Nat Cap Modeling for The Nature Conservancy and Dow Chemical Co.

Robert Griffin*, Katie Arkema, Joey Bernhardt, Joe Faries, Greg Guannel, Anne Guerry, Jess Silver, Jodie Toft, Gregg Verutes, Spencer Wood

naturalcapitalproject.org*rmgriff@stanford.edu

Natural Capital Project Annual Meeting, 2013

Overview

Developing methods to assess “natural defenses” to protect Dow’s Freeport, TX facility from storms

Dow - Chemical company - $40B Market Cap

Dow Freeport - 5,000 acres on Gulf of Mexico - Half of U.S. production - 21% of global prod - Hurricane prone

Overview

Overview

TNC and Dow - 2011 Collaborative Agreement - 3 Pilot Projects

- Freeport, Texas- Santa Vitoria, Brazil- TBD

- Freeport Project- Air Quality and Reforestation- Freshwater Supply- Coastal Hazard Mitigation

Research Questions

Hypotheses/QuestionsGeneral: Does marsh restoration reduce the inundation level and damage from storms?Dow: To what extent is marsh restoration a substitute for levees?

Auxiliary AnalysisMarsh restoration has spillover effects to public (direct and indirect) - Direct: Protect “public” properties - Indirect: Recreation, carbon sequestration, fisheries

Valuation Framework

Net value of management options to Dow and Public

Sea level riseStorms

CoastalDevelopment

Scenarios- No restoration

(status quo)- No restoration,

build levees- Restoration

- Opportunistic- Targeted

Dow

Cost Benefit Analysis

Public

Value of avoided Dow damages

Value of avoided damages

Affected Parties Valuation

Local Forcings

Value of co-benefits

Action Costs to Dow

Responses

Natural Defenses

Storm

Land Cover

Flooding

Inundation

Damage

Physical Modeling

1.

• Estimate storm surge in response to different forcing conditions and SLR

2.

• Models changes in wave height in response to critical habitat

3.

• Surge + waves = inundation map

Avoided Damages Model

1.

• Modeled property damages to Dow and Freeport

2.

• Uses tax assessment data (public) and AIR report (Dow) for property values

3.

• Translates inundation to damage via depth-damage curves from U.S. Army Corps of Engineers

Natural Defenses

Recreation

• Uses Flickr data to estimate visitation rates in an area of interest

• Predictors can be:– Natural Phenomena– Culture– Industry– Cost– Land Cover

• Matched with expenditures it can estimate changes in expenditures

Fisheries

• Fisheries model species’ propensity to respond to changes in habitat– Qualitative assessment based on changes in

critical habitat area– Returns population response as +/- and scaled

(low-high on a 5 point scale)

Carbon Sequestration

• Landcover changes can sequester carbon• Our blue carbon model outputs:– changes in carbon due to management action– social or private value of carbon

Results

• Developed assessment methods for natural defenses

• Assessment results (targeted restoration)– Salt marsh restoration does not significantly

reduce damages in this area to Dow or Freeport– NPV of carbon sequestration is $1.2 million– Recreation expenditures increase $150 million– 12 fisheries benefit