3
Aquatic and Related Terrestrial Ecosystems

INTRODUCTION

An ecosystem is generally accepted to be an interacting system of biota and its associated physical environment. Ecologists tend to think of these systems as identifiable at many different scales with boundaries selected to highlight internal and external interactions. In this sense, an aquatic ecosystem might be identified by the dominance of water in the internal structure and functions of an area. Such systems intuitively include streams, rivers, ponds, lakes, estuaries, and oceans. Most ecologists and environmental regulators also include vegetated wetlands as members of the set of aquatic ecosystems, and many think of groundwater aquifer systems as potential members of the set. “Aquatic and related terrestrial ecosystems” is a phrase that recognizes the impossibility of analyzing aquatic systems absent consideration of the linkages to adjacent terrestrial environments.

The inclusion of “related terrestrial ecosystems” for this study is a reflection of the state of the science that recognizes the multitude of processes linking terrestrial and aquatic systems. River ecologists have long understood the important connections between rivers and their floodplains (Junk et al., 1989; Stanford et al., 1996). The inflows of water, nutrients, and sediments from surrounding watersheds are heavily influenced by conditions within the floodplain. Conversely, floodplain plant and animal habitat value and sediment supply and fertility are often determined by river hydrology. This same sort of relationship between terrestrial and aquatic system is now understood to influence many of the functions of wetlands that motivate management efforts (Wetzel, 2001). Wetland ecologists have debated for years about appropriate recognition of capacity and opportunity to perform functions when conducting assessments of wetlands. A classic example of the discussion focuses on two identical wetlands, one in a pristine forested landscape, and the other in an intensely developed landscape. Both are assumed to have equivalent internal capacities to sequester pollutants, modify nutrient loads, and provide habitat, but the surrounding conditions mean that the opportunity for these functions to occur will differ significantly.

For many of the ecosystem functions and derived services considered in this chapter, it is not possible, necessary, or appropriate to delineate clear spatial boundaries between aquatic and related terrestrial systems (see Box 3-1). Indeed, to the extent that there is an identifiable boundary, it is often dynamic in both space and time. Floods, droughts, and seasonal patterns in rainfall are inte-



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Valuing Ecosystem Services: Toward Better Environmental Decision–Making 3 Aquatic and Related Terrestrial Ecosystems INTRODUCTION An ecosystem is generally accepted to be an interacting system of biota and its associated physical environment. Ecologists tend to think of these systems as identifiable at many different scales with boundaries selected to highlight internal and external interactions. In this sense, an aquatic ecosystem might be identified by the dominance of water in the internal structure and functions of an area. Such systems intuitively include streams, rivers, ponds, lakes, estuaries, and oceans. Most ecologists and environmental regulators also include vegetated wetlands as members of the set of aquatic ecosystems, and many think of groundwater aquifer systems as potential members of the set. “Aquatic and related terrestrial ecosystems” is a phrase that recognizes the impossibility of analyzing aquatic systems absent consideration of the linkages to adjacent terrestrial environments. The inclusion of “related terrestrial ecosystems” for this study is a reflection of the state of the science that recognizes the multitude of processes linking terrestrial and aquatic systems. River ecologists have long understood the important connections between rivers and their floodplains (Junk et al., 1989; Stanford et al., 1996). The inflows of water, nutrients, and sediments from surrounding watersheds are heavily influenced by conditions within the floodplain. Conversely, floodplain plant and animal habitat value and sediment supply and fertility are often determined by river hydrology. This same sort of relationship between terrestrial and aquatic system is now understood to influence many of the functions of wetlands that motivate management efforts (Wetzel, 2001). Wetland ecologists have debated for years about appropriate recognition of capacity and opportunity to perform functions when conducting assessments of wetlands. A classic example of the discussion focuses on two identical wetlands, one in a pristine forested landscape, and the other in an intensely developed landscape. Both are assumed to have equivalent internal capacities to sequester pollutants, modify nutrient loads, and provide habitat, but the surrounding conditions mean that the opportunity for these functions to occur will differ significantly. For many of the ecosystem functions and derived services considered in this chapter, it is not possible, necessary, or appropriate to delineate clear spatial boundaries between aquatic and related terrestrial systems (see Box 3-1). Indeed, to the extent that there is an identifiable boundary, it is often dynamic in both space and time. Floods, droughts, and seasonal patterns in rainfall are inte-

