Mission (gray bloc)

   
Valuing Nature
Samuel Vionnet
Sustainability Expert and Founder
Switzerland
+41 (0)76 372 90 27

I support organisations to integrate the value of natural and social capital into decision making, by providing innovative methodologies, data and expertise.

780% return on investment

For every US dollar invested by Novartis in each of the four carbon-sink projects, an average of USD 7.8 worth of societal value is created thanks to climate change mitigation, ecosystem services,...

How sustainable is renewable hydroelectricity?

The Las Cruces hydroelectric project in Mexico might lead to a negative outcome for the Mexican if built. A natural and social capital accounting method has been used to assess the project's impact,...

There is no sustainability without a balance sheet

Measuring social and natural capital only makes sense when we consider balance sheet. So far, very few organizations have managed to do this. We only see P&L published. But P&L is like GPD, it only...

Jobs at all costs

The private sector is exploring new ways to measure its societal impact, moving beyond traditional economic indicators. We developed an innovative model based on social determinant of health studies....

Achieving net positive impact using the SDGs

If not already done, you will have to use SDGs for defining your net positive impact. But how to measure it? I discuss four steps to support you in this difficult task: your theory of change, your...

Honey is worth more than you think

The Association mellifera is developing a high impact social project around honey bees. Valuing Nature sponsored the creation of one bee colony and calculated the societal value created by the...

Solving half the world’s problems

This article explores the role of Natural Capital within the SDGs and addresses in particular the connexions that exist between SDGs targets. It provide as well some statistics on the maturity of a...

The Sustainable Development Goals and the Mont Blanc

An innovative analysis of the SDG’s targets is unlocking barriers and triggering efficient actions to reach these goals by 2030. By understanding that these targets are inter-connected and that...

The wider benefit of water recycling in a water scarce region

ENGIE, a global energy company, used a water valuation approach to assess the benefits of a water recycling project with the help of Valuing Nature. It showed that the overall benefit generated per...

Water scarcity is not a problem… Undervalued water is

This article summarizes the outcome of a session held at the World Water Week 2015, managed by Valuing Nature, which explored the benefits and limitations of the use of water valuation metrics and...

And now what? The future of Natural Capital Accounting

This article presents the results of a survey, of executives working for private companies and consultancies, on the trends and future challenges of the Natural Capital Accounting approach.

Valuing Water – The Basics

The basic concepts of water valuation as an ecosystem service are presented in this article. Water valuation can fulfil the need for a Natural Capital Accounting method for the private sector. This...

Why is Investment in Watershed Services the future of conservation?

Successful conservation projects have mostly targeted low opportunity cost areas in remote locations until now. Conservation has now entered a new phase by competing with humans needs. Investment in...

The Opportunity Cost of Biodiversity Loss in the Swiss Plateau

Measures to maintain the biodiversity on the Swiss plateau would generate 136 millions CHF of benefit for the society. It is urgent that we realize that the sharp decline in biodiversity in...

Global Land Use Dataset

Data is critical to assess the reliance of companies on natural capital. A new model is available to fill this data gap with a global coverage of land use related externalities.

The Value of Rain

A study showed how to link water footprint and ecosystem services valuation to identify the value of rain and freshwater in Santa Cruz (Bolivia) region. This study was done in partnership with Forest...

Natural Capital Accounting - An Introduction

Recognizing the benefits we obtain from nature is key to ensuring long term profit while creating shared value. This article presents shorty the interest for the methodology, illustrated by a case...

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Contact

Valuing Nature
Samuel Vionnet
Switzerland - Guatemala
CH: +41 76 372 90 27
GT: +502 4490-5633‬
sv@valuingnature.ch
 

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Valuing Water – The Basics

The basic concepts of water valuation as an ecosystem service are presented in this article. Water valuation can fulfil the need for a Natural Capital Accounting method for the private sector. This short article, although quite technical, provides the overview of the concepts and methods to value water.

