Module 2: understanding the economic causes of invasions Economic Analysis of Invasive Species.

Module 2:

understanding the economic causes of invasions

Economic Analysisof Invasive Species

Economic Analysis of Invasive Species2

what this module covers

1. identifying the economic factors that lead to invasions

2. using policy analysis matrices to trace the economic causes of invasions

3. linking invasions to changes in human wellbeing

about invasive species

about invasive species Module 1Module 1

understanding the economic causes of invasions

understanding the economic causes of invasions Module 2Module 2

impacts of invasive species and ways to address them

impacts of invasive species and ways to address them Module 3Module 3

defining invasive-relatedcosts & benefits

defining invasive-relatedcosts & benefits Module 4Module 4

valuing ecosystem impacts

valuing ecosystem impacts Module 5Module 5

informing actionsto address invasives

informing actionsto address invasives Module 6Module 6


how economic conditions and forces prompt invasions

• most of the processes which result in invasions are economically motivated,for example:– use of exotic species for

production, consumption and trade

– conversion and fragmentation of habitat

– liberalisation and deregulation of markets

– expansion in the trade of goods and services

– increasing mobility of people and things


direct & indirect economic causes

directeconomic

causes

indirecteconomic

causes

each has different drivers and manifestations,

involves different processes,

originates from the action (or inaction) of different groups,

and requires different responses


• direct economic causes:– production and consumption

activities which themselves introduce, establish and spread potentially invasive species

• indirect economic causes– underlying economic,

livelihood, market, price, policy and institutional conditions that permit or encourage people to behave in particular ways



introductionintroduction

establishmentestablishment

spreadspread

naturalisationnaturalisation

invasioninvasion


direct economic causes

introduction of species for commercial purposes

e.g. aquaculture, seeds, crops, livestock, food, biofuels

introduction of species for commercial purposes

e.g. aquaculture, seeds, crops, livestock, food, biofuels

introduction of species for control purposes

e.g. biocontrol, landscape restoration

introduction of species for control purposes

e.g. biocontrol, landscape restoration

introduction of species for lifestyle and aesthetic

purposese.g. pets, ornamental plants, aquariums

introduction of species for lifestyle and aesthetic

purposese.g. pets, ornamental plants, aquariums

unintentional or accidental introductions

e.g. contaminated imports, hitch-hikers in freight or luggage, ballast water,

dumping

unintentional or accidental introductions

e.g. contaminated imports, hitch-hikers in freight or luggage, ballast water,

dumping

indirect economic causes

forces and conditions which determine trade, production and

consumption practices and preferences

e.g. expanding travel & trade, globalisation, subsidies to production, trade and

investment incentives, market demand and consumer preferences, low fines, high

reliance of economy on imports

forces and conditions which determine trade, production and

consumption practices and preferences

e.g. expanding travel & trade, globalisation, subsidies to production, trade and

investment incentives, market demand and consumer preferences, low fines, high

reliance of economy on imports

forces and conditions which determine land and resource

use practices and preferences e.g. high reliance of economy on particular

productions sectors, incentives to clear land and replace native species, price support to exotic monocrops, unclear institutions and property rights, lack of budgets and funding to conservation

forces and conditions which determine land and resource

use practices and preferences e.g. high reliance of economy on particular

productions sectors, incentives to clear land and replace native species, price support to exotic monocrops, unclear institutions and property rights, lack of budgets and funding to conservation


invasives as externalities

the positive or negative consequence of an economic activity that is experienced by

unrelated third parties, that is not reflected in the price of the goods or services being produced and for which no compensation

is paid or received

externalityexternality



introduction of water hyacinth into garden ponds

imposes external cost

aesthetic benefits, improvement in

land values

INSTIGATOR OF ACTION

choking of wetland, leading to loss of

ecosystem services

HOST ECOSYSTEM

decreased fish catch,increased floods,

declining water quality,difficulties in access

OTHER RESIDENTS


policy, market & price failures

policy failure

policy failure

economic policies and instruments encourage behaviour which lead to the spread of invasives, thereby incurring social

and economic costs

markets and prices fail to allocate resources to their most efficient use: market transactions, and the prices

they are based on, do not incorporate the broader social and

economic costs of invasives

market failure

market failure

price failure

price failure


economic policy and market failures result in invasions

• lead to a situation where:

– the prices and profits that people face as they carry out their economic activities do not internalise the full costs of invasions to the wider economy (or the risk of invasions occurring)

– there are for the most part no economic incentives (or requirements) for individuals or companies to make decisions based on the likelihood of invasions occurring, or of these costs being incurred to them



privatecosts and benefits

socialcosts and benefits

do not equate to

encourage producers, consumers and traders to behave in particular ways

that are profitable or beneficial to them

but which incur costs and losses to other groups,

individuals and the economy


invasives as externalitiesthe positive or negative consequence of an economic activity that is experienced by unrelated third parties, that is not reflected in the price of the goods or services being produced and for which no compensation is paid or received


• invasions are usually the external effects of market transactions

• market prices do not reflect full social and economic costs associated with invasions

• costs and losses are felt by wider economy, not by the person who causes the invasion

• no penalty/compensation is levied for damages caused



• in many ways invasives show the characteristics of “typical” economic externalities, and should be treated as such in analysis and measures

• key difference:– “normal” externalities only continue as long as source activity does

– invasions, once set in motion, are self-perpetuating and often their impacts increase over time

