Summary

On April 20, 2010, the Deepwater Horizon (DWH) platform drilling the Macondo well in Mississippi Canyon Block 252 exploded, killing 11 workers and injuring another 17. The DWH oil spill resulted in nearly 5 million barrels (approximately 200 million gallons) of crude oil spilling into the Gulf of Mexico (GoM). The full impacts of the spill on the GoM and the people who live and work there are unknown but expected to be considerable, and will be expressed over years to decades. In the short term, up to 80,000 square miles of the U.S. Exclusive Economic Zone were closed to fishing, resulting in loss of food, jobs, and recreation.

The DWH oil spill immediately triggered a process under the U.S. Oil Pollution Act of 1990 (OPA) to determine the extent and severity of the “injury” (defined as an observable or measurable adverse change in a natural resource or impairment of a natural resource service) to the public trust, known as the Natural Resource Damage Assessment (NRDA). The assessment, undertaken by the trustees (designated technical experts who act on behalf of the public and who are tasked with assessing the nature and extent of site-related contamination and impacts), requires (1) quantifying the extent of damage; (2) developing, implementing, and monitoring restoration plans; and (3) seeking compensation for the costs of assessment and restoration from those deemed responsible for the injury. The goal of this effort is to “make the environment and the public whole for the injuries to natural resources and services” (NOAA, 1996). The services referred to are the benefits that people receive from the resources.

Historically, damage assessments have measured losses in ecological terms (e.g., number of acres damaged or number of fish killed) and restoration generally follows a methodology of equivalency wherein losses are compensated by the replacement of resources of the same type (e.g., acres of habitat restored or fish stocks replaced). The injuries to the ecosystem and the services it provides are quantified by comparisons to baselines when



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Summary On April 20, 2010, the Deepwater Horizon (DWH) platform drilling the Macondo well in Mississippi Canyon Block 252 exploded, killing 11 workers and injuring another 17. The DWH oil spill resulted in nearly 5 million barrels (approximately 200 million gallons) of crude oil spilling into the Gulf of Mexico (GoM). The full impacts of the spill on the GoM and the people who live and work there are unknown but expected to be consider- able, and will be expressed over years to decades. In the short term, up to 80,000 square miles of the U.S. Exclusive Economic Zone were closed to fishing, resulting in loss of food, jobs, and recreation. The DWH oil spill immediately triggered a process under the U.S. Oil Pollution Act of 1990 (OPA) to determine the extent and severity of the “injury” (defined as an observable or measurable adverse change in a natural resource or impairment of a natural resource service) to the public trust, known as the Natural Resource Damage Assessment (NRDA). The assessment, undertaken by the trustees (designated technical experts who act on behalf of the public and who are tasked with assessing the nature and extent of site-related contamination and impacts), requires (1) quanti- fying the extent of damage; (2) developing, implementing, and monitoring restoration plans; and (3) seeking compensation for the costs of assessment and restoration from those deemed responsible for the injury. The goal of this effort is to “make the environment and the public whole for the injuries to natural resources and services” (NOAA, 1996). The services referred to are the benefits that people receive from the resources. Historically, damage assessments have measured losses in ecological terms (e.g., number of acres damaged or number of fish killed) and resto- ration generally follows a methodology of equivalency wherein losses are compensated by the replacement of resources of the same type (e.g., acres of habitat restored or fish stocks replaced). The injuries to the ecosystem and the services it provides are quantified by comparisons to baselines when 1

