Understanding the Connection between Ecosystems, Humans, and the Economy

Overview

Federal policymakers and land managers are accountable to the American public for how they invest public funds and for the outcomes of the policy and management decisions being made. Through a variety of economic analyses and custom modeling, Policy Analysis and Science Assistance (PASA) Branch economists evaluate how investments and management decisions affect individuals, local communities, and society as a whole. Specifically, our team of economists: (1) conduct economic effects analyses to quantify how spending cycles through local economies, generating business sales and supporting jobs and income; (2) conduct research to assess nonmarket values associated with public policy and land management practices, and (3) assess the economic values associated withecosystem services and other natural resource-management issues.

Economic Impact Analysis

Economies are complex webs of interacting consumers and producers in which goods produced by one sector of an economy become inputs to another, and the goods produced by that sector can become inputs to yet other sectors. Thus, a change in the final demand for a good or service can generate a ripple effect throughout an economy as businesses purchase inputs from one another. Economic impacts measure how spending cycles through local economies, generating business sales and supporting jobs and income. PASA economists collect data and build economic models to calculate the direct and secondary effects of visitor spending in gateway regions to National parks, refuges and other Federal lands. PASA economists also measure the economic effects of federal investments in ecosystem restoration and other Department of Interior investments. This information is important for planning, management, budget formulation, policy analysis, and public outreach.

Nonmarket Analysis

Many environmental and publicly provided goods and services such as clean air and water, healthy fish and wildlife populations, and scientific data and information sources, are not directly priced in conventional markets, but nevertheless have considerable economic value. The economic benefits that individuals derive from these resources and environmental services contribute to human well-being, and therefore, reflect nonmarket values. Nonmarket valuation methods provide an objective estimate of the economic value placed on outcomes, which offers advantages over other approaches to factoring these outcomes into policy analysis. Well established research has validated nonmarket valuation analyses, allowing researchers to estimate economic values held for a wide range of resource uses and services, ranging from recreation-based activities, to the protection of threatened and endangered species, to satellite imagery. Research economists in the PASA branch have the capability to apply a range of methods to measure user benefits for nonmarket and publicly provided goods and services, including stated preference techniques, revealed preference techniques, and benefit transfer methods. Applying economics to understand the value that the public places on scarce resources can ultimately lead to more informed decisions, and can help consider the American public’s preferences towards management of the nation’s lands.

Valuation of Ecosystem Services

Arising from ecological processes and functions, ecosystem services reflect the benefits that contribute to human well-being. Examples include recreation, commercial fishing, pollination, and climate regulation from carbon sequestration. In the context of natural resource management and planning, human behavior and decision-making can affect both the quality and quantity of ecosystem services, and estimating the change in services can provide managers and policy makers with more comprehensive information from which to draw upon during the decision-making process. Calculating the value of ecosystem services takes this understanding one step further by expressing the value of a natural or restored ecosystem to human users in monetary units. Research economists in the PASA branch implement both market and nonmarket valuation techniques to link changes in ecosystem services resulting from management decisions to gains and losses in human welfare. Ecosystem service valuation contributes to a more comprehensive accounting of the economic benefits provided by ecosystems, information that can be incorporated into both public and private decisions to better inform management of natural capital and ecosystems.

Economic Tools

Land-management actions often have significant social and economic impacts and the need to address and analyze these impacts has increased over time, but has historically lacked framework. Social scientists within the PASA branch develop comprehensive socioeconomic tools to assist land management and decision-making that affect our nation’s resources, ensuring the use of best science practices. Assessing Socioeconomic Planning Needs (ASPN) is a decision-support tool for choosing appropriate social and economic analysis for Federal land management and planning. The tool assists resource managers and planners in identifying and prioritizing social and economic issues affected by management actions, highlights possible methods and analyses that could be used to address these issues, and provides demographic and economic data for a designated land unit. The Benefit Transfer Toolkit, another tool developed by PASA scientists,allows analysts to quantify nonmarket values for various recreational opportunities and ecosystem services using benefit transfer methods. This information can be used by natural resource planners and managers to evaluate economic tradeoffs between alternative ways of managing natural resource use on public lands.

Collaborating with our Partners

Economics is an essential component in the evaluation of land use policy and natural resource decisions. The Fort Collins Science Center’s team of economists improve the ability for managers to make decisions regarding our Earth’s natural resources by addressing the connections and interdependence between ecosystems, humans, and the economy. PASA researchers have been selected as principal investigators on numerous projects, with specialization in nonmarket valuation, ecosystem service valuation, economic impact analysis and visitor spending, environmental and resource economics, agricultural economics, econometric modeling, survey work, value of information, and regional economics. Through expert analysis and the application of economic modeling, PASA economists have evaluated: the economic impacts of National Park visitor spending; ecosystem service values associated with restoration of the Everglades; the nonmarket value of Landsat imagery; the economic impacts of restoration of Federal lands and ecosystems; and assisted with Comprehensive Conservation Plans for National Wildlife Refuges by examining economic impacts in this changing world.

Related Partners

The USGS serves the Nation by providing reliable scientific information to describe and understand the Earth; minimize loss of life and property from natural disasters; manage water, biological, energy, and mineral resources; and enhance and protect our quality of life.

Contacts

For more information contact: Leslie Richardson