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making BOX 3-1 Understanding Ecosystem Terminology Ecology is a scientific field that studies the relationships between and among (micro)organisms such as plants, animals, and bacteria and their environment. Like most scientists, ecologists use a variety of terms to describe aspects of their discipline. A few of the terms used throughout this report are defined below in the interest of facilitating the readability and understanding of this report. Ecosystem biodiversity describes a number and kinds of organisms in a specific geographic area that can be distinguished from other areas by its physical boundaries (e.g., lake, forest), though such boundaries can be somewhat arbitrary. In addition to biodiversity, ecosystems have properties such as the amount of plant and animal matter they produce (primary and secondary production) and the flow of chemical elements within and through the system (nutrient cycling). Ecosystem structure refers to both the composition of the ecosystem (i.e., its various parts) and the physical and biological organization defining how those parts are organized. A leopard frog or a marsh plant such as a cattail, for example, would be considered a component of an aquatic ecosystem and hence part of its structure. The relationship between primary and secondary production would also be part of the ecosystem structure, because it reflects the organization of the parts. Ecosystem function describes a process that takes place in an ecosystem as a result of the interactions of plants, animals, and other (micro)organisms in the ecosystem with each other or their environment and that serves some purpose. Primary production (most notably the generation of plant material) is an example of an ecosystem function. The net primary production in an ecosystem is determined by the number and kinds of plants present; the amounts of sunlight, nutrients, and water available; and the amount of this productivity used internally by the plants themselves. Ecosystem structure and function provide various goods and services to humans that have value: for example, rare species of plants or animals, fish for recreational or commercial use, clean water to swim in or drink. The functioning of ecosystems (interaction of organisms and the physical environment) often provides for services such as water purification, recharge of groundwater, flood control, and various aesthetic qualities such as pristine mountain streams or wilderness areas.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making gral forcing functions for freshwater systems, just as tides, hurricanes, and sealevel rise constantly revise the boundaries between land and water in coastal systems. For these reasons, and as stated in Chapter 1, “aquatic ecosystems” collectively refers to aquatic and related terrestrial ecosystems unless noted otherwise. The conceptual challenges of valuing ecosystem services involve explicit description and adequate assessment of the link (i.e., the ecological production function) between the structure and function of natural systems and the goods or services derived by humanity (see Figure 1-3). Describing structure is a relatively straightforward process, even in highly diverse ecosystems. Exceptions sometimes arise at the levels of small invertebrates and microorganisms. However, function is often difficult to infer from observed structure in natural systems. Furthermore, the relationship between ecosystem structure and function as well as how these attributes respond to disturbance are not often well understood. Indeed, ecological investigations of aquatic systems show no signs of running out of questions about how these systems operate. Without comprehensive understanding of the behavior of aquatic systems, it is clearly difficult to describe thoroughly all of the services these systems provide society. Although valuing ecosystem services that are not completely understood is possible (see Chapters 4 and 5 for further information and examples), when valuation becomes an important input in environmental decision-making, there is the risk that the valuation may be incomplete. There have only been a few attempts to develop explicit maps of the linkage between aquatic ecosystem structure/function and value. There are, however, a multitude of efforts to separately identify ecosystem functions, goods, services, values, and/or other elements in the linkage without developing a comprehensive argument. One consequence of this disconnect is a diverse literature that suffers somewhat from indistinct terminology, highly variable perspectives, and considerable divergent convictions. Despite these shortcomings, the core issue of how to assess and value aquatic ecosystem services is intuitive and important enough to support some synthesis—especially as related to environmental decision-making. The goal of this chapter is to review and summarize some of the common elements in the published literature concerning the identification of aquatic ecosystem functions and their linkage to goods and services for subsequent economic valuation. It also includes a summary review of the extent and status of aquatic ecosystems in the United States and some of the issues that continue to complicate efforts to value aquatic ecosystem services. The chapter closes with a summary of its conclusions and recommendations.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making EXTENT AND STATUS OF AQUATIC AND RELATED TERRESTRIAL ECOSYSTEMS IN THE UNITED STATES There are impressive examples of almost every kind of aquatic ecosystem within the United States. The country has some of the largest freshwater lakes in the world (see Box 3-2), one of the world’s largest river systems (see Box 3-3), one of the world’s largest estuaries (see Box 3-4), thousands of miles of coastline, extensive underground aquifers (see Box 3-5), a vast array of tidal and nontidal wetlands (see Box 3-6), and so many small creeks and streams that they are still being mapped. There is a long history of efforts to understand and manage these resources for public and private benefit, and the need to make informed decisions continues to motivate both research and monitoring. These short summaries identify some of the ways that humans have used and benefited from these ecosystems over time and many of the ecosystem services that managers seek to value in efforts to inform decisions. The summaries also identify some of the key management issues that have arisen as a result of evolving and often conflicting interests regarding ecosystem services. In 2002, U.S. Environmental Protection Agency (EPA) released the 2000 National Water Quality Inventory (NWQI; EPA, 2002)—the thirteenth installment in a series that began in 1975. These reports are required by Section 305(b) of the Clean Water Act and are considered by EPA to be the primary vehicle for informing Congress and the public about general water quality conditions in the United States. As such, the reports characterize water quality, identify widespread water quality problems of national significance, and describe various programs implemented to restore and protect U.S. waters. Notably, these assessments include streams and rivers, lakes and ponds, coastal resources to include tidal estuaries, shoreline waters (coastal and Great Lakes), and wetlands. Table 3-1 summarizes some of the relevant results and findings from the 2002 NWQI report.1 Although EPA, various federal and state partners, and other nongovernmental organizations and scientists have been assessing the condition of estuaries for decades, the National Coastal Condition Report (NCCR; EPA, 2001) represents the first comprehensive summary of coastal conditions in the United States and uses data and information collected from 1990 to 2000.2 The report, a coordinated effort between EPA (lead), the National Oceanic and Atmospheric Administration (NOAA), the U.S. Geological Survey (USGS), and the U.S. Fish and Wildlife Service (USFWS), compiles and summarizes several data sets from 1   The NWQI report includes information about water quality standards, detailed summaries of the results of waterbody assessments by designated uses and states, and a discussion of the data collection and analysis methods used in that report. 2   Interested readers are directed to the NCCR report (EPA, 2001) for further information and details on the findings as well as data collection and analysis methods used to generate and interpret the regional results. Notably, Chapter 1 of that report includes a comprehensive list of federal programs and initiatives that address coastal issues, many of which are conducted jointly with various coastal states and local organizations.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making BOX 3-2 Great Lakes Ecosystem The Great Lakes ecosystem is the largest freshwater system in the world, comprising Lakes Michigan, Superior, Huron, Erie, and Ontario. Collectively, they cover a land area of 94,000 square miles and contain 5,500 cubic miles of water in the United States and Canada. Rivers and streams running into the lakes drain 201,000 square miles of land. Rain that falls in Chicago or Duluth may eventually leave the ecosystem more than 1,000 water miles to the east at Montreal, although outflows of water and its solutes are small, less than 1 percent by volume per year. Habitats within the ecosystem are diverse. In the north, forests surrounding Lake Superior support healthy populations of black bears, bald eagles, wolves, and moose. Waterfowl, songbirds, and raptors funnel between Lakes Michigan and Erie during the spring and fall migrations. Lakes, wetlands, and uplands across the basin provide a mixture of habitats for temperate plants and animals of many types. The beaches and dunes of the southern shores are nesting areas for open water birds and wading birds such as the endangered piping plover. Mining, timbering, agriculture, and industry brought major changes to the ecosystem beginning in the 1800s. Industries of all sorts grew up on the shorelines of lakes and rivers and used these waterbodies to facilitate both waste disposal and shipping. New locks and canals between the lakes allowed access to the Atlantic, while also opening pathways for the introduction of exotic species. For example, saltwater alewives displaced native species and sea lamprey devastated Great Lakes trout populations. Although industry created great wealth and well-being, it also left behind vast quantities of waste, including residues of dichlorodiphenyltrichloroethane and 1,1,1-trichloro-2,2-bis(4-chlorophenyl)ethane (DDT), polychlorinated biphenyls (PCBs), and heavy metals. Sewage and soil erosion turned lake water from clear blue to dark green through eutrophication. Different trends began in the 1960s. Economic and public policy changes began to stem the flow of pollutants into the system, while aging mines, mills, and refineries closed. Electricity and natural gas replaced coal for heating, and air pollution laws cut power plant and automobile emissions. DDT and PCBs were banned, and the use of heavy metals declined. Treaties with Canada and interstate agreements established ecosystem-wide authorities to identify environmental problems and implement solutions. Marked changes in the former ecosystem followed these economic and regulatory changes. Water quality gradually improved so that the “oligotrophic blue” is reestablished in all the lakes. Between 1974 and 1994, PCB levels in top-of-the-food-web predators dropped by as much as 90 percent. Bald eagles once again breed along lake and river shorelines, and shoreline beaches and dunes are major summer destinations. Boating and recreational fishing are multibillion dollar industries.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making However, history and the daily activities of 33 million people present continuing challenges for the ecosystem. Old harbors and shipping points are still lined by millions of tons of toxic materials and sediments. Although ambient concentrations are low, persistent toxic materials are concentrated by the ecosystem and food web, and levels of metals and PCBs in the blood and tissue of fish, waterfowl, and birds of prey are still high. Fish consumption advisories for recreational anglers remain in effect in across the region, and further reductions in mercury use and emissions remain a regulatory priority. Restoring habitat and native species is also a priority. Wetland regulations halted the destruction of rare wetland types such as cedar bogs, fens, and salt marshes. Wetland restoration aims at restoring scarce wetland types, especially those along Great Lakes shorelines and bird migration routes. Elk and moose are reestablished in some areas, and significant efforts are under way to strengthen populations of Lake Superior native clams, walleye, brook trout, and sturgeons. Invasive and exotic species such as zebra mussels, lamprey, ruffe, and goby, however, continue to displace and threaten native species. The Great Lakes region can be viewed a continuing experiment in testing human capability to live and prosper within the bounds of a major aquatic ecosystem, and although the last four decades allow some optimism, major environmental problems remain. During storms, combined sewer and stormwater drainage systems overflow, releasing untreated sewage in otherwise protected waterbodies. Urban and agricultural runoff contribute excessive nutrients into susceptible bays and inlets. Toxic air emissions disperse trace contaminants across the region, feeding the cycle of bioaccumulation. Success in this Great Lakes experiment will not be accidental. Thus, careful choices must be made and subsequent actions taken. SOURCE: Great Lakes National Program Office (2001, 2002). federal and state coastal monitoring programs to present a broad baseline picture of the condition of U.S. coastal waters as divided into five discrete regions: Northeast, Southeast, Great Lakes, Gulf of Mexico, and West Coast. The report is intended to serve as a benchmark for assessing the progress of coastal programs in the future and will be followed by subsequent reports on more specialized coastal issues. It is important to note that the condition of U.S. coastal waters is described primarily in terms of data on estuaries, which are loosely defined in the NCCR as the productive transition areas between freshwater rivers and the ocean. In addition, although the intent of the report is to evaluate the condition of coastal waters (i.e., primarily estuaries) nationwide, the report states that there was insufficient information to completely assess West Coast estuaries and the Great

