Green Infrastructure Evidence Base

5 Economic Benefits

5 Economic benefits

Green Infrastructure

Green Infrastructure is the network of green spaces and water systems that delivers multiple environmental, social and economic values and services to urban communities. This network includes parks and reserves, backyards and gardens, waterways and wetlands, streets and transport corridors, pathways and greenways, farms and orchards, squares and plazas, roof gardens and living walls, sports fields and cemeteries. Green Infrastructure secures the health, liveability and sustainability of urban environments. It strengthens the resilience of towns and cities to respond to the major current and future challenges of growth, health, climate change and biodiversity loss, as well as water, energy and food security.

 

5.1 Scope

A recent body of research has aimed to quantify the impacts ofGreen Infrastructure on the economic vitality of commercial centres and on residential property values. Another extensive body of research is attempting to quantify the economic value of the ecological services provided to communities by Green Infrastructure. This section describes the main research findings as well as some of the economic evaluation techniques underlying the research. Figure 28 summarizes the economic benefits provided by Green Infrastructure.

Figure 28: Summary of economic benefits of Green Infrastructure. By author.

 

5.2 Economic evaluation

5.2.1 Green Infrastructure values

Due to its ‘multifunctional’ nature the various benefits of Green Infrastructure may be difficult to quantify, as different functions may require a range of different forms of measurement (European Commission, 2012). Attempting to place a monetary value on the functions performed by Green Infrastructure, however, is a useful method of deriving a more uniform assessment of the contribution of a range of different ecosystem services. Monetary values can also be easily to communicated to stakeholders and the community, and can be fed directly into the policy decision making process (Vandermeulen et al., 2011). Some of the values provided by ecosystem services howeverremain difficult to quantify in financial terms, particularly those associated with cultural and aesthetic values. It also appears that evidence of the benefits of Green Infrastructureare less easy to quantify, and more variable than costs, and are often expressed in qualitative terms (Naumann et al., 2011a).

(Costanza, 2012) argues that traditional models of the economy, (based on an ‘empty world’ concept in which natural resources were abundant) including the use of Gross Domestic Product (GDP) as the prime measure of human well-being, are no longer appropriate ways to measure human well-being and quality of life. According to (Costanza, 2012) p.18:

‘We have to first remember that the goal of the economy is to sustainably improve human well-being and quality of life. We have to remember that material consumption and GDP are merely means to that end, not ends in themselves. But in the new full world context, we have to think differently about what the economy is and what it is for if we are to create sustainable prosperity. We have to better understand what really does contribute to sustainable human well-being (SHW), and recognize the substantial contributions of natural and social capital, which are now the limiting factors to improving SHW in many countries’.

In terms of measuring the economic value of ecosystem services, (Costanza, 2012) suggests that:

  • Conventional economic valuation presumes that people have well-formed preferences and enough information about trade-offs that they can adequately judge their ‘willingness-to-pay.’ However these assumptions do not hold for many ecosystem services.
  • The conventional economic approach to ‘benefits’ is far too narrow and tends to limit benefits only to those that people both perceive and are ‘willing to pay’ for in some real or contingent sense. But the general population’s information about ecosystem services is extremely limited and many ecosystem services go almost unnoticed by the vast majority of people, especially when they are public, non-excludable services that never enter the private, excludable market.
  • The benefits one receives from functioning ecosystems do not necessarily depend on one’s ability to pay for them in monetary units. For example, indigenous populations with no money economy at all derive most of the essentials for life from ecosystem services but have zero ability to pay for them in monetary terms. To understand the value of these ecosystem services we need to understand the trade-offs involved, and these may be best expressed in units of time, energy, land or other units, not necessarily money.
  • Since many people understand monetary units as an index of value, it is often helpful to express trade-offs in those units. But this does not imply that monetary units are the only or the best way to express the trade-offs.
  • It is necessary to not confuse expressing values in monetary units with treating ecosystem services as tradable private commodities. Most ecosystem services are public goods that should not be privatized or traded. This does not mean they should not be valued.

(Costanza, 2012) also suggests that ecosystem services are, by definition, not ends or goals, but means to the end or goal of sustainable human well-being. To achieve sustainability it is necessary to incorporate natural capital, and the ecosystem goods and services that it provides, into our economic and social accounting and our systems of social choice. In estimating these values we must consider how much of our ecological life support systems we can afford to lose. For example to what extent can we substitute manufactured for natural capital, and how much of our natural capital is irreplaceable? Because natural capital is a public good it is not handled well by existing markets, and special methods must be used to estimate its value.

5.2.2 Total Economic Value approach

As discussed above, it is often useful to convert the costs and benefits of different Green Infrastructure functions into a common measure. The concept of Total Economic Value (TEV) is a widely used framework for examining the utilitarian value of ecosystems (Pearce and Warford, 2003; European Commission, 2012). As illustrated in Figure 29, Total Economic Value (TEV) aims to capture the full value of different natural resources. TEV recognises a range of values, including:

  • Use values:
    • Direct use values. Direct benefits from the use of primary services such as the provision of food and water.
    • Indirect use values. Benefits from secondary services such as air and climate regulation.
    • Option values. Benefits of preserving the option for future use.
  • Non-use values:
    • Existence value. Value of the existence of a service without its actual use.

Figure 29: Total Economic Value Framework. Source: (Millennium Ecosystem Assessment, 2003) p.132.

Figure 30 further illustrates the use of the TEV framework in the context of evaluating the European Natura project.

Figure 30:The Total Economic Value framework in the context of Natura 2000. Source: (Ten Brink et al., 2011) p.29.

5.3 Commercial benefits

5.3.1 Attractiveness of cities

(Whitehead et al., 2005) examined the impact of general urban quality improvements, such as walkable places, on economic activity in Manchester, England. The researchers measured willingness to shop, do business or work in areas before and after ‘walkability’ improvements. Previous research had shown a 20-40% increase in foot traffic and a 22% increase in rents in pedestrianized retail areas. They found that adding urban quality improvements that promote pedestrian activity will have a small but significant positive effect on workers and businesses. The urban forest, parks and tree lined boulevards can also play an important role in marketing a city, creating an attractive, welcoming image, and providing settings for a range of events and activities that can boost the local economy (City of Melbourne, 2011).

5.3.2 Local economic regeneration

Economic regeneration involves increasing employment, encouraging business growth and investment, and tackling economic disadvantage (Forest Research, 2010). It has been suggested that investment in Green Infrastructure can encourage and attract high value industry, entrepreneurs and skilled workers to a region through the creation of high quality, environmentally friendly living and working environments, value adding to local economies (ECOTEC, 2008). Local economic regeneration is strongly related to increased quality of place (including visual amenity), recreation and leisure, and tourism. Two UK examples of good local economic regeneration are:

Developing woodland was shown to enhance property values in the surrounding area, for example in Bold  Colliery, St Helens, Lancashire, where property values increased by around £15 million and helped realise a further £75 million for new development (Forestry Commission, 2005).
The Glasgow Green Renewal project stimulated the development of 500-750 new residential properties, enhanced average house prices and the total value of property transactions by a net £3 million–£4.5 million, increased return in council taxes by 47% and increased the value of the land from £100,000 to £300,000 per ha (GEN Consulting, 2006).

In 2013 the UK Department for Environment, Food, and Rural Affairs (Defra) released a review of ways green infrastructure contributes to economic growth. The study was conducted by the Economics for The Environment Consultancy and Sheffield Hallam University. Green infrastructure is defined in the report as the ‘planned approach to the delivery of nature in the city’ (Eftec 2013 p4). The report’s definition includes street trees, green roofs, wetlands, and other green spaces, which deliver stormwater management benefits, as well as the cited economic advantages.

The report compiles evidence from several case studies, concluding that green infrastructure increases property values and inward investment, visitor spending, job creation, and health benefits, and it helps prevent environmental costs.

  • According to a study by the Urban Land Institute, which is cited in the report, 95% of European real estate developers and consultants think green space adds value to commercial property, and, on average, developers are willing to pay 3%, and in some cases, as much as 20%, for land near green space.
  • In the UK, parks departments, nature reserves, landscape services, and others in the green-space sector, account for 5% of all jobs, according to a CABE (2010) study cited in the report.

A report The Economic Value of Green Infrastructure by Natural Economy Northwest (2008) (a partnership between the Northwest Regional Development Agency and Natural England) aims to help practitioners make the case for investment in green infrastructure. The study identified the many benefits of green infrastructure and the way in which it can underpin the success of other economic sectors, offering an improved environment, jobs, sustainable business enterprises, social benefits, economic security and cost savings.  These savings include a reduced need for healthcare, better employee productivity and better adaptation for climate change. It also shows how more credible and consistent tests and measures are being developed to assess the value of green infrastructure projects.

Key findings include:

  • The Northwest’s environment generates an estimated £2.6bn in Gross Value Added (GVA), and supports 109,000 jobs.
  • The environment is critical to sustainable economic prosperity by contributing to the conditions for growth and economic security, as well as providing healthy ecosystems.
  • Green infrastructure can mitigate and alleviate the effects of climate change and pollution, reduce the impacts of flooding, and improve public health, civic pride and educational opportunities.
  • Environmental attractiveness draws in investment and jobs and enhances the value of property.
  • Workers with access to green infrastructure are healthier and more productive, and green infrastructure is vital to key Northwest sectors such as tourism and agriculture.
  • Assessing the value of green infrastructure is still a work in process. Economic value is complemented by the non-market social and environmental benefits that green infrastructure can offer.

Natural Economy Northwest (2008). The Economic Value of Green Infrastructure, Northwest Regional Development Agency and Natural England (see Figure 31).

 

 

            

Figure 31: The Economic Benefits of Green Infrastructure (Natural Economy Northwest 2008).

 

            

            

5.3.3 Business Resilience

In 2013 experts from The Dow Chemical Company, Shell, Swiss Re, and Unilever, working with The Nature Conservancy and a resiliency expert, evaluated a number of business case studies, and developed a white paper with recommendations that green and hybrid infrastructure solutions should become part of the standard toolkit for modern engineers (The Nature Conservancy 2013). The research team evaluated the assumption that green infrastructure can provide more opportunities than grey infrastructure to increase the resilience of industrial business operations against disruptive events such as mechanical failure, power interruption, raw material price increases, and floods. The evaluation concluded that hybrid approaches, utilizing a combination of green and grey infrastructure, may provide an optimum solution to a variety of shocks and improve the overall business resilience.

The case studies gathered to support this research encompass a wide variety of possible applications of green infrastructure. They range from planting trees that cost-effectively remediate contaminated soil (phytoremediation), to constructing wetlands that naturally treat industrial wastewater, to mitigating air pollution through innovative forest management approaches.

5.3.4 Commercial vitality

A number of studies, mainly in the US, have investigated the role of ‘greening’ in enhancing the ‘commercial vitality’ of specific business precincts. One study in 2003, examining the influence of trees and landscaping on rental rates of 85 office buildings in Cleveland, Ohio, found that landscaping with the highest aesthetic values added approximately 7% to average rental rates, while providing building shade by landscaping added another 7% (Laverne and Winson-Geidman, 2003).The research appears to indicate an overall net benefit, but further research is also required. Another research study in New York City and New Jersey, using an Image Based Valuation Survey (IVBS) demonstrated a preference for shopping in greener commercial establishments (with trees and landscaping) and a willingness to pay more for their preferences through a payment mechanism of increased travel time (BiscoWerner, 1996).