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2 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO possible. In some instances, the assessment of injuries has been straightfor- ward because the service products are well characterized in the economic marketplace (e.g., the income loss from the closure of a particular fishery). However, the connections between many service products and ecosystem condition have not been well characterized. In other cases, baseline data may not exist (e.g., hydrocarbon levels in marsh sediments) or baseline eco- logical data may be available but without an assessment of services (e.g., acreage of wetlands may be known, but not the value to fisheries). Ecosystem services describe the benefits people receive from a mul- titude of resources and processes that are provided by ecosystems. They are produced as a consequence of the functioning of the ecosystem—the interactions of plants, animals, and microbes with the environment—and are ubiquitous and immensely valuable to society. They include • provisioning services or the material goods provided by ecosystems (often simplified to food, feed, fuel, and fiber); • regulating services (e.g., climate regulation, flood control, water purification); • cultural services (e.g., recreational, spiritual, aesthetic); and • supporting services (e.g., nutrient cycling, primary production, soil formation). The magnitude and depth of the DWH event, in concert with the com- plexity of the GoM ecosystem and the difficulties in establishing baseline values, pose serious challenges to the trustees charged with carrying out the NRDA process, which has historically been applied to shallow-water events of much more limited extent and scale. Recent studies suggest that an “ecosystem services approach” may expand the potential to capture, value, and restore the full breadth of impacts to the ecosystem and the public. Recognition of the unprecedented nature of the DWH spill and concerns about both short- and long-term impacts on the GoM and its citizens were immediate and international in scope. Among the many concerned with the fate of the GoM and its communities were members of the U.S. Congress, who requested a study by the National Academy of Sciences to assess the impacts of the DWH spill on the natural resources of the Gulf. A commit- tee made up of 16 members representing a broad range of disciplines was formed in January 2011 and met twice in early 2011. To provide advice to the federal agencies during their preparation of the NRDA, the committee was asked to produce an interim report that covers questions 1 through 3 of the Statement of Task (Box S.1). A final report, encompassing the interim report and including questions 4 through 8, will be delivered in the spring of 2013.

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3 SUMMARY BOX S.1 STATEMENT OF TASK Interim Report questions: 1. What methods are available for identifying and quantifying various ecosystem services? What are the spatial and temporal scales condu- cive to research, that provide meaningful information for the public and decision makers? 2. What methods and types of information can be used to approximate baselines (but for the spill) for distinguishing effects on ecosystem services specific to the spill? 3. What kinds of valuation methods are appropriate for measuring eco- system services over time with regard to recovery under the follow- ing approaches: natural processes, mitigation, and restoration efforts? What baseline measures are available that would provide benchmarks for recovery and restoration efforts? Final Report questions: 4. What ecosystem services (provisioning, supporting, regulating, and cultural services) were provided in the Gulf of Mexico Large Marine Ecosystem prior to the oil spill? How do these differ among the subre- gions of the Gulf of Mexico? 5. In general terms, how did the spill affect each of these services, and what is known about potential long-term impacts given the other stresses, such as coastal wetland loss, on the Gulf ecosystem? 6. How do spill response technologies (e.g., dispersant use, coastal berm construction, absorbent booms, in situ burning) affect ecosystem services, taking into account the relative effectiveness of these tech- niques in removing or reducing the impacts of spilled oil? 7. In light of the multiple stresses on the Gulf of Mexico ecosystem, what practical approaches can managers take to restore and increase the resiliency of ecosystem services to future events such as the Deep- water Horizon Mississippi Canyon-252 spill? How can the increase in ecosystem resiliency be measured? 8. What long-term research activities and observational systems are needed to understand, monitor, and value trends and variations in ecosystem services and to allow the calculation of indices to compare with benchmark levels as recovery goals for ecosystem services in the Gulf of Mexico?

