THE VALUE OF BIODIVERSITY IN THE CITY OF CAPE TOWN

WHY INVESTING IN NATURAL ASSETS MAKES SENSE

presented at the Cape Town launch of the The Economics of Ecosystems and Biodiversity (TEEB) D2 Report, SANBI Kirstenbosch, 9 Sep 2010

presented by Martin de Wit

as based on

Overview presentation• Biodiversity and ecosystems goods and

services (EGS)• Economic value of EGS in City of Cape Town• Business case for investment and economic

development

Based on study done by City of Cape Town: De Wit, M.P., Van Zyl, H., Crookes, D.J., Blignaut, J.N., Jayiya, T., Goiset, V. & Mahumani, B.K. 2009. Investing in Natural Assets. A Business Case for the Environment in the City of Cape Town. Report prepared for the City of Cape Town.

Biodiversity, ecosystems, wellbeing

Biologically diverse systems

are more productive

More resilient functioning

Delivering more and/or better

quality goods and services

Additional contribution to

human well-being

Increasingly, ecosystems are seen as capital assets, with the potential to generate a stream of vital life-support services meriting careful evaluation and investment

(Turner & Daily 2008)

4

Prioritised ecosystem services for Cape TownHigher High Medium LowerNatural hazard regulation Water purification and

waste treatment, assimilation

Climate regulation – local (air quality)

Climate regulation global

Recreation and Tourism Space for biota Small scale urban farming Fresh water provisionAesthetic values and sense of place

Water regulation Building materials provision

Fish and marine resources Provision of inspirational beautyEducational usersCultural and artistic practicesReligious practicesErosion regulationDisease regulationHarvestingMaterials for craft and fashionUse in productions, advertising and publications

Natural hazard regulation (buffering function for flooding, fires, sea level rise/ coastal surge)

Provision of natural characteristics that are conducive to tourism and recreation

The improvement of water quality and the assimilation of waste - ecosystems help filter and decompose organic wastes

Provision of space for globally important biota, and

The aesthetics and sense of place provided by the natural environment

Based on Participatory Rapid Assessment with line function managers and senior staffCriteria: Beneficiaries, Development Objectives, Environmental mandate, Socio-ecological Risks

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Valuable flowsTable 1: The value of prioritised ecosystem services to the City of Cape

Town: 2008 (A partial analysis)

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Nature’s Value in Tourism and Recreation

Beaches: R70 – R85 m/aNature Reserves: R 68 – R83 m/a

Green open spaces: R270 – R326 m/a

Tourism: R965 m - R2.95 bn/a

These values are an estimation of nature’s share in the production and consumption of ecosystem goods and services.

Natural Hazards Regulation

Natural Hazards

FiresFloodingStorm surge & Sea-level rise

Reduced Consequences

Damages Management costs People at risk

Ecosystems: natural barriers and buffers against natural hazards.

• Dune cordons and kelp beds reduce storm surges impact on land.• Natural pervious ground cover absorb rainfall, impervious ground cover increases water runoff and flood risk.

Lack of management: enhanced natural hazards risk and potential damages.

• Invasive alien species enhance fire risk, frequency, intensity, soil’s vulnerability to erosion → enhance potential damages, fire fighting costs, and clean up costs.

Nature’s services in hazard regulation: R5m - R60m/a

The increased risks of storm surges and their associated costs in Cape Town have been assessed recently in terms of:• Loss of real estate value• Damage to infrastructure• Foregone tourism revenue

Natural solutions: natural parts of the coastline which act as buffers are not lost to development

Sea-Level Rise and Storm Surge: Investing in the coast line

Increase buffering: creating kelp beds, rockier beaches and sand dunes that will increase the absorption capacity of the coastline.

Flooding: Investing in rivers and catchments

Informal settlements affectedDamaged structuresPeople directly affectedPeople housed at emergency shelters in community hallsPeople displaced in safety zonesNumber of meals served twice a dayNumber of blankets distributed

70750030 0003000248022 00013 000

Table 2: Impacts of the July 2008 floods in Cape Town

Source: City of Cape Town, media release No 330/2008, 10 July 2008.

