ACES and Ecosystem Markets 2012 Wednesday/1... · • To quantify ecosystem footprints by...
Transcript of ACES and Ecosystem Markets 2012 Wednesday/1... · • To quantify ecosystem footprints by...
© Hitachi, Ltd. 2012. All rights reserved.
ACES and Ecosystem Markets 2012
Ms. Ayako Kohno
Environmental Strategy Office
Hitachi, Ltd.
Corporate Ecosystem Valuation (CEV):
New Ways
to Value Natural Capital
for Business
December 12, 2012
© Hitachi, Ltd. 2012. All rights reserved.
1. Introduction What is Corporate Ecosystem Valuation (CEV)? Why Did Hitachi Apply the CEV?
2. Pilot Case Studies in Hitachi Group
Contents
© Hitachi, Ltd. 2012. All rights reserved.
1. Introduction
What is Corporate Ecosystem Valuation (CEV)?
Why Did Hitachi Apply the CEV?
© Hitachi, Ltd. 2012. All rights reserved.
What is Corporate Ecosystem Valuation?
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5) 5)
Embedding
embed the CEV approach within company processes & procedures
Post valuation
4) 4)
Application
use & communicate valuation results to influence internal & external decision-making
Valuation
3)
Valuation
3)
Valuation
actual valuation: may be qualitative, quantitative and/or monetary
2)
Planning
2)
Planning
develop suitable plan to undertake valuation effectively
Preparation
1)
Scoping
1)
Scoping
define scope for valuation exercise, using checklist of questions
What is Corporate Ecosystem Valuation? 5 Stages to Undertake a CEV Exercise
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What Motivated Hitachi to Apply the CEV?
5
• To quantify ecosystem footprints by monetizing both the societal (economic) / financial costs as well as the benefits of ecosystems and ecosystem services, through our operation • To re-think and improve project planning, to be more sustainable in practice • To tackle the issue of ecosystem conservation through the lens of lifecycle and supply chain management
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2. Pilot Case Studies in Hitachi Group
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Pilot Case Studies
Since May 2011, Hitachi had conducted the following two CEV pilot projects, with the support of ERM (and James Spurgeon, SustainValue) • Water Treatment Business in the Maldives by Hitachi Plant Technologies, Ltd. and Male' Water & Sewerage Company Pvt. Ltd. • Identifying Effects on Ecosystems Using IT software(GeoMationFarm) and Improving Efficiency in Agricultural Production by Hitachi Solutions, Ltd.
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2. Pilot Case Studies Case 1: Water Treatment Business in the Maldives
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Case 1: Water Treatment Business in the Maldives
Scope: Current drinking water treatment and sewage treatment business operation by MWSC and its future expansion plan in Male as well as surrounding islands in the Maldives (over the next 30 years)
Issue: In 3 to 5 years, likely to experience greater demand than supply of drinking water in the capital island of Male
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Maldives CEV Project Methodology
10
Comparing BAU scenario with proposed expansion plan
(including both new water supply and wastewater
treatment plant, as well as new power generation) and
monetize the impacts of expansion plan to the
ecosystems in the area
LCA was used to calculate the environmental impacts on
the volumes of the proposed material for the treatment
works construction as well as impacts of operating the
power plant
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Findings from the CEV Maldives Project
11
Renew-
ables
Oper
water
supply
Oper
waste
water
Power Constr Oper Constr Oper Constr Oper Oper
Land available PS Other land uses + + + + + + + + + + + + + + - -
Beach/foreshore CS Recreation + + + + + o + + + + + + + + + o
Coral reefsPS/RS/
CS
Recreation/coast
protection/fisheries/non-
use
+ + + + + o + + + + + + + + + o
Seabed RS Supports fisheries + + - o - + - + - o o
Sea/Fisheries PS Fish + + - o - + - + + o - o
Freshwater PS Water - drinking/use + + + - o - + + + - + + + o o o
GroundwaterPS/RS/
CSSource of freshwater + - - - o o - - + + o o o
Air emissions NOx, SOx, CO, PM, HC - - - o o - - - - o - o - - o
GHG CO2, GHG - - - o o - - - - o - o - - - o
Noise Noise - - - - - - - - - - - - - - - -
Visual Visual - - - - - - - - - - - -
Road disruption Traffic, noise o o o o - o - o - o o
Fuel storage Risk explosion - - o o - - o o o o o - - o
New wastewater
plant
New power
supply
Eco
syste
mE
xte
rna
lity
OEE
Ecosystem/
Externality
Ecosystem services/
Environmental externality
Relative value of ecosystem/externality associated with that scenario
Existing
baseline
Business as Usual New water
supply
Key: Green shade = positive impact (i.e. benefit); Orange shade = negative impacts (i.e. cost) + = minor, ++ = moderate, +++ = major benefit (same scale for -, - -, - - - ) o = no/negligible impact
Step 5 of Stage 3: Finding out the Relative Ecosystem Services & Externalities
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Quantitative Results from the CEV Application
12
(1) The results for three scenarios combined (new water
supply, new wastewater supply, and power generation)
was CBA of 2.3, which shows reasonably strong
economic viability
(2) In this case, the planned expansion plan involves with
pipe/cable installation, and the costs of restoration of
coral reefs were also estimated, using benefit transfer
approach, which was based on a value of
US$ 13/m2/year as damage cost
A stated preference survey would be needed to
determine a more accurate value
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Main Findings from the CEV Maldives Project
13
• Although there will be additional air emissions and GHGs arising from the construction phase of the planned new water and power supply project, significant overall reduction of GHG is anticipated, compared to the BAU, by:
- altering the source of power supply, and - improving equipment efficiency, over the next 30 years
• If only considering financial costs and benefits, the project is already feasible, but even when taking into account of the societal and environmental costs, the CBA is still more than 1, indicating that there is a net societal gain from this project.