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4 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO This report is not intended as a review of the ongoing damage assess- ment. There is a tremendous amount of important work under way to sup- port the NRDA for the DWH spill; hence a review of this effort would be premature and inappropriate at this time. Instead, the report provides options for expanding the current effort to include the analysis of ecosystem services to help address the unprecedented scale of this spill in U.S. waters and the challenges it presents to those charged with undertaking the damage assess- ment. The Statement of Task highlights “ecosystem services” as an approach for assessing impact and estimating the value of losses due to injury. Such an approach focuses not only on the restoration of damaged resources (as per NRDA practice) but also on reestablishing the value of those resources to the public. This broader view may be particularly useful in capturing the full spectrum of impacts from this event given the magnitude, duration, depth, and complexity of the DWH spill. KEY FINDINGS OF INTERIM REPORT Environmental Context for the Gulf of Mexico The Gulf of Mexico is remarkably rich and complex and provides a wealth of ecosystem services including tourism worth an estimated $19.7 billion per year, storm surge protection by coastal wetlands, habitat for mi- grating waterfowl, cycling of nutrients from river discharges, and the unique cultural heritage of coastal communities. In 2008, the GoM accounted for approximately 25 percent of the seafood provided by the contiguous United States. The GoM also provides 29 percent of the oil and 13 percent of the natural gas produced in the United States. The impacts from these societal demands on these critical ecosystem services have often led to the degrada- tion of the health and resilience of the GoM ecosystem. The unprecedented depth, application of dispersants at the well head, and tremendous volume of oil in the DWH spill complicate the assessment of potential impacts on the deepwater ecosystems of the Gulf, a relatively unstudied realm of abundant marine life including bottom-dwelling fish, deepwater corals, and chemosynthetic communities. To fully quantify the impact of the oil spill thus requires a thorough understanding of the complex interactions and linkages between and among the various components and processes of these ecosystems. Modification of the GoM ecosystem by a number of human activities makes it more difficult to isolate impacts associated with the DWH spill. In addition to the long-term impacts of the oil and gas industry, there has

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5 SUMMARY been a tremendous loss of coastal wetlands, in part due to flood control and navigation projects. Massive “dead zones” of oxygen-depleted water, which may cover thousands of square miles of the Gulf seafloor, form each year as a consequence of plankton blooms stimulated by nutrients from fertilizers used by farmers in the Mississippi watershed. Finding S.1: The Gulf of Mexico comprises a large, complex ecosystem that has been and continues to be subject to both natural and human forces of change. Hence, the baselines against which the impact of the spill can be assessed are both spatially and temporally dynamic. Approaches to Assessment and Valuation of Ecosystem Services The National Oceanic and Atmospheric Administration (NOAA) has developed and used well-recognized and tested methods for assessing injury or impact to natural resources. A simplified summary of these approaches and the data collected to support them is presented in the columns labeled “Damage Assessment Practice” in Table S.1. Under typical practice, losses are generally measured in ecological terms (e.g., number of acres dam- aged) rather than in terms of losses in the value of ecosystem services. The losses are then used to assess the damages (the debit) to the relevant natural resources. In most cases, those damages (or the debit) translate directly to, or can be scaled to, potential restoration projects that generate “credit” suf- ficient to offset the debit. For most NRDA cases, estimating or scaling the restoration requirements generally follows equivalency approaches wherein losses of resources can be compensated with replacements of the same type. Habitat Equivalency Analysis (HEA) measures damages in terms of the number of acres damaged. Resource Equivalency Analysis (REA) focuses mainly on assessing injury to specific organisms rather than on the amount of habitat and is frequently applied in oil spill cases. These equivalency approaches also focus more on the implicit value of the habitat or the organism in an ecological sense rather than the ultimate value of the resource to humans. Restoration thus could be in terms of the acres of habitat that need to be restored, the numbers of wildlife that need to be reintroduced, or other suitable projects allowed under the statute and regulations. Under NRDA, if damages do not trans- late readily into a particular restoration project, or if restoration projects in proximity to the injury are not readily available, funds may be provided as compensation and applied at a later date when a suitable restoration project is identified. In general, the equivalency approaches (HEA and REA) can be

