Performance differences and trade-offs in the provision of ecosystem goods and services

Method

The method is based on a two-stage frontier approach. In the first stage, a non-parametric robust estimator is used to estimate the efficient frontier and determine relative performance with which regions generate biodiversity, ecosystem services and income. In the second stage, the estimated nonparametric frontier is approximated with a flexible translog production function such that opportunity costs can be derived.

Results

The two-stage approach is illustrated with synthetic data for 1166 grid cells in 18 countries in middle and eastern Europe generated by the integrated assessment model IMAGE and biodiversity model GLOBIO. Based on the analysis, regional performance is evaluated and opportunity costs for biodiversity and ecosystem services and their dependence on income are assessed. It is observed that opportunity costs differ substantially between regions and that more developed countries generally combine ecosystem services and biodiversity in a more efficient way. In addition, carbon opportunity costs decrease with increasing carbon sequestration levels, exhibiting economies of scale characteristics. On the other hand, opportunity costs of biodiversity generally increase with increasing biodiversity, showing that reasonable levels of provisioning services and biodiversity can be combined.