Kathleen Wolf at the University of Washington: College of the Environment has conducted a number of research studies into the relationships between urban trees and commercial vitality in a range of US shopping environments. A study in 2004 investigated the relationships between trees and business district preferences in the downtown business district in Athens Georgia (Wolf, 2004). Data was collected via consumer surveys which included preference rating of a number of landscape scenarios. The results indicated that highest ranked photos consistently had a major tree presence, and the highest response values were associated with large trees. The results suggest that landscaping associated with well-maintained buildings positively affected consumer judgement. Wolf also concluded that ‘the urban forest may be the streetscape equivalent of interior store atmospherics and retailers would benefit from greater attention to landscaping.

In another 2004 study, Wolf  investigated potential shoppers’ (local residents) and business owners’preferences and perceptions of trees in several inner-city business districts undergoing revitalization (Wolf, 2004a). A mail survey format was used including rating of a range of images of retail settings with different landscaping characteristics. The lowest preference scores went to the ‘sparse vegetation’ category, with the highest score to the ‘formal foliage’ category. Business owners/managers, however, consistently rated the scenes lower than residents.

In 2005, Wolf also looked at the relationship between street trees and main street business districts in a number of large US cities (Wolf, 2005). In each city mail surveys were administered aimed at measuring perceptions of visual quality, place perceptions, shopper patronage, and product pricing. The findings of mail surveys indicated that image preference ratings increased with the presence of trees, indicating a clear valuing of the trees in terms of their amenity and visual quality. The presence of trees also appeared to influence consumers’ perceptions of the businesses and the quality of their products. Respondents indicated a willingness to travel greater distances, visit more often, and pay more for parking at locations with trees. The survey also revealed a higher estimation of the value of goodssold in business districts with trees (the amenity margin associated with trees ranging from 12% for large cities to 19% for small cities). Wolf acknowledged that the price differentials could also be caused by other factors such as the local economy. However, she concluded that the overall results indicated a net benefit for business owners willing to maintain trees near their properties.

In another study, Wolf investigated driver perceptions of roadside landscaping in several major urban areas in the US (Wolf, 2003). A random sample of residents was surveyed, using images of a variety of freeway landscape treatments and all of the settings with natural vegetation scored higher than non-vegetated settings. The results suggest that drivers pay attention to their surroundings, and the presence of landscaping could influence driver state of mind and even behaviour. Although only a small sample size, the results appear to be consistent with other studies regarding human preferences for green space (Kuo, 2003).

5.3.5 Residential property values

A number of studies have attempted to quantify the impacts of tree cover on residential property values. Increased house prices are of value to both property owners and local government (in terms of increased rate revenues). A diverse range of studies has investigated the role of street trees, tree cover on the property itself, and proximity to natural features such as water or green spaces. Some of these are ‘hedonic analysis’ studies which use the sale prices of comparable properties to isolate increases in market value due to specific variables, such as the presence of street trees.

Hedonic analysis

The hedonic pricing method is used to estimate economic values for ecosystem or environmental services that directly affect market prices.  It is most commonly applied to variations in housing prices that reflect the value of local environmental attributes.It can be used to estimate economic benefits or costs associated with:

  • Environmental quality, including air pollution, water pollution, or noise.
  • Environmental amenities, such as aesthetic views or proximity to recreational sites.

The basic premise of the hedonic pricing method is that the price of a marketed good is related to its characteristics, or the services it provides. For example, the price of a car reflects the characteristics of that car - transportation, comfort, style, luxury, fueleconomy, etc. Therefore, we can value the individual characteristics of a car or other good by looking at how the price people are willing to pay for it changes when the characteristics change. The hedonic pricing method is most often used to value environmental amenities that affect the price of residential properties.

Source: (Ecosystems Valuation, 2012).

In a variety of studies the presence of trees has been found to increase the selling price of a residential unit from 1.9% (Dombrow et al., 2000) to 3-5%  (Anderson and Cordell, 1988) to 7% (Payne, 1973). In a study of Philadelphia’s revitalized neighbourhoods, houses adjacent to street tree plantings were seen to gain a 9% premium (Wachter and Gillen, 2006). In addition, neighbourhood commercial corridors in ‘excellent’ condition, including a green streetscape, were correlated with a 23% net rise in home values within a quarter mile of the corridor and an 11% rise within a half mile. A survey by the Real Estate Institute of Queensland in 2004 found that the value of homes in leafy streets were up to 30% higher in the same suburb (Plant, 2006).

A recent study by (Donovan and Butry, 2010) used hedonic price modelling to simultaneously estimate the effects of street trees on the sales price and the time-on-market (TOM) of houses in Portland, Oregon. On average, street trees add US$8870 to sales price and reduce TOM by 1.7 days. In addition, the researchers found that the benefits of street trees spill over to neighbouring houses.

Another recent study by (Sander et al., 2010) used hedonic property price modelling to estimate the value of urban tree cover's value in Minnesota, predicting housing value as a function of a number of environmental variables, including tree cover. The results showed that a 10 percent increase in tree cover within 100 metres increases average home sale price by $1371 (0.48%) and within 250 metres by $836 (0.29%). The researchers concluded that the results suggest significant positive effects due to neighbourhood tree cover, for instance the shading and aesthetic quality of tree-lined streets, indicating that tree cover provides positive neighbourhood externalities.

5.4 Value of ecosystem services

5.4.1 Overview

The following section reviews literature related to the economic valuation of the ecosystem services provided by different types of Green Infrastructure. Research aimed at quantifying the value of ecosystem services covers a number of broad areas including:

  • Street trees and the urban forest (including the use of the i-Tree tool)
  • Water Sensitive Urban Design
  • Urban green space
  • Natural areas

A 2010 study investigated Green Infrastructure valuation methods, and reviewed the economic benefits of a range of Green Infrastructure practices including (CNT, 2010). These included:

  • Urban Forests:
    • Reduced demand for energy for cooling and heating
    • Reduced negative health impacts from extreme heat events
    • Air quality improvements
    • CO2 Reductions (Avoided and Sequestered)
  • Permeable pavements:
    • Increased Stormwater Retention
    • Reducing Energy Use, Air Pollution and Greenhouse Gas Emissions
    • Reduced Ground Conductivity
    • Reducing Air Pollution
    • Reducing Salt Use
    • Reduced Noise Pollution
  • Water Harvesting:
    • Reduced Potable Water Use
    • Increasing Available Water Supply
    • Improving Plant Life
    • Public Education
  • Green Roofs:
    • Storm Water Retention
    • Reduced Building Energy Use
    • Carbon Sequestration
    • Greenhouse Gas Emissions Reductions
    • Urban Heat Island Mitigation
    • Improved Air Quality
    • Noise Reduction
    • Biodiversity and Habitat
    • Longer Roof Life
  • Infiltration Practices: rain gardens, bio-swales and constructed wetlands:
    • Rain gardens
    • Bio-swales
    • Constructed Wetlands
    • Stormwater Retention and Pollutant Removal
    • Uncertainties and Other Considerations

The authors also reviewed methods of economically valuing ecosystem services including the following:

  • Reduced Energy Use
  • Improved Air Quality
  • Value of Avoided CO2 Emissions and Carbon Sequestration
  • Property Value
  • Recreation Value
  • Avoided Grey Infrastructure Costs
  • Avoided Construction Costs
  • Reduced Treatment Costs
  • Reduced Flood Risk/Damage
  • Groundwater Recharge
  • Noise
  • Urban Heat Island Effect

5.4.2 Trees and the urban forest

The value of trees

‘The aesthetic value of trees in the avenues, boulevards, parks and gardens of Australian cities is often widely appreciated, but their economic value is often under-valued. Trees provide services and fulfil functional roles in cities. They are significant components of urban infrastructure and have a real and calculable economic value. An urban forest of 100,000 trees can save $1million per annum because their shade reduces electricity consumption. Shade can prolong the life of tarmac, and carbon is sequestered as the trees grow. A single large tree growing in a school may provide the equivalent shade of four shade sails, returning a value of about $2000 per annum, while five trees can stabilise a steep suburban block which would otherwise require about $50 000 of engineered piling to secure building insurance. Calculation of the economic contributions of trees can change the economic algorithms upon which decisions are made in cities’.

Source: Moore (2012) p.167.‘The importance and value of urban forests as climate changes’.

 

5.4.2.1 Amenity valuation

The amenity or replacement value of an individual tree can be expressed in monetary terms using a number of established formulas, with the Thyer and the Burnley methods being most commonly used in Australia (Moore, 2000a). i-Tree Eco also includes the amenity or ‘compensatory’ values of the urban forest based on the CTLA (Council of Tree and Landscape Appraisers) methodology (Nowak et al., 2002), which is , recommended by Arboriculture Australia. The CTLA formula is as follows: Tree Value = Base Value × Cross Section Area × Species Class × Condition Class × Location Class.

5.4.2.2 Structural and functional values

Urban forests can be seen to have a structural value based on the trees themselves (e.g., the cost ofhaving to replace a tree with a similar tree); they also have functional values (either positiveor negative) based on the functions the tree performs (i-Tree, 2010).The structural value of an urban forest tends to increase with a rise in the numberand size of healthy trees (Nowak et al., 2002). Annual functional values also tend to increase with increasednumber and size of healthy trees, and are usually of the order of several million dollars peryear. Through proper management, urban forest values can be increased; however, thevalues and benefits also can decrease as the amount of healthy tree cover declines. For instance the following structural and functional values were calculated for the urban forest in Washington:

  • Structural values:
    • Structural value: $3.99 billion
    • Carbon storage: $12.3 million
  • Annual functional values:
    • Carbon sequestration: $393 thousand
    • Pollution removal: $2.30 million
    • Lower energy costs and carbon emission reductions: $3.58 million

Replacement Value of Seattle’s Urban Forest

Infrastructure systems are essential for supporting human health and well-being in cities. While grey infrastructure is made up of drains, pipes, and wires that deliver water and energy and carry away waste, trees and vegetation make up a green infrastructure. This report demonstrates that the urban forest in Seattle is part of a green infrastructure system that works to provide a wide array of services and benefits.To get a sense of the costs to re-establish Seattle’s urban forest, i-Tree Eco estimates the replacement value. This equates to the cost of physically replanting trees and nurturing them to the size and extent of Seattle’s current forest.The replacement value of Seattle’s current urban forest is estimated to be $4.99 billion dollars.This value is estimated using methods established by the Council of Tree and Landscape Appraisers. Much as houses can be appraised, the replacement value of trees can be assessed. Field-collected size, species, condition, and location data, as well as literature-based replacement costs, trans­plantable size information, and local species factors are used in this estimate.

Source:(Green Cities Research Alliance, 2012).

 

 

5.4.2.3 Value of ecosystem services

A number of studies have attempted to quantify the economic benefits generated by an individual tree, or the collective value of the ecosystem services delivered by an urban forest (Coder, 1996; MacDonald, 1996; Hewett, 2002). These benefits include air pollution reduction, storm water runoff reduction, direct carbon capture, indirect emission reduction from the cooling effects of tree shade, and higher sales prices of houses in leafy streets. For example, a 1996 study of stormwater management costs, showed that the urban forest provided stormwater management benefits valued at US$15.4 million in Milwaukee, Wisconsin, and US$122 million in Austin, Texas, by reducing the need for constructing additional retention, detention and treatment capacity (MacDonald, 1996).

Other environmental services provided by trees, which can be given a monetary market value, include carbon sequestration and air pollution mitigation.Results of the 3-year Chicago Urban Forest Climate Project indicate that there are about 50.8 million trees in the Chicago area Counties; 66% of these trees are in good or excellent condition. It was estimated that the trees removed 6145 tons of air pollutants (valued at $9.2 million), and sequestered 155 000 tons of carbon per year, in addition to providing energy savings for residential heating and cooling that, in turn, reduce carbon emissions from power stations. The projected net present value of investment in planting and care of trees in Chicago indicates that the long-term benefits of trees are more than twice their costs (Nowak, 1994).