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making BOX 3-3 The Missouri River Ecosystem The Missouri River basin extends over 530,000 square miles and covers approximately one-sixth of the continental United States. The one-hundredth meridian, the widely accepted boundary between the arid western states and the more humid states in the eastern United States, crosses the middle of the basin. The Missouri River’s source streams are in the Bitterroot Mountains of northwestern Wyoming and southwestern Montana. The Missouri River begins at Three Forks, Montana, where the Gallatin, Jefferson, and Madison Rivers merge on a low, alluvial plain. From there, the river flows to the east and southeast to its confluence with the Mississippi River just above St. Louis. Near the end of the nineteenth century, the Missouri River’s length was measured at 2,546 miles. Between 1804 and 1806, the famous explorers Meriwether Lewis and William Clark led the first recorded upstream expedition from the river’s mouth at St. Louis to the Three Forks of the Missouri, and eventually reached the Pacific coast via the Columbia River. The Missouri River subsequently became a corridor for exploration, settlement, and commerce in the nineteenth and early twentieth centuries, as navigation extended upstream from St. Louis to Fort Benton, Montana. Social values and goals in the Missouri River basin during this period reflected national trends and the preferences of basin inhabitants. Statehood, federalism, and regional demands to develop and control the river produced a physical and institutional setting that generated demands from a wide range of interests. The Missouri River ecosystem experienced a marked ecological transformation during the twentieth century. At the beginning of the century, the Missouri River was notorious for large floods, a sinuous and meandering river channel that moved freely across its floodplain, and massive sediment transport. However, by the end of the twentieth century, the Missouri River bore little resemblance to the previously wild, free-flowing river. Over time, demands for the benefits associated with the Missouri’s control and management resulted in significant and lasting physical and hydrologic modifications of the river. These modifications led to substantial changes in the river and floodplain ecosystem. Numerous reservoirs are scattered across the basin, with seven large dams and reservoirs located on the river’s mainstem. Ecological changes that accompanied changes in hydrology proceeded more slowly but were of a similar magnitude. Large floodplain areas along the upper Missouri were inundated by the reservoirs, and large areas of native vegetation communities in downstream floodplains were converted into farmland. Many native fish and avian species experienced substantial reductions, while nonnative species—especially fish—thrived in some areas. The rich biodiversity of the pre-regulated Missouri River ecosystem was sustained through a regime of natural disturbances that included periodic floods and attendant sediment erosion and deposition. These disturbances, in turn, supported a variety of ecological benefits, including commercial and recreational fishing, timber,

