Introduction

At the heart of cost-benefit analysis (CBA) theory lie two basic principles (Pearce, 1986; Hanley and Spash, 1993): first that, as far as possible, all the costs and benefits arising from a project should be assessed; and, second, that they should be measured using the common unit of money. While these seem common-sense precepts, in application both principles raise highly complex problems. The issue of complete appraisal is, when taken to the extreme, ultimately insoluble in a world ruled by the laws of thermodynamics where, as noted by commentators such as Price (1987a, 2000) and Young (1992), everything affects everything else. For real-world decision-making, practical rules regarding the limits of appraisal are needed. Such rules are the stuff of numerous project appraisal guidelines, for example the Treasury's ‘Green Book’ (H.M. Treasury, 1991), whereas the research described here focuses on the second principle – of monetary valuation.

In discussing approaches to the monetary evaluation of environmental preferences we can first identify a wider global family of monetary assessment methods (see Figure 2.1). This comprises both the formal ‘valuation’ (or demand curve) methods discussed below and a quite separate group of ad hoc environmental ‘pricing’ techniques (see the review in Bateman, 1999). In theoretical terms valuation and pricing approaches are quite distinct. Whereas the former are based upon individuals' preferences and yield conventional, neoclassical, welfare measures (hence the term ‘valuation methods’), the pricing techniques are much more akin to market-price observations.

The nature of value: differing paradigms

Perhaps the most often quoted definition of an economist is of someone who knows the price of everything and the value of nothing. However, it is an awareness of the distinction between value and price which separates out the true economist from the glorified book-keepers and accountants who so often masquerade under such a title. Recent years have seen a growth of badge-engineering in which so-called new disciplines such as environmental or ecological economics have risen to prominence. However, whilst these are appealing titles, in essence they represent not a radical departure but rather a very welcome return to the basic principles and domain of economics – the analysis of true value.

It is one of these basic principles which underpins this study: namely the assumption that values can be measured by the preferences of individuals. The interaction of preferences with the various services provided by a commodity generates a variety of values. Many economists have studied the nature of these values; however, a useful starting point is the concept of aggregate or total economic value (TEV) (Pearce and Turner, 1990; Turner, 1999; Fromm, 2000).

Figure 1.1 shows how TEV can be broken down into its constituent parts and illustrates these with reference to some of the values generated by the principal commodity under consideration in this study; woodland.

The bulk of economic analyses concentrate upon the instrumental or use values of a commodity.

This book concerns the application of environmental economic analysis to real-world decision-making. In particular it seeks to demonstrate a number of ways in which geographical information systems (GIS) can be employed to enhance such analyses. We have written it because, in our opinion, GIS techniques can considerably improve the way in which the complexities of the real world can be brought into economic cost-benefit analyses (CBA), so reducing the reliance upon simplifying assumptions for which economists are infamous.

As we are primarily interested in demonstrating the flexibility and applicability of GIS techniques to a diversity of situations, we assume no prior knowledge of such techniques and avoid unnecessary technicalities wherever possible by referring the interested reader to related academic papers throughout. In so doing it is our objective to appeal to students, researchers, academics and, in particular, decision-makers and analysts across a broad spectrum of disciplines including economics (especially environmental, agricultural and resource economics), geography, land use planning and management, environmental science and related policy studies.

The application of GIS to environmental economic analyses is introduced gradually through the use of a diverse land use change case study. This concerns the potential for converting surplus agricultural land to multipurpose woodland in Wales. However, neither the specifics of this case study nor its location need be of particular interest to the reader as the study is designed primarily to demonstrate the flexibility of the underlying approach.

