Corporate Ecosystem Valuation (CEV)Corporate Ecosystem Valuation (CEV)

Road Test Case Study: Lafarge

May 3, 2011

Suzanne Ozment, World Resources Institute

Amy Rosenthal, World Wildlife Fund

John Finisdore, The Nature Conservancy

The Presenters

Lafarge Group

• Major positions in three product lines:– Cement– Aggregates and Concrete– Gypsum Wallboard

• Global manufacturing operations• Approx. 80,000 employees worldwide• Approx. 2,000 facilities worldwide• Approx. 720 quarries worldwide

Assess the value of ecosystem services to enhance Lafarge’s land management planning for future quarry reclamation

Better understand ecosystem services, valuation, and how to incorporate ecosystem services into Lafarge business decision-making

The Objective & Partnership

The Plan for Ecosystem Valuation

Tools:• Corporate Ecosystem Services Review

• Wildlife Habitat Benefits Estimation Toolkit

• Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST)

Ecosystem Valuation Partnership

• Major positions in three product lines:– Cement– Aggregates and Concrete– Gypsum Wallboard

• Global manufacturing operations• Approx. 80,000 employees worldwide• Approx. 2,000 facilities worldwide• Approx. 720 quarries worldwide

www.wri.org/ecosystems/esr

5. Develop strategies

4. Identify business risks and opportunities

3. Analyze trends in priority services

2. Identify priority ecosystem services

1. Select the scope

The Corporate Ecosystem Services Review

Huron Watershed Land Use (1996)Forest 66%

Agriculture 22%

Residential/Industrial

10%

Other 2%

PIQ

Step 2: Identify dependence & impacts

Step 3. Trends analysis framework

Condition and trends in ecosystem service

Direct driversActivities

of others

Indirect drivers

Company activities

Ecosystem Valuation Tools

• Corporate Ecosystem Services Review

• Wildlife Habitat Benefits Estimation Toolkit

• Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST)

Wildlife Habitat Benefits Estimation Toolkit

• Spreadsheet-based valuation models• Value databases & peer-reviewed studies of

ecosystems and species• Recreation use model• Technical reports & user’s manual

The WHBE Toolkit

₊ Increases in property value from nearby open space

₊ Outdoor recreation associated with wildlife

₊ Conservation of threatened & endangered species

₊ Some ecosystem services, using ‘benefits transfer’

= Total conservation value

of a site for wildlife + habitat

How the Toolkit works: pros & cons

Pros• Synthesizes information from many studies• Straightforward data needs• Useful for rapid assessment, cheaper than new studies

Cons• Requires some technical expertise • Not specifically designed for business applications• Values derived from other study sites can be inaccurate

Toolkit is Best Used When

• Working in the US context• The area is a commonly

studied habitat type• Studies are available for

characteristics being evaluated

• Coarse estimates are needed

Benefit transfer

Single point

estimate

Avg value

Admin approved value

Use value estimate at site

Natural Capital Project: InVEST

Integrated Valuation of Ecosystem Services and Tradeoffs

• Family of models that enables users to quantify, map and value the ecosystem service impacts of alternative decisions.

• Maps, tradeoff curves, balance sheets

Lands and waters:CarbonHydropowerWater purificationAvoided sedimentationManaged timber productionCrop pollinationOceans and coasts:Wave energyCoastal hazardsAquacultureAesthetic viewsBiodiversity

Ecosystem Services

Measures & Values

• Supply of service

• Delivery of service

• Value

Market valuationAvoided damage costsProduction Economics

InVEST is Best Used When

• Addressing a specific business strategy, question or decision

• Comparing alternative options or scenarios

• Managing land, water or coastal resources

• Considering moderate resolution and scale

Land cover 2000

Conservation 2025 BAU 2025

or

Pros• Spatially explicit results comparing options• Good for addressing multiple benefits & risks

Cons• Requires technical expertise, data & time• Not specifically designed for business

applications• Without reliable, precise input data, values

derived can be inaccurate

How InVEST works: pros & cons

Project Work Flow

Project team• 3 technical team, 2 reporting team, 2 Lafarge

team, review & support from numerous othersTimeline • 6 months

1. kick-off & scoping, 2. planning & valuation,3. review & reporting

Tools• 4 models, 1 reportCost• ~ $60,000

Results: Habitat Benefits

Risks & Opportunities: Water contamination v. purification

Nitrogen pollutant loadPIQ Total: ~2,500 kg/year

Nitrogen regulation services

PIQ Total: over 3,300 kg/year

*In PIQ, nutrient exported goes through sediment settlement system*

Value of Ecosystem Services

Valuation of Erosion Regulation Services PIQ Total: ~$2,000,000 per year

PIQ Total: over 145,000 metric tons retained annually

Challenges & risks successes & opportunities

Complexity Uncertainty Landscape scale

Stakeholders

Data, techniques & costs

Defined business decision

Defined material risks and opportunities

Consistency, conservative, transparency, validation

Physical measurement

Strive for “necessary”

Economic valuation

Engage experts

Data, techniques & costs

Use sensitivity analysis

AcknowledgementsAcknowledgements

Lafarge: Harve Stocke & David Carroll

WRI: Susan Minnemeyer & Andrew Leach

Natural Capital Project: Nirmal Bhagabati, Emily McKenzie, Heather Tallis, Driss Enaanay, Sheri Willoughby