Identifying cost-effective hotspots for restoring natural capital and enhancing landscape multifunctionality

Abstract

Much effort is expended toward planning for conservation, natural resource management and sustainable land use in agricultural landscapes. Although often not explicitly stated, the aims of these efforts are often to restore natural capital for the provision of ecosystem services and stimulate multifunctionality in landscapes. However, the scarcity of resources for, and the potential economic impact of, ameliorative actions that restore natural capital necessitates the identification of cost-effective geographic priorities, or hotspots, which provide multiple ecosystem goods and services. This requires the integrated spatial modelling of multiple environmental and economic processes accompanied by clear goals and performance indicators. Identification of hotspots provides guidance for highly targeted land use change that cost-effectively adds to the stocks of natural capital in a landscape. Additionally, the multifunctionality of the landscape can be increased through the provision of multiple ecosystem goods and services. This paper begins by examining data requirements for identifying geographic hotspots for land use change. This study integrates traditionally disparate landscape-scale biophysical and economic data and models. The elements of natural capital considered here are species and ecosystems, soil and water resources, and the atmosphere. It is demonstrated that locating ameliorative actions towards hotspots will be more cost-effective at restoring natural capital and stimulating landscape multifunctionality than a random targeting approach. We calculate these efficiencies using a small set of indicators for assessing aspects of multifunctionality. The focus of this study is the agricultural landscapes of the Lower Murray region of south-eastern Australia.

Introduction

The singular focus of economic development has led to extensive land use transformation and over-exploitation of natural resources in many of the world's agricultural landscapes (Tilman et al., 2001, Foley et al., 2005, Cocklin et al., 2006). Consequences of the development of agricultural landscapes typically include the depletion of natural capital stocks of species and ecosystems (McLaughlin and Mineau, 1995, Tilman et al., 2001), soil and water resources (Miller and Wali, 1995, Scanlon et al., 2007) and the atmosphere (Robertson et al., 2000). A range of ameliorative management actions are required to address the widespread degradation and restore stocks of natural capital (Vitousek et al., 1997).

There has been a shift away from the traditional focus on the economic production of food and fibre for human consumption from agricultural landscapes, toward a new recognition that agricultural land resources can be multifunctional (OECD, 2001). Sustainable agricultural landscapes can provide a large number of functions relating to social, economic and environmental prosperity and sustainability. The shift has been particularly prominent in the European Union in response to the Common Agricultural Policy (Tait, 2001) that provides subsidies rewarding farming practices that recognize the full range of economic, social, cultural and environmental functions of agriculture (Wiggering et al., 2006, Otte et al., 2007). Although dominant within the European Union, multifunctionality is also recognized in the United States (Hollander, 2004, Bills and Gross, 2005), and Australia (Anderson, 2000, Cocklin et al., 2006, Bryan et al., 2007a).

The concept of natural capital (Krutilla, 1967, Costanza et al., 1997, Aronson et al., 2007) has evolved in recognition of the increased human influence and reliance on ecosystem goods and services. Natural capital can be defined as the stock of assets provided by natural systems and the benefits that flow, especially to humans (Costanza et al., 1997). The idea of natural capital has been used to explore the inter-relationships between environmental, economic and social issues, and studies have attempted to integrate traditionally disparate natural resource, ecological system, aesthetic, recreational and economic properties of landscapes (e.g. Antrop, 2000, de Groot et al., 2002, Potschin and Haines-Young, 2003, Bailey et al., 2006, Aronson et al., 2007). The book, Restoring Natural Capital: Science, Business, and Practice (Aronson et al., 2007), presents a series of case studies investigating the valuation and restoration of natural capital in a variety of landscapes and provides a solid grounding for studies into restoration of natural capital.

The evolution of the concept of natural capital has occurred in parallel with the evolution of the multifunctional landscape paradigm. However, the explicit link between the two appears to be rarely made within the literature despite their commonalities (although see Haines-Young and Potschin, 2004, Haines-Young et al., 2006, Mander et al., 2007). Natural capital is the stock from which ecosystem goods and services are provided and multifunctional landscapes are the spaces in which this provision often occurs. A stock of natural capital is required for landscapes to be multifunctional and provide ecosystem goods and services. Overexploited agricultural landscapes require land use change and/or management to restore the stocks of natural capital. The stock of natural capital provides a complement to the economic benefits of landscapes by producing ecosystem goods and services and thereby enhancing the multifunctionality of landscapes. Making these linkages explicit has policy and planning advantages by providing a robust economic argument for expenditure on enhancing landscape multifunctionality.

