A feasibility assessment of the application of environmental valuation methods to Rand Water open space

Abstract

Rand Water contracted UNISA to develop a monetary valuation method for its open spaces and their inherent ecological functions. This study began by reviewing existing contemporary definitions of open space in South Africa and then identifying their key characteristics. The research project then looked at the economic contribution that open spaces make to the economy as a basis for environmental valuation. By determining the economic value of open spaces, decision makers can be informed about the importance of open space provision, preservation and maintenance. The project applied the participatory action research method which requires the active participation of focus groups. The focus groups consisted of Rand Water employees who deal with open spaces in their respective areas of work. During the literature review and problem formulation the various limitations of environmental valuation methods became evident. It became apparent that the development of new valuation methods would not be possible before existing valuation methods had been tested to see if they could feasibly be applied to open space in the Rand Water context. A literature review also determined that open space valuation studies in South Africa are very limited, which made it difficult to formulate a localised context. It was furthermore found that environmental valuers prefer to use the contingent valuation, travel cost and hedonic pricing methods. These methods rely on revealed and stated preferences of open space users to infer an economic value for an open space. Access to Rand Water’s open spaces is largely limited owing to strict access control. The excludability of open space users therefore hampers the generation of sufficient data to apply revealed and stated preference valuation methods. On the basis of this finding, it was decided to eliminate the contingent valuation and travel cost methods from this study. It was decided to apply the constraint composition theory, under the grounded theory model, to study the constraints or moderators which could affect the feasibility of environmental valuation application to Rand Water open spaces. Four moderators were then identified which could influence the outcome of the feasibility assessment. These are the limitations of the methods, the limitations of the legal framework, the limitations of the user and the limitations of the study area. It was found that the limitations of the methods were a moderator owing to their inherent data requirements. The only suitable valuation methods vi were found to be market based as they were not influenced by the excludability factor. These methods include the replacement cost, damage cost avoided, restoration cost and defensive expenditure valuation methods. The focus group was introduced to each method by participating in a method application exercise. Questionnaires regarding each method were completed to test variables. The legal framework was found not to be a moderator since even though there are limited direct provisions in legislation to mandate environmental valuation, there are legal principles which require economic impacts to be measured and damage to the environment to be estimated. These principles in themselves have supported litigation cases and the mere admission of environmental value estimates in court as evidence and support to a case therefore sets the required legal precedence and mandates further application. The user was found not to be a moderator. Feedback from the focus groups as well as an environmental resource economics workshop held at the Gauteng Department of Agriculture, Conservation and Environment showed that users understood environmental valuation principles, their benefits and limitations. With training, environmental scientists can apply these methods. The study area was found to be a moderator. The limited access for potential open space users, limited harvesting, limited agriculture and limited open space categories result in limited values that can be measured. In conclusion, it was found that not all environmental valuation methods can be applied to Rand Water open space owing to inherent limitations of the methods and the study area. Only market-based methods were found to be suitable for use on Rand Water open space. Notwithstanding the limitations of the methods and study area, which restrict the ability of valuers to obtain a total economic value for Rand Water open space, the available suite of methods can provide an indicator of value for environmental goods and services that flow from the utility’s open spaces. It was concluded that the application of environmental valuation methods to Rand Water open space is feasible within the context of the identified limitations.