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The Value of Water: Social Costs

According to Freeman (1993) and Matete (2004), "ecological value is estimated from the utility humans derive from using ecological services. […] It then follows that the basis for deriving measures of economic value of the environment and goods and services it provides is their effects on human welfare".

It is easy to take ecosystem services for granted, especially when there is a disconnection between the end product and the services. We rely on ecosystem services to survive and have to recognise their importance in terms of function and economic value. 

Economic valuation of ecosystem services, allows for the benefits of ecosystem services to be quantified and justified. This is a hotly debated topic with a number of studies providing value estimations for a number of essential services, resulting in a wide range of values for the same services. The table below is a summary of the range of economic values that have been assigned to aquatic ecosystem services on a global scale, and more specifically in developing countries (Forslund et al. 2009).

Economic values of aquatic ecosystem services reported in recent literature.

Type of value

Service provided

Range of economic values reported in the literature

Global estimate (USD/ha/year)

Developing countries (USD/ha/year)

Direct Use

Water for people

45-7500

50-450

Fish/shrimp/crabs (non-recreational)

20013

6-750

Fertile land for flood-recession agriculture and grazing

40-520

3-370

Wildlife (for food)

40-520

0.02-320

Vegetables and fruits

40-470

1-200

Fibre/organic raw material

4513

1-40

Medicine plants Inorganic material

25-160

0.1-63

Indirect Use

Chemical water quality control (purification capacity)

60-6700

20-1400

Flood mitigation

15-5500

2-1700

Groundwater replenishment

10-90

10-90

Erosion control

20-120

20-120

Carbon trapping (sequestration)

130-270

2-2000

Microclimate stabilization

 

1026

Potentially all (direct and indirect use, option, bequest and existence

Recreation and tourism (incl. fishing and hunting)

230-3000

20-260

Biodiversity conservation

 

0.6-3600

Cultural/religious/historical/symbolic activities

30-1800

8026

Total Economic Values*

 

120-370

30-2900

Source: (Emerton & Kekulandala (2002), Turpie et al. (1999), Emerton et al. (2002), Iftikhar (2002), Emerton (1994), IUCN (2001), Emerton et al. (1999), Rosales et al. (2003), Gerrard (2004), De Groot (1992), Kirkland (1988), Thibodeau & Ostro (1981), Schuyt & Brander (2004), Busk (2002), Chowdhury (2003), Rogers et al. (1998), Sadoff et al. (2003), Karanja et al. (2001), Seyam et al. (2001), Acharya (2000), Woodward & Wui (2001), Brown (1991), MRCS (1998), Ringler & Cai (2003), Pyo (2002), Seild & Moraes (2000), Schuyt & Jansen (1999), Christensen (1982), Sathirathai (1998), Bann (1997), Drew et al. (2005), Costanza et al. (1997).) As quoted in Forslund et al. 2009

* Values as assigned by the literature, not a sum of ranges minimums and maximums.

Flood mitigation is one of many aquatic ecosystem services.
Source: ARA-Sul 2000
( click to enlarge )

Cost vs Benefit

Attempts have been made to determine social benefits related to increased water yield as a result of the eradication of alien species in the Western Cape Province. An estimated R4660/ha/annum total benefits value, were accrued as a result of removing alien vegetation (2000 prices). Of that, the increased water yield contributed a share of R377/ha/annum to the above value. Multiplied by the total area cleared by the year 2000 (1.06 million hectares) this gives total benefits value (in terms of gains in water yield) of around R400 million, which is about half the total amount spent on the programme in the same time frame.

Source: Turpie et al. 2002 in Lange and Hassan 2006.