used to determine and assess environmental goods and assets. The classification of these approaches is based on the type of value being investigated. The valuation of ecosystem services in protected areas is still in a pioneering stage in Slovakia and in the Carpathian eco-region. Previous valuations were done in Central Europe in two national parks, Tatra National Park (Slovak side; cf. FÜZYOVÁ et al. 2009, BREZOVSKÁ & HOLÉCY 2009), Tatra National Park (Polish side) and Slovenský raj National Park (Slovakia; cf. GETZNER 2009). The Tatra National Park (Poland) was also subject to a study with special emphasis on valuation and regional development (GETZNER 2010). Last studies have been carried out in Veľká Fatra National Park (POVAŽAN 2011, POVAŽAN 2013) and Tatra National Park (Slovakia; cf. ŠVAJDA et al. 2013). Whereas numerous valuation studies provide already good reference for facilitating decision-making, the current challenge is to further refine indicators and the quantitative methods behind them. Ideally, this process leads to a generally accepted valuation scheme which incorporates as many relevant services as possible, while at the same time leaving flexibility to integrate area-specific variables. Protected areas not only have become refuges for wildlife, but these areas cover also some of the most important source areas for provisioning services such as clean water and air. In many cases, they represent carbon sinks and contribute substantially to soil stabilization (erosion control, water retention) and provide natural solutions for avoiding and mitigating damages from extreme hazardous events, solutions that would otherwise be very costly (flood control). Notwithstanding the fact that globally the total number and surface of protected areas have risen continually, the degree of fragmentation of ecologically valuable habitat has also increased, making the need for ecological networks of protected areas linked through functional corridors more and more essential. Given this divide between the benefits protected areas provide to locals and the society, and the continuing pressure they face from unsustainable practices in management, infrastructure and spatial (landscape) planning, ecosystem valuation is an important tool to argue for the responsible use of natural assets and sustainable approaches in regional development. For example, in the TEEB study (The Economics of Ecosystems and Biodiversity), the value of ecosystems and biodiversity has been demonstrated in various case studies from around the world. The majority of these case studies addresses the values of larger areas beyond protected area boundaries, up to country or regional level, and includes a wide range of different types of ecosystems. The TEEB findings, brought into context with the results of the present study, suggest that many of the values which people are benefiting from outside protected areas, are ultimately derived from either protected areas or unprotected areas which are nevertheless managed in responsible ways. This constitutes a major added value represented by protected areas, and at the same time poses the demand for effectively and efficiently managed protected areas and other critical sites for ecosystem services and natural resources that are not part of the protected area system. The objective of these guidelines is to provide a framework for assessing the economic value of ecosystem services of forested protected areas as they represent most of the cover of the protected 5

areas in the country. In a broader view, they also constitute an information source on different valuation approaches, and represent a call for the establishment of more harmonized valuation schemes. Another contribution is a completion of missing socio-economic information from the protected areas in Slovakia. These data will help in elaboration of the protected areas management plans and various reports, obligatory due to membership of Slovakia in the EU and various international treaties. Another contribution is a development of conditions for the proposal of ecosystem services payments (Payments for Ecosystem Services PES) or a calculation of ecological loss according to an example in the Czech Republic. The assessment supports or is in accordance with many national and international nature protection strategic documents: The fundamental strategic document of the Slovak Government The Strategy, Principles and Priorities of the State Environmental Policy - Sector G Economics of the environment (e.g. Aim No. 2. Elaboration of the environmental financial policy concept, harmonisation of the socio-economic and environmental interests, application of the sustainable development philosophy, and especially Aim No. 8. Introduction and application of the protection and reasonable use of natural resources evaluated also according to their environmental value and public function); National Environmental Action Programme II One of the aims of the Economics of the environment (Sector G) is an introduction and application of the protection and reasonable use of natural resources evaluated also according to their environmental value and public function; National Strategy of Biodiversity Protection in Slovakia Aim No. 16. To develop a widely applicable system of stimulating measures for the biodiversity protection and its sustainable use (strategic directions: to set up a nationwide policy for the stimulating measures, that would support the biodiversity protection and its sustainable use; to assess the biological resources as soon as possible and to evaluate their value for national economy; to assess the value of non-productive ecosystem functions and to express it in financial terms; to introduce the biological resources value and the value of non productive ecosystem functions to the planning processes at all levels... to determine the structures for the management of incentive measures for biodiversity protection and its sustainable use, including the safeguarding their provision and evaluation of their impact; to develop the new and sufficient mechanisms for financial support provision, to support a decentralised approach in their creation and to safeguard the involvement of a non-governmental sector; Updated National Strategy of Biodiversity Protection for 2012 2020 (draft) contains so called long-term vision of biodiversity and ecosystem services protection for sustainable development of socially and environmentally orientated market economy; Aim No. 2. The preservation of and strengthening of ecosystems and their functions; Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions: Our life insurance, our natural capital: an EU biodiversity strategy to 2020 (COM(2011) 244) Action 5: Improve knowledge of ecosystems and their services in the EU 5) Member States, with the assistance of the Commission, will map and assess the state of ecosystems and their services in their national territory by 2014, assess the economic value of such services, and 6

promote the integration of these values into accounting and reporting systems at EU and national level by 2020. Convention on Biological Diversity (CBD) Strategic Plan for Biodiversity 2011 2020 includes commitments to raise awareness of the value of biodiversity and to integrate them into plans, strategies and accounts; it contains so called Aichi Biodiversity Targets. Strategic Goal D: Enhance the benefits to all from biodiversity and ecosystem services. 7