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making wild game, trapping and fur production, clean water, soil replenishment processes, and natural recharge of groundwater. Flow regulation and channelization substantially changed the Missouri River’s historic hydrologic and geomorphic regimes. The isolation of the Missouri River from its floodplain caused by river regulation structures has in many stretches largely eliminated the flood pulse and its ecological functions and services. As a result of these changes, the production and the diversity of the ecosystem have both markedly declined. For purposes of comparison, the major benefits of river regulation come from hydropower, water supply, and flood damage reduction, each of which has annual benefits measured in hundreds of millions of dollars. Recreation comes next, with annual benefits measured in tens of millions of dollars. Navigation follows, with annual benefits measured in millions of dollars. The value of ecosystem services that have been forgone in order to achieve other benefits is largely unknown. Today the Missouri River floodplain ecosystem consists of extensive ecosystems in and around the large reservoirs, open reaches of channel, and riparian floodplains. Some of these systems are recognized producers of recreational opportunities or agriculture. Some traditional ecosysems, particularly those representing the historical habitats of the pre-regulated Missouri, have been less well recognized for the social values provided through ecosystem services. Many ecosystem services, such as fish, game, and aesthetic values, are not monetized and are not traded in markets. They thus tend to be underappreciated and undervalued by the public and by decision-makers. SOURCE: NRC (2002b). Lakes, and no assessment was possible for the estuarine systems of Alaska, Hawaii, and other island territories. However, new ecological programs, both newly created and proposed, should permit a comprehensive and consistent assessment of all of the nation’s coastal resources by 2005. The NCCR used aggregate scores for a total of seven water quality indicators (water clarity, dissolved oxygen, coastal wetland loss, contaminated sediments, benthos, fish tissue contaminants, and eutrophic condition); 56 percent of assessed estuarine areas (representing more than 70 percent of the estuarine areas of the conterminous United States, excluding Alaska) were found to be in good condition for supporting aquatic life use (plant and animal communities) and human uses (e.g., water supply, recreation, agriculture). In contrast, 44 percent of the nation’s estuaries were characterized as impaired for human use (10 percent), aquatic life use (11 percent), or both (23 percent). In general, the nation’s coastal areas were rated as poor if the mean conditions for the seven indicators showed that more than 20 percent of the estuarine area in that region was degraded.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making BOX 3-4 Chesapeake Bay The Chesapeake Bay is the largest estuary in the United States and among the largest in the world. The watershed spreads over approximately 64,000 square miles, encompassing major portions of Pennsylvania, Maryland, and Virginia; all of the District of Columbia; and lesser portions of New York, West Virginia, and Delaware. It receives freshwater from six major rivers and has more than 2,000 square miles of relatively protected tidal waters. The bay has been prized by its human inhabitants for centuries for its ability to provide food, water, navigation, waste disposal, recreation, and aesthetic pleasures. The estuary supports extensive commercial and recreational fisheries for striped bass, menhaden, flounder, perch, and many others. Oyster, crab, and clam harvests have supported local fishermen for generations. In addition, important habitat is provided for sea turtles, sharks, rays, eels, whelks, and an enormous diversity of waterfowl. Hampton Roads located at the mouth of the bay in Virginia and Baltimore near the head of the bay in Maryland are among the nation’s largest ports. Hampton Roads is home to the world’s largest naval base, and both ports contain major international shipping terminals. Shipbuilding and repair are major industries in the regional economy. The value of commercial navigation in the bay is rivaled by the tremendous investment in recreational boating that operates from hundreds of marinas and thousands of private docks. The more than 20,000 miles of tidal shoreline in the system also provide highly desired home locations for many of the area’s residents. All of these benefits have led to intensive and continually increasing pressure on the ecosystem as human populations in the region have increased and subsequent use has escalated. One consequence has been emergence of the Chesapeake Bay as one of the most extensively studied estuaries in the world. Interest in the system has been driven by concern for declines in finfish and shellfish populations. These trends are recognized as the result of overharvesting, pollution, habitat destruction, and introduced diseases. The challenge of restoring the system’s productivity has motivated investment of millions of dollars of public funds through the Chesapeake Bay Program, a cooperative effort by states and the federal government to reduce impacts and improve conditions in the ecosystem. The extensive and complex array of stakeholder groups, commitments, and programs orchestrated under the umbrella of this program has become a model for similar efforts emerging in other large aquatic ecosystems. The current focus of the Chesapeake Bay Program is on reduction of nutrient, sediment, and toxic inputs to the system. This is being accomplished through the use of state-of-the-art simulation models, extensive monitoring, outreach and education, and a mix of regulatory and nonregulatory programs to design and implement best management practices throughout the watershed.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making Parallel efforts are under way to restore vital habitats such as wetlands, submerged aquatic vegetation, and oyster reefs; promulgate multispecies and ecosystem management plans; and control the impacts of continuing development. Estimates of the funding necessary to achieve restoration goals in the Chesapeake Bay extend into the tens of billions of dollars. This amount exceeds currently available resources by several orders of magnitude, creating unavoidable need to prioritize such efforts. To date, the incorporation of economic valuation in bay program management has been informal. Although cost-benefit analyses are implicit in almost every budget decision for Program activities, explicit use of economic assessments is not a characteristic of program management. SOURCE: Scientific and Technical Advisory Committee (2003). BOX 3-5 The Edwards Aquifer and Groundwater Recharge in San Antonio, Texas The Edwards Aquifer of central Texas is a highly permeable karst limestone on the edge of the Chihuahuan Desert. The average annual temperature is 20.5°C average annual precipitation is 28.82 inches. The annual recharge for the aquifer ranges from 44,000 to 2,000,000 acre-feet and averages 635,500 acre-feet per year. Thousands of springs flow from this groundwater source, including the largest springs in the state, and potable water is the primary use of the groundwater supply (Bowles and Arsuffi, 1993). Recharge of the aquifer has been monitored by the U.S. Geological Survey (USGS) since 1915, while water quality monitoring began in 1930. Currently, more than 1.7 million people rely on the Edwards Aquifer. However, recharge of the porous karstic limestone occurs primarily during wet years when precipitation infiltrates deeply into the soils and underlying rock. As a result, new laws were introduced that changed the legal basis of ownership from “right of capture” for a demonstrated “beneficial use” of the extracted water to a new approach based on prior appropriation (i.e., senior water rights). Concern increased as several springs (Comal, San Antonio, San Pedro) in the area began to dry up following a seven-year drought in the 1950s. Groundwater storage is critical in most aquatic ecosystems to provide persistent springs and streams during drought. Diverse microbial communities and a wide range of invertebrate