Release date: 09.07.2015
Category: Method

Water is undervalued, although water is key in our lives, as it is needed everyday to grow the food we eat, produce the energy we use, fulfill our basic needs, and even for many recreational activities. Competition over resources and its impact on our economy is already well known and experienced. Valuing water might change the way we perceive water, generate new insights and open new doors to innovative solutions to better manage it.

So how do we measure the value of water for an organization? How do we account for our reliance or impact on water resources? I present here the basic concept of water valuation as an ecosystem service, which can fulfill the need for a Natural Capital Accounting method for the private sector.

The value of water can take many forms within the ecosystem services concept, as a provisioning service (e.g. drinking water), regulating (e.g. waste assimilation within an ecosystem) or supporting service (e.g. typically within wetlands). The following four-step approach guides you to identify the value of water:

  1. Identify stakeholders who benefit from water (e.g. your organization, but also communities, the agriculture sector, other companies, etc.) and the types of benefits (e.g. direct supply of water, input for production/activity, etc.)
  2. Identify the ecosystem(s) that provide or influence the service (it can be a forest, agricultural landscape, wetland, etc.)
  3. Quantify qualitatively or quantitatively the relationship between the ecosystem(s) and the stakeholder(s). Here methods such as the water footprinting might be useful.
  4. Calculate the value of water by selecting the most adequate valuation technique (see list and description below).

The valuation step is not always necessary, as in many situations the first three steps will be enough to derive a valuable insight. However, in some cases understanding the value of water in economic units is of great help to engage with stakeholders.

A table is presented below with the main families of techniques that we will further detail in the following section:

A wide variety of literature exists with regard to each of those techniques. It is not my objective to reproduce it here. The selection of a valuation technique depends on the type of stakeholders, the ecosystem service, the available data, the objective of the study, as well as others constraints.  To facilitate the selection of techniques and better understand when they apply, the table below summarizes the following elements: the question answered by each technique, the typical data required, the main stakeholders for which the technique is easily deployed and the favored type of values measured by each technique.

The first two techniques (market and cost based) usually require less effort to deploy than the revealed and stated preferences. The benefits transfer method is probably the easiest method to use for screening studies, although it might lead to high uncertainty. An example of the market based (production function) approach is presented in this article.

The type of value you would like to measure is also important to consider. The type of value is typically separated into “use” (whether direct use as a provisioning service or indirect use as supporting and regulating services, including potential future value) and “non-used” values (such as existence or cultural values). Those types of values are summarized in the standard concept of the total economic value. Just keep in mind that this expresses your relation type with the ecosystem service, whether you:

  1. Use it directly;
  2. Use it indirectly (through another ecosystem service that require water);
  3. Might use it in the future; and/or
  4. Think it is important to exist (for various reasons: cultural, religion, future generations, etc).

There is no current standard regarding the preferred technique to value water, and it is unlikely that one will be recommended over another in the near future, for example within the Natural Capital Coalition work.

As different techniques provide different results, there is no single value for a specific water resource. Some of those calculated values can even be added together. The key is to present the results as transparently as possible to allow a sound interpretation of the results and inform well the decision-making process.

A typical value of water ranges between 0-2 USD/m3, although it can be as high as 10-15 USD/m3 in some cases. The unit to measure the value of water is not necessarily $/m3, it can be $/ha or /unit of production for instance. Using USD/m3 tends to lower the value of water in stressed area in some cases, as the calculated cost or value is divided by a large amount of water that is lacking, reducing the overall relative value although the total value is very large if it were measured per capita, ha or region.

Lastly, we should mention that the value of water can be approached from two distinct perspectives:

  1. Reliance: you want to assess how much you benefit from water resources
  2. Externalities: you want to assess the impact on other stakeholders arising from your water use (i.e. impact which is not addressed currently by your organization).

These two perspectives are addressed in the Natural Capital Protocol development. Sectorial or regional analyses tend to look at reliance. But most published corporate case studies (such as the Kering one) look in priority at externalities rather than reliance. Externalities linked to water resources use can be measured for example thanks to Life Cycle Impact Assessment methods such as the one used by Pfister et al. 2009 and Boulay et al. 2011.

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