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6 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO TABLE S.1 Provision and Valuation for the Services of Hazard Moderation, Food, and Recreation Methodology for the Provision and Valuation of the Damage Assessment Practices Ecosystem Services Approach Type of data needed for Typical approach ecological production Data category Resource to the assessment Ecosystem service function Biological Wetland Determine Hazard Moderation A. Plant type (or species), exposure (reduction in storm height and density. pathways and surges; see Box 4.1). B. Percentage of area likely spatial extent to experience acute of vegetation toxicity and die off. oiled; collect and C. Cross-shore and along- document any shore extent of wetland dead or oiled harmed. wildlife. D. Estimates of ability of the wetland to reestablish with and without human intervention. Food 1. Measures of fishery (commercial fisheries). landings. 2. Measures of fishery stock and recruitment. 3. Estimates of the ability of wetlands to reestablish with and without human intervention. Recreation 1. Measures of fishery (recreational fisheries). landings. 2. Measures of fishery stock and recruitment. 3. Estimates of the ability of wetlands to reestablish with and without human intervention.

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7 SUMMARY Type of data needed for Ecological production Type of data needed for valuation of ecosystem function valuation Valuation method service 1. Relationship between 1. Location of structures, Avoided cost: calculate 1. Data on (A), (C), and plant type, height, infrastructure, the expected damages (D). Data on wetland density, and areal agriculture, etc. near associated with storm extent and amount oiled extent of vegetation the coast. surge. would be collected in a and reduction of 2. Value of structures, standard NRDA but other The value of the wave energy and infrastructure. data would likely not be. ecosystem service is storm surge. 2. Building the functional equal to the reduction relationships to translate in expected damages. from data on plant type, height, density, and extent to likely height of storm surge. This may be done via empirical relationships and/or modeling. 3. Building the functional relationship that translates height of storm surge to expected damage. 1. Relationship 1. Market price of Market valuation: 1. Data on (B) and (C). between wetland commercial fish. calculate profit from 2. Building the functional condition and fishery 2. Fishing cost per unit fishing. Use market price relationship between productivity. effort (capital, labor, and harvest data to wetland condition and fuel). calculate revenue. Use fishery productivity. cost data along with This may be done via revenue calculation to empirical relationships calculate profit. and/or modeling. 1. Relationship 1. Survey information Travel cost. Use 1. Data on (2) and (3). between wetland on fishing trips. information on 2. Building the functional condition and fishery recreation trips, time relationship between productivity. and resource costs wetland condition and of trips to calculate fishery productivity. willingness-to-pay for This may be done via recreational fishing trips. empirical relationships and/or modeling. 3. Estimation of value using travel cost (random utility model).

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8 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO thought of as attempting to make the environment whole in the sense that habitat areas or populations of species have been restored. However, this approach to restoration does not necessarily make the public whole in terms of ecosystem services. Finding S.2: Habitat and resource equivalency approaches may not capture the whole value provided by large ecosystems such as the Gulf of Mexico because of the complex long-term interactions among ecosystem components. Of particular concern is the potential for chronic impacts of oil on important natural resources that are not manifested or identified during the injury assessment, nor accounted for in the scaling of the restoration. In this situation, the impacts may not be evident for several years and may require additional human intervention and restoration for mitigation. Finding S.3: The spatial and temporal scales of the DWH spill and the complexity of the GoM ecosystem make it unlikely that all important long-term impacts can be identified during the initial injury assessment. There is growing recognition that what is needed for informed manage- ment and policy decision making are measures that link human actions to likely changes in ecosystems and that link changes in ecosystems to conse- quent changes in human well-being. Ecosystem services, the benefits that people receive from ecosystems, provide this link between ecosystem condi- tions and human well-being. An analysis of how changes in management or in environmental conditions affect the provision of ecosystem services, and the consequent benefits to people, facilitates the comparison of management interventions and changes in environmental conditions and can be used to estimate the impacts of these changes in terms of value to society. Thus an “ecosystem services approach” that focuses not only on the restoration of damaged resources but also on establishing and maintaining the usefulness of those resources to the public may also offer a useful tool for assessing the impact of disasters on the environment. Finding S.4: Habitat and resource equivalency approaches could be broadened to include an ecosystem services approach by consideration of the extent to which affected areas or resources generate benefits to the public. It may be possible, however, to include the impact on human benefit in equivalency approaches. For example, the limitation of HEA in the context of making the public or environment whole could be addressed by expanding

