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Evaluating services and damage costs of degradation of a major lake ecosystem

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  • Mueller, Hannah
  • Hamilton, David P.
  • Doole, Graeme J.

Abstract

Values of ecosystems and potential losses associated with their degradation are complex and often ignored in economic assessments. The concept of ecosystem services may describe these values, as it is widely used to communicate the benefits that humans derive from ecosystems. The aim of this study was to conduct a valuation of a lake ecosystem and potential damage costs arising from its degradation. The approach was applied to Lake Rotorua (central North Island, New Zealand). The range of values derived from ecosystem services provided by Lake Rotorua was calculated using selected indicators and direct market pricing, indirect pricing (hedonic pricing, replacement cost) and existence value pricing. Social damage costs were calculated from loss of income from impaired recreation and reduced property values, as well as ecological damage costs caused by algal blooms and decline in habitat quality for aquatic fauna. The values of ecosystem services provided by Lake Rotorua in 2012 were calculated to be NZD 94-138 million p.a., with potential damage costs of eutrophication calculated at $14-48 million p.a. These estimates indicate that lakes are an important economic asset, and continuous ecosystem degradation has an external cost that is commonly ignored in management decisions.

Suggested Citation

  • Mueller, Hannah & Hamilton, David P. & Doole, Graeme J., 2016. "Evaluating services and damage costs of degradation of a major lake ecosystem," Ecosystem Services, Elsevier, vol. 22(PB), pages 370-380.
    • Handle: RePEc:eee:ecoser:v:22:y:2016:i:pb:p:370-380
    DOI: 10.1016/j.ecoser.2016.02.037
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    7. Sterner, Robert W. & Keeler, Bonnie & Polasky, Stephen & Poudel, Rajendra & Rhude, Kirsten & Rogers, Maggie, 2020. "Ecosystem services of Earth’s largest freshwater lakes," Ecosystem Services, Elsevier, vol. 41(C).
    8. Jacobs, Sander & Dendoncker, Nicolas & Martín-López, Berta & Barton, David Nicholas & Gomez-Baggethun, Erik & Boeraeve, Fanny & McGrath, Francesca L. & Vierikko, Kati & Geneletti, Davide & Sevecke, Ka, 2016. "A new valuation school: Integrating diverse values of nature in resource and land use decisions," Ecosystem Services, Elsevier, vol. 22(PB), pages 213-220.
    9. Jeanne Amar & Vincent Piron, 2020. "The Global Project Assessment Method: A New Tool to Bridge the Gap between Cost-Benefit Analysis and Budgetary Decisions," GREDEG Working Papers 2020-55, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
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