1 Valuing the ecosystem services of protected areas Whereas ecosystem services and their values are present in almost any landscape, one of the most important challenges is to assess the quality and quantity of the services provided in key natural areas such as protected areas, since these are often the source area of environmental services characterized by an exceptionally high productivity, and a great resilience towards external (and internal) shocks. The task of quantifying the value of ecosystem services is very complex. On one hand, the amount of scientific data needed, e.g. in the assessment of carbon sequestration or flood mitigation / erosion control of a given area would be enormous if it would be conducted in a comprehensive manner for larger areas. This is practically not realistic given the time and budget constraints of national authorities; therefore, scientific/primary data usually stems from relatively small plots, and is afterwards extrapolated based on assumptions and evaluating probabilities. On the other hand, another critical aspect is that there are different approaches possible for the mathematical assessment of some of the criteria. Consequently, depending on the approach, there are differences in the resulting value. Moreover, the valuation of non-use values (see below), is conducted with auxiliary calculation methods, making this assessment cluster very much subject of interpretation and discussion. In some cases, further impediments for more detailed assessments derive from uncertainties from an incomplete understanding of ecosystem dynamics. It is very important to understand that biodiversity and ecosystem services have high intrinsic values that can not be realistically measured and quantified. Whenever presenting economic values of protected areas, managers should emphasise that those values are only representing a small percentage of the benefits deriving from nature, natural resources and protected areas. In this sense, presenting money values of protected areas aims at providing an understanding of the enormous significance of ecosystem services, and thus should illustrate this importance. While it is commonly acknowledged, that no calculation scheme results in an exact value on ecosystems there is an equally common understanding that a range of valuation techniques, if properly applied, provide sound approximations. In any case, though, money values are presented based on the understanding that there might exist a wide range of values for ecosystem services. Therefore, in monetary terms, approximations constitute valid references e.g. for protected area administrations or landscape planners from regional councils, in order to argue for pursuing or dismissing specific management options, particularly where investments and revenues have to be weighed against the continuous flow of ecosystem functions and services. The guidelines can be used as a supporting document for the employees of the State Nature Conservancy of the SR, protected areas administrations, or the Ministry of Environment of the SR, non-governmental organisations, which deal with the environmental issues or when planning and realising the rapid (rough) ecosystem services assessment in the protected areas. The results of this sort of assessment should help the nature conservation employees to convince themselves as well as others of a huge value that the protected areas have, and to help in discussions with the decision-makers and stakeholders who might aim at realising harmful developments (e.g., investments) in the protected areas. The main aim of this assessment is safeguarding of adequately precise information on the economic value of the protected areas and their use when influencing stakeholders and decision-makers by demonstrating the importance of the area, especially when it comes to establishment and management 8

of the protected areas. They provide more than just the space for scientists or nature fans. They provide real functions that we all use and these can be evaluated. The most widely used approach to classify ecosystem services is presented in the following scheme. Figure 1: Ecosystems value classification (PEARCE & WARFORD 1993) The concept of total economic value (TEV) is a widely used framework for ascertaining the (utilitarian) value of ecosystems (PEARCE & WARFORD 1993). This framework typically disaggregates the TEV into two categories: use values and non-use values. Use value refers to the value of ecosystem services that are used by humans for consumption or production purposes. It includes tangible and intangible services of ecosystems that are either currently used directly or indirectly, or that have a potential to provide future use values. The TEV separates use values as follows: Direct use values Some ecosystem services are directly used for consumptive (when the users actually take away or remove certain quantities of the available good) or non-consumptive purposes (no reduction/removal of resources). Harvesting of food products, timber for fuel or construction, medicinal plants, and hunting of animals for consumption from natural or managed ecosystems are examples of consumptive use. Non-consumptive uses of ecosystem services include enjoying recreational and cultural amenities for example through wildlife and bird-watching and photo safaris, water sports, and spiritual and social utilities that do not require harvesting/collecting. Indirect use values A wide range of ecosystem services are used as intermediate inputs for production of final goods and services to humans such as water, soil nutrients, and pollination and biological control services for food production. Other ecosystem services contribute indirectly to the enjoyment of other final consumption amenities, such as water purification, waste assimilation, and other regulation services leading to clean air and water supplies and thus recycling essential parts of the life support system and reducing health risks. 9

Option values Despite the fact that people may not currently be deriving any utility from them, many ecosystem services still hold value for preserving the option to use such services in the future either by the individual (option value) or by others or heirs (bequest value). Quasi-option value is a related kind of value: it represents the value of avoiding irreversible decisions until new information reveals whether certain ecosystem services have values that are currently unknown. (Note that some analysts place option value as a subset of non-use value rather than of use value, but they do not otherwise treat it differently.) This category of benefits also includes provisioning, regulating, and cultural services to the extent that they are not used now but may be used in the future. Non-use values are also usually known as existence value (or, sometimes, conservation value or passive use value). Humans ascribe value to knowing that a resource exists, even if they never use that resource directly. The sum of all use and non-use values constitutes the total economic value (TEV). The total economic value is sometimes also seen as total economic benefit which is counterbalanced by the total economic costs (figure 2): Figure 2: Total economic benefit vs. total economic cost of protected areas. (http://www.mekong-protected-areas.org/mekong/docs/tlp-05.pdf) Nature conservationists should count in all relevant aspects from both categories of values, in order to guarantee a sound information base for decision-making. 10