Introduction

The global process of industrialisation which has grown so rapidly over the past two centuries has, in more recent years, led to detectable increases in the concentration of insulating greenhouse gases (GHGs). These have in turn resulted in increases in global temperatures, and these are expected to continue rising with GHG emissions for the foreseeable future (Houghton et al., 1992; Wigley and Raper, 1992; IPCC, 1996a, 2001a, 2001b; Zecca and Brusa, 1997). The most recent report of the Intergovernmental Panel on Climate Change (IPCC) summarises the findings of contemporary research as showing:

The consequences of such climatic change are uncertain but potentially highly adverse (Warr and Smith, 1993; Parry, 1993, 2000). The IPCC concludes that:

Introduction

In this chapter we utilise a geographical information system (GIS) to model the predicted number of visitors to a particular woodland site and test the efficiency of the resultant arrivals function in estimating visits to other sites. This is achieved through a zonal model which estimates visitor arrival rates from areas around a given site, and which is then applied to other sites through the definition of similar zones around them. Findings from our studies of the value of open-access woodland recreation (discussed in Chapter 3) are then applied to our predicted visits surface to obtain valuations of potential demand.

Estimating an arrivals function

Previous studies

We are concerned with estimating overall visit rates which are applicable across populations, rather than being specific to individuals. By definition, conventional ITC valuation studies refer only to site visitors and say little about non-visitors. As a consequence they are unsuited to determining the absolute number of people who will visit a site. Therefore, our visitor arrivals model has to be composed of variables that have relevance across the population and can be readily transferred between sites.

To date there has been relatively little research regarding the level and determinants of visits to woodland in the UK. Furthermore, of those few studies which have examined this issue, most have looked at national recreational demand (Willis and Benson, 1989; Whiteman, 1991) rather than that at any particular forest site.

Introduction

In this chapter we present various models of timber production for the two species under consideration: Sitka spruce and beech. In the next section we present a brief review of previous studies. These have exclusively been based upon relatively small-scale surveys of tree growth; furthermore, they have also generally been confined to comparatively small areas and often to one topographic region, e.g. upland areas. Our study differs from these previous models in that it employs a GIS to utilise large-scale existing databases covering a very large and diverse study area: the whole of Wales. The subsequent section presents details regarding the various datasets used in this study and discusses how these data were transformed for the purposes of subsequent regression analysis. Subsequently, results from our models of Sitka spruce and beech growth rates are presented, while the following section presents and analyses GIS-created map images of predicted yield class. The final section applies the findings of the previous chapter to produce monetised equivalents of these results.

Literature review and methodological overview

Literature review

It is clear that tree growth rates depend upon a variety of species, environmental and silvicultural factors. Early work in this field relied on simple rules of thumb based upon relatively little supporting data (Busby, 1974) or analyses of single factors. Reviews across this literature provide a number of clues regarding the specification of a yield class model. An early focus of interest was the impact of elevation upon productivity (Malcolm, 1970; Mayhead, 1973; Blyth, 1974).

Introduction

In this chapter we assess the net benefits of converting land out of agriculture and into woodland. This appraisal is made from a number of standpoints. We have considered two types of agricultural production (sheep and milk) each assessed in two ways (farm-gate and social values), and two species of tree (conifer, represented by Sitka spruce, and broadleaf, represented by beech). Furthermore, we have assessed a variety of woodland benefits (recreation, timber and carbon sequestration) allowing us to consider a succession of definitions of what, in economic terms, constitutes a woodland. Finally, we have assessed the net benefits of land conversion using a variety of discount rates.

The results presented here consider various permutations of the factors discussed above. In essence our approach starts with the present agricultural values of a specific farm type (say sheep farming) and subtracts various definitions of woodland benefits (say, timber and carbon storage) assessed at a given discount rate (say 6 per cent). Thus a negative outcome would indicate that woodland benefits outstrip those of agriculture, and vice versa for positive sums. These various net benefit value estimates are obtained by using the GIS to overlay the respective value maps and adding or subtracting values as necessary.

A general caveat to our findings concerns the fact that our study data period is the early 1990s rather than the present day.

