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Trade-offs between ecosystem services: Water and carbon in a biodiversity hotspot


  • Chisholm, Ryan A.


Carbon sequestration by afforestation can help mitigate global climate change but may have adverse environmental and economic impacts in some regions. For example, economic incentives for carbon sequestration may encourage the expansion of Pinus radiata timber plantations in the Fynbos biome of South Africa, with negative consequences for water supply and biodiversity. I built a dynamic ecological-economic model to investigate whether afforestation of a Fynbos catchment with Pinus radiata is economically viable when the potential benefits of carbon sequestration and timber production are balanced against the losses to water supply. I found that afforestation appears viable to the forestry industry under current water tariffs and current carbon accounting legislation, but would appear unviable if the forestry industry were to pay the true cost of water used by the plantations. I also found that under various plausible future economic scenarios, afforestation can be associated with either large future economic gains or losses, suggesting a need for future analyses based on branches of decision theory that deal with severe uncertainty. I conclude with a general recommendation that climate legislation should be explicit about the conditions under which afforestation for carbon sequestration of native vegetation is a legitimate climate mitigation strategy.

Suggested Citation

  • Chisholm, Ryan A., 2010. "Trade-offs between ecosystem services: Water and carbon in a biodiversity hotspot," Ecological Economics, Elsevier, vol. 69(10), pages 1973-1987, August.
  • Handle: RePEc:eee:ecolec:v:69:y:2010:i:10:p:1973-1987

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    References listed on IDEAS

    1. Currie, Bianca & Milton, Suzanne J. & Steenkamp, J.C., 2009. "Cost-benefit analysis of alien vegetation clearing for water yield and tourism in a mountain catchment in the Western Cape of South Africa," Ecological Economics, Elsevier, vol. 68(10), pages 2574-2579, August.
    2. Alejandro Caparrós & Emilio Cerdá & Paola Ovando & Pablo Campos, 2010. "Carbon Sequestration with Reforestations and Biodiversity-scenic Values," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 49-72, January.
    3. Olschewski, Roland & Benitez, Pablo C., 2005. "Secondary forests as temporary carbon sinks? The economic impact of accounting methods on reforestation projects in the tropics," Ecological Economics, Elsevier, vol. 55(3), pages 380-394, November.
    4. Creedy, John & Wurzbacher, Anke D., 2001. "The economic value of a forested catchment with timber, water and carbon sequestration benefits," Ecological Economics, Elsevier, vol. 38(1), pages 71-83, July.
    5. Turpie, Jane K., 2003. "The existence value of biodiversity in South Africa: how interest, experience, knowledge, income and perceived level of threat influence local willingness to pay," Ecological Economics, Elsevier, vol. 46(2), pages 199-216, September.
    6. Martin L. Weitzman, 2001. "Gamma Discounting," American Economic Review, American Economic Association, vol. 91(1), pages 260-271, March.
    7. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
    8. Caparros, Alejandro & Jacquemont, Frederic, 2003. "Conflicts between biodiversity and carbon sequestration programs: economic and legal implications," Ecological Economics, Elsevier, vol. 46(1), pages 143-157, August.
    9. Turpie, J.K. & Marais, C. & Blignaut, J.N., 2008. "The working for water programme: Evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa," Ecological Economics, Elsevier, vol. 65(4), pages 788-798, May.
    10. Sergey Paltsev & John M. Reilly & Henry D. Jacoby & Angelo C. Gurgel & Gilbert E. Metcalf & Andrei P. Sokolov & Jennifer F. Holak, 2007. "Assessment of U.S. Cap-and-Trade Proposals," NBER Working Papers 13176, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Hearnshaw, Edward J.S. & Cullen, Ross, 2010. "The Sustainability and Cost-Effectiveness of Water Storage Projects on Canterbury Rivers: The Opihi River Case," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 97265, New Zealand Agricultural and Resource Economics Society.
    2. Coria, Jessica & Robinson, Elizabeth & Smith, Henrik G. & Sterner, Thomas, 2012. "Biodiversity Conservation and Ecosystem Services Provision: Tale of Confused Objectives, Multiple Market Failures and Policy Challenges," Working Papers in Economics 546, University of Gothenburg, Department of Economics.


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