For valuing the TEV, it is important to understand that the total economics value presents an approximation to the value of flows of goods and services; it does, however, not represent the value of the stock of the ecological capital (species and ecosystems as main elements) which cannot be measured. Furthermore, most valuation techniques account for changes in the quantity and/or quality of ecosystem services, and not in the level (total sum) of these ecosystem services. 11

2 Valuation techniques Although each of the existing techniques has earned its justification among economists, there are still, at least in some cases, disputes e.g. on which technique is more appropriate, which reference values are closer to the actual conditions, or on how detailed the criteria have to or can be, in order to achieve results which are supposed to reflect benefits and costs as realistically as possible. Furthermore, debates still arise with respect to the concrete application and the design of some of the applied valuation methods. In addition, careful consideration should be given to avoid overlapping information in the calculation of a value. How to apply the valuation techniques described below is presented in chapter 3.2. The common and most widely used valuation techniques are: Indirect valuation methods (revealed preferences) Market prices: A simple and direct way of valuing protected area goods and services is to look at their market prices: how much does it cost to buy or what they are worth to sell. Typical examples for applying the market price method are the valuation of timber and non-timber products, etc. Travel costs: Protected areas typically hold a high value as a recreational resource or destination. Although in many cases there are no charges for viewing or enjoying natural ecosystems and species, people still spend time and money to reach protected areas. This spending for transport, food, equipment, accommodation, time, etc. can be calculated, and visitation rates can be compared to expenditures. Travel costs reflect the value that people place on leisure and recreational aspects of tourism; benefits are derived from travel costs by linking the frequency of trips and travel costs in order to calculate the consumer surplus (benefits, total and/or net of travel costs). Hedonic pricing: The method of hedonic pricing in the context of protected areas is used mainly for providing a value to environmental attributes by correlating them to housing and real estate prices within or close to protected areas. This method may be relevant in particular for protected areas of IUCN categories V and VI with considerable or substantial human activity within PA borders, or in the buffer areas and/or vicinity of IUCN category II protected areas. This method combines aspects from market pricing, the consideration of air and water quality, noise pollution, as well as aesthetic values. Replacement costs: Replacement costs refer to the amount necessary for the restoration of ecosystems and their services, or the amount necessary to generate substitute services (like for e.g. investing in infrastructure in protecting river banks instead of maintaining the natural riparian vegetation). Avoided costs: Avoided costs refer to the amount that would be saved by not carrying out activities which lead to the degradation or loss of ecosystem services. They reflect economic losses that can be forestalled by effective conservation. These methods can be applied particularly where reference values from past experiences (under comparable circumstances) exist (investment and maintenance cost saved to avoid flood risks). 12

Direct valuation methods (revealed preferences) The contingent valuation (WTP Willingness to pay) involves directly asking people, in a survey, how much they would be willing to pay for plant and/or animals, or another specific biodiversity component (e.g. habitats, landscape, etc). In some cases, people are asked for the amount of compensation they would be willing to accept to give up habitats of high diversity. It is called contingent valuation, because people are asked to state their willingness to pay, contingent on a specific hypothetical scenario and description of the aspects of biodiversity under focus. Choice experiments ask respondents to choose between conservation programmes which can be described by a small number of attributes, in order to compute the marginal willingness-to-pay. These attributes may consist of water quality, biodiversity conservation, flood risks etc., in combination with a cost price for the programmes offered to respondents. 13

3 Methodology 3.1 Overview of the applied methodologies There are two basic categories of benefits of protected areas such as national parks; use (direct, indirect, and option values) and non-use values (existence and bequest values). These kinds of values represent the concept of Total Economic Value (TEV; cf. MILLENNIUM ECOSYSTEM ASSESSMENT, 2005). Various methods for valuing ecosystem services and benefits of the protected areas making up the TEV have been developed. One major approach is the valuation of the ecological dimensions of nature and the landscape (habitat valuation) which has been used, for instance, in the Czech Republic (SEJÁK et al. 2010). Nevertheless, most methods are based on deriving environmental values depending on the preferences of private households and/or companies. These methods can be divided into methods of deriving values from markets (revealed preferences elicited, e.g., by means of hedonic prices or travel costs, or avoided costs) and direct surveys (stated preferences) based on the willingness to pay or accept (WTP/WTA; contingent valuation, choice experiments, or contingent behavior). The current guidelines take up the methodology that was used for valuing the ecosystem services of the Tatra and Slovenský raj national parks (GETZNER 2009, 2009), as well as new guidelines developed by WWF (BUCUR & STROBEL 2012). Wetland ecosystem services and valuation described recently in The economics of ecosystems and biodiversity for water and wetlands (RUSSI et al. 2013) was also taken into account. The first step of ascertaining use and non-use values consists of a collection and assessment (quantification) of the existing ecological data on ecosystem services of the protected area, and on a geographical (spatial) assignment of the relevant protected area region. Table 1 presents a rough outline of information requirements for a comprehensive assessment of the ecosystem services of a national park. The following sections take up this framework and provide an empirical assessment of these ecosystem services on this list with respect to the importance of these services in the current context. Tab. 1: Overview of specific ecosystem services provided by national parks, and information requirements for a comprehensive assessment Description of ecosystem services in situ Quantity Prices** 1. Ecosystem services Before* After* EUR/unit 1.1 Forest products 1.1.1 Timber 1.1.2 Non-timber products 1.1.3 Water provision, supply 1.1.4 Water retention / flood protection 1.1.5 Carbon sink, climate regulation, CO2 sequestration 1.1.6 Erosion control 1.1.7 Medicinal resources 1.2 Agricultural products 1.2.1 Cattle, grazing 14

