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Updates in the Valuation of Ecosystem Services
1. Updates in the Valuation of
Ecosystem Services
Moderator:
Michelle Lapinski, Director of Corporate Practices, The Nature Conservancy
Panelists:
Mark Weick, Director of Sustainability, The Dow Chemical Company
Diane O'Connor, VP Environment, Health, Safety and Sustainability, Xerox
3. Natural Capital
Coastal natural
hazard protection
Freshwater supply
Air pollution mitigation
via re/forestation
Photos: Jennifer Molnar
4. Value of nature
Company
Public
Biodiversity &
Ecosystems
Jennifer Molnar
5.
6. Business Message…and Action
• Nature has value to business – degradation is
risk and business opportunity
• Natural capital is a productive asset alongside
financial and human capital
• Leading from the “bottom up” –progressive
private sector action – beyond one size fits all
• Not waiting for government to act, but ready
to collaborate: $500B in commitments
7.
8.
9. The New Metrics of
Sustainable Business
Valuation of Ecosystem Services:
Xerox/TNC Partnership
Xerox Environment, Health, Safety and Sustainability
September 27, 2012
10. Xerox Today
With sales approaching $23 billion, we are the world’s largest enterprise for business
process and document management.
• Employees: 140,000 worldwide
• Headquarters: Norwalk, CT
• Chairman and CEO: Ursula M. Burns
Services Technology
Business Process IT Outsourcing Document Technology
Outsourcing and Managed Print
Services
12. Steps Toward a Sustainable
Paper Cycle
Responsible Sourcing Responsible Use Responsible Disposal
Environmentally-sound Xerox equipment is Enabling beneficial
papers: designed for efficient management:
use of paper:
• Forestry Practices • Print management • Xerox paper,
• Supplier Requirements features packaging, and prints
for Paper Mills • Recycled paper runs are recyclable
• Environmentally Sound reliably
Paper Offerings • On-ramp to digital
– (FSC, PEFC, SFI) document
management
– Recycled Paper
• Workflow SW tools
13. Sustainable Paper Cycle Metrics
TNC Provides the Upstream SME for Xerox Goal of a Sustainable Paper Cycle
Responsible Sourcing Responsible Use Responsible Disposal
Environmentally-sound Xerox equipment is Enabling beneficial
papers: designed for efficient management:
use of paper:
• % paper offerings FSC, • Duplex rate (Managed • De- inkability rating
SFI, PEFC, recycled Print accounts)
• % Suppliers responding
to Xerox annual paper
survey
• % certified fibers in
Xerox papers
14. The Nature Conservancy & Xerox Partnership
Progress Report (2006 – 2012 YTD)
• High Conservation Value (HCV) Resource Network- promote, train, steer
– Global Network
– Indonesia Learning Network
• Support Implementation of the Canadian Boreal Forest Agreement
• Certification- work with Xerox Suppliers and other Land Managers in select
regions of North America
• Forest Carbon- develop & test broadly applicable methods (domestic & int’l) for
quantifying carbon from improved forest management
– Serve as a platform for suppliers receiving potential carbon benefits
• 20% of tropical forests are • Reduced impact logging
slated to be logged rarely achieved
• 30-50% of logging impacts • Much work needed
can be avoided while • Methodology – critical piece
maintaining timber production
15.
16. A Breakthrough Collaboration:
The Economics of Ecosystems
Mark Weick
Director, Sustainability Programs
The Dow Chemical Company
17. Driving the Next Generation of Change
Dow’s 2015 Sustainability Goals
Maintain absolute Reduce our energy
greenhouse gas intensity 25%
emissions below
2006 levels
Achieve at least Publish
three breakthroughs product safety
that will significantly assessments
help solve world for all
products
challenges
Achieve on average a Achieve individual
75% improvement of key community acceptance
indicators for EH&S ratings for 100% of Dow
operating excellence sites where we have a
from 2005 baseline Increase the percentage of major presence
sales to 10% for products
that are highly advantaged
by sustainable chemistry
1 October 2012 17
18. Valuing Nature – A Strategic Fit for Dow
•Access to ecosystem services
•Product alignment to fit growing
need
•Project planning and
stakeholder buy-in
•Expansion/Permitting Process
•Green Infrastructure
•Remediation
•Conservation Activities
•Recognition of offsets or
payments from ecosystem
services on lands Dow owns
19. Pilot #1:
Dow Texas Operations, Freeport
• Freshwater
• Coastal natural
hazard protection
• Air pollution
mitigation via
reforestation
Freeport
20. Future Scenarios: Freshwater
90
80
Temperature (F)
70
60
50
40
2 4 6 8 10 12
Month
= current average
= potential range in 2050
More demand Less supply
22. Freshwater: Planning for Future Water
• Future value of water
• On-site / off-site responses with greatest net benefit
Jennifer Molnar
23. Freeport Coastal Area
Brazoria National
Wildlife Refuge
Stratton Largest
Ridge Undeveloped
Parcel
Lake Jackson
Plant B Oyster
Creek
Freeport Seaside
Plant A
San Bernard
Wildlife Refuge
Outside of levee system
25. Air Quality
AIR QUALITY
Evaluating large-scale tree planting
for air quality improvement
Expected output:
•Cost-benefit and feasibility
analysis of “green
infrastructure” project
26. Air Quality at Freeport: The Issues
• Freeport located in Houston-Galveston-Brazoria (HGB) non-
attainment area for ground-level ozone (8-hr NAAQS)
28. Air Quality: Reforestation
• Trees remove ambient pollutants (ozone,
PM, NO2, SO2, CO)
7bigspoons.com
• We can quantify this removal
• Tree planting is an EPA-approved measure
for inclusion in SIPs for ozone
29. Air Quality:
Identify best sites for reforestation
• Biggest ozone and precursor
removal
• Credit/offset generation
for Dow
• Open land available for
reforestation
• Suitability for reforestation
• Conservation gains
• Costs
30. Pilot #2: Brazil“Project Cabana”
Dow-Mitsui JV: Santa Vitória Açúcar e Álcool (SVAA)
Polyethylene production from sugarcane
Cultivation area: 200,000 hectares
• Properties leased from local land owners.