REEF RESEARCH: JAMES COOK UNIVERSITY AND THE AUSTRALIAN INSTITUTE OF MARINE SCIENCE

Throughout the years of political confrontation between the Commonwealth and Queensland over the future of the Great Barrier Reef, the need for serious, institutionalised research had already been demanded for more than a decade by Queensland Senator Felix Dittmer, previously a marine science collector for museums. In his maiden speech of 27 August 1959 Dittmer had argued the case for more Commonwealth involvement in north Queensland, including ‘the establishment of a large marine biological site on the Barrier Reef’ (Senate Parliamentary Debates, 8 Eliz.II, V.S15, 354). Maintaining pressure throughout the following years, in the Senate Estimates Debate of September 1963 Dittmer questioned John Gorton, at the time Minister for Science, about allocation of funds for the much neglected area of marine research, asserting, in the flow of argument, that it was in need of considerable upgrading. ‘I believe’, he stressed,

The Great Barrier Reef, Australia's most outstanding natural feature, has captured the interest of scientists and tourists from around the world. Yet surprisingly, despite its immense attraction, scientific importance and heritage value, no single, comprehensive account of its fascinating history has ever been published.

My own interest in the Reef, arising from a lifetime of involvement with coastal and marine environments, was initially aroused by the Great Barrier Reef conservation conflict of the 1960s. During an academic career that included extensive publishing in the history of ideas and environmental thought, the present study was commenced as a visiting Professorial Fellow in the Centre for Resource and Environmental Studies of the Australian National University from 1984 to 1989. In that stimulating context the task was conceived as a project to bring into the public record the history of the Great Barrier Reef since its discovery by Europeans.

This became a challenging collaborative research project with Dr Margarita Bowen, scientist and historian. Following the original conception we worked closely together, guided by her wide experience in ecological studies and competence in the study of the development of scientific thought, originally presented in her impressive study of scientific ideas in the eighteenth and nineteenth centuries in Empiricism and Geographical Thought (1981). Published in the prestigious Cambridge Geographical Studies series, that work still challenges much ecological theory today.

THE PAN-PACIFIC UNION 1920

Following World War I a major new phase of Reef research occurred throughout the 1920s, stimulated by the efforts of Alexander Ford (1868–1945), a prominent newspaper publisher in Honolulu, who, in the same idealistic spirit that motivated President Wilson, dreamed of a fellowship of the Pacific nations, united in a common bond of ‘friendly and commercial contact and relationship’. To that end he worked tirelessly to create a formal organisation to further his vision, which also sought to promote Hawaii as a centre of Pacific cultural and research activity. Ford's efforts were rewarded when in 1919 the government of the Territory of Hawaii, as it then was, incorporated the Pan-Pacific Union as a trusteeship of twenty-one nation members appointed by Pacific governments with a comprehensive charter ‘to unite the races and countries in and about the Pacific in closer bonds of fellowship’. The central activity envisaged was promoting knowledge of their resources and opportunities by means of periodic conferences on a wide range of matters of common concern.

In those same years a separate movement had been initiated by William Morris Davis from Harvard University, one of the more accomplished of the foreigners invited to the British Association meeting in Adelaide and Melbourne in 1914.

RESEARCH ORGANISATION AND PROCEDURE

While the focus of the Low Isles Expedition for the year was biological, although there was, in addition, an independent three month geomorphological survey of the Reef north of the Low Isles, from August to October 1928, financed by the Royal Geographical Society of London and conducted by a small team of three, led by James Steers. The aim of that survey, formulated in England, was to find further evidence on the origin of Reef foundations, and in particular, the relationship of the coastline to submerged reefs, cays, and continental islands, with the aim of assisting the biologists.

