The Economic Value of Nature’s Services and its role in Integrated Water Management: Four California Case Studies

Here we present four case studies of integrated regional water management that include enhancement of biological diversity among their goals. Each pilot-scale project focuses on multiple water-related natural resources in a defined geographic area, usually a watershed. A common element of the projects is to show the economic benefits of protecting and restoring natural resources in a manner that allows their continued use over the long term.

One of the aims of the projects is to recognize the economic value of the goods and services that nature provides and to incorporate that value into natural resource management decisions. Such recognition includes development of ways to measure the economic value of those services. This can be important information for water managers who normally see only the costs of ecosystem protection and restoration, but not the benefits, in their budgets. The goods and services considered in these projects include water supply, water quality, erosion prevention, wildfire prevention, hydropower generation, wood products, flood attenuation, carbon sequestration, land subsidence reversal, and fish and wildlife.

Collectively, the projects constitute on-the-ground efforts to advance several of the objectives in the implementation plan of Water Plan 2009. In particular, they aim to expand integrated regional water management (objective 1), protect surface water and groundwater quality (objective 4), expand environmental stewardship (objective 5), practice integrated flood management (objective 6) and manage a sustainable California Delta (objective 7).

The case studies accomplish and document several key ingredients of integrated resource management–although no single study does all of them. They identify and involve watershed stakeholders, both managers and users of natural resources. In turn, the stakeholders come to agreement about how they want the watershed to look or function, usually in terms of the goods and services that they want the watershed to provide. Then they reach agreement on a set of management practices that can support and enhance those services and move the watershed toward the desired condition. Finally, the case studies seek to estimate the amounts of goods and services derived from specific management practices.

The pilot projects go beyond most watershed management efforts and most ecosystem services work in laying the foundation for establishment of markets for nature’s services, that is, mechanisms for beneficiaries to pay producers for goods and services they receive. This requires some sort of assessment of the monetary value of the benefits. One desired end product is to put payments in the hands of producers– that is, resource managers—as an incentive to keep them producing.