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Scoping study on valuing the social and environmental benefits oftrees and woodlands in England, Scotland and WalesRef No.: CFSTEN 2/14Report to the Forestry CommissionCentre for Social and Economic Research on the Global Environment (CSERGE)Land, Environment, Economics and Policy Institute (LEEP)College of Social Sciences and International StudiesUniversity of ExeterEX4 4RJContributing Authors:Amy Binner, a.r.binner@exeter.ac.ukGreg Smith, g.smith4@exeter.ac.ukIan Bateman, i.bateman@exeter.ac.ukBrett Day, brett.day@exeter.ac.ukMatthew Agarwala, m.agarwala@uea.ac.ukAmii Harwood, amii.harwood@uea.ac.ukSteering Group Members:Pat Snowdon, Forestry Commission,Pat.Snowdon@forestry.gsi.gov.ukGlyn Jones, FERA,Glyn.d.Jones@fera.co.ukJonathan Bonas, Defra,Jonathan.Bonas@defra.gsi.gov.ukRichard Morgan, Welsh Government,Richard.Morgan4@Wales.GSI.Gov.UKRebecca Clark, Natural England,Rebecca.Clark@naturalengland.org.ukJames Ogilvie, Forestry Commission,James.Ogilvie@forestry.gsi.gov.ukKieran Doick, Forestry Commission,Kieron.Doick@forestry.gsi.gov.ukNikki Parker, Defra,Nikki.Parker@defra.gsi.gov.ukHelen Dunn, Defra,helen.dunn@defra.gsi.gov.ukHelen Sellers, Forestry Commission,helen.sellars@forestry.gsi.gov.ukPeter Green, Forestry Commission,peter.greene@forestry.gsi.gov.ukColin Smith, Defra,Colin.Smith2@defra.gsi.gov.ukJulian Harlow, Defra,Julian.Harlow@defra.gsi.gov.ukIan Tubby, Forestry Commission,Ian.Tubby@forestry.gsi.gov.ukRichard Haw, Forestry Commission,richard.haw@forestry.gsi.gov.ukGregory Valatin, Forestry Commission,Gregory.Valatin@forestry.gsi.gov.uk1

ContentsExecutive Summary . 31.Ecosystem Services: The paradigm and its terminology . 172.Water resources . 272.1.Water Quality . 272.2.Water Availability and Flood Alleviation. 383.Air Quality . 474.Climate. 555.Recreation . 626.Physical and mental health . 727.Biodiversity . 808.Trees and Woodlands on Farms . 979.Plant (Tree) health . 10210.Urban trees . 10611.Issues Arising from Gains and Losses . 11412.Integrated Assessment and Decision Making Tools . 11813.Natural Capital Accounting . 12414.Prioritising the Gaps . 145References . 156Annex 1: Ecosystem Services and Economic Valuation . 171Annex 2: Woodland Valuation Tool (WVT) User Guide . 1922

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Executive SummaryIntroductionThe diverse resources provided by trees and woodlands contribute to the production of a widearray of benefits ranging from timber to wildlife habitats and from carbon storage to waterpurification. This diversity is further complicated by the fact that, while some of the goodsassociated with forests are traded in markets and hence have associated prices, others ariseoutside markets and, while valuable, lack prices. The need to make evidence based decisionsregarding woodlands, including decisions such as how much public funding should beallocated to support the non-market benefits they generate, has necessitated the estimation ofthe value of those benefits. This scoping study provides a structured review of the state ofknowledge regarding the economic valuation of social and environmental benefits derivedfrom trees and woodlands in the UK in order to support policy and practice; particular(although not exclusive) attention is paid to recent extensions to the literature since previousreviews (in particular Eftec, 2011).In preparing this scoping study, the research team at CSERGE undertook a structure reviewedof how technical and methodological developments are transforming the potential for robustvaluation of non-market benefits and allied decision making. The methods, data andmodelling techniques which underpin the existing evidence base on the value of woodlandsand trees were critically evaluated so as to provide a practical set of actionable options forenhancing that evidence base and improving decision making.The benefits provided by trees and woodlands are methodicallyexamined in the report using the ecosystem services approach.Unlike the 2005 Millennium Ecosystem Assessmentsclassifications, which divides ecosystem services intoprovisioning, regulating, supporting and cultural services, theecosystem services approach establishes a structured method forvaluing environmental and social benefits. The ecosystemservices approach attempts to clearly identify and understand thepathways (and environmental production processes) that affectthe provision of final goods and services and to acknowledgethat economic value comes directly from the consumption ofthese final goods and services. For example, people derive valuefrom a house but would find it practically impossible todisaggregate that value into the independent contributions madeby individual inputs such as the bricks, timber and concrete thatwent into its construction. Likewise, a water company derivesvalue from the purity of the raw water they abstract from theenvironment but have no direct perception of the value of thetrees, soils and biotic community that contribute to the quality ofthat water. The ecosystem services approach is grounded in4