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9 SUMMARY the definition for one of the more frequently used equivalency metrics—the Service Acre Year (the ecological service provided by one acre of habitat per year where the flow of the service is to another ecological resource)—as the currency by which the value of a habitat is judged. Finding S.5: A more comprehensive assessment of the overall value of the resources could be obtained by expanding the definition of the Service Acre Year to include services that flow from a habitat or ecological resource to human benefits. An ecosystem services approach could also help relieve what might be called the NRDA “restoration bottleneck.” OPA provides incentives for the NRDA trustees to collect monetary damages from a responsible party to the extent that the trustee can conceive of feasible and productive restoration, rehabilitation, replacement, or acquisition projects. In practice, trustees, the public, and the responsible party often struggle to identify and develop a mutually acceptable project prior to the time of settlement, creating a “bottleneck.” Finding S.6: An ecosystem services approach has the potential to ex- pand the array of possible projects for restoration through alternatives that restore an ecosystem service independently of identification of an equivalent habitat or resource, albeit with the caveat that these proj- ects must in aggregate make the environment and the public whole. Evaluation of the impacts on ecosystem services as part of the damage assessment process would expand the range of mitigation options. The dynamic nature of ecosystems, composed of interactive complexes of species and their physical environment, challenges any type of assess- ment process and is even more challenging for a damage assessment of an event with the scope and duration of the DWH spill. Measuring such a change requires estimating the difference in provision and value of ecosystem services after the spill compared to the pre-spill, or baseline, conditions. Methods to Establish Baselines for Gulf of Mexico Ecosystem Services An assessment of the impact of an event like the DWH spill requires comparison with conditions in place before the event. In the language of the NRDA process, injuries are quantified by comparing conditions of the injured resource or service to baseline data. The establishment of baseline

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10 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO conditions for a region as vast and complex as the GoM, however, is a daunting task. The physical, chemical, and biological environments of the GoM are not constant. There are natural variations in meteorological and hy- drologic conditions that lead to changes in sea surface temperatures, water currents, and flood conditions. These, in turn, lead to changes in chemical and ecological conditions. Assessment in light of these natural processes is further complicated by anthropogenic changes to the environment from construction of levees for storm protection, dredging of waterways for ship passage, construction of permanent infrastructure for oil and gas extrac- tion, and use of fertilizers and pesticides on agricultural fields throughout the associated watersheds. Because ecosystem services in the GoM were already degraded prior to the spill, establishing realistic baselines will be essential in order to distinguish the effects of the oil spill from other prior and concurrent activities. Our discussion of baselines is focused on representative examples of ecosystem services important to the GoM (Hazard Moderation and Hydro- logical Balance representing regulating services; Soil and Sediment Balance and Water Quality representing support services; Food; Oil and Gas for provisioning services; and Spiritual, Aesthetic, Historic, Existence, Recre- ation and Tourism representing cultural services). The discussion highlights examples of key parameters that have been or can be measured to ascertain GoM ecosystem services prior to the DWH oil spill. These examples may be used as a guideline for how to approach the complex problem of deter- mining changes in ecosystem services following the DWH spill. For each service, a brief description of the current state of knowledge is provided, followed by a description of the primary parameters that can be measured and the state-of-the art methods for conducting the measurements. Where possible, references have been provided to databases and publications that may contain relevant information for comparison of ecosystem services before and after the spill. Some of these ecosystem services are understood better than others, as reflected in the variation in the depth of discussion for the different sections that are covered. An Ecosystem Services Approach to Damage Assessment The ecosystem services approach requires understanding of three im- portant links: • Determining the impact of human actions on environmental condi- tions that affect the structure and function of the ecosystem;