1.2.2 Grains, food production 1.3 Fishing 1.4 Hunting 1.5 Recreation 1.5.1 Tourists for a day / no., expenditure, origin, motive to stay 1.5.2 Overnight stays / no., expenditure, origin, motive to stay 1.6 Recreation opportunities (national park policies) 1.6.1 Education, information 1.6.2 Hiking 1.6.3 Climbing 1.6.4 Others (e.g. rafting, mountain biking) 1.7 Biodiversity conservation values 1.7.1 Habitats, ecosystems, species, landscapes 1.7.2 Existence values 1.7.3 Option / quasi-option values 1.7.4 Bequest values 1.8 Cultural values 1.8.1 Traditions, traditional landscapes 1.8.2 Culture, artistic benefits 2. Other information 2.1 Land cover / land use 2.2 Economic structure of the region 2.3 Development concepts / strategies 2.4 PA management plan 2.5 PA Management strategies / frameworks 2.6 PA budget, decision autonomy (including all transactions) 2.7 PA Networks with the region 2.8 Stakeholder(s) (involvement) 2.9 Socio-economic development of the region 2.9.1 Municipalities, residents, age/education, jobs, unemployment * This overview provides a selection of the potential full range of ecosystem services relevant for and adapted to protected areas in Slovakia, taking into account the national frameworks and information basis. Before/after indicates that the change in the quality and/or quantity of ecosystem services provided by a park is the focus of the valuation exercise, e.g., before/after a conservation programme has been established, or before/after a certain category of protected area is introduced. It is thus important to assess the change in ecosystem services both before and after management measures and policies are undertaken since the valuation of ecosystem services relies on differences in quality and quantity. In many cases, though, a direct comparison might not be feasible due to lack of data. ** In order to value differences in ecosystem services, standardized prices might be used; a reliable, and in many cases, feasible method in this respect is the transfer of benefits, for instance, by taking values of the TEEB study (KUMAR 2010). Source: GETZNER (2010) Tab. 1 lists all relevant ecosystem services provided by the protected area with the focus on forest ecosystems, and includes empty cells for providing more detailed information (description of regional/local specificities of ecosystem services), quantification of ecosystem services provision before and after the establishment of the national park (or the change of management policies). After collection of the data available, the second step consists of linking the quantitative information to 15

prices. The value and benefits in monetary terms which may exist for a certain study have to be adapted to local/national circumstances and transferred to the policy site (benefits transfer). Adaptation may include a wide range of variables influencing the value of ecosystems services and the willingness-to-pay to conserve these (income, GDP, other information regarding preferences or sociodemographics, ecological and site-specific characteristics, if necessary and feasible). In addition, data can also be collected by a visitor survey on individual s WTP for specific ecosystem services. In particular, the recreation value and non-use values (existence values) of the park s services (species and habitat conservation) are to be addressed. Other data collection methods include primary study investigating hedonic values, or the assessment of replacement and/or avoided costs. Summary of the (indicative) monetary values of wetlands was provided in the publication of RUSSI et al. (2013) based on different research across the globe. For our conditions are relevant examples from two wetland categories: inland wetlands and rivers and lakes. Tab. 2: Monetary value of services provided by inland vegetated wetlands (floodplains, swamps/marshes and peatlands), and by rivers and lakes [Int.$/ha/year 2007 values] (RUSSI et al. 2013) Minimum values Maximum values A - Inland vegetated wetlands / (Int.$/ha/y) (Int.$/ha/y) B - Rivers and lakes A B A B TOTAL: 981 1779 44.597 13.488 PROVISIONING SERVICES 34 1169 9709 5776 1. Food 16 27 2090 196 2. (Fresh) water supply 6 1141 5189 5580 3. Raw materials 12 2430 4. Genetic resources 5. Medicinal resources 6. Ornamental resources REGULATING SERVICES 321 305 23.018 4978 7. Influence on air quality? 8. Climate regulation 5 351 9. Moderation of extreme events 7 4430 10. Regulation of water flows 4 9369 11. Waste treatment / water purification 9 305 4280 4978 12. Erosion prevention 13. Nutrient cycling / maintenance of soil fertility 5 4588 14. Pollination 15. Biological control HABITAT SERVICES 10 0 3471 0 16. Lifecycle maintenance (esp. nursery service) 2 917 17. Gene pool protection (conservation) 7 2554 CULTURAL SERVICES 648 305 8399 2733 18. Aesthetic information 2 3906 19. Opportunities for recreation and tourism 9 305 3700 2733 20. Inspiration for culture, art and design 2 793 21. Spiritual experience? 22. Cognitive information (education and science)? 16

