RESOURCE ECONOMICS

Resource economics

Economics is essentially about the way in which tradeoffs, seen from a human welfare point of view, influence decision-making. Tradeoffs are always made when making decisions about scarce resources, and the funds that are expended on controlling invasive alien plants represent a scarce resource. Thus in allocating funds to alien plant control, the opportunity to use them for another use is foregone, and the value of this other use is the opportunity cost of putting them to the first use. Functioning ecosystems generate goods (natural products e.g. water, timber, flowers, food and medicines) and services (e.g. recycling of wastes, purification of water and air, flood attenuation, and recreation opportunities) whose abundance and quality is affected by invasion of the ecosystem by alien plants. In addition, many social benefits arise from public works programmes, and these can add significantly to the value of programmes such as Working for Water. Until relatively recently, the opportunity costs of sacrificing these ecosystem goods and services, and social benefits, have largely been ignored in decision-making, to the detriment of ecosystems, their functioning and human well-being. Our research into the economic aspects of invading alien plants must seek to provide information that can assist decision-makers in affecting rational trade-offs.

It is well known that invading alien plants have significant impacts on the economy. The negative impacts include reductions in water run-off, loss of biodiversity and ecosystem resilience, loss of potentially productive land, increased costs of fire protection and management, and erosion following fires in heavily invaded areas. Estimates for the United States indicate that alien plant invasions cost the US economy at least $24 billion per annum. Selected studies within South Africa have shown that invasions have reduced the value of fynbos ecosystems by over US$11.75 billion. They have also shown that the total cost of invasion would be in the order of US$3.2 billion on the Agulhas Plain in the Western Cape and that the cost to clear alien plant invasions in South Africa amounts to approximately US$ 1.2 billion.

Not all impacts of alien plants are necessarily negative. Some positive aspects include firewood (eg Acacia species), food (Opuntia and Psidium species) and bee-keeping (Eucalyptus species). There is clearly a need to extend these valuations further, and a co-ordinated research programme to address these needs is currently being developed.

The largest components of the resource economics research programme have been externally funded over the past year. Two large projects have focussed on the value of developing "carbon sinks" through the effective management of alien plant invasions and fire regimes on the one hand, and on developing methods for the macro-economic evaluation of benefits and opportunity costs arising from the programme on the other. In addition, two other projects were completed in the past year. The first provided a review of all resource economics studies relating to invasive alien plants carried out to date in South Africa, and the second provided an in-depth analysis of the costs and benefits associated with black wattles. Finally, a study to determine to costs and benefits of biological control research on seven major weed species was initiated. This study was identified as a priority by the biocontrol research review panel, and it seeks to document the costs of research into biological control as well as the savings in terms of impacts that arose from the release of successful biological control agents.

A USAID funded project was initiated to develop a cost-benefit analysis framework of various components of Working for Water. This analysis will enable us, for the first time, to formally estimate the benefits associated with Working for Water. The project focuses on developing a decision support system containing cost-benefit streams of the three major objectives of the programme, namely enhancing ecosystem goods and services, developing human capacity through training, and developing secondary industries. Good progress has been made with this project, which is ongoing.

The work on black wattle also produced interesting results. Black wattle is an important commercial species, as well as an aggressive invader, giving rise to significant environmental impacts and conflicts of interest. The results of an economic analysis at a national level suggest that a "do nothing" scenario (with no attempts being made to control the spread of the species beyond the limits of plantations) is not sustainable, as the benefit/cost ratio is around 0.4. The most attractive control option will be to combine physical clearing and plant-attacking biological control with the continuation of the commercial growing activities. In case this is not practically feasible the next best option is a combination of seed-attacking biological control, physical control and the development of secondary industries based on wood products from clearing programmes. There is, however, a 40% loss of benefits involved with this option when compared with the first best option.

The resource economics research theme will to a large extent focus on quantifying the impacts of invasive alien plants highlighted by the other research themes. It will therefore be a more integrated research area, which will take its strategic cue from the finalization of the other theme strategies. Current potential priority areas of interest will include the field testing of the cost-benefit analysis models in the USAID study mentioned above. A second priority area will focus on the completion of work aimed at quantifying the costs and benefits associated with biological control. The estimation of the non-water benefits of alien plant clearing will also be receiving some attention. This should provide us with the tools for valuing ecosystem services and the impacts of invasive alien plants on them.