Another study in Davis, California, showed that the city’s 24,000 public street trees provided US$1.2 million annually in net environmental and property value benefits (Maco and McPherson, 2003). It was also shown that the benefit cost ratio was US$3.81 for every US$1.00 spent on tree planting and management in Davis. Another study showed cooling cost reductions of 20-50%, and heating cost reductions of 10-15% for residential allotments with trees (Heisler, 1986).

A recent study at the Australian National University estimated that the trees in Canberra have an annual economic value of more than $23 million through energy reduction, pollution mitigation and stormwater reductions (Killy et al., 2008).A study at the University of Adelaide attempted to estimate the gross annual benefits from a typical medium sized street tree in Adelaide (Killicoat et al., 2002). As shown in Table 5, a four year old tree was estimated to generate a gross annual benefit of ‘roughly’ $171 per tree, consisting of energy savings due to reduced air conditioning costs, air quality improvements, stormwater management, aesthetics and other benefits.

Table 5: Gross Annual Benefits of an Adelaide Street Tree (2002).

BENEFIT CATEGORY

VALUE

Energy Savings

$64.00

Air quality

 

CO2 (reduced power output)

$1.00

Air Pollution

$34.50

Storm Water

$6.50

Aesthetics/others

$65.00

Repaving Savings

Not known

ESTIMATED GROSS BENEFITS

$171.00

Source: Compiled from data in Killicoat, Puzio et al.(2002)

 

Stringer revisited this estimate in a 2007 paper and concluded that, with more adequate data and computer simulations, the gross benefits would actually be significantly higher (Stringer, 2007). In a follow up paper in 2009 the annual benefits for a typical Adelaide street tree were re-calculated at approximately $424 per tree, as shown on Table 6 (Brindal and Stringer, 2009).

Table 6: Gross Annual Benefits of an Adelaide Street Tree (2009)

Benefit Category

Value

Notes

Household benefits

 

 

Energy savings

$64

 

Aesthetics/others

$65

 

Capital appreciation

$72

Based on a median house value of $360,000 and assuming 2% pa appreciation

Local Government Benefits

 

.

Storm water

$6.50

 

Repaving Savings

$180

 

Community Value

 

 

Air Quality (reduced pollution)

$34.50

 

Reduced CO2 Emissions

$1.00

 

CO2 sequestration

$1.40

Based on absorption figures for a mature deciduous tree with a CO2 trading price of $20.00 per tonne

ESTIMATED GROSS BENEFIT

$424.40 pa

.

Source: Compiled from data in Brindal and Stringer (2009).

 

 

5.4.2.4 The big tree argument

Geiger advocates the case for growing large trees in cities (Geiger et al., 2004). Large, mature trees are considered to deliver more significant benefits than smaller stature trees. Therefore, large tree species should be planted, and trees should be allowed to grow to maturity to maximize their benefits. For example, large trees provide greater benefits of  improved shade, water quality and air quality than smaller trees (McPherson, 2005). Large trees out-perform small trees in moderating air temperatures, blocking UV radiation, conserving energy, sequestering carbon and reducing air pollution, in a manner directly related to the size of the tree canopy (Nowak, 2004). McPherson estimates that a large tree with a height of 14 metres provides three times the annual environmental benefits of a similarly aged 7 metre high tree, and that the value of benefits increases faster than the costs of managing a larger tree (McPherson, 2005).

Larger trees also have greater visual presence, and are often more highly valued by residents, especially where ‘canopy closure’ over the street is achieved (Kalmbach and Kielbaso, 1979; Schroeder and Cannon, 1983; Sommer et al., 1989). In one study the single largest factor in determining the attractiveness of a street scene was the size of the trees and their canopies (Schroeder and Ruffolo, 1996). This was supported by a study in which there was a preference for large canopied trees in a tree replacement program (Heimlich et al., 2008). According to (Schroeder et al., 2009) big trees have long been a significant feature in many cities and towns. A canopy of mature trees arching over the street and shading properties has defined the character of many urban and suburban communities. In fact it is the enduring nature of large trees in a rapidly changing urban environment that contributes to their high symbolic value and a sense of permanence in our fast changing society (Dwyer et al., 2003).

5.4.2.5 The i-Tree tool

Economic modelling is now commonly being used in the United States to quantify the economic benefits generated by urban forests (USDA Forest Service, 2005). The United States Department of Agriculture (USDA) Forest Service provides online tools allowing communities to estimate the net economic benefits generated by their urban forest. i-Tree STRATUM (Street Tree Resource Analysis Tool for Urban Forest Managers) is a user-friendly online model which allows communities to quantify the environmental benefits of their urban forest, in comparison with its management costs (McPherson et al., 2005). The model can quantify benefits such as energy conservation, air quality improvement, CO2 reduction, stormwater control, and property value increases. Such economic modelling has been applied in a number of United States cities including Davis California, Milwaukee, Minneapolis, Pittsburgh, Houston and New York (Maco and McPherson, 2003). Importantly, these analyses are helping cities like New York, Los Angeles, Portland Sacramento and Baltimore to justify investments in major urban greening projects that address declining urban tree cover, increasing population and urban climate change.

i-Tree Eco was developed to help managers and researchers quantify urban forest structure and functions based onstandard inputs of field, meteorological, and pollution data. The model currently calculates the following parameters based on local measurements:

  • Urban forest structure, including species composition, tree cover, tree density, tree health (crown dieback, tree damage), leaf area, leaf biomass, and information on shrubs and ground cover types.
  • Hourly pollution removal by the urban forest for ozone, sulphur dioxide, nitrogen dioxide, carbon monoxide, and particulate matter (PM10). The model accounts for potential negative effects of trees on air quality due to BVOC emissions.
  • Effect of trees on building energy use and related reductions in carbon dioxide emissions.
  • Total carbon stored and net carbon sequestered annually by trees.
  • Rainfall interception and value.
  • Susceptibility to significant pest and diseases.
  • Exotic species composition.

i-Tree Eco makes use of user-collected field data. For large-scale areas (entire cities, councils or regions), a random sample of fixed area plot can be analysed. For smaller-scale sites, a complete inventory option is available that will provide information on urban forest structure, pollution removal, carbon sequestration and storage, and resource value. Model outputs are given for the entire population and, for smaller scale projects making use of complete inventories, results are also provided for individual trees.i-Tree is based on a number of key peer reviewed research papers into the ‘functional’ values of the urban forest by (Nowak et al., 2006) on pollutant removal and carbon sequestration and storage (Nowak and Crane, 2002) and by James McPherson on passive energy benefits (McPherson, 1992). i–Tree also includes the amenity or ‘compensatory’ values of the urban forest based on the CTLA (Council of Tree and Landscape Appraisers) methodology (Nowak et al., 2002).

i-Tree Tools

i-Tree is a state-of-the-art, peer-reviewed software suite from the USDA Forest Service that provides urban and community forestry analysis and benefits assessment tools. The i-Tree tools help communities of all sizes to strengthen their urban forest management and advocacy efforts by quantifying the environmental services that trees provide. Developed by USDA Forest Service and numerous co-operators, i-Tree is in the public domain and available by request through the i-Tree website www.itreetools.org. The i-Tree suite v4.0 includes the following urban forest analysis tools and utility programs.

i-Tree Eco provides a broad picture of the entire urban forest. It is designed to use field data from complete inventories or randomly located plots throughout a community along with local hourly air pollution and meteorological data to quantify urban forest structure, environmental effects, and value to communities.

i-Tree Streets focuses on the benefits provided by a municipality's street trees. It makes use of a sample or complete inventory to quantify and put a dollar value on the street trees' annual environmental and aesthetic benefits. Streets also describes urban forest structure and management needs to help managers plan for the future.

i-Tree Hydro (beta) is a new application designed to simulate the effects of changes in tree and impervious cover characteristics within a watershed on stream flow and water quality.

i-Tree Vue allows you to make use of freely available national land cover data maps to assess your community's land cover, including tree canopy, and some of the ecosystem services provided by your current urban forest. The effects of planting scenarios on future benefits can also be modelled.

i-Tree Design (beta) is a simple online tool that provides a platform for assessments of individual trees at the parcel level. This tool links to Google Maps and allows you to see how tree selection, tree size, and placement around your home affects energy use and other benefits. This beta tool is the first stage in development of more sophisticated options that will be available in future versions.

i-Tree Canopy offers a quick and easy way to produce a statistically valid estimate of land cover types (e.g., tree cover) using aerial images available in Google Maps. The data can be used by urban forest managers to estimate tree canopy cover, set canopy goals, and track success; and to estimate inputs for use in i-Tree Hydro and elsewhere where land cover data are needed.

As an example the STRATUM model was applied in Pittsburgh in April 2008 to evaluate the resource structure, function and value of the city’s street tree population, as shown on Table 7 (Davey Resource Group, 2008).

Table 7: Pittsburgh Municipal Forest Resource Analysis.

Item

Annual value (total) ( US$)

Annual value (per street tree)

Energy savings (shading and

climate effects)

$1.2 million

$40.66

Atmospheric carbon dioxide

removal

$35,424 (5,303 tons)

$1.20

Air pollutant removal/avoidance

$252,935

$8.53

Stormwater interception

$334,601 (158 million litres)

$11.00 (14,113 litres)

Property value increases,

aesthetics, other less tangible

improvements

$572,882

$19.33

Cumulative gross annual

benefits

$2.4 million

$81.00

Annual tree related expenses

$816,400

 

NET ANNUAL BENEFIT

$1.6 million

$53.00

Benefit/cost ratio

$2.94 for every $1.00 (2.94:1)

 

Source: Compiled from data in Davey Resource Group (Davey Resource Group 2008).

A recent i-Tree analysis of street trees and canopy cover completed by the Wisconsin Department of Natural Resources showed that public trees provide $6.14 million in annual benefits. As shown on Figure 32 the study highlighted the significant benefits that community trees provide Green Bay area residents including the following:

  • $1.81 million per year in summer cooling and winter heating energy savings
  • $1.78 million per year in storm water management savings by intercepting approximately 65 million gallons of storm water annually
  • $2.02 million per year increase in local property value
  • $296,206 per year in air quality improvement by mitigating harmful air pollutants
  • $233,998 per year in atmospheric carbon dioxide reduction

 

Figure 32: Green Bay Metro Area Street Tree Benefits. Source: http://www.itreetools.org/resources/reports/WDNR_GreenBay_Metro.pdf

i-Tree in Australia

i-Tree was developed in the US primarily for use there and had limitations when applied elsewhere. Since i-Tree was first introduced in 2006, there has been interest in applying the tools outside the United States, including Australia. As the i-Tree tools were developed for use in the United States, they require regional adaptation for Australian conditions. i-Tree STRATUM was trialled by the University of Melbourne in a study of two Melbourne city councils: the central City of Melbourne, and the newer outer suburban City of Hume. The study, funded by Nursery and Garden Industry Australia, was intended as a ‘proof of concept’ for adapting i-Tree tools to an Australian setting (NGIA, 2011). The model showed that for the environmental benefits estimated (carbon sequestration, water retention, energy saving, aesthetics and air pollution removal) the population of street trees in two suburbs of the City of Melbourne provides ecosystem services equivalent to approximately $1 million dollars, and approximately $1.5 million dollars in the City of Hume. On an individual scale, the trees in the City of Melbourne provide ecosystem services valued at $163 per tree, and in Hume at $89 per tree.An Australia-compatible version of the i-Tree Eco application was introduced at the 2011 ISA Conference in Parramatta, Australia. Australian users in New South Wales, Australian Capital Territory and Victoria now have the same access and automated processing as Eco users in the U.S. and can refer to an i-Tree ECO Australia Users Manual produced by ENSPEC and Arboriculture Australia (ENSPEC, 2012).

