spatial complementarity of forest and farms accounting fo ecosystem services

presentation on the paper

1. Spatial Complementarity of Forests and Farms: Accounting for Ecosystem Services by Subhrendu K. Pattanayak and David T. Butry . Published in 2005 in Presenters Panchi and Ashar

2. Fig-1: Ruteng Park, Indonesia

3. Motivation Forest benefits=ecoservices=water flow+soild erosion

4. Key terms Weak Complementarity: In the context of demand analysis, weak complementarity refers to the situation where the demand for one good or service increases when the quantity of another good or service increases, but the increase is not strictly proportional. It refers to a modeling approach that integrates economic principles and ecological processes to analyze the relationship between human activities, economic outcomes, and ecological systems. In the context of this study, economic-ecological modeling is used to assess the economic contributions of forest ecosystem services. Economic Valuation- It is used to assign economic value to goods and services that do not have a market price.

5. Introduction the objective of the paper ecosystem services and their importance The various ecosystem services provided by forests, such as carbon sequestration, habitat maintenance, hydrological regulation, soil erosion prevention, and microclimate improvement. The negative impacts of deforestation and forest degradation on ecosystem functions. The study focuses on the relationship between forest protection in upstream watersheds and its impact on soil stabilization and hydrological flows in downstream farms. Why societies and governments would permit rapid or excessive deforestation? It suggests that one reason for this is the failure to fully recognize and take into account the various benefits and services that forests provide.

6. Contribution Developing countries Spatial Data intensive approaches based on profit functions

7. Research Question Does forests help in protecting watershed services and livelihood of the farmers ?

8. Literature Review and Research Gap Some of the literatures are – Pattanayak , S.K and D.T.Butry , 2003, Forest Ecosystem Services as Production Inputs. Pattanayak , S.K and D.T.Butry , 2000, Welfare Implications of Tropical Forest Conservation: The case study of Ruteng Park, Indonesia. Research Gap Valuation studies have overlooked livelihood values of natural resources in developing countries. A detailed consideration of spatial aspects of ecosystems and ecological processes such as spatial dependence has been ignored in most valuation studies. Valuation of ecological services has only relied on the measurement of full profit functions instead of focusing on demand for weak complements.

9. Objectives of the study The paper seeks to improve the understanding and quantification of the economic contributions of forest ecosystem services. It emphasizes the need to consider the full range of goods and services provided by forests, particularly in developing countries like Indonesia.  the paper aims to provide insights into the economic importance of forest ecosystem services and the potential undervaluation of these services if spatial dependence is ignored. It contributes to the field of economic-ecological modeling and nonmarket valuation by addressing research gaps and providing a case study from Flores, Indonesia.

10. Fig-2 : Ruteng Topography

11. Research Contributions Limited understanding and quantification of the economic contributions of forest ecosystem services.  Neglecting the spatial aspects of ecosystems and ecological processes in valuation studies. Reliance on data-intensive approaches instead of focusing on the demand for a weak complementarity.

12. Data & Methodology the case study conducted in Flores, Indonesia- 500 HH , Mangarai People  the integration of economic interactions, ecosystem services, and farm processes in the estimation models. the theoretical properties of the estimated models across different specifications. valuing ecosystem services>>>> estimating their demand The typical Ruteng household relies extensively on agriculture, growing primarily coffee and rice. Most of the local people (87%) are employed in agriculture We use geographical information system (GIS) to integrate the soil and hydrology data from the forest hydrology models with the socioeconomic survey data. In addition, GIS allows us to calculate the spatial weights matrix, derived on the basis of distances between village centers.

13. Functional Forms of Labour Demand L1 L0 are labour demand evaluated at mean wage with and without Ecosystem services. ß is regression coefficient for wage P is price of Labour Z is list of all other variables ϒ Regression coefficients

14. Valuing change in Eco system management Ecosystem management = forestation, reforestation. Linking ecosystem services that people value >>> with >> function Benefit=nature is represented in policy We are interested in valuing soil erosion. gap=erosion valuation studies miss how upstream causing change in downstream farms. Spatial Phenomen .

15. Spatial dimension of forest Eco valuation For modelling, the challenge lies in spatial dependence. Forest have spatial dimesion , neighborhood effect, farmers copy and learn and get effected. Omitted variables are likely to be captured in spatial correlations. Spatial interpolation to match data among GIS and socio-economic data.

16. Results

17. Tests for Spatial Dependence Spatial Lag Model matrix of independent variables, δ is the N x 1 vector of coefficients and ε is the N x 1 vector of disturbance term.

18. Simulation

19. Findings Strong evidence of economically substantive benefits provided by forest ecosystem services to local people. The undervaluation of these services if spatial dependence is ignored.

20. Implications the importance of considering the full range of ecosystem services provided by forests, especially in developing countries.

21. Conclusion By utilizing a clear economic model, analyzing spatial relationships, and estimating the values of these services, it is important to shed light on the significant but often underestimated benefits provided by forests in protecting watersheds. The study shows how forests benefit impoverished farmers in Indonesia. It highlights the use of weak complementarity logic and spatial econometrics to improve the accuracy and efficiency of estimating these benefits.

22. Our impression Expand the literature review section to provide a comprehensive overview of existing research on the economic contributions of forest ecosystem services. clearly outline the data collection process, the econometric models used, and any assumptions or limitations. Mention limitations of the study This study is mixing two broad objectives; spatial and weak complementarity, making reader confuse, should be limited to one objective.