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making and vertebrate species live in groundwaters (Gibert et al., 1994; Jones and Mulholland, 2000). Their main ecosystem functions are breaking down organic matter and turning dead materials (detritus) into live biomass that is consumed in food webs. Thus, these species recycle nutrients and are important in secondary productivity. The trade-offs in extracting groundwater include possible loss of habitat for endemic species that are protected by state and federal regulations. For example, the Edwards Aquifer-Comal Springs ecosystem provides critical habitat for the Texas blind salamander (Crowe and Sharp, 1997; Edwards et al., 1989). Moreover, 91 species and subspecies of fish are endemic in this underground ecosystem (Bowles and Arsuffi, 1993; Culver et al., 2000; Longley, 1986). Several economic values of groundwater are associated with ecosystem services such as processing of organic matter by diverse microbes and invertebrates, providing possible dilution of some types of surface-originating contaminants, and sustaining populations of rare and endangered species that are often restricted to very local habitats (Culver et al., 2000). By 1970, new regulations were issued to protect water quality in the Edwards Aquifer. These new rules limited economic development within the recharge zone to balance the long-term average recharge rate with the extraction rate. This steady-state equilibrium, however, is often characterized by time lags in recharge and drought frequencies that complicate predictable levels of water supply. Other physical considerations include how much and what types of development occur without disrupting rapid infiltration of the recharge zone. Degradation of subsurface water quality as well as declines in rates of recharge occur when economic development increases the extent of impervious surfaces that, in turn, cause more rapid runoff and loss of infiltration during and after precipitation events. The increased surface area of roof tops, roads, parking lots, and so on changes stormwater and groundwater hydrology and water chemistry. As groundwater is depleted the cost for deeper drilling and pumping increases costs and can terminate or slow the rate of extraction. Thus, it is difficult to consistently define “overextraction.” The rate of extraction depends on future values relative to current values under specific alternative uses and climatic conditions (Custodio, 2002). The Texas legislature created the Edwards Aquifer Authority to control pumping and to reallocate water through market mechanisms (Kaiser and Phillips, 1998; McCarl et al., 1999; Schaible et al., 1999). This approach has reallocated water from lower economic uses (e.g., agricultural irrigation) to higher-valued uses (e.g., for domestic and industrial water supplies and environmental and recreational uses). Especially during dry years, it appears feasible for transfers from irrigation to offset demands for municipal water supplies. In 1997, farmers accepted an offer of $90 per acre prior to the cropping season in a pilot study of the Irrigation Suspension Program (Keplinger and McCarl, 2000; Keplin-