In 2013, a representative sample of Brisbane City Councils street tree population was run through version 5 of Australian i-Tree ECO to estimate the value of three of the annual environmental benefits provided by street trees (Brisbane City, 2013). The3% sample comprised a stratified random sample of 16,600 street trees across 80 sample areas, considered to be representative of Brisbane’s street tree population. The results were extrapolated to provide an estimate of the total benefits of the city’s street tree population. Brisbane’s estimated 575,000 street trees and their 2,000 hectares of canopy coverage were estimated to provide an annual estimated $1.65m worth of carbon sequestration, air quality improvement and rainfall interception. That comprises a return of a little over 10% of the annual planting and maintenance costs. Stratified random sample surveys were found to offer representative, rapid assessment of street tree population, stocking level, species diversity, condition, maintenance needs, risk profile, and i-Tree ECO extrapolation opportunities.

Table 8: Estimates of 3 types of annual benefits of Brisbane street tree population, based on Australian V5 i-Tree ECO. Source (Brisbane City, 2013).

i-Tree ECO benefit type

Quantity/year

$ value/year

Carbon dioxide sequestration

7,300 tonnes

$168,300/yr.

Air Pollution Removal

87,200 kg

$44,200/yr.

Rainfall Interception

635,733 cubic metres

$1,444,533/yr.

TOTAL

$1.657m/yr.

 

The Victoria Business Improvement District (BID) in Greater London considers trees to be a core component of the local infrastructure and commissioned a research study to provide a clearer understanding of the financial benefits of its trees (Rogers et al., 2013). This report presents a baseline quantitative assessment of the air pollution, amenity, carbon storage and sequestration benefits of trees as well as the storm water and surface temperature benefits of existing green infrastructure in the Victoria BID, using i-Tree Eco. The Green Infrastructure Valuation Toolkit (GIVAT) (http://www.greeninfrastructurenw.co.uk) was also used as a companion to the i-Tree Eco assessment, to quantify the water management and temperature moderation benefits associated with green infrastructure. Similarly, the Capital Asset Valuation for Amenity Trees (CAVAT) was also applied to the field data.

The study found that existing trees, green spaces and other green infrastructure assets in Victoria divert up to 112,400 cubic meters of storm water runoffs away from the local sewer systems every year. This is worth between an estimated £20,638 and £29,006 in carbon and energy savings every year. The trees in Victoria also remove a total of 1.2 tonnes of pollutants each year and store 847.08 tonnes of CO2. The total structural value of all trees in Victoria (which does not constitute a benefit provided by the trees, but rather a replacement cost) currently stands at £2,103,276. When implemented, the green infrastructure opportunities identified by Victoria BID have the potential to:

  • Divert up to 67,600 additional cubic meters of storm water runoff every year, representing an estimated extra £6,300 and £17,500 in yearly carbon and energy savings respectively. Future design choices (particularly in relation to green roofs) will have a determining impact on the scale of water management benefits realised.
  • Reduce peak summer surface temperatures by up to 5.1˚C in the area surveyed. This will moderate local air temperatures, helping to ensure that the BID remains an attractive and comfortable environment for residents, visitors and workers alike. It will also reduce the need for air conditioning in office buildings, lowering energy costs and carbon emissions.

5.4.3 Open Space

A number of studies have examined the economic benefits to householders and communities of open space. Findings from some of the key studies are summarized below.

5.4.3.1 City Parks Forum

The City Parks Forum of the American Planning Association produces briefing papers on how cities can use parks to address urban challenges. A 2002 briefing paper addressed the ways in which ‘cities use parks for economic development’ (City Parks Forum, 2002). The researchers concluded that;

‘Parks provide intrinsic environmental, aesthetic, and recreation benefits to our cities. They are also a source of positive economic benefits. They enhance property values, increase municipal revenue, bring in homebuyers and workers, and attract retirees. At the bottom line, parks are a good financial investment for a community. Understanding the economic impacts of parks can help decision makers better evaluate the creation and maintenance of urban parks’ (p.1).

The study made the following ‘key points’:

  1. Real property values are positively affected
  2. Municipal revenues are increased
  3. Affluent retirees are attracted and retained
  4. Knowledge workers and talent are attracted to live and work
  5. Homebuyers are attracted to purchase homes

Real property values

Over 100 years ago US landscape architect Frederick Law Olmsted conducted a study of how parks influence property values. From 1856 to 1873 he followed the value of property immediately adjacent to Central Park to justify the $13 million spent on its creation, and found that over the 17-year period there was a $209 million increase in the value of the property affected by the park. More recent studies in the US also show how proximity to a park setting is related to property values.

In the early 1980s the city of Chattanooga, Tennessee faced rising unemployment and crime, polluted air, and a deteriorating quality of life. To attract middle-class residents back it was decided to improve the quality of life by cleaning the air, acquiring open space, and creating new parks and trails. As a result, property values increased by 127.5 percent (Lerner and Poole, 1999). In Atlanta, Georgia, after the Centennial Olympic Park was built, adjacent condominium prices rose from $115 to $250 a square foot. In Amherst, Massachusetts, cluster housing with dedicated open space was found to appreciate at 22 percent annually compared with the comparable conventional subdivision rate of 19.5 percent.

Municipal revenues

Another component of Olmsted’s Central Park study was increased tax revenue as a result of the park. The annual excess of tax increase from the property value was $4 million more than the increase in annual debt payments for the land and improvement. It was concluded that New York City actually made a profit from building Central Park. As shown with Central Park, parks can actually pay for themselves and even generate extra revenue. In addition, tax revenues from increased retail activity and tourism-related expenditures can further increase municipal income.

In terms of property tax benefits,the improvements in Chattanooga discussed above resulted in a 99 percent increase in annual combined city and county property tax revenues (Lerner and Poole, 1999). In Boulder the presence of a greenbelt in a Boulder neighbourhood was found to annually add approximately $500,000 in property tax revenue. In terms of sales tax benefits the East Bay Regional Park District in Oakland, California is estimated to stimulate about $254 million annually in park-related purchases, of which $74 million is spent in the local East Bay economy. In terms of tourism-related benefits, the Atlanta Centennial Olympic Park has about 1.5 million visitors each year, attending public events. In San Antonio, Texas, the Riverwalk Park, created for $425,000, is lined with outdoor cafes and shops and has become the most popular attraction for the city's $3.5-billion tourism industry.

Attracting affluent retirees

According to (Longino, 1995) p.7 ‘There is a new, clean growth industry in America today- the industry is retirement migration’. According to the U.S. Census Bureau, by the year 2050, 1 in every 4 Americans will be 65 years or older, creating an affluent group of retirees with financial benefits and with an average life expectancy of 75 to 83 years. They are also mobile, moving to various locations across the country. Members of this mobile retiree cohort have been termed ‘GRAMPIES’ (growing number of retired active moneyed people in excellent shape). And GRAMPIES are attracted to communities with leisure and recreation amenities. In a study by (Miller et al., 1994)  retirees were asked to review 14 features and identify their importance in the decision to move. The first three chosen were scenic beauty, recreational opportunities, and mild climate. Retirees also bring expendable income to their communities. One study found that if 100 retired households come to a community in a year, each having an annual retirement income of $40,000, the impact is similar to that of a new business spending $4 million annually in the community (Crompton, 2001).

Attracting knowledge workers

In the US industry today is composed of smokeless industries, high technology, and service-sector businesses, collectively referred to as the ‘New Economy.’ Workers in this New Economy are now selling their knowledge rather than their physical labour, and are referred to in studies as ‘knowledge workers’ who work in a ‘footloose’ sector. Companies are not tied to a particular location in order to achieve a competitive advantage (Florida, 2000). Several studies have been undertaken to determine what factors are important to these people when making employment decisions. A 1998 KPMG survey of 1,200 high technology workers found that quality of life in a community increases the attractiveness of a job by 33 percent. Knowledge workers apparently prefer places with a diverse range of outdoor recreational activities, from walking trails to rock climbing. Portland, Seattle, Austin, Denver, and San Francisco are among the top cycling cities and are also leaders in attracting knowledge workers.

Attracting homebuyers

A survey in 2001 by the National Association of Realtors (NAR) found that 57 percent of voters would choose to live close to parks and open space. In addition, 50 percent of voters would be willing to pay 10 percent more for a house located near a park or open space. The National Association of Home Builders found that 65 percent of home shoppers surveyed felt that the presence of parks would realistically influence them to move to a community. A 1991 Economics Research Associates (ERA) survey in Denver found that 48 percent of residents would pay more to live in a neighbourhood near a park or greenway (Phillips, nd.).

5.4.3.2 Active Living Research program

In a study for US Active Living Research program of the Robert Wood Johnson Foundation entitled, ‘The Economic Benefits of Open Space, Recreation Facilities and Walkable Community Design. A Research Synthesis’, (Shoup and Ewing, 2010) reviewed a large body of peer-reviewed and independent reports on the economic value of outdoor recreation facilities, open spaces and walkable community design. Their study focused on the ‘private’ benefits that accrue to nearby homeowners and to other users of open space. While it was noted that parks may also generate a range of ‘public’ benefits to the whole community not reviewed in the study (including alleviating traffic congestion, reducing air pollution, flood control, wildlife habitat, improved water quality and facilitating healthy lifestyles), the literature estimating the economic value of these types of benefits is not reviewed. Key research findings were classified as follows.

  1. Open spaces such as parks and recreation areas can have a positive effect on nearby residential property values, and can lead to proportionately higher property tax revenues for local governments.
  2. The level of economic impact recreational areas have on home prices depends on how far the home is located from a park, the size of the recreational area and the characteristics of the surrounding neighbourhood.
  3. Open space in urban areas provides a greater economic benefit to surrounding property owners than open space in rural areas.
  4. Open space land, recreation areas and compact developments may provide fiscal benefits to municipal governments.
  5. Compact, walkable developments can provide economic benefits to real estate developers through higher home sale prices, enhanced marketability and faster sales or leases than conventional development.

Effects on nearby residential property values

Two studies conducted in 2000 and 2001 analysed the same group of more than 16,400 home sales in Portland, Oregon, using two different methods. The first found that the 193 public parks analysed had a significant, positive impact on nearby property values. The existence of a park within 1,500 feet of a home was found to increase its sale price by between $845 and $2,262 (USD$2000). In addition, as parks increased in size, their impact on property value increased significantly (Bolitzer and Netusil, 2000).The second study found that large natural forest areas had a greater impact on nearby property values than smaller urban parks, playgrounds and golf courses. Houses located within 1,500 feet of natural forest areas enjoyed significant property premiums, averaging $10,648, compared with $1,214 for urban parks, $5,657 for specialty parks and $8,849 for golf courses (USD$1990) (Lutzenhiser and Netusil, 2001).

Studies in a number of US municipalities have used data from residential sales, the population census and Geographic Information Systems (GIS) to investigate the marginal values of different types of parks. These studies confirmed that different types of open space have different effects on property (Geoghegan, 2002; Song and Knaap, 2004; Nicholls and Crompton, 2005; Anderson and West, 2006; Payton et al., 2008). In general, urban parks, natural areas and preserved open spaces showed positive effects on property values (Nicholls, 2004).