• means that many of the financial and economic instruments usually designed to address environmental externalities are less suited to invasives

the positive or negative consequence of an economic activity that is experienced by unrelated third parties, that is not reflected in the price of the goods or services being produced and for which no compensation is paid or received



using policy analysis matrices to identify environmental effects

• thorough analysis of the direct and indirect causes of invasions is a key step in economic analysis

• policy analysis matrices provide a useful tool for this

• Action Impact Matrix: originally developed to show relationships between economy-wide policies and the environment

• can be simplified and adapted for invasives


applying policy analysis matrices to invasives

Step 1Step 1 list key issues relating to invasives and identify direct causes

Key issuesKey issues Direct causesDirect causes

Introduction and spread of potentially invasive species

Introduction and spread of potentially invasive species

Cultivation of exotic cropsCultivation of exotic crops

Issues relating to the introduction, establishment and spread of potential invasivesIssues relating to the introduction, establishment and spread of potential invasives

Hitch-hiker species coming in with seed and food shipmentsHitch-hiker species coming in with seed and food shipments

Spread of potentially invasive speciesSpread of potentially invasive species Road and boat transport of exotic species between sitesRoad and boat transport of exotic species between sites

Invasion of speciesInvasion of species

Loss of biodiversity and ecosystem servicesLoss of biodiversity and ecosystem services

Issues relating to the resilience of human and natural systems to invasions Issues relating to the resilience of human and natural systems to invasions

Intensive monocroppingIntensive monocropping

High use of agro-chemicalsHigh use of agro-chemicals



Step 2Step 2 describe underlying economic conditions or motivations

Cultivation of exotic cropsCultivation of exotic crops


Hitch-hiker species coming in with shipmentsHitch-hiker species coming in with shipments

Road and boat transport of exotic speciesRoad and boat transport of exotic species

Loss of biodiversity and ecosystem servicesLoss of biodiversity and ecosystem services

Issues relating to the resilience of human and natural systems to invasionsIssues relating to the resilience of human and natural systems to invasions

Intensive monocroppingIntensive monocropping

High use of agro-chemicalsHigh use of agro-chemicals

Direct causesDirect causes Underlying economic conditionsUnderlying economic conditions

• High consumer demand

• High producer profitability

• Promotion of cash crop cultivation

• Reliance on imported inputs

• High consumer demand

• High producer profitability

• Promotion of cash crop cultivation

• Reliance on imported inputs

• Clearance of natural vegetation for monocrop farming• Clearance of natural vegetation for monocrop farming



Step 3Step 3 identify economic policies and instruments which set particular economic conditions and motivations


Issues relating to the resilience of human and natural systems to invasionsIssues relating to the resilience of human and natural systems to invasions

High consumer demandHigh consumer demand

Clearance of natural vegetation for monocrops

Clearance of natural vegetation for monocrops

Underlying economic conditionsUnderlying economic conditions Economic policies or instrumentsEconomic policies or instruments

• Subsidies to retail price of crop for consumers• Price support to cash crop farmers• Subsidies and preferential credit for cash crop production• Export tax exemption for cash crops• High input and export taxes for alternative native crops• Import duty exemption for agricultural sector inputs• Over-valued exchange rate making imports relatively cheaper

• Subsidies to retail price of crop for consumers• Price support to cash crop farmers• Subsidies and preferential credit for cash crop production• Export tax exemption for cash crops• High input and export taxes for alternative native crops• Import duty exemption for agricultural sector inputs• Over-valued exchange rate making imports relatively cheaper

• Lack of clear property rights over natural ecosystems• Requirement that farm land is cleared to establish ownership• Relatively lower taxes on agricultural land than forest • Low budget allocations to conservation agencies

• Lack of clear property rights over natural ecosystems• Requirement that farm land is cleared to establish ownership• Relatively lower taxes on agricultural land than forest • Low budget allocations to conservation agencies

High producer profitabilityHigh producer profitability

Promotion of cash crop cultivationPromotion of cash crop cultivation

Reliance on imported inputsReliance on imported inputs


linking invasions to changes in human wellbeing

• ultimately, invasives are of concern because they impact on human wellbeing

• invasives take over space that generates economically valuable goods and services

• we are concerned with levels and degrees of invasion: incremental costs and benefits to humans


ECOSYSTEM SERVICES

Supporting• Nutrient cycling• Soil formation• Primary production• …

Provisioning• Food• Fresh water• Wood and fiber• Fuel• …

Regulating• Climate regulation• Flood regulation• Disease prevention• Water purification• …

Cultural• Aesthetic• Spiritual• Educational• Recreational• …

Security• Personal safety• Secure resource access• Security from disasters

Basic material for good life• Adequate livelihoods• Sufficient nutritious food• Shelter• Access to goods

Health• Strength• Feeling well• Access to clean air & water

Good social relations• Social cohesion• Mutual respect• Ability to help others

Freedom of choice and action

Opportunity to be able to achieve what an individual values

being and doing

CONSTITUENTS OF WELL-BEING

Adapted from Millennium Ecosystem Assessment 2005

which results in changes in

impact on the provision of

invasions

understanding, assessing and acting on invasives in the light of the changes in ecosystem services and human wellbeing they give rise

toeconomic analysis


linking invasions to changes in human wellbeing• concern for human wellbeing

provides the context for economic analysis

• it involves:– pinpointing the economic

causes of invasions– assessing their economic

impacts– finding tools to help in

addressing invasives

• in order to ensure outcomes which are economically beneficial, and positive in human wellbeing terms


thank youthank you

Module 2: understanding the economic causes of invasions Economic Analysis of Invasive Species.

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Transcript of Module 2: understanding the economic causes of invasions Economic Analysis of Invasive Species.