The recommended methodology for valuing ecosystem services provided by the protected area considered two main aspects: - Data availability most of data should be already present in the descriptive part of the management plan or readily available at the land/resource managers. In this case, the ecosystem services assessment in the Slovak protected areas is a bit more complicated as the large-scale protected areas lack the management plans and the needed information are not systematically stored, sometimes even non accessible; - Relevance and the effectiveness of the assessment the process should be very simple but not simplistic and a strong instrument for awareness, fundraising and negotiations. As mentioned before, this methodology should be considered as a rapid assessment or rough evaluation, providing basic information for protected area managers, helping them in communicating the need to efficiently manage protected areas, for awareness raising and lobbying decision makers to support protected area management, for informed decisions about investments and so on. 3.2 Relevant ecosystem services/values From the range of ecosystem services that protected areas provide, valuation is not equally applicable to all of them. Valuation is relatively easily applicable to the following ecosystem services in the most of the Slovak (mountainous) protected areas, services grouped according to the classification presented above: Direct use values Timber products Non timber forest products Fishing and hunting Recreation and tourism Indirect use values Water provision Water retention/flood prevention/erosion control Carbon sequestration As indicated above (from RUSSI et al. 2013), in wetland protected areas for assessing and demonstrating the value of water and wetlands can be used: 17

Provisioning services Food: sustainably produced/harvested wild berries, fungi, nuts, game, fish, and other aquatic resources; Water quantity Raw materials: sustainably produced/harvested timber, firewood, reed, plant fibre, biomass etc. Regulating services Climate/climate change regulation: carbon sequestration, maintaining and controlling temperature and precipitation; Moderation of extreme events: flood control, drought mitigation; Water regulation: regulating surface water runoff, aquifer recharge etc.; Water purification: decomposition/capture of nutrients and contaminants, prevention of eutrophisation of water bodies etc.; Erosion control: maintenance of nutrients and soil cover and preventing negative effects of erosion; Cultural and social services Landscape and amenity values: amenity of the ecosystem, spiritual values, cultural heritage values etc.; Ecotourism and recreation: hiking, nature walks, canoeing, rafting, recreational fishing, animal watching etc.; Cultural values and inspirational services: e.g. education, art and research. Timber and non-timber forest products can be evaluated (as an added value of the PA), if they are coming from a sustainably managed area and only if the PA (status and/or management) is ensuring proper management of these resources. Otherwise, it can be considered that all forests in Europe and not only are managed and logged based on sustainable principles, so, no difference from a PA. It is important to consider that timber production is even in its sustainable form an extractive use of ecological resources. Many categories of protected areas (e.g. national park, Natura 2000) exclude even such sustainable use of resources, and prescribe forest management in order to fulfill ecological (biodiversity) conservation goals. It is necessary to mention that the protected areas administrations are not the real managers of the forests in the protected areas, as forest management is done by other entities and authorities in Slovakia (e.g. State Forest Enterprise, Municipal forests, urbariats). The forests in the protected areas make no difference to the economy forests if they have no sustainable management and therefore the evaluation of the value of the wood harvested in the protected area is very sensitive issue. Application of certain restrictions or a good practice in the forest by the protected area administration, which supports the long-term quality of the forest products and services, serves as a good argument for 18

including these values in the assessment. 1 In the case of Slovakia there is a possibility of commenting on forest management plans by the protected area administrations. However, as ŠVAJDA & FENICHEL (2011) has shown, the effective ecological management of protected areas in Slovakia is certainly hindered by the lack of management authority and power of the administration of protected areas. If some restrictions or good practices imposed by the PA administration or its status (legal status mainly) are providing security of long term access to quality goods and services provided by forest, then this is a real argument for including these values in the assessment. 3.3 Applied valuation techniques/calculation In wetland protected areas different approaches and tools can help assess the benefits that flow from water and wetlands by providing different and complementary information, including qualitative, quantitative, spatial and monetary approaches (RUSSI et al. 2013). Qualitative analysis is based on non-numerical information, which describes values and benefits that are not easily translated into quantitative information (e.g. landscape beauty, impacts on security and wellbeing, cultural and spiritual values). Quantitative data are used to represent the state of, and the changes in, the ecosystems and the services they provide using numerical units of measurement (e.g. groundwater availability in a watershed in cubic metres, nitrogen and phosphorous in a water body in micrograms per litre; carbon annually sequestered in peatlands in tonnes per hectare per year; number of people who benefit from access to clean water from wetlands). Geospatial mapping allows the quantitative data to be linked with geographical information (e.g. which community benefits from clean water provision from a given wetland). Monetary valuation can build on biophysical information on the services provided by ecosystems to derive values (e.g. carbon storage). It can be of help to inform a specific decision, management tool or policy instrument, e.g. the strategies of using wetlands for carbon sequestration, ecosystem based adaptation to climate change, flood mitigation etc. In many cases, provisioning ecosystem services (such as timber) are more visible and are favoured in the policy-making processes because they have a market price, but there are many other ecosystem services that are less visible and often overlooked or underrepresented in the policy-making policies. The calculation of the economic value of traditionally less well covered provisioning services (e.g. the value of some genetic materials or of water provision from wetlands) and non-provisioning ecosystem services (e.g. water purification, erosion control) contribute to the arguments for conservation, wise use and restoration. For the identified ecosystem services, the following calculation schemes have been applied. Unless otherwise indicated, variables and values are "per year". a1) Timber products 1 In fact, the reduction of timber production owing to the establishment of a protected area is rather a cost of the PA than a benefit. 19

