Ecosystem Services Analysis

Ecosystem services analyses are undertaken to specify the condition of ecosystem components that provide the services to key stakeholders, potential threats to that condition, and where the most strategically advantageous locations would be to protect, restore, or maintain those services. This analysis is important for supporting other analyses, particularly as it relates to expected benefits and costs of different management strategies.

What is an ecosystem services analysis?

An ecosystem services analysis is a technical study that focuses on a set of strategically targeted ecosystem components and the core biophysical and geographic factors that influence those components ability to provide specific ecosystem services (e.g. regulate flow, filter water, sequester carbon, etc.).

This analysis explores the relationship between drivers such as hydrology, land use, and climate change to identify and optimize strategies for source water conservation. Technical analyses for ecosystem services can require a significant amount of time, resources, and expertise to complete. It is critical that sufficient consideration be given to the scope and quality of these studies, as they will directly support the promotion and justification for the applied water fund model. For instance, by allocating sufficient scope and resources these analyses can benefit from integrating a range land-use change and climate change scenarios, as comparative analyses can be conducted that consider what would happen in cases where a Water Fund is or is not developed.

An ecosystem services analysis will typically consider the following:

  • Ecosystem Services

    Natural processes such as hydrologic regulation, sediment control, carbon sequestration and pollination, among others, generate benefits to humans that are often not quantified or recognized. This valuation will assist you in the estimation of these types of benefits. At a minimum, this valuation should consider key water quantity components (meteorological data, hydrologic flows, groundwater) and water quality components (sediments and nutrients; where possible, more sophisticated parameters such as temperature, dissolved oxygen, bacteria, etc.). Given that many aspects of technical studies are interrelated, other data such as land use are critical inputs for this analysis.

    The ecosystem services analysis will further assist in validating the area of influence for the prospective Water Fund.. By doing so, the project team should be positioned to analyze the overall supply, how use is allocated, existing and potential conflicts, and current and potential threats, which in turn will determine where conservation investments should be focused to guarantee the ecological integrity and availability of those ecosystem services (e.g. focus may be on one or several watersheds or sub-watersheds).

  • Conservation Value

    Quantifying the potential conservation value that could be accrued by developing a water fund in the proposed project area is beneficial for several reasons. Understanding the quantity and quality of terrestrial and aquatic biodiversity that could benefit from the water fund may assist in determining their relative significance in the project area. For instance, this analysis may seek to quantify key terrestrial species (vegetation, birds, mammals, and threatened species) and/or aquatic freshwater species (fish species, fish habitat, and macroinvertebrates). The resultant data from this analysis may become an important discussion point for advancing the water fund, such as in cases where carbon sequestration, species protection, or ecotourism are considered important by local, regional, or global communities, companies, or institutions.

  • Land Use

    Identifying how land has historically and is currently being used within the source watersheds that are being assessed may assist in identifying potential drivers of water impairments, high sediment loadings, and opportunities for the application of natural infrastructure. Land use datasets should be selected based on the spatial resolution and quality that is required to accurately assess local conditions. Classifications for these datasets will vary widely, but may include a very broadly defined set of land use categories such as cropland, urbanized areas, forest, grassland, lakes/rivers, barren, and other (e.g. snow/ice).

  • Climate Change

    As Water Funds are mechanisms with long-term visions and work plans (e.g. 80 years), they provide unique opportunities to address the predicted impacts of climate change. As such, consideration of which actions the proposed Water Fund could take to support adaptation to climate change impacts should be a key part of the overall Feasibility Study. As with the other analyses, climate change analyses should be led by experts with the proper level technical expertise and experience, be they in-house or external. In cases where stakeholders are not in agreement about the impacts of climate change, it may be the most effective to focus on impacts to water (e.g. drought, wildfire, etc.).

    Climate change analyses should take advantage of the state of the art of science in modelling and predicting climate change impacts and mitigation. Specifically, any related conservation activities that are located within the project area and that are already outlined in existing government plans or that have been explored by institutions concerned with climate change should be considered. In cases where local data is not available to support these analyses, global datasets should be used to support the climate change analyses.

What are the key questions that should be answered when conducting an ecosystem services analysis?

Ecosystem services analyses require a high-level of technical expertise and experience in the tools that are being applied.

Accordingly, the process for conducting ecosystem services analyses will vary greatly and will require that those leading the analyses follow the typical implementation processes of the respective tools they are using.

At a minimum, an ecosystem services analysis will typically seek to address the following questions:

  • What are the specific ecosystem services of interest? (e.g. sedimentation control, base flow regulation)
  • What is the condition of hydrologic services in terms of supply and demand? (e.g. what is the overall availability of water in the watershed, what is the demand for drinking water, what is the natural versus anthropogenic driven sediment level in the watershed, etc.)?
  • What are the threats/risks over the condition of the hydrologic services?
  • Where should the water fund invest to maintain or improve identified ecosystem services and obtain the greatest possible return on investment?
  • What is the cost of maintaining or improving ecosystem services in the watershed vs. the cost of doing nothing?
  • How do ecosystem services vary under different management schemes in terms of land use and how would this be affected by climate change scenarios?
  • What other ecosystem services could the water fund help maintain (e.g. carbon sequestration, recreation, etc.)?
  • What are the potential benefits for nature (e.g. terrestrial and aquatic biodiversity)?
  • What are the potential benefits in terms of climate change adaptation and/or mitigation?

Lessons Learned

  • What lessons have you learned from completing ecosystem services analyses for Water Funds?

    Listen to Kari Vigerstol from TNC to learn more.

  • What lessons have you learned from completing ecosystem services analyses for Water Funds?

    Listen to Jorge Sarmiento Léon from TNC to learn more.