Most developed countries have a mixture of voluntary incentive-based programs, cross-compliance programs and limited regulatory programs to encourage sustainable land management practices within agricultural landscapes (Smith, 2006). Some programs encourage land retirement (e.g. the US Conservation Reserve Program; USDA-NRCS, 2007) and pay a fee according to the amount of environmental benefits provided, while others subsidise farmers to provide environmental benefits from land that remains in production (e.g. the UK Countryside Stewardship Scheme, DEFRA, 2007). They, in effect, have the aim of restoring the stocks of natural capital and in the case of the latter, directly stimulating multifunctionality in agricultural landscapes. Expenditure is generally allocated through market-based mechanisms (e.g. auctions) or through more controlled and planned mechanisms such as grants. However, the ecological, economic and social complexity inherent in agricultural landscapes necessitates significantly greater planning to ensure the expenditure of money within these programs is cost-effective, provides the greatest restorative benefits and has the least impact on farm profitability. Quantification of natural capital and the benefits provided by ameliorative actions is necessary to underpin this planning.

Recent studies have made considerable progress toward a stocktake of natural capital for planning. For example, MacDonald et al. (1999) provide a descriptive and qualitative assessment of a region's natural capital stock for natural resource management. The authors conclude their study with support for a framework that takes stock of existing natural capital in regional resource management policy and planning. The main barrier, suggests MacDonald et al. (1999), is the lack of quantitative data for assessing ecosystem services. However, we argue that the spatial distribution of many elements of natural capital can be quantified using modelling techniques based on existing data. For example, relatively intact remnant vegetation in large patches contributes to the provision of all 17 ecosystem services listed by Costanza et al. (1997) and this can be readily quantified. Blaschke (2006) provides the theoretical underpinning for a spatial approach to quantifying natural capital and socio-economic characteristics within a landscape planning approach, but do not provide a real example. Haines-Young et al. (2006) apply some simple GIS techniques to model restoration of natural capital for biodiversity but do not consider potential economic impacts. Gimona and van der Horst (2007) map hotspots for targeting conservation and restoration actions that provide ‘multiple win’ outcomes. However, they also do not consider the economic impacts at the farm level of undertaking actions within their hotspots despite the fact that inclusion of ‘cost’ can lead to substantial improvements in the cost-effectiveness of efforts to restore natural capital (e.g. Moore et al., 2004). In an earlier paper, Van der Horst (2006) presents a framework for spatial targeting that employs estimates of cost but doesn't include an application.

Many ameliorative actions are available for restoring natural capital. They include the protection of remnant vegetation through reduction or removal of threats such as grazing stock and invasive species (Yates et al., 2000, Maron and Lill, 2005), ecological restoration in cleared areas using a diverse mix of indigenous species (Saunders and Hobbs, 1995, Vesk and MacNally, 2006, Loyn et al., 2007), conservation farming practices (Thomas et al., 2007), and planting deep-rooted herbaceous perennial fodder crops (Bathgate and Pannell, 2002, Lefroy et al., 2005). Ecological restoration using indigenous species can restore ecosystems and provide additional habitat for native species, but it also restores soil and water resources through preventing soil wind erosion and rising groundwater, respectively (Hobbs et al., 1993, Salt et al., 2004, Pannell and Ewing, 2006). Furthermore, ecological restoration sequesters carbon from the atmosphere (Mills and Cowling, 2006, Redondo-Brenes and Montagnini, 2006). The ameliorative action of ecological restoration is the focus of this study because of the multiple benefits provided by the action.

The aims in this paper are to model spatially-explicit hotspots for ecological restoration to cost-effectively restore the stocks of natural capital and enhance landscape multifunctionality. The study area is the agriculturally-dominated Lower Murray region of southern Australia. Locations for ecological restoration are selected based on their ability to improve biodiversity, mitigate dryland salinity and soil erosion, sequester carbon, and do so in a potentially cost-effective manner. Hotspots are identified that: i) maximise benefits, analogous to Newburn et al.'s (2005) ‘benefits-only targeting’, and; ii) have the highest benefit–cost ratio, analogous to Newburn et al.'s (2005) ‘benefit–cost targeting’. Hotspots can be used to guide expenditure on ecological restoration. A set of key indicators are calculated to demonstrate the potential gains from locating ecological restoration in cost-effective hotspots versus a more random approach or an approach driven purely by environmental priorities.