As soon as the main Low Isles Expedition team had settled in, the first task was to make a survey of the layout of the Low Isles themselves. The complex consists of two irregularly-shaped islands joined together, some 1800 metres in length and 1200 metres wide, with the long axis lying in a roughly east–west direction. The smaller island, the vegetated coral cay on which the lighthouse had been built and the expedition huts erected, is on the western (mainland) side. The cay itself is of regular oval shape, covering some 2 hectares at low tide, with an adjoining sandflat to the south of around 16.5 hectares. To the east is the mangrove and submerged lagoonal area of much greater dimensions. In the constriction joining the two islands on the northern side was the anchorage and expedition site.

ISSUE OF REEF BIOLOGICAL STUDIES, 1923–1927

Virtually no biological work appeared throughout 1923 and 1924. The years 1925 and 1926, in effect, were a low point in the development of Reef studies when a sequence of difficulties came together. On 25 September 1925 Nathan completed his term as Governor and retired to England as ‘Patron’ of the Committee where he worked on its behalf until his death in 1939. The Committee had now lost its most eloquent and influential advocate in Queensland. The ongoing fracas with the Royal Geographical Society of Australasia, Queensland (RGSAQ) was a major irritant that continued to destabilise the Committee, along with growing discontent that no significant biological work was in progress, especially in zoology which, apart from the work of Saville-Kent and Hedley, had still not developed any vigour. Then, on 14 September 1926 came the distressing news that Charles Hedley had died soon after he had returned to Sydney to farewell his wife Harriett and pack for the imminent Third Pan-Pacific Scientific Congress to be held in Tokyo. A lifelong asthmatic who had successfully found relief from the rigours of his native Yorkshire in tropic regions, he had contracted a chest complaint that exacerbated a heart condition to which he succumbed quickly.

The Great Barrier Reef burst suddenly into European consciousness in 1773. In that year the sensational account of James Cook's amazing voyage and discovery was released to the public as part of a huge three volume edition entitled An account of the voyages undertaken by order of his present Majesty for making discoveries in the southern hemisphere. Two years earlier, when he returned to England on 13 August 1771 after a three year voyage around the world, Cook reported that he had discovered and traversed the eastern and northern shores of the mysterious Great South Land which for centuries had been a quest for navigators. What became a central feature of the voyage was his description of a reef that beggared belief at the time: ‘a wall of Coral Rock rising all most perpendicular out of the unfathomable Ocean … the large waves of the vast Ocean meeting with so sudden a resistance make a most terrible surf breaking mountains high’.

By Cook's time coral reefs had already become well known and had acquired an extensive folklore, but nothing in the literature equalled the account of his nightmare travel through dangerous waters unmatched anywhere else in the world. For two years his journals were embargoed by the Admiralty to preserve their sensitive commercial information, especially from the French who were anxious to beat the British in the race to create an overseas empire.

Although issues related to the Great Barrier Reef in the late nineteenth and early twentieth centuries – controversy over Darwinian theories of evolution and reef formation, and the final decline in the pearling industry due to unrestricted resource use – attracted considerable specialised attention, apart from occasional reports in the newspapers, they rarely reached the general public. In the same period, however, a new perception of the Reef was being presented by Edmund Banfield (1852–1923), a journalist for the Townsville Daily Bulletin, whose writings were to have a profound and lasting effect on public awareness and attitudes, and indeed, on many scientists. They marked, in fact, the beginning of a new understanding of the Reef. No longer primarily a navigation hazard, a strange separate creation to be catalogued by biologists, or a frontier to be subdued and a resource to be exploited to extinction, it was now interpreted as one of nature's most diverse and beautiful creations, to be respected and preserved. The Reef was to come into international prominence as, quite literally, a unique natural phenomenon.

In 1897 Banfield, due to ill health, moved with his wife Bertha north from Townsville to Dunk Island, a small but attractive continental island, some 5 kilometres out from the mainland, rich with unspoiled rainforest, beaches and coral reefs. There, for the next twenty-six years, he wrote numerous articles for Australian newspapers, several tourist pamphlets, and four widely distributed books which brought a new interpretation of the Reef to an ever-widening readership.