The effects of natural open space has on nearby property values can result in higher valuations and therefore higher property tax revenues for local governments. In one Boulder, Colorado neighbourhood, the overall value of a greenbelt was approximately $5.4 million, which contributed potentially $500,000 annually to property tax revenue. The purchase price of this greenbelt for the city was approximately $1.5 million and it was concluded that the potential property tax revenue alone would allow a recovery of the  initial costs in only three years (Correll et al., 1978). Another study conducted in three Maryland counties calculated the economic benefits of preserved agricultural land to homeowners, and estimated the property tax revenues generated from an increase in permanent open space. It was found that with a 1 percent (148 acre) increase in preserved agricultural land in Calvert County the increase in housing values within a one-mile radius generated $251,674, which was enough tax revenue to purchase an additional 88 acres of parkland in one year (Geoghegan et al., 2003).

It has also been suggested that the impact parks can have on property values may actually underestimate the value of open space, by excluding the nonmarket values associated with passive uses, such as simply knowing that the open space exists. Stated preference surveys, (similar to hedonic pricing methods) attempt to value such ‘nonmarket benefits’ by asking respondents their willingness to pay for such an amenity. Residents in one Boulder, Colo., neighbourhood were willing to pay $234 per household (USD$1995) to keep a 5.5 acre parcel of undeveloped land preserved forever. Extrapolating this to the whole neighbourhood within a mile of the parcel gave a total value of $774,000, more than the $600,000 cost of the land (Breffle et al., 1998).Another method for calculating the economic benefits of parks and open space is to estimate the travel costs associated with visiting a park. A study of the Monon Trail in Indianapolis found that the average property price premiums for 1999 home sales could total $140.2 million, with anadditional net present recreational benefit of $7.6 million (Lindsey et al., 2004).

Effects of distance from park

A review of over 60 studies on the impact open spaces have on residential property values showed a general increase in property values but with the magnitude depends on the size of the open space, its proximity to housing, the type of open space and the method of analysis. The review found increases in property values 500–600 feet from the park (McConnell and Walls, 2005). As shown on Figure 33 for community-sized parks over 30 acres, the effect was measurable out to 1,500 feet, but 75 percent of the premium value generally occurred within 500–600 feet (Miller, 2001;Crompton, 2004). One study estimated that an average household living half a mile from open space would be willing to pay $4,104 more for a home (USD$ 1992) to live a quarter mile closer to the open space (Walsh, 2007).

Figure 33: Impact of 14 Neighbourhood Parks on Adjacent Neighbourhoods in Dallas-Fort Worth. Source: (Miller, 2001).

5.4.3.3 Center for City Park Excellence

In 2003, the US Trust for Public Land’s Center for City Park Excellence gathered two dozen park experts and economists in Philadelphia for a colloquium to analyse how park systems economically benefit cities. Based on this and subsequent consultation with other leading economists and academics, the centre identified seven attributes of city park systems that provide measurable economic value. These were:

  1. Property value
  2. Tourism
  3. Direct use
  4. Health
  5. Community cohesion
  6. Clean water
  7. Clean air

Five test cases were also undertaken as part of this program: the cities of Washington, D.C., San Diego, Boston, Sacramento, and Philadelphia. In 2009, a report was issued entitled  ‘Measuring the Economic Value of a City Park System’ which identified a methodology for assessing economic benefits (Harnik and Welle, 2009). Two of the factors identified provide a city with direct income. The first factor is increased property tax from the increase in property value because of proximity to parks. (Also known as ‘hedonic value’ by economists). The second is increased sales tax on spending by tourists who visit an area primarily because of the parks. Beyond tax revenue, these factors can also enhance the collective wealthof the community through increased property values and increased tourism revenue.

Three other factors provide a city with direct savings. The largest value accrues from residents’ free use of a city’s parkland and other free or low-cost recreation opportunities (rather than having to purchase these in the marketplace). Health is the second direct benefit, with savings in medical costs due to the benefits of increased physical activity in parks. The third is the community cohesion benefit of communities ‘coming together’ to save or improve local parks. This is referred to as ‘know-your-neighbour’ social capital which helps reduce antisocial problems that may otherwise cost the city more in policing and rehabilitation.

The last two factors provide environmental savings, including water pollution reduction through stormwater retention via the park system’s trees, vegetation and soil, reducing treating stormwater control and treatment costs. The other benefit considered is air pollution reduction by a park’s trees and vegetation.

In 2010, the City of Virginia Beach requested that The Trust for Public Land carry out a study of its park and recreation system based upon these seven factors. The following section provides a description and estimate of the economic value of each park attribute in Virginia Beach, using the formulas which can be obtained from the Center for City Park Excellence.(The Trust for Public Land, 2011). Table 9 summarizes the annual value of the Virginia Beach park and recreation system as estimated by the study.

Table 9: The Estimated Annual Value of the Virginia Beach Park and Recreation System. Source: (The Trust for Public Land, 2011) p.2.

Revenue-Producing Factors for City Government

Tax receipts from increased property value

$2,218,740

Tax receipts from increased tourism value

$8,428,688

Total

$10,647,428

Wealth-Increasing Factors for Citizens

Property value from park proximity

$10,249,256

Net profit from tourism

$295,004,064

TOTAL

$305,253,320

 

Property Value

Studies consistently show that parks and open space have a positive impact on nearby residential property values, with people willing to pay more for a home close to an attractive park. A park’s effect on property values has been shown to be determined by two main factors: distance from the home, and the quality of the park. While the value of park proximity has been documented up to 2,000 feet from a large park, most of the value has been shown to be within the first 500 feet. In this study the researchers identified all residential properties within 500 feet of a Virginia Beach, comprising 25,598 residential properties with a combined assessed value of $7.6 billion. A regression analysis was conducted of residential property sales from 2006 to 2010 to identify the ‘hedonic value’ of location near a park, which showed a 3.26 percent ‘park effect’ (an additional $9,246 in average sale price per park-proximate dwelling). As shown on Table 10 this was multiplied by the total number of park-proximate dwelling units in Virginia Beach giving a collective gain in personal wealth to homeowners of just over $249 million.The researchers also determined the tax revenue generated from the additional property value attributable to parks, using the same 3.26 percent park-proximate factor, multiplied it by the property tax rate which determined the value of additional tax received by the city in 2010 to be more than $2.2 million. In addition the researchers considered the additional value to the sellers of dwelling units. The value of park-proximate residential properties sold in 2010 was $314,396,427; therefore the 3.2 percent of that value attributable to parks yielded more than $10.2 million in personal wealth to the sellers.

Table 10: Effect of Virginia Beach Parks on Residential Property Values. Source: (The Trust for Public Land, 2011) p.4.

Value of residential properties within 500 feet of parks

$7,647,187,931

Value attributable to parks (3.26%)

$249,296,681

Property tax revenue from properties within 500 feet of parks

$68,059,973

Tax revenue attributable to parks (3.26%)

$2,218,740

Value of properties sold in 2009 within 500 feet of parks

$314,396,427

Value attributable to parks (3.26%)

$10,249,256

 

Tourism value

Statistics indicate that approximately 3.15 million tourists visited Virginia Beach in 2010, some of them (700,000) staying for just the day but most of them (2.45 million) staying at least one night. The typical overnight visitor was found to spend over $100 per day and stayed an average of 4.6 days, while the typical day visitor spent just over $50. The researchers applied these to the estimated number of tourists who visit Virginia Beach because of its parks, which comprised the 65 percent of total tourists who report travelling to Virginia Beach for its beach parks, another 3 percent estimated to travel to the area for adventure tourism, and nearly 100,000 tourists who visit to attend sporting events each year. Combined, these groups of tourists spent nearly $843 million in Virginia Beach in 2010. City-managed athletic facilities generated roughly $30 million in tourist spending, while natural areas generated $36 million from adventure tourists. Of this total tourist spending, one percent was retained by the city as sales tax (with the majority of sales tax being taken by the state). The researchers concluded that the total tax revenue to the city of Virginia Beach from park-based tourism was $8,428,688 in 2010. In addition, as 35 percent of every tourist dollar is considered profit to the city economy, the community’s collective increase in wealth from park and beach based tourism was estimated to be $295,004,064.

Table 11: Tourism Value of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.6.

Types of park tourists

Tourists who come to Virginia Beach for beach parks

2,047,500

Spending by beach park tourists

$777, 959,000

Tourists who come to Virginia Beach for adventure tourism

94,500

Spending by adventure tourists

$35,905,800

Total city tax receipts attributable to tourism

$8,428,688

Total profit to local businesses

$295,004,064

 

Direct Use Value

Virginia Beach’s public parks provide services to residents that are known to economists as ‘direct uses’. Most of these direct uses of public parks are free of charge, but their value can still be determined in terms of a consumer’s ‘willingness to pay’ for the recreational experience in the private marketplace i.e. if parks were not available how much would the resident pay for a similar experience at a commercial facility? The method used in the study for quantifying direct use benefits was based on the ‘unit day value’ method documented by the U.S. Army Corps of Engineers Water Resources Council recreation valuation procedure. The unit day value method categorizes park visits by activity, and then assigns each activity a dollar value, for example playing in a playground is worth $3.50 each time to each user. A random telephone survey of 600 Virginia Beach residents was also conducted to provide data on typical patterns of park usage.

Table 12: Direct Use of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.8.

Facility/Activity

Person-visits

Average value per visit

Total value

Common activities (picnicking, walking on trails, visiting playgrounds, watching sports, etc.)

62,988,218

$2.25

$141,704,055

High-intensity activities (fitness training, running, bicycling, swimming, team sports, etc.)

41,218,463

$3.84

$158,412,661

Special activities (camping, fishing, golf, boating, before- and after-school programs, summer camp, etc.)

6,463,998

$5.78

$37,337,158

Total value of direct use of parks

$337,453,874

 

Health Value

A recent report by the United States based Centers for Disease Control and Prevention (CDC) estimated that in 2008, $147 billion in health care costs could be attributed to obesity. Research suggests that nearby parks and walkable urban environments can help increase levels of physical activity and reduce medical expenses. A Health Benefits Calculator was used to measure Virginia Beach residents’ collective health care savings attributable to parks. The calculator was created by identifying common medical problems associated with lack of physical activity, such as heart disease and diabetes. Based on other studies, a value of $351 was assigned as the annual difference in health care costs between people who exercise regularly and those who do not. An increased value of $702 was assigned to people over the age of 65, as seniors typically incur two or more times the medical care costs of other adults. Unfortunately, no established metric was available for calculating the dollar value of exercise to children. The key data input used in the study to determine health care cost savings was the number of park users participating in a sufficient amount of physical activity to make a difference in their health. (The Centers for Disease Control and Prevention defines this as at least 150 minutes of moderate activity or at least 75 minutes of vigorous activity per week). The researchers found that 94,991 residents (82,206 aged younger than 65 and 12,785 aged 65 or older) exercised actively enough in parks to result in a reduction to their health care costs. Virginia Beach residents’ combined health care savings attributable to park use in 2010 was estimated to be $38,472,475.

Table 13: Health Value of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.9.

Adults Younger Than 65 Years of Age

Average annual medical care cost difference between active and inactive persons

$351

Number physically active in parks*

82,206

Medical care cost savings subtotal

$28,854,306

Adults 65 Years of Age and Older

Average annual medical care cost difference between active and inactive persons

$702

Number physically active in parks*

12,785

Medical care cost savings subtotal

$8,975,070

Subtotals combined

$37,829,376

Regional multiplier for health costs

1.017

Total annual value of medical care cost savings attributable to parks

$38,472,475

 

Community Cohesion Value

Like other social gathering places parks can promote a sense of community. Studies show that institutions that foster the web of human relationships can make communities stronger and safer. Urban anthropologist Jane Jacobs coined the term ‘social capital’ for this human web. The economic values of social capital are not easy to quantify. In this study a proxy measure was adopted, i.e. the amount of time and money that residents donate to their parks. The researchers combined this information with a dollar value assigned to volunteerism by the Points of Light Foundation, $20.85 in 2010. In addition the researchers added the value of cash donations, corporate sponsorship, and in-kind donations to parks. The Social Capital Calculator for parks in Virginia Beach calculated value just under $4 million.