Valuation technique: market prices The value of timber production can be calculated by the following equation: where Vt a denotes the value of timber (EUR) produced in year a, St a is the size of the area (ha) which is used for harvesting timber in year a, H a is the average of timber harvesting (m³/ha), and Pt a is the price of timber (EUR/m³) in year a. Data sources: data from the PA administrations, forest districts, national statistics (Green Report). Uses the attached excel spreadsheet according to available data. Due to partly insufficient resources for in-depth investigation on the timber quantities and prices logged and sold, an average harvest amount and a mean value of the national timber price can be taken as reference for the calculation. However, if the PA managers have access to more detailed, area specific information, a more accurate calculation should be made for this value., a2) Non-timber products Valuation technique: market prices Typical products of this category are herbs, berries, mushrooms and natural fibres. The assessment of these products is worth doing only in the landscape protected areas, as picking of the forest fruits and plants is forbidden in the national parks (according to the Nature and Landscape Protection Act it is a third degree of protection). It is usually allowed to pick up the forest fruits and mushrooms for a direct use in the area which is within the reach of the tourist trail. In the whole scope of the ecosystem services this is only a marginal issue, though. The value will be considered only if the management plan ensures long term existence of all these plants through specific provisions. The permission for harvesting has to be issued only to locals and the price represents the amount received by locals when they sell them to tourists or processing companies. Variables and units: - Harvest amount per year from species i A i (kg). - Mean value of product price based on local market P i (EUR/kg). - i - species no. i Value of non timber products: V NT = A i * P i Data sources: data from the PA administrations, forest districts, national statistics. Use the attached excel spreadsheet according to available data. 20

a3) Fishing and hunting Valuation technique: market prices If there is no added value to hunting or fishing in a PA, it could be even tricky to consider these services as values of PA. In fact, what are we protecting? If and only if fishing and hunting are controlled by the PA staff (or with supervision of the PA staff) as active management measures for balancing disturbed ecosystems, then we can offer these services for higher prices (because we are in a PA) and consider them as values. This issue is questionable in Slovakia. The right to fishing and hunting is not dealt with by PA administrations, but by the regional forestry authorities, land users and organizations such as the Slovak Fishing Association or the Slovak Hunting Association and their organizational units. PA administration representatives are members of Advisory Boards for hunting on regional level, but in practice can not influence game management much. The value of fishing and hunting V FH usually contains two major components: the value of the sold product (determined by market prices) and the value of the license (determined by national or local price levels). Variables: - Number of licenses for fishing or hunting (including wildlife photo/video shooting) for I species N FHi - Price per license P FHi (EUR) - Number of sold units from I species N Pi - Price per sold unit from I species V Pi (EUR) V FH = N FHi * P FHi + N Pi + V Pi Data sources: data from the PA administrations, regional forestry authorities, hunters associations, angling associations, national statistics. Use the attached Excel spreadsheet according to available data. If photo/video shooting is making a difference and is important to communicate as a profitable and sustainable alternative to hunting and fishing it is important to highlight separately the associated values in your valuation, reports and presentations. Fishing and hunting certainly does not only provide certain usable products (fish, deer meat) but also serves as an important recreation activity, which is dealt with in the next section. a4) Recreation and tourism Valuation technique: travel costs The value of recreation/tourism V RT is based on contingent assessment and statistical data on protected areas visitors. The average expenditure per person and day and the average length of the visitor's stay is calculated from the visitors survey questionnaires. The questionnaires point out that people visit the 21

protected area because of its values. Basic version of the questionnaire (see Annex 2) needs to be adjusted to the specifics of a particular protected area. It is made of 30 questions aimed especially at finding out the visitors' preferences their willingness to pay for the nature protection (WTP) and the willingness to accept the restrictions related to the nature protection (WTA). Unlike in other countries, there is no entrance fee introduced for visiting the protected area so far in Slovakia, therefore this entry (question No. 18) was replaced by a parking fee. The offer of various facilities and activities within the protected areas by nature conservation organisations is very limited in Slovakia; therefore it is necessary to include also the activities, which are not carried out by the PA administration (questions No. 9 and 10). The questions related to demographic statistics have also been amended to the conditions in Slovakia (questions No. 28 30). The average number of visitors is calculated from the statistical data (estimations) of the PA administrations. It is necessary to stress that the knowledge of the PA administrations on the number of visitors is very poor in Slovakia. There are no employees who would deal specifically with the issue of tourism. The necessary information can be obtained in cooperation with the local tourism organisations, or in cooperation with the Institute of High Mountain Biology of University in Žilina. Some of the PA administrations partly gather the data on number of visitors in some valleys; however, detailed survey is still not a certainty. It will be necessary to use a qualified estimation in most cases. In some cases, it may be advisable to use primary data collection on the number of tourists, for instance, counting tourists over a certain period at the entry points of the park, and then reasonably aggregating to total numbers of visitors. The values are based on the level of the expenditures spent by the visitors in the area and do not include the travel costs from their home to the place of visit. Travel costs can be included into the calculation; however, they do not present direct benefits for local inhabitants. They, however, indicate the effort made to visit the favourite area. Especially in case of remote and difficult to reach area. If such an estimate is available, it can be used to show the PA contribution to the regional or national economy. Total travel can be calculated by the following equation: with TC a denoting total travel costs of visitors in year a; N a is the number of visitors at the national park in year a, D i is the mean duration of stay of visitor i, TC i,1 are travel expenses based solely on transport costs, TC i,2 denotes other costs of the visit (e.g. expenses for accommodation or souvenirs), and M a is the average share of visitors who visit solely for the purpose of seeing the park. Travel costs in general only give a first (but nevertheless important) indication of the recreation benefits; more reliable and consistent with economic theory and applications is the consumer surplus. Usually, the relation between the frequency of trips and the travel costs are explored and estimated by statistical-econometric analysis (e.g. regression analysis) which results in a demand curve for visits to the park. The consumer surplus (benefits) can then be calculated easily. 2, 2 For some steps of the analysis, it may be advisable to commission parts of the environmental/ecological economists dealing with these issues. 22