economic theory and provides a structured method for identifying how benefits are provided,who benefits and what value they place on these benefits.The central idea behind the ecosystem services approach is to characterise the role of naturein delivering human wellbeing using the same concepts as are applied to describing theeconomy. In this sense, the environment can be characterised as a complex natural factoryengaged in a myriad of productive processes. These natural productive processes1 combineenvironmental inputs to produce final environmental goods and services, which have directand immediate consequences for productive activities in the human economy. To understandthe role of nature in delivering human wellbeing it is important to understand how theseenvironmental production functions feed into the production activities of firms andhousehold. A woodland based example of these processes is captured in the diagram below,which shows how a final good, furniture, is the product of environmental inputs such as soil,water and seeds from which trees are grown. Trees are an environmental good which feedinto the human production functions to produce timber, using labour input from a forester.Timber is then crafted by a carpenter using tools to produce furniture which is sold on toconsumers, who gain welfare from its use.Conceptually, by adopting an ecosystem services approach the review builds upon recentdevelopments that have sought to enhance the valuation evidence base through improving theintegration of natural science, economic and social science methods. To achieve this, a goodunderstanding of the biophysical pathways influencing the physical provision of goods and1These productive activities of nature are described by environmental production functionsand include processes such as the transpiration and the absorbance and deposition ofparticles.5

services that are heavily dependent upon the natural world is just as crucial for robustvaluation as the contribution of appropriate economic methods.Given the crucial importance of the natural environment in the generation of woodlandbenefits, this harmonisation of knowledge and approaches is considerably assisted by theconceptualisation of the environment as a stock of ‘Natural Capital’ (such as soil, air, waterand living things) which generates flows of ‘Ecosystem Services’ that contribute to humanwellbeing. These underlying principles are discussed early on in the report and frame thesubsequent review.The review itself considers the range of unpriced benefits associated with trees andwoodlands. As part of this review we seek to highlight areas where the evidence base isincomplete or missing. Alongside gaps in the underpinning natural science base, we find asignificant requirement to improve, standardise and integrate evidence regarding the value ofthe multiple benefits delivered by trees and woodlands. Building upon this, the scoping studyculminates with a clear, prioritised set of realistically actionable options for enhancing theevidence base to generate valid, robust, and comprehensive valuations of the social andenvironmental benefits of trees and woodlands.Structure: Report and Woodland Valuation ToolThe report is organised in chapters which group together topics. Chapter 1 provides theconceptual frame for the report by developing the Ecosystem Services paradigm in relation totrees and woodlands (a detailed theoretical appendix is also provided to yield acomprehensive resource reference). The ecosystem services framework provides thestructure for the other chapters in the report. Chapters 2 to 8 review the economic assessmentof the impact of trees and woodlands on a wide range of values including those associatedwith water quality, water availability, flood alleviation, air quality, climate, recreation,physical and mental health, biodiversity and agriculture. Chapter 9 addresses the issue of treehealth and how this influences the social and environmental benefits provided by woodlands.Given that the majority of the population live in towns and cities, Chapter 10 reviews theexisting evidence and decision making tools relating specifically to urban trees. This isfollowed, in Chapter 11, by a critical assessment of the issues arising from the biophysical,economic and psychological differences between gains and losses in relation to trees andwoodlands. Chapter 12 reviews recent innovations in integrated modelling and decisionsupport tools while Chapter 13 explores current issues and debates in relation to NaturalCapital Accounting. Finally, Chapter 14 presents a prioritised list of research gaps and, wherepossible, suggestions for addressing these gaps.The results of the scoping study are also organised in a supporting ‘Woodland ValuationTool’, developed in Excel. This enables users to search for and cross reference appropriatemethods and the existing literature relating to different goods and services, or by beneficiariesor various other categorisations related to trees and woodlands. The literature contained inthe tool relates specifically to trees, woodlands and forests and as such is appropriate for use6

by analysts involved in forest management decisions. However, the system has been set up tofacilitate and encourage easy extension to consider other natural environment resources. Thetool has been designed to be easy to use, multiplatform, accessible using open sourcesoftware, and simple to update and extend. The tool is compatible with Microsoft Excelv.2007 and above as this is a familiar and easily accessible program for the target users. Allinstructions are for Microsoft Office 2013 but should be very similar in versions 2007 and2010. A use guide is provided in an Annex to this report and an accompanying video hasalso been supplied to the Forestry Commission and is available from the authors.PrioritiesThe results of the scoping study revealed a number of general critical research gaps which cutacross several, if not all, of the research areas: Biophysical pathways: The scoping study explored both the existing biophysicalliterature and the valuation literature. Although, we were generally able to findseparate evidence relating to both biophysical processes and values; the usefulness ofthese existing studies is severely hindered by the absence of rigorous evidence linkingthe biophysical processes associated with trees to quantifiable changes in theprovision of goods and services. Valuation literature: The existing literature is patchy, incomplete and uses a plethoraof different units, years and scales. This makes a coherent approach to valuationextremely difficult, particularly because study design plays a large role in determiningthe valuation estimates. An integrated, consistent and comprehensive approach tovaluing all of the benefits and costs associated with tree and woodland land use andmanagement is needed. Making the most of existing data: There is an abundance of existing but fragmenteddata relating to social and environmental benefits. With advances in computingpower and cross-disciplinary collaborations there is clear potential for these datasources to be brought together and used to develop sophisticated models for valuation.In order to achieve this, decision makers will require access to the broad range of dataavailable. In this vein, a new class of integrated ecosystem service mapping tools isbeginning to emerge, including InVEST, LUCI, MIMES and The Integrated Model(TIM, developed by CSERGE). These tools incorporate biophysical models to reflectinteractions between multiple ecosystem services at various spatial and temporalscales.For the purposes of policy making and valuation TIM has certain advantages: It contains an economic behaviour model, which shows how decision makers(e.g. farmers) respond to changes in the market, policy and the environment.This allows the policy maker to see how changes in policy, prices, regulationetc. affect land use and avoids the use of scenarios that do not explain howfuture land uses arise.7

