Events & Media

May 28, 2014

Ecosystem Services: Looking Forward to Mid-century
Two papers co-authored by Bren professor Andrew Plantinga project land-use changes up to 2051 and examine options for auctions that provide incentives for land owners.

Andrew Plantinga

As population grows, society needs more: more energy, more food, more paper,more housing – more of nearly everything. Meeting those needs can lead to changes in how land is used: native grasslands, forests, and wetlands may be converted into croplands, tree plantations, residential areas, and commercial developments. Those conversions can, in turn, diminish the health of natural ecosystems and their ability to provide an array of valuable services, such as clean air and water, wildlife, and opportunities for recreation, to name a few.

An important question, say Bren professor Andrew Plantinga and his co-authors of a paper published in the Proceedings of the National Academy of Sciences in May, is how to strike a balance between providing for humanity's growing needs and preserving the natural systems that make it possible to produce the goods to meet those needs.

In "Projected land-use change impacts on ecosystem services in the United States," the researchers model the future of land-use change in the United States under various scenarios and its possible effect on the provision of some important ecosystem services. In a related paper, also appearing in the Proceedings of the National Academy of Sciences, Plantinga and some of those same researchers seek the incentive structures that will best encourage land owners to provide ecosystem services.

Projecting Land-Use Change and Associated Shifts in Ecosystem Services

The authors examine how addressing society's needs can have large impacts on land use, which can lead to cascading effects in terms of the provision of ecosystem services, defined for the purposes of the study as "the goods and services provided by nature that are of value to people."

The project focused on policies that might balance various land uses to preserve valuable ecosystem services.

They created a model for the contiguous U.S. to forecast land-use trends from 2001-2051 for two baseline scenarios and three policy alternatives designed to encourage forest cover and preservation of natural landscapes while reducing urban expansion.

The first of the two baseline scenarios, referred to as "The 1990s Trend," assumes that land-use trends will continue as they did during the 1990s, resulting in less cropland, pasture, and rangeland, and increases in forest and urbanization. (The researchers chose the 1990s rather than the 2000s because the latter decade was anomalous in many ways.)

The second scenario, referred to as "High Crop Demand," accounts for significant growth in the demand for agricultural commodities, with related pressures to expand agricultural lands. Those scenarios were then used as alternative baselines against which the researchers analyzed the effects of the following three alternative land-use policies:

  • Forest Incentives: provides incentives for reduced deforestation and for afforestation (moving land into forest, whether by converting cropland to natural forest or by establishing commercial timber operations)
  • Natural Habitats: provides incentives for conserving natural habitats
  • Urban Containment: restricts urban land expansion

The model estimates the probability of conversion among major land-use categories – cropland, pasture, forest, range, and urban areas – based on observations of past land-use change, characteristics of individual land parcels, and economic returns from the land. It also accounts for such elements as price changes in agricultural commodities resulting from the model's feedbacks. For instance, a certain policy might result in decreased agricultural land. Put through the model, that information results in less agricultural output and correspondingly higher commodity prices, which then provides an incentive for converting land back into agriculture.

"As we implement policies, we’re accounting for the markets effects on products like timber," Plantinga says. "The policy itself induces changes in the incentives required to convert land to different uses."

The model then integrates land-use change analysis with models representing the provision of specific ecosystem services, the primary ones being carbon storage, food and timber production, and habitat for 194 vertebrate species.

As an example, under the Forest Incentives Policy, forest land increased by more than 30 million hectares. That, in turn, led to significant increases in timber production (18%) and biomass carbon (8%) relative to the 1990s scenario. But endogenous price changes (those generated by the model as a result of implementing the policy) had a countervailing effect on forest expansion, as the increase in forest area led to a scarcity of land in other uses, which drove up returns for those uses.

As part of the same scenario, increasing crop prices created a financial incentive to convert lands to agriculture that were in other uses under the 1990s trends scenario. As a result of converting pasture, range, and some forest to cropland, the gains in total carbon storage resulting from forest expansion were reduced by decreases in carbon held in soil and biomass caused by the conversion to agriculture.

The paper examines numerous such scenarios and the results in terms of providing ecosystem services.

The key takeaway, Plantinga explains, is that there are tradeoffs for every policy regardless of which baseline scenario it is applied to. The Natural Habitat policy, for instance, is the best choice for achieving improvement in species conservation but results in a decline in food production. In other words, the authors write, "Projected land-use changes by 2051 will likely enhance the provision of some ecosystem services and decrease the provision of others."

Another key finding is that because the underlying factors determining land use are very strong, it's hard to alter the path even if aggressive policies are established. "Our results show that the adoption of policies can influence land-use changes and increase the expected provision of at least some ecosystem services relative to baseline scenarios" , Plantinga explains. But, he adds, "Political will and economics get in the way of change."

While the three policy choices shifted the numbers slightly, the researchers found that, not surprisingly, they "could not reverse powerful underlying trends."

"Reversing current land-use patterns is too big of an ambition," says Plantinga. "To think that we're not going to have any more urbanization in the U.S. in the next fifty years is not reasonable.

"Land use isn't the most important thing," he adds. "The point is to identify which types of ecosystem services are provided as land use changes. Food and carbon sequestrations are fine and may even rise under the various scenarios, but you may need strong incentives to limit declines in the provision of other ecosystem services."

Read the abstract.
Read the paper

Auctions that Produce Incentives

Once policy makers identify preferred policies to optimize the provision of ecosystem services, they need a mechanism to secure those services, especially when they are provided by private lands. Because forests, clean rivers, climate regulation and other ecosystem services are freely available to everyone, landowners often receive nothing for actions they take on their own land that contribute to the pool of ecosystem services. Lacking price incentives for private activities taken for the public good, those services may be under-provided.

One solution is to provide landowners with cash payments for the ecosystem services they provide on their property. To run an incentive program, however, an agency needs to be able to identify which lands provide the most ecosystem services, and the costs associated with providing a particular service. An auction is one mechanism for doing that.

Professor Plantinga collaborated with many of the same researchers who co-authored the paper on land-use change described above to identify the best auction structure. The results of their near-decade-long collaboration, "Implementing the optimal provision of ecosystem services," appeared in The Proceedings of the National Academy of Sciences in April.

Building on established auction theory, the paper broke new ground in structuring an auction that can address three key challenges to inducing private landowners to provide optimal levels of ecosystem services: the spatial component of ecosystem services (for instance, adjoining parcels of land may be more valuable from the perspective of providing habitat than three fragmented parcels adding up to the same size); asymmetric information, which refers to the fact that landowners know the opportunity cost of their land, while the government agency does not; and the requirement that the program use voluntary incentives, or what are often called payments for ecosystem services.

The researchers designed an auction that would elicit the optimal enrollment of lands – i.e. the optimal provision of ecosystem services – in situations defined by asymmetric information and spatially dependent benefits.

Read the abstract.
Read the paper.