Data sources: data from the PA administrations, Institute of High Mountain Biology University of Žilina, tour operators, national/regional statistics. Uses the attached excel spreadsheet according to available data. Willingness-to-pay for a national park s policies and environmental values In order to derive an indication of potential value in terms of existence, of the (quasi-) optional and bequest value of biodiversity conservation, and to facilitate a comparison with other studies in national parks, the willingness-to-pay (WTP) question was formulated as concretely as possible. The policy program offered consists of maintaining species conservation programs in the PA by an annual (hypothetical) earmarked payment. The question also explains that the funds provided by the government may be insecure, and that citizens might have to pay directly for PA policies. Respondents are also warned that their stated WTP comes on top of their expenses during the visit (GETZNER 2010). The individual WTP elicited in the visitor survey may be aggregated to account for the total willingness-to-pay for the existence, option and bequest values (non-use values) of the PA in terms of the value of the whole population of Slovakia. Total WTP for each of the separate payment motives can be summed up by the following equation: with WTP j,a denoting total WTP in year a for payment j (j = 1 to 3, for the existence, bequest, and optional values, respectively); NP a is the total population of Slovakia in year a, WTP i is the total willingness-to-pay of respondent i (EUR), and PM j,i denotes the share of respondents stating that their main payment motive would fall under category j. WTPi is the mean value of willingness-to-pay of all respondents (times the population of Slovakia total WTP)., b1) Freshwater provision Valuation technique: market prices For the water use per person per year the respective national averages can be taken as reference. The water prices indicated in the calculation must reflect the regional water price level of the district to which the protected areas belong, at the time of the research. Usually, the watershed is properly managed due to a large extent to the protected area. Water courses are not managed by the PA administrations in Slovakia. Smaller rivers and brooks are usually managed by the Slovak Forest Enterprise. Economically important watercourses are managed by the Slovak water management enterprise. Drinking water supply is provided by water supply companies, which also determine the price of the drinking water. The management plan has to include an important goal to maintain the watershed in a way that no other investments will be needed to ensure quality water on the long term for domestic use and industrial purposes in the local communities. Variables and units: - Average number of persons receiving water from the protected area - N m 23

- Average water use per person per year U aw (m 3 ) - Average regional water price P mw (EUR/m 3 ) Value of water provision: V WP = N m * U aw * P mw In order to value this ecosystem service, market prices are used according to equ. (2): with Vw a denoting the annual value of fresh water provision, R a is the number of residents using water originating from the ecosystem, Uw a is the average water consumption per resident, and Pw a is the current price of water in year a. Data sources: regional and national statistics. Uses the attached excel spreadsheet according to available data. It should be noted that determining the value of water and wetland ecosystem services is different from the concept of the price paid by consumers for water supply. The price of water supply can be determined by factors such as infrastructure and treatment cost, which may be subsidised and take into account other factors. This is different from the value of water as an ecosystem service., b2) Water retention / flood protection / erosion control Valuation technique: reference values related to replacement/avoided costs On-site scientific assessments on the water retention capacity and corresponding values might not exist, therefore mean values had to be taken as a reference (in this case from the EU27 countries). These have to be then brought into the national context by multiplying them with the respective income differentials for respective country. Average GDP in Slovakia is approximately 75 % of the EU 27 average (year 2012). If, in this context, the cost side is also taken into consideration, there might arise differences in overall investment and maintenance costs, e.g. in cases where water is drained for consumption. This depends largely on the individual topographic conditions which determine the water flow regime and soil stability, and requires a separate analysis. Variables and units: - Protected area surface - A (ha) - Mean value of water retention (for EU27; as for unmanaged forests) - V mwr (EUR/ha) - Income differential ID which is GDP per inhabitant minus PPP (purchasing power parity) EU statistics, EUROSTAT. V WR = A * V mwr * ID 24