Storm water runs off of impervious surfaces and is not absorbed; runoff volume typically increases:

- twofold as the catchments’ imperviousness increases to 10–20%, - threefold with an impervious surface cover of 35–40%, and - more than fivefold with an impervious surface cover of 75–100%

when compared to catchments with natural vegetation cover.

Fires: Investing in alien control

R30 million to R40 million in damages attributable to the March 2009 fires in Somerset West (R25 to R30 million in damages for Lourensford wine estate and R5 million to R10 million for Vergelegen wine estate

In January 2000, two wildfires burnt 8 000 ha on the Cape Peninsula resulting in insurance claims of approximately $5.7 million or R73 million

Invasive Alien Plants lead to higher damage costs, higher firefighting costs and avoidable clean-up costs.

Water Purification and Waste Assimilation: Investing in rivers and wetlands

WetlandsWaterpurification function

• processing some of the grey and waste water outfalls• creation of recreational and economic opportunities• contribution to a healthy environment for communities.

Services provided by wetlands save cities significant amounts of infrastructural costs if the natural ecosystem wasn’t present or became inefficient.

Zandvlei:

• Replacement cost of a treatment plant: R180 million estimated.• Replacement cost of a flood storage capacity: R24 million estimated• Costs of constructing an artificial wetland.

Illustrates the magnitude of the “free” services provided.

Within assimilative capacities

Space for Biota: Investing in biodiversity

Cape Floral Kingdom

9000 plant species70% endemic

2002 - 2006: International funding = R225 million

2008 - 2009: Environmental Education Programs = 23 781 learners from 500 schools.

Biodiversity needs to be recognised and valued as a critical ‘umbrella’ service without which most other valuable ecosystems services would be diminished or may even become unavailable.

Film making: Investing in scenery and aesthetics

Number of productions

Average expenditure per production (Rm 2006)

Total expenditure (Rm 2006)

Long form (features) 30 37.2 1 115.6Local Commercials 142 0.9 162.5Service Commercials 400 1.8 631.8International Commercials 58 2.6 77.9Stills 2 100 0.3 659.8Provincial Total 2 730 2 647.6Cape Town Total 2 027.0

Table 3: Number of productions and expenditure in the Cape Town and Western Cape film industry (2005/2006)

Source: Standish & Boting (2007)

Film and advertising total values associated with natural assets of between R133 million and R398 million pa

3. MAKING A BUSINESS CASE

Net present value of combined natural assets:

→ R43 billion to R82 billion.

Ratio of environmental expenditure to the value generated EGS

→ R1 spent by municipality on natural assets ≈ R8.30 (range R4.50 - R13.50) of ecosystem goods and services (EGS) generated compared to → R1 spent by municipality overall ≈ R 7.30 added value generated in local economy

Indicator1

Indicator2

Leverage of municipal expenditure on economicvalue of EGS

Leverage of municipal expenditure on the broaderCity economy.>

Between 1.2 and 2 times

Insights into the level of environmental expenditures in relation to the benefits received from the natural environment.

Investing into underlying natural assets can leverage relatively high economic value in the broader City economy (1.2 - 2 times higher than overall municipal expenditure).

Investing and maintaining the City’s natural assets or ‘ecological infrastructure’ yields highly valuable services which provide the backbone for value addition in the City’s economy.

CONCLUSION

It is conservatively estimated that the highest priority natural assets in the City yield a flow of services valued at R4 billion per annum, within a range of between R2 billion and R6 billion per annum.

As an entity focused on service provision and as an enabler of economic growth and development, the municipality has the mandate and opportunity to invest adequately in natural assets to maintain a healthy flow of services to the benefit of people living in and visiting Cape Town.

Nature provides a free lunch, but only if we control our appetites.

William Ruckelshaus, Business Week, 18 June 1990