Table 14: Community Cohesion Value of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.11.

Total value of donations

$85,433

Volunteer hours

185,560

Value per hour

$20.85

Total value of volunteer hours

$3,868,926

Total community cohesion value

$3,954,359

 

Air Pollution Removal Value

Vegetation in Virginia Beach’s parks absorbs air pollutants such as nitrogen dioxide, sulphur dioxide, carbon monoxide, and ozone, and improves air quality through particulate matter adhering to plant surfaces. The vegetation in city parks therefore represents a ‘free green infrastructure’ that helps urban residents avoid costs associated with air pollution. The Northeast Research Station of the U.S. Forest Service in Syracuse, New York, has designed a calculator to estimate the pollution removal value of trees in urban areas, which was applied in this study. Analysis determined that 51.8 percent of the city’s 33,640 acres of parkland is covered with trees. Total pollutant flux (pollutant flow within a given time period) was multiplied by tree-canopy coverage to estimate total pollutant removal by trees in the study area. The monetary value of pollution removal by trees was estimated using the median U.S. externality values for each pollutant, which is the amount it would otherwise cost to prevent a unit of that pollutant from entering the atmosphere. The result of applying the Air Quality Calculator for the park system of Virginia Beach in 2010 was a saving of $4,516,704.

Table 15: Air Pollution Removal Value of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.12.

Pollutant

Tons removed

Savings per ton removed

Pollutant removal value

Carbon dioxide

19.4

$870

$16,863

Nitrogen dioxide

116.5

$6,127

$713,871

Ozone

451.5

$6,127

$2,766,475

Particulate matter

216.3

$4,091

$884,851

Sulphur dioxide

89.8

$1,500

$134,643

Total savings

$4,516,704

 

Stormwater Management Value

Virginia Beach’s parks can reduce stormwater management costs by capturing rainfall and slowing runoff.The large pervious surface areas of parks allow rainfall to infiltrate and recharge groundwater. Vegetation also intercepts and stores some rainwater. The authors conclude that ‘in effect, urban green spaces function like mini-storage reservoirs-green infrastructure’. The study used a model developed by the Western Research Station of the U.S. Forest Service in Davis, California, which estimates the value of retained stormwater runoff from public green space, and which gives a preliminary indication of the stormwater management value of the Virginia Beach park system. The researchers compared actual runoff against the theoretical runoff that would occur if the city had no parks. They then calculated the costs of managing stormwater using ‘hard’ infrastructure such as concrete pipes and sewers. By considering rainfall, patterns of land cover, and cost factors, the researchers obtained a total stormwater management value of just over $1.5 million for the park system of Virginia Beach in 2010.

Table 16: Stormwater Retention Value of Virginia Beach Parks. Source: (The Trust for Public Land, 2011) p.14.

Rainfall

5,169,051,756 cu. ft. (42.33 in.)

Runoff from parks

523,982, 657 cu. ft.

Runoff from same acreage if there were no parks (theoretical)

636,296,686 cu. ft.

Runoff reduction due to parks

112,314,029 cu. ft.

Runoff reduction rate

18%

Average cost of treating stormwater ($ per cubic foot)

$0.0135

Total savings due to park runoff reduction

$1,516,239

 

 

 

5.4.3.4 Cooperative Research Centre for Irrigation Futures

In Australia a study by (Fam and Mosely, 2008) at the Cooperative Research Centre for Irrigation Futures, reviewed the environmental, social and economic benefits to the community of irrigated green spaces. In terms of economic benefits, the researchers examined increases in economic activity related to urban green spaces, and the values of greenery in increasing property value and tax revenue.

Increased Economic activity related to urban green spaces

The researchers found that in Australia there were 52,164 separate recreational parks and gardens at the end of June 1997, covering 3,386,354ha including national parks, which employed 16,646 people at a cost of AU$470.2 million in wages. Open urban spaces were also seen as having the ability to enhance the image and identity of a city, for example Central Park in New York, Royal Parks in London, Red Square in Moscow and the Royal Botanical Gardens in Sydney (Tajima, 2003). These urban amenities will become even more important as cities compete for skilled workers, and more cities are beginning to recognize the importance of urban green spaces in attracting skilled workers and companies (Glaeser et al., 2001).

The authors refer to a survey conducted in Melbourne which found that 90% of human resource managers felt that city parks and gardens improved staff morale in their businesses, and 55% of respondents used parks and city gardens for employee events. Economic benefits may relate to reduced work related stress, reduced absenteeism and increased productivity. The importance of vegetation and greenery has been recognised by the City of Melbourne which has valued its green spaces, which include 55,000 mature trees, at AU$500 million dollars. The tourism sector can also be positively affected by attractive public parks and gardens. A 1998 study found that Melbourne’s gardens and parks were a valuable economic and social asset, which contributed $15 million in export sales to the metropolitan economy, $1.25 million from organized bus tours, $2.4 million from the Melbourne International Flower Show and $11.6 million from parks related to the Moomba festival (Maller et al., 2002). The tourism benefits of Melbourne’s public parks and gardens were reflected in a survey of related businesses which found that:

  • 92% felt the parks & gardens were important in attracting visitors
  • 83% felt that tourism would be affected by a decline in city parks
  • 41% felt that businesses would be affected by a decline in city parks

Increasing Property Value and Tax Revenue

Research shows that people are willing to pay more for a property located close to parks, open space and greenery. One US survey found that 50% of respondents would be willing to pay 10% more for a house near a park, with 57% stating they would select neighbourhoods close to parks and open space if in the market for a home (Crompton, 2000). Homebush Bay, site of the 2000 Olympics, was a former ammunitions dump, abattoir, and ground for a toxic chemical dump. The ‘green’ transformation of the site for the Olympics has been shown to have helped improve property values in the area immediately around the park (Dann, 2004). Residential properties with well-maintained gardens and properties in close proximity to green public spaces have also been found to be valued approximately 10% higher than comparable properties (Real Estate Industry Australia, 2007).

Increased property values near parks can also benefit local government through increased property taxes, which in certain cases may even be sufficient to finance the development of the park (Crompton, 2000). Australian local governments were found to have collected $8,920 million in property taxes in 2005/06, therefore it may be to their economic advantage to maintain public parks and urban green spaces (Dann, 2004).The authors conclude that maintaining public parks, private gardens and green sporting fields benefits the community socially, economically and environmentally; it provides an advantage to property owners in increasing value of homes and is of economic benefit to local governments as increased tax revenue (Real Estate Industry Australia, 2007).

5.4.4 Land and water conservation

Researchers have also investigated the economic benefits of conserving natural areas, such as forests and water ways. For example the Land and Water Conservation Fund (LWCF) uses a portion of receipts from offshore oil and gas leases for land conservation and recreation, including creating and maintaining the US system of state, local and national Parks. In a study entitled ‘Return On The Investment From The Land & Water Conservation Fund the Trust for Public Land’ the Trust for Public Lands (TPL) conducted an analysis of the return on the investment by LWCF for 16 federal land ‘units’ acquired between 1998 and 2009 (The Trust for Public Land, 2010). A total of 131,000 acres were acquired with $357 million in funding. The study found that every $1 invested returned $4 in economic value, over this time period, from natural resource goods and services alone. In addition it found that approximately 10.6 million people visit these federal parks each year and spend $511 million in the surrounding communities.

Natural Goods & Services

Natural goods and services provided by these protected lands were reviewed in terms of 12 distinct ecosystems, as shown on Figure 34.

Figure 34: Acreage acquired by land cover type. Source: (The Trust for Public Land, 2010) p.9.

Natural goods and services provided, and their monetary values, were determined using a benefits transfer methodology. This comprised a literature review of the types of goods and services provided by the 12 ecosystem types identified, and an estimate was made of per acre economic value of these goods and services.The benefits transfer method is used to estimate economic values for ecosystem services by transferring available information from published studies in another location and/or context. The basic goal of benefit transfer is to estimate benefits for one context by adapting an estimate of benefits from some other context. Benefit transfer is often used when it is too expensive and/or there is too little time available to conduct an original valuation study, yet some measure of benefits is needed. It is important to note that benefit transfers can only be as accurate as the initial study. (The Trust for Public Land, 2010)p.10.

The researchers estimated the per acre value of the following natural goods and services:

  • Protecting water quality and supply
  • Flood protection
  • Fish production
  • Habitat provision
  • Storm protection
  • Carbon sequestration
  • Grazing
  • Aesthetics
  • Pollination
  • Dilution of wastewater
  • Erosion control

Based upon these per acre values, the researchers concluded that the 131,000 acres of conserved land would provide $2 billion in total economic value from date of purchase to 2019 (10 years from ‘today’) in natural goods and services. They then estimated the return on the present value (the value of past investments in today’s dollars) of $537 million invested in the 131,000 acres of land conservation from 1998 to 2009, by comparing this investment with the $2 billion of natural goods and services generated by these lands in the past (from 1998 to 2009) and into the future (over the next ten years). It was found that every $1 invested returned $4 in economic value. These goods and services would also continue to be provided well beyond the next ten years, increasing the total return on investment beyond that calculated in the analysis.

Additional Economic Benefits

In addition to providing natural goods and services, the federal lands studied were found to play a significant role in the local recreation and tourism industries, as follows:

  • National Forests.Visits to US national forest lands are an important contribution to the economic vitality of rural communities, with about 174 million recreation visits to national forests per year. Regional spending by these recreation visitors is estimated to be nearly $13 billion annually. Visitor spending also ‘ripples’ through the economy sustaining over 224,000 full and part time jobs.
  • National Parks.Outdoor recreation at National Parks also provides an economic boost to surrounding communities. The national park system received 275 million recreation visits in 2008, with these visitors spending about $11.6 billion in regional economies, supporting 205,000 jobs and $4.4 billion in employment income.
  • National Wildlife Refuges. Wildlife based recreation at national wildlife refuges also contributes to regional economies. In year 2006, 34.8 million people visited national wildlife refuges in the ‘lower 48’ US states for recreation, and their spending generated sales of $1.7 billion in regional economies, which supported 27,000 jobs and $543 million in employment income.
  • Bureau of Land Management Managed Lands. Recreational use on the public lands managed by the Bureau of Land Management (BLM) also helps support the economies of Western US communities and states. More than 55 million people live within 25 miles of BLM managed lands, and two-thirds of these lands are within 50 miles of an urban area. Visits to recreation sites on BLM managed lands have significantly increased from 51 million in 2001 to 57 million in 2008.
  • Increased Tourism, Recreation & Spending. The relatively ‘modest’ investment in protection of land by LWCF has been found to support an ‘impressive’ level of tourism visits to federal lands. About 10.6 million tourists visit the 16 federal units studied each year, spending $511 million annually in these local economies. For example, over the past 10 years LWCF has invested $3.85 million dollars in land acquisition in the Acadia National Park. Over that same time period it is estimated that 22.0 million visitors recreated in the park and spent $1.40 billion in the local economy.
  • State & Local Parks Benefits. While the focus of the Trust for Public Land study is on the economic benefits of federal LWCF investments, several other studies have documented the economic benefits from state and local parks and recreation, which are supported through the LWCF state grants program. For example, the National Association of State Park Directors reports that America's state park system contributes $20 billion to local and state economies. According to the National Recreation and Park Association, studies have shown that for every $1 million invested in parks and recreation infrastructure, at least 20 jobs are created.