The Project is still at early planning stage, so we will take into consideration the results from the CEV application as
we proceed with project planning
© Hitachi, Ltd. 2012. All rights reserved.
2. Pilot Case Studies
Case 2: Identifying Effects on Ecosystems using IT Software (GeoMationFarm) and Improving Efficiency in Agricultural Production
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Case 2: Identifying Effects on Ecosystems Using IT Software
15
Scope: Application of GeoMationFarm, an agricultural information management system that improves efficiency of resource use and enhances crop productivity, with a focus in hypothetical studies on the USA and France. (Note: This study is a high-level theoretical analysis based on publicly available data, and not based on empirical data taken from actual regions or the farms.)
Current Situation: Demand and use of IT in agriculture—as well as the economic assessment of benefits from agriculture (societal and environmental)—is growing, but sometimes difficult to implement, due to challenges in assessing the effects of the agricultural activities on ecosystems
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Background: What is GeoMationFarm?
16
• GeoMationFarm is a geographic information system (GIS) applied to the management of agricultural activities to enable:
- Using high quality agricultural production by information - Managing this agricultural information in a spatially explicit way - Mapping crop fields - Identifying optimum pesticide application - Providing know-how in planning fertilizer inputs
• Combined use of GeoMationFarm with various technologies of Precision Agriculture (PA) will assist farmers to enhance efficiency and reduce pollution relating to agriculture
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Findings from CEV - GeoMationFarm Project
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Methodology:
Three major crop types (corn, wheat, soybean) were
examined using the CEV methodology in order to:
• quantify the value in monetary terms, and
• assess scenarios in terms of productivity and inputs
(such as water, fertilizer and pesticides) with and
without use of GeoMationFarm
Note: This study is a high-level theoretical analysis based on publicly
available data, and not based on empirical data taken from actual
regions or the farms
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Findings from CEV - GeoMationFarm Project
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Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Prov S + + + + + + + + + + + + + + + + + + + +
Prov S - - + + + - - - + + - -
Nitrogen Nitrate pollution - - - - - - - - - - - -
PhosphorousPhosphate
pollution- - - - - - - - - - - -
Pesticides &
herbicidesPollution - - - - - - - - - - -
GHG - - - - -
Air emissions - - - - -
Water
Crops
Category Parameter
- - - - - -
Other
environ-
mental
extern-
alities
(OEE)
Farm
in
pu
ts
Fuel/energy
Business as Usual Precision agricultureBaseline
Eco
syte
m
se
rvic
es -
Dir
ect
Step 5 of Stage 3: Relative Magnitude Value of Directly Affected Ecosystem Services and Externalities for the USA and France
Key: Green shade = positive impact (i.e. benefit); Orange shade = negative impacts (i.e. cost) + = minor, ++ = moderate, +++ = major benefit (same scale for -, - -, - - - ) o = no/negligible impact Scenarios: Baseline: Condition at current state Business as Usual: Simulation if current practice continues for the next 25 years. Precision Agriculture: Simulation if PA is used in agricultural practice for the next 25 years.
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Findings from CEV - GeoMationFarm Project
19
Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Financial -
Farmers
bottom line
Societal -
Stakeholders
impacted
Surface waters + + + + + + + + + + + +
Ground water + + + + + + + + + + + +
Coastal water n/a + + n/a + n/a + + +
Terrestrial
habitats + + + + + + + + + + + +
Prov SFisheries/
aquaculturen/a + + n/a + n/a + + +
Reg S Pollination + + + + + + + + + + + +
Reg S Pest control + + + + + + + + + + + +
Cult S Recreation n/a + + n/a + n/a + + +
Cult SNon-use/
conservationn/a + + n/a + n/a + + +
Human health + + + + + + + + + + + +
Precision agriculture
Ecosystem
services -
Indirect
impacts
Other
Ecosystems (and
associated species)
Category Sub-category
Baseline Business as Usual
Key: Green shade = positive impact (i.e. benefit); Orange shade = negative impacts (i.e. cost) + = minor, ++ = moderate, +++ = major benefit (same scale for -, - -, - - - ) o = no/negligible impact Scenarios: Baseline: Condition at current state Business as Usual: Simulation if current practice continues for the next 25 years. Precision Agriculture: Simulation if PA is used in agricultural practice for the next 25 years.
Step 5 of Stage 3: Relative Magnitude Value of Indirectly Affected Ecosystem Services and Externalities for the USA and France
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Initially, the efforts by the farmers to clarify the societal
and environmental benefits of conserving ecosystems
throughout the agricultural activities may be a challenge,
but such initiative will bring long-term solutions to
maintain sustainability of agriculture, and for that
reason, increasing knowledge by conducting CEV
studies based on actual agricultural site is preferable
and recommended
Findings from CEV - GeoMationFarm Project
© Hitachi, Ltd. 2012. All rights reserved.
Corporate Ecosystem Valuation (CEV)
New Ways to Value Natural Capital for Business
December 12, 2012
Thank you!
Ms. Ayako Kohno
Environmental Strategy Office
Hitachi, Ltd.
E-mail: [email protected]
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