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making Continuing with the watershed example above, each wetland may have the capacity to accrete organic matter, sequestering carbon. However, the significance of this function for carbon cycles may not be realized at any scale less than all of the nation’s wetlands. Alternatively, the provision of suitable habitat for a rare plant may be regionally significant at the scale of a single wetland. Some generalizations regarding recognition of ecosystem services across scales may be possible (see Table 3-4 for one example). The problem is recognition of the thresholds at resolution sufficient to inform management and policy decisions. Knowing precisely the scale at which services can be realized is a practical challenge. Success in identification of these scale thresholds would increase opportunities for accurate recognition and appropriate economic valuation of ecosystem services. Another challenge in valuing ecosystem services across scales arises in attempts to aggregate such information. The complex nature of ecosystems means that many interrelationships and feedback loops may operate at scales above the level of individual service assessment. Protection of wetlands important as habitat for migrating waterfowl may be undermined by loss of wetlands at other critical points on the flyway. Restoration of wetlands as nursery grounds for fish along the Louisiana coast may be less successful if nutrient pollution in the Mississippi River degrades open water habitat for the adult populations. The implication is that aggregation of service values to larger scales or composite system evaluations will almost axiomatically misrepresent the processes at the TABLE 3-4 Examples of the Generation of Ecosystem Services at Different Scales for Aquatic Ecosystems Time or Space Scale (day) (meters) Aquatic Ecosystem Example of Ecosystem Service Scale at Which Service is Valued 10-6 to 10-5 Bacteria Nutrient uptake and production of organic matter Local/regional 10-3 to 10-1 Plankton Trophic transfer of energy and nutrients Local/regional 100 to 101 Water column and/or sediments, small streams Provision of habitat Local 102 to 104 Lakes, rivers, bays Fish and plant production Local/regional ≥105 Ocean basins, major rivers, and lakes Nutrient regulation, CO2 regulation Global   SOURCE: Adapted from Limburg et al. (2002).

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making target scale. This is a particularly difficult problem since it is assumed to exist and yet can be managed only by comprehensive knowledge of the system under study. The uncertainties associated with consideration of scale in assessment of ecosystem goods and services will only be resolved by continuing investigation of natural systems. At present the practical solution is upfront recognition of the potential for aggregation errors and careful framing of the assessment question. Explicit identification of the ecosystem goods and services being evaluated, careful definition of the scale at which those services are generally realized, and comparison to the scale of the assessment being undertaken can at least bound the valuation process and inform subsequent decisions. System Dynamics Natural systems are increasingly understood as dynamic constructs that may exist in a number of alternate states (also referred to as “regimes” or “domains of ecological attraction” depending on the terminology being used). A system may move, or “flip,” from one state to another if it passes a threshold of some controlling variable. The transition to an alternate state may be rapid or gradual, and may or may not reflect a change in the trajectory of the system. The concept of alternative states with boundary thresholds is used to explain the nonlinear behavior of natural systems. Indeed, examples of thresholds and regime shifts in aquatic ecosystems have been a significant part of the evolving understanding of nonlinear ecosystem behavior (Muradian, 2001; Scheffer and Carpenter, 2003; Scheffer et al., 2001; Walker and Meyers, 2004). Many ecosystems can persist in a particular state or regime for some time because they exhibit resistance or resilience. Resistance is measured by the capacity to withstand disturbance without significant change, while resilience is indicated by the capacity to return to the original state after perturbation toward an alternate state. Resilience was originally described by Holling (1978) and persists as an important concept in the analysis of social-ecological system dynamics today (Walker and Myers, 2004; Walker et al. 2004). The nonlinear system behavior that emerges in response to thresholds and regime shifts can be problematic for assessment of ecosystem services. Recognition of the points at which alternative behavior will emerge is difficult in many systems. (See Figure 3-1 for a conceptual representation of the nonlinear ecosystem response to stress.) As noted by Chavas (2000) “…ecosystem dynamics can be highly nonlinear, meaning that knowing the path of a system in some particular situation may not tell us much about its behavior under alternative scenarios.” An example of this type of behavior can be found in the waste assimilation and transport services of lakes, rivers, and estuaries. Increased nutrient loads in an aquatic ecosystem may simply increase productivity of the resident biota up to the point of harmful eutrophication. At that point, the high levels of primary