5.4.5 Water Sensitive Urban Design

5.4.5.1 Overview

Research is being undertaken in a number of Australian cities to develop a ‘business case’ for the implementation and institutionalization of Water Sensitive Urban Design (WSUD) practices. Water Sensitive Urban Design benefits commonly cited in literature and studies include (Taylor, 2005):

  • Avoided waterway rehabilitation costs.
  • Prolonged 'useful life' of stormwater conveyance assets. Stormwater drains will be less clogged with gross pollutants and sediment, natural creeks will be in better condition to handle major storm flows without eroding, posing risks to infrastructure, property and public safety.
  • Increased land value, locality 'branding' and marketability.
  • Improved amenity, for example, urban areas taking advantage of waterway corridors; 'greener' streets and reduced 'urban heat island' effects.
  • Improved active and passive recreation, health and lifestyle, and social well-being through improved open spaces.
  • Biodiversity and ecological benefits.
  • Improved sustainability of primary industries, tourism and other businesses that rely on health waterways.

On the other hand, Water Sensitive Urban Design‘lifecycle costs’can include:

  • Land acquisition costs for stormwater measures
  • Design, construction and establishment costs
  • On-going maintenance costs
  • Possible negative impacts on nearby residents

5.4.5.2 Lynbrook Estate development

Lynbrook Estate 35 kms south east of Melbourne was the first broad scale application of Water Sensitive Urban Design in Melbourne, with the implementation of a ‘treatment train’ to detain and treat stormwater and has been used as a case study to demonstrate the benefits of a Water Sensitive Urban Design approach to stormwater management (Farrelly and Davis, 2009). Monitoring the performance of the treatment train technology indicated that hydraulic performance of the Water Sensitive Urban Design drainage system performed exceptionally well. The treatment train was considered to have ‘performed hydraulically better than the other conventional drainage systems in the estate’ (Brown and Clarke, 2007). Monitoring of pollutant loads demonstrated that the WSUD approach significantly improved the quality of stormwater runoff in comparison to conventional drainage (a reduction of 60% of total nitrogen, 80% reduction in total phosphorous and 90% reduction of total suspended solids) (Wong, 2006a). In addition, stormwater was found to be draining efficiently through the system, remnant red river gums were reviving and water was being filtered and cleaned before being discharged to Dandenong Creek (Melbourne Water, 2003).

Early concerns regarding consumer acceptance by developers were quickly overcome following the strong land sales (Lloyd, 2004). Sale prices for subdivisions that incorporated WSUD reported increases in the order of 20%-30%. Stakeholders involved in the project attributed this strong market acceptance to the improved aesthetics of the development, relative to others at that time. Melbourne Water however believe that there were also other reasons relating to market changes that contributed to the development’s success (Brown and Clarke, 2007). VicUrban now applies WSUD in all new greenfield, urban developments where appropriate.

Capital costs are often cited as a barrier to the introduction of any new technology. A cost comparison between the conventional and WSUD stormwater drainage systems demonstrated only a 5% difference in costs for applying Water Sensitive Urban Design (Lloyd, 2001; Wong, 2001).

Other social research showed that the local community found the development more aesthetically attractive than earlier traditional developments (Lloyd, 2004).Researchers also assumed that the inclusion of water features, preservation of remnant vegetation and an emphasis on environmental issues made the development more desirable and marketable (Wong, 2001).

5.4.5.3 Living Victoria Living Melbourne Road Map

The Victorian Government’s Living Melbourne, Living Victoria policy aims to:

  • Establish Victoria as a world leader in liveable cities and integrated water cycle management.
  • Drive generational change in how Melbourne uses rainwater, stormwater and recycled water to provide better water services and reduce Victoria’s footprint with regard to energy and water use.
  • Drive integrated projects and developments in Melbourne and regional cities to use stormwater, rainwater and recycled water to postpone Victoria’s next major water augmentation.

One of the reform priorities of the recent Living Victoria Living Melbourne Roadmap (Living Victoria Ministerial Advisory Council, 2011) is to ‘establish a common approach to economic evaluation’. Integrated water cycle management is seen as providing multiple benefits to the community (including improvements to downstream water quality, reduced urban heat, reduced risk of flooding and improved urban amenity). These benefits accrue to the general public, rather than water providers and users, and are often not considered in investment decision-making. The negative impacts of some projects, however, are not borne by the project owner; but are felt more broadly, for example, stormwater pollution leading to degraded urban waterways.

At the moment decision-making does not account for the full costs and benefits of different options. Risks of climate variability and the availability of more diverse water supply options highlight the need for a more holistic economic assessment of water projects including real option and insurance values associated with different investment choices (Farrier Swier Consulting, 2011). Option value captures the benefits of deploying a diversified portfolio of water sources, including the value of deferring large supply augmentations. Figure 35 illustrates what such a holistic assessment framework might look like.

Figure 35: Holistic value assessment. Source (Living Victoria Ministerial Advisory Council, 2011).

5.4.5.4 South East Queensland Business Case

In 2010 Water by Design prepared a Business Case for Best Practice Urban Stormwater in South East Queensland (Water by Design, 2010).Both ‘tangible’ (market) and ‘intangible’ (non-market) costs and benefits were estimated from six case study assessments of a range of WSUD developments across Queensland. Whilst the policy scenarios modelled are specific to Queensland, the detailed methodology adopted in the study is relevant to the development of a ‘business case’ for the other aspects of Green Infrastructure. The study outlines a useful framework for analysing the costs and benefits of WSUD including both market factors (such as property values) and non-market factors (such as improved water quality). Quantitative data is provided in the study where it was available; and the reference section lists a range of relevant resources, both Queensland specific and generic to WSUD.

The study authors concluded that the benefits of implementingWater Sensitive Urban Design practices to achieve the government’s stormwater management objectives ‘are likely to outweigh the costs for typical development types’. The study made the following observations with regard to the valuation of Water Sensitive Urban Design benefits.

  • Best practice urban stormwater management via WSUD potentially provides a range of benefits, however the majority of benefits are non-market benefits and estimations of their economic worth are difficult.
  • More easily quantifiable benefits include the value of annual reduction in pollutant loads discharged to water ways.
  • Most benefits occur over a long time scale (albeit with some immediate benefits such as improved amenity of developments).
  • Many of the benefits may be returned to the wider community or region rather than to local householders or developers.
  • Costs associated with WSUD can often be indirectly borne by households, particularly by land costs and local government rates.
  • The majority of benefits will then accrue to a wider section of the current and future community, via lower costs, an enhanced environment, and benefits such as improved recreational activities and stronger tourism industries

A summary of the value of benefits identified in the study is presented in Table 17.

Table 17: Typical benefits of WSUD practices to achieve stormwater management objectives. Source: (Water by Design, 2010) p.14.

Item

Potential benefit

Distribution

Value estimates

Data source

Indirect Financial

 

 

 

 

Avoided water way rehabilitation costs*

Implementing WSUD practices will enhance waterway stability by reducing the volume and velocity of runoff during rainfall events. This will reduce in-stream erosion, the disturbance of in-stream ecosystems, and the risk to ecosystem function within waterways(Walsh et al. 2009). There is therefore the potential to avoid stream rehabilitation costs if WSUD is applied to developments.

Local governments, community

Capital cost rates range from $200-800/m for a number of Gold Coast City Council projects to$2,500-3,000/m for BCC projects. Rates vary according to the extent and scope of works.

 

Maintenance costs rates are approximately $25/m of stream per year.

DesignFlow estimates, BCC, Australian Wetlands Pty Ltd.

Premium on land values (linked to a range of social values)*

Some WSUD practices (e.g. constructed wetlands) that are included in or are additional to a developments green space may create a premium market for adjacent land.

Developers and households

The premium on land close to urban green space (e.g. in Ipswich) is around 10% for properties within 500 m of open space. Premium on land adjacent to water, particularly open water, can be as high as 100%.

Marsden Jacob Associates (2007a)

 

 

Developers and households

Research in WA indicated property values increase by 7% when located adjacent to natural wetlands that are preserved, or newly created stormwater treatment wetlands.

Tapsuwan et al. (2007)

 

Marketability of sustainable developments

Developers and households

Positive perceptions of WSUD were noted by market research, which showed over 85% of homebuyers drawn from Melbourne’s growth corridors support the introduction of biofiltration systems, wetlands and water reuse schemes into their neighbourhoods.

Lloyd (2002)

 

Protection of water quality in in receiving waters improves land prices.

Households

A review of six studies that attempted to measure the effect of water quality on the value of nearby properties in Washington found a premium associated with improvements in water quality typically ranged from 1%-20%.

Washington State Department of Ecology (2003)

 

 

Households

There was a drop in property values for water frontage lots around Lake Boga (Victoria) after major algal blooms in the summers of 1993-94 and 1994-95. Property valuations in late 1995 indicated on average, lakeside properties were worth 20%-25% less than before the blooms.

Read Sturgess and Associates (2001)

Avoided development costs on flat sites

Infrastructure costs such as conventional pits, pipes and earthworks can be reduced through alternative stormwater conveyance and management approaches.

Developers

The avoided capital cost on flat sites is estimated to be at least $36,000 per hectare on flat sites

DesignFlow estimates

Estuarine and marine ecosystem management costs avoided

Potential to reduce management costs associated with changes in Moreton Bay, the Great Barrier Reef and other similar ecosystems.

State and federal government, local governments, community

Some evidence is available, but it is insufficient to develop quantitative estimates.

 

Tourism reliant on waterway health.

The tourism sector, particularly in the Great Barrier Reef, is reliant on the quality of experience that is partially reliant on waterway health.

Tourism and associated industries

The economic contribution to the national economy of the recreational dive and snorkelling industry in the Great Barrier Reef catchment is between $690 million and $1.09 billion per annum.

Marsden Jacobs Associates (2009b)

 

 

 

The value of the freshwater recreational fishing industry in South East Queensland is estimated to be approximately $3 million per annum ($2002)

Taylor (2002)

 

 

 

The estimated direct expenditure by local residents on recreational fishing in the Maroochy River is $19 million per annum

CSIRO (2008)

 

 

 

The estimated annual expenditure of South East Queensland resident anglers is $193 per angler ($2001)

Marsden Jacob Associates (2006)

Seafood industry reliant on waterway health.

Commercial fishing is partially reliant on waterway health.

Industry

The value of commercial fishing in the Moreton Region is estimated at $33 million per annum ($1998)

Taylor and Fletcher (2006)

Non-market

 

 

 

 

Waterway health*

Non-market values associated with waterway health

Community

Queensland-1% change in the proportion of waterways in good health is worth $6.35 per householder per annum ($2009)

Windle and Rolfe (2006)

 

 

 

SE Queensland-1% improvement or preservation worth $3.74 per householder per annum ($2009)

Windle and Rolfe (2006)

 

 

 

Mackay-1% improvement or preservation worth $8.65 per householder per annum ($2009)

Windle and Rolfe (2006)

 

 

 

The value of the Maroochy River to the local council through direct investment (funded by an environmental levy) in the ‘Improving our waterways program’ was $1.4 million in 2006/07.

CSIRO (2008)

 

 

 

The global average value of estuaries has been estimated at $22,382/ha/year, seagrass as $19,004/ha/year and wetlands as $14,785/ha/year (in US1994).

