Full Project Title: An integrated hydro-ecological and socio-economic model of environmental flow delivery to wetlands: A case study of Macquarie Marshes in Australia
This project was led by Dr Fiona Dyer
Increased demand for irrigation in the agricultural sector and decreased water supply due to reduced precipitation in some parts of the world have increased the importance of accurate water demand modelling. The allocation of water resources requires a clear understanding of the trade-offs involved in economic terms between agriculture and environmental flow needs of riverine ecosystems. While it is straightforward to estimate the economic values of increased irrigation water in the agricultural sector, the economic values generated by increased environmental flows are difficult to obtain. This is because the goods and services produced by environmental flows, e.g. wetland health, aquatic vegetation, bird habitat, are not traded in the market. A significant volume of non-market stated preference valuation studies have been undertaken over the past decade to estimate non-use values associated with riverine ecosystem protection. Non-use values include an existence value, which represents benefits to the current generation from knowing that a depletable resource exists (Loomis and White, 1996), and abequest value, which represents benefits to future generations from the continuing existence of that depletable resource (Moran and Pearce, 1994). Non-market valuation studies use public surveys to understand societal preferences for ecological/environmental attributes and estimate willingness to pay to enhance or maintain ecological health of the wetland or river system by constructing a hypothetical market or referendum.
Past non-market stated preference valuation has been undertaken in isolation of hydroecological modelling which simulates the hydrologic and hydraulic behaviour of the river or wetland systems and the response of the water dependant ecological assets. The need for integrated bio-physical and economics studies is being increasingly acknowledged among scientists from both disciplines (George et al., 2010; Kragt et al., 2011) although few integrated biophysical-economic models have been developed that can provide information regarding the economic value of delivering water to the environment.
Water is a major limiting resource in the Murray-Darling Basin, and providing sufficient water to meet the various needs is a major challenge. To do this in an equitable and transparent manner requires an understanding of the goods and services delivered by water, the values of those services, the water required to ensure delivery of those services, and finally a method to understand the implications of delivering water for a selected set of services. The main objective of this project is to inform water managers of the relative ecological and economic benefits of different water delivery and allocation scenarios for the Macquarie Marshes. The Macquarie Marshes are the largest of many freshwater wetlands of tributary rivers in the Murray–Darling catchment. A hydro-ecological response model, the IBIS Decision Support System (DSS), has been developed for this wetland ecosystem (Merritt et al., 2010) providing the opportunity to design economic models that can link directly with outputs from the hydro-ecological models. The hydro-ecological model will simulate the habitat suitability for wetland vegetation and waterbird under alternative water supply and delivery scenarios. The economic model will then integrate economic values of these riverine attributes to estimate unit price of environmental water. The environmental attributes dependant on wetland inundation are not traded in the market and so non-market valuation tools will be applied to estimate household willingness to pay to maintain or enhance wetland habitat conditions.
This project is comprised of two components: the non-market valuation study and the hydroecological modelling.
Non-market valuation study
A non-market valuation study will be designed in consultation with the hydro-ecological modellers in the research team. The core design strategy of the non-market valuation study will be to match the IBIS DSS model outputs. The uncertainty associated with the biophysical response model will be addressed in the socio-economic study. A specific form of stated preference technique which is commonly known as choice experiment (or choice modelling) will be applied. This technique has an advantage over the widely used contingent valuation technique of stated preference survey as it estimates 'part-worths' for different characteristics of an environmental good. The choice experiment method is more suitable than the contingent valuation technique when managers and policy makers are interested in the marginal value of changing certain attributes rather than the value of the environmental good in general. For example, in this case, we are interested in knowing household willingness to pay for waterbird breeding and aquatic wetland vegetation instead of the wetland ecosystem in general. These part-worths or implicit prices will feed into the hydroecological response model and help estimate in-stream value of water to community. Like other stated preference methods, choice experiment method also uses a public survey by constructing a hypothetical market or referendum. In a choice experiment survey respondents are presented with a sequence of choices between alternative goods or scenarios. The scenarios are described by a number of characteristics or attributes, which have multiple levels that differ among the alternatives. Respondents are asked a series of questions in which a unique 'choice set' is presented each time. Before the choice sets are presented, there is a description of the scenario, the research issues, the proposed policy changes, and the implications for the environmental attributes that are being modelled.
The IBIS DSS will be used to simulate the ecological response of hydrological scenarios produced by the NSW Office of Environment and Heritage using the Integrated Quality Quantity Model (IQQM) – the hydrology model used for river basin hydrologic planning in NSW. The IBIS DSS predictions for individual species across the Marshes will be aggregated to produce inputs for the economic modelling. Sensitivities in the DSS outputs to formulation of the ecological response models will impact economic valuations of hydrologic scenarios. Concurrent with the development of the economic modelling, the hydro-ecological team will undertake research on the sensitivity of the IBIS DSS outputs to model parameterisations. The ecological response models in the IBIS are currently based on generic parameters describing watering requirements of vegetation and waterbirds species (Rogers and Ralph, 2010). Additionally, there is incomplete and at times conflicting knowledge on the water requirements of particular species. Of crucial importance is the definition of how individual components of water requirements (duration, interflood dry period, etc) interact to impact ecological response. The sensitivity and uncertainty analyses of the IBIS DSS will provide an assessment of the uncertainty in ecological and economic predictions.
Photo courtesy of Murray-Darling Basin Authority. Macquarie Marshes - Image taken April, 2010 in the Macquarie Marshes near Warren, New South Wales.
MDBfutures is supported by the Australian Government's Collaborative Research Networks program.