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making FIGURE 3-1 Value responses to stress under marginal (well-behaved dynamics) and nonmarginal (nonlinear, threshold dynamics) system behaviors. SOURCE: Reprinted, with permission, from Limburg et al. (2002) © 2000 by Elsevier. production overwhelm secondary production and decomposition processes, resulting in excessive accumulation of organic matter, depletion of oxygen in the water column, and a change in the trophic structure. The change can represent a new and undesirable condition that may persist even if nutrient loads are reduced (see Carpenter, 2003; Carpenter et al., 1998). From the perspective of ecosystem service assessment, waste assimilation may still be occurring, but habitat services, recreational services, and maintenance of biodiversity may all be significantly changed. The point at which this abrupt shift in services occurs may be controversial and unpredictable. In some circumstances the abrupt shift, or flip to an alternate regime in state may be part of a hysteretic system behavior. In this case the stress threshold that generated the response may be significantly higher than the stress threshold that will allow a recovery. This type of response can be found in many dense and highly productive aquatic communities, such as seagrass beds (Batuik et al., 2000). Often these communities can tolerate significant levels of physical stress simply because there are a sufficient number of individuals to moderate physical conditions inside the community and enough reproductive potential to offset the

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making continual losses. When the physical stresses surpass a community’s capacity to withstand them, reestablishment can often succeed only in conditions significantly less stressful than the robust community could tolerate (Molles, 2002). In essence, the recovery threshold differs from the impact threshold such that the state of the system will lag in response to changes in controlling forces. Cascading effects are another example of ecosystem dynamics that can be difficult to predict (Molles, 2002). Harvest of top-level predators can result in increases in lower-level predators, decreases in herbivore prey, and resultant changes in vegetation. Alterations in river flows can change the timing of nutrient introductions to downstream waterbodies, resulting in modified phytoplankton and zooplankton communities, and culminating in shifts in habitat quality for higher-trophic-level fish communities. There is considerable ongoing research to define thresholds and develop indicators of system condition that will assess proximity of thresholds. While understanding of these system dynamics continues to expand, this knowledge can inform assessment of ecosystem functions only if the assessment occurs at appropriate spatial and temporal scales, and appropriate spatial and temporal scales can be identified only if the dynamics are already understood. In the face of this apparent conundrum the practical solution to the need to complete an assessment of ecosystem function and/or provision of services is to proceed with caution. Observations of a system’s behavior through time are an obvious first step, but such monitoring data can only confirm the existence of nonlinear behavior, not prove its absence. Simply considering the possibilities for threshold responses may be adequate to inform some assessments, and is certainly preferable to ignoring the issue. Intrinsic Values Many people believe that ecosystems have value quite apart from any human interest in explicit goods or services (see Chapter 2 for further information). The fact that ecosystems exhibit emergent behaviors and operate to sustain themselves is sufficient to argue that they have value to their components. Although comprehending this intrinsic value does not trouble most individuals, assessing it is problematic. Farber et al. (2002) state, “As humans are only one of many species in an ecosystem, the values they place on ecosystem functions, structures and processes may differ significantly from the values of those ecosystem characteristics to species or the maintenance (health) of the ecosystem itself.” Incomplete Knowledge Comprehensive valuation of aquatic ecosystems should be viewed as a practical improbability. The assumption that our knowledge is imperfect is at

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making the root of the concern for aggregation of assessments to larger scales and composite valuation of whole ecosystems. As a consequence, unforeseen behaviors and services are anticipated, and valuations are automatically caveated with concern for the state of the science. This does not imply no ecosystem valuation can be accomplished, simply that comprehensive valuation should not be presumed. Many decisions using economic or other valuation techniques can be made without a comprehensive assessment of ecosystem goods and services An example of how the state of our understanding can impact the capacity to value an ecosystem service involves the relationship between biodiversity and aquatic ecosystem functions. In efforts to identify ecosystem services, researchers typically acknowledge the importance of habitat functions for maintenance of biodiversity. For some time, high biodiversity was assumed to confer some inherent resistance and/or resilience to a system, allowing it to sustain performance of other valued services in the face of disturbance. However, researchers are not of a single mind about the nature of the relationship between biodiversity and ecosystem functioning (e.g., Duarte, 2000; Ghilarov, 2000; Hulot et al., 2000; Schwartz et al., 2000; Ulanowicz, 1996). It can be difficult, if not impossible, therefore to accurately assess the importance of any particular ecosystem’s contribution to maintenance of biodiversity, or conversely the role of biodiversity in the functioning of the ecosystem. Another area in which a lack of comprehensive knowledge limits full recognition of services provided by aquatic ecosystems is the continual growth in the number of ways humans can use aquatic resources. The continually expanding lists of medicinal and industrial products found in aquatic ecosystems provide obvious examples, while the evolving number of aquatic recreational activities is another. The point is that the list of services is not determined entirely by the suite of natural functions in aquatic ecosystems, but also by human ingenuity in deriving benefits. SUMMARY: CONCLUSIONS AND RECOMMENDATIONS In review and discussion of the state of the science in the identification of aquatic ecosystem functions and their linkage to goods and services, the committee arrived at several specific conclusions: Ecologists understand the uncertainties in ecosystem analysis and accept them as inherent caveats in all discussions of system performance. As the committee pursued its charge, the problems of developing an interdisciplinary terminology and/or a universally applicable protocol for valuing aquatic ecosystems were illuminated, but ultimately identified as unnecessary objectives. From an ecological perspective, the value of specific ecosystem functions/services is entirely relative. The spatial and temporal scales of analysis are critical determinants of potential value.