Costanza et al. (1997)

 

 

 

Blackwell estimated the value of lakes and rivers in Australia to be $1,528,078 ($2005) per km2

Blackwell (2005)

Reduced pollutant loads*

Lower loads of pollutants discharging to downstream waterways and ultimately receiving wetlands

Utilities and ultimately households

Levelized annual treatment costs to remove nutrients from wastewater in urban areas range from $180,000-$850,000 per tonne of TN removal and from $80,000-$600,000 per tonne of TP removal (national estimates).

BDA Group (2006)

Wetlands

Non-market value of wetlands in South East Queensland

Community

One off value of wetland protection estimated at $11-19 per household

Clouston (2002)

Urban cooling

Shading and cooling offered by vegetated WSUD treatment systems.

Community

Where urban cooling does occur, benefits of avoided energy consumption for air conditioners and reduced CO2 emissions could be  significant, albeit unquantified

Cleugh et al. (2005)

 

 

Community

Shading offered by trees in car parks in the United States resulted in a local air  temperature reduction 0f 1-2 degrees Celsius

McPerson et al. (2002)

Area’s general liveability and amenity

WSUD potentially enhances amenity (e.g. wetlands and the marginal benefit of well-designed, vegetated bioretention systems (compared to lawn or turf)).

Community

A survey of 300 property owners and prospective buyers from four greenfield development areas in Melbourne found that 85-90% of respondents supported the integration of grassed and landscaped bio-filtration systems into local streetscapes to manage stormwater.

Lloyd (2002)

Recreation

WSUD has the potential to enhance open space.

Community

Previous analysis of the economic benefits of outdoor recreation in South-East Queensland found that a 1% enhancement in outdoor recreation opportunities is worth around $12 per household per annum, while the same increase in recreational fishing opportunities is worth around $2 per household per annum.

Marsden Jacob Associates (2008)

Education

Provision of a research or educational asset

Community

Data is unavailable

 

Ecological ‘existence’ values

The impact on the ecological health of affected local or regional ecosystems (‘existence’ values).

Community

It is estimated that residents of the (former) Maroochy Shire were willing to pay up to $2 million per annum for non-use values associated with Moreton Bay and its environs.

Taylor (2005b)

Ecological ‘option’ values

The impact of the value of providing healthy aquatic and riparian ecosystems for potential use in the future (i.e.’ option’ values).

Community

A New Zealand study found that the ‘option price’ (i.e. the sum of use, preservation and option values) is $17.05 (NZ$2004) expressed as a mean willingness to pay per household per year for users and non-users of the River.

Taylor (2005b)

Ecological ‘bequest’ values

The impact of the value of providing healthy aquatic and riparian ecosystems for future generations (i.e. ‘bequest’ values).

Community

The Rakia River study by Kerr et al. (2004) found the present value of preservation values of the river to be approximately $19 million (NZ$2004).

Taylor (2005b)

*Major benefits that should dominate the assessment of the likely net benefit of applying WSUD to new developments in Queensland.

 

5.4.5.5

5.4.5.5      US EPA

 

In 2013 the US EPA prepared a report to help utilities, state and municipal agencies, and other stormwater professionals understand the  potential benefits of low impact development and green infrastructure (LID/GI) programs. The US EPA  (2013) uses the term "green infrastructure" to generally refer to systems and practices that use or mimic natural processes to infiltrate, evapotranspirate (the return of water to the atmosphere either through evaporation or by plants), or reuse stormwater or runoff on the site where it is generated. Green infrastructure can be used at a wide range of landscape scales in place of, or in addition to, more traditional stormwater control elements to support the principles of LID. LID is an approach to land development (or re-development) that works with nature to manage stormwater as close to its source as possible

 

The report highlights different evaluation methods that have been successfully applied in 13 case studies, and also demonstrates cases where LID/GI have been shown to be economically beneficial ( See Figure 36).

Although many entities have begun to implement LID and GI approaches for stormwater anagement, research shows that a relatively small percentage of jurisdictions have conducted economic analyses of their existing or proposed programs. This lack of program analysis is due to many factors including uncertainties surrounding costs, operation and maintenance requirements, budgetary constraints, and difficulties associated with quantifying the benefits provided by LID/GI.

 

Figure 36: Summary of analytical approaches used by three LID/GI case study agencies (US EPA 2013).

5.4.6 Green Roofs

A recent study commissioned by Green Roofs for Healthy Cities in Toronto, Ontario (Peck, 2012) aimed to provide guidance in attributing economic values to selected ‘hard’ and ‘soft’ public benefits of green roofs at the community level, in order to provide a basic understanding of the public return on investment associated with green roof policies. Green roofs can offer tangible solutions to many challenges faced by urban communities. Articulating the value of those benefits in monetary terms provides an estimate of their contribution to local and regional economies and permits governments, land developers and building owners to assess short- and long-term public and private gains. While some benefits are directly measurable and have ‘hard’ values (such as the energy savings due to the insulation provided by the growing media and vegetation of a green roof), many benefits are ‘soft’ (not readily measurable) and their values are difficult to estimate (such as the health benefits of a green roof).

Benefits may be attributed directly to the owners/occupants of the facility on which they are installed (e.g. reduction in cost of energy used for cooling). However, the nature of green roofs is such that there are many public benefits that will accrue to the larger community (e.g. improvement in air quality). Some benefits, such as increase in property values, may accrue to the owners but will also benefit the larger community in the form of long term changes to the tax base. In addition, many public/private benefits such as the reduction in urban heat island effect, or the incidence and severity of flooding, will only be felt when a certain minimum scale of green roof implementation is achieved.

The researchers reviewed and consolidated work on the economic benefits of green roofs reported elsewhere, primarily in North America, and attempted to provide, in one location, a range of methods that can be employed by policy makers and others to determine the potential economic impact of green roof policies. This approach requires a trade-off between ease of use and the level of detail and precision. A more accurate evaluation of the hard and soft public economic benefits would require a much greater investment in biophysical studies of impacts (e.g. reduction in the urban heat island), and socio-economic studies (e.g. avoided costs of stormwater infrastructure investment) of the resulting benefits.

The public benefits of ‘living architectural systems’ were broadly categorized as follows (Peck, 2012):

  • Urban heat island mitigation
  • Improvements in on-site stormwater management
  • Aesthetic improvements
  • Urban food production
  • Carbon sequestration
  • Employment from manufacture, design, installation, and maintenance
  • Increase in property values and corresponding increase in municipal tax base
  • Noise attenuation
  • Shading
  • Increase in life of building envelope components
  • Improved biodiversity
  • Incorporation of green products and systems
  • Reduced flooding

The following method was proposed for determining an estimate of the benefits of investing in a green roof program that utilizes incentives to help overcome the higher initial costs.

  • Step 1: Determine the Scope (What is the Area of Green Roofs That Will Result?)
  • Step 2: Estimate the costs and applicable benefits
  • Step 3: Normalize Values to local conditions
  • Step 4: Calculate the Potential Benefits

Table 18: Public economic values of green roofs. Source:(Doshi and Peck, 2013).

Benefit

Value ranges $/m2

Studies cited

Stormwater infrastructure cost reduction due to volume reduction – Capital

$0.3 to $45.9

EcoNorthwest (2008; Tomalty and Komorowski (2010); Garrison and Lunghino (2012); Toronto City (2013)

Stormwater infrastructure cost reduction due to volume reduction – Operating and Maintenance

$0.358

EcoNorthwest (2008)

Combined sewer overflow reduction in storage – Capital

$0.9

Toronto City (2013)

CSO – environmental impact – annual

$0.015

Toronto City (2013)

Reduction of pollutants through capture by vegetation – annual

$0.052 to $1.695

EcoNorthwest (2008); Tomalty and Komorowski (2010); Toronto City (2013)

Air Quality (Nitrous Oxide compounds)(EPA Study)

$0.000074 to $0.055

GSA (2011)

Air Quality (Particulate Matter PM10)

$0.000106

GSA (2011)

Air Quality (Sulfur-oxygen compounds)

$0.000000185

GSA (2011)

Building Energy – Reduction in energy infrastructure – Capital

$1.378

Toronto City (2013)

UHI – reduction in energy demand and infrastructure – Capital

$1.601

Toronto City (2013)

Reduction in GHG due to reduction in energy demand – annual

$0.002 to $0.215

EcoNorthwest (2008); Tomalty and Komorowski (2010); Garrison and Lunghino (2012); Toronto City (2013)

Creation of habitat – Capital

$6.808

EcoNorthwest (2008)

Habitat Creation (Australia’s BushBroker Scheme which replaces vegetation on denuded land for habitat) - Capital

0.039 - 0.1356

GSA (2011)

Habitat Creation (US Biodiversity Banking System) - Capital

$0.0381

GSA (2011)

Job creation – job creation estimates are provided as jobs/ m2 of green roof

0.6 to 1.1 person years of jobs per 1000 m2 of roofing (Toronto) or 4.2 jobs per 1000 m2 of installed roofing (Washington DC)

American Rivers (2012); Toronto City (2013)

Maintenance (Extensive)

0.124 person hours/square meter/visit (2 per year)

GSA (2011)

Maintenance (Intensive)

139 person hours/square meter/visit (4 per year)

GSA (2011)

Flooding Avoided Costs (Figures are very site specific)

$9000 per 4,046 square meters of floodplain for the 100 year event to $21,000 per 4046 square meters for the 2 year storm event.

American Rivers (2012)

This tool provides a basic approach to estimating the costs and benefits of investment and regulatory initiatives that concern green roof installation. Although far from perfect, the tool does provide policy makers with approximation of public costs and benefits that can be applied before conducting a more detailed assessment.

A 2013 study by the US EPA documented the economic benefits of ‘ecoroofs’ in Portland Oregon by the Portland Bureau of Environmental Services (BES). BES calculated the net present value (NPV) of its ecoroof program to the public, i.e., the public stormwater system and the environment to private property owners, e.g., developers and building owners, and to a combination of both public and private stakeholders. Based on this analysis, BES concluded that the construction of ecoroofs provides both an immediate and a long-term benefit to the public. At year five the net present benefit is US$101,660, and at year 40 the net present benefit is US$191,421. For building owners, the benefits of ecoroofs do not exceed the costs until year 20, when conventional roofs require replacement. In the long term (over the 40-year life of an ecoroof), the net present benefit of ecoroofs to private stakeholders is more than US$400,000.

Figure 37: Summary of ecoroof costs and benefits (US EPA 2013).

 

 

5.5 Summary

  • A number of researchers have attempted to measure the economic benefits of Green Infrastructure, which provides a useful metric for policy makers.
  • One approach is the Total Economic Value method of measuring ecosystem services, however some benefits are difficult to quantify.
  • Hedonic analysis attempts to systematically measure the impacts of different variables, such as tree cover, on residential property values.
  • A major research focus has been on quantifying the economic benefits of the urban forest, using the US based i-Tree tool now being adapted to Australian conditions.
  • Recent research has also attempted to build a ‘business case’ for Water Sensitive Urban Design in Australian cities.
  • Other researchers have developed tools for measuring the economic benefits of green roofs.
  • Research generally supports the economic benefits of Green Infrastructure and can be used to help develop a business case for Green Infrastructure.
  • It must be noted, however, that some benefits remain difficult to quantify, and that the existing body of research draws upon a wide range of methodologies.
  • Some researchers have criticized the use of economic values to measure ecosystem services provided by Green Infrastructure, where other measures may be more appropriate.

5.6 References

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Brisbane City (2013). Aussie i-Tree estimates of the environmental values of Brisbane’s street trees. Case Study Contributions to NUFA Website, Brisbane City Council.          

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