Alongside quantitative analyses of the integrated effects of land use change,TIM also delivers economic values for these changes, allowing the policymaker to conduct cost-benefit analyses of changes. TIM contains an optimisation routine which allows policy makers to explorethe best way to achieve their objectives. The model also provides the abilityto adjust the definition of what constitutes a “best” outcome. Ongoing workseeks to examine issues such as the distributional implications of differentdecisions.Accessible decision support tools: There is a general need for the development of upto date, easy to use decision support tools. These tools need to be technicallysophisticated enough to incorporate the most recent advances in data, methods andmodelling, yet also amenable to use by non-analyst decision makers followingrelatively brief (e.g. one week) training.The scoping study also allowed the identification of knowledge gaps specific to each benefitvaluation area. Top priorities are summarised below and discussed in further detail withinChapter 14.Water Quality Biophysical pathways: Many valuation studies fail to link water quality outcomes towoodland management or planting actions. This makes it difficult to establishcausality and limits the usefulness of existing studies for investment appraisal whenthe objective is to achieve specific improvements in water quality. Multi-impact, multi-scale valuation: There is a need to extend the valuation ofdifferent pollutants and their removal from waterways. This needs to be flexible interms of the scale of analyses embracing both catchment and national levels.Water Availability and Flood Alleviation Biophysical pathways: There exists a variety of evidence on the biophysicalrelationships between tree cover and water quantity e.g. through modelling studiesand to a much lesser degree through observed data at the catchment level. To fullyquantify the effect of afforestation or deforestation data is needed to validate models,especially at the catchment scale. The absence of robust biophysical evidencequantifying the relationship between local woodland management, location and forestdesign, and changes in the quantity of water available constitutes a significant barrierto reliable valuation and decision making, particularly as scale increases. There isalso a gap in the evidence base in terms of the impact of climate change and risingCO2 levels on the water use of trees, which will affect the services (dis-services)provided in the future. Flood alleviation: The current literature linking trees and woodlands to theprevention of flooding is growing but due to the wide variety of other factors involvedin flood events we are still some way off being able to fully quantify the effect of8

upstream tree planting or woodland management changes on the probability ofdownstream flooding. Integrated valuation of water: There is a clear need to integrate the variety of valuesassociated with water resources and the role that woodlands can play in enhancingthese.Air Quality Valuation and spatial proximity to populations: The health impacts caused by airpollution depends upon the number of people being exposed; a tonne of SO2 in adensely populated area causes more damage than a tonne in a sparsely populatedarea. The value of pollution absorption by trees should reflect this populationexposure.Climate Economic valuation: Improved estimates of the social cost of carbon / abatementcosts (carbon price). This is an active area of research, but is unlikely to be resolvedin the short or medium run. As such, employing UK government carbon prices is astraightforward compromise which would allow current research efforts to focus onhigher priority issues.Recreation Decision support tools: Research has the potential to substantially improve decisionmaking in this area. Improved decision making tools are needed to support urbanplanning and the management of recreational sites.Physical and mental health Measurement challenges: There is no commonly applied generic measure for mentalhealth. This makes comparison between biophysical studies difficult and the lack of awell-defined and commonly understood mental health good or service poses achallenge for valuation. A more fundamental challenge is the need to establishcausality, substitution and response behaviours between trees/woodland (as opposedto other environments) and mental and physical health. So, for example, if newwoodlands generate visits, to what extent are these genuinely additional visits asopposed to substitution away from other activities? To what extent are there nethealth gains? Does enhanced engagement with nature generate positive or negativeco-impacts (e.g. does outdoor exercise stimulate improved mood or give individuals aperceived license to indulge in other unhealthy lifestyles).Biodiversity Economic valuation: The need for improvements in the economic valuation ofbiodiversity needs to be matched by better data and natural science understanding ofthe physical impacts of afforest

1 Scoping study on valuing the social and environmental benefits of trees and woodlands in England, Scotland and Wales Ref No.: CFSTEN 2/14 Report to the Forestry Commission Centr

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