Average property size: 200 hectares
Commitment to Brazil Forest Code
• Designation of permanent preservation areas
(~20% land)
• Tree replanting (10 for each tree removed)
• Current regulation: Parcel-by-parcel basis
(inefficient)
Collaboration High-level Goals:
• Develop an optimum selection of land for
sugarcane and conservation and implement with
government approval.
• Optimize generation and value of ecosystem services to Dow and external
beneficiaries, minimize farming cost
Not just an ecological issue… “People” = corporations, local communities, society at large
(may drop slide and mention elsewhere)
Notes: We learned in our own experience, there are 4 fundamental aspects for any successful sustainability program:It has to be quantitative. What gets measured gets doneNeeds to be value chain focused...decisions have ripple effect up through supply chain and down through to the customerHas to be economically driven...it’s not sustainable to put the organization out of business to save the environment...gear to reducing costs, economic benefits of reducing carbon footprintIf starting or re-invigorating a sustainability program... have a quick payback... show that what's good for the environment is also good for the bottom line... this gets innovative thinking flowing inside the organization
Valuing Nature & Business CaseWhat is the business case for conservation? Just a few years ago, I don't think many people in either the business or conservation communities would have thought to even pose that question, let alone try to answer it in a meaningful way. But times are changing. The challenge for both of our communities is to think big, beyond the next factory or the next land deal, beyond the next quarter or the next fund-raising campaign. Companies have been reporting on their sustainability efforts for years. That is not news. The difference today is the urgency of those reports; sustainability is moving from the fringes to the core business decisions companies must make and the fundamental questions they must answer: what are the risks to our business, and how can we minimize them? How can we keep costs down? Where are the new markets and the new opportunities? In ways unheard of until now, the answers to those questions rest in part on understanding how every company relies on something they usually take for granted and get for free: services from nature like clean water and flood protection. In the coming decades those services will be neither guaranteed nor free, and the companies that will thrive are those that start paying attention to those realities today. (from Mark Tercek Huff Post editorial - http://www.huffingtonpost.com/mark-tercek/making-the-business-case-_b_1251251.html)
Overview of Freeport PilotAir Quality Mitigation: The Collaboration is evaluating the cost effectiveness of large-scale tree planting projects for the reduction of nitrogen oxides (NOx) and other ozone precursors. If proven to be cost effective and sustainable, tree planting may be an option for regional air quality improvements and emissions reduction through existing credit trading programs. In addition to modeling the potential effectiveness of this example of “green infrastructure” in the region, we will also evaluate the ancillary ecosystem service benefits it would provide. For example, large-scale tree planting projects would result in carbon sequestration and potentially water quality improvements, and recreational opportunities. These could decrease the total cost of the project and/or provide additional public benefits. Photo: Dow site, Freeport, TX? (from Freeport ES presentation, July 2011)
1997 8-hr ozone standard of 80 ppb2008 revised standard: 75 ppb (scientific review of standard ongoing)Both are measured as the “annual fourth-highest daily maximum 8-hr concentration, averaged over 3 years”.
Precursor emissionsNOx: Overall 80% NOX reduction from existing industrial sources and utility power plants between 2003 and 2007, implemented through a cap and trade program. In 2008, about 32% from point sources, 31% on-road, 27% non-road (ships, planes, construction etc) and 10% from area sources (small commercial sources like dry cleaners or gas stations too small to be classified as point sources). Room for further NOx reduction using control technologies is limited and such reductions will be very expensive (which is why trees become interesting).HRVOC: Affects cooling towers, process vents, and flares, and establishes an annual emissions limit with a cap and trade for each site in Harris County. Seven perimeter counties subject to permit allowable limits and monitoring requirements. Cap and trade program implemented January 1, 2007 HECT cap incrementally stepped-down from 2014 through 2017 for a total 25% cap reduction.Forests cool the local atmosphere through evaporation and transpiration. Forest loss thus increases local temperatures.- According to a recent USFS study (Nowak and Greenfield, 2012), Houston is the city with the second-highest rate of tree loss (in the US) in recent years (10% of tree cover during 2004-2009, or 3% of city area) after New Orleans, with an average of 890 ha/yr. In per-capita terms, Houston had the 5th-highest rate of tree loss of the 20 cities examined. Much of this is due to development (Change to grass, bare soil and impervious surfaces together accounted for almost all tree cover loss.- The Houston-Galveston Area Council (H-GAC) estimates that between 2008 and 2035, 46% (289,500 ac or 452 mi2) of bottomland and 55% (270,400 ac or 423 mi2) of upland forest will be lost in the HGB area. While strong forest protection policies could potentially reduce by one-half the future loss of forested lands in the HGB area, even under a maximum protection scenario, some additional 300 mi2 are expected to be lost between now and 2030 (Boyers, A. 2010). This shows that the primary driver of forest loss in the Houston area is development coupled with lack of effective forest protection. Climate change and land use change are estimated to be of roughly equal importance for future O3 formation in the Houston area (Jiang et al. 2008).SO: the problem is unlikely to go away.
So why reforestation?The UFORE model developed by the US Forest Service is extensively peer-reviewed and has been applied to over 100 cities in the US (and also abroad).