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11 SUMMARY • Establishing how changes in the structure and function of the eco- system lead to changes in the provision of ecosystem services. This is done through the establishment of ecological production functions—a quantification of the internal processes of the ecosys- tem; and • Establishing how changes in the provision of ecosystem services affect human well-being, e.g., how can they be valued? Impact of Human Actions on the Structure and Function of the Ecosystem The damage assessment process historically used by NOAA includes widely used and accepted methods for assessing injury or impact to natural resources. The initial steps in assessment of injury involve sampling and analysis of various components of the ecosystem (see columns labeled “Damage Assessment Practice” in Table S.1). Thousands of samples have already been taken and analyses performed, and research and sampling continues through the NRDA process, by academic researchers, the trustees, and by BP and its contractors. In order to extend the damage assessment practice to include an eco- system services approach, each ecosystem service would require a specific type of sampling and analysis that complements the existing practice. An example of this extended sampling for coastal protection and fisheries is presented in the columns labeled “Ecosystem Services,” “Type of Data Needed for Ecological Production Function,” and “Ecological Production Function” in Table S.1. Finding S.7: Additional sampling and analyses could facilitate an eco- system services approach by identifying the impacts on ecosystem function and structure that in turn affect the ecosystem services pro- vided. The collection of these additional data would set the framework for establishing the impact of the spill on ecosystem services. Ecological Production Functions Once the impact on ecosystem function and structure is established, the second step in the ecosystem services approach is the determination of Ecological Production Functions. An Ecological Production Function speci- fies the output of ecosystem services generated by an ecosystem given its current condition. Changes in ecosystem conditions, either from natural

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12 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO disturbances such as hurricanes, or from human interventions, will in gen- eral alter the amount of various services provided. For some ecosystem services, ecological production functions are fairly well understood and data exist that can be used to quantify the amount of a service provided. For many other ecosystem services, there is either a lack of mechanistic understanding, a lack of data, or both that inhibits accurate quantification of ecosystem services as a function of ecosystem condition. Moreover, the complexity of marine ecosystems makes it difficult to understand how disturbances to an ecosystem will reverberate through the system and ultimately lead to changes in the provision of ecosystem services. A further complication in predicting the provision of ecosystem services arises from the high level of environmental variability characteristic of many coastal and marine ecosystems. Models for specific ecosystem services (e.g., food from commercial fisheries) or components of the ecosystem (e.g., wetlands) are more read- ily available and applied. Examples are given in Table S.1 of the types of additional measurements and analyses that could be made to extend the damage assessment process to incorporate ecological production functions and ecosystem services in particular environments. A mechanistic understanding of, and model for, the complex linkages and interdependencies of the ecosystem being studied would be of immense value in analyzing ecosystem services. However, a complete ecosystem model is not essential to derive predictive models focused on the provision of specific ecosystem services. Focused models would allow for prediction of the restoration of ecosystem services given the state of the ecosystem (i.e., the ecological production function). In general, establishing models of ecological production functions is perhaps the greatest challenge facing the application of an ecosystem services approach for damage assessment. Utilizing the extensive data that have been collected for the NRDA process and the existing ecosystem models for the GoM presents a unique oppor- tunity for enhancing our understanding of ecological production functions and the provision of ecosystem services in the GoM. Finding S.8: Measurements and analyses such as illustrated in Table S.1 would allow for the determination of the impact of the DWH spill related to the ecosystem function and structure of coastal wetlands and to quantify the impact on key ecosystem services. Further research is needed to determine what measurements are required to assess other ecosystem services and habitats.