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making Potentially useful classification and inventories of aquatic ecosystems as well as their functional condition exist at both regional and national levels, though the relevance of these classification and inventory systems to assessing and valuing aquatic ecosystems is not always clear. Ecologists have qualitatively described the structure and function of most types of aquatic ecosystems. However, the complexity of ecosystems remains a barrier to quantification of these features, particularly their interrelationships. General concepts regarding the linkages between ecosystem function and services have been developed. Although precise quantification of these relationships remains elusive, the general concepts seem to offer sufficient guidance for valuation to proceed with careful attention to the limitations of any ecosystem assessment. Many, but not all, of the goods and services provided by aquatic ecosystems are recognized by both ecologists and economists. These goods and services can be classified according to their spatial and temporal importance. Complex ecosystem dynamics and incomplete knowledge of ecosystems will have to be resolved before comprehensive valuation of ecosystems is tractable, but comprehensive ecosystem valuation is not generally essential to inform many management decisions. Further integration of the sciences of economics and ecology at both intellectual and practical scales will improve ecologists’ ability to provide useful information for assessing and valuing aquatic ecosystems. There remains a significant amount of research and work to be done in the ongoing effort to codify the linkage between ecosystem structure and function and the provision of goods and services for subsequent valuation. The complexity, variability, and dynamic nature of aquatic ecosystems make it likely that a comprehensive identification of all functions and derived services may never be achieved. Nevertheless, comprehensive information is not generally necessary to inform management decisions. Despite this unresolved state, future ecosystem valuation efforts can be improved through use of several general guidelines and research conducted in the following areas: Aquatic ecosystems generally have some capacity to provide consumable resources (e.g., water, food); habitat for plants and animals; regulation of the environment (e.g., hydrologic cycles, nutrient cycles, climate, waste accumulation); and support for nonconsumptive uses (e.g., recreation, aesthetics, research). Considerable work remains to be done in documentation of the potential that various aquatic ecosystems have for contribution in each of these broad areas. Delivery of ecosystem goods and services occurs in both space and time. Local and short-term services may be most easily observed and documented, but the less intuitive accumulation of services over larger areas and time

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Valuing Ecosystem Services: Toward Better Environmental Decision–Making intervals may also be significant. Alternatively, services that are significant only when performed over large areas or long time intervals may be beyond the capacity of some ecosystems. Investigation of the spatial and temporal thresholds of significance for various ecosystem services is necessary to inform valuation efforts. Natural systems are dynamic and frequently exhibit nonlinear behavior. For this reason, caution should be used in extrapolation of measurements in both space and time. Although it is not possible to avoid all mistakes in extrapolation, the uncertainty warrants explicit acknowledgment. Methods are needed to assess and articulate this uncertainty as part of system valuations. REFERENCES Batuik, R.A., P. Bergstrom, M. Kemp, E. Koch, L. Murray, J.C. Stevenson, R. Bartleson, V. Carter, N.B. Rybicki, J.M. Landwehr, C. Gallegos, L. Karrh, M. Naylor, D. Wilcox, K.A. Moore, and S. Ailstock. 2000. Chesapeake Bay Submerged Aquatic Vegetation Water Quality and Habitat-Based Requirements and Restoration Targets: A second technical synthesis. Annapolis, Md.: U.S. Environmental Protection Agency, Chesapeake Bay Program. Berkes, F., J. Colding, and C. Folke (eds.). 2003. Navigating Social-Ecological Systems: Building Resiliency for Complexity and Change. Cambridge, U.K.: Cambridge University Press. Bowles, D.E., and T.L. Arsuffi. 1993. Karst aquatic ecosystems of the Edwards Plateau region of central Texas, USA—A consideration of their importance, threats to their existence, and efforts for their conservation. Aquatic Conservation-Marine and Freshwater Ecosystems 3:317-329. Brinson, M.M. 1993. A Hydrogeomorphic Classification for Wetlands. U.S. Army Corps of Engineers, Wetlands Research Program Technical Report WRP-DE-4. Vicksburg, Miss.: U.S. Corps of Engineers. Busch, W.D.N., and P.G. Sly. 1997. The Development of an Aquatic Habitat Classification System for Lakes. Boca Raton, Fla.: CRC Press. Carpenter, S.R. 2003. Regime Shifts in Lake Ecosystems: Pattern and Variation. Book 15 in the Excellence in Ecology Series. Ecology Institute: Olendorf/Luhe, Germany. Carpenter, S., N. Caraco, D.L. Correll, R.W. Howarth, A.N. Sharpley, and V.H. Smith. 1998. Nonpoint pollution of surface waters with phosphorus and nitrogen. Ecological Applications 8:559-568. Chang, C., and R.C. Griffin. 1992. Water marketing as a reallocative institution in Texas. Water Resources Research 28:879-890. Chavas, J. 2000. Ecosystem valuation under uncertainty and irreversibility. Ecosystems 3:11-15. Chen, C.C., D. Gillig, and B.A. McCarl. 2001. Effects of climatic change over a water dependent regional economy: A study of the Texas Edwards Aquifer. Climatic Change 49:397-409. Cowardin, L.M., V. Carter, F.C. Golet, and E.T. LaRoe. 1979. Classification of Wetlands and Deepwater Habitats of the United States. FWS/OBS-79/31. Corvallis, Ore.: U.S. Fish and Wildlife Service. Crowe J.C., and J. M. Sharp, Jr. 1997. Hydrogeologic delineation of habitats for endangered species—The Comal Springs/River system: Berlin. Environmental

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