Valuation of Ecosystem Services Based on EU Carbon Allowances—Optimal Recovery for a Coal Mining Area

Alicja Krzemień (), Juan José Álvarez Fernández, Pedro Riesgo Fernández, Gregorio Fidalgo Valverde and Silverio Garcia-Cortes
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Alicja Krzemień: Department of Extraction Technologies, Rockburst and Risk Assessment, Central Mining Institute, 40166 Katowice, Poland
Juan José Álvarez Fernández: School of Mining, Energy and Materials Engineering, University of Oviedo, 33004 Oviedo, Spain
Pedro Riesgo Fernández: School of Mining, Energy and Materials Engineering, University of Oviedo, 33004 Oviedo, Spain
Gregorio Fidalgo Valverde: School of Mining, Energy and Materials Engineering, University of Oviedo, 33004 Oviedo, Spain
Silverio Garcia-Cortes: Polytechnic School of Mieres, University of Oviedo, 33600 Mieres, Spain

IJERPH, 2022, vol. 20, issue 1, 1-21

Abstract: This paper presents a new way of valuing ecosystem services based on the price of EU carbon dioxide emission allowances. Its main advantage is that it facilitates the monetisation of non-provisioning ecosystem services, which is the Achilles heel of current frameworks. The research approach is built on the notion that land rehabilitation and ecological restoration involve trade-offs between ecosystem services. A quantitative assessment (valuation) of these trade-offs is necessary to make sound decisions. However, using different valuation methods to estimate monetary values creates a non-comparability in the valuation process that is difficult to correct. To address this problem, in the first place, the propagation of imprecise preference statements in hierarchical weighting is proposed, avoiding the non-comparability caused by the different current approaches while reducing the effort of preference elicitation. In the second place, to achieve consistency, monetisation of all non-provisioning ecosystem services was carried on the above comparison and the monetary valuation of the attribute with the most direct and market-related valuation possible: carbon sequestration, using the EU Emissions Trading System. A former coal mining area exemplifies the valuation of ecosystem services provided by alternative ecological restoration scenarios. The aim is to estimate their contribution to human well-being, understand the incentives faced by decision makers to manage ecosystems in different ways and assess the values of alternative solutions. An exercise is then carried out to show that the price of EU carbon permits (as of December 2021) after the price escalation that coincides with phase 4 of the allocation of allowances under the EU Emissions Trading System can be estimated by prioritising biodiversity over other ecosystem services.

Keywords: ecosystem services; valuation; preference programming; EU carbon dioxide emission allowances; coal mining; RECOVERY project (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
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