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13 SUMMARY Approaches to Valuing Ecosystem Services The third component of the ecosystem services approach focuses on establishing the value of ecosystem services—the final step in understanding and quantifying impact. Economics provides a well-developed approach based on the theory of welfare economics to measure values. To assess the value of changes in ecosystem services from environ- mental impacts such as an oil spill, economic valuation methods need to be combined with ecological assessments of impacts. Analysis of impacts on the supply of services combined with economic valuation methods can generate estimates of the value of changes in ecosystem services as a result of environmental changes. Three main types of economic valuation methods applied to ecosystem services are as follows: • Revealed preference based on observed economic behavior. These methods include direct market valuation (amount of goods bought and sold and individuals’ willingness-to-pay) and non-market ap- proaches using observed behavior like “travel-cost” studies and “hedonic” property pricing methods that use a range of data on property characteristics to predict property price as a function of changes in parameters that can affect property value; • Stated preference based on responses to survey questions, which includes the “contingent valuation method” that surveys people’s willingness-to-pay for ecosystem services, “conjoint analysis,” and “attribute-based stated choice approach” in which respondents rank alternative scenarios with different environmental attributes; and • Cost-based methods, which look at information about costs rather than trying to estimate benefits. Two commonly used cost-based methods are “avoided damages,” which looks at likely damages to be caused with and without environmental protection; and “re- placement cost,” which estimates the cost of providing the service in an alternate way. Many economists are skeptical about the use of cost-based methods for ecosystem services because they focus on cost rather than benefits, but this approach may be appropriate in certain situations. Finding S.9: Both market and non-market approaches to valuing eco- system services have become accepted and established practice over the past two decades since the Exxon Valdez oil spill. When appropri- ately applied, these techniques can generate valid estimates of value for ecosystem services lost due to human-caused and natural events.

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14 APPROACHES FOR ECOSYSTEM SERVICES VALUATION FOR THE GULF OF MEXICO Valuation Methods Applied to the Gulf of Mexico Building on our example of key ecosystem services provided by wet- lands (storm protection and fisheries) we now extend our analyses to include methods for valuing ecosystem services (see the columns labeled “Type of Data Needed for Valuation,” “Valuation Method,” and “Type of Data Needed for Valuation of Ecosystem Service” in Table S.1). Please note, the examples shown in Table S.1 are meant to illustrate how an ecosystem services approach could be incorporated into the existing NRDA process; they are not intended to capture the full complexity of the three component steps involved in the ecosystem services approach or the ongoing NRDA process. With respect to valuing other ecosystem services, the theoretical founda- tions and the practical application of both revealed and stated preference approaches are well grounded in a rich literature. Cost-based approaches do not have the same grounding. Nonetheless, an avoided damages cost-based approach may be useful in estimating the value of coastal protection in the GoM. Travel cost approaches are most commonly used for measuring the value of recreational opportunities. Hedonic property price studies could be used to measure changes in values to coastal communities as a result of the DWH oil spill, but their use is limited to capturing only the impacts felt by property owners in coastal communities. Stated preference methods can be used for virtually any ecosystem service, including nutrient regulation, hazard moderation, and erosion control, but careful attention needs to be paid to survey design to get reliable answers to valuation questions. These issues will be examined further in the final report. Finding S.10: Primary research on the values of ecosystem services would provide additional grounding for the DWH damage assessment. CONCLUSION It will take many years to fully understand the long-term effects and impacts of the DWH oil spill, but much effort is being expended to as- sess the damages caused by the event and to estimate the value of these damages so that appropriate restoration measures can be developed and implemented. Recognizing the complexity of the Gulf of Mexico ecosystem and the magnitude, duration, and depth of the DWH event, the committee concludes that an ecosystem services approach would complement the ongoing approaches to the NRDA process. The ecosystem services ap-

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15 SUMMARY proach focuses not only on the restoration of damaged resources but also on establishing and maintaining the usefulness of those resources to the public. Implementation of an ecosystem services approach would require a detailed understanding of the complex linkages among various ecosystem components (ecological production function) in addition to well-established baseline data, both of which are lacking to various degrees in the Gulf of Mexico. Nonetheless, given the vast amount of data currently being col- lected and research being conducted in the Gulf of Mexico, the committee believes that efforts to apply an ecosystem services approach to the DWH spill would greatly improve understanding of the full suite of impacts and greater options for achieving restoration of the critical services of the Gulf of Mexico ecosystem.

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