Ecosystem services of water retention and flood control (including erosion control) are valued according to the following equation (3): VFC SK,a denotes the value of flood control (water retention, erosion control) of the PA (at Slovak price levels; EUR/ha), Vfcu EU,a denotes the value of these ecosystem services taken as an EU average value from different studies (benefit transfer; see below) for unmanaged forests (EUR 90 per ha per year), while the corresponding value for managed (used) forests is denoted by Vfcm EU,a (EUR 36 per ha per year). Su a is the relevant area of unmanaged forest ecosystems providing flood protection and erosion control; while Sm a denotes the managed forest areas. Id a is the income differential between the EU average and the Slovak economy (GDP differential 75 %, year 2012). Data sources: data from the PA administrations, EU statistics. Uses the attached excel spreadsheet according to available data. ; b3) Carbon sequestration Valuation technique: market prices Forests and other ecosystem types store carbon, but there might be also either human-induced or natural carbon release. Carbon release rates have to be taken into consideration as well for a comprehensive view on the matter. The issue of relative importance of carbon release versus carbon storage is probably one of the most controversial one within the broader theme of carbon sequestration. Primary studies may reveal a clearer picture on individual sites, however, there is still potential to develop more generally valid reference values for particular ecosystems. The lack of primary studies leads to extrapolations, average values and different sets of assumptions. The value generated by carbon sequestration depends on several criteria. Some of the most important ones are: tree species, tree age, annual growth, wood density, root structure, soil type. The ideal case is when primary studies are available providing a good set of data on the assessed site. Often however, first-hand data is lacking, making reference values or extrapolations from data of sites with comparable characteristics the best calculation option. The most important two elements related to carbon sequestration are the annual growth, indicating the biomass produced by the ecosystem, and the use of the biomass, since fuel wood for instance has to be taken out in this balance. In this respect, the most valuable forest ecosystems are the ones incorporated in core areas where the natural balance of CO 2 is still positive, as more CO 2 is captured than released. Roughly, but precise enough for our purpose, we calculate the carbon following the next algorithm: Biomass Divide by 2 (organic matter is c. 50 % water, varies by site and season) = Dry biomass Dry biomass Divide by 2 (dry biomass is 42 52 % C) = Carbon (C) Carbon (C) Multiply by 3,668 (3.668 t of CO 2 includes 1 t of C because of the atomic mass of the elements) = CO 2 So, considering the carbon credit as one tone of CO 2 sequestered, we will calculate only the CO 2 captured and stored since it has to be sold to someone. Carbon storage is mainly ensured in the core 25

area of any protected area, so non-intervention management is considered as Improved Forest Management and really counts for carbon projects. Other basic underlying questions which may have to be considered are: (1) How much carbon is sequestered above-ground and how much below-ground, and (2) What are the carbon release rates in relation to the carbon sequestration rates? In most cases only above-ground carbon sequestration is measured. Below-ground carbon sequestration is more difficult to determine, and therefore more rarely included in studies. There is still a need to more clearly elaborate reference values: what is the share of above-ground carbon sequestration to below-ground carbon sequestration in different forest biomes: temperate mixed forests, boreal coniferous forests or tropical broadleaf forests? Furthermore, the role of climate change and its effects on carbon sequestration has to be better analysed and included in future assessments, in particular with regard to how much carbon is sequestered/released considering on average higher temperatures, as well as locally and regionally changing climatic conditions. Variables and units: - Forest surface of the protected area - A (ha) - Annual growth G y (m 3 /ha) - Mass density - M d (tones/m 3 ) - Unit price for 1 tone of CO 2 P co2 (euro) V CS = [(A * G y * M d )/2]*3.668*P co2 Data sources: data from the PA administrations, statistics, for updated value of the carbon credits, the quotations from www.ecosystemmarketplace.com can be used. Uses the attached excel spreadsheet according to available data. Below-ground biomass can be estimated using the function described by CAIRNS et al. (1997) for temperate forests: BBD (t/ha) = exp(-1.0587 + 0.8836 x ln ABD + 0.2840), where BBD is belowground biomass density in tons per hectare (t/ha) and ABD is aboveground biomass density in t/ha. Since ABD can be easily calculated as it was described before, we have the underground biomass as well. ABD = A * G y * M d The most important carbon storage on land represents peatlands (RUSSI et al. 2013). The peatland equilibrium between production and decay is, however, delicate and can easily be disturbed by human activities. Drainage turns peatlands from a carbon sink to a carbon source. For this reason, restoration and conservation of peatlands represent a key strategy for climate change mitigation (along with protection of other peatland ecosystem services). 26

Examples of ecosystem service indicators in wetlands useful as quantitative measures of value of nature (RUSSI et al. 2013) are in Table 3. It is important to identify and use indicators that capture the different dimensions of values of water and wetlands and are useful in practical decision making. Table 3. Ecosystem service Ecosystem service indicator PROVISIONING SERVICES Food e.g. Fish production from sustainable sources in kg/t live weight Water quantity Total freshwater resources in m 3 Raw materials Timber in m 3 from sustainably managed forests REGULATING SERVICES Climate/climate change regulation Total amount of carbon sequestered / stored = sequestration / storage capacity per ha x total area (t CO 2 ) Moderation of extreme events Trends in number of damaging natural disasters; probability of incident Water regulation Infiltration capacity/rate of an ecosystem (e.g. amount of water / surface area) volume through unit area/per time; Soil water storage capacity in mm/m; Floodplain water storage capacity in mm/m Water purification Removal of nutrients by wetlands (t or percentage); Water quality in aquatic ecosystems (sediment, turbidity, phosphorous nutrients etc.) Erosion control Soil erosion rate by land use type CULTURAL AND SOCIAL SERVICES Ecotourism and recreation Number of visitors to sites per year; Amount of nature tourism Culture values and inspirational services Total number of educational excursions at a site; Number of TV programmes, studies, books, etc. featuring sites and the surrounding area; Number of scientific publications It is important to note that the ecosystem services that wetlands provide are not always synergistic with each other. In protected areas it is important to be clear on priorities for wetland management and, therefore, which trade-offs are acceptable. 3.4 Total Economic Value For all ecosystem services, the indicated resulting values of the reference study represent mean values, which are framed by a lower and an upper bound value. These alternative values were calculated with the same calculation method, however using lower respectively higher reference values. Summing up all the values we obtained in this exercise we will get the total economic value of the protected area for one year timeframe. We considered only the direct and indirect use values since they are easier to calculate. Nevertheless we have to keep in mind the